7th Circuit Determination on Retaliation

On December 15, 2011, the U.S. Court of Appeals for the Seventh Circuit issued a blow to corporate defendants by determining that retaliation against an employee for reporting alleged criminal activity to law enforcement can constitute a racketeering “predicate act,” resulting in liability under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). DeGuelle v. Camilli, No. 10-2172 (7th Cir. Dec. 15, 2011). This unprecedented decision provides whistleblowers with yet another possible cause of action and expanded remedies.

Under RICO, it is unlawful for an employee of an enterprise engaged in interstate commerce to “conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity,” which requires the commission of at least two “predicate acts” of racketeering within a span of ten years. In enacting the Sarbanes-Oxley Act (“SOX”) in 2002, Congress added retaliation for “providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense” to the list of statutorily-defined predicate acts. To prove that predicate acts are part of a pattern under RICO, a plaintiff must demonstrate a relationship between the predicate acts and a threat of continuing activity – known as the “continuity plus relationship” test.

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