The mythical organized-crime figure Little Caesar, a k a Rico, may have faded from memory, but his namesake, the federal Racketeer Influenced and Corrupt Organizations Act(RICO), has become an acute pain for businessmen and women across America.

Adorned with automatic treble damages and attorneys' fees for successful plaintiffs, the civil portion of the federal RICO statute is fast becoming the legal weapon of choice in commercial litigation. And why not? All that is needed to turn a simple contract dispute into a federal racketeering case is the willingness to plead fraud and to allege that the defendant used the mails or the telephone at least twice in forming or breaching the contract.

The statute casts a net so wide that almost any commercial dispute is a candidate for civil RICO jurisdiction. And practically every type of controversy, from the common to the bizarre, has been turned into a civil RICO case. The statute has been used in domestic disputes between spouses, in litigation between family members over inheritance rights, in controversies among church members and in a suit against FBI agents who orchestrated an undercover sting operation (Little Caesar's revenge).

But the vast majority of civil RICO cases are neither comical nor of limited economic consequence. Most involve conventional business disputes that are part and parcel of the complex web of relationships that define the American economy.

A recent survey of major manufacturing firms reflects the growing use of RICO. Between 1970 and 1983, only 12 civil RICO suits were reported by the 120 firms responding to the survey. Since 1984, the number of RICO suits against these same 120 firms increased more than tenfold to 128. Some federal district judges report that as many as one-sixth of the civil complaints in their courts contain RICO counts, usually providing the only basis for federal jurisdiction.

Unfortunate consequences flow from the expanded use of civil RICO. Ordinary businessmen and women are being branded as racketeers simply because they have become involved in a legal controversy. The mere threat of a treble-damage suit is being used to obtain substantial settlements on often less than substantial allegations. Civil RICO is supplanting other carefully crafted and finely tuned state and federal remedies. And the federalization of commercial disputes heretofore resolved in state courts threatens to swamp the federal judiciary.

At the midnight hour of the 99th Congress, the Senate, by a mere three votes, tabled RICO reform legislation approved by the House of Representatives. The bill was the outgrowth of extensive negotiations involving representatives of the business-labor coalition for RICO reform, the American Civil Liberties Union, consumer representatives and interested members of Congress.

Most observers agreed that the bill would have significantly trimmed RICO's sails. Automatic treble damages were limited to suits brought by federal and state governments and to cases in which the defendant had been convicted of a criminal offense that gave rise to the plaintiff's injury. Prevailing business plaintiffs would be compensated only for their actual losses. And consumers could win up to treble damages in egregious cases.

But unexpected opposition from the Department of Justice, expected opposition from the insurance industry and the ambivalence of the U.S. Chamber of Commerce and the National Association of Manufacturers (all of whom thought the bill didn't go far enough in limiting civil RICO suits) breathed renewed life into RICO's legacy.

The reform effort is again on the march, however. After months of negotiations, bills bearing a strong resemblance to the House-passed measure have been introduced in the House and the Senate. Additional safeguards for defendants in multiple-damage suits have been added to win the allegiance of the NAM, the Chamber of Commerce and many in the insurance industry. Organized labor's support for the measure is unshaken, and the ACLU remains an ally. The Department of Justice is taking a more favorable look at the revised proposals.

The process this year will involve sharp debate and, perhaps, further compromise. But the chances are good that RICO reform will soon be taken off the 10-most-wanted list.

Rep. Rick Boucher (D-Va.) is the author of H.R. 2983, civil RICO reform legislation.