In the
United States Court of Appeals
For the Seventh Circuit
No. 09-2781
JAY E. H AYDEN F OUNDATION, et al.,
Plaintiffs-Appellants,
v.
F IRST N EIGHBOR B ANK, N.A., et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:08-CV-00325-MJR-PMF—Michael J. Reagan, Judge.
A RGUED M ARCH 30, 2010—D ECIDED JUNE 22, 2010
Before P OSNER, R OVNER, and T INDER, Circuit Judges.
P OSNER, Circuit Judge. A foundation created by Jay
Hayden, and the estates of his mother and of another
woman (R. Maurine Johnson), brought this RICO suit
against a bank, two law firms, and seven persons con-
nected with either the bank or the law firms. The suit
charges that the defendants (along with others not
named as defendants, in particular Robert Cochonour)
had formed an informal RICO enterprise that had de-
frauded the foundation and the estates. Without waiting
2 No. 09-2781
to file an answer to the complaint, the defendants moved
to dismiss the suit pursuant to Rule 12(b)(6), on the
ground that the complaint itself showed that the plain-
tiffs had missed the four-year deadline governing RICO
suits. Rotella v. Wood, 528 U.S. 549, 552-53 (2000); Agency
Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143,
156 (1987); Cancer Foundation, Inc. v. Cerberus Capital
Management, LP, 559 F.3d 671, 674 (7th Cir. 2009). The
district judge agreed and granted the motion. Although
the statute of limitations is an affirmative defense to
liability and so ordinarily must be pleaded and proved
by the defendant, if it is plain from the complaint that
the defense is indeed a bar to the suit dismissal is proper
without further pleading. Jones v. Bock, 549 U.S. 199, 214-15
(2007); Cancer Foundation, Inc. v. Cerberus Capital Manage-
ment, LP, supra, 559 F.3d at 674-75; Limestone Development
Corp. v. Village of Lemont, 520 F.3d 797, 802 (7th Cir. 2008).
The complaint alleges that the fraud began, and the
RICO enterprise (if that is what it is) came into existence,
in 1985, when the plaintiff foundation was created by
Hayden’s will. But the plaintiffs argue that although
they were reasonably diligent they didn’t discover the
fraud before May 5, 2004, four years before they filed
suit; and that even if that argument is rejected and a
finding made that they did discover it before then, the
defendants prevented them from obtaining informa-
tion essential to their being able to file a complaint that
would withstand dismissal.
Our only source of facts is the 252 paragraphs of the
second amended complaint, which sprawl over 66 pages.
No. 09-2781 3
For purposes of the appeal we assume the facts alleged
in the complaint to be true, though without vouching
for their truth.
Hayden’s will had appointed the lawyer Robert
Cochonour, afterward an Illinois state-court judge, to be
the executor of his estate. Between becoming executor
in 1985 upon the death of Hayden, and 2001, Cochonour
looted the Hayden Foundation and the two women
(who were still alive during that period, but very elderly)
by forging endorsements and signatures on checks, on
security agreements, and on other financial documents
and by writing checks drawn on the foundation to
himself or to entities that he controlled. He funneled
the looted money through an account in the defendant
bank, which was in cahoots with him, called the
“M&M account,” which he had opened by forging
the signatures of Mrs. Johnson and of another woman,
who later became Mrs. Johnson’s agent. The defendants
assisted Cochonour’s fraud by allowing him to forge
signatures and convert funds that they knew didn’t
belong to him and by preparing false documents that
facilitated the transfer of funds to him from the Hayden
foundation and the two old women.
The fraud began to unravel in 2002. It was then that
Cochonour acknowledged to Maurine Johnson’s agent
(who had a power of attorney because Mrs. Johnson
had become incompetent) that he had stolen money
from Mrs. Johnson, though he lied about the amount he
had stolen; and it was also then that her agent learned
from someone associated with the bank about the
4 No. 09-2781
existence of the bank account through which stolen
funds had been channeled. The trustees of the Hayden
Foundation became suspicious around the same time
when they learned that Cochonour had arranged for a
court hearing to approve annual reports of the estate for
the years 1986 to 2001; although he administered the
foundation’s affairs, he had never filed a financial report
with the trustees. The trustees filed a complaint with
the Illinois judicial inquiry board and notified the
state’s attorney general of their concerns, and the at-
torney general filed a petition in an Illinois state court
to intervene in the Jay Hayden estate, which had never
been closed. The petition was granted and Cochonour
immediately resigned his judgeship. By this time the
trustees knew that the foundation, though believed to
have had more than $1 million in assets when it was
created on Jay Hayden’s death in 1985, now had no
assets at all, and there was no record of what had hap-
pened to the money.
All this was in 2002. In January of the following year
Cochonour pleaded guilty to having stolen more than
$100,000 from the Jay Hayden estate between
1985 and 1990, and was sentenced to prison. Also well
before May 5, 2004 (four years, remember, before this
suit was filed), employees of the defendant bank tried to
persuade one of the foundation’s trustees to get the
trustees to drop their inquiry into Cochonour. They
told the trustee that all the irregularities could be ex-
plained, and that in any event, because a close confidant
of Cochonour had become the subject of grand jury pro-
ceedings for stealing from an elderly person, Cumber-
No. 09-2781 5
land County (the site of the fraud) didn’t need more bad
publicity. A cousin of Jay Hayden hired a lawyer who
told the cousin that he believed there was a conspiracy
between Cochonour and the defendants.
Yet besides alleging all these things and more, the
complaint also alleges that the defendants made
assiduous efforts to prevent the plaintiffs from learning
more about the conspiracy. They tried to convince
Mrs. Johnson’s agent not to investigate Cochonour and
they filed complaints against the lawyer who had
been retained by Jay Hayden’s cousin to investigate the
defendants. At the behest of the defendants the Illinois
Attorney Registration & Disciplinary Commission told
the lawyer to leave the state forthwith, as otherwise
the commission would reopen investigations of him
that had opened but not pursued to completion. And
Cochonour in the legal proceedings against him tried
to hide behind the Fifth Amendment, refusing to come
clean about his activities, and when his stonewalling
failed he defied court orders and was held in contempt.
See Estate of Hayden, 838 N.E.2d 93 (Ill. App. 2005).
A defendant who prevents a plaintiff from obtaining
information that he needs in order to be able to file a
complaint that will withstand dismissal is forbidden,
under the rubric of equitable estoppel (“estopped” is the
legal term), to plead the statute of limitations for the
period in which the inquiry was thwarted. Beckel v. Wal-
Mart Associates, Inc., 301 F.3d 621, 622 (7th Cir. 2002); Cada
v. Baxter Healthcare Corp., 920 F.2d 446, 450-52 (7th Cir.
1990); see also Rotella v. Wood, supra, 528 U.S. at 561. But
6 No. 09-2781
if the obstructive behavior occurs after the plaintiff’s
inquiry has reached the point at which he has dis-
covered, or by exercising reasonable diligence should
have discovered, that he has a claim upon which to found
a suit, the defendant’s obstructionism has no causal
significance, see Flight Attendants Against UAL Offset v.
Commissioner, 165 F.3d 572, 576-77 (7th Cir. 1999), and so
is not a ground for an estoppel. Paige v. Police Department,
264 F.3d 197, 199-200 (2d Cir. 2001) (per curiam). Likewise
if the defendant’s behavior, whenever begun and how-
ever ill intentioned, fails to prevent the plaintiff from
learning that he has a claim in time to sue within the
statutory period. See Flight Attendants Against UAL Offset
v. Commissioner, supra, 165 F.3d at 577; Dummar v. Lummis,
543 F.3d 614, 621-23 (10th Cir. 2008); cf. Shropshear v.
Corporation Counsel of City of Chicago, 275 F.3d 593, 597-98
(7th Cir. 2001). For again the behavior has no causal
significance.
We have said (not inconsistently with the qualifica-
tions just indicated) that “the plaintiff’s lack of due dili-
gence is not a defense [to a claim of equitable estoppel],
because the defendant’s conduct is deliberate, just as a
plaintiff’s contributory negligence is not a defense to an
intentional tort.” Id. at 597; see also Flight Attendants
Against UAL Offset v. Commissioner, supra, 165 F.3d at 577.
Not all courts agree, see, e.g., Egerer v. Woodland Realty,
Inc., 556 F.3d 415, 425 (6th Cir. 2009); Robinson v. Dalton, 107
F.3d 1018, 1023 (3d Cir. 1997), and—more to the point—the
Supreme Court has held that when an event occurs that
tolls the statute of limitations in either a RICO or an
No. 09-2781 7
antitrust case, even if the event is fraud by the defendant,
the plaintiff cannot fold his hands, sit back, and do
nothing until the defendant returns to good behavior.
He has to continue investigating diligently, to the extent
he can despite the defendants’ obstructionism, because
the RICO and antitrust statutes seek not merely to
protect private rights but also to enlist private plaintiffs
in enforcing these laws, which are believed to serve
important public purposes. Klehr v. A.O. Smith Corp., 521
U.S. 179, 193-96 (1997); see also In re Copper Antitrust
Litigation, 436 F.3d 782, 790-91 (7th Cir. 2006); Prudential
Ins. Co. v. United States Gypsum Co., 359 F.3d 226, 237-
38 (3d Cir. 2004).
Most of the frauds alleged in this case date back to the
period 1985 to 1994, which was 14 to 23 years before the
suit was filed. By the summer of 2003 at the latest, despite
(and in part because of) the defendants’ obstructive
behavior, the plaintiffs knew that Cochonour had
looted the Jay Hayden estate and that the bank’s em-
ployees were trying to prevent further investigation
of Cochonour, on implausible, suspicion-arousing
grounds—that everything would be explained in due
course and that further exposure of skullduggery would
injure Cumberland County’s good name.
If the plaintiffs didn’t yet have enough information to
be able to sue, they did by 2005, when Cochonour was
deposed and made (in the words of the complaint) “de-
tailed exhaustive admissions of repeated forgeries and
thefts involving the M&M account and the Estate of
Jay E. Hayden and the fact that all annual reports sub-
8 No. 09-2781
mitted . . . in February 2002 to the Trustees were false and
misleading.” And while Cochonour “continued to
assert that all such actions were done by him alone,” the
plaintiffs knew better and so knew enough to sue
his accomplices despite his and their continued stone-
walling. Cf. Sharp v. United Airlines, Inc., 236 F.3d 368,
373 (7th Cir. 2001); Paige v. Police Department, supra,
264 F.3d at 199-200.
The plaintiffs mistakenly contend that a limitations
period does not begin to run until the precomplaint
investigation is complete, which may not have been
until 2005, three years before they sued. Actually it starts
running when the prospective plaintiff discovers
(or should if diligent have discovered) both the injury
that gives rise to his claim and the injurer or (in this
case) injurers. See United States v. Kubrick, 444 U.S. 111, 123-
24 (1979), and United States v. Norwood, 602 F.3d 830, 837
(7th Cir. 2010), and with specific reference to the RICO
limitations period Barry Aviation Inc. v. Land O’Lakes
Municipal Airport Commission, 377 F.3d 682, 688 (7th Cir.
2004); Prudential Ins. Co. v. United States Gypsum Co., supra,
359 F.3d at 233, and Pincay v. Andrews, 238 F.3d 1106, 1108-
09 and n. 3 (9th Cir. 2001). The plaintiffs had discovered
or should have discovered these things by the summer
of 2003. Armed with the information obtained by then
they should have been able to complete well within
the four-year statutory period an investigation that
would have unearthed enough facts to enable them to
file a suit that would withstand dismissal. See United
States v. Kubrick, supra, 444 U.S. at 122; Lukovsky v. City &
County of San Francisco, 535 F.3d 1044, 1049-51 (9th Cir.
No. 09-2781 9
2008); Wastak v. Lehigh Valley Health Network, 342 F.3d
281, 287-88 and n. 2 (3d Cir. 2003). They could then
have used pretrial discovery to beef up their claim. A
plaintiff is not required to have collected, before he files
suit, all the evidence he needs in order to win the suit.
Otherwise the civil procedure rules would have to autho-
rize precomplaint discovery rather than just pretrial
discovery.
In the case of suits under RICO, as Barry Aviation and
the other cases cited above explain, the injury arising
from the first predicate act to injure the plaintiff (“predi-
cate acts” are the illegal acts committed by the
racketeering enterprise) starts the limitations period
running, rather than the injury from the last predicate
act, which might occur decades after the first, Rotella v.
Wood, supra, 528 U.S. at 554; Klehr v. A.O. Smith Corp., supra,
521 U.S. at 186-91. And the victim doesn’t have to
know he’s been injured by a RICO violation, which is to
say by a pattern of racketeering activity (that is, a series
of predicate acts). Rotella v. Wood, supra, 528 U.S. at 554.
The scope and nature of his legal claims are what he
has four years to discover, or more (through invocation
of tolling doctrines) if he really needs it. For remember
that it’s the discovery of the injury (and injurer), not of
the facts that establish a particular legal theory, that
starts the limitations period running; the limitations
period is the time allowed to the plaintiff for determining
the specific violation upon which to base a suit. That at
least is the general rule, though there are exceptions;
the limitations period in the Securities Exchange Act of
1934, for example, doesn’t begin to run until the plaintiff
10 No. 09-2781
discovers “the facts constituting the violation.” 28 U.S.C.
§ 1658(b)(1); see Merck & Co. v. Reynolds, 130 S. Ct. 1784,
1796-97 (2010). But RICO requires discovery only of the
injury and the injurer.
We said that the defendants’ obstructive behavior may
have prevented the plaintiffs from obtaining enough
information before 2005 to know they’d sustained a
legal injury and by whom it had been inflicted. But that
did not automatically give them four more years to sue.
Tolling doctrines need not extend the date on which the
statute of limitations begins to run; for as soon as the
tolling events cease—in a case of equitable estoppel, as
soon as the defendants’ obstructive behavior ceases—the
plaintiffs should get to work and file suit as soon as
is practicable, in order to minimize the inroads that
dilatory filing makes into the policies served by statutes
of limitations.
Certainly this is true with regard to equitable tolling,
where, through no fault of the defendant (unlike
equitable estoppel), the plaintiff has though diligent
been unable to discover the injury or injurer within the
statutory period. But there is a division of authority over
whether the rule should be the same when the basis
of tolling is the defendant’s misconduct, giving rise to
equitable estoppel. As we pointed out in Gaiman v.
McFarlane, 360 F.3d 644, 656 (7th Cir. 2004), some cases
hold that even in that case the plaintiff “must sue as
soon as it is feasible to do so,” while “other [cases], distin-
guishing equitable estoppel, where the defendant is
responsible for the plaintiff’s delay, from equitable
No. 09-2781 11
tolling, where he is not, hold that in the former case
though not the latter the plaintiff can subtract the entire
period of the delay induced by the defendant, or in
other words can extend the statutory period by the full
amount of the delay,” and “at least one case [Buttry v.
General Signal Corp., 68 F.3d 1488, 1494 (2d Cir. 1995)] takes
a middle position: the plaintiff is presumptively entitled
to subtract the entire period” (emphasis in original).
In a RICO case, given the Supreme Court’s emphasis
noted earlier on the importance of prompt suit to achieve
the statute’s public purposes, the plaintiff should not
be entitled to an automatic extension of the statute of
limitations by the length of the period of concealment
by the defendants. The injury on which the present suit
is based occurred many years before the statute of limita-
tions would have run had it not been for that conceal-
ment, for otherwise the plaintiffs would have dis-
covered the fraud; and it is discovery that starts the
limitations period running. To litigate a claim so long
after the events giving rise to it is bound to be difficult
because of lost evidence and faded memories, and the
difficulty would be needlessly augmented had the plain-
tiff no duty of alacrity once the facts that the defendants
had improperly concealed are at last in the open. By
2005 the plaintiffs knew so much that they did not
need three more years to complete their precomplaint
investigation and file suit.
And so their suit is indeed time-barred. But for the
sake of completeness we take up the defendants’ alterna-
tive argument that the complaint fails to allege a RICO
12 No. 09-2781
violation because the allegations show there was no
RICO enterprise.
Until recently we would have said that conspiracy
to commit a predicate act is a different animal from a
RICO enterprise. E.g., Stachon v. United Consumer Club,
Inc., 229 F.3d 673, 675 (7th Cir. 2000); United States v.
Masters, 924 F.2d 1362, 1367 (7th Cir. 1991). We would
have explained that while RICO enterprises, being illegal,
often lack the structure of a legal enterprise, such as
a corporation or a public agency (but not always—a RICO
enterprise can be a conventional enterprise that has been
taken over by crooks, e.g., Cedric Kushner Promotions, Ltd.
v. King, 533 U.S. 158, 160-62 (2001); United States v. Goot,
894 F.2d 231, 239 (7th Cir. 1990); United States v. Kovic,
684 F.2d 512, 516 (7th Cir. 1982); Landry v. Air Line
Pilots Ass’n Int’l, AFL-CIO, 901 F.2d 404, 434 (5th Cir.
1990)), and so are often hard to distinguish from con-
spiracies, the distinction is essential—otherwise the
requirement of proving an enterprise and not merely a
conspiracy would be read out of the statute. And in this
case we have just a conspiracy, between a judge-executor,
lawyers, and a bank and its officers, rather than any-
thing that looks even remotely like an enterprise, how-
ever informal; for there was no structure, organization,
or leadership. Limestone Development Corp. v. Village of
Lemont, supra, 520 F.3d at 804-05; Stachon v. United Con-
sumers Club, Inc., supra, 229 F.3d at 675; Jennings v.
Emry, 910 F.2d 1434, 1440 (7th Cir. 1990) (a RICO “enter-
prise” requires proof of “an ongoing ‘structure’ of persons
associated through time, joined in purpose, and organized
in a manner amenable to hierarchical or consensual
No. 09-2781 13
decision-making”); United States v. Fiel, 35 F.3d 997,
1003 (4th Cir. 1994); Old Time Enterprises, Inc. v. Inter-
national Coffee Corp., 862 F.2d 1213, 1217 (5th Cir. 1989).
But the Supreme Court’s recent decision in Boyle v.
United States, 129 S. Ct. 2237 (2009), throws all in doubt.
All that Boyle requires of a RICO enterprise is that it
have “three structural features: a purpose, relationships
among those associated with the enterprise, and long-
evity sufficient to permit these associates to pursue the
enterprise’s purpose.” Id. at 2244; see also Rao v. BP
Products North America, Inc., 589 F.3d 389, 399-400 (7th
Cir. 2009); United States v. Hutchinson, 573 F.3d 1011, 1019-
22 (10th Cir. 2009). The only difference the Court sug-
gested between such a minimal RICO enterprise and
a conspiracy is that conspiracy “is an inchoate crime
that may be completed in the brief period needed for the
formation of the agreement and the commission of a
single overt act in furtherance of the conspiracy.” 129 S. Ct.
at 2246. Well, the alleged enterprise in this case had
purpose and relationships and it certainly had “longevity,”
and if Boyle is taken at face value nothing more is
required to make a conspiracy a RICO enterprise.
Even so, the RICO offense is using an enterprise to
engage in a pattern of racketeering activity. 18 U.S.C.
§ 1962(c); Reves v. Ernst & Young, 507 U.S. 170, 185 (1993)
(“liability depends on showing that the defendants con-
ducted or participated in the conduct of the ‘enterprise’s
affairs,’ not just their own affairs” (emphasis in original));
Fitzgerald v. Chrysler Corp., 116 F.3d 225, 226-27 (7th
Cir. 1997); Walter v. Drayson, 538 F.3d 1244, 1247-48 (9th
14 No. 09-2781
Cir. 2008). That element is conspicuous by its absence
from this case. Conceivably the defendants who were
officers of the bank that is alleged to have assisted
Cochonour in his fraud were using the bank (an enter-
prise) to commit fraud—but that is not alleged. The
enterprise alleged is the conspiracy led by Cochonour,
who was not using an entity separate from himself (as
the bank officers were), for he was the leading conspira-
tor—yet he is not even a defendant. A bank could be
accused of fraud without also being accused of con-
ducting itself through a pattern of racketeering activity.
The defendants did not use the conspiracy (the enter-
prise); they were the conspiracy.
The suit was properly dismissed.
A FFIRMED.
6-22-10