OPINION OF THOMAS, J.
ANZA V. IDEAL STEEL SUPPLY CORP.
547 U. S. ____ (2006)
SUPREME COURT OF THE UNITED STATES
NO. 04-433
JOSEPH ANZA, et al., PETITIONERS
v.
IDEAL STEEL SUPPLY CORP.
on writ of certiorari to the united states court of
appeals for the second circuit
[June 5, 2006]
Justice Thomas, concurring in
part and dissenting in part.
The Court today limits the
lawsuits that may be brought under the civil enforcement provision
of the Racketeer Influenced and Corrupt Organizations Act (RICO or
Act), 18 U. S. C. §1961
et seq. (2000 ed. and Supp.
III), by adopting a theory of proximate causation that is supported
neither by the Act nor by our decision in
Holmes v.
Securities Investor Protection Corporation,
503 U. S. 258, 268
(1992), on which the Court principally relies. The Court’s
stringent proximate-causation requirement succeeds in precluding
recovery in cases alleging a violation of §1962(c) that, like the
present one, have nothing to do with organized crime, the target of
the RICO statute. However, the Court’s approach also eliminates
recovery for plaintiffs whose injuries are precisely those that
Congress aimed to remedy through the authorization of civil RICO
suits. Because this frustration of congressional intent is directly
contrary to the broad language Congress employed to confer a RICO
cause of action, I respectfully dissent from Part II of the Court’s
opinion.
I
The language of the civil RICO
provision, which broadly permits recovery by “[a]ny person injured
in his business or property by reason of a violation” of the Act’s
substantive restrictions, §1964(c) (2000 ed.), plainly covers the
lawsuit brought by respondent. Respondent alleges that he was
injured in his business, and that this injury was the direct result
of petitioners’ violation of §1962(c).[
Footnote 1] App. 12–17. In
Holmes, however, we
held that a RICO plaintiff is required to show that the RICO
violation “not only was a ‘but for’ cause of his injury, but was
the proximate cause as well.” 503 U. S., at 268. We employed the
term “ ‘proximate cause’ to label generically the judicial
tools used to limit a person’s responsibility for the consequences
of that person’s own acts.”
Ibid. These tools reflect
“ ‘ideas of what justice demands, or of what is
administratively possible and convenient.’ ”
Ibid.
(quoting W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and
Keeton on Law of Torts §41, p. 264 (5th ed. 1984) (hereinafter
Prosser & Keeton)).
Invoking one of the common-law
proximate-cause considerations, we held that a RICO plaintiff must
prove “some direct relation between the injury asserted and the
injurious conduct alleged.” 503 U. S., at 268
. Today the
Court applies this formulation of proximate causation to conclude
that the “attenuated and uncertain relationship” between the
violation of §1962(c) and Ideal’s injury “cannot, consistent with
Holmes’ demand for directness, sustain Ideal’s claim.”
Ante, at 6. But the Court’s determination relies on a
theory of “directness” distinct from that adopted by
Holmes.
In
Holmes, the Court explained that
“a plaintiff who complained of harm flowing merely from the
misfortunes visited upon a third person by the defendant’s acts was
generally said to stand at too remote a distance to recover.” 503
U. S., at 268–269. The plaintiff in
Holmes was indirect in
precisely this sense. The defendant was alleged to have
participated in a stock manipulation scheme that disabled two
broker-dealers from meeting their obligations to customers.
Accordingly, the plaintiff, Securities Investor Protection
Corporation (SIPC), had to advance nearly $13 million to cover the
claims of customers of those broker-dealers. SIPC attempted to sue
based on the claim that it was subrogated to the rights of those
customers of the broker-dealers who did not purchase manipulated
securities. We held that the nonpurchasing customers’ injury was
not proximately caused by the defendant’s conduct, because “the
conspirators have allegedly injured these customers only insofar as
the stock manipulation first injured the broker-dealers and left
them without the wherewithal to pay customers’ claims.”
Id., at 271.[
Footnote
2]
Here, in contrast, it was not
New
York’s injury that caused respondent’s damages;
rather, it was petitioners’ own conduct—namely, their underpayment
of tax—that permitted them to undercut respondent’s prices and
thereby take away its business. Indeed, the Court’s acknowledgment
that there is no appreciable risk of duplicative recovery here, in
contrast to
Holmes,
ante, at 7, is effectively a
concession that petitioners’ damages are not indirect, as that term
is used in
Holmes. See 503 U. S., at 269 (“[R]ecognizing
claims of the indirectly injured would force courts to adopt
complicated rules apportioning damages among plaintiffs removed at
different levels of injury from the violative acts, to obviate the
risk of multiple recoveries”). The mere fact that New York is a
direct victim of petitioners’ RICO violation does not preclude
Ideal’s claim that it too is a direct victim. Because the
petitioners’ tax underpayment directly caused respondent’s injury,
Holmes does not bar respondent’s recovery.
The Court nonetheless contends that respondent
has failed to demonstrate proximate cause. It does so by relying on
our observation in
Holmes that the directness requirement
is appropriate because “ ‘[t]he less direct an injury is, the
more difficult it becomes to ascertain the amount of a plaintiff’s
damages attributable to the violation, as distinct from other,
independent, factors.’ ”
Ante, at 6 (quoting
Holmes,
supra, at 269, in turn, citing
Associated Gen. Contractors of Cal., Inc. v.
Carpenters,
459 U. S. 519 (1983)).
In
Holmes, we noted that it would be hard for the District
Court to determine how much of the broker-dealers’ failure to pay
their customers was due to the fraud and how much was due to other
factors affecting the broker-dealers’ business success. 503 U. S.,
at 273–274. The Court contends that here, as in
Holmes, it
is difficult to “ascertain the damages caused by some remote
action.”
Ante, at 6.
The Court’s reliance on the difficulty of
ascertaining the amount of Ideal’s damages caused by petitioners’
unlawful acts to label those damages indirect is misguided.
Holmes and
Associated General Contractors simply
held that one reason that
indirect injuries should not be
compensable is that such injuries are difficult to ascertain.
Holmes,
supra, at 269;
Associated General
Contractors, supra, at 542. We did not adopt the converse
proposition that any injuries that are difficult to ascertain must
be classified as indirect for purposes of determining proximate
causation.[
Footnote 3]
Proximate cause and certainty of damages,
while both related to the plaintiff’s responsibility to prove that
the amount of damages he seeks is fairly attributable to the
defendant, are distinct requirements for recovery in tort.[
Footnote 4] See 4 Restatement (Second)
of Torts §912 (1977) (certainty of damages); 2
id.,
§§430–431 (1963–1964) (proximate causation). That is, to recover, a
plaintiff must show
both that his injury is sufficiently
connected to the tort that “the moral judgment and practical sense
of mankind [will] recognize responsibility in the domain of
morals,” Sutherland 18, and that the specific pecuniary advantages,
the loss of which is alleged as damages, “would have resulted, and,
therefore, that the act complained of prevented them,”
id., at 106–107.
Holmes and
Associated
General Contractors dealt primarily with the former showing.
The Court’s discussion of the Union’s “highly speculative” damages
in
Associated General Contractors focused not on the
difficulty of proving the precise amount of damages, but with “the
tenuous and speculative character of the relationship between the
alleged antitrust violation and the Union’s alleged injury.” 459 U.
S., at 545. Here, the relationship between the alleged RICO
violation and the alleged injury is clear: Petitioners underpaid
sales tax, permitting them to undercharge sales tax, inflicting
competitive injury on respondent. The question with which the Court
expresses concern—whether Ideal can prove the amount of its actual
damages “with sufficient certainty,” Sutherland 106, to permit
recovery—is simply not before the Court.
It is nonetheless worth noting that the Court
overstates the difficulties of proof faced by respondent in this
case. Certainly the plaintiff in this case, as in all tort cases
involving damage to business, must demonstrate that he suffered a
harm caused by the tort, and not merely by external market
conditions. See generally Prosser & Keeton §130, at 1014–1015,
and nn. 92–99 (gathering cases authorizing liability for torts that
“depriv[e] the plaintiff of customers or other prospects”); cf.
Dura Pharmaceuticals, Inc. v.
Broudo, 544 U. S. 336, 342
(2005) (“[A]n inflated purchase price will not itself constitute or
proximately cause the relevant economic loss,” absent evidence that
it was the inflated price that actually caused harm). But under the
facts as alleged by Ideal, National did not generally lower its
prices, so the Court need not inquire into “any number of reasons,”
ante, at 7, that it might have done so.[
Footnote 5] Instead, it simply
ceased
charging tax on cash sales, allegedly, and logically, because
it had ceased reporting those sales and accordingly was not itself
paying sales tax on them. App. 11–13. Nor is it fatal to Ideal’s
proof of damages that National could have continued to charge taxes
to its customers and invested the additional money elsewhere.
Ante, at 7. Had National actually done so, it might be
difficult to ascertain the damages suffered by Ideal as a result of
that investment. But the mere fact that National
could
have committed tax fraud without readily ascertainable injury
to Ideal does not mean that its tax fraud
necessarily
caused no readily ascertainable injury in this case. Likewise, the
Court is undoubtedly correct that “Ideal’s lost sales could have
resulted from factors other than petitioners’ alleged tax frauds.”
Ibid. However, the means through which the fraudulent
scheme was carried out—with sales tax charged on noncash sales, but
no tax charged on cash sales—renders the damages more ascertainable
than in the typical case of lost business. In any event, it is well
within the expertise of a district court to evaluate testimony and
evidence and determine what portion of Ideal’s lost sales are
attributable to National’s lower prices and what portion to other
factors.
The Court also relies on an additional reason
Holmes gave for limiting recovery to direct
victims—namely, that “[t]he requirement of a direct causal
connection is especially warranted where the immediate victims of
an alleged RICO violation can be expected to vindicate the laws by
pursuing their own claims.”
Ante, at 8 (citing
Holmes, 503 U. S., at 269–270). Certainly, New York can
sue here and vindicate the law, rendering respondent’s enforcement
of the law less necessary than it would be if respondent were the
only direct victim of the illegal activity. But our recognition in
Holmes that limiting recovery to direct victims would not
undermine deterrence does not support the conclusion that any
victim whose lawsuit is unnecessary for deterrence is an indirect
victim. Indeed, in any tort case with multiple possible plaintiffs,
a single plaintiff’s lawsuit could suffice to vindicate the law. If
multiple plaintiffs are direct victims of a tort, it would be
unjust to declare some of their lawsuits unnecessary for
deterrence, absent any basis for doing so in the relevant statute.
Because respondent’s injuries result from petitioners’ fraud, and
not from New York’s injuries, respondent has a right to recover
equal to that of New York.
Application of common-law principles of
proximate causation beyond the directness requirement likewise
supports a finding that causation was sufficiently pleaded in this
case. Though the
Holmes Court noted that directness was
“one of [the] central elements” it had considered in evaluating
causation, it recognized that proximate causation took “many
shapes” at common law.
Id., at 268. Cf. Prosser &
Keeton §42, at 273 (noting “two contrasting theories of legal
cause,” one extending liability to, but not beyond, “the scope of
the ‘foreseeable risks,’ ” and the other extending liability
to, but not beyond, all “ ‘directly traceable’ ”
consequences and those indirect consequences that are
foreseeable).[
Footnote 6] The
proximate-cause limitation serves to ensure that “a defendant is
not answerable for anything beyond the natural, ordinary and
reasonable consequences of his conduct.” Sutherland 57. “If one’s
fault happens to concur with something extraordinary, and therefore
not likely to be foreseen, he will not be answerable for such
unexpected result.”
Ibid. Based on this principle, courts
have historically found proximate causation for injuries from
natural causes, if a wrongful act “rendered it probable that such
an injury will occur,”
id., at 62; for injuries where the
plaintiff’s reliance is the immediate cause, such as in an action
for fraud, so long as the reliance was “reasonably induced by the
prior misconduct of the defendant,”
id., at 62–63; and for
injuries where an innocent third party intervenes between the
tortfeasor and the victim, such that the innocent third party is
the
immediate cause of the injury, so long as the
tortfeasor “contributed so effectually to [the injury] as to be
regarded as the efficient or at least concurrent and responsible
cause,”
id., at 64–65 (emphasis deleted).
The Court of Appeals, by limiting RICO
plaintiffs to those who are “ ‘the targets, competitors and
intended victims of the racketeering enterprise,’ ” 373
F. 3d 251, 260 (CA2 2004) (quoting
Lerner v.
Fleet Bank, N. A., 318 F. 3d 113, 124 (CA2
2003)), outlined a proximate-causation standard that falls well in
line both with the reasoning behind having a proximate-cause
requirement at all, and with the traditional applications of this
standard to tortfeasors who caused injury only through a two-step
process. The Court, in contrast, permits a defendant to evade
liability for harms that are not only foreseeable, but the
intended consequences of the defendant’s unlawful
behavior. A defendant may do so simply by concocting a scheme under
which a further, lawful and intentional step
by the
defendant is required to inflict the injury. Such a rule
precludes recovery for injuries for which the defendant is plainly
morally responsible and which are suffered by easily identifiable
plaintiffs. There is no basis in the RICO statute, in common-law
tort, or in
Holmes for reaching this result.
II
Because neither the plain
language of the civil RICO provision nor our precedent supports the
Court’s holding, it must be rejected. It is worth noting, however,
that while the Court’s holding in the present case may prevent
litigation in an area far removed from the concerns about organized
crime that led to RICO’s enactment, that holding also precludes
civil recovery for losses sustained by business competitors as a
result of quintessential organized criminal activity, cases
Congress indisputably intended its broad language to reach.
Congress plainly enacted RICO to
address the problem of organized crime, and not to remedy general
state-law criminal violations. See
H. J. Inc. v.
Northwestern Bell Telephone Co.,
492 U. S. 229, 245
(1989). There is some evidence, to be sure, that the drafters knew
that RICO would have the potential to sweep more broadly than
organized crime and did not find that problematic.
Id., at
246–248. Nevertheless, the Court has recognized that “in its
private civil version, RICO is evolving into something quite
different from the original conception of its enactors.”
Sedima, S. P. R. L. v.
Imrex Co.,
473 U. S. 479,
500 (1985).
Judicial sentiment that civil RICO’s evolution
is undesirable is widespread.[
Footnote 7] Numerous justices have expressed
dissatisfaction with either the breadth of RICO’s application,
id., at 501 (Marshall, J., joined by Brennan, Blackmun,
and Powell, JJ., dissenting) (“The Court’s interpretation of the
civil RICO statute quite simply revolutionizes private litigation;
it validates the federalization of broad areas of state common law
of frauds, and it approves the displacement of well-established
federal remedial provisions… . [T]here is no indication that
Congress even considered, much less approved, the scheme that the
Court today defines”), or its general vagueness at outlining the
conduct it is intended to prohibit,
H. J. Inc.,
supra, at 255–256 (Scalia, J., joined by Rehnquist,
C. J., and O’Connor and Kennedy, JJ., concurring in judgment)
(“No constitutional challenge to this law has been raised in the
present case … . That the highest Court in the land has
been unable to derive from this statute anything more than today’s
meager guidance bodes ill for the day when that challenge is
presented”). Indeed, proposals for curtailing civil RICO have been
introduced in Congress; for example, the Private Securities
Litigation Reform Act, enacted in 1995, removed securities fraud as
a predicate act under RICO. Pub. L. 104–67, §107, 109 Stat. 758,
amending 18 U. S. C. §1964(c); see also Abrams, Crime
Legislation and the Public Interest: Lessons from Civil RICO, 50
SMU L. Rev. 33, 34 (1996).
This case, like the majority of civil RICO
cases, has no apparent connection to organized crime. See
Sedima, 473 U. S., at 499, n. 16 (quoting an ABA Task
Force determination that, over the period reviewed, only 9% of
civil RICO cases at the trial court level involved
“ ‘allegations of criminal activity of a type generally
associated with professional criminals’ ”). Given the distance
the facts of this case lie from the prototypical organized criminal
activity that led to RICO’s enactment, it is tempting to find in
the Act a limitation that will keep at least this and similar cases
out of court.
The Court’s attempt to exclude this case from
the reach of civil RICO, however, succeeds in eliminating not only
cases that lie far outside the harm RICO was intended to correct,
but also those that were at the core of Congress’ concern in
enacting the statute. The Court unanimously recognized in
Sedima that one reason—and, for the dissent, the principal
reason—Congress enacted RICO was to protect businesses against
competitive injury from organized crime. See
id., at
500–523 (Marshall, J., dissenting) (concluding that the provision
conferring a right of action on individual plaintiffs had as its
“principal target … the economic power of racketeers, and its toll
on legitimate businessmen”);
id., at 494–500.
The unanimous view of the
Sedima
Court is correct. The sponsor of a Senate precursor to RICO noted
that “ ‘
the evil to be curbed is the unfair
competitive advantage inherent in the large amount of illicit
income available to organized crime.’ ”
Id., at 514
(Marshall, J., dissenting) (quoting 113 Cong. Rec. 17999 (1967)
(remarks of Senator Hruska); some emphasis deleted); see also 473
U. S., at 515 (Marshall, J., dissenting) (“ ‘When organized
crime moves into a business, it brings all the techniques of
violence and intimidation which it used in its illegal businesses.
Competitors are eliminated and customers confined to sponsored
suppliers’ ”). Upon adding a provision for a civil remedy in a
subsequently proposed bill, Senator Hruska noted:
“ ‘[This] bill also creates civil remedies for
the honest businessman who has been damaged by unfair competition
from the racketeer businessman. Despite the willingness of the
courts to apply the Sherman Anti-Trust Act to organized crime
activities, as a practical matter the legitimate businessman does
not have adequate civil remedies available under that act. This
bill fills that gap.’ ”
Id., at 516 (Marshall, J.,
dissenting) (quoting 115 Cong. Rec. 6993 (1969); emphasis
deleted).
A portion of these bills was ultimately included in
RICO, which was attached as Title IX to the Organized Crime Control
Act. The Committee Report noted that the Title “has as its purpose
the elimination of the infiltration of organized crime and
racketeering into legitimate organizations operating in interstate
commerce.” S. Rep. No. 91–617, p. 76 (1969).
The observations of the President’s Commission
on Law Enforcement and Administration of Justice, the source of
much of the congressional concern over organized crime, are
consistent with these statements. Its chapter on Organized Crime
noted that “organized crime is also extensively and deeply involved
in legitimate business… . [I]t employs illegitimate
methods—monopolization, terrorism, extortion, tax evasion—to drive
out or control lawful ownership and leadership and to exact illegal
profits from the public.” The Challenge of Crime in a Free Society,
p. 187 (1967). The report noted that “[t]he millions of
dollars [organized crime] can throw into the legitimate economic
system gives it power to manipulate the price of shares on the
stock market, to raise or lower the price of retail merchandise, to
determine whether entire industries are union or nonunion, to make
it easier or harder for businessmen to continue in business.”
Ibid.
It is not difficult to imagine a competitive
injury to a business that would result from the kind of organized
crime that
Sedima, Congress, and the Commission all
recognized as the principal concern of RICO, yet that would fail
the Court’s restrictive proximate-cause test. For example, an
organized crime group, running a legitimate business, could,
through threats of violence, persuade its supplier to sell goods to
it at cost, so that it could resell those goods at a lower price to
drive its competitor out of the business. Honest businessmen would
be unable to compete, as they do not engage in threats of violence
to lower their costs. Civil RICO, if it was intended to do anything
at all, was intended to give those businessmen a cause of action.
Cf. Sedima, 473 U. S., at 521–522 (Marshall, J., dissenting). Yet
just like respondent, those businessmen would not themselves be the
immediate target of the threats; the target would be the supplier.
Like respondent’s injury, their injury would be most immediately
caused by the lawful activity of price competition, not the
unlawful activity of threatening the supplier. Accordingly, under
the Court’s view, the honest businessman competitor would be just
an “indirect” victim, whose injury was not proximately caused by
the RICO violation.[
Footnote 8]
Civil RICO would thus confer no right to sue on the individual who
did not himself suffer the threats of violence, even if the threats
caused him harm.
As a result, after today, civil RICO
plaintiffs that suffer precisely the kind of injury that motivated
the adoption of the civil RICO provision will be unable to obtain
relief. If this result was compelled by the text of the statute,
the interference with congressional intent would be unavoidable.
Given that the language is not even fairly susceptible of such a
reading, however, I cannot agree with this frustration of
congressional intent.
III
Because I conclude that Ideal has
sufficiently pleaded proximate cause, I must proceed to the
question which the Court does not reach: whether reliance is a
required element of a RICO claim predicated on mail or wire fraud
and, if it is, whether that reliance must be by the plaintiff. The
Court of Appeals held that reliance is required, but that “a RICO
claim based on mail fraud may be proven where the
misrepresentations were relied on by a third person, rather than by
the plaintiff.” 373 F. 3d
, at 262–263. I disagree
with the conclusion that reliance is required at all. In my view,
the mere fact that the predicate acts underlying a particular RICO
violation happen to be fraud offenses does not mean that reliance,
an element of common-law fraud, is also incorporated as an element
of a civil RICO claim.
Petitioners are correct that the
common law generally required a showing of justifiable reliance
before a plaintiff could recover for damages caused by fraud. See
Neder v.
United States,
527 U. S. 1, 24–25 (1999);
Prosser & Keeton §105, at 728. But RICO does not confer on
private plaintiffs a right to sue defendants who engage in any act
of common-law fraud; instead, racketeering activity includes, as
relevant to this case, “any act which is indictable under [18 U.
S. C. §]1341 (relating to mail fraud) [and §]1343 (relating to
wire fraud).” §1961(1) (2000 ed., Supp. III). And we have
recognized that these criminal fraud statutes “did not incorporate
all the elements of common-law fraud.”
Neder, 527
U. S., at 24. Instead, the criminal mail fraud statute applies to
anyone who “having devised or intending to devise any scheme or
artifice to defraud … for the purpose of executing such scheme
or artifice or attempting so to do, places in any post
office … any matter or thing whatever to be sent or delivered
by the Postal Service … .” §1341. See §1343 (similar
language for wire fraud). We have specifically noted that “[b]y
prohibiting the ‘scheme to defraud,’ rather than the completed
fraud, the element of reliance … would clearly be inconsistent
with the statutes Congress enacted.”
Id., at 25.
Because an individual can commit an indictable
act of mail or wire fraud even if no one relies on his fraud, he
can engage in a pattern of racketeering activity, in violation of
§1962, without proof of reliance. Accordingly, it cannot be
disputed that the Government could prosecute a person for such
behavior. The terms of §1964(c) (2000 ed.), which broadly authorize
suit by “[a]ny person injured in his business or property by reason
of a violation of section 1962,” permit no different conclusion
when an individual brings a civil action against such a RICO
violator.
It is true that our decision in
Holmes to apply the common-law proximate cause requirement
was likewise not compelled by the broad language of the statute.
But our decision in that case was justified by the “very
unlikelihood that Congress meant to allow all factually injured
plaintiffs to recover.” 503 U. S., at 266. This unlikelihood stems,
in part, from the nature of proximate cause, which is “not only a
general condition of civil liability at common law but is almost
essential to shape and delimit a rational remedy.”
Systems
Management, Inc. v.
Loiselle, 303 F. 3d 100, 104
(CA1 2002). We also decided
Holmes in light of Congress’
decision to use the same words to impose civil liability under RICO
as it had in §7 of the Sherman Act, 26 Stat. 210, into which
federal courts had implied a proximate-cause limitation. 503 U.
S.
, at 268. Accordingly, it was fair to interpret the
broad language “by reason of” as meaning, in all civil RICO cases,
that the violation must be both the cause-in-fact and the proximate
cause of the plaintiff’s injury.
Here, by contrast, the civil action provision
cannot be read to always require that the plaintiff have relied on
the defendant’s action. Reliance is not a general limitation on
civil recovery in tort; it “is a specialized condition that happens
to have grown up with common law fraud.”
Loiselle,
supra, at 104. For most of the predicate acts underlying
RICO violations, it cannot be argued that the common law, if it
even recognized such acts as civilly actionable, required proof of
reliance. See §1961 (2000 ed., Supp. III). In other words, there is
no language in §1964(c) that could fairly be read to add a reliance
requirement in fraud cases only. Nor is there any reason to believe
that Congress would have defined “racketeering activity” to include
acts indictable under the mail and wire fraud statutes, if it
intended fraud-related acts to be predicate acts under RICO only
when those acts would have been actionable under the common
law.
Because reliance cannot be read into §§1341
and 1343, nor into RICO itself, it is not an element of a civil
RICO claim. This is not to say that, in the general case, a
plaintiff will not have to prove that someone relied on the
predicate act of fraud as part of his case. If, for example, New
York had not believed petitioners’ misrepresentation with respect
to their sales, Ideal may well not have been injured by
petitioners’ scheme, which would have faltered at the first step.
Indeed, the petitioners recognize that “in the ordinary
misrepresentation case, the reliance requirement simply functions
as a necessary prerequisite to establishing the causation required
by the language of §1964(c).” Brief for Petitioners 29. But the
fact that proof of reliance is often used to prove an element of
the plaintiff’s cause of action, such as the element of causation,
does not transform reliance itself into an element of the cause of
action. See
Loiselle, supra, at 104 (“Reliance is
doubtless the most obvious way in which fraud can cause harm, but
it is not the only way”). Because respondent need not allege
reliance at all, its complaint, which alleges that New York relied
on petitioners’ misrepresentations, App. 16, is more than
sufficient.
* * *
The Congress that enacted RICO
may never have intended to reach cases like the one before us, and
may have “federalize[d] a great deal of state common law” without
any intention of “produc[ing] these far-reaching results.”
Sedima, 473 U. S., at 506 (Marshall, J., dissenting). But
this Court has always refused to ignore the language of the statute
to limit it to “the archetypal, intimidating mobster,” and has
instead recognized that “[i]t is not for the judiciary to eliminate
the private action in situations where Congress has provided it
simply because plaintiffs are not taking advantage of it in its
more difficult applications.”
Id., at 499–500. Today,
however, the Court not only eliminates private RICO actions in some
situations Congress may have inadvertently regulated, but it
substantially limits the ability of civil RICO to reach even those
cases that motivated Congress’ enactment of this provision in the
first place. I respectfully dissent.
Footnote 1
Respondent also alleges that petitioners
injured his business through a violation of §1962(a), although the
parties dedicate little attention to this issue. In light of the
Court’s disposition of the §1962(c) claim and the limited
discussion of §1962(a) by the parties, I agree with the Court that
we should give the Court of Appeals the first opportunity to
reconsider the §1962(a) claim. Accordingly, I join Part III of the
Court’s opinion.
Footnote 2
Sutherland’s treatise on damages, on which
the Court relied in
Holmes, labels the same type of claims
indirect: those where one party is injured, and it is that very
injury—and not the wrongful behavior by the tortfeasor—that causes
the injury to the plaintiff. See 1 J. Sutherland, Law of Damages 55
(1882) (hereinafter Sutherland). Indeed, every example cited in
Sutherland in illustration of this principle parallels
Holmes; the plaintiff would not be injured absent the
injury to another victim. See Sutherland 55–56.
Footnote 3
Indeed, in
Associated General
Contractors, we did not even squarely hold that the reason
that indirect damages are not compensable was that the damages were
not easily ascertainable; instead, we merely recognized the
empirical fact that “[p]artly because it is indirect, and partly
because the alleged effects on the Union may have been produced by
independent factors, the Union’s damages claim is also highly
speculative.” 459 U. S., at 542.
Footnote 4
Sutherland described the interrelation
between the two concepts: “A fatal uncertainty may infect a case
where an injury is easily provable, but the alleged responsible
cause cannot be sufficiently established as to the whole or some
part of that injury. So it may exist where a known and provable
wrong or violation of contract appears, but the alleged loss or
injury as a result of it cannot be certainly shown.” Sutherland
94.
Footnote 5
Nor is it fair to require a plaintiff to
prove that the tort caused the lowering of prices at the motion to
dismiss stage. Ideal’s complaint alleges that petitioners “pass on
to National’s customers the sales tax ‘savings’ that National
realizes as a result of its false returns.” App. 16. This
allegation that, as a factual matter, National was able to charge a
lower price after tax because of its fraud suffices to permit Ideal
to survive a motion to dismiss on the question whether the prices
were lowered due to the fraud, as opposed to other factors.
Footnote 6
Prosser and Keeton appear to use “direct” in
a broader sense than that adopted by the Court in
Holmes.
See Prosser & Keeton §43, at 273, 293–297.
Footnote 7
See Rehnquist, Remarks of the Chief Justice,
21 St. Mary’s L. J. 5, 13 (1989) (“I think that the time has
arrived for Congress to enact amendments to civil RICO to limit its
scope to the sort of wrongs that are connected to organized crime,
or have some other reason for being in federal court”); Sentelle,
Civil RICO: The Judges’ Perspective, and Some Notes on Practice for
North Carolina Lawyers, 12 Campbell L. Rev. 145, 148 (1990)
(“[E]very single district judge with whom I have discussed the
subject (and I’m talking in the dozens of district judges from
across the country) echoes the entreaty expressed in the Chief
Justice’s title in
The Wall Street Journal [,Get RICO
Cases Out of My Courtroom, May 19, 1983, p. A14, col. 4]”).
Footnote 8
The honest businessman would likewise fail
Justice Scalia’s theory of proximate causation, because laws
against threats of violence are intended to protect those who are
so threatened, not other parties that might suffer as a
consequence.
Ante, at 1 (concurring opinion).
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