v.

THE SECOND CIRCUIT

No. 00–549. Argued April 18, 2001—Decided June 11, 2001

Petitioner, a corporate promoter of boxing matches, sued Don King, the

president and sole shareholder of a rival corporation, alleging that

King had conducted his corporation’ s affairs in violation of the Rack-eteer

Influenced and Corrupt Organizations Act, which makes it

"unlawful for any person employed by or associated with any enter-prise

. . . to conduct or participate . . . in the conduct of such enter-prise’

s affairs through a pattern of racketeering activity," 18 U. S. C.

§1962(c). The District Court, citing Circuit precedent, dismissed the

complaint. In affirming, the Second Circuit expressed its view that

§1962(c) applies only where a plaintiff shows the existence of two

separate entities, a "person" and a distinct "enterprise," the affairs of

which that "person" improperly conducts. In this instance, the court

noted, it was undisputed that King was an employee of his corpora-tion

and also acting within the scope of his authority. Under the

court’ s analysis, King, in a legal sense, was part of the corporation,

not a "person," distinct from the "enterprise," who allegedly improp-erly

the formal legal distinction between "person" and "enterprise"

(namely, incorporation); hence, the provision applies when a corpo-rate

employee unlawfully conducts the affairs of the corporation of

which he is the sole owner—whether he conducts those affairs within

the scope, or beyond the scope, of corporate authority. This Court

does not quarrel with the basic principle that to establish liability

under §1962(c) one must allege and prove the existence of two dis-tinct

entities: (1) a "person"; and (2) an "enterprise" that is not simply

Syllabus

Court disagrees with the appellate court’ s application of that "dis-tinctness"

principle to the present circumstances, in which a corpo-rate

employee, acting within the scope of his authority, allegedly con-ducts

the corporation’ s affairs in a RICO-forbidden way. The

corporate owner/employee, a natural person, is distinct from the cor-poration

itself, a legally different entity with different rights and re-sponsibilities

due to its different legal status. The Court can find

nothing in RICO that requires more "separateness" than that. Lin-guistically

speaking, an employee who conducts his corporation’ s af-fairs

through illegal acts comes within §1962(c)’ s terms forbidding

any "person" unlawfully to conduct an "enterprise," particularly when

RICO explicitly defines "person" to include "any individual . . . capa-ble

of holding a legal or beneficial interest in property," and defines

"enterprise" to include a "corporation," §§1961(3), (4). And, linguisti-cally

speaking, the employee and the corporation are different "per-sons,"

even where the employee is the corporation’ s sole owner. In-corporation’

s basic purpose is to create a legal entity distinct from

those natural individuals who created the corporation, who own it, or

61–62. The precedent on which the Second Circuit relied involved sig-nificantly

different circumstances from those here at issue. Further,

to apply RICO in these circumstances is consistent with the statute’ s

basic purposes of protecting both a legitimate "enterprise" from those

452 U. S. 576, 591, and the public from those who would unlawfully

use an "enterprise" (whether legitimate or illegitimate) as a "vehicle"

court’ s critical legal distinction—between employees acting

within and without the scope of corporate authority—would immu-nize

from RICO liability many of those at whom this Court has said

criminal enterprise, who, seeking to further the enterprise’ s pur-poses,

581. Finally, nothing in the statute’ s history significantly favors an

alternative interpretation. This Court’ s rule is no less consistent

than is the lower court’ s rule with the following principles cited by

King: (1) the principle that a corporation acts only through its direc-tors,

officers, and agents; (2) the principle that a corporation should

not be liable for its employees’ criminal acts where Congress so in-tends;

and (3) antitrust law’ s intracorporate conspiracy doctrine.

Pp. 2–8.

219 F. 3d 115, reversed and remanded.

Opinion of the Court

_________________

No. 00–549

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

[June 11, 2001]

The Racketeer Influenced and Corrupt Organizations

person employed by or associated with any enterprise . . .

to conduct or participate . . . in the conduct of such enter-prise’

s affairs" through the commission of two or more

statutorily defined crimes—which RICO calls "a pattern of

racketeering activity." §1962(c). The language suggests,

and lower courts have held, that this provision fore-sees

two separate entities, a "person" and a distinct

"enterprise."

This case focuses upon a person who is the president

and sole shareholder of a closely held corporation. The

plaintiff claims that the president has conducted the

corporation’ s affairs through the forbidden "pattern,"

though for present purposes it is conceded that, in doing

so, he acted within the scope of his authority as the corporation’s employee.

In these circumstances, are there two

entities, a "person" and a separate "enterprise"? Assum-ing,

as we must given the posture of this case, that the

allegations in the complaint are true, we conclude that the

RICO provision applies.

Petitioner, Cedric Kushner Promotions, Ltd., is a corporation

that promotes boxing matches. Petitioner sued Don

King, the president and sole shareholder of Don King

Productions, a corporation, claiming that King had con-ducted

the boxing-related affairs of Don King Productions

commission of at least two instances of fraud and other

RICO predicate crimes. The District Court, citing Court of

Appeals precedent, dismissed the complaint. Civ. No. 98–

6859, 1999 WL 771366, *3–4 (SDNY, Sept. 28, 1999). And

the Court of Appeals affirmed that dismissal. 219 F. 3d

view, §1962(c) applies only where a plaintiff shows the

existence of two separate entities, a "person" and a distinct

"enterprise," the affairs of which that "person" improperly

that King was an employee" of the corporation Don King

Productions and also "acting within the scope of his

analysis, King, in a legal sense, was part of, not separate

from, the corporation. There was no "person," distinct

from the "enterprise," who improperly conducted the

Other Circuits, applying §1962(c) in roughly similar

1529, 1534 (CA9 1992). We granted certiorari to resolve

the conflict. We now agree with these Circuits and hold

that the Second Circuit’ s interpretation of §1962(c) is

We do not quarrel with the basic principle that to estab-lish

liability under §1962(c) one must allege and prove the

existence of two distinct entities: (1) a "person"; and (2) an

"enterprise" that is not simply the same "person" referred

to by a different name. The statute’ s language, read as

ordinary English, suggests that principle. The Act says

that it applies to "person[s]" who are "employed by or

associated with" the "enterprise." §1962(c). In ordinary

English one speaks of employing, being employed by, or

associating with others, not oneself. See Webster’ s Third

purposes are consistent with that principle. Whether the

Act seeks to prevent a person from victimizing, say, a

small business, S. Rep. No. 91–617, p. 77 (1969), or to

prevent a person from using a corporation for criminal

victim, or the person and the tool, are different entities,

not the same.

The Acting Solicitor General reads §1962(c) "to require

some distinctness between the RICO defendant and the

particularly in light of the fact that 12 Courts of

Appeals have interpreted the statute as embodying some

such distinctness requirement without creating discerni-ble

1268, 1270 (CA11) (en banc), cert. denied, 531 U. S. 1102

and n. 2 (CA2 1985), cert. denied, 474 U. S. 1058 (1986);

(CA Fed. 2000) (approving of distinctness requirement in

dicta), cert. denied, 531 U. S. __ (2001). Indeed, this Court

previously has said that liability "depends on showing that

the defendants conducted or participated in the conduct of

While accepting the "distinctness" principle, we none-theless

disagree with the appellate court’ s application of

that principle to the present circumstances—circum-stances

in which a corporate employee, "acting within the

scope of his authority," 219 F. 3d, at 117, allegedly con-ducts

the corporation’ s affairs in a RICO-forbidden way.

The corporate owner/employee, a natural person, is dis-tinct

from the corporation itself, a legally different entity

with different rights and responsibilities due to its differ-ent

legal status. And we can find nothing in the statute

either formal or practical separateness sufficient to be

distinct under §1962(c)).

Linguistically speaking, an employee who conducts the

affairs of a corporation through illegal acts comes within

the terms of a statute that forbids any "person" unlawfully

explicitly defines "person" to include "any individual . . .

capable of holding a legal or beneficial interest in prop-erty,"

and defines "enterprise" to include a "corporation."

18 U. S. C. §§1961(3), (4). And, linguistically speaking,

the employee and the corporation are different "persons,"

even where the employee is the corporation’ s sole owner.

After all, incorporation’ s basic purpose is to create a dis-tinct

legal entity, with legal rights, obligations, powers,

and privileges different from those of the natural indi-viduals

who created it, who own it, or whom it employs.

Cyclopedia of the Law of Private Corporations §§7, 14 (rev.

ed. 1999).

We note that the Second Circuit relied on earlier Circuit

precedent for its decision. But that precedent involved

quite different circumstances which are not presented

here. This case concerns a claim that a corporate em-ployee

is the "person" and the corporation is the "enter-prise."

It is natural to speak of a corporate employee as a

"person employed by" the corporation. §1962(c). The

earlier Second Circuit precedent concerned a claim that a

corporation was the "person" and the corporation, together

with all its employees and agents, were the "enterprise."

of complaint). It is less natural to speak of a corporation

as "employed by" or "associated with" this latter oddly

constructed entity. And the Second Circuit’ s other prece-dent

also involved significantly different allegations com-pared

dismissal where plaintiff alleged that same bank was both

"person" and "enterprise"), cert. denied, 528 U. S. 1188

sidiaries were "persons" and subsidiaries, taken together

as parent, were "enterprise"), vacated on other grounds,

these cases, and note only their distinction from the in-stant

case.

Further, to apply the RICO statute in present circum-stances

is consistent with the statute’ s basic purposes as

this Court has defined them. The Court has held that

RICO both protects a legitimate "enterprise" from those

public from those who would unlawfully use an "enter-prise"

(whether legitimate or illegitimate) as a "vehicle"

corporate employee who conducts the corporation’ s affairs

through an unlawful RICO "pattern . . . of activity,"

§1962(c), uses that corporation as a "vehicle" whether he

is, or is not, its sole owner.

Conversely, the appellate court’ s critical legal distinc-tion—

between employees acting within the scope of corpo-rate

authority and those acting outside that authority—is

within §1962(c)’ s meaning, "not just by upper manage-ment

added)). It would immunize from RICO liability

many of those at whom this Court has said RICO directly

criminal enterprise, who, seeking to further the purposes

of that enterprise, act within the scope of their authority.

that an enterprise consisting of a group of individuals

was exclusively criminal").

Finally, we have found nothing in the statute’ s history

that significantly favors an alternative interpretation.

That history not only refers frequently to the importance

of undermining organized crime’ s influence upon legiti-mate

businesses but also refers to the need to protect the

public from those who would run "organization[s] in a

manner detrimental to the public interest." S. Rep. No.

91–617, at 82. This latter purpose, as we have said, i n-vites

the legal principle we endorse, namely, that in pres-ent

circumstances the statute requires no more than the

formal legal distinction between "person" and "enterprise"

(namely, incorporation) that is present here.

In reply, King argues that the lower court’ s rule is con-sistent

with (1) the principle that a corporation acts only

be liable for the criminal acts of its employees where

Congress so intends, Brief for Respondents 20–21, and (3)

the Sherman Act principle limiting liability under 15

U. S. C. §1 by excluding "from unlawful combinations or

n. 15 (1984). The alternative that we endorse, however, is

no less consistent with these principles. It does not deny

that a corporation acts through its employees; it says only

that the corporation and its employees are not legally

RICO for the criminal acts of its employees; that is a

cannot be "vicariously liable" for §1962(c) violations

committed by its vice president). Neither is it inconsistent

with antitrust law’ s intracorporate conspiracy doctrine;

simply that the need for two distinct entities is satisfied;

hence, the RICO provision before us applies when a corpo-rate

employee unlawfully conducts the affairs of the corpo-ration

of which he is the sole owner—whether he conducts

those affairs within the scope, or beyond the scope, of

corporate authority.

For these reasons, the Court of Appeals’ judgment is

reversed, and the case is remanded for further proceedings