Saying anti-racketeering laws are improperly being used in normal business litigation, Sens. Dennis DeConcini, D-Ariz., and Orrin Hatch, R-Utah, introduced a bill Wednesday to reform and clarify them.
Hatch said the Racketeer Influenced and Corrupt Organizations Act (RICO) was enacted in 1970 "to combat organized crime infiltrating into legitimate businesses."However, he said, the law's provisions - including penalties requiring payment of triple the actual damages - are being used increasingly in ordinary commercial and contract litigation not involving racketeer-influenced business.
Hatch said those are "circumstances far removed from the intent of Congress to strike at organized crime."
"Some plaintiffs have taken advantage of the civil RICO provisions to hold the threat of treble damages over the head of the defendant. Even the Supreme Court has said that RICO is evolving into something quite different from its original conception. We hope the bill will help clarify the RICO civil provisions."
The new bill removes the availability of treble damages in ordinary business vs. business litigation, allowing only actual damages in them.
Treble penalties are still available, however, for RICO civil suits filed by units of government and in cases where a defendant was convicted of a felony crime that gave rise to civil RICO action.