t t whisky is on submission  thank you your honor good morning caitlin halligan on behalf of empire the complaint here alleges that defendants in gage in a classic bootlegging scheme designed to break into new york's close market and steal sales from empire which is a licensed new york liquor wholesaler with exclusive contracts to distribute in the new york metro area the district court dismissed the complaint because it believed empire had not alleged proximate cause or a scheme to defraud it aired on both counts let me start with proximate cause empire was required to allege that it is a direct victim in other words the defendants racketeering led directly to empires injury it did exactly that illegible in detail that every case of liquor smuggled from maryland to new york constituted a lost sale by virtue of both the exclusivity contracts that empire has and new york's licensing scheme a lost sale that empire alone was entitled to make the goal of this scheme exclusive distribution rights what the complaint says what is the source of those rights this is simply an agreement by the distributors not to sell to anyone other than empire not to deal with anyone other than empire for distribution in new york and i wholesalers my understanding is that it is an agreement between the manufacturers and the wholesalers and the liable churchill as well has a number of these exclusivity contracts albeit in maryland not in new york where it is not licensed to distribute liquor at all so it's with with between the manufacturers and the wholesalers the district court dismissed for three reasons each of which is independently erroneous let me start with this notion that empire somehow disclaimed reliance on the tax evasion the was committed here the text of asian was what made this king profitable empire allege that in detail the district court raising a point the defendants had not made at all in their motion to dismiss look not at the complaint but it's several pages in empire's opposition to the motion to dismiss pages twenty seven through thirty one in which empire explained in response to questions about that it was not seeking to recover lost taxes that that was an injury sustained by the state that the injury here was distinct there was no disclaimer of the consequences of the tax evasion and the way in which it made this scheme work in terms of the revenue that it put on the table we i take your point why doesn't that very point the suggest that your client's injuries are derivative of those of new york as you say these new york retailers would not have had any interest in the scheme except for the ability to evade taxes and the money they pocketed was the state tax money so it seems to me your client may have been injured by the scheme but it is  your honor just laid out on sarah and the allegations here are completely different and let me lay out why that is the market was an open market not closed like the market here by operation of law and contract there were lawful competitors that were a play here here but i a bill is not a lawful competitor at all the participants in the scheme are effectively whole selling liquor in this state completely illegally because they are not complying with the state laws that require them to register as a wholesaler to report the liquor that they sell and to pay taxes so this concern that motivated the court in arms and when the court's decision in ns a came up to the supreme court court had said competitive disadvantage is sufficient to create proximate cause the supreme court said it's not enough you must show that there is a direct injury and it explained that one of the concerns with was that there could be overlap between the antitrust laws and rico that's completely absent here because there is no lawful competition in addition the injury here could not be more direct it's a very unusual fact pattern here because unlike cases like onza where you have a question of using some profits from a scheme in a way that allows one competitor to out to another here you have both  exclusivity contracts and the licensing regime which mean that there is necessarily every time a battle comes into new york that was a battle that empire has a contract to sell that's necessarily a lost sale for empire so in this regard it's not only distinct from answer but maybe sui generous the notion that because there is tax evasion at play here there can be no other direct victim has to be wrong for a few reasons first of all if you look at the structure of the statute itself bekah lays out a number of predicate acts we counted twelve i believe in which the government can be directly injured if congress had to intended not to allow a private cause of action for any of those twelve predicate acts it probably would have drafted one thousand nine hundred sixty four differently it did not it simply said for any predicate act you have a cause of action if you're injured by reason of the racketeering activity and secondly this court and other courts i have never suggested that there can be only one direct victim that if the government is a direct victim that there can be no others what the district court also did was it pointed to these intervening factors that the supreme court have looked at in their word what the court called serious discontinuity between the fraudulent conduct and the injurious conduct on the one hand the tax dollars that were gleaned by virtue of the evasion could have been used to lower prices they could have been used to do a number of other things the sales could have been lost because of the lower pricing could have been lost for a number of other reasons those intervening factors are not present here would be permissible on a motion to dismiss to speculate about them anyway but this is what judge posner in remained on the bridge case called throwing sand in the district court size the notion that somehow the new york retailers are holding this liquor for some reason other than to bootleg it is exactly the kind of implausible speculation that judge posner said cannot defeat proximate cause the re's also a tremendous reliance here by reliable on the notion that the new york retailers much like reliable says the purchasers the third party independent purchasers in are somehow making it depends decisions and that disrupts the chain of causation that is not the case the purchasers here are the new york retailers they're defendants in this case they are participants in this game so the notion that they are in the same shoes addition there are numerous guilty pleas with respect to wire fraud and so there can really not be any question here but that there was a scheme to defraud and i just says if there if if you took the sales tax out of yes the new york retailers paid their sales tax but they were still smuggling helping to smuggle liquor into new york and they were still selling it what is the money or property what is the wire fraud scheme then could you  still charge this is a wire for i think that was and that's because the tax evasion simply happens to be the mechanism that generates the money the property that would be taken would be the right to the sales by the same token if there was the right to the sales come from back to these  exclusive con distributorship contracts yes that's that's correct and by the same token your honor i realize i'm over if i can just finish responding if there were other innocent new york retailers who were not involved in the scheme and they said the folks down the street who are participating in the scheme and they can undercut me because of the dollars they get from this game if they sued then this case would be much more like so too if there were no exclusivity contract or licensing scheme which prohibited reliable on the other defendants from penetrating this market and flooding it with the illegal sale so it's those factors that make this quite unusual maryland sometimes it at discounts which we were required to do under maryland federal law we could not discriminate on discounts we got paid by check we there was an allegation that we were asked about removing a sticker that sticker has no force of law your honor that stickers an internal of routing sticker to reliable everything that that is alleged in the complaint and judge ross all right through this is standard business practice by a the allegation you would you throw the maryland retailers under the bus and agree they were breaking the law some went to jail right well your honor to do question is whether there's a cause of action a rico cause of action against us that could include us but in your honor we are not responsible for what they did and in any event if not of a rico cause of action because again one place why i agree with my adversary here is that the central issue on this appeal is whether there is proximate cause proximate damage causation that's that's the central issue in judge police question was somebody must have been breaking the law here and you would finger the maryland example the u s attorney in maryland enforce the laws and some people and drop the cases to others so there is no allegation against libel nor was there ever an allegation against reliable that we had broken the law but at this stage we take the allegations in the complaint is true so those allegations suggest you participated in the scheme with the maryland retailers and the new york retailers to bring liquor into new york state of aiding new york state taxes and harming empire so why is that not a properly planned recount because again the central issue on subpoena your honor and it goes to the some of the questions you put to my my adversary and that is whether there is direct proximate damage under the allegations taken as true and the problem for my adversary is what they're substituting for that damage causation are allegations of motive that it was our ultimate motive to harm them but the reality is in order to get to the damage their damage as your honor pointed out is derivative of the damage at taking all the allegations is true and judge pooler we disagree with them wholeheartedly but taking them all is true their damage such as it is is derivative because it relies on tax harm that is suffered by new york state that the failure to pay excise tax let's take the taxes out of the equation and just say that the conspiracy here was to increase your judge was aired when she said that she took them at their word in their briefing this is in their briefing at e c f one forty five at page twenty seven he said in their briefing that the court shouldn't rely on the quote unquote false narrative that this case is about sales taxes so they were doing a rhetorical tap dance in front of judge ross changing their claim in order to suit the continuing to survive a motion to dismiss the reality is your honor if you look it would be at best as judge ross said a tortious interference with contract claim but it's certainly not a criminal claim certainly not a record to ring claim and that's why my adversary has gone wrong and claiming that you were harmed or were left without redress there is redress here in a state court if they want to make that allegation that there's been a tortious interference with their contractual rights the other thing this court has to consider is that this so called close market is close by one twenty seven five which deals with the payment of excise tax it in the reason i bring this up now and not because this was brought up in my adversaries reply brief in one twenty seven section five the it's not the whole sale or the has the or the distributor that has the exclusive right to pay this tax in fact if if the distributor doesn't pay it the retailers on the hook for so there's no closed market here either by wouldn't either of us could do that but could i open up of a retail liquor store without a contract with the manufacture and start to buy scotch and sell it by the case yes under the law well you would have to be licensed under the state licensing regime but would you need necessarily a contract with them or you could you could there are numerous ways under the under the law where you could import liquor from you could open a wine store and get wine  owned a distribution where they charge no excise tax a lot of smuggling across the border from from from new hampshire those brands going to come from there as well so that's the problem with causation that that gets to the audience a concern e by the way and i'm told my statute cite was wrong it's four twenty seven section five just a few minutes and i want to turn to other grounds that even if your honour's have these concerns about judge ros decision there are other grounds that judge ross did not reach below that this court could decide that this rico cannot stand one of the main ones a statute of limitations this case was filed in september of last year september twenty ninth two thousand and sixteen so for your statute would mean what did what did empire know before september twentieth two thousand and twelve well they knew that  according to their complaint and this is at the joint appendix two fifty that there were conspicuously reduced sales in two thousand and nine they knew in two thousand and ten when nino magli oco their chairman testified before the new york state analysis cited about highlighting the bootlegging problem into new york in two thousand and eleven there's a government forfeiture complaint the same government forfeiture complaint that had to do with the indictment of our in d c our competitor in maryland that was that was in two thousand and eleven five years or a student a year before they filed and that was on the very same scheme that's attached to their complaint also in two thousand and twelve there was their own distributor while all the time sitting on their rights about smuggling into new york is fanciful that's another reason why this court can affirm judge ross below the other problem that they have that hasn't been examined but what we raise below judge ross did not get to is the failure to plead enterprise there is no common common purpose there's no sharing of proceeds there's no operational control ledge here for example are in d c which is our competitor in maryland they claim that our in d c was just put in this rico enterprise but gave no motive as to why r and d c would would conspire with reliable churchill to harm empire particularly when they say in their complaint that our in sea smuggle such as it was did not hamas so they don't they also if you look at their complaint and i don't know where do they start the site what is the motive in the sharing of proceeds between new york retailers and cecil county kind of conduct that congress look to get at when it interacted rico is an invasion of lawful business activity by criminal activities and that's exactly what rico covers so we have fully alleged the elements and we would like to proceed and be able to develop the proof in order to show that in fact there is a viable rico claim here a couple of other comments in response to my adversaries points  bull was deeply involved in this scheme as we allege in particular paragraphs ninety one to one o five it recruited it incentivised and it helped conceal the liquor as it was smuggled from maryland to new york with respect to direct injury we allege that in detail let me say not only is the insurer to empire not derivative if anything it is to seek and to the injury sustained by the government because it's when the liquor comes across and goes not to the wholesaler but straight to the retailer that the point at which the tax should be paid is completely omitted with respect to who is to see as you have had and the court have held judge livingston greenberg is very clear that as long as the government is to see if it matters not who else is to see but we have also alleged that empire is to see with respect to the tax law any wholesaler must be licensed registered and pay taxes the exclusivity contracts have also been breached here but the laws have been violated as well we lay those provisions out in our reply brief with respect to the numerous other grounds that council has cited these issues  statute of limitations are not appropriate for determination at this juncture as this court has held and built they need to await further factual development finally with respect to damages we believe we will have no problem proving up damages in this case reliable has in fact said repeatedly that it has cooperated with the government in its investigation of the tax evasion and to the extent that's the case we assume there are sufficient records that will allow us to document the lost sales that empire sustained and we look forward and hope that this court gives us the opportunity to do that and remain thank you thank you thank you both lively case will reserve decision