Environmental Tectonics v. W.S. Kirkpatrick, Inc.

847 F.2d 1052 (1988)

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Environmental Tectonics v. W.S. Kirkpatrick, Inc.

United States Court of Appeals for the Third Circuit
847 F.2d 1052 (1988)

Facts

Harry Carpenter (defendant) was chairman and chief executive officer of New Jersey corporation W.S. Kirkpatrick & Company (Kirkpatrick) (defendant). To bid on an aeromedical-equipment contract with the Federal Republic of Nigeria (Nigeria), Kirkpatrick formed a subsidiary, W.S. Kirkpatrick & Company International (Kirkpatrick International). Carpenter hired Benson Akindele, a Nigerian citizen, to act as Kirkpatrick’s agent in Nigeria. In 1981, Akindele told Carpenter that Nigerian officials would expect to be paid sales commissions by contract bidders and that United States-based firms had lost Nigerian bids because they failed to make these payments. Two Panamanian corporations controlled by Akindele were formed to make the commissions payments. Kirkpatrick International was awarded the contract in 1982. As Kirkpatrick received installments of contract payments in 1982 and 1983, Kirkpatrick paid over $1.7 million in commissions to Nigerian officials through the Panamanian firms. A Pennsylvania-based competitor, Environmental Tectonics Corporation International (ETC) (plaintiff), had also bid on the Nigerian contract and learned that its final bid had been lower than Kirkpatrick’s. ETC reported its concerns. Carpenter and Kirkpatrick were charged with and pleaded guilty to violations of the Foreign Corrupt Practices Act. ETC then sued Carpenter and Kirkpatrick in United States district court, bringing claims under the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. 1962–1968, and other law. ETC alleged injuries resulting from Kirkpatrick’s scheme to obtain the Nigerian contract through bribery. On a motion for summary judgment, the district court dismissed ETC’s entire action, holding that the act-of-state doctrine barred ETC’s claims, and dismissed the RICO Act claims on grounds that ETC failed to show a pattern of racketeering activity because the Nigerian bribery scheme was only one scheme and was not continuous or ongoing. The district court explained that a pattern of racketeering required more than one criminal scheme or a single, open-ended scheme. ETC appealed.

Rule of Law

Issue

Holding and Reasoning (Pollak, J.)

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