RICO – Damages – double-counting

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RICO – Damages – double-counting

A court may award both treble damages under RICO and punitive damages on a state law claim based on the same conduct.

“The plaintiffs’ state law claim was for tortious interference with a business opportunity, and the jury awarded punitive damages for the tort. The defendants argue that this was double
counting, because the damages for the same activity that were awarded for the defendants’ violation of RICO were treble the loss that the violation had inflicted on the plaintiffs, yet the
same acts had been charged as violations both of RICO and of state tort law. To this the plaintiffs respond that damages are trebled under RICO not as punishment but because the ordinary
methods of calculating compensatory damages undercompensate. And so the Supreme Court has held. PacifiCare Health Systems, Inc. v. Book, 538 U.S. 401, 405–06 (2003); Cook County v. United
States ex rel. Chandler, 538 U.S. 119, 129–31 (2003); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 240–41 (1987); see also Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1310 n. 8
(7th Cir. 1987). The holding can be questioned. It’s true that under-compensation is one of the reasons for awarding punitive damages, Mathias v. Accor Economy Lodging, Inc., 347 F.3d
672, 676–77 (7th Cir. 2003), though the main reason is punishment (deterrence). But even if the methods used to calculate compensatory damages systematically undercompensate plaintiffs, it
can’t be right that in RICO cases those methods always yield exactly one third of the damages actually sustained by a plaintiff, in which event trebling would indeed be necessary to provide
him with full compensation. But of course we’re bound by the Supreme Court’s interpretation of RICO’s treble-damages remedy as being compensatory rather than punitive, and this defeats the
defendants’ argument.”

Affirmed.

12-3235, 12-3241, 12-3281, 12-3292, 13-1052, 13-1055, 13-1056, 13-1060, 13-1433, 13-1435, 13-1449 & 13-1450 BCS Services, Inc., v. BG Investments, Inc.

Appeals from the United States District Court for the Northern District of Illinois, Kennelly, J., Posner, J.

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