X.L.O. Concrete Corp. v. Rivergate Corp.

X.L.O. Concrete Corp. (X.L.O.) (plaintiff), a subcontractor, entered into a contract with Rivergate Corporation (Rivergate) (defendant) to do work on a project in Manhattan which included building a concrete super-structure. X.L.O. completed the work and, after Rivergate refused to pay the balance due on the contract, commenced an action against Rivergate. Rivergate asserted a defense alleging that the contract could not be enforced because it was illegal under the Donnelly Act, an antitrust statute. Rivergate alleged that the contract was an integral part of "the Club" which engaged in bribery and extortion. The Club consisted of a conglomeration of organized crime bosses called the "Commission," seven concrete construction companies conducting business in New York City and various labor organizations. The Commission typically determined what concrete companies would be allowed to perform large contracts and took back a percentage of the contract to guarantee that there would be no labor problems. The Commission also engaged in bid rigging. The Commission would use threats of labor unrest or violence to maintain control. X.L.O. had joined the Club prior to entering into the contract and Rivergate had full knowledge of the Club's activities at the time of contract negotiations. The Commission assigned the Rivergate project to X.L.O, who paid the requisite percentage for labor peace, and then negotiated a contract with Rivergate. The trial court dismissed the complaint and, upon appeal, the Appellate Division re-instated it. Rivergate then appealed to the New York Court of Appeals.