U1IT4less Inc. v. Fedex Corporation
OPINION, Concurring, by judge G. WOODS, FILED. [16-533]
Case 16-533, Document 129, 09/18/2017, 2126386, Page1 of 3
Woods, District Judge, concurring in part and concurring in the judgment:
I concur in the judgment because I am persuaded that this conclusion is
mandated by the Second Circuit’s decision in Cruz v. FXDirectDealer, LLC, 720
F.3d 115 (2013). I write separately only because the decision to reaffirm the
approach this Circuit took to the application of the “distinctness” principle in this
context prior to Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001), was
made four years ago by the panel in Cruz. Given that we are not working with a
blank canvas—Cruz dictates the outcome here—I decline to paint in an analysis
here to reconcile the court’s decision in Cruz with Cedric.1 As a result, I do not
join in the discussion on pages 19 to 22 of this decision describing how the
Supreme Court’s ruling in Cedric supports this conclusion.
but ‘operate within a unified corporate structure’ and ‘guided by a single
corporate consciousness’ cannot be both the ‘enterprise’ and the ‘person’ under
Cruz reaffirmed the principle that “corporations that are legally separate
As the opinion notes, our Circuit’s approach in Cruz, which cabins the Supreme
Court’s decision in Cedric to its facts, is consistent with that taken by a number of other
federal courts. Several commenters have remarked on this trend. See, e.g., William B.
Ortman, Parents, Subsidiaries, and RICO Distinctiveness, 73 U. Chi. L. Rev. 377, 398 (2006)
(arguing that circuit courts have “ignored the Supreme Court’s repeated directives
against the use of purposive interpretation to extratextually cabin RICO liability”);
Laurence A. Steckman, RICO Section 1962(c) Enterprises and the Present Status of the
“Distinctness Requirement” in the Second, Third and Seventh Circuits, 21 Touro L. Rev. 1082,
1296 (2006) (observing that “Cedric . . . plainly stated that bare legal distinctness is all
the ‘distinctness’ RICO requires. . . . The Second, Third and Seventh Circuits, plainly,
remain committed to their pre‐Cedric analytical paradigms.”)
Case 16-533, Document 129, 09/18/2017, 2126386, Page2 of 3
§ 1962(c).” Cruz, 720 F.3d at 121. In support, Cruz cited to the Second Circuit’s
1996 decision in Discon, Inc. v. NYNEX Corp., 93 F.3d 1055 (2d Cir. 1996), vacated
on other grounds, 525 U.S. 128 (1998). In reaffirming the rule established in Discon,
the opinion in Cruz did not analyze the impact of the Supreme Court’s
intervening decision in Cedric on the Circuit’s approach to the “distinctness”
principle. The analysis of Cedric presented in this case—limiting the Supreme
Court’s holding in Cedric to its facts, applicable only to distinctness analysis
involving an individual owner and her wholly‐owned corporation, and equating
a separately organized subsidiary of a corporation to an “agent or employee” of a
corporation—was not stated overtly in Cruz.
Nor did Cruz expressly grapple with the Second Circuit’s first decision
addressing the distinctness principle following Cedric—City of New York v.
Smokes‐Spirits.com, Inc., 541 F.3d 425 (2d Cir. 2008). In Smokes‐Spirits, the panel
described the Supreme Court’s holding in Cedric in a way that is at least arguably
broader than the approach reaffirmed in Cruz. The Smokes‐Spirits court wrote:
In Cedric Kushner, the Supreme Court explained that the RICO
“person” and alleged “enterprise” must be only legally, and not
necessarily actually, distinct. . . . The City has alleged . . . that the
enterprise is an innocent corporation, with its own legal basis for
existing, and the persons are employees or officers of the
organization unlawfully directing the enterprise’s racketeering
Case 16-533, Document 129, 09/18/2017, 2126386, Page3 of 3
Id. at 448. In light of this language, I understand why Judge Seibel, writing
before Cruz was handed down, reached her initial conclusion regarding the
proper application of the distinctness principle after Cedric. U1IT4less, Inc. v.
FedEx Corp., 896 F. Supp. 2d 275, 288 (S.D.N.Y. 2012).
I emphasize too that in affirming the ruling below, we are not endorsing
the test applied by Judge Forrest in her opinion, namely “whether the fact of
separate incorporation facilitated the alleged unlawful activity.” Judge Forrest
derived the “facilitation” test from the Seventh Circuit’s ruling in Bucklew v.
Hawkins, Ash, Baptie & Co., 329 F.3d 923 (2003). While Bucklew has been cited
favorably by a number of courts evaluating this issue, the test has no foundation
in the jurisprudence of the Second Circuit, and the application of existing circuit
doctrine suffices to resolve this case.2
While decided two years after Cedric, Bucklew does not mention the Supreme Court’s
decision in its analysis. Moreover, the single paragraph of analysis of this issue in
Bucklew relies on cases involving the Sherman Act, principally Copperweld Corp. v.
Independence Tube Corp., 467 U.S. 752 (1984). Bucklew, 329 F.3d at 934. In Cedric, Mr.
King argued that Copperweld supported a ruling in his favor. The Supreme Court
rejected that argument, stating that its conclusion that legal separateness was all that
was required by RICO was not “inconsistent with antitrust law’s intracorporate
conspiracy doctrine; that doctrine turns on specific antitrust objectives.” Cedric, 533 U.S.
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