GM sued: VW of America; the "Lopez Group" including Jose Ignacio Lopez, Jose Manuel Gutierrez, Jorge Alvarez, Rosario Piazza, Hugo Van der Auwera, Francisco Garcia-Sanz, Andries Versteeg, and Willem Admiraal; VW Group including Ferdinand Piech, Jens Neumann, Jaero Wicker, and H.W. Lytle. GM sued because they alleged that the defendants stole trade secrets and conspired against GM. GM alleged that at least as early as August 1992 and until March 1993, while Lopez was still working for GM, Lopez talked with VW and agreed to come work for VW and take confidential GM information with him to his new job at VW. March 1993, the Lopez Group all left GM to go work for VW. The Lopez Group brought 20 boxes of documents with them to VW, spent a month copying the documents, and then destroyed the documents; all while working for VW.
In June of 93' German police found Opel, a subsidiary of GM at the time, documents at the houses of various Lopez Group members and at VW. Alvarez sent a letter to Gutierrez soon after saying that they needed to come up with an explanation for having the documents. At later press conferences the members of the Lopez Group denied taking any documents and Piech publicly claimed that the documents seized from Alvarez's home were planted by Opel. VW hired an outside firm to investigate the activities of the Lopez Group; the firm found that GM documents were brought to VW, copied, and shredded. On March 7, 1996 GM filed the instant case and alleged: RICO violations of wire fraud, interstate and foreign travel to aid racketeering, tampering with witnesses, and transportation and receipt of stolen goods; conspiracy to violate RICO; trademark and copyright violations; fraud; breach of fiduciary duty; conversion; misappropriation of trade secrets; conspiracy and unjust enrichment.
Defendants attempted to dismiss the RICO charges. The RICO statute in question says, "It shall be unlawful 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 or collection of unlawful debt." 18 U.S.C. sec. 1962(c) Racketeering activity is any act or threat involving specified state crimes, specified federal statutes, and specified federal crimes. 18 U.S.C. sec. 1961(1). Defendants moved to dismiss because they claimed that there was no "pattern" of racketeering. The supreme court held that a common sense approach to RICO's "pattern" requirement be used, and reasoned that "pattern" means a relationship between the predicate acts together with the threat of continuing activity. H.J., Inc. v. Northwestern Bell Telephone co., 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195(1989). The court in the instant case went on to hold that covering up the predicate acts is itself a continuation of the scheme, and satisfies the "pattern" requirement. From these holdings, the court was able to hold that GM's predicate acts alleged, if proven, would satisfy the "pattern" element of the RICO statute. The court said that the actual acts of theft coupled with the continuing effort to obstruct justice was evidence enough of a "pattern of racketeering."
Defendants also attempted to claim that GM never proved the "enterprise" element, as required by the statute. The court decided that even if the "enterprise" element had to be plead with specificity, as opposed to notice, GM had adequately plead the element. The court held that participation of a corporation in a racketeering scheme, by itself, is enough to show that there was the necessary organization to satisfy the "enterprise" element. The court reasoned that by GM alleging that VW provided the facilities for the copying and shredding of purloined papers, GM had plead with specificity enough to prove that there was an "enterprise".
The court held that because violations of RICO were sufficiently plead, intentions to violate RICO were sufficiently plead, so the court denied a motion to dismiss the conspiracy charge. In response to Defendants assertion that GM was only harmed indirectly, the court held that a theft of a trade secret is a direct injury, and outlined how the damages could be calculated. The defendants tried to argue that because the injury would be felt in Western Europe, that this complaint was complaining of extraterritorial causes and effects, which U.S. courts do not have jurisdiction to hear. The court reasoned that because the predicate acts were part of a larger scheme, that enough predicate acts happened within the U.S. to make the whole scheme and its effects under U.S. jurisdiction. VW sought to dismiss the RICO claim against them saying that they did not "participate, directly or indirectly, in the conduct of" the enterprises affairs. The court held that VW had given direction to the Lopez Group and that was more than enough to satisfy the participation element. So the court denied the motion for dismissal of the RICO claims.
In June of 93' German police found Opel, a subsidiary of GM at the time, documents at the houses of various Lopez Group members and at VW. Alvarez sent a letter to Gutierrez soon after saying that they needed to come up with an explanation for having the documents. At later press conferences the members of the Lopez Group denied taking any documents and Piech publicly claimed that the documents seized from Alvarez's home were planted by Opel. VW hired an outside firm to investigate the activities of the Lopez Group; the firm found that GM documents were brought to VW, copied, and shredded. On March 7, 1996 GM filed the instant case and alleged: RICO violations of wire fraud, interstate and foreign travel to aid racketeering, tampering with witnesses, and transportation and receipt of stolen goods; conspiracy to violate RICO; trademark and copyright violations; fraud; breach of fiduciary duty; conversion; misappropriation of trade secrets; conspiracy and unjust enrichment.
Defendants attempted to dismiss the RICO charges. The RICO statute in question says, "It shall be unlawful 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 or collection of unlawful debt." 18 U.S.C. sec. 1962(c) Racketeering activity is any act or threat involving specified state crimes, specified federal statutes, and specified federal crimes. 18 U.S.C. sec. 1961(1). Defendants moved to dismiss because they claimed that there was no "pattern" of racketeering. The supreme court held that a common sense approach to RICO's "pattern" requirement be used, and reasoned that "pattern" means a relationship between the predicate acts together with the threat of continuing activity. H.J., Inc. v. Northwestern Bell Telephone co., 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195(1989). The court in the instant case went on to hold that covering up the predicate acts is itself a continuation of the scheme, and satisfies the "pattern" requirement. From these holdings, the court was able to hold that GM's predicate acts alleged, if proven, would satisfy the "pattern" element of the RICO statute. The court said that the actual acts of theft coupled with the continuing effort to obstruct justice was evidence enough of a "pattern of racketeering."
Defendants also attempted to claim that GM never proved the "enterprise" element, as required by the statute. The court decided that even if the "enterprise" element had to be plead with specificity, as opposed to notice, GM had adequately plead the element. The court held that participation of a corporation in a racketeering scheme, by itself, is enough to show that there was the necessary organization to satisfy the "enterprise" element. The court reasoned that by GM alleging that VW provided the facilities for the copying and shredding of purloined papers, GM had plead with specificity enough to prove that there was an "enterprise".
The court held that because violations of RICO were sufficiently plead, intentions to violate RICO were sufficiently plead, so the court denied a motion to dismiss the conspiracy charge. In response to Defendants assertion that GM was only harmed indirectly, the court held that a theft of a trade secret is a direct injury, and outlined how the damages could be calculated. The defendants tried to argue that because the injury would be felt in Western Europe, that this complaint was complaining of extraterritorial causes and effects, which U.S. courts do not have jurisdiction to hear. The court reasoned that because the predicate acts were part of a larger scheme, that enough predicate acts happened within the U.S. to make the whole scheme and its effects under U.S. jurisdiction. VW sought to dismiss the RICO claim against them saying that they did not "participate, directly or indirectly, in the conduct of" the enterprises affairs. The court held that VW had given direction to the Lopez Group and that was more than enough to satisfy the participation element. So the court denied the motion for dismissal of the RICO claims.
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