Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-06-35112/USCOURTS-ca9-06-35112-0/pdf.json

Parties Involved:
Canyon County
Appellant
Harris Moran Seed Co.
Appellee
Albert Pacheco
Appellee
Sorrento Lactalis, Inc.
Appellee
Swift Beef Company
Appellee
Syngenta Seeds, Inc.
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CANYON COUNTY, a political 

subdivision of the State of Idaho,

Plaintiff-Appellant,

v.

No. 06-35112

SYNGENTA SEEDS, INC., a Delaware

D.C. No. corporation; SORRENTO LACTALIS,  CV 05-0306 EJL INC., a Delaware corporation;

SWIFT BEEF COMPANY, a Delaware OPINION

corporation; HARRIS MORAN SEED

CO., a California corporation;

ALBERT PACHECO, an individual,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Idaho

Edward J. Lodge, District Judge, Presiding

Argued and Submitted

August 7, 2007—Seattle, Washington

Filed March 21, 2008

Before: William C. Canby, Jr., A. Wallace Tashima, and

Consuelo M. Callahan, Circuit Judges.

Opinion by Judge Tashima

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COUNSEL

Howard W. Foster, Johnson & Bell, Ltd., Chicago, Illinois,

for the plaintiff-appellant. 

George R. Wood, Littler Mendelson, P.C., Minneapolis, Minnesota, for defendant-appellee Syngenta Seeds, Inc. 

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Juan P. Morillo, Sidley Austin LLP, Washington, D.C., for

defendant-appellee Sorrento Lactalis, Inc. 

Marie R. Yeates, Vinson & Elkins LLP, Houston, Texas, for

defendant-appellee Swift Beef Company. 

Richard A. Leasia, Thelen Reid & Priest, LLP, San Jose, California, for defendant-appellee Harris Moran Seed Company.

Cynthia J. Wooley, Ketchum, Idaho, for defendant-appellee

Albert Pacheco.

OPINION

TASHIMA, Circuit Judge: 

This case involves an Idaho county’s attempt to recover

damages under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, for additional

monies it claims to have expended on public health care and

law enforcement services for undocumented immigrants.

Plaintiff-appellant Canyon County commenced this action

against four companies and one individual under RICO’s civil

enforcement provision, 18 U.S.C. § 1964(c), alleging that

defendants engaged in an illegal scheme of hiring and/or harboring undocumented immigrant workers within the County,

and that their actions forced the County to pay “millions of

dollars for health care services and criminal justice services

for the illegal immigrants.” 

The district court concluded that the County did not have

statutory standing under § 1964(c) because the County did not

meet the threshold requirement that a civil plaintiff be “injured in his business or property” by reason of the alleged

RICO violation. Consequently, the court dismissed the County’s complaint. 

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We have jurisdiction pursuant to 28 U.S.C. § 1291, and we

affirm the district court. We agree with the district court that

the County has failed to allege that it was injured in its business or property. We also conclude that, with respect to

almost all of the defendants’ alleged RICO violations, the

County cannot show that its claimed injuries were proximately caused by defendants’ conduct. For both of these reasons, the County lacks statutory standing to pursue its federal

RICO claims. 

BACKGROUND

I. Civil Enforcement Under RICO

RICO focuses on “racketeering activity,” which the statute

defines as a number of specific criminal acts under federal

and state laws. See 18 U.S.C. § 1961(1). As relevant to this

case, acts which are indictable under § 274 of the Immigration

and Nationality Act (“INA”) are included in the definition of

racketeering activity. 18 U.S.C. § 1961(1)(F). INA § 274

(codified as amended at 8 U.S.C. § 1324) criminalizes the

bringing in, transportation, harboring, and employment of

undocumented aliens. 

Substantive violations of RICO are defined in 18 U.S.C.

§ 1962. Under § 1962(c), it is illegal for any person “to conduct or participate, directly or indirectly, in the conduct of

[an] enterprise’s affairs through a pattern of racketeering

activity,” where that enterprise affects interstate commerce. It

is also illegal for any person to conspire to do so. 18 U.S.C.

§ 1962(d). A “pattern of racketeering activity” requires at

least two predicate acts of racketeering activity, as defined in

18 U.S.C. § 1961(1), within a period of ten years. 18 U.S.C.

§ 1961(5).1

1RICO violations are criminally punishable by fines, forfeiture, and

imprisonment. 18 U.S.C. § 1963(a). 

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Under RICO’s civil enforcement mechanism, “[a]ny person

injured in his business or property by reason of a violation of

[18 U.S.C. § 1962] may sue therefor in any appropriate

United States district court and shall recover threefold the

damages he sustains and the cost of the suit, including a reasonable attorney’s fee . . . .” 18 U.S.C. § 1964(c). To have

standing under § 1964(c), a civil RICO plaintiff must show:

(1) that his alleged harm qualifies as injury to his business or

property; and (2) that his harm was “by reason of” the RICO

violation, which requires the plaintiff to establish proximate

causation. Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258,

268 (1992); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496

(1985). 

II. Canyon County’s Complaint

The County’s first amended complaint (“complaint”)

names as defendants Syngenta Seeds, Inc. (“Syngenta”), Sorrento Lactalis, Inc. (“Sorrento”), Swift Beef Company

(“Swift”), Harris Moran Seed Company (“Harris”), and

Albert Pacheco. Because we are reviewing the dismissal of

the complaint, we assume that the factual allegations of the

complaint, summarized below, are true. 

According to the complaint, each of the four defendant

companies knowingly employed and/or harbored large numbers of illegal immigrants within Canyon County, in an “Illegal Immigrant Hiring Scheme.”

2

 The companies’ actions have

damaged the County because the County “has paid millions

of dollars for health care services and criminal justice services

for the illegal immigrants who have been employed by the

defendants in violation of federal law.” The individual defendant, Pacheco, has engaged in a policy of “Wilful Blindness

and Harboring” of illegal immigrants, in his role as director

2Each defendant apparently conducted its own separate scheme, as there

are no allegations that the defendants cooperated with each other in any

way. 

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of a local social service agency, which has resulted in similarly increased costs for the County. 

Defendants Syngenta and Harris are both growers and processors of agricultural commodities. The County claims that

both companies have deliberately hired hundreds of workers

who the companies knew were not authorized to work in the

United States. Working with a farm labor contractor, Ag Services, the companies agreed to employ undocumented immigrants supplied by Ag Services. The contractor acts as a

“front” for Syngenta and Harris: in addition to supplying

workers, the contractor channels the workers’ wages to them,

completes fraudulent I-9 employment eligibility forms for the

workers, and supplies the workers with false documents. The

companies have thus allegedly violated both 8 U.S.C.

§ 1324(a)(3),3 which criminalizes knowing hiring of more

than ten unauthorized aliens during a single year, and 8

U.S.C. § 1324(a)(1)(A)(iii),4 which criminalizes harboring of

unauthorized aliens. 

The County further alleges that Syngenta and Harris have

each formed an “association-in-fact enterprise” with the farm

labor contractor, and that the companies’ sustained custom of

hiring and/or harboring undocumented workers amounts to a

pattern of racketeering activity. As a consequence, the companies have allegedly violated 18 U.S.C. § 1962(c), by partici3Under 8 U.S.C. § 1324(a)(3)(A), it is illegal for any person “during any

12-month period, [to] knowingly hire[ ] for employment at least 10 individuals with actual knowledge that the individuals are aliens described in

subparagraph (B) . . . .” An alien described in subparagraph B “is an alien

who— (i) is an unauthorized alien (as defined in section 1324a(h)(3) of

this title), and (ii) has been brought into the United States in violation of

this subsection.” 8 U.S.C. § 1324(a)(3)(B). 

4Under 8 U.S.C. § 1324(a)(1)(A)(iii), it is illegal for any person to

“knowing or in reckless disregard of the fact that an alien has come to,

entered, or remains in the United States in violation of law, . . . harbor[ ]

. . . or attempt[ ] to . . . harbor . . . such alien in any place, including any

building or any means of transportation.” 

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pating in the conduct of an enterprise’s affairs through a

pattern of racketeering activity. 

The complaint contains similar allegations against Sorrento, a cheese processor, and Swift, a meat packer, the only

difference being that Sorrento and Swift have allegedly

formed “association-in-fact” enterprises with a different labor

contractor, Labor Ready. 

The County’s claim against defendant Pacheco is distinct,

as it is not based on the hiring of undocumented immigrants.

Instead, the County alleges that Pacheco, in his position as

Executive Director of the Idaho Migrant Council, has directed

his staff to assist immigrant workers in fraudulently applying

for public benefits, despite Pacheco’s knowledge that the

workers lacked legal status in the United States and were ineligible for such benefits. In directing his staff to take these

actions, Pacheco has allegedly committed a pattern of racketeering activity, by knowingly harboring undocumented

immigrants in violation of 8 U.S.C. § 1324(a)(1)(A)(iii).

Thus, based on his association with the Migrant Council,

which is asserted to be a RICO enterprise, Pacheco has allegedly violated 18 U.S.C. §§ 1962(c) and 1962(d).5

III. Dismissal by the District Court

Defendants filed motions to dismiss the County’s complaint, challenging both the County’s standing under RICO

and the adequacy of the County’s allegations of substantive

RICO violations. The district court granted defendants’

motions and dismissed the complaint in its entirety. It held

that the County lacked statutory standing to bring its federal

RICO claims because it had not been injured in its business

or property by the alleged conduct constituting the RICO violations. 

5The complaint also charges Pacheco with violations of the Idaho Racketeering Act, Idaho Code §§ 18-7801 to 18-7805. 

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In evaluating whether the County had alleged injuries of a

type cognizable under § 1964(c), the district court first discussed the tort doctrine known as the “municipal cost recovery rule,” drawing on our decision in City of Flagstaff v.

Atchison, Topeka & Santa Fe Ry., 719 F.2d 322 (9th Cir.

1983). In City of Flagstaff, we held that, under Arizona law,

a municipality could not recover the cost of public services

for fire or safety protection from a negligent tortfeasor. Id. at

323. We did, however, recognize several exceptions to the

“municipal cost recovery rule,” including exceptions allowing

municipal recovery “where it is authorized by statute or regulation” and “where the acts of a private party create a public

nuisance which the government seeks to abate.” Id. at 324. 

Noting that the County appeared “to concede the existence

of the municipal cost recovery rule,” the district court rejected

the County’s argument that its claims fit within either the

exception for suits to abate a public nuisance, or the exception

for suits authorized by statute. First, the district court stated

that the County was not acting in its governmental capacity to

abate a nuisance, but suing for treble damages under civil

RICO. It then considered the County’s argument that the

RICO statute itself authorized its recovery. The court rejected

this contention, citing what it characterized as “extensive persuasive authority” from other circuits to the effect that a

municipality may not recover under RICO for alleged injuries

to its governmental functions. 

Thus, relying on the municipal cost recovery rule and on

case law from other circuits, the district court concluded that

the County’s claim for the costs of municipal services did not

qualify as an injury to business or property within the meaning of RICO. On this basis, the court dismissed the federal

RICO claims against all defendants and entered judgment

against the County.6 The County timely appealed.

6Upon dismissing the federal RICO counts against all defendants, the

court also dismissed the Idaho Racketeering Act claims against Pacheco

without prejudice to refiling those claims in state court. 

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STANDARD OF REVIEW

In reviewing dismissal of the County’s complaint under

Federal Rule of Civil Procedure 12(b)(6),7“we accept as true

the factual allegations in the amended complaint.” Anza v.

Ideal Steel Supply Corp., 126 S. Ct. 1991, 1994 (2006). We

will uphold the dismissal “only if it is clear that no relief

could be granted under any set of facts that could be proved

consistent with the allegations.”

8 Mendoza v. Zirkle Fruit Co.,

7The district court did not specify whether its dismissal was based on

Federal Rule of Civil Procedure 12(b)(1), lack of subject matter jurisdiction, or 12(b)(6), failure to state a claim upon which relief can be granted,

noting that “the case law is unclear as to whether a challenge to a plaintiff’s standing under RICO is jurisdictional.” There is case law from other

circuits suggesting that statutory standing may sometimes be a jurisdictional prerequisite. See Lerner v. Fleet Bank, 318 F.3d 113, 126-29 (2d

Cir. 2003). We have held, however, that the question of statutory standing

is to be resolved under Rule 12(b)(6), once Article III standing has been

established. Cetacean Cmty. v. Bush, 386 F.3d 1169, 1175 (9th Cir. 2004)

(“If a plaintiff has suffered sufficient injury to satisfy the jurisdictional

requirement of Article III but Congress has not granted statutory standing,

that plaintiff cannot state a claim upon which relief can be granted.”).

In this instance, we preliminarily conclude that the County has met Article III’s jurisdictional requirements. Although, as we discuss below, the

County cannot show the proximate causation that is necessary for civil

RICO standing, the County’s allegation that the defendants’ hiring and/or

harboring of undocumented immigrants within the County caused additional strain on County-provided health and public safety services meets

the less rigorous Article III causation threshold, at least at this stage of the

proceedings. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)

(stating that Article III requires the plaintiff to have suffered an injury that

is “fairly traceable” to the defendant’s conduct); Barbour v. Haley, 471

F.3d 1222, 1226 (11th Cir. 2006) (“[F]or purposes of satisfying Article

III’s causation requirement, we are concerned with something less than the

concept of proximate cause.”) (citation and internal quotation marks omitted), cert. denied, 127 S. Ct. 2996 (2007); Lerner, 318 F.3d at 122 & n.8

(holding that plaintiffs’ allegations failed to meet RICO proximate causation requirements but satisfied “the lesser burden for constitutional standing”). Thus, because Article III jurisdiction is not at issue, we review the

question of whether the County satisfies civil RICO’s standing requirements under the standard for Rule 12(b)(6). 

8Because the County cannot meet the more liberal “any set of facts”

standard, we need not decide whether the Supreme Court’s recent “retireCANYON COUNTY v. SYNGENTA SEEDS 2743

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301 F.3d 1163, 1167 (9th Cir. 2002) (citation and internal

quotation marks omitted). We may, however, affirm the dismissal on any ground supported by the record. McKesson

HBOC, Inc. v. N.Y. State Common Ret. Fund, Inc., 339 F.3d

1087, 1090 (9th Cir. 2003).

DISCUSSION

[1] A civil RICO “plaintiff only has standing if, and can

only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation.”

Sedima, 473 U.S. at 496; see 18 U.S.C. § 1964(c). Below, we

examine whether the allegations in the County’s complaint

meet the requirements for standing under RICO’s civil suit

provision, 18 U.S.C. § 1964(c). We discuss first whether the

County has alleged the requisite type of injury, then whether

the defendants’ alleged RICO violations could have proximately caused the County’s injury. 

I. Canyon County Has Failed to Allege that It Has Been

Injured in Its Business or Property

[2] To determine whether a plaintiff has sufficiently alleged

that he has been “injured in his business or property,” we

must examine carefully the nature of the asserted harm. Our

circuit requires that a plaintiff asserting injury to property

allege “concrete financial loss.” Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783, 785 (9th Cir. 1992) (en banc). Financial loss alone, however, is insufficient. “Without a harm to

a specific business or property interest — a categorical

inquiry typically determined by reference to state law — there

is no injury to business or property within the meaning of

RICO.” Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en

banc), cert. denied, 546 U.S. 1131 (2006). 

ment” of the “no set of facts” standard, Bell Atl. Corp. v. Twombly, 127

S. Ct. 1955, 1968-69 (2007), and its adoption of a new “plausibility” standard, see id. at 1965-67, applies to RICO complaints. 

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In this case, the County bases its RICO claims on the fact

that “it has paid millions of dollars for health care services

and criminal justice services for the illegal immigrants who

have been employed [and/or harbored] by the defendants in

violation of federal law.” The County argues that it has sufficiently alleged that it has been injured in its property because

it claims to have been forced to spend money. According to

the County, “[a]ny involuntary expenditure of money is a loss

of ‘property.’ ” However, a government entity cannot rely on

expenditures alone to establish civil RICO standing, and there

is no indication that the County holds a property interest in

the law enforcement or health care services that it provides to

the public. 

A. Government Expenditures Alone Are Insufficient to

Qualify as Injury to Property 

In the ordinary context of a commercial transaction, a consumer who has been overcharged can claim an injury to her

property, based on a wrongful deprivation of her money. See

Reiter v. Sonotone Corp., 442 U.S. 330, 342 (1979) (interpreting provision of the Clayton Act that grants standing to “any

person . . . injured in his business or property” by an antitrust

violation). As the Supreme Court reasoned in Reiter, “[i]n its

dictionary definitions and in common usage ‘property’ comprehends anything of material value owned or possessed.

Money, of course, is a form of property.” Id. at 338 (citation

omitted). Thus, the Court concluded that “where petitioner

alleges a wrongful deprivation of her money because the price

of the hearing aid she bought was artificially inflated . . . , she

has alleged an injury in her ‘property’ . . . .” Id. at 342. 

[3] Similarly, government entities that have been overcharged in commercial transactions and thus deprived of their

money can claim injury to their property. See Chattanooga

Foundry & Pipe Works v. City of Atlanta, 203 U.S. 390, 396

(1906) (holding that city’s claim that it was overcharged for

its purchases of water pipe qualified as allegation that it was

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“injured in its property . . . by being led to pay more than the

worth of the pipe”); County of Oakland v. City of Detroit, 866

F.2d 839, 847 (6th Cir. 1989) (outlying counties “sustained an

injury in their property when they paid the allegedly excessive

charges” to Detroit for treatment and disposal of sewage). 

[4] But the law commonly distinguishes between the status

of a governmental entity acting to enforce the laws or promote

the general welfare and that of a governmental entity acting

as a consumer or other type of market participant. See, e.g.,

Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458

U.S. 592, 601-02 (1982) (distinguishing between the sovereign, quasi-sovereign, and proprietary interests of governmental bodies). When a governmental body acts in its sovereign

or quasi-sovereign capacity, seeking to enforce the laws or

promote the public well-being, it cannot claim to have been

“injured in [its] . . . property” for RICO purposes based solely

on the fact that it has spent money in order to act governmentally. All government actions require the expenditure of

money in this sense, insofar as the government acts through

public servants who are paid for their services. If government

expenditures alone sufficed as injury to property, any RICO

predicate act that provoked any sort of governmental response

would provide the government entity with standing to sue

under § 1964(c) — an interpretation of the statute that we

think highly improbable. We find it particularly inappropriate

to label a governmental entity “injured in its property” when

it spends money on the provision of additional public services, given that those services are based on legislative mandates and are intended to further the public interest. 

B. The County Does Not Have a Property Interest in

Services It Provides to Enforce the Laws and

Promote the Public Welfare

[5] As the County cannot satisfy the requirement of injury

to a “specific property interest” based solely on its expenditure of money to provide public services, we must examine

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whether the County can claim a property interest in the services themselves. We conclude that the government does not

possess a property interest in the law enforcement or health

care services that it provides to the public; therefore, a governmental entity is not “injured in its property” when greater

demand causes it to provide additional public services of this

type. 

[6] We base this conclusion on several factors. First, the

ordinary meaning of the term “property” does not include the

interests of local governments in performing functions such as

policing, caring for the indigent sick, and otherwise protecting

the well-being of the public. Moreover, following Diaz’s

instruction to determine whether the relevant state’s law recognizes the alleged property interest, we see no indication that

Idaho law creates a property-like entitlement in such services

on the part of counties. See Diaz, 420 F.3d at 900. The County

has made no showing that Idaho law grants counties a protectable legal interest in the public services they provide, and we

have found none. The persuasive authority of other jurisdictions tilts against such an interest. Cf. id. (plaintiff’s claim for

lost wages due to false imprisonment alleged harm to a property interest, because California law recognizes the torts of

intentional interference with contract and interference with

prospective business relations); see also Living Designs, Inc.

v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 364 (9th Cir.

2005) (plaintiff’s claim alleging diminished litigation settlement due to the defendant’s fraud alleged injury to a property

interest, because fraudulent inducement is an actionable tort

under Hawaii law), cert. denied, 126 S. Ct. 2861 (2006). 

[7] Second, the Supreme Court has interpreted the statutory

provision that served as a model for § 1964(c) to exclude

claims for damages to governments’ non-proprietary interests.

The civil enforcement provision of the antitrust laws, § 4 of

the Clayton Act, provides a private right of action to “any person who shall be injured in his business or property by reason

of anything forbidden in the antitrust laws . . . .” 15 U.S.C.

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§ 15(a). Because Congress based the RICO private right of

action on § 4, courts have often, though not invariably, interpreted the two statutory provisions in a like manner. See, e.g.,

Holmes, 503 U.S. at 267-68; Sedima, 473 U.S. at 489, 498-99.

Interpreting the Clayton Act, the Court has read the phrase

“injured in his business or property” to encompass only injury

to a state’s “commercial interests,” meaning “the interests of

the [state] as a party to a commercial transaction.” Reiter, 442

U.S. at 341-42. If a similar interpretation of the identical

phrase is applied in the RICO setting, a government’s claim

for its law enforcement and health care expenditures would

not qualify as injury to property. 

In Hawaii v. Standard Oil Co., 405 U.S. 251 (1972), the

State of Hawaii sued four petroleum suppliers for antitrust

violations. Hawaii raised claims in three capacities: a claim in

the state’s proprietary capacity for overcharges it paid directly

as a consumer of petroleum products; a claim in its parens

patriae capacity as a representative of the state’s citizens; and

a class action claim on behalf of all consumers in the state. Id.

at 253-56. To support the claims brought in the state’s parens

patriae capacity, Hawaii alleged various harms, including loss

of its citizens’ revenues, increases in taxes as a result of lost

revenues, lost opportunities in commerce, and frustration of

state measures to promote its citizens’ welfare. Id. at 255. The

Court held that the state, acting in a parens patriae capacity to

redress injury to its general economy, had not been injured in

its property and thus lacked standing to recover damages

under § 4 of the Clayton Act. The Court stated: 

Like the lower courts that have considered the meaning of the words ‘business or property,’ we conclude

that they refer to commercial interests or enterprises.

When the State seeks damages for injuries to its

commercial interests, it may sue under § 4. But

where, as here, the State seeks damages for other

injuries, it is not properly within the Clayton Act. 

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Id. at 264 (citations omitted). 

The Court also relied on 15 U.S.C. § 15a, an adjacent provision permitting the federal government to recover damages

whenever “injured in its business or property” by an antitrust

violation. That provision, the Court wrote, did not permit the

United States to “recover for economic injuries to its sovereign interests, as opposed to its proprietary functions.” Id. at

265. Similarly, the Court held, “[§] 4, which uses identical

language, does not authorize recovery for economic injuries

to the sovereign interests of a State.” Id.

Later, in Reiter, the Court clarified that states could claim

to have been injured in their property when alleging harm to

their interests as consumers, despite the reference in Hawaii

to the state’s “commercial interests”: 

The phrase ‘commercial interests’ was used [in

Hawaii] as a generic reference to the interests of the

State of Hawaii as a party to a commercial transaction. This is apparent from Hawaii’s explicit reaffirmance of the rule of Chattanooga Foundry and

statement that, where injury to a state ‘occurs in its

capacity as a consumer in the marketplace’ through

a ‘payment of money wrongfully induced,’ treble

damages are recoverable by a state under the Clayton

Act. 

Reiter, 442 U.S. at 341-42. 

[8] As used in the Clayton Act’s private right of action,

then, the phrase “business or property” excludes states’ interests in their sovereign or quasi-sovereign capacities, but does

include states’ interests as ordinary marketplace actors. We

believe that this interpretation of the phrase “business or property” should apply in the context of a civil RICO claim, as

well. 

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The Second Circuit has already applied Hawaii and Reiter

in this way. In Town of West Hartford v. Operation Rescue,

915 F.2d 92, 103-04 (2d Cir. 1990), the court considered a

town’s civil RICO claims against abortion protesters who had

demonstrated for two days at a local clinic. According to the

town, the protesters’ activities amounted to extortion against

the town under the Hobbs Act and thus were a pattern of racketeering activity. Id. at 95-98. The town alleged that the protesters had limited the police department’s ability to respond

to other public safety needs, and caused extraordinary police

overtime wage expenses, among other harms, all of which

amounted to “injury to the governmental functions and property” of the town. Id. at 95-96. 

The court first concluded that extortion under the Hobbs

Act required the “obtaining of property from another by

wrongful means” and that neither “altered official conduct”

nor overtime police expense qualified as property for this purpose. Id. at 101-02 (internal quotation marks omitted). Therefore, the town had failed properly to allege any RICO

predicate acts and there was “no plausible basis for . . . assertion” of the RICO claim. Id. at 102-03. The court then analyzed whether the town had alleged injury to its “business or

property” resulting from the RICO violation, as required for

civil RICO standing. Relying on Hawaii and Reiter for the

proposition that a governmental entity may “recover for such

injury only when it functions ‘as a party to a commercial

transaction,’ ” the Second Circuit held that “[i]njuries of the

sort asserted by the Town do not fall within the ambit of section 1964(c).” Id. at 104. 

Thus, the Second Circuit held that the town’s claimed injuries stemming from the burden the protesters placed on the

town’s police department — which included expenditures for

increased overtime costs — did not qualify as injury to the

town’s business or property. Rather, these were injuries to the

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town’s sovereign or quasi-sovereign interests of the sort held

non-compensable in Hawaii.

9

[9] The injuries claimed by the County in this case,

increased expenditures for law enforcement and health care

services, are analogous to those that the Second Circuit ruled

non-compensable in Town of West Hartford. The County sustained these injuries in its sovereign and/or quasi-sovereign

capacities, and may not claim the costs as damages to its

property for purposes of civil RICO standing. 

We note finally that the common law doctrine barring government recovery of the costs of public safety services in tort

supports our holding. The rationale underlying the “municipal

cost recovery rule” is twofold: (1) that there is little reason for

courts to use tort law to unsettle expectations and disrupt the

existing, tax-payer funded system of providing public safety

9Although the Second Circuit’s interpretation of “business or property”

for RICO standing purposes in Town of West Hartford has been characterized as dicta, lower courts have relied on it in several instances. See Attorney Gen. v. R.J. Reynolds Tobacco Holdings, Inc., 103 F. Supp. 2d 134,

151-55 (N.D.N.Y. 2000) (holding that “Town of West Hartford compels

the Court to conclude that [increased law enforcement] costs do not constitute a cognizable RICO injury to Canada as a party to a commercial

transaction”), aff’d on other grounds, 268 F.3d 103 (2d Cir. 2001); City

of New York v. JAM Consultants, Inc., 889 F. Supp. 103, 105 (S.D.N.Y.

1995) (holding that city’s relationship with its employees is a “commercial

relationship” under Town of West Hartford, and thus inducement of disloyal employee conduct injures city in its property interests for purposes

of RICO standing); Town of Brookline v. Operation Rescue, 762 F. Supp.

1521, 1523 (D. Mass. 1991) (holding that town could not establish that it

had been injured in its business or property based on increased expenses

resulting from abortion protests). But see City of New York v. Cyco.Net,

Inc., 383 F. Supp. 2d 526, 555-56 (S.D.N.Y. 2005) (characterizing the law

as “unsettled” following Town of West Hartford and holding that city’s

loss of its right to collect sales taxes may qualify as injury to its business

or property); Eur. Cmty. v. RJR Nabisco, Inc., 150 F. Supp. 2d 456, 492-

93 (E.D.N.Y. 2001) (concluding that foreign government’s claim for lost

tax revenues and increased law enforcement costs “are, at bottom, claims

for lost money” and thus qualify as property for RICO standing purposes).

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services; and (2) that it is not the courts’ role to disturb the

legislature’s decision to fund such services as a part of its

overall fiscal policy choices. See City of Flagstaff, 719 F.2d

at 323-24. A number of courts have applied this rule to bar

recovery by local governments of public safety expenses.10

In this instance, we are not dealing with state common law,

but with a statutory cause of action created by Congress.

Therefore, we are not concerned that our court might upset

the local legislative body’s fiscal policy by allowing recovery

for public safety services. Instead, the question is one of Congress’ intent, specifically whether Congress meant to disrupt

settled expectations and alter the legislatively-chosen system

of funding local government services. We recognize that Congress could have used its powers to do so, enabling local governments to pursue treble damages under RICO for injuries

arising from their provision of governmental services. But had

Congress intended such a result, we believe that Congress

would have been more explicit; the term “business or property” does not readily connote a government’s interest in the

services it provides in its sovereign or quasi-sovereign capacity.11 As we think it unlikely that Congress intended this type

10See, e.g., District of Columbia v. Air Florida, Inc., 750 F.2d 1077,

1080 (D.C. Cir. 1984); County of San Luis Obispo v. Abalone Alliance,

223 Cal. Rptr. 846, 850-52 (Ct. App. 1986); City of Chicago v. Beretta

U.S.A. Corp., 821 N.E.2d 1099, 1144-47 (Ill. 2004); City of Bridgeton v.

B.P. Oil, Inc., 369 A.2d 49, 54 (N.J. Super. Ct. 1976); Koch v. Consol.

Edison Co., 468 N.E.2d 1, 7-8 (N.Y. 1984). But cf. White v. Smith & Wesson Corp., 97 F. Supp. 2d 816, 821-23 (N.D. Ohio 2000); City of Gary v.

Smith & Wesson Corp., 801 N.E.2d 1222, 1242-44 (Ind. 2003); James v.

Arms Tech., Inc., 820 A.2d 27, 48-49 (N.J. Super. Ct. 2003); City of Cincinnati v. Beretta U.S.A. Corp., 768 N.E.2d 1136, 1149-50 (Ohio 2002).

11There is no legislative history regarding Congress’ intent in this

regard. Cf. Sedima, 473 U.S. at 495 n.13 (referring to what lower court

described as the “ ‘clanging silence’ of the legislative history” of

§ 1964(c) regarding the provision’s scope); see also Reiter, 442 U.S. at

343 (“Many courts and commentators have observed that the respective

legislative histories of § 4 of the Clayton Act and § 7 of the Sherman Act,

its predecessor, shed no light on Congress’ original understanding of the

terms ‘business or property.’ ”). 

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of recovery under RICO, and because Idaho’s legislature has

assigned the fiscal burden for law enforcement and health

care services differently, it is not our place to disturb these

decisions. 

Contrary to the County’s argument, in holding that the

costs of their law enforcement and public health care services

are not recoverable damages under civil RICO, we are not

inserting an additional injury requirement into § 1964(c).

Rather, our holding is based on the statutory language itself.

We simply do not think that the term “business or property”

can be interpreted to encompass the sorts of interests that the

County relies on in this case. 

[10] In light of the foregoing reasoning, we conclude that

the County lacks RICO standing and cannot bring suit under

RICO for the injuries that it asserts in its complaint. 

II. Canyon County Cannot Show That the Alleged

RICO Violations Proximately Caused Its Injuries

Even if the County’s claimed injuries were cognizable

under § 1964(c) as injuries to property, the County’s complaint is flawed in another critical aspect: most of the defendants’ alleged RICO violations do not bear a direct

connection to the County’s asserted harms. See Anza, 126

S. Ct. at 1998 (“When a court evaluates a RICO claim for

proximate causation, the central question it must ask is

whether the alleged violation led directly to the plaintiff’s

injuries.”). 

A. The County’s Claims Against the Defendant

Companies 

Canyon County alleges that it “has paid millions of dollars

for health care services and criminal justice services for the

illegal immigrants who have been employed by the defendants in violation of federal law.” We conclude that the

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County cannot, as a matter of law, show an adequate causal

nexus between the four defendant companies’ employment of

undocumented workers and the financial harm the County

claims to have suffered. 

[11] A “showing that the defendant violated § 1962, the

plaintiff was injured, and the defendant’s violation was a ‘but

for’ cause of plaintiff’s injury” is insufficient to meet the

requirement in § 1964(c) that the plaintiff’s injury be “by reason of” the RICO violation. Holmes, 503 U.S. at 265-66.

Rather, a plaintiff must also show that the defendant’s RICO

violation proximately caused her injury. Id. at 268. Proximate

causation requires “some direct relation between the injury

asserted and the injurious conduct alleged.” Id.

In Holmes, the Court applied the proximate cause requirement to preclude a RICO suit by a plaintiff whose injury was

entirely contingent on the injury of direct victims. Id. at 271-

74. In that case, a number of conspirators had allegedly

engaged in a fraudulent stock manipulation scheme which led

to the insolvency of two securities broker-dealers. As a result

of the insolvency, the broker-dealers could no longer meet

their obligations to their customers, and the plaintiff, the

Securities Investor Protection Corporation (“SIPC”), was

forced to cover the broker-dealers’ debts. Id. at 262-63. SIPC

asserted the broker-dealers’ customers’ claims against the

conspirators, arguing that the customers had been injured “by

reason of” the conspirators’ fraudulent scheme in violation of

RICO. The Court disagreed, noting that “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. Finding “the link . . . too remote between the stock

manipulation alleged and the customers’ harm, being purely

contingent on the harm suffered by the broker-dealers,” the

Court concluded that proximate causation was lacking. Id.

[12] Subsequently, in Anza, the Supreme Court clarified

that the Holmes proximate cause requirement not only bars

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RICO suits by derivative victims, or those whose injuries are

“purely contingent on the harm suffered by” direct victims,

but generally precludes recovery by those whose injuries are

only tenuously related to the RICO violation at issue. 126

S. Ct. at 1996. Under Anza, courts must scrutinize the causal

link between the RICO violation and the injury, identifying

with precision both the nature of the violation and the cause

of the injury to the plaintiff. See id. at 1996-98. Where the

violation is not itself the immediate cause of the plaintiff’s

injury, proximate cause may be lacking. 

In Anza, Ideal Steel Supply Company sued its competitor,

alleging that the competitor had violated RICO by conducting

its business through a pattern of defrauding the State of New

York of sales tax payments. Id. at 1994. According to Ideal,

the defendant was able to undersell Ideal by not charging

sales tax on cash purchases, and thus deprived Ideal of sales

it otherwise would have made. Id. at 1994-95, 1997. The

Court concluded, however, that the competitor’s alleged violations could not have proximately caused Ideal’s injuries,

because “[t]he cause of Ideal’s asserted harms . . . is a set of

actions (offering lower prices) entirely distinct from the

alleged RICO violation (defrauding the State).” Id. at 1997. 

In support of this conclusion, the Court discussed the rationale for the requirement that the plaintiff’s harm directly

result from the alleged RICO violation. Id. (citing Holmes,

503 U.S. at 269-270). First, the Court cited “the difficulty that

can arise when a court attempts to ascertain the damages

caused by some remote action.” Id. The Court emphasized the

attenuated causal chain between the defendant’s tax fraud and

the plaintiff’s loss of sales. It noted the difficulty of determining whether the defendant’s lower prices were in fact based

on the defendant’s fraudulent failure to pay sales tax, or

whether other causes determined the defendant’s pricing. Id.

The Court also pointed out that the plaintiff’s lost sales could

have resulted from a host of factors other than its competitor’s

fraud. Id.

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Second, the Court discussed “the speculative nature of the

proceedings that would follow if Ideal were permitted to

maintain its claim.” Id. at 1998. A court would have to determine the portion of Ideal’s damages resulting from the RICO

violation, by evaluating the relative causal role of the defendant’s fraud in lowering the defendant’s prices, and the relative causal role of those lowered prices in diminishing Ideal’s

sales — in effect, requiring a complex apportionment of fault

among various causes. Id. The proximate causation requirement “is meant to prevent these types of intricate, uncertain

inquiries from overrunning RICO litigation.” Id.

Finally, the Court referenced the consideration of whether

“the immediate victims of an alleged RICO violation can be

expected to vindicate the laws by pursuing their own claims.”

Id. In the case before the Court, the State of New York could

be expected to pursue its own remedies for the fraud practiced

upon it by the defendant. Thus, the Court found “no need to

broaden the universe of actionable harms to permit RICO

suits by parties who have been injured only indirectly.” Id.

[13] Under Anza, we must determine whether the County

meets the proximate cause requirement by examining

“whether the alleged violation led directly to the plaintiff’s

injuries.” Id.12 The basis of the RICO violation, according to

the County’s complaint, is the defendant companies’ knowing

hiring of undocumented immigrants. The alleged harm is the

12We are mindful that, in evaluating a complaint’s adequacy at the

motion to dismiss stage, we must “presume that general allegations

embrace those specific facts . . . necessary to support the claim.” Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 615 (6th Cir. 2004) (quoting

Nat’l Org. for Women v. Scheidler, 510 U.S. 249, 256 (1994), in support

of the proposition that “a weak or insubstantial causal link” is not a good

basis for dismissal on the pleadings). Anza itself, however, dealt with the

adequacy of the proximate cause allegations at the motion to dismiss

stage. 126 S. Ct. at 1994. It is therefore evident that courts need not allow

RICO plaintiffs leeway to continue on with their case in an attempt to

prove an entirely remote causal link. 

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County’s increased expenditures on health care and criminal

justice services. Here, just as in Anza, the cause of the plaintiff’s asserted harms is a set of actions (increased demand by

people within Canyon County for public health care and law

enforcement services) entirely distinct from the alleged RICO

violation (the defendants’ knowing hiring of undocumented

workers). 

[14] The three rationales for the proximate cause requirement described in Anza also suggest that the County’s harm

fails the proximate cause test. Cf. id. at 1997. As to the first

consideration, the difficulty of assessing causation, the

asserted causal chain in this instance is quite attenuated, and

there are numerous other factors that could lead to higher

expenditures by the County. In fact, it is not clear how the

companies’ hiring of undocumented immigrants would

increase demand for health care and law enforcement within

Canyon County. Further, holding employers liable for the

actions of their employees that are not even recognized as

being a basis for respondent superior liability would be contrary to centuries of precedent concerning proximate causation. 

[15] The causal chain would also be difficult to ascertain

because there are numerous alternative causes that might be

the actual source or sources of the County’s alleged harm.

Increased demand for public health care and law enforcement

may result from such varied factors as: demographic changes;

alterations in criminal laws or policy; changes in public health

practices; shifts in economic variables such as wages, insurance coverage, and unemployment; and improved community

education and outreach by government. 

[16] Second, the proceedings required to evaluate the

County’s injury would be speculative in the extreme, perhaps

more so than those discussed in Anza. Cf. id. at 1998. A court

would be forced to evaluate the extent to which the companies’ illegal hiring practices had created increased demand for

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County services. This would not consist of simply estimating

the number of undocumented immigrants employed by the

companies and their average usage of County services.

Rather, the court would have to construct the alternative scenario of what would have occurred had the companies

employed legally authorized workers, and determine how this

might have affected the County’s total population, and how

these alternative workers might have differed from the

undocumented workers in their consumption of County services, if at all. This would be an “intricate, uncertain” inquiry

of the type that the Anza Court warned against. Id.

Given the substantial — and fatal — shortcomings of the

complaint in meeting Anza’s proximate cause requirements,

we need not inquire into the question of whether there are

more immediate victims of the defendants’ alleged RICO violations who are likely to sue. See Newcal Indus., Inc. v. IKON

Office Solution, 2008 WL 185520, at *13 (9th Cir. 2008).13

The County has attempted to limit Anza’s reach, characterizing the holding as applying only to “derivatively injured

plaintiffs.” Because the County’s injury is not “derivative of

an injury suffered by any other party,” the County asserts that

Anza is inapplicable. 

We are, however, unpersuaded by the County’s attempt to

distinguish Anza as a “derivative or passed-on” injury case. It

is true that the Court in Holmes dealt with derivative injury,

in the sense that any harm to the plaintiff occurred only to the

extent that a direct victim’s injuries were “passed on,” or

flowed through another victim. But there was no such

13We note that under Anza, the likelihood of more direct victims bringing suit is not essential to a finding of no proximate cause. See Anza, 126

S. Ct. at 1998 (noting that “[t]he requirement of a direct causal connection

is especially warranted where the immediate victim of an alleged RICO

violation can be expected to vindicate the laws by pressing their own

claims”) (emphasis added). 

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“passed-on” harm in Anza: the plaintiff alleged that it lost

business due to the defendant’s lowered prices, a harm which

was distinct from and not contingent on the harm suffered by

the state due to the defendant’s sales tax fraud. Thus, Anza

applies fully to cases like this one, where the harm to the

plaintiff from the defendant’s RICO violation does not flow

through any intervening victims. 

[17] The County’s claims against the defendant companies

fail for lack of proximate causation. The asserted link between

the companies’ hiring practices and increased demand for

County services is far too attenuated. 

B. The County’s Claim Against Pacheco

The County’s claim against Albert Pacheco, the former

Executive Director of the Idaho Migrant Council, is founded

on two specific factual allegations: first, that Pacheco directed

his staff to assist undocumented immigrants in filing false

applications for the County’s indigent medical assistance

fund, which cost the County money; and second, that Pacheco

directed his staff to assist undocumented immigrants in procuring public housing, and that those immigrants subsequently burdened the County’s public assistance and criminal

justice systems. As we noted above, neither of these allegations supports a claim that the County was injured in its

“property,” and so the claim against Pacheco was properly

dismissed for that reason. The second allegation against

Pacheco, that he assisted immigrants in securing housing, suffers from an additional flaw: lack of proximate causation. 

Here, as in Anza, the defendant’s alleged RICO violation

(assisting undocumented immigrants in securing housing) is

distinct from the cause of the plaintiff’s harm (increased

demand placing a burden on Canyon County’s public assistance and criminal justice systems). Further, the considerations cited in Anza demonstrate that proximate cause is

absent. See id. at 1997-98. The causal chain between the

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RICO violation and the plaintiff’s harm is dubious for any

number of reasons: for example, the immigrants might have

secured public housing without Pacheco’s staff’s assistance,

and the immigrants might have remained in the County even

without being able to occupy public housing. It is even more

attenuated to postulate that having the benefit of public housing made the immigrants more prone to commit crimes,

require health care, or otherwise increase their use of County

services. Given the speculative nature of the causal links

between the alleged harm and Pacheco’s actions, a court

attempting to identify the specific portion of the County’s

financial loss caused by Pacheco’s actions would be sorely

pressed to do so. Finally, to the extent that Pacheco’s actions

were indeed unlawful, the most direct victim is the public

housing authority itself; there is little need to allow the

County to pursue this RICO claim in order to vindicate the

laws. 

[18] Thus, we conclude that proximate causation is lacking

as to this portion of the County’s claim against Pacheco.

CONCLUSION

We conclude that the County lacks statutory standing under

18 U.S.C. § 1964(c) to proceed with its federal RICO claims

against the four defendant companies. First, the County has

failed to plead that it has been “injured in [its] business or

property” by reason of the defendants’ alleged RICO violations. Second, the County cannot show that its claimed injuries were proximately caused “by reason of” the defendant

companies’ alleged RICO violations. 

As for the County’s claim against the individual defendant,

Pacheco, the County lacks standing to pursue this claim as

well: the County has not pled injury to its business or property, and proximate causation is lacking as to at least a portion

of Pacheco’s alleged RICO violations. 

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As a consequence, the judgment of the district court dismissing the County’s federal RICO claims is AFFIRMED.

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