De Falco v. Bernas

=== Opinion ===

244 F.3d 286
(2nd Cir. 2001)
JOSEPH DE FALCO, ELEANOR DE FALCO, ROBERT BROWN, JANICE BROWN, TOP OF THE WORLD ESTATES, INC. and JOBO  ASSOCIATES, INC., Plaintiff-Appellees-Cross-Appellants,
v.
JOHN BERNAS, JOHN BERNAS, INC., and JML QUARRIES, INC., WILLIAM DIRIE, Defendants-Cross-Defendants-Appellants-Cross-Appellees,
PAUL ROUIS, V. EDWARD CURTIS, ALFRED STEPPICH, RICHARD FERBER, and WILLIAM ROSEN, Defendants-Cross-Defendants-Cross-Appellees,
GEORGE LAHM, Defendant-Cross-Appellee,
TERRY KELLY, Defendant-Cross-Defendant-Cross-Claimant-Cross-Appellee,
HARRY FISHER, WILLIAM DIEHL and ROBERT ROSEN, Defendants-Cross-Defendants.
Docket No. 99-7648 (L); Docket No. 99-7696 (XAP); Docket No. 99-7694 (CON)
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Argued: January 5, 2000.
Decided: March 16, 2001.
1
Appeal and cross-appeal from a judgment entered by the United States District Court for the Southern District of New York.
2
Affirmed in part, reversed in part.[Copyrighted Material Omitted][Copyrighted Material Omitted][Copyrighted Material Omitted][Copyrighted Material Omitted][Copyrighted Material Omitted]
3
MICHAEL L. LEVINE, The Law Firm of Michael Levine, P.C., Scarsdale, NY for Plaintiffs-Appellees-Cross-Appellants.
4
JAMES J. HARRINGTON, Harrington Henry LLP, New York, NY for Defendant-Cross-Defendant-Appellant-Cross-Appellee William Dirie and for Defendant-Cross-Defendant-Cross-Appellee V. Edward Curtis.
5
MARTIN J. SCHWARTZ, Rubin Baum Levin Constant & Friedman, New York, NY and MAX WILD, Liberty, NY for Defendants-Appellants-Cross-Appellees John Bernas, John Bernas, Inc. and JML Quarries, Inc. and for Defendant-Cross-Appellee Paul Rouis.
6
LAWRENCE S. GOLDMAN, Goldman & Hafetz, New York, NY for Defendant-Cross-Defendant-Cross-Appellee William Rosen.
7
Before: KEARSE and SACK, Circuit Judges, and UNDERHILL, District Judge.
*
8
TABLE OF CONTENTS
I. THE PARTIES [2]
A. The Plaintiffs [2]
B. The Defendants [2]
II. BACKGROUND [3]
A. Factual Background [3]
B. Procedural History [14]
1. The First Trial [14]
9
2. Unconsummated Sales Opportunities and the October 15, 1998 Order [15]
3. The Second Trial [19]
III. DISCUSSION [22]
A. Standard of Review [22]
B. Elements of a RICO Claim [23]
1. The Town of Delaware as a RICO Enterprise [25]
2. Interstate Commerce [30]
3. Participation in the Conduct of the Town's Affairs [30]
4. Predicate Acts [36]
a. William Dirie [36]
b. The Bernas Defendants [42]
i. The JOBO Stock [43]
ii. The Sand and Gravel [47]
5. Pattern of Racketeering Activity [50]
a. Closed-Ended Continuity [52]
b. Open-Ended Continuity [55]
C. Damages [58]
1. The Damages from the Predicate Acts [59]
2. The Vacated $1.6 Million Award [66]
D. Dismissal of the Claim Against William Rosen [69]
E. Vacating the First Jury Verdict and the October 15, 1998 Order [70]
IV. CONCLUSION [71]
UNDERHILL, District Judge:
10
Plaintiffs brought this action under
18 U.S.C. § 1962
(c), a provision of the Racketeer Influenced and Corrupt Organizations Act ("RICO"),
18 U.S.C. §§ 1961
68, claiming that their efforts to develop real estate in Sullivan County, New York, were illegally impeded as a result of the defendants' operation of the Town of Delaware, New York as a RICO enterprise. Plaintiffs claimed that the action arose out of a conspiracy, plan and scheme among the defendants - an assortment of public officials, private individuals and corporations - to use the Town of Delaware as a racketeering enterprise to extort money, real property and personal property through misuse of certain public offices, in violation of section 1962(c).
11
After pretrial proceedings eliminated a number of defendants, the plaintiffs' claims against eleven remaining defendants were first tried to a jury between December 10 and December 20, 1996, with United States District Judge Barrington D. Parker presiding. The trial resulted in jury verdicts against six defendants. The Court granted motions for judgment as a matter of law in favor of two defendants and, with respect to the remaining four defendants, the Court held that the proof of damages adduced at trial was too speculative and imprecise to support the damages awarded by the jury. Accordingly, Judge Parker granted a new trial on both liability and damages.
12
The case was then retried against the remaining defendants from February 1 to February 9, 1999, with United States District Judge Charles L. Brieant presiding. The second trial again resulted in jury verdicts against the four defendants. Although the Court sustained certain damage awards, Judge Brieant vacated a special verdict of $1.6 million (before trebling) as having "no relation to reality."
13
This appeal and cross-appeal followed. The defendants appealed, contending that the plaintiffs' evidence at the second trial was insufficient as to both liability and damages. The plaintiffs' cross-appeal challenges the Court's vacatur of the jury's verdicts at the first trial and, alternatively, the Court's vacatur of the $1.6 million award at the second trial. For the reasons discussed below, we vacate a $1,000.00 award against the defendant Dirie, but affirm the judgments of the District Court in all other respects.
I. THE PARTIES
A. The Plaintiffs
14
Plaintiff Top of the World Estates, Inc. ("TOP") is the owner and developer of approximately 1,450 acres of land in the Town of Delaware in Sullivan County, New York. Located on this property is a residential development known as "Top of the World Estates."
15
Plaintiff JOBO Associates, Inc. ("JOBO") owns approximately 250 acres adjoining the TOP property. The JOBO property contains deposits of sand and gravel.
16
The individual plaintiffs, Joseph DeFalco, Eleanor DeFalco, Robert Brown and Janice Brown are the principal officers, directors and shareholders of both TOP and JOBO.
B. The Defendants
17
The defendants are an assortment of public officials, private individuals and corporations from Sullivan County, New York:
18
Defendant William Dirie was the elected Supervisor of the Town of Delaware from January 1986 to December 1991. In that position, Dirie served as a member of the Town Board and as a member of the Town Legislature;
19
Defendant John Bernas is a local contractor and owner of both Defendant JML Quarries, Inc. and Defendant John Bernas, Inc.;
20
Defendant V. Edward Curtis was the appointed Chairman of the Delaware Planning Board from 1964 to December 1994. At all relevant times, he was also engaged in the nursery and landscaping business;
21
Defendant Alfred Steppich was the appointed Building Inspector of the Town of Delaware from 1986 to 1991;
22
Defendant Richard Ferber was an elected Tax Assessor for the Town of Delaware from 1976 to 1994 and was Chairman of the Delaware Tax Assessors from 1990 to 1994;
23
Defendant Donald Meckle was an elected Tax Assessor for the Town of Delaware from 1978 to 1993 and was Chairman of the Delaware Tax Assessors from 1979 to 1990;
24
Defendant Paul Rouis was the appointed Sullivan County Administrator from 1977 to June 1993;
25
Defendant Terry Kelly was at all relevant times chief engineer of the Town of Delaware;
26
Defendant William Rosen was the appointed Town Attorney for the Town of Delaware from 1986 to December 1991. He was also Sullivan County Attorney from 1988 to 1991;
27
Defendant George Lahm was at all relevant times the Highway Superintendent for the Town of Delaware; and
28
Defendant Harry Fisher was at all relevant times an overseer of the plaintiffs' business operations as well as a personal acquaintance of William Dirie.
II. BACKGROUND
A. Factual Background
29
Reading the evidence from the second trial in the light most favorable to the plaintiffs, a reasonable jury could have found the following facts.
30
In May 1987, Joseph DeFalco ("DeFalco"), a butcher and professional hunter from Long Island, New York, decided to purchase approximately 1,700 acres of land from the Tamarack Hunting Club. The property straddled the Town of Delaware and the Town of Cochecton, in Sullivan County, New York. DeFalco and his partner, Robert Brown, and their wives, formed two corporations, Top of the World Estates, Inc. ("TOP") and JOBO Associates, Inc. ("JOBO"). TOP acquired title to the portion of the property in the Town of Delaware and JOBO acquired title to the smaller portion located in the Town of Cochecton. Although DeFalco initially intended to use the Tamarack property for hunting, he subsequently decided to develop a small part of it as a residential real estate development known as "Top of the World Estates."
31
Before the closing of the land purchase, DeFalco was approached by local resident Harry Fisher ("Fisher"), who told DeFalco that there were potentially valuable gravel deposits on the JOBO parcel. Shortly thereafter, Fisher paid another visit to DeFalco, this time with William Dirie ("Dirie"), Supervisor of the Town of Delaware and a local firewood salesman. Dirie introduced himself and informed DeFalco that Delaware, New York "is not Long Island," and that "[a]round here in Sullivan County, you got to deal with the local people." (T2:71).
1
Dirie advised DeFalco that he would help guide DeFalco "through the muddy waters" of real estate development in the Town of Delaware, so long as DeFalco followed Dirie's suggestions. (T2:70).
32
Dirie made some suggestions to DeFalco at this initial meeting. First, Dirie informed DeFalco that Fisher was about to retire and he recommended that DeFalco hire Fisher as a foreman for the real estate development project at $300 per week. It was imperative, however, that Fisher not show the $300 per week as income, so Dirie suggested that DeFalco pay Fisher by purchasing him a new truck in Fisher's son's name and making the loan payments on the truck purchase. Second, Dirie recommended that DeFalco buy shrubs and other landscaping items from V. Edward Curtis ("Curtis"), a local nursery owner and Chairman of the Delaware Planning Board. Dirie also suggested that DeFalco, an avid hunter with a televised hunting program, support Tax Assessor Donald Meckle ("Meckle") by purchasing equipment at Meckle's sporting goods store. Finally, Dirie suggested that DeFalco use local resident John Bernas ("Bernas") to do the road construction at the development and mine the gravel from the JOBO gravel pit.
33
DeFalco complied with Dirie's initial suggestions. DeFalco agreed to hire Fisher as a foreman for the real estate development project, purchased Fisher a new truck in his son's name, and made loan payments on the truck.
2
DeFalco also purchased equipment at Meckle's sporting goods store and hired Bernas to construct the roads at the development.
34
DeFalco also visited nursery owner and Planning Board Chairman Curtis. Curtis indicated that "things [would] go a lot easier" if DeFalco were to use a particular landscaping contractor, Ed Matern, who would purchase plants and shrubs from Curtis' nursery. (T2:74). Later, Curtis also suggested that DeFalco hire a particular contractor, Jim Glavin, to design the entrance to the development, indicating that DeFalco should "do it the right way and bring in Galvin [sic]. And if you use these people, everything is going to go smoother." (T2:82).
3
35
Plaintiffs intended the TOP development to proceed in four phases. Before Phase I commenced, in August 1987, DeFalco and Bernas met to discuss road construction for the development. Although no written contract was executed, DeFalco and Bernas agreed that Bernas' company John Bernas, Inc. ("JBI") would construct roads at TOP in exchange for the cost of labor plus a one-third stock interest in JOBO. Bernas was to extract gravel from the JOBO site to use in building the roads at TOP and was additionally entitled to sell any excess sand and gravel removed from JOBO, with any profits from such sales split 50-50 between Bernas and the plaintiffs.
36
As the project progressed, the defendants made additional demands on DeFalco coupled with a threat of adverse official action on the project. For example, Dirie suggested that DeFalco let Dirie's son cut timber on the property. When DeFalco resisted and indicated that he intended to bring in a logger to cut timber for himself, Dirie responded, "If you want to go by the Planning Board and you want things to go smooth, you know, this is the way it is in Sullivan County. That's it." (T2:97).
37
DeFalco also complied with the defendants' suggestions to hire particular individuals. At an October 2, 1987 meeting between DeFalco, Brown, Bernas and Sullivan County Administrator, Paul Rouis ("Rouis"), Rouis pulled DeFalco aside and insisted that he be the accountant for the development project and that DeFalco hire a local attorney named Robert Rosen. (T2:113-14). Rouis further indicated that he would be making Robert Rosen's brother and Delaware Town Attorney, William Rosen, the Sullivan County Attorney in January 1988. (T2:114). When DeFalco indicated that he planned to use his son as the accountant for the project and planned to use his son-in-law as the attorney, Rouis stated that "You're in Sullivan County now. And if you want this development to go, you can't bring up New Yorkers." (T2:113-14). DeFalco hired Rouis and Robert Rosen even though he did not want to use them. (T2:114); see also Letter from Joe DeFalco to Robert Rosen dated Oct. 5, 1987 (E:141-42) ("I would like to talk to you about representing TOP OF THE WORLD ESTATES in all transactions that are going to occur in Sullivan County.... I would like you to know that you were highly recommended by Mr. Paul Rouis.").
38
Each time a demand was made and DeFalco resisted, the defendants used their political power to impede the development or otherwise harm the plaintiffs. Conversely, each time DeFalco complied with a demand, he was "rewarded" by having the development project proceed.
39
For example, following the defendants' suggestions, DeFalco permitted Dirie, Fisher and others to cut timber and firewood on TOP property. In order to avoid any questions, Dirie insisted that DeFalco run an ad in certain newspapers that DeFalco was offering free firewood. One such advertisement ran June 11, 1988 in the New York Times. (T2:136); see also Pl.'s Ex. 34 (E:158) (New York Times, "Free Oak Firewood" advertisement dated June 11, 1988). The defendants, however, wanted their logging activities to remain exclusive. When DeFalco granted a logging contract for a certain section of the property to the Walczak Lumber Company for a price of $8800, see (E:129-30), Dirie insisted that DeFalco cancel the contract and return the check. When DeFalco protested, Dirie told him "Don't expect to get your approvals at the Planning Board meeting unless it's done." (T2:126). At the next Planning Board meeting, the plaintiffs' project was suspended for thirty days. (T2:127); see also Pl.'s Ex. 24, Oct. 21, 1987 Planning Board Minutes (E:133-34). The following day, Dirie visited DeFalco at the development and asked whether he "got the message." (T2:127). DeFalco returned the check and paid a penalty for canceling the contract. (T2:128). DeFalco was further instructed by Tax Assessor Richard Ferber to use his cousin, Ray Ferber, for the logging contract; "[o]therwise [he was] never going to get approvals." (T2:128). At the next Planning Board meeting on November 18, 1987, the project was once again allowed to move forward. (T2:130); see also Pl.'s Ex. 26, Nov. 18, 1987 Planning Board Minutes (E:135-37).
40
Similarly, when DeFalco attempted to fire Fisher and his crew, Rosen warned him against "rocking the cradle," Dirie told him that he would "scrap the project," and Rouis stated that DeFalco was "going to have major problems." (T2:132).
41
Former Town of Delaware Building Inspector Alfred Steppich ("Steppich") also testified that both Supervisor Dirie and Planning Board Chairman Curtis instructed him at one point to stop issuing building permits for Top of the World. (T2:335). Notwithstanding that neither Dirie nor Curtis was authorized to tell Steppich to stop issuing building permits, Steppich wrote in his personal log: "Called Kathy at Top of the World. Told her no more building permits to be issued until I got an okay from Bill Dirie and Ed Curtis." (T2:338-39).
4
42
As the project progressed, DeFalco complied with other demands made by the defendants. For example, DeFalco gave a set of used truck wheels and tires to Dirie's son, as demanded by Dirie (T2:152-53). During the course of Bernas' work on the roads, the Town of Delaware removed gravel from the plaintiffs' gravel pit free of charge. (T2:162-63). When DeFalco questioned Bernas' giving free sand and gravel to the Town of Delaware, DeFalco suddenly faced problems with a previously agreed deal regarding plowing and maintenance of the development roads by the Town as well as threats that the Phase I roads either would not be accepted for dedication by the Town or that the dedication process would be delayed. (T2:165-66); see also (E:287-88).
5
43
In mid-1989, before Phase I was complete, DeFalco approached Bernas about beginning work on the roads for Phase II. Both Bernas and DeFalco, however, wanted to address certain outstanding issues. DeFalco wanted Bernas to give him a detailed breakdown of what materials he had removed, sold or given away from the gravel pit. Bernas wanted resolution of the then outstanding issue of when he would receive the one-third equity interest in JOBO.
44
Over the course of the project, Bernas had been extracting gravel from the JOBO site. Pursuant to the agreement with plaintiffs, Bernas was to provide plaintiffs with accountings of the gravel and other materials removed from the pit. After repeated requests from DeFalco and Brown,
6
Bernas rendered the accountings of materials sold from the JOBO site. See (E:163-71). DeFalco became skeptical of the accuracy of the accountings and insisted that Bernas both refrain from giving away any materials free-of-charge and that he share the profits of any sales with the plaintiffs. Whenever DeFalco broached the topic with Bernas, however, Bernas threatened to get the Town to either stop the project or refuse dedication of the development's roads.
45
Under DeFalco's agreement with Bernas, DeFalco was not required to turn over the one-third interest in JOBO stock until Bernas had completed twelve miles of roads. (T2:177). By mid-1989, however, DeFalco faced mounting pressure from several defendants with respect to transferring the JOBO stock to Bernas. For example, when issues arose over the transfer of the JOBO stock, Rouis, as the development's accountant, entered on the project's financial statements a false entry showing $275,000 payable to Bernas. (T2:179-81). This fraudulent entry purportedly reflected monies owing to Bernas for services in connection with road work on Phase I. Rouis threatened to cause a tax audit of the project unless DeFalco conveyed the JOBO shares to Bernas. When DeFalco pressed his concerns over the gravel pit accounting, Rouis told him to "back off, and that he was going to get involved, and that (DeFalco) should sign... a third of the gravel pit over now." (T2:175). DeFalco testified that "Rouis told me straight up and down, like if I don't sign the stock over, 'you ain't seen nothing yet.'" (T2:181-82). With respect to the financial statement, DeFalco testified that Rouis "was going to take care of it when the stock was signed over." (T2:182).
46
Similarly, Dirie threatened adverse official action if DeFalco failed to give Bernas the stock. (T2:178). DeFalco testified that "Dirie told me straight up and down, 'you can kiss Phase 2 good-bye, the development good-bye.'" (T2:178). The sudden issues regarding plowing and maintenance of the development's roads and whether the roads would be accepted for dedication by the Town were also tied to transfer of the JOBO stock. According to DeFalco, with Dirie, "it was always the same story. 'If you sign over the stock, the problems go away.'" (T2:197). Delaware Town Engineer Terry Kelly, Tax Assessor Ferber, Tax Assessor Meckle and Building Inspector Steppich each pressured DeFalco to turn the stock over to Bernas. (T2:183).
47
On several occasions, Dirie and Bernas indicated that, if DeFalco didn't sign over the stock, the project would be scrapped. (T2:202). DeFalco testified: "I didn't have a choice. I wanted to get this matter over with." (T2:201). DeFalco ultimately transferred the one-third interest in the JOBO stock to JBI on December 6, 1989. See Pl.'s Ex. 60, Stock Transfer Agreement dated Dec. 6, 1989 (E:181); Pl.'s Ex. B31, JOBO Stock Certificate for John Bernas, Inc. (E:361). The Phase I roads were thereafter accepted for dedication by the Town. (T2:206); seealso Letter from Robert M. Rosen to William Dirie dated Dec. 7, 1989 (E:179).
48
After DeFalco signed over the one-third interest in JOBO to Bernas, however, Bernas wanted rights to the entire gravel pit, and suddenly the dedication of the Phase I roads was again called into question. (T2:206). At the same time, DeFalco remained concerned with the accountings Bernas had prepared for the gravel pit and instructed Bernas not to mine the JOBO site after December 15, 1989. (T2:208).
7
In March 1990, on DeFalco's return from a seasonal trip to Florida, however, he found Bernas' people working to remove material from the JOBO site. (T2:207). DeFalco again directed Bernas to stop work at JOBO and erected physical barriers there. (T2:208-12); see also "Cease and Desist Order" Letter from Joe DeFalco to John Bernas, Inc. and JML Quarries dated Mar. 2, 1990 (E:182). On March 15, 1990, DeFalco wrote to Bernas: "I feel that I am always being harassed over this gravel pit. I have no intentions of backing down anymore." (T2:212); see also Letter from Joe DeFalco to John Bernas, Inc. and JML Quarries dated Mar. 5, 1990 (E:183-84).
49
DeFalco faced mounting pressure from several of the defendants to give Bernas the entire gravel pit. For example, Bernas told DeFalco that, if DeFalco did not turn over the gravel pit, "(t)hey were going to close the development down." (T2:214). When DeFalco resisted giving Bernas the entire gravel pit, Tax Assessors Ferber and Meckle reassessed certain lots from $20,000 to $45,000 a piece, more than doubling plaintiffs' taxes. (T2:253).
8
50
On or about April 2, 1990, the Town of Delaware Planning Board issued a letter listing certain requirements to be completed before final approval would be granted for Phase II. The Planning Board required: (1) a letter from Town Engineer Kelly stating that the roads satisfied certain town requirements; and (2) a letter from the Supervisor of the Town stating that the Town Board was satisfied that the Top of the World Estates had met certain guaranty requirements by posting a surety bond acceptable to the Town Board, as directed by the Town Attorney. (T2:223); see also Town of Delaware Planning Board Letter from V. Edward Curtis to Robert M. Rosen dated Apr. 2, 1990 (E:188; E:317). Only when those requirements were met would the Planning Board "give final approval to Phase 2 of the Top of the World Estates." (T2:223); see also (E:188; E:317). When DeFalco subsequently spoke with Dirie about the letter and asked Dirie how he could get Phase II approved, Dirie replied, "Give Bernas the gravel pit." (T2:225).
51
DeFalco never completed Phase II nor sought any approvals from the Town in the years preceding trial. Although he had received conditional final approval for Phase II from the Town Planning Board and was invited to retain another road contractor or, alternatively, to put up a completion bond of $200,000 from a creditworthy bonding company and commence marketing lots in Phase II prior to completion of the roads, DeFalco claimed that he could not get final Town approval of Phase II because he refused to comply with the new demand by Bernas to give him all of the JOBO property.
B. Procedural History
52
The initial complaint in this action was filed on September 6, 1990. (JA:9). Pretrial proceedings eliminated a number of defendants, one of whom is pertinent to this appeal.
53
On October 17, 1996, the District Court dismissed the claim against William Rosen as articulated in the plaintiffs' second amended complaint. The Court concluded that, based on the Supreme Court's decision in Central Bank of Denver v. First Interstate Bank,
511 U.S. 164
(1994), RICO does not provide for aider and abettor liability. Because the plaintiffs' second amended complaint accused Rosen of aiding and abetting liability, the Court dismissed the case against Rosen for failure to state a claim.
1. The First Trial
54
Plaintiffs' claims against the eleven remaining defendants were tried before Judge Barrington D. Parker and to a jury between December 10 and December 20, 1996. The jury found that the Town of Delaware had been operated as a RICO enterprise and that six of the defendants had conducted or participated in the affairs of the Town through a pattern of racketeering activity. The jury returned verdicts in favor of the other five defendants. The jury found that each of the six liable defendants committed two or more predicate acts and assessed monetary damages (prior to trebling) as follows:
55
William Dirie $ 250,000 
John Bernas $ 500,000 
JML Quarries, Inc. $ 500,000 
V. Edward Curtis $ 250,000 
Paul Rouis $1,000,000 
John Bernas, Inc. $ 0
56
Each of these defendants filed motions for judgment as a matter of law and for a new trial pursuant to Rules 50(b) and 59 of the Federal Rules of Civil Procedure.
57
With respect to Rouis and Curtis, the District Court held that there was insufficient evidence for the trier of fact to have concluded that the predicate acts found to have been committed by them were the proximate cause of harm to plaintiffs' business or property and, accordingly, their motions for judgment as a matter of law pursuant to Rule 50(b) were granted. With respect to the remaining four defendants, however, the Court concluded that the proof of damages adduced at trial was too speculative and imprecise to support the damages awarded by the jury and, because the issues of damages and liability were inextricably intertwined, Dirie, Bernas, JML and JBI were entitled to a new trial on both liability and damages. See DeFalco v. Dirie,
978 F. Supp. 491, 500
(S.D.N.Y. 1997) (Plaintiffs' "wide ranging and vague theories of RICO injury created a substantial likelihood that the jury's award was based on something other than adequate proof.").
58
2. Unconsummated Sales Opportunities and the October 15, 1998 Order
59
The evidence presented at the first trial included DeFalco's unsuccessful attempts to sell certain portions of the project to two entities known as Tri Sec and Valente in 1989. Plaintiffs' theory that the defendants were responsible for frustrating the Tri Sec and Valente deals was set forth in their post trial brief:
60
The evidence established that [DeFalco] at one point, received an offer to sell [the] property (including the JOBO gravel pit) to an entity called Tri Sec for an aggregate purchase price of $8.3 million [Tr.12/11, p. 342 343; Tr.12/12, p. 485]. The gravel pit itself was to be sold for $2,000,000.00 [Ex. C & D 51; Ex. B 25]. Rouis, however, upon learning of that, threatened to have the Town of Delaware take detrimental action regarding road dedications at [DeFalco's] development if DeFalco went ahead with his plans to sell the gravel pit to Tri Sec....
61
Thus, Rouis' extortionate infusion [sic] as accountant for [DeFalco's] development project resulted in his ability to (1) know of the prospective sale to Tri  Sec; and (2) threaten the further misuse of his public office and control of the enterprise to cause the sale not to take place [Tr.12/11, p. 350]. The result was that Rouis "killed" the deal [Tr.12/12, p. 485]. Clearly, the fact that [DeFalco] would lose the profits from that transaction were foreseeable when Rouis acted in the manner that he did. Rouis' actions just in this regard were sufficient to support the jury's damage award against him.
62
The evidence also established that the defendants (including Rouis) pressured DeFalco into not making another deal to sell a portion of the property [Tr.12/11, p. 352 356]. This deal was with Louie Valente who agreed to purchase the gravel pit and another 800 acres of [DeFalco's] land... for a purchase price of $6 million [Tr.12/11, p. 353 354]. Valente and DeFalco entered into a letter agreement for that sale, and Valente tendered a $5,000.00 deposit [Tr.12/11, p. 353]. Again, because of Rouis' predicate acts of compelling [DeFalco] to convey JOBO stock to Bernas, Bernas was placed in a position of being able to take action intended to "kill" this deal as well, which Bernas intentionally did [Tr.12/11, p. 355]. Again, the damages flowing from that (i.e., the loss to [DeFalco] of the profit that [he] would have made from this deal) was clearly foreseeable. (sic) (Plaintiffs' Memorandum of Law in Opposition to Post Trial Motion by Defendant Paul Rouis, ¶. 22 24.)
63
DeFalco v. Dirie,
978 F. Supp. 491, 498
(S.D.N.Y. 1997).
64
In ruling on certain post-trial motions, however, the Court held that this theory was analytically inadequate because "neither the retention of Rouis as the Project's accountant nor the transfer of one third of the shares of JOBO to Bernas could be reasonably concluded to have been the proximate cause of any lost profits from unconsummated sales opportunities. There was no "direct relationship between the plaintiffs' injury and the defendants' injurious conduct." DeFalco,
978 F. Supp. at 498
. The Court stated that:
65
Common experience teaches that real estate developments are inherently speculative and that myriad factors - foreseen and unforeseen - can frustrate their completion. DeFalco's proof at trial of the two inchoate land deals was insufficient. There was no testimony to indicate that either of the deals had progressed to the point where any enforceable obligations had been created. No written agreement between DeFalco and Valente was produced at trial. A two page agreement with Tri Sec was introduced but it was no more than a preliminary document. It contained none of the provisions customarily found in a formal commitment to convey land, much less the sorts of provisions essential to a large, complex real estate transaction of the sort DeFalco claims was contemplated. Moreover, the trial testimony conclusively showed that the purported Tri Sec agreement was signed not by the purchaser but by DeFalco's secretary. As a result, the proffered documentation did not satisfy the New York Statute of Frauds.
66
DeFalco,
978 F. Supp. at 499
(citing
N.Y. Gen. Oblig. Law § 5
703(2) (McKinney 1989)).
67
The Court also noted that "DeFalco paid approximately $960,000 for the land in 1987 and claims to have lost the opportunity to sell the land for approximately $7,300,000 in 1989. However, at the time of the trial DeFalco still owned the land. Consequently, the critical issue was not simply the purchase price for the land, or the value of the contract said to have been frustrated. DeFalco was also obligated to offer satisfactory evidence of the market value of the land at the time of trial. No such evidence was adduced."
Id.
at 499 n.3. With respect to the unconsummated sales opportunities, the Court concluded that:
68
There was no evidence offered at trial to establish adequately the existence of an agreement with respect to either transaction whose consummation DeFalco claims were thwarted. Moreover, there was no adequate proof that the conduct of the defendants actually interfered with either of these purported deals. Assuming, arguendo, that DeFalco had entered into purchase and sale agreements, and that the defendants illegally impeded their completion, DeFalco's evidence of any RICO damages was far too speculative and uncertain.
69
Id. at 499-500
. The Court therefore concluded that the plaintiffs' evidence of RICO damages alleged to have been incurred as a consequence of DeFalco's inability to consummate the Tri-Sec and Valente real estate transactions was highly speculative and legally insufficient.
70
With this problem in mind, on May 1, 1998, the Court directed counsel for the plaintiffs to supply an affidavit informing the Court what evidence of the Tri-Sec and Valente deals would be offered at the second trial that was not offered at the first. The plaintiffs were also instructed "to append to the affidavit or otherwise clearly identify any documentation that would be offered at trial to establish that the deals existed and that they were frustrated by the conduct of the defendants." See Memorandum and Order dated Oct. 15, 1998 (Parker, J.) at 2 (JA:614).
71
In response, counsel for the plaintiffs submitted an affirmation regarding damages dated June 25, 1998. (JA:573-82). The affirmation indicated that, at the second trial, the plaintiffs intended to offer essentially the same proof with respect to the Valente and Tri-Sec deals that was offered at the first trial. See Memorandum and Order dated Oct. 15, 1998 at 2 (JA:614).
72
In an October 15, 1998 decision, the Court held that:
73
This Court has carefully considered the evidence proffered and concludes that it is still too speculative, conjectural and contingent to serve [as] a predicate for the possible imposition of RICO damages. Sedima S.P.R.L. v. Imrex Company, Inc.,
473 U.S. 479
(1985); Holmes v. SIPC,
503 U.S. 258
(1992) and Norman v. Niagra Mohawk Power Corp.,
873 F.2d 634
(2d Cir. 1989).
74
As the first trial of this action demonstrates, in a RICO jury trial, the danger of massive damage awards based on factors other than adequate proof of RICO injury is a source of potentially serious prejudice. Norman at 636. In view of this Court's experience with plaintiff's [sic] proof with respect to the Valente and Tri-Sec deals, this Court would exclude at retrial such evidence pursuant to Rule 403 Fed. R. Evid. since its probative value is substantially outweighed by its prejudicial effects.
75
Independent of this conclusion, this Court grants defendants' motion in limine with respect to the Valente and Tri-Sec transactions. For the reasons set forth herein and in this Court's opinion of September 26, 1997, this Court concludes that such evidence should also be excluded as too speculative and conjectural.
76
Id. at 2-3 (JA:614-15). Accordingly, the plaintiffs' proffered evidence regarding the unconsummated Valente and Tri-Sec deals was ordered excluded at the second trial.
3. The Second Trial
77
The remaining issues were thereafter retried against Dirie, Bernas, JBI and JML from February 1 to February 9, 1999 with Judge Charles L. Brieant presiding. The jury at the second trial returned verdicts against all four defendants.
78
With respect to Dirie, the jury found that, as RICO predicate acts, Dirie: (1) extorted from the plaintiffs the value of the services of Harry Fisher; (2) extorted timber and firewood from the plaintiffs for his own benefit, and separately for the benefit of Ray Ferber; (3) extorted from the plaintiffs one-third of the shares of JOBO for the benefit of JBI; and (4) extorted from the plaintiffs two truck wheels and tires for the benefit of Dirie's son.
79
The jury also found that, by means of the RICO enterprise, John Bernas and JBI extorted from the plaintiffs one-third of the shares of JOBO and a substantial amount of sand and/or gravel from the gravel pit on the JOBO property. As to JML, the jury found that it, too, had extorted sand and/or gravel from the JOBO gravel pit.
80
The jury, answering special interrogatories, assessed monetary damages (prior to trebling) as follows. As to Dirie, the jury found damages with respect to the services of Harry Fisher to be $20,251.91.
9
The jurors found no damages for the timber or firewood that Dirie obtained; $12,300.00 for the timber extorted for the benefit of Ray Ferber; and $1,000.00 for the truck wheels and tires.
81
As to John Bernas, and both of his corporations, JBI and JML, jointly and severally, the jury found they had extorted sand and gravel worth $250,000.00.
82
The jury awarded $1.6 million as damages in addition to the damages described in answers to specific interrogatories. Those damages were attributed to the defendants' participation in the conduct of the affairs of the Town of Delaware through a pattern of racketeering activity, and were in addition to the value of one-third of the shares of the stock of JOBO, as to which the Court had reserved decision whether to require specific equitable restitution.
83
Finally, the jury found that Bernas, JBI and JML obtained $45,000.00 worth of sand and/or gravel by conversion, and that Bernas, JBI and JML extorted from plaintiffs the shares of JOBO by conversion and fraud.
84
On motions to set aside all or part of the jury verdict, or, in the alternative, for a new trial, the Court noted that:
85
For the second time in this Court a jury has held unanimously that the plaintiffs have proved that the Town of Delaware was conducted as a RICO enterprise which affected interstate commerce, and that all the defendants on trial before it conducted or participated in the conduct of the affairs of the Town through a pattern of racketeering activity, namely William Dirie, John Bernas, John Bernas, Inc. and JML Quarries, Inc., and probably others.
86
See Memorandum and Order dated May 17, 1999 (Brieant, J.) (JA:877). The Court added that it had
87
no fault to find with the jury verdict in general. The granting of a new trial should be done sparingly, and a court must respect the findings of a trial jury. This is especially true when a different jury in a prior trial has reached a very similar result.
88
Id. (JA:880).
89
Although the Court noted that the $1,600,000.00 figure "corresponds very closely to the general damages awarded in the first trial before Judge Parker in the amount of $2,500,000.00, at which the Valente and Trisec evidence had been received," id. (JA:879), the Court granted the defendants' motions to the extent of vacating the special verdict award of $1.6 million. The Court explained that:
90
[W]e are constrained to conclude from the trial record that there is simply insufficient credible evidence of any kind of damages directly flowing from the predicate acts which the jury found, other than as specifically found in the separate interrogatories regarding damages for those predicate acts. Accordingly, the damage award of $1,600,000... simply has no relation to reality.
91
As Judge Parker already found, it is far from clear that the cessation of activity at the land development site of Top of the World, Inc., was attributable entirely to the criminality of the defendants, and plaintiffs are still left in full ownership of their land. This Court can only conclude that the unfolding of the whole sordid story of the relationships between the Town of Delaware officials and its parallel twilight government which included these defendants and numerous others, so inflamed the passions of our jury that they found damages beyond those which were actually proved at the trial. There is no reason to believe that the plaintiff[s] could present any more direct or any better evidence to support this non-specific damage claim, were this Court to order a third trial. With some regret, the Court concludes that it must vacate that much of the jury's award in the amount of $1,600,000.00... and grant judgment on that issue in favor of defendants notwithstanding the verdict. In all other respects the verdict is well justified by the proof at trial.
92
Id. (JA:880).
93
The Court sustained the other damages awards: (1) $250,000 (before trebling) against the Bernas defendants, based upon a predicate act of extortion of sand and gravel mined from the JOBO property; and (2) a total of $33,551.94 (before trebling) against Dirie for extortion of firewood or timber; the used truck wheels and tires for his son; and the pickup truck for Harry Fisher. See Final Judgment dated May 17, 1999 (JA:874-75).
10
94
The trial court also required JBI to deliver its one-third of the outstanding shares in JOBO Associates, Inc. to the plaintiffs, based upon the jury's finding that those shares were extorted and plaintiffs' election to recover the shares in lieu of monetary damages.
11
95
This appeal and cross-appeal followed.
III. DISCUSSION
A. Standard of Review
96
"A court of appeals reviews a district court's decision on a motion for judgment as a matter of law de novo, applying the same standards as the district court to determine whether judgment as a matter of law was appropriate." Merrill Lynch Interfunding, Inc. v. Argenti,
155 F.3d 113, 120
(2d Cir. 1998); Schlaifer Nance & Co. v. Estate of Andy Warhol,
119 F.3d 91, 98
(2d Cir. 1997); Katara v. D.E. Jones Commodities, Inc.,
835 F.2d 966, 970
(2d Cir. 1987). Under Rule 50 of the Federal Rules of Civil Procedure, judgment as matter of law is appropriate where "there is no legally sufficient evidentiary basis for a reasonable jury to find for" a party. Fed. R. Civ. P. 50(a)(1). In ruling on a motion for judgment as a matter of law, the court "must view the evidence in a light most favorable to the non movant and grant that party every reasonable inference that the jury might have drawn in its favor." Samuels v. Air Transport Local 504,
992 F.2d 12, 16
(2d Cir. 1993).
97
A district court's decision to grant or deny a motion for a new trial will be reversed only if the trial court's decision was an abuse of discretion. Atkins v. New York City,
143 F.3d 100, 102
(2d Cir. 1998); Lightfoot v. Union Carbide Corp.,
110 F.3d 898, 911
(2d Cir. 1997). "A motion for a new trial ordinarily should not be granted unless the trial court is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." Lightfoot,
110 F.3d at 911
(internal notations and quotations omitted). We now review the district courts' decisions in light of these well established standards.
B. Elements of a RICO Claim
98
To establish a RICO claim, a plaintiff must show: "(1) a violation of the RICO statute,
18 U.S.C. § 1962
; (2) an injury to business or property; and (3) that the injury was caused by the violation of Section 1962." Pinnacle Consultants, Ltd. v. Leucadia Nat'l Corp.,
101 F.3d 900
, 904 (2d Cir. 1996) (citing First Nationwide Bank v. Gelt Funding Corp.,
27 F.3d 763, 767
(2d Cir. 1994)). Section 1962(c), the section relevant here, makes it unlawful
99
for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity....
100
To establish a violation of
18 U.S.C. § 1962
(c) then, a plaintiff must show "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 496
(1985); Cofacredit, S.A. v. Windsor Plumbing Supply Co. Inc.,
187 F.3d 229, 242
(2d Cir. 1999); Azrielli v. Cohen Law Offices,
21 F.3d 512, 520
(2d Cir. 1994). The requirements of section 1962(c) must be established as to each individual defendant. See United States v. Persico,
832 F.2d 705, 714
(2d Cir. 1987), cert. denied,
486 U.S. 1022
(1988) ("The focus of section 1962(c) is on the individual patterns of racketeering engaged in by a defendant, rather than the collective activities of the members of the enterprise, which are proscribed by section 1962(d).").
101
The terms "enterprise," "racketeering activity," and "pattern of racketeering activity" are defined in
18 U.S.C. § 1961
. A RICO enterprise "includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."
18 U.S.C. § 1961
(4). "Racketeering activity" is broadly defined to encompass a variety of state and federal offenses including, inter alia, murder, kidnapping, gambling, arson, robbery, bribery and extortion. See
18 U.S.C. § 1961
(1). A "'pattern of racketeering activity' requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years... after the commission of a prior act of racketeering activity."
18 U.S.C. § 1961
(5).
102
Although at least two predicate acts must be present to constitute a pattern, two acts alone will not always suffice to form a pattern. See Sedima,
473 U.S. at 496
n.14 ("The implication is that while two acts are necessary, they may not be sufficient."); see also United States v. Indelicato,
865 F.2d 1370, 1382
(2d Cir. 1989) ("The legislative history is... inconsistent with a rule that any two acts of racketeering activity, without more, suffice to establish a RICO pattern.").
103
In short, to establish a violation of
18 U.S.C. § 1962
(c), a plaintiff must establish that a defendant, through the commission of two or more acts constituting a pattern of racketeering activity, directly or indirectly participated in an enterprise, the activities of which affected interstate or foreign commerce. See, e.g., Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 496
(1985); Moss v. Morgan Stanley, Inc.,
719 F.2d 5, 17
(2d Cir.1983), cert. denied sub nom. Moss v. Newman,
465 U.S. 1025
(1984).
104
We take up each of the RICO elements at issue below.
105
1. The Town of Delaware as a RICO Enterprise
106
Dirie claims that the plaintiffs failed to establish that the Town of Delaware was a RICO enterprise and that the plaintiffs failed to establish an enterprise separate from the individual defendants.
12
The plaintiffs argue that an enterprise may be organized for a legitimate and lawful purpose and may include such things as a municipality or town or a subdivision thereof.
107
As noted above, the RICO statute defines an "enterprise" as "includ[ing] any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."
18 U.S.C. § 1961
(4). The enterprise "is an entity,... a group of persons associated together for a common purpose of engaging in a course of conduct." United States v. Turkette,
452 U.S. 576, 583
(1981). A racketeering enterprise is proven through "evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." Id.; see United States v. Morales,
185 F.3d 74, 80
(2d Cir. 1999). Thus, evidence of an ongoing organization, the associates of which function as a continuing unit, suffices to prove an enterprise. See Turkette,
452 U.S. at 583
; Procter & Gamble Co. v. Big Apple Industrial Buildings, Inc.,
879 F.2d 10, 15
(2d Cir. 1989).
108
Under section 1962(c), a defendant and the enterprise must be distinct. Indeed, "[i]t is well established in this Circuit that, under § 1962(c), the alleged RICO 'person' and RICO 'enterprise' must be distinct." Cedric Kushner Promotions, Ltd. v. King,
219 F.3d 115, 116
(2d Cir. 2000) (per curiam) (footnotes omitted) (citing Anatian v. Coutts Bank (Switzerland) Ltd.,
193 F.3d 85, 89
(2d Cir. 1999); Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A.,
30 F.3d 339
, 343 45 (2d Cir. 1994); Bennett v. U.S. Trust Co.,
770 F.2d 308, 315
(2d Cir. 1985), cert. denied,
474 U.S. 1058
(1986)).
109
In Riverwoods, this Court applied the distinctness requirement to hold that a bank - the RICO enterprise and the sole defendant - could not be liable under section 1962(c) when the RICO persons identified were the bank and bank employees acting within the scope of their employment. The Court later explained that "the distinctness requirement could not be circumvented 'by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.'" Cedric Kushner Promotions,
219 F.3d at 116
(quoting Riverwoods,
30 F.3d at 344
).
110
Because a corporation can only function through its employees and agents, any act of the corporation can be viewed as an act of such an enterprise, and the enterprise is in reality no more than the defendant itself. Thus, where employees of a corporation associate together to commit a pattern of predicate acts in the course of their employment and on behalf of the corporation, the employees in association with the corporation do not form an enterprise distinct from the corporation.
111
Riverwoods,
30 F.3d at 344
(citation omitted). Notably, the Court stated that "the plain language of section 1962(c) clearly envisions separate entities, and the distinctness requirement comports with legislative intent and policy." Riverwoods,
30 F.3d at 344
(citing Bennett,
770 F.2d at 315
). "This requirement focuses the section on the culpable party and recognizes that the enterprise itself is often a passive instrument or victim of the racketeering activity."
Id.
(internal quotation marks omitted).
112
The requirement of distinctiveness between the defendants and the enterprise, however, was met here. The jury could reasonably have concluded that the RICO persons - Dirie, Bernas, JBI and JML - were a separate and distinct assortment of public officials, private individuals and corporations who used their political power to influence the Town of Delaware's exercise of governmental authority over the plaintiffs' development. From the evidence adduced at trial, there was sufficient evidence from which a reasonable jury could conclude that the named defendants were separate, culpable parties and that the alleged enterprise, the Town of Delaware, was the "passive instrument or victim of [their] racketeering activity."
Id.
113
Moreover, this Court has previously held that a governmental unit can be a RICO enterprise. See United States v. Angelilli,
660 F.2d 23, 30-35
(2d Cir. 1981), cert. denied,
455 U.S. 910
, 945 (1982). In Angelilli, the defendants were four of approximately eighty New York City marshals appointed by the Mayor of the City of New York as officers of the City's Civil Court. The marshals were charged with mail fraud in a scheme to auction judgment debtors' property at artificially deflated prices. Prior to an auction, the marshals would meet with certain buyers and determine: (1) a deflated price at which property would ostensibly be sold and (2) the amount over the agreed sales price that would be paid to the marshals in return ("top money"). The marshals retained the "top money" and subsequently mailed to judgment creditors amounts reflecting the fraudulently deflated prices. The enterprise in whose activities the marshals were alleged to have participated in a pattern of racketeering activity was the New York City Civil Court.
114
In concluding that the New York City Civil Court was an enterprise within the meaning of RICO, this Court first noted that, under the language of the statute: "the definition of 'enterprise' is quite broad. We see no sign of an intention by Congress to exclude governmental units from its scope." Id. at 31. In reviewing the language of RICO, the Court concluded that, "on its face the definition of an enterprise to 'include any... legal entity' is unambiguously broad, and that it does not exclude the Civil Court." Id.
115
That conclusion was bolstered by certain of RICO's substantive goals, some of which are specifically directed toward governmental entities. Id. Recognizing that "racketeering activity" is defined in section 1961(1) to include bribery and extortion, the Court noted that "bribery is 'a crime which is peculiar to public officials,'" and "[e]xtortion under color of law is a crime which 'can only be committed in the context of governmental activity.'" Id. at 31-32 (citations omitted).
116
By making bribery and extortion RICO offenses, Congress must be said to have understood that these offenses would be committed by governmental officials as a part of their work. Since these offenses can only be committed in the context of the work of a government agency, Congress must be taken to have intended that a governmental agency could be one of the types of "enterprises," the affairs of which are conducted through a pattern of racketeering offenses.
117
Id. at 32 (quoting United States v. Sisk,
476 F. Supp. 1061, 1062
(M.D. Tenn. 1979)). Thus, "[t]he connection between the named offenses of bribery and extortion and governmental work is too close to say that government work is not one of the kinds of activity that may constitute a RICO 'enterprise.'"
Id.
118
The interpretation of the language of the statute to extend to activities affecting governmental entities is supported by the purpose and legislative history of the Organized Crime Control Act of 1970 ("the Act"),
Pub. L. No. 91-452, 84
Stat. 922, of which RICO is Title IX. Angelilli,
660 F.2d at 32-33
. Both the purpose and legislative history of the Act reflect "concern about the infiltration of local government units."
Id. at 32
. Accordingly, "the language of section 1961(4), defining enterprise,... unambiguously encompass[es] governmental units, and... the purpose and history of the Act and the substance of RICO's provisions demonstrate a clear congressional intent that RICO be interpreted to apply to activities that corrupt public or governmental entities."
Id.
at 33 (citing cases).
119
The analysis in Angelilli applies with equal force to this case. Throughout this action, the only enterprise alleged by the plaintiffs was the Town of Delaware, and the jury specifically found that the Town of Delaware was a RICO enterprise. See Special Verdict Form, Question 1 at 1 (JA:629); see also (T2:1200). Based upon the evidence admitted at trial, the jury could reasonably have concluded that the Town of Delaware's grant or denial of approval for aspects of the plaintiffs' development was conditioned upon complying with the demands of Dirie, the Town Supervisor, and others with influence. As with the New York City Civil Court in Angelilli, the jury here could have reasonably found that the Town of Delaware was a "passive instrument" through which the defendants wielded power for their personal benefit and, accordingly, was a RICO enterprise.
2. Interstate Commerce
120
Dirie argues that the plaintiffs offered little, if any, proof of a material impact on interstate commerce of either the enterprise or the RICO predicate crimes. We disagree.
121
The law in this Circuit does not require RICO plaintiffs to show more than a minimal effect on interstate commerce. United States v. Banton,
647 F.2d 224, 233
(2d Cir.), cert. denied,
454 U.S. 857
(1981) ("In determining what connections with interstate commerce must be proven... to establish a violation of § 1962, the courts have ruled that the impact need not be great. So long as the activities of the enterprise affect interstate commerce, the jurisdictional element is satisfied.") (collecting cases). Here, one of the extortionate demands caused DeFalco to break an $8800 contract with the Walczak Lumber Company, an out-of-state logger located in Clifford, Pennsylvania. (T2: 125-29); (E:129-30). There was also testimony by the Clerk of the Town of Delaware that the regular business of the Town affected interstate commerce. (T2:579-83). Accordingly, Dirie's contention that the plaintiffs failed to establish that the activities of the enterprise affected interstate commerce is without merit.
122
3. Participation in the Conduct of the Town's Affairs
123
Section 1962(c) makes it unlawful "for any person employed by or associated with any enterprise... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity...."
18 U.S.C. § 1962
(c) (emphasis added). The Supreme Court has interpreted the phrase "to participate... in the conduct of [the] enterprise's affairs" to mean participation in the operation or management of the enterprise. See Reves v. Ernst & Young,
507 U.S. 170, 185
(1993). Both Dirie and the Bernas defendants argue that there was insufficient evidence for the jury to find that they conducted the affairs of the Town and that their conduct met the "operation or management" test. We disagree.
124
In Reves, when assessing the RICO liability of an outside accounting firm for racketeering activity carried on by its client, the Supreme Court addressed the question "whether one must participate in the operation or management of the enterprise itself to be subject to liability under this provision."
Id. at 172
. The Supreme Court examined Section 1962(c) and adopted an "operation or management" test to determine whether a defendant had sufficient connection to the enterprise to warrant imposing liability.
Id. at 178-79
. The Court held that, to conduct or participate, directly or indirectly, in the conduct of an enterprise's affairs, "one must have some part in directing those affairs."
Id. at 179
. The Court stated that "the word 'participate' makes clear that RICO liability is not limited to those with primary responsibility, just as the phrase 'directly or indirectly' makes clear that RICO liability is not limited to those with a formal position in the enterprise...."
Id.
125
The jury specifically found that Dirie, Bernas, JML and JBI each "conducted or participated in the conduct of the affairs of the Town of Delaware through a pattern of racketeering activity," see Special Verdict Form, Question 3 at 2 (JA:630); (T2:1200-01), and the record here contains ample evidence from which a reasonable jury could have found that Dirie and the Bernas defendants each had some part in directing the Town of Delaware's affairs.
126
Dirie was the elected Supervisor of the Town of Delaware from January 1986 to December 1991. In this position, Dirie served as a member of the Town Board and as a member of the Town Legislature. There was evidence at trial that Dirie offered to help guide DeFalco "through the muddy waters" of real estate development in the Town of Delaware, so long as DeFalco followed Dirie's suggestions. (T2:70). There was also evidence that, when DeFalco resisted Dirie's suggestions, Dirie used his authority within the Town of Delaware to affect the plaintiffs' development.
127
For example, when DeFalco resisted Dirie's suggestion that DeFalco let Dirie's son cut timber on the property, Dirie responded, "If you want to go by the Planning Board and you want things to go smooth, you know, this is the way it is in Sullivan County. That's it." (T2:97). When DeFalco granted a logging contract to a lumber company for $8800, see (E:129-30), Dirie insisted that DeFalco cancel the contract and return the check. When DeFalco resisted, Dirie told him "Don't expect to get your approvals at the Planning Board meeting unless it's done." (T2:126). At the next Planning Board meeting on Oct. 21, 1987, DeFalco's project was suspended for thirty days (T2:127); see also Pl.'s Ex. 24, Oct. 21, 1987 Planning Board Minutes (E:133-34). The following day, Dirie visited DeFalco at the development and asked whether he "got the message." (T2:127). DeFalco returned the check and paid a penalty for canceling the contract. (T2:128). At the next Planning Board meeting on November 18, 1987, the project was once again allowed to move forward. (T2:130); see also Pl.'s Ex. 26, Nov. 18, 1987 Planning Board Minutes (E:135-37). Similarly, when DeFalco attempted to fire Fisher and his crew, Dirie told DeFalco that he would "scrap the project." (T2:132). Dirie also instructed Town of Delaware Building Inspector Alfred Steppich to stop issuing building permits for Top of the World. (T2:335).
13
128
Dirie also threatened adverse official action if DeFalco failed to give Bernas the JOBO stock. (T2:178). DeFalco testified that "Dirie told me straight up and down, '[y]ou can kiss Phase 2 good-bye.'" (T2:178). The sudden issues regarding plowing and maintenance of the development's roads and whether the roads would be accepted for dedication by the Town were also tied to transfer of the JOBO stock. According to DeFalco, with Dirie, "it was always the same story. 'If you sign over the stock, the problems go away.'" (T2:197).
129
Dirie also influenced the Town of Delaware tax assessments for the plaintiffs' development. For example, Tax Assessor Richard Ferber testified that, notwithstanding that the Town Supervisor and the Town Board had no role in tax assessments, there were several conversations with Dirie and others, off the record and outside of official Town Board meetings, regarding the Top of the World taxes. (T2:614-19).
130
In short, there was ample evidence from which a reasonable jury could conclude that Dirie participated in the operation or management of the Town of Delaware. Indeed, there was more than enough evidence in the record for a reasonable jury to conclude that Dirie had more than just "some part in directing those affairs." Reves,
507 U.S. at 179
(emphasis added).
131
Similarly, a reasonable jury could have found that the Bernas defendants participated in the operation or management of the Town of Delaware. Although the Bernas defendants had no official role in the operation or management of the Town, "RICO liability is not limited to those with primary responsibility for the enterprise's affairs,... [or] limited to those with a formal position in the enterprise...."
Id.
"An enterprise also might be 'operated' or 'managed' by others 'associated with' the enterprise who exert control over it as, for example, by bribery."
Id. at 184
. There was ample evidence from which the jury could have concluded that Bernas played some part in directing the affairs of the Town.
132
For example, when DeFalco complained about Bernas giving free sand and gravel to the Town of Delaware, DeFalco suddenly faced problems with a previously agreed deal regarding plowing and maintenance of the development roads by the Town as well as threats that the Phase I roads either would not be accepted for dedication by the Town or that the dedication process would be delayed. (T2:165-66). Although the Town was prepared to accept the roads in October 1988, see Sullivan County Board of Supervisors Letter from William Dirie dated Oct. 17, 1988 (E:287), in December 1988 Bernas sought to delay the dedication of the roads to the Town until they met his standards. See Letter from John Bernas to Robert M. Rosen dated Dec. 9, 1988, showing courtesy copies to William Dirie and Joseph DeFalco (E:288).
14
133
Bernas also threatened adverse official action from the Town of Delaware if DeFalco did not give him the JOBO stock. On several occasions, Bernas indicated that, if DeFalco did not sign over the stock, the project would be scrapped and that Bernas had the power to cause the development to come to a halt. (T2:202). Dirie threatened adverse official action if DeFalco failed to give Bernas the stock (T2:178), and Delaware Town Engineer Terry Kelly, Tax Assessor Ferber, Tax Assessor Meckle and Building Inspector Steppich each pressured DeFalco to turn the stock over to Bernas. (T2:183). Once DeFalco transferred the stock to Bernas, the Phase I roads were immediately accepted for dedication by the Town. (T2:206).
134
After DeFalco signed over the one-third interest in JOBO, however, Bernas wanted rights to the entire gravel pit and the dedication of the Phase I roads was called into question again. (T2:206). Bernas told DeFalco that, if he did not turn the gravel pit over to him, "[t]hey were going to close the development down." (T2:214). When DeFalco resisted giving Bernas the entire gravel pit, Tax Assessors Ferber and Meckle reassessed certain lots from $20,000 to $45,000 a piece, more than doubling plaintiffs' taxes. (T2:253). When DeFalco asked Dirie how he could get Phase II approved in light of the April 2, 1990 letter from the Town of Delaware Planning Board listing certain uncompleted requirements, Dirie replied, "Give Bernas the gravel pit." (T2:225).
135
Perhaps the most striking evidence that Bernas influenced the affairs of the Town, however, was set forth in the Sullivan County Board of Supervisors Letter from Delaware Supervisor William Dirie to Joe DeFalco dated March 30, 1990, in which Dirie wrote: "As we have previously discussed, there are several ways that you can complete the work on Phase II. I am confident that we can reach an agreement with the approval of John Bernas, that will meet all our needs." See Sullivan County Board of Supervisors Letter from Delaware Supervisor William Dirie to Joe DeFalco dated Mar. 30, 1990 (E:189-90; E:315-16) (emphasis added).
15
That letter - stating in effect that completion of Phase II of the plaintiffs' development was subject to Bernas' approval - is strong evidence from which a jury could conclude that Bernas participated in the operation or management of the Town of Delaware.
136
In short, there was ample evidence from which a reasonable jury could conclude that Bernas participated in the operation or management of the Town of Delaware, had at least some part in directing the affairs of the Town and, indeed, exerted some control over it. See Reves,
507 U.S. at 179, 184
.
16
4. Predicate Acts
137
Both Dirie and the Bernas defendants argue that the plaintiffs failed to establish the commission of at least two predicate acts of racketeering by them.
138
a. William Dirie
139
Dirie argues that the crimes allegedly constituting racketeering activity by him were all based on extortion.
17
In essence, Dirie argues that extortion requires the wrongful use of force, violence or fear and, in each of these instances, that element is entirely missing. Dirie claims that there was no evidence of a threat from him and that there was no evidence of the requisite fear of adverse consequences with respect to each of the charges of extortion. Dirie also argues that the predicate acts with which he was charged were "supported, like much else, by no evidence except the testimony of DeFalco." See Brief of Defendant-Cross-Defendant-Appellant-Cross-Appellee William
Dirie at 14
.
140
The plaintiffs argue that
18 U.S.C. § 1951
(b)(2) defines "extortion" as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence or fear, or under color of official right." The plaintiffs further claim that fear of economic loss has long been held to satisfy this statutory definition of "extortion." The plaintiffs argue that Dirie's acts clearly constitute extortion because, in each instance that DeFalco followed Dirie's orders, DeFalco acted under a threat or implication that the plaintiffs' project would be harmed by the political actions or inactions of Dirie or the other defendants.
141
Under the Hobbs Act, "[t]he term 'extortion' means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right."
18 U.S.C. § 1951
(b)(2).
18
Extortion through threats of economic loss falls within the Hobbs Act's prohibitions, see United States v. Robilotto,
828 F.2d 940
, 944 45 (2d Cir.1987), cert. denied,
484 U.S. 1011
(1988). Extortion may therefore be established on a theory that activities amounted to extortion by wrongful use of fear of economic loss. See, e.g., United States v. Capo,
817 F.2d 947, 951
(2d Cir. 1987) (en banc); United States v. Rastelli,
551 F.2d 902, 904
(2d Cir.), cert. denied,
434 U.S. 831
(1977).
142
In this Circuit, "[t]he cases interpreting the Hobbs Act have repeatedly stressed that the element of 'fear' required by the Act can be satisfied by putting the victim in fear of economic loss." Capo,
817 F.2d at 951
(quoting United States v. Brecht,
540 F.2d 45, 52
(2d Cir. 1976), cert. denied,
429 U.S. 1123
(1977)) (citations omitted). The absence or presence of fear of economic loss "must be considered from the perspective of the victim, not the extortionist; the proof need establish that the victim reasonably believed: first, that the defendant had the power to harm the victim, and second, that the defendant would exploit that power to the victim's detriment." Capo,
817 F.2d at 951
(citing Rastelli,
551 F.2d at 905
).
143
This Circuit's case law on extortion by wrongful use of fear of economic loss "is comprised of cases in which the evidence was plain that nonpayment would result in preclusion from or diminished opportunity for some existing or potential economic benefit." Capo,
817 F.2d at 951
. For example, in Brecht, the evidence established that the defendant was the manager of Westinghouse's technical publications group, a position that afforded him discretion to award outside subcontracts for the production of Westinghouse's technical manuals. At a meeting with a subcontractor's representative, the defendant "demanded a $1,000 kickback as a condition for the award of the contract to [the subcontractor]." Brecht,
540 F.2d at 47
. This Court affirmed Brecht's conviction for extortion by wrongful use of fear of economic loss because "the evidence showed that he obtained the $1,000 by the use of fear, attempting to convince the victim that he would be denied any chance to obtain a contract unless he paid."
Id. at 52
; see also United States v. Clemente,
640 F.2d 1069
, 1073 (2d Cir.) (nonpayment would lead to loss of existing carpentry account), cert. denied,
454 U.S. 820
(1981); United States v. Daley,
564 F.2d 645, 650
(2d Cir. 1977) (failure to provide free supplies and labor to union official would lead to loss of jobs and labor unrest), cert. denied,
435 U.S. 933
(1978); Rastelli,
551 F.2d at 904-05
(failure of lunch truck suppliers to pay kickbacks to union official would lead to loss of union members' business).
144
Conversely, in Capo, there was no evidence that noncompliance would result in preclusion from or diminished opportunity for some existing or potential economic benefit. In Capo, the defendants allegedly solicited bribes in exchange for certain job referrals to Eastman Kodak. The government argued that the evidence was adequate to allow a rational juror to find that the victims reasonably feared economic loss if they did not make the payments demanded by the defendants. In holding that the evidence of fear of economic loss was insufficient as a matter of law, the Court held that there was no evidence that any defendant did, in fact, negatively influence any hiring decision after allegedly soliciting bribes in exchange for job referrals to Eastman Kodak. Capo,
817 F.2d at 952
. The Court noted that "not one witness testified to any fear that nonpayment would result in one of the defendants adversely affecting his or her chances for a job at Kodak; indeed, most of the 'victims' testified that they had no such fear, while others simply were not asked."
Id.
Accordingly, the Court held that "the second part of the Rastelli test - that the victim reasonably believed that the defendant would exploit his power to the victim's detriment - [was] not satisfied."
Id.
145
Applying these principles here, we conclude that extortion by Dirie through threats of economic loss was shown in the instant case. Dirie was the elected Supervisor of the Town of Delaware. In this position, Dirie served as a member of the Town Board and as a member of the Town Legislature. As set forth in detail above, there was ample evidence at trial that Dirie offered to help guide DeFalco with his real estate development in the Town of Delaware, provided that DeFalco followed the suggestions that Dirie made to him. There was also considerable evidence that, when DeFalco resisted each of Dirie's suggestions, Dirie used his authority within the Town of Delaware to adversely affect the plaintiffs' development.
146
Dirie's argument that the "suggestions" were not accompanied by the requisite threat of harm to the plaintiffs is perhaps strongest with respect to the finding that Dirie "[e]xtorted from plaintiffs the value of the services of Harry Fisher," see Special Verdict Form, Question 4 at 2 (JA:630); (T2:1201), because the suggestion that DeFalco hire Fisher occurred at the initial 1987 meeting between DeFalco, Dirie and Fisher at DeFalco's home. Although it is a close call, there was sufficient evidence from which a reasonable jury could conclude that DeFalco reasonably believed, at the time of their first meeting, that Dirie had the power to harm him, and that Dirie would exploit that power to his detriment. See Capo,
817 F.2d at 951
(citing Rastelli,
551 F.2d at 905
).
147
At the initial meeting, Dirie informed DeFalco that he was the Supervisor of the Town of Delaware. (T2:70). Dirie proceeded to tell DeFalco that "This is not Long Island....We're going to help you every possible way we can to guide you through the muddy waters.... I'm going to make some suggestions to you." (T2:70). Dirie then proceeded to make his initial suggestions that: (1) DeFalco hire Fisher as a foreman and pay Fisher by purchasing him a new truck in Fisher's son's name; (2) DeFalco buy landscaping materials from Curtis, local nursery owner and Chairman of the Delaware Planning Board; (3) DeFalco purchase equipment at Tax Assessor Meckle's sporting goods store; and (4) DeFalco use Bernas to do the road construction at the development and mine the gravel from the JOBO gravel pit. Dirie explained that "Around here in Sullivan County, you got to deal with the local people." (T2:71) (emphasis added).
148
Although Dirie characterizes his initial statements as "suggestions" that were accompanied with no threat of adverse action, and DeFalco characterizes them as threats made by a Town Supervisor demanding that DeFalco use local people, the jury reasonably sided with DeFalco. Dirie informed DeFalco of his position as the Town of Delaware Supervisor. Dirie's "suggestions" not only benefited certain members of the Town government and favored local residents, but also were coupled with the statement that: "Around here in Sullivan County, you got to deal with the local people." (T2:71) (emphasis added). A reasonable jury therefore could have concluded that these were credible threats rather than mere suggestions. A reasonable jury could also have found that DeFalco reasonably believed that Dirie had the power to harm him, and that Dirie would exploit that power to the his detriment. Indeed, that fear of economic loss was subsequently borne out - when DeFalco "fired the whole crew, including Harry Fisher... Dirie told [him] that he'd scrap the project" (T2:132), and took steps to do so. Accordingly, there was sufficient evidence for a reasonable jury to find that Dirie extorted the value of the services of Harry Fisher.
149
As set forth in detail above, there was also ample evidence from which the jury could reasonably have found that Dirie put DeFalco in fear of economic loss with respect to the other predicate acts - namely, that Dirie extorted timber and/or firewood for his own benefit; extorted timber for the benefit of Ray Ferber; extorted one-third of the shares of JOBO Associates, Inc., for the benefit of John Bernas, Inc.; and extorted from plaintiffs truck wheels and tires for the benefit of William Dirie's son. For example, when DeFalco protested Dirie's demand that he cancel the Walczak logging contract so that Dirie's logging activities could remain exclusive, Dirie told him "Don't expect to get your approvals at the Planning Board meeting unless it's done." (T2:126). DeFalco was also instructed by Tax Assessor Richard Ferber to use his cousin, Ray Ferber, for the logging contract, "[o]therwise [he was] never going to get approvals." (T2:128). There was also considerable evidence of actual or threatened adverse official action with respect to the transfer of the JOBO stock. In short, there was sufficient evidence of fear of economic loss with respect to all five predicate acts charged against Dirie for a reasonable jury to conclude that DeFalco believed that Dirie had the power to harm him, and that Dirie would exploit that power to the plaintiffs' detriment.
150
b. The Bernas Defendants
151
The Bernas defendants also argue that the plaintiffs failed to establish the commission of at least two predicate acts of racketeering against them. The plaintiffs charged the Bernas defendants with three predicate acts: (1) extortion of the construction contract to build the development's roads; (2) extortion of one-third of the JOBO stock; and (3) extortion of sand and gravel from the JOBO pit. The jury found that none of the Bernas defendants "[e]xtorted from plaintiffs a construction contract to build Top of the World Phase I roads;" but that they "[e]xtorted from plaintiffs one-third of the shares of JOBO;" and "[e]xtorted from plaintiffs sand and/or gravel from the JOBO gravel pit." (JA:630-31); (T2:1201-02).
19
152
i. The JOBO Stock
153
The Bernas defendants argue that the evidence does not demonstrate extortion of the one-third JOBO stock interest: "Extortion, as defined in the Hobbs Act, consists of the use of wrongful means to achieve a wrongful objective," and "[t]he use of economic fear as leverage to drive a hard bargain in an ordinary commercial relationship will not support a RICO claim based on extortion." Brief of Defendants-Appellants John Bernas, John Bernas, Inc. and JML Quarries, Inc. at 21. They argue that a threat to cause economic loss is wrongful only when it is used to obtain property to which one is not entitled.
154
The Bernas defendants claim that the District Court erred by failing to instruct the jury that, before it could find wrongful use of actual or threatened fear of economic loss, it had to find that the Bernas defendants had no lawful right to the JOBO stock. They argue that DeFalco and Bernas never had a binding agreement providing for the number of miles of roads Bernas had to build in order to obtain the transfer of the JOBO stock. They also argue that DeFalco later accepted a proposal by Bernas that he would finish the Phase I roads and do the Phase 2 roads for a flat fee of $40,000, in return for the plaintiffs' transfer of the one-third stock interest in JOBO. See Brief of Defendants-Appellants John Bernas, John Bernas, Inc. and JML Quarries, Inc. at 23-24 (citing (E:354); (T2:297)); see also (E:356). The Bernas defendants argue that, according to DeFalco's own testimony, this offer induced DeFalco to agree to give the stock to Bernas. See
id.
(citing (T2:175, 294-97)). The Bernas defendants therefore argue that they had a legal right to the JOBO stock and that the court erred by failing to instruct the jury that it had to find that the Bernas defendants had no lawful right to the JOBO stock before it could find wrongful use of actual or threatened fear of economic loss.
155
The trial court's instruction with respect to extortion as a RICO predicate act was as follows:
156
Extortion is a separate crime. Extortion is the obtaining of property or anything of value from another person with his consent, when that consent is induced or caused or brought about by the wrongful use of actual or threatened force, violence or fear of physical injury or economic harm and loss.
157
The word "property" includes money and any valuable right considered to be a source or element of wealth. It is not limited to physical or tangible property and things. In this case "property" includes money and payment for unwanted services, such as accounting or engineering or legal or landscaping or other work, sand and gravel and firewood and timber, and anything else of value. It also includes the right to have government affairs administered impartially, and to receive the benefits of permits or other lawful applications to planning boards or building inspectors or zoning boards.
158
The terms "force," "violence," "fear," and "threats" have their common everyday meanings. The use or exploitation of fear exists if the victim would reasonably experience anxiety, concern or worry about economic harm to himself or his company. The reasonable existence of fear must be determined by considering all the facts existing at the time of the defendant's actions.
159
You may consider the person who made the demand, the nature of the conduct, and all the circumstances a reasonable person, situated as the particular victim was situated, would perceive.
160
You may consider the relationship of the parties in deciding whether the element of the use of fear exists. A friendly relationship between the parties, however, does not mean that you cannot find that fear exists. Indeed, the fact that relations between a victim and alleged extorter may sometimes appear cordial is not inconsistent with the crime of extortion.
161
Threats can be direct or indirect. It may be aimed at a third person. They may be veiled threats made by suggestion, implication and inference, though such inference on the part of the person extorted must be reasonable. Whether a physical gesture or veiled reference amounts to a threat is a matter for you to decide under all the circumstances. You must determine if a reasonable person under all the circumstances would perceive it to be a threat.
162
(T2:1174-76). The Bernas defendants failed to object to this charge, and now argue that the charge was plain error.
163
Because the Bernas defendants failed to object, this Court will review the jury charge not for "plain error," but for "fundamental error." As noted above, Rule 51 of the Federal Rules of Civil Procedure provides, in pertinent part, that "[n]o party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection." Fed. R. Civ. P. 51; see also Fogarty, 162 F.3d at 79 ("A party who fails to object to a jury instruction at trial waives the right to make that instruction the basis for an appeal."). Under these circumstances, the charge is reviewed for "fundamental error," which "is narrower than the plain error doctrine applicable to criminal cases." Travelers Indem. Co., 62 F.3d at 79. To qualify as a fundamental error there must be "an error so serious and flagrant that it goes to the very integrity of the trial," id. (quoting Modave, 501 F.2d at 1072 (2d Cir. 1974)), and the instruction must have "deprived the jury of adequate legal guidance to reach a rational decision." Id. (quoting Werbungs, 930 F.2d at 1026).
164
There was nothing close to fundamental error in the present case. The District Court's instruction on extortion - at the point at which it discussed the RICO claim - did not include language that "wrongful" means that the defendants had no lawful right to the property obtained. That principle was covered, however, elsewhere in the charge. In its discussion of the plaintiffs' claim of conversion by extortion, the District Court instructed the jury:
165
To prove conversion by extortion, the plaintiffs must prove by a preponderance of the evidence that by means of extortion, the defendants intentionally exercised control over the property of another, thereby interfering with the person's right of possession. The parties agree that 50 shares of JOBO stock were transferred to John Bernas by Mr. DeFalco. I have already explained the elements of extortion in connection with the RICO claim.
166
The plaintiffs allege that by means of extortion, John Bernas, John Bernas, Incorporated, and JML Quarries removed and sold large quantities of gravel and sand from the JOBO gravel pit belonging to JOBO Associates, Inc., and did not belong to them. Defendants assert that any gravel or sand taken from the JOBO pit was taken rightfully, with authority and by agreement with the plaintiffs, and not as a result of extortion....
167
The plaintiffs also allege that by means of extortion, John Bernas, Incorporated, through its agent, obtained one-third of the stock in the JOBO Corporation. You are instructed that John Bernas, Inc., currently exercises control over one-third of the shares in JOBO Associates.
168
The defendants assert that John Bernas, Incorporated, obtained the shares of JOBO Associates rightfully by voluntary agreement with the plaintiffs, not by extortion.
169
(T2:1180-82) (emphasis added).
170
The principle that "wrongful" means that the defendants had no lawful right to the property obtained should have been set forth in the section discussing extortion under the RICO claim. Nevertheless, we cannot say that the failure to do so was fundamental error. "'[A] single instruction to a jury may not be judged in artificial isolation, but must be viewed in the context of the overall charge.'" United States v. Locascio,
6 F.3d 924, 942
(2d Cir.1993), cert. denied,
511 U.S. 1070
(1994) (quoting Cupp v. Naughten,
414 U.S. 141
, 146 47 (1973)). Moreover, although it is preferable that the district court expressly instruct the jury that it must find that the defendants had no lawful claim of right to the property they obtained through wrongful use of fear, cf. United States v. Jackson,
196 F.3d 383, 387
(2d Cir. 1999), cert. denied, --- U.S. ---,
120 S. Ct. 2731
(2000), "[t]he thrust of the district court's charge, when read as a whole, was that the use of fear of economic loss to obtain property to which one is not entitled is wrongful." United States v. Clemente,
640 F.2d 1069, 1077
(2d Cir.), cert. denied,
454 U.S. 820
(1981) (citation omitted). Unlike Jackson, where the Court gave no other explanation of the term "extort" and did not limit the scope of that term to the obtaining of property to which the defendant had no actual, or reasonable belief of, entitlement, the District Court here instructed the jury regarding the defendants' claim that the JOBO stock and any gravel or sand taken from the JOBO pit "was taken rightfully, with authority and by agreement with the plaintiffs, and not as a result of extortion." (T2:1181). Accordingly, this was not "an error so serious and flagrant that it goes to the very integrity of the trial." Travelers Indem. Co., 62 F.3d at 79 (internal quotation marks omitted); see also United States v. Middlemiss,
217 F.3d 112, 121
(2d Cir. 2000) ("While we prefer the district court to explicitly instruct the jury that it must find that the defendants were not lawfully entitled to the property they obtained through wrongful use of fear, [the district court's] charge as a whole conveys that idea. No plain error is present.") (citation omitted).
20
171
ii. The Sand and Gravel
172
The Bernas defendants also argue that the plaintiffs did not adduce any evidence from which the jury could find that the Bernas defendants extorted gravel and sand. The Bernas defendants argue that the gravamen of extortion is consent induced by the wrongful use of threats. They argue that, based on DeFalco's own testimony, the jury found that the Bernas defendants did not extort the contract to build the development's roads. The Bernas defendants assert that the same agreement under which they built the roads also "permitted Bernas to mine the JOBO site to extract gravel necessary to build the roads at [Top of the World], as well as to sell to third parties, splitting any profits with plaintiffs 50-50." Brief of Defendants-Appellants John Bernas, John Bernas, Inc. and JML Quarries, Inc. at 19. They argue that this compels the conclusion that the removal and sale of sand and gravel was not the product of extortion, but of a wholly voluntary agreement.
173
The defendants further argue that the plaintiffs instructed Bernas to close down the JOBO operation effective December 15, 1989, and when DeFalco returned from Florida in March 1990 and found Bernas working at JOBO, DeFalco immediately ordered Bernas out and erected physical barriers to prevent entry. Accordingly, the defendants argue, any removal of materials after December 15, 1989 was without the plaintiffs' consent and, by definition, "[s]uch materials were not obtained by extortion, the essence of which is consent induced by wrongful use of threats or fear." Brief of Defendants-Appellants John Bernas, John Bernas, Inc. and JML Quarries, Inc. at 20.
174
The plaintiffs concede that, pursuant to the negotiations between Bernas and DeFalco, the parties contemplated that Bernas would mine the JOBO gravel pit to obtain material for the roads in plaintiffs' development and sell the excess (and split the profit with plaintiffs). The plaintiffs argue, however, that it was not until after the plaintiffs discovered that Bernas was using the gravel for neither purpose and there was no splitting of profits that they instructed Bernas to cease removing any additional gravel. When Bernas refused to do so, the defendants threatened adverse political action from members of the enterprise if plaintiffs tried to force him to stop, thereby committing extortion. The plaintiffs argue that the evidence before the jury was therefore sufficient to conclude that Bernas used the political power of the enterprise to extort sand and gravel from the plaintiffs. We agree.
175
The essence of Bernas' argument is that he was contractually entitled to mine the sand and gravel and, if the plaintiffs were not satisfied with the work done or the profit sharing, their claim was for breach of contract. Bernas' argument, however, presupposes that the Bernas defendants indeed had a contractual right to the sand and gravel. The jury, however, made no such finding.
176
Although the jury found that the Bernas defendants did not extort a construction contract to build the development's roads, that is not tantamount to a finding that a construction contract existed and that the Bernas defendants therefore had a contractual right to the sand and gravel. The Bernas defendants' effort to infer a contractual right from the jury's negative finding on the first predicate act is unavailing. The jury could reasonably have concluded that there was no extortion of any construction contract because there was no contract. Indeed, Bernas concedes that there was no formal, written contract. See Brief of Defendants-Appellants John Bernas, John Bernas, Inc. and JML Quarries, Inc. at 19 ("the removal and sale of sand and gravel was not the product of extortion but of a wholly voluntary agreement in principle, which the parties proceeded to carry out without benefit (unwisely) of ever executing a definitive written contract.").
177
Even assuming there was a contract, however, a reasonable jury could have found that Bernas had breached the agreement at the time DeFalco ordered him to stop removing sand and gravel, and DeFalco was within his contractual rights to order the stoppage. The jury could reasonably have concluded that the only reason DeFalco allowed any further access to the gravel was because of extortionate threats by Bernas.
178
In any event, there was ample evidence from which the jury could reasonably conclude that the Bernas defendants extorted sand and gravel from the JOBO pit. During the course of Bernas' work on the roads, the Town of Delaware removed gravel from the plaintiffs' gravel pit free-of-charge. (T2:162-63). When DeFalco raised the issue of Bernas giving away free sand and gravel, DeFalco suddenly faced problems with plowing and maintenance of the development roads by the Town as well as threats that the Phase I roads either would not be accepted for dedication by the Town or that the dedication process would be delayed. (T2:165-66); compare (E:287) with (E:288). DeFalco also wanted Bernas to give him a detailed breakdown of what materials had been removed, sold or given away from the gravel pit. Whenever DeFalco broached the topic with Bernas, however, Bernas threatened to get the Town either to stop the project or to refuse dedication of the development's roads. In short, the evidence was sufficient for a reasonable jury to conclude that the Bernas defendants extorted from the plaintiffs sand and gravel from the JOBO pit.
5. Pattern of Racketeering Activity
179
The Bernas defendants argue that the plaintiffs failed to establish a pattern of racketeering activity. RICO defines a "pattern of racketeering activity" as requiring "at least two acts of racketeering activity" committed in a 10-year period.
18 U.S.C. § 1961
(5); see also Cofacredit, S.A. v. Windsor Plumbing Supply Co. Inc.,
187 F.3d 229, 242
(2d Cir. 1999); Azrielli v. Cohen Law Offices,
21 F.3d 512, 520
(2d Cir. 1994). To establish a pattern, a plaintiff must also make a showing that the predicate acts of racketeering activity by a defendant are "related, and that they amount to or pose a threat of continued criminal activity." H.J., Inc. v. Northwestern Bell Tel. Co.,
492 U.S. 229, 239
(1989); Cofacredit,
187 F.3d at 242
. The continuity necessary to prove a pattern can be either "closed ended continuity," or "open ended continuity." See H.J., Inc.,
492 U.S. at 239, 241
.
180
The Bernas defendants argue that the plaintiffs have failed to establish the requisite minimum period of closed-ended continuity. Here, the Bernas defendants argue, the extortion took place over a period of only a few months: the one-third stock in JOBO was extorted in December 1989, induced by pressure upon DeFalco between May and December 1989; and the extortion of sand and gravel was also complete by December 1989. Thus, the defendants' extortion scheme lasted at most a few months during the last half of 1989, a duration not sufficient to establish a closed-ended pattern of racketeering by these defendants.
181
The Bernas defendants argue that the plaintiffs have also failed to establish a pattern of open-ended continuity, because the scheme by the Bernas defendants was by its very nature finite - once achieved the scheme would necessarily come to an end and there was no evidence that the predicate acts by the Bernas defendants were a regular way of conducting defendants' ongoing legitimate business.
182
The plaintiffs claim that they established both closed- and open-ended continuity. They argue that the Bernas defendants' extortionate theft of sand and gravel included multiple extortionate acts and lasted for an extended period of almost three years from September 1987 through May 1990. The plaintiffs claim that the other racketeering activities of the enterprise commenced in 1987 and are continuing to date, because the extortionate acts by which the defendants obtained the JOBO stock began in December 1989 and continued through the time that the defendants were ordered to deposit the stock in escrow with the court. The plaintiffs further claim that the defendants are still preventing plaintiffs from completing their development project. They argue that the escalating nature of the defendants' demands, such as their demanding an increasing interest in JOBO, reveals an enterprise with no intention of stopping once it met an immediate goal.
183
a. Closed-Ended Continuity
184
Closed ended continuity is demonstrated by predicate acts that "amount to continued criminal activity" by a particular defendant. To satisfy closed ended continuity, the plaintiff must prove "a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months... do not satisfy this requirement."
Id. at 242
. To establish closed-ended continuity, "a plaintiff must provide some basis for a court to conclude that defendants' activities were 'neither isolated or sporadic.'" GICC Capital Corp. v. Technology Finance Group, Inc.,
67 F.3d 463, 467
(2d Cir. 1995).
185
Since the Supreme Court decided H.J., Inc., this Court has never held a period of less than two years to constitute a "substantial period of time." See Cofacredit,
187 F.3d at 242
; see also GICC Capital Corp.,
67 F.3d at 467
; Metromedia Co., 983 F.2d at 369 (finding closed ended continuity when predicate acts occurred over a period of two years); Jacobson v. Cooper,
882 F.2d 717, 720
(2d Cir. 1989) (finding closed ended continuity when predicate acts occurred over a "matter of years"). Other circuits have required similar periods. See GICC Capital Corp.,
67 F.3d at 468
(collecting cases). Although closed ended continuity is primarily a temporal concept, other factors such as the number and variety of predicate acts, the number of both participants and victims, and the presence of separate schemes are also relevant in determining whether closed ended continuity exists. See Cofacredit,
187 F.3d at 242
; GICC Capital Corp.,
67 F.3d at 468
.
186
The duration of a pattern of racketeering activity is measured by the RICO predicate acts the defendants commit. See Cofacredit,
187 F.3d at 243
(citing H.J., Inc.,
492 U.S. at 242
(continuity test looks to period during which predicate acts were committed)); GICC Capital Corp.,
67 F.3d at 467
(actions that do not constitute predicate racketeering activity not included in the calculation). Here, the jury found that the Bernas defendants extorted from plaintiffs sand and/or gravel from the JOBO gravel pit and extorted from plaintiffs one-third of the shares of JOBO Associates, Inc. (JA:630-31); (T2:1201-02).
187
The plaintiffs claim that they satisfy closed-ended continuity because the extortion of sand and gravel took place over a period of at least three years from September 1987 through May 1990. Their only record citation for this proposition, however, is the handwritten note that Bernas gave DeFalco as his accounting of the gravel pit through 1989. See Brief of Plaintiffs-Appellees-Cross-Appellants at 31 n.23 ("The Bernas Defendants extortion of sand and gravel occurred multiple times over a long period of time.") (citing (E:163-65)). We are not persuaded that these three pages, which purport to be the yards of sand and gravel Bernas billed from January to June 1989, establish extortion of sand and gravel from September 1987 through May 1990 as plaintiffs claim.
188
Even assuming that the Bernas defendants were taking gravel from the site and not using it on the developments' roads or sharing the profits from any third-party sales, the earliest threat that we can find by Bernas to stop the project if the Bernas defendants were not allowed to continue to remove sand and gravel from the pit is December 1988. See (T2:165-66); see also Letter from John Bernas to Robert M. Rosen dated Dec. 9, 1988, with courtesy copies to William Dirie and Joseph DeFalco (E:288).
21
Bernas' December 1988 letter is well past the September 1987 point at which the plaintiffs allege the extortion began.
22
189
The plaintiffs point to only one other extortionate act by the Bernas defendants with respect to the sand and gravel, namely, when the plaintiffs told the Bernas defendants to "cease and desist" from removing any additional gravel and "Bernas refused to do so, threatening adverse political action from members of the enterprise if plaintiffs tried to force him to do so...." Brief of Plaintiffs-Appellees-Cross-Appellants at 37-38. The record reveals, however, that DeFalco did not instruct the Bernas defendants to refrain from removing additional gravel until December 15, 1989. (T2:207). When DeFalco returned to New York in March 1990 from Florida and found Bernas' people working on the JOBO site, DeFalco again directed Bernas to stop work at JOBO and erected physical barriers there. (T2:208-12); see also "Cease and Desist Order" Letter from Joe DeFalco to John Bernas, Inc. and JML Quarries dated Mar. 2, 1990 (E:182).
190
Similarly, the duration of the Bernas defendants' predicate act of extorting the one-third interest in JOBO occurred over a relatively short period of time. DeFalco testified that it was not until mid-1989 that he faced extortionate threats to induce the transfer of the JOBO stock to Bernas. (T2:176-83). DeFalco transferred the one-third interest on December