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Commercial Division Courts Keep Dismissing Civil RICO Claims at Pleading Stage

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14

Why it matters

New York's Commercial Division continues to reject civil RICO claims at the motion to dismiss stage, treating them as an increasingly poor fit for ordinary business disputes. The pattern reflects courts' strict application of federal and state RICO pleading standards, which require plaintiffs to establish a violation of 18 U.S.C. § 1962, injury to business or property, causation, and—critically—an enterprise distinct from the predicate racketeering pattern itself. Judges have grown especially skeptical when the alleged "enterprise" is merely the same fraudulent scheme repackaged as a RICO violation.

The Commercial Division's "losing streak" for civil RICO plaintiffs shows no signs of reversing. Courts continue to dismiss these claims when the underlying facts amount to breach of contract or garden-variety fraud rather than a true racketeering enterprise. The specific contours of recent dismissals and any emerging judicial consensus on particular pleading deficiencies remain unclear from available rulings.

For New York business litigators, the takeaway is straightforward: civil RICO remains a difficult sell in the Commercial Division despite the Supreme Court's broader approach to RICO standing in Medical Marijuana, Inc. v. Horn. Adding a RICO count to chase treble damages and attorney's fees will likely draw heightened scrutiny. Practitioners should expect courts to demand concrete factual allegations of an organized enterprise operating through a pattern of racketeering activity—not simply a recharacterization of fraud claims under RICO's label.

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