## Facts

- American Computer Trust Leasing (ACTL) leased computer hardware to two farm-equipment dealers, Boerboom International, Inc. and Jack Farrell Implement Co.
- Automatic Data Processing, Inc. (ADP) supplied related software, maintenance, and support under license agreements that warned default could result in termination of services and deactivation.
- Farrell became delinquent; after notice and a deadline to cure, ADP deactivated Farrell’s software, later reactivating it after payment. ADP alleged Farrell then impeded access and again stopped paying.
- Boerboom switched systems and asked ADP to deactivate its software, which ADP did.
- ACTL sued for unpaid lease amounts; Boerboom and Farrell asserted defenses based on alleged system malfunctions and filed counterclaims against ACTL, ADP, Navistar (International Harvester), and J.I. Case Co.
- Counterclaims alleged (among other theories) civil RICO based on purported misrepresentations, a concealed “doomsday device” enabling deactivation, and wrongful deactivation as coercion; they also alleged fraud, breach of contract, and breach of express and implied warranties.
- Navistar and Case were alleged to have promoted or participated in the ADP dealer-system program, including purported royalty or related arrangements.

## Issues

1. Whether the counterclaimants produced evidence of civil RICO predicate acts (including mail/wire fraud or extortion) and a “pattern” of racketeering activity arising from marketing, contracting, and deactivation of the software.
2. Whether the federal extortion statute supports an independent private civil cause of action.
3. Whether the evidence supported claims for fraud, breach of contract, and breach of express or implied warranties regarding the computer systems’ performance, sufficient to survive summary judgment.
4. Whether the record supported liability of Navistar and Case for any actionable misconduct connected to the ADP system arrangements.
5. Whether enforcing contractual default remedies through software deactivation could be treated as wrongful coercion rather than permissible contract enforcement.

## Decision

- The court granted summary judgment for ACTL and ADP on all counterclaims.
- The court granted summary judgment for Navistar and Case on all claims asserted against them.
- The court dismissed the civil RICO claims for failure to show legally sufficient predicate acts and a qualifying pattern.
- The court held the federal extortion statute is purely criminal and creates no private right of action.
- The court denied the dealers’ motion to stay entry of judgment.

## Legal Principles

- Civil RICO requires proof of predicate criminal acts and a pattern of racketeering activity; a commercial contract dispute and ordinary enforcement of contractual remedies do not, without more, satisfy these elements.
- Allegations framed as mail or wire fraud must be supported by evidence of material misrepresentations (not mere sales talk or broken promises) and must meet RICO’s strict requirements.
- RICO “pattern” analysis requires continuity; conduct confined to a limited set of related commercial dealings, without a sufficient temporal scope or threat of ongoing criminal activity, is inadequate.
- Federal criminal extortion provisions do not create a private civil cause of action absent a separate statutory basis.
- Fraud, contract, and warranty claims must be supported by admissible evidence on essential elements (including material misrepresentation, causation, and breach); contractual disclaimers and limitations of liability may bar or narrow such claims.
- Contractually disclosed rights to terminate service or deactivate software upon default (or at a customer’s request) are generally treated as permissible contract remedies rather than extortion.

## Conclusion

The court treated the dispute as a contract and performance disagreement over leased hardware and licensed software, not racketeering. Because the dealers failed to produce evidence supporting RICO predicates and continuity, any private claim under the federal extortion statute, or viable fraud/contract/warranty theories (including against Navistar and Case), the court entered summary judgment dismissing all counterclaims and allowed ACTL’s collection action to proceed without them.


Am. Comput. Tr. Leasing v. Jack Farrell Implement Co., 763 F. Supp. 1473 (D. Minn. 1991)