Robert and Meshell McDorman win 5th Circuit appellate victory in RICO case
Clients McDorman, Robert & Meshell
Jones Day won a significant appellate victory in the United States Court of Appeals for the Fifth Circuit with broad implications for civil Racketeer Influenced and Corrupt Organizations Act ("RICO") defendants. The Court of Appeals decision resolved an important legal issue of first impression in the Fifth Circuit, which is one of the first federal appellate courts in the country to address it.
The Firm represented on appeal two individuals, Robert and Meshell McDorman, and some related business entities, who obtained a take-nothing judgment while proceeding as pro se defendants at trial. The principal issue on appeal was whether the common law in pari delicto defense - which bars recovery by plaintiffs who are at least substantially equally responsible for the violations on which their claims are based - applies to a civil RICO claim brought under 18 U.S.C. § 1964.
Professor G. Robert Blakey of the University of Notre Dame Law School, a nationally recognized authority on RICO who has been credited with principally drafting the federal RICO statute, argued the case for the plaintiffs.
In the underlying case, the former directors of a small Texas bank brought the civil RICO action alleging a complex check-kiting scheme that allegedly caused massive losses when it unraveled. At the conclusion of a 12-day trial, the jury found Mr. and Mrs. McDorman and the related entities liable for certain civil RICO and common law claims but found that the plaintiffs were substantially equally involved in the same pattern of racketeering activity. The United States District Court for the Eastern District of Texas entered a take-nothing judgment on the jury's verdict.
In a published opinion, the Fifth Circuit affirmed the district court's judgment. The Court of Appeals held that in pari delicto is a cognizable defense to civil RICO and that the district court properly analyzed the defense and submitted it to the jury, whose verdict, the Court of Appeals concluded, was based on sufficient evidence that the plaintiffs were in pari delicto. The Fifth Circuit panel also rejected several other challenges to the judgment raised by the plaintiffs.
The Firm undertook the representation on a pro bono basis. The lawyers representing Mr. and Mrs. McDorman and the related business entities before the Fifth Circuit were David L. Horan (who argued the case) and David J. Schenck, who are members of the Issues and Appeals Practice in the Firm's Dallas Office.
The Fifth Circuit case is Rogers, et al. v. McDorman, et al., No. 05-41347. A copy of the opinion is available at http://www.ca5.uscourts.gov/opinions/pub/05/05-41347-CV0.wpd.pdf.
Rogers v. McDorman, 521 F.3d 381 (5th Cir. 2008)