1 (Slip Opin i o n) OCTOBER T ERM, 20 09

Sy llabu s

N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti meth e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a rt of th e op in i o nof th eC o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r

. Se e United Statesv. Detroit Timbe r& Lumb er Co., 200U. S

. 3 21, 337

. 

## SUPREME CO URT O FTHE UNI TED STATES

Sy llabu s HEMI GROUP, LLC, ET AL

. v . CITY OF NEW YORK, NEW YOR K

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECON D CIRCUIT

No. 08–9 69. Ar g u ed Nov e mber3, 2009 —Dec ided Jan u a r y25, 2010 Respondent N e w Yo r kCitytax e s the po sses s ion of c i g a r e ttes. Pet i

tioner Hemi Group, based in New Mexic o , s e lls ciga ret t e s online t o
r e sidents of th e City

. Neith e rsta t e norc i tylaw r e quir e s out-of-s tate seller s suc ha s Hemi to c h ar g e , c o llec t , orr e mit the City ’ s tax ; in

stead, the Ci tymust r e c o v e r its t a x on out-of-state sales directly from the pur c h asers. But the Je n k in s Ac t, 15 U. S. C. §§375 –37 8, r e qu ir es out-of-state se ller s to submitc u stom er info rmation to the State s int o which t h e ys h ip ciga ret t e s , a n d New York S t at e ha s agreed t ofor

ward that inf o rmation to t h e City. Thatinformation helps the C i ty t r a c k down cig a ret t epurcha s ers who do not paytheirtax e s. Ag ainst that b a c k dr op, the Cityfile d this l a wsuit under the Racketeer Influ

enc e d and Co r r u pt Or g a niz a tions Ac t (R I C O), allegi ngthat He mi’ s failure to file t h e Jenkins Act repo r t s with the Sta t e c o nstituted m a i l

an d wir efr aud, wh ichar e defin e d as “r a c keteer in gac t iv i t[ies],” 1 8 U. S. C. §1961 (1), su bjec t to en for c e men tun derc iv il RICO, §1964(c )

. The Dis t rictCourtdis m is sed t h e cla i m s , b u tt h e S e cond Circuitva

c a ted the judg ment and r e m a nded. A m ongotherthing s , the Cour t o f Appeal s h e ld t h at th e City ’ s asse rted injur y—lost tax revenue—came about “by reason of” the predicate ma il and wire fra u d s

. Ita ccord

ingl ydeter m ined that the Cit yhad stated a v a lid RICO c l a i m. Held:The jud g ment is rever s ed, and the c a s eis remanded. 541 F. 3d 42 5, r e v e r s ed an d reman d ed. C HI EF J US TI CE R OBERTS deli vered the opinion of the Cou r t in part,

c o nc ludingthat bec a use the Cityc a nnot sh ow that itlos t taxr e v e nue “by reason of ” the alleged RICO vi olation, it ca nnot sta t e a RICO

c l aim. Pp. 5–1 5.2 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Sy llabu s (a) To establi s hth at anin ju r yc a me abou t“byr e asonof ” a RI CO

v i olation
, a plain t iff mu st s h ow th ata pre d icate offense “not only was

a‘b ut for’ ca us e of his inj u r y , b u t was the proximate cause as well.” Holmesv. Se c u riti es Inv esto rProte c tionCorporation , 503 U. S. 258, 268. Proximate cause for RICO purposes should be evaluated in l i ght of its com m on-law foundatio ns; it t hus requires “ s om e directrela t i on between the injury assertedand the injur i ous c o nduc t alleg e d.” Ibid

. A link that is “too r e mote,” “pur ely c o ntingent,” o r“indirec[t]” is in

sufficient. Id ., at 271, 2 74.

The Cit y ’s caus a lt h eory cannots a t i s f y RICO’s directrela t i ons h ip

r e quir ement. Indeed, the c a usal link h e r eis farmo r eattenuated than the one the Court rejected as “pur elyc o nting e nt” and “too r e

mote” in Holmes

. Id ., at 27 1. Ac c o r d ingto the City , Hem ic o mmi tte d fraud by selli ng cigarettes t ocity resident s and fa iling t osubmi tthe required customer information to the State. Without the r e por t s from Hemi, the State could not pass on the information to the City, even if it had been so incli n ed. Some of the customers legally obli

g a ted to paythe c i g a r e tte taxto the Cityfailed to do so. Bec a use the Citydid not r e c e iv e the customerinfor m ation, it c o uld not deter m ine whic h c u stomer s had failed to paythe tax

. The Citythus c o uld not pursue those customers for payment. The City thereby was injured in the amount of the portionof back taxes that were never collected. As the Court reiterated in Ho l m es , “[t]he gener a l tendenc yof the law, in r e g a r dto damag e s at lea s t, is notto g o bey o nd the fir s t step,” id., at 2 71– 27 2, a n d th at “g en er al ten d en c y”applies wi thfu ll for c eto proximate cause inquiries under RICO, e.g., ibid

. Because the City’s

c a usation theor y r e quir es the Cour t to mov ewell bey o nd the fir s t

s t ep, t h a tt h eory ca n n ots a t i s f y RICO’s directrela t i ons h ip req u ire

ment.

The City ’ s c l ai m suffer s fr om the same defec tas the RI C O c l aim r e

jected in Anzav. Ideal Steel Supply Corp. , 547 U. S. 451, 4 58– 46 1, where t h e con d uctdirect ly ca us ing t h e ha rmwa s dist inctfromt h e
c o nduc t giv i ng r i se to the fraud, see id ., a t458. In deed, th e disc on

nect between the assertedinjury and the a lleged fraud inthis case is even sharper. In Anza, the same p a r t yhad both eng a g e d in the har m ful c o nduc t and c o mmitted the fr au dulent ac t. Her e , the City ’ s theory of liabi lity rests not just on sep a rate actions , but separ a te ac

t i ons ca rried outb ys e pa ra t e parties

. The City’s theory thus requires that the Cour t ex tend RIC O liabil i tyto situat ions wher e the defen

dant’s fraud o nthe thirdp a rty (theState) has made it easier for a fourthpa rty (t he ta xpa y er) to ca us e ha rm to the pla i ntiff (the City). Indeed, the four th-par tytaxpay er s her eonlyc a used har mto the City in the fir s t pl a c e if theydec i ded not to p a ytax e s theywer eleg a llyob

lig ated to p a y

. Put simply , Hemi’ s obliga t ion was to file Jenkins Act3 Cite as: 55 9 U

. S. ____ (2010)

Sy llabu s report s wit hthe S t at e, notthe Cit y , a n d the Cit y ’s ha rmwa s direct ly caused by the customers, not Hemi. The Court has never before

s t ret c hed t h e ca us a lcha i n of aRICO violat ion s ofa r, a n d declines to do so today. See, e. g. , id
., at 460 –4 61. Pp. 5–9.

(b) The Cityattempt s to av oi d this c o n c lu sionbych ar ac ter i zin gth e violation not merely as Hemi’s failure to file Jenkins Ac t reports with the State, but as a more general sy stem a t icsc h e me to defr au d th e Cityof taxr e v e nue. But if th e Ci ty could escape the proximate-cause

r e qu ir emen t mer e lybyalle gi n gth at th e fr au du len tsc heme embr ac ed all those indirectly harmed by the a lleged conduct, the Court’s RICO proximate cause precedent would beco me a mer epleadi ngrule. That precedent makes clear that “the co mpensable injury flo w ing f r om a [RICO] violation .

. . ‘ne c es s a rily is the h a rm caused by [the] predi

c a te ac ts.’ ” Anza, s u pra, at 457. Bec a u s e th e on ly fr a u du len t co n

ductalleged here is a violat i o n of th e Jenkins Ac t, the Ci tymust, but

c a nnot, show that Hemi’ s f a ilur etofile t h e Jenkins Act reports led directly to its injuries.

The City also errs in relying on Bridgev. Phoenix Bon d & Indem

nity Co. , 553 U. S. ___. There, the pl aintiffs’ causa t io n theory was “str aigh tfor wa r d”: The c a usal l i nk in Bri d geinvolv ed adirect a n d easily i d entifi able connection betw een the fraud at is sue and th e plaintiff s ’ inju ry, id., at ___; the plainti ffs there “were the onlypartie s injured by pe titioners’ misr epr e sen t ation s , ” id ., at ___; and there were “ n o inde pendentfa ct ors t h a ta ccount [ed] for [t he] i n j u ry ,” id., at

___. The City’s theory in this ca se is anything but straightfor

w a r d : Mu ltipl estep s separ a te th e a lleged fraud from the asserted in

j u ry. And in cont ra s tt o Bridge , whe r e th ere we re “noindependen t fa ct ors t h at accou n t [ ed] for [t he pla i nt iffs ’] inj u ry,” id ., at ___, here there ce rtainly we re: T h e C i ty’s theory of liabil i ty rests on theinde

pen d en t ac tion s of th ir d an d ev en fou r th par t ies. Pp. 10–14.

R OBERTS , C. J., delivered the opinion of the Court in part, in which S CALIA , T HOMAS , and ALITO , JJ., joined, and in whichG IN SB U R G , J., joined in part. G IN SB U R G , J ., filed an opinion concurri ng in part and

conc urri ng i n the j u dgment. B REYER , J., filed a dis s enti ng opinion, in which S TEVENS an d K ENNED Y , JJ., joined. S OTOMAYOR , J., took no par t in the co nsideration or decision of the case._________________

_________________ 1 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt

NOTIC E : Th is op i n ionis subjec t to f o rma lrevi si onbef o r e publicat ioninth e p r eli m in ary p rin t of th e U n it edS t at es R e p o rts

. R e ad ers ar e r e qu es ted to
n o tif yth e R e p o rt e rof D e c i s i on s , Su p r em e C o u rt of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on sm a y b e mad eb e f o r e th ep r e lim in aryp rin t go es t o p r es s

. 

## SUPREME CO URT O FTHE UNI TED STATES

No. 08–9 69

HEMI GROUP, LLC AN D KAI GA CHUPIN,

PETITIONERS v. CITY OF NEW YORK, NEW YOR K

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Jan u a r y25, 2010]
C HIEF J U S TICE R OBER TSdelivered the opinion of the Court in pa rt. The City of New Yorktaxes the possession of cigarettes

. Hemi Group, based in New Mexico, sel l s cigarettes onlin e to residents of the City. Neithe r state norcity law r e

quires Hemi to charge, collect, or remit the t a x, and the purchasers seldom p a y it on their own. Federal l a w, however, r e quires out

- of-state vendors suchas Hemi t o submit customer information to the States into which they ship the cigarettes. Against that backdrop, the City fil e d this lawsuit unde r the Rack eteer Influ e n c ed and Corrupt Organizations Ac t (RICO), alleging that Hemi failed to file the required customer information with the State. Th at failure, the City a r gues , constitute s mail and wire fraud, which caused it to los e t e ns of mill i o ns of dolla rs in unrecovered cigarette ta xes. Because t h e City can n ot show th at it lost the tax revenue “by reason of” the alleged RICO violation, 18 U. S. C. §1 964(c), we hold that the City ca nnot state a claim under RICO. W e thereforereverse the Court of2 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt Appeals’ decision to the contrary.
I A This case arises from a motion to dismiss, and so we accept as tr ue the fact ual allegations in the City’s secon d amended complaint. See Leatherman v. Ta rran tCounty Narco tics I n telligence and Coordination Unit , 507 U. S. 163, 164 (1993). New York State auth o rizes the City of New York to impose its own taxes on cigarett es. N. Y. Unconsol. Law Ann. §9436(1) (West Supp. 2009). Under th at authority, the City ha s levied a $1.50 per pack ta x on each standar d pack of ciga rettes possessed within the Cityfor sale or use. N. Y. C. Admin. Code §11–1302(a) (2008); see also Record A1016. When purchasers buy cigarettes from in-state vendors, the seller is r e sponsible f o r charging, collecting, and remitti ng the ta x. N. Y. Tax Law Ann. § 471(2) (Wes t Supp. 2009 ). Out-of-state vendors, however, are not. Ibid .; see City of Ne w York v. Smokes-Spi r its. com, Inc. , 541 F. 3d 4 25, 432–43 3 (CA2 2008). Instead
, the City is responsible for recovering, di rect ly from th e customers, use taxes on cigarettes sold outside New York. That ca n be difficult, as those c u stomers are often rel u ctant to pay and tough to trac kdown. One way the Ci ty can ga th er informationthat would assist itin collecting the back taxes is through the Jenkins Act, 6 3 Stat. 884, as amended by 69 Stat. 627. Tha tAct requires out-of-state cigarette sellers to r e gister and to file a r e port with state tobacco tax adminis trators listi ng the nam e, address, and quantity of cigarettes purchased by state residents. 15 U. S. C. §§375–378. New York State and the Ci ty ha ve executed an agreement under which both parties undertake to “cooperate fully with each other and k eep each other fully an d promptly in formed with reference to any person or trans­3 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt action subject to both State andCity cigar e tte taxes including [i]n formation obtainedwhich may re sult in additional cigar e tte tax rev e nue to the State o rC i ty p r ovided that the disclosure of that information is permissible under existing laws and agreements.” Record A1003. Th e City asserts that under that agreement, th e State forwards Jenkins Act information to the City. Id

. , at A998; Second Am ended Compl. ¶54. Th at information helps the City tra ck down purc hasers who do not pay their tax e s. Id ., ¶¶58–5 9. Hemi Grou p is a New Mexico company that sells cigarettes online. Hemi, however, does n o t file Jenkins Ac t information with the State. The Cityalleges that thi s failure has cost it “te ns if not hundreds of millions of dollars a year in ciga rette ex cise tax re venue.” Recor d A996. Based on Hemi’s failure to file the infor m ation with the State, t h e City filed this federal RICO cla i m. B RICO provides a private cause of action for “[a]ny person injuredin his bu siness or property by reason of a violation of section 19 62 of this chapter.” 18 U. S. C. §1964(c). Section 1962, in turn, co ntains RICO’s criminal provisions. Specifically, §1962(c), which the City invoke s here, makes it “unlawful for any person em ployed by o r associated with an y en terprise eng a ged in, or t h e activities of which affect, interstate .

. . commerce, to conduct or participate, directly orindirectl y, in the conduct of suc h enterprise’s affairs th rough a p a ttern of racketeerin g activity. ” “[R]acketeer ing acti vity” is defined to include a number of so-called predicate acts, including the two at issue in this case—mail and wire fraud. See §1961(1).The City alleges that Hemi’s “interstate sale of cigarettes and t h e failure to file Jenkins Actreports identify

ing those s a les” consti tute the RICO predicate offenses of mail and wire fraud in violation of §1962 (c), for whi c h4 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt §1964(c) provides a pri v ate cause of action. Record A980. Invoking th at pri v ate c ause of action, the Cityasserts tha t it has suffered injury i nthe form of lost tax revenue—its “business o rproperty” in RICO terms—“byreason of” He mi’s frau d. Hemi does not contest the City’s c haracteriza tion of the Jenkins Act violations as predicate offenses actionable under §1964(c). (We therefore assume, without deciding, that failure to file Jenkins Act m a terial can serve as a RICO predicate offense

. ) Instead, H e mi argues that the City’s asser t ed injury—lost tax r e venue—is not “business or property” under RICO, and th at the City cannot show that it suffered any inj u ry “b y rea s on of” the failure to file Jenkins Actreports. The Distric tCourt dismissed the City’s RIC O claims, determining that Hemi owne r and officer Kai Gach upin did not have an individual duty to file Jenkins Act reports, and thus co uld not have committed the alleged predicate acts. City of New York v. Nexico n, Inc. , No. 03 CV 383 (DAB), 200 6 WL 647716, *7–*8 ( S DNY, Mar. 15, 2006). The Distric tCourt the r efore held that the City could not establish that Hemi an d Gachu p in formed an “enterprise” as required to establis h RICO liability. Id
., at *7–*10. Because it dismissed on that gro und, the District Cour t did not ad dress whet her the Ci ty’s loss of tax revenue constitutes an injury t o its “business or property” under §1964, or whether th at injury was caused “by reason of” Hemi’s failure to file t h e Jenkins Act repor t s. The SecondCircuit va cated the DistrictCo urt’s ju dgment and remanded fo r further proceedings. The Court o f Appeals held that the City had established t hat Gachupin and Hemi operated as an “enterprise” and that the enterprise committed the predicate RICO acts of mail and wire fraud, based on the fai l ure to file the Jenkins Act materia l with the State. 541 F. 3d, at 4 47–448. The court al so determined that the C i ty’s assert ed injury, l o st tax rev e

­5 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt nue, was “business or property” u n der RICO. Id ., at 444– 445. And that injury, the court co ncluded, ca me about “by reason of” t h e predicate mailand wire frauds. Id
., at 44 0– 444. The City thus had stated a viable RICO clai m. Judge Winter dissented on the ground that the alleged RICO violation was no t the proximate cause of the City’s injury. Id ., at 458–461. Hemi filed a petition for certi orari, asking th is Court to determine whether th e City ha d been “directly injured in its ‘business or property’ ” by reason of the alleged mail and wire fr auds. Pet. for Cert. i. We gran ted thatpetition. 556 U. S. __ (2009 ).
II Though framed as a single question, Hemi’s petition for certiorari r a ises two distinct issues: First, whether a loss in tax reve nue is “business or pro p erty” unde r18 U. S. C. §1964(c); and second, whether th e City’s asserted injur y came about “by reason of” th e allegedly frau dulent conduct, as required by §1964(c). We determine that the City cannot satisfy the causation requirement—that any injury the City suffered must be “by reason of”the alleged frauds—and therefore do not de cide whether the City’s allegations of lost tax revenue constitute an injury to i t s “business o rproperty.”
A In Ho lmes v. Se curi tie sInves t or Protec tion Co rporation , 503 U. S. 258 (1992), we set forth the standard of causation that applies to civil RICO cl aims. In that case, we addressed a RICO claim brought by Secu rities Investor Protection Corporation (SIPC) against defen d ants who m SIPC alleged had manipulated stock pri c es. Id., at 262– 263. SIPC had a duty to reimburse customers of certain registered brok er-dealers in the event the brok er-dealers were unable to meet their financial obligations. Id ., at6 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt
261. Whenthe conspiracy by the stock mani pulators wa s detected, stockprices collapsed, and two brok er-dealers were unable to meet their obligations to their customers

. SIPC, as in surer again s t that loss , ultimately was on the hook for nearly $13 mi llionto co ver the customers’ claims. The Court held that SIPC co uld not recover against th e conspirators because it could not establish that it wa s injured “by reason of” the alleged fraud, as th at phrase i s used in RICO. We explain e d that, to state a cla i m under civil RICO, the plaintif f is required to show that a RICO predicate offense “not only was a ‘but for’ cause of his injury, but was the proximate cause as well.” Id ., at 268

. Proximate cause for RICO purposes, we mad e clear, sh o u ld be evaluated in light of its common -law foundations; proximate cause thus requires “ s ome direc trelation between the injury asserted and th e injurious conduct alleged.” Ibid

. A link that is “too remote,” “p urely contingent,” or “in d i

rec[t]” is insufficient. Id ., at 271, 274. Applying th at standard, we rejected SIPC’s RI CO claim

. The alleged conspiracy, we he ld, directly harm e d only the broker-dealers; SIPC’s injury, on the other hand, wa s “purely contingent” on that harm. Id
., at 27 1. The con

nection between the al leged conspiracy an d S I PC’s injur y was therefore “too rem o te” to satisfy RIC O’s direct relationship req u irement. Ibid

. The City’s causal theory is far more attenuated than the one we rejected in Ho lmes

. Accor d ing to the City, Hemi committed fraud by selling ciga rett es to city residents and failing to s ubmit the r e quired cus t omer infor m ation to t h e State. Wit h out the re ports from Hemi, the S t ate could n o t pass on theinformatio n to the Cit y , even if it had beens o inclined. Some of the customers legally obligated to pay the cigarett e tax to the City failedto do so. Because the City did no t receive t h e customer informati o n, the Cit y could not d e termine which customers had failed to pay th e7 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt

tax. The C i ty thus co uld not pu r s ue those customers for payment. The City thereby was injured in the amount of the portion of back ta xes that were never c o llected. See Record A99 6

. But as we reiterated in Ho lme s , “[ t ] he general tendenc y of the law, in regard t o damages at least, is not to go b e

yond the first step.” 5 03 U. S., at 271–272 (q uoting Asso

ciated Gen. Contrac t ors of Cal., Inc. v . Car p ente rs, 459 U. S. 519, 534 (1983), in turn quotingSouthern Pacific Co.

v. Darn ell- Taenze r Lu mber Co. , 245 U. S. 531, 533 (191 8), internal qu otation ma rks om itted). Our c a ses confirm that the “ g eneral tendency” ap plies with full force to proximate cause inquiri es under RICO. Ho lmes
, sup ra, at 271–272; s ee als o Bridgev. Pho e nix Bond & Indemnity Co. , 553 U. S. __, __ ( 2008) (slip op., at 18– 19); Anza v. Ideal Steel Supply Corp. , 547 U. S. 451, 460–461 (2006)

. Because th e City’s the o ry of causa t ion requires us to mov e well beyondthe first step, that theory cannot meet RICO’s direct relationship requirement. Our decision in Anza , supr a , con f irms that the City ’s theory of causation is far too indirect. Ther e we considered a RICO claim brought byIde a l Steel Su pply a g ainst its competitor, National Steel Supply. Idealalleged that National h a d defrauded New York State by failing to charge and remit sales taxes, and that National was thus able to undercut Ideal’s prices. The lower prices offered by National, Ideal contended, allowed Na tional to attract customers at Ideal’s expense. Id

. , a t458. Finding the link between the frau d alleged a n d injury suffered to be “attenuated,” we rejected Ideal’s claim. Id
., at 459. “T he direct victim of this conduct,” we held, was “the State o f New York, not Ideal.” Id ., at 458. “It was th e State that was being defrauded and the State that lost tax

revenue as a result.” Ibid

. We re cognized that Ideal had asserted “its own harms when [National] failed to cha r ge customers for the appl icable sales tax.” Ibid

. But th e8 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt
cause of Ideal’s harm was “a set of actions (offering lower prices) entirely distinct from the alleged RICO violation (defrauding the State).” Ibid

. The alleged vi olation ther efore had not “led directly to the plaintiff’s injuries,” and Ideal accordingly had failed to meet RICO’s “requirement of a directcausal con n ection” between the predicate o f

fense and the alleged h a rm. Id ., at 460–461. The City’s claim suffers from th e same defect as the claim in Anza

. Here, t h e conduct directly res p onsible for the City’s harm was the customers’ failure to pay their taxes. And the conductconstituting the alleged fraud was Hemi’s failure to file Jenkin s Act reports. Thus, as in Anza , the conduct directly causin g the harm was distinct from the conduct gi ving rise to the fraud. See id ., at 458. Indeed, the disconnect between t h e asserted injury and the alleged fraud in this case is even sharper than i n Anza

. There, we viewed the poin t as important because the same p a rty—Natio nal Steel—had both engaged in the harmful conduct and committed the fraudul ent act. W e nevertheless found th e distinction between the relevant acts sufficient to defeat Idea l’s RICO claim. Here, the City’s theory of liab ilit y rests not just on sep a rate actio n s , but separat e actions carried out byseparate parti e s

. The City’s theory thus requires that we extend RICO liability to situations where the defendant’s fraud on the third party (the State ) has made it easier f o r a fourth party(the taxpayer) to cause harm to the plaintiff (th e City). Indeed, the fourth-part yta xpayers here only caused harm to th e City in t h e first pla c e if they d e cided not to pay taxes they were legally obligated to pay. Put simply, Hemi’s obli gation was to filethe Jenkins Act reports wit h the State, not the Cit y , and the City’s harm was di rect ly caused by the customers, not Hemi. We have never before stretched the causal chain of a RICO violati o n so far, and we decline to do so today. Seeid., at 460–46 1; cf. Associ

ated Gen. Contra ctors , supra, at 541, n. 46 (finding n o9 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt proximate cause intheantitrust context where the plaintiff’s “harm stems most directly fr om the conduct of persons who are not victims of the conspiracy”). One consideration we have high lighted as relevant to the RICO “direct rela tionship” requirementis whether better situa t ed plaintiffs woul d ha ve an incen t ive to sue. See Ho lmes
, supra, a t269–270. The State certainly is better situated than th e City to seek recovery from Hemi. And the State has an incentive to sue—the State imposes its own $2.75 per pack tax on ciga rettes possessed within the State, n e arly double what the City cha r ge s. N. Y. Ta x Law Ann. § 471(1) (Wes t Supp. 200 9). We do not opine on whether th e State cou l d bring a RICO action for any lost tax revenu e. Suffice it to say th at the Stat e would have concrete incentives to t r y. See Anza , supra, at 460 (“Idea l accuses the Anzas of defrauding the State of New Yorkout of a substantial amount of money. If the allegations are true, the State can be expected to pursue appropriat e remedies”). The dissen twould have RICO’s proximate cause requirement turn on foreseeability, rather than on the existence of a sufficiently “direct relationship” between the fraud and the harm. It would find that the City has satisfied that requirement because “th e harm is foreseeable; it is a consequence that Hemi intended, indeed desired; an d it falls well within the set of risks that Congre ss sought to prevent.” Pos t , at 6 (opinion of B RE Y E R , J.). If this line of reasoning sounds familiar, it should. It is precisely the argument lodged against the majority opinion in Anza

. There, the dissent crit i cized the majority’s v i ew for “pe r

mit[ting] a defendant to evad e liability for harms that are not only foreseeable, but the int e ndedconsequ e nc es of t h e defend ant’s unla w ful behavior.” 547 U. S., at 4 70 (T HOMAS , J ., concurring in part and dissenting in part). But the dis s ent there did not car r y the da y, and no on e has asked us to revisit Anza

.10 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt The concepts of direct r e lationship and foreseeability are of course two of the “many shapes [proximate cause] to ok at common law,” Ho l m es , su pra , at 268. Our precede n ts make clear that in the RICO context, the focus is on t h e directness of the relationship between the conduct and th e harm. Ind eed, Anzaan d Ho lmes never even mention th e concept of foreseeabilit y. B The City offers a number of responses. It first chal

lenges our characterization of the violation at issue. I n the City ’s v i ew, the vio l ation is not merely Hemi’s failure to file Jenkins Act information with the State, but a more general “sy s tematic sc heme to defraud the City of ta x revenue.” Brief for Responde nt 42. Having broadly defined the violation, th e City contends that i thas been directly ha rmed by reason of that system atic schem e

. Ibid

. But the Ci ty cannot escape the proximate cause requirement merely by alleging th at the frau dulent scheme embraced all those indi rectly harmed by the alleged conduct. Otherwise our RICO pro x imate cause precedent would become a mere pleading ru le. In Anza , for example, Ideal alleged that Nati onal’s sc heme “was to give National a competitive advanta g e overIdeal.” 547 U

. S., at 454– 455. But that allegation did not prevent the Court fro m concluding that Nation al’s fraud directly harmed only the State, not I d eal. As the Court e x plained, Ideal could not “circum v entthe proxi m ate-cause requirement simply by claiming that the defendant’s aim was to increase market share at a competitor’s expense.” Id ., at 460. 1

——————

1 Even if wewe re willing to look to Hemi’s intent, as the dissent sugg e sts we should, the Citywould far eno better

. Hemi’ s aim was not t o defr aud the C i ty(orthe Sta t e, for thatm a tter) of taxr e v e nue, but to sell more cigarettes. Hemi itself neither owed taxes nor was obliged t o collecta n d rem i t t h em

. This a l l s u gges t s t h a tHemi’s alleged fra u d wa s11 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt Our preced ent makes clear, moreover, that “the com

pensable in jury flowing from a [RI C O] violatio n .

. . ‘necessarily is th e harm cau s ed by [the] predicate a cts.’ ” Id., at 457 (quotin g Sedima, S. P. R. L. v. Imrex Co. , 473 U. S. 479, 497 (1 985)). In its RICO sta t ement, the City alleged that Hemi’s failure to f ile Jenkins Act reports constituted the predica t e act of m a il and wire fraud. Record A980

. The City went on to allege that th is predicate act “di r ectl y caused” its harm, id., a tA996, but that assertion is a lega l conclusion about proxi m ate c ause—indeed, the very legal conclusion before us. The only fraudulent conductalleged here is a violation of t h e Jenkins Act. See 541 F. 3d, at 459 (Winter, J., dissenting). Thus, the City must sho w that Hemi’s failure to file th e Jenkins Act reports with the State led directly to its injuries. This it cannot do. The Cityalso relies on Brid ge , 553 U. S. ___. Br idge reaffirmed the requirement t hat there must be “asufficiently dire ct relationship between the defendant’s wron gful conduct and the pla i ntiff’s injury.” Id ., at ___ (slip op., at 18). Th e case involved competing bidders at a county tax-lien auction. Because the liens were profitable even at the lowest possible b i d, multiple b i dders offered that low bid. (The bidding took the form of the percentage tax penalty the bidder would requi re the property owner to pay, so the lowest poss ible b i d was 0%.) To decide which bidder would be awarded the lien, the county devised a plan to allocate the liens “on a rotational basis.” Id ., a t ___ (s lip op.
, at 3) (inter nal quotati on mark s omitted). Butas we noted in that case, this created a “perverse incentive”: “Bid d e rs who, in addition to biddingthemselves,sen[t] agents to bid on their behalf [would] obtain a disproportionate share of liens.” Ibid

. The coun ty therefore

—————— aimed a tHem i ’ s c o mpetitor s , not the City

. But Anzateac hes that the competitors’ injuries insucha c a se ar e t oo atten u a ted to state a RI C O cla i m

.12 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt prohibited bidders from using such agents. Ibid

. A losing bid d er alleged that a competitor had defraude d the county by employing shadow bidders to secure a greater proportion of liens than it was due. We held that the bidder-plaintiff had met RICO’s causati o n requirement. Distinguishing that claim from the one at issue in Anza , we n o ted that the plaintiff’ s theory of causation in Bridgewas “straightfo rwar d”: Be cause of the zero-sum nature of the auction, and because the cou n ty awarded bids on arotational b a sis, each t i me a frau d-induced bid

was awa r de d, a particu l ar legitimate bidder was necessarily passed over. 553 U. S., at ___ (slip op., at 18). Th e losing bidders, moreover, “were the onlyparties injured by petitioners’ misrepresentations.” Ibid

. The county wa s not; it rec e ived the same revenue regard less of which bidder prevailed. The City’s theory in t h is case is anything b u t straightforward: Multiple steps, as we have detailed, separate the alleged fraud from the asserted inj u ry. And in contrast to Bridge
, wh ere there were “no i n dependent factors th at account[ed] for [the plaintiff’s] injury,” ibid
., here there certainly were: The City’s th eory of liabi lity rests on th e independent actions of third and even fourth parties. The City at various poi n ts during the proceedings below described its injury as the lost“opportunity t o tax” rathe r than “lost tax revenu e.” It is not clear th at there is a substantive distinction between the two descriptions. In any event, before this Court, the City’s ar gu ment turned on lost revenue, not alost op portunity to collect it. See, e.g. , Brief for Respondent i(“Counter-Question Presented[:] Does the Cit yof New Yorkhave standing under RICO beca use lost tax revenue constitutes a direct injur y to the City’s ‘business or pr operty’ in accor dwith the statute, 18 U. S. C. §19 64(c), and this Court’s authority?”); id ., at 40 (“[T]he City alleges that it has beeninjured (th e loss of tax revenues) by defe ndants’ RICO violations”).13 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt Indeed, in its entire brief on the merits, the City never uses the word “opport unity” (o r anything si milar) to describe its injury. Perhaps th e City artic u lated its argument in terms of the lost revenue itself to meet Hemi’s contention that a n injury to th e mere “opportuni tyt o collect” ta xes fell shor t of RICO’s injury to “ p roperty” r e quirement

. Brief fo r Petitioners 25 (“The opportunit yto collec ttaxes f r om those who di d owe the m

. . . fa lls within a cla ss of expectation interests thatdo not qualify as injury to business or property and therefore do not confer civil RICO standin g” (internal quotation m a rk s omitted)); see Clevel and v. UnitedStates , 531 U. S. 12, 15 (2000) (“It does not suffice

. . . that the object of the fraud may become property in the recipient’s hands; for purposes of the mail fraud sta t ute, the thing o b tained must be property in the hands of the victim”). That is not to say, however, that the City would fare an y better on the causation question had it framed its argument in terms of a lostopportunity. Hemi’s filing obligation would still be to the State, and any harm to the Ci ty would still be caused di rectly by the customers’ failure to pay their ta xes. See 541 F. 3d, at 461 (Winter, J., dissenting). What ever the Ci ty’s reasons for framin g its merits arguments as it has, we will not reformulate them for it

now. 2

——————

2 Th e dissen trec o g n izes th at its posi tionposes th e tr ou blin gspec ter of turning RICO into a tax collection sta t ut e. Post , at 11 –12 (opin i ono f B REYER , J.). The dissent’s answer looks largely to prosecution policy set fort h in t h e F e dera l Depa rt m e ntof Justi c e Guidelines, which are, of

c o u r se, n o t on lych an g e able, bu t h av en oa pplic abi litywh atev erto stat e or local go vernments. Under the dec i sionbelowan d th e dissen t ’ s position , RIC O c o u l d be u s ed as a taxc o llec t iondev i c ebasedsolely on the failure to file reports under the Jenkins Act, which itself provides
qu ite li mite d r e medies. See 15 U. S. C. §3 77 (pr o v i din g th at a v i ola t io n of the J e nkins Act ma y b e punis h ed a s a mis d emea nor with afine up to $1,00 0 an d i m pr ison men tforn omor eth ansixmon t h s ). An d th a t14 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of theCourt In a final effort to save its claim, the City has shifted course before this Court. Inits second amended complain t and RICO statement, the City relied s o lelyon H e mi’s failure to file Jenkins Actreports withthe S t ate to for m the basis of the predicate act mail and wire frauds. See Second Am ended Compl. ¶¶99, 101, 118, 125; Record A980–A982. Before t h is Court, however, the City contends that Hemi made affirmative misrepres e ntations to City residents, which, the Cityno w ar gues, c o mprise part of the RIC O predicate mail and wire frauds. See Brief fo r Respondent 42–43. Th e City’s cou n sel pressed the point at oral argument, asserting that the City’s injury was“caused by the seller’s misrepresentation, which encourages the purchasers not to pay ta x e s.” Tr. of Oral Ar g. 4 4

. The City, however, af firm atively disavowed below any reliance on misreprese ntations to form the predicate RICO violation. The allege d false statements, the City there stated, “are evidence of the scheme to defraud, but are not part of the fraud itself. .

. . [T]he s c heme to defraud woul d exist even absent the statements.” Record A980. The City reiterated the point: “The sche me consists of the interstate sale of cigarettes and the failureto file Jenkins Act reports indentifying those sales.” Ibid

. “Related to the fraud, but not a circu mstance ‘co n stitutin g’ the fraud, the defendants inform customers that [their] purchases will b e concealed, and also seek to convin ce their customers thatno taxes are owed by claiming, falsely, that the sales are ta x-free.” Id., at A982. Not only did the City disclaim any reliance upon misrepresentations to the cust omers to form the predicate acts under RICO, but the City m a de clear in its second amended complaint that its t w o RICO claims rested solel y on the J e n k ins Act violations as the predicate acts. Se e

—————— dev i c ewou l d be av ai lable n o t on lyto th e St ate, to wh ic hth e r e por t s
wer edue, but also to the Ci ty , to which Hemi owed no duty under th e Act and to whi c h it owed no t a xes

.15 Cite as: 55 9 U

. S. ____ (2010)

Opinion of theCourt
Second Amended Com p l. ¶¶ 118, 125. Beca use the City defined the predicate act before the Distric tCourtas Hemi’s failure to file the Jenkins Act rep o rts, and expressly disavowed reliance on the alleged misrepresentations themselves as predicate acts, we decline to consider Hemi’s alleged misstatements as p r edicate acts at this lat e stage. * * * It bears remembering what this case is about. It is about the RICO liability of a company for lost taxes it had no obligation to collect, remit, or pay, whi c h harmed a p a r t y t o w h o mi to w e dn o d u t y

. I ti s ab o u ti m p o s i n gs u c h liability to s ubstitute for or complement a governing body’s uncertain ability or desire to coll ect taxes directly fro m those who owe them. And it is about the fact that the liability comes with treble dama ges and attorney’s fee s attached. This Court has interpreted R I CO broadly, consistent with its ter ms, but we have also held that its reach is limited by the “requirement of a direct caus al connection” between the predicate wrong and the harm. Anza , 547 U. S., at 46 0. The City’s injuries here were n o t caused dire ctly b ythe allege d fraud, and thus were n o t caused “by reason of” it. The City, therefore, has no RICO claim. The judgm e nt of the Court of Ap peals for the Second Circuit is r e versed, and the case is remanded for furthe r proceedings consistent with this opinion. It is so orde red.

J USTICE S O T OMAYORtook no partin the con s ideration or decision of this case._________________

_________________ 1 Cite as: 55 9 U

. S. ____ (2010)

Opinion of G IN SB U R G , J. 

## SUPREME CO URT O FTHE UNI TED STATES

No. 08–9 69

HEMI GROUP, LLC AN D KAI GA CHUPIN,

PETITIONERS v. CITY OF NEW YORK, NEW YOR K

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Jan u a r y25, 2010]
J USTICE G IN S B UR G , concurring in part and co ncurring i n the judgme nt. As the Cou rt points ou t, this is a case “about the RIC O liability of a company for lost taxes it had no obligation to collect, remit, or pay. ” Ante , at 15. New York City ( o r City) cannot, consistent with the Commerce Clause, com

pel Hemi Group, an out-of-state seller, to collect a Cit y sales or use tax. See Quill Corp. v. NorthDakota , 5 04 U. S. 298, 301 (1992); National Bellas Hess , Inc. v. De

partm ent of Revenue of Ill. , 386U. S. 753, 758 (1967 ). Unable to impose its t a x on Hemi Group, or to require Hemi Grou p to collect its tax, Ne w York Cit yis attempting to use the Rack eteer I n fluenced and Corrupt Act (RICO), 18 U. S. C. §1964(c), in combination with the Jenkins Act, 15 U. S. C. §§375–378, to overcome that disability. H e mi Group committed fraud only insofar as it violated the Jenkins Act by failing to report the names and ad

dresses of New York purchasers to New York State. The r e is no othergrounding for the City’s charge that it was defrauded by Hemi Group. “Absent the Jenkins Act, [H emi Gro u p] would have owed no duty to disclose [its ] sales to an yone, and [its] failure to disclos e could not conceivably be deem edfraud of a n y kind.” City of N e w York v. Sm okes-Spiri t s

. com, Inc. , 541 F. 3d 425, 460 (CA22 HEMI GROU P, LLC v. CITY OF NEW Y O RK

Opinion of G IN SB U R G , J., 2008) (Winter, J., dissenting in part and concurring i n part). Because “the alleged fraud is bas ed on violations of

. . . the Jenkins Act, .

. . the nature and consequences of t h e fraud are [properly] determined sol e ly by the s c ope of that Act.” Id., at 459. But “conspic u ously absent from the City’s pleadings is any claim b r ought pu rsuant to the Jenkins Act itself, rather than RICO, seeking enforcement of the Jenkins Act.” Id., at 460. T h e City thus effectively admits that its claim is outsid e thescope of the very stat

ute on which it builds i t s RICO sui t

. I resist reading RICO to allow the City to end-run it s lack of auth o rity to collect to bacco taxes from Hemi Grou p or to reshape the “quite limited remedies” C o ngress has provided fo r violations of the Jenk ins Act, see ante , at13 , n. 2. Without subscribing to the broader range of th e Court’s proximate cause analysis, I join the Court’s opi n

ion to the extent it is consistent with the above-stated view, and I concur in th e Court’s ju dgment._________________

_________________ 1 Cite as: 55 9 U

. S. ____ (2010)

B REYER , J., diss enting 

## SUPREME CO URT O FTHE UNI TED STATES

No. 08–9 69

HEMI GROUP, LLC AN D KAI GA CHUPIN,

PETITIONERS v. CITY OF NEW YORK, NEW YOR K

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Jan u a r y25, 2010]
J USTICE B REYER , wit hwhom J USTICE S T EVEN Sand J USTICE K E NNEDY join, dissenting. In my view, the H e mi Group’s failure to provide New York State with the na mes and addresses of its New York City cigare tte custom ers proxim ately caused New Yor k City to lose tobacco t a x re venue. Idissen tfrom the Court’s cont rary holding.
I A Although the ultimatelegal issu eis a simpl e one, the statutory framework within which it arises is complex. As the majority points out, ante , at 3, the Rack eteer Influenced and Corrupt Or ganizations Act (RIC O), 18 U. S. C. §§1961–196 8, provides a private cause of action (and treble damages) to “[a]ny pers on injured in” that person’s “business o rproperty byreason of ” conductth at involves a “pattern of racketeering acti vity. ” §§1964(c) (emphasis added), 1962. RICO defines “racketeering activity” to include violations of various predicate crimi nal statutes including mail and wire fraud. §1 961(1). Th e “pattern o f rack eteering” at issue here consis ts of repeated instances of mail fraud, which in turn consist largely of violations of the federal Jenkins Act, 15 U. S. C. §§375–378

. That Ac t2 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting seeks to help States col l ect tobacco taxes by requiring outof-state cigarette sellers, such as Hemi, to file reports with state tobacco tax ad ministrators identifying the names and addresses of in-sta te customers and the a m ounts they purchased. The violations consistof Hemi’s intentional failure to do so. As the maj o rity points out, we m u st assume for p r esent purposes that an intentional failure to file Jenkins Act reports cou n ts as mail fraud (at l e ast where the failure is part of a scheme that includes use of the mails). Ante , at 4. Lower courts hav e sometimes so held. See United States v. Melvin , 54 4 F. 2d 76 7, 773–777 (CA5 197 7); United Sta t esv. B rew e r , 528 F. 2d 492, 497–498 (CA4 1975). The Court of Appeals here so held. City of N e w Yorkv. Sm okes-Spiri t s

. com, Inc. , 541 F. 3d 425, 446 (CA2 2008). And no one has challenged that holding. We must a l so assume that Hem i ’s “intentiona[l] conceal[ment]” of the name/address/purchase information, Second Am. Compl. ¶¶103, 104, is the legal equivalent of an affirmative representation that Hemi had no New York City custo m ers. See Restatement (Second) of Torts §5 51, p. 119 (197 6) (a person “who fail s to disclose .

. . a fact” may be “subject to .

. . liability” as if “he had represented the nonexistence of the matte r that he has f a iled to dis

close”); cf. Stewartv. Wyoming Cattle Ran c he Co. , 12 8 U. S. 383, 388 (1888) (concealmentor suppression ofmaterial fact equivalent to a false representation). On these assumptions, the question bef o re u s is whether New York City’s loss of tax reve nues constitutes an injury to it s “business or property by reason of” Hemi’s Jenkins Act misrepresentations.
B The case arises as a r e sult of the District C o urt’s dismissal of New York Cit y ’s RI CO co mplaint. F e d. Rule Civ. Proc. 12(b)(6). Hence we must answer the question in3 Cite as: 55 9 U

. S. ____ (2010)

B REYER , J., diss enting light of the facts alleg e d, taking as true the facts pleaded in the complaint (along with the “RICO s t at ement” submitted pursuant to the District Court’s rul e ). Bridgev. Phoenix Bond & Indemnity Co. , 553 U. S. ___, ___, n. 1 (2008) (slip op., at 1, n. 1). Those facts (as I interpret them) include the following:

1. New York State (or State) an d New York City (or City) both impose tobacco ta xes on New York cigar e tte buyers. Second Am. Compl. ¶37. 2. Both City and Sta t e normally collect the taxes from in-state cigarette sellers, who, in turn, char ge retail customers. Id., ¶¶4, 6. 3. Hemi, an out-of-state company, sells cigarettes over the Internet to in-state buyers at prices that are lower than in-state cigarette prices. Th e difference in price is almost entirely att r ibutable to the fact tha tHemi’s prices do n o t include any char ge for New Yo rk ta xes. Hemi advertises its cigarettes as “t ax free” and often adds that it “does notreport any sales activity to any State taxin gauthority.” Id., ¶¶2, 6, 108b (internal quotation marks omit ted; emphasis deleted). 4. New York State normally receives Jenkins Act repor t s from out-of-state seller s

. It is contractually o b liged to pass the information on to New Yo rk Cit y(a nd I assume it nor m ally does so). Id., ¶¶ 8–9, 11, 54– 57. 5. When it receives Jenkins-Act-type information, Ne w York City writes letters to resident customers asking them to pay the tobacco tax theyowe. As a result, New York City collects about 40% of the tax due. (By doing so, in 2005 the City obtained $400,000 out of $ 1 million owed.) Id., ¶¶58–59. 6. Hemi has consistently and intentionally failed to file Jenkins Actreports in order to pre v ent both S t ate and City from c o llecting the tobacco t a xes that Hemi’s instate custo m ers owe and wh ich otherwise many of those customers would pay. Id., ¶¶13, 24, 58.4 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting
II A The majority asks whet her New York Cit ystat ed a valid cause of action in allegi ng that it lost tobacco tax revenue “by reason of” Hemi’s unlawful misrepresentations. The facts just s e t forth ma ke clear th at we mustanswer th at question aff i rmatively. For one thing, no one denies that Hemi’s misrepresentation was a “but-for” condition of Ne w York City ’s loss. In the absence of the misrepr e sentation, i.e. , had Hemi told N e w York S t ate the tru th about it s New York City cus t omers, New York Cit ywould have written lett ers to the purchasers and obtained a significant share of the tobacco taxes buyers owed. For another thing, New York Cit y ’s losses are “reasonably foreseeable” resul t s of the misrepresentation. It is foreseeable that, without the name/address/purcha s e information
, New York City would not be ab le to write successful dunning letters, and it is foreseeable that, with that information, it would be able to write successful dunning letters. Indeed, that is a natural inference from
, among other things, the complaint ’ s assertion that Hem i advertised that it did not “report” sales information to “State ta xi ng authorit [ies].” See, e.g., Smithv. Bolles , 1 32 U. S. 125, 130 (188 9) (for causation purposes, “ ‘those results are proximate which the wrong-do er from hi s position m u st have contemplated as the probable consequence of his fraud or breach of contract’ ” (qu o ting Cra t e r
v. Binninger , 33 N. J. L. 513, 518 (Ct. Errors and Appea l s 1869)); see also W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Pros ser and Keeton on La w of Torts §110, p. 76 7 (5th ed. 1984) (hereinafter Pro sser and Keeton); 3 S. Speiser, C. Krause, & A. Gans, The American Law of Torts §11:3, p. 68 (2003) (“By far the most treate dand mos t discussed aspect of the law of pro x imate or l e gal cause i s the so-called doctrine of foreseeability”). But cf. ante, at 9 (“The disse nt woul d have RI CO’s pro x im a t e cause r e

­Cite as: 55 9 U

. S. ____ (2010) 5

B REYER , J., diss enting quirement turn on foreseeability . . .”). Further, Hemi misrepresented the relevant facts in order to bring about New York City ’s relevant loss. It knew the loss would occur; it in tended the loss to occur ; one might even say it desir e d the loss to occur. It is difficult to find common-law cases denying liability for a wrongdoer’s intended conse quenc es, particularly wher e those consequences ar e also fores eeable. Cf. Bridge, su

pra , at ___–___ (slip op.
, at 9–10) (“[S]uppose an enterpris e that wants to get rid of rival businesses mails representations about them to the i r customer s and suppl i ers, but not to the rivals themselves. If th e rival bus inesses los e money as a result of the misrepresentations, it would certainly seem that they were inju red in their business ‘by reason of’ a patternof mail fraud .

. .”); N. M. ex rel. Cale b

v. Daniel E

. , 2008 UT 1, ¶7, n. 3, 175 P. 3d 5 66, 569, n. 3 (“[I]f an un skilled marksman were to shoot asingle bul l e t at a distant individual with the intent of killi ng her, that individual’s injury or death may not be the natural an d probable consequence of the [shooter’s] act[,]

. . . [but] the harm would not be a naccident because th e shooter intended the harm, even though the lik elih o o d of succe ss was improbable”); 1 F. Harper & F. James, The La w of Torts, §7 .13, p. 584 (1956) (explaining that, ordinarily, “all intended consequences” of an intentional act “a re proximate”). In addition, New York City’s reven u e loss falls squarely within the bounds of the kinds of harms tha tthe Jenki n s Act (essentially the predicate st atute) seek s to prevent. The statute is entitled “An Ac t To assist States in collect

ing sales a n d use taxes on cigarettes.” 63 Stat. 884. I have no reason to believe the Act intends any different result withrespect to collecti on of a city’s tobacco tax assessed u n der the authority of state law. See N. Y. Un

consol. Law Ann. §943 6(1) (West Supp. 2009) (authorizing cities with over one m illioninhab itants to impose thei r6 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting own cigarette taxes). The Restatement (Second) of Tort s explains that where “a statute requires information to be furnished .

. . for the protection of a particular class of persons, one who makes a fra u dulent misrepresentation . . . is subject to liability to the persons for pecuniary loss

. . . in a transactionof the kind in whichthe statute is intended to protect them .” §536, at 77 (1976).
See also §5 36, Appendix (citing supporting cases in the Reporter’s Note). Finally, we have acknowledg ed that “Congress mode le d §1964(c) onthe civil-a ction provision of the f e deral antitrust la ws,” and we ha ve theref ore look ed to those laws as an interpretive aid in RICO cases

. Ho lmesv. Secu riti e s Investor Protection Corporation , 503 U. S. 2 58, 267, 268 (1992). I can find no antitrust a nalogy that suggests any lack of cau s ation here, nor has the majority referred t o any such analogical antitrust circu mstance. The upshot is that the harm is foreseeable; it is a consequence that Hemi intended, indeed desired; and it falls well within the set of risks that Congress sought to pr event. Neith e r antitrust analogy nor any statu t ory policy of which I am aware precludes a finding of “proximate cause.” I re cognize tha tsome of our opinions may be rea d to suggest that the words “by rea s on of” in RICO do not perfectly track commo n -law notions of proximate cause. See, e.g. , Br idge , 553 U. S., at ___–___ (slip op.
, at 14–16). But where so much basic common law argues in favor of such a finding, how can the Court avoid that conclusion here?
B The majority bases it s contrar y conclusion upon thre e special circumstances and its reading of two of this Court’s prior cases. In my view, none of the three circumstance s7 Cite as: 55 9 U

. S. ____ (2010)

B REYER , J., diss enting precludes finding causation (ind eed two are not even relevant to the causation issue)

. Nor can I find the two prior cases controlling. The three circumstan ces are the following: First, the majority seems to arg u e that th e intervening volunta r y acts of third parties, namely, the customers’ own independent failures to pay the tax, cuts the causal chain. Ante , at 8 (“[T]he City’s harm was directly ca used by the customers, not Hemi”); see Sauger ties Bankv. Dela war e& Hudson Co. , 236 N. Y. 425, 430, 141 N. E. 904, 905 (1923) (third party’s forgery of a b ill of lading an intervening cause); Prosser and Keeton §44, at 313–314 (collecting

cases on intervening intentional orcriminal ac ts). But an intervening third-pa rt yact, e v en if criminal, d oes not cut a causal chain where th e intervening act is foreseeable a n d the defendant’s condu ct incr eas e sthe risk of its occurrence. See Lilliev. Thompson , 332 U. S. 459, 462 (194 7) (per curiam ); Ho ranv. Wa ter t own , 217 Mass. 185, 186, 104 N. E. 464, 465 (1914); see also R e statement (Second) o f Torts §435A, at 454 (1963–1964) (intentional tortfeasor liable for intended ha rm “ex c ept where the harm results from an out s ide force t h e riskof w h ich is not i n creased by the defendant’s ac t”). Hemi’s a ct here didincrease the risk tha tN e w York Ci ty would n o t be paid; and not only was the ris kforeseeable, but He mi’s advert ising strongly suggests that Hemi actually kn ew nonreporting wou l d likely bring about this very harm. The majority claims that “directne ss,” rather than foreseeabil i ty, should be our guide in assessin gproximate cause, and that the la ck of a “ d ir ect” relationship in this case precludes a finding of proxi m ate causation. Ante , a t 9–10. But courts used this co ncept of directness in tort law to expand liability (for direct consequences) beyon d what was foreseeable, not to el im inate liab ili ty for what was foreseeable. Thus, under the “directness” theory of proximate causation, there is liab ility for both “all ‘direct’8 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting (or ‘direc tly tra ceable’) consequences and those indirect consequenc e sthat a reforesee abl e .” Prosser and Keeton §42, at 273 (emphasis added); see also id., §43, at 294, and

n. 17 (citing Nun a n v. Benn ett , 184 Ky. 59 1, 212 S. W. 570 (1919)). I do n o t read this Court’s opinions in Ho lmesor Anzav. Ide a l Steel Su pply Corp.
, 547 U. S. 4 51 (2006), to invoke anything other than this traditiona l understanding. Second, the majority corre ctly points outthat Hemi misrepresented the situation to the State, not to t h e City—a cir c u mstance which, the majority believes, significantly sepa rates misrepresentation from harm. Ante , at 8. But how could that be so? New York State signed a contract p r omising to relay relevantinformation to the City. In respect to that relevant information, the State is a conduit, indeed roughly analogou s to a post al employee. This Court has recognized sp ecifically that “under the common la w a fraud may be established when the defendant has made use of a third party to reach the target of the fraud.” Tanner v. United Sta t es , 483 U. S. 107, 129 (1987). The treatises s a y the sam e

. See, e.g., Prosser an d Keeton §107, at 743–745; 26 C. J. S., Fraud §47, p. 1121 (1921) (collecting cases); see als oProsser, M i srepresentation and Third Parties, 19 Vand. L. Rev. 231, 240–24 1, and nn. 56–59, 62–64 (1966) (collecting cases). This Court has never suggested the contrary, namely, t hat a defen

dant is not liable for (foreseeable) harm (in t entionally) caused to the target of a scheme to defraud si mply becau s e the misrepresentation was transm i tted via a third (or even a fourth or fifth) party. Cf. Terry, Intent to Defraud, 2 5Yale L. J. 87, 93 (1915) (“When a representation is communicated through on e person to another in such circu mstances that it can be deemed to be directed to the latter, it makes no difference through h o w many persons or by how circuit ous a route it reaches the latter . . .”). Third, the majority places great weight upon its view9 Cite as: 55 9 U

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that Hemi tried to defraud the St ate, not the City. An te, at 8–9. Hemi, howev e r, sought to defraud both. Third Amended RICO Statement ¶d (explaining that “[e]ver y other State or localgovernmentthat imposes a use tax on cigarettes and whose resident s purchase cigarettes” fro m Hemi is a vi ctim of its s c heme to defraud). He mi sought to prevent the State from collectingstate taxes; and it sought to prevent t h e City f r om collecti ng citytaxes. Here we ar e concerned only withth e latter. In respect to t h e latter, th e State was an information conduit. The fact that s t ate taxes were also involved is beside t h e point. The two S u preme Court cases t o which th e majorit y refers involve significantly different causal ci rcumstance s

. Ante, at 5–8. The predicate acts in Ho lmes—the defendant’s acts that led to the plaintiff’s harm

—consisted of securities frauds. The defendant misrepresented the prospects of one company and misled the investing public into falsely believing that it could readily buy and sell the stockof another. Wh en the truth came out
, stockprices fell, investors (specifically, st ockb rokers) lost money, and since the stockbro kers coul d not pay certai ncreditors, those creditors also lost money. 503 U. S., at 262–26 3. Claiming subrogation to stand inthe shoes of the credi

tors, the Securities Investor Protection Corporation sued. Id., at 270–271. Since the creditors had not bought the securities, there was little r e ason to believe the defendant intended their harm. An d the securities statutes seek, first a n d foremost, to protecti nvestors, n o t credito rs of those who sell stock to those inves t ors. The latter harm (a brok er’s creditor’s loss) differs in kind from the harm that the “p redicate act” statute pri m arily seeks to av oid and that its violation would ordi narily caus e (namely, investors’ stock-relate d monetary losses). As Part II–A, supra, points out, neither of these circumstances is present here. In Anza , the plaintiff was a business competitor of the10 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting
defendants. The plaintiff claimed that th e defendants falsely told state officials thatthey did not owe sales tax. The plaintiff added tha t , had the defendants paid the ta x they owed, the defen d ants would have had less mon e y available to run their business, and the pl aintiff consequently would have b een able to compete a g ainst them more effectively. 547 U. S., at 454, 457–458. Again, in Anzathe kind of harm that the plaintiff alleged is not the kind of harm that the tax s t atutes primarily seektoprevent. Rather, it alleged a ki nd of har m (competitiv e injury) t hat tax vio l ations do not ordinarilycause and which ordinarily flows from the regular operation of a co mpetitive mark etplace. Thus, inboth H o lmes and Anza, unlik e the present case, plaintiffs alleged special harm, neither squ a rely within the class of harms a t which the relevant statutes we r e directed, nor of a kind that typical violators would intend or even fore see. Bridge, whi c h the majority seeks to distinguish, ante, at 11–12, is a more closely analogous case. Th e defendants in that cas e directed agents to misrepresent to a cou n ty that they q ualified as indepe ndent bidders at a county-ru n property au ction. They consequently partici pated in the auction. And the plai ntiffs, facing additiona lbidders, lost some of the property that the yotherwise would ha ve won—all to their financial disadvantage. 553 U. S., a t

___–_ __ (sli p op., at 3–4). The harm was fo reseeable ; i t was intended; and it was precisely the k i nd of harm that the county’s bidding rules sought to pre v ent. Thus thi s Court held that the harm was “a foreseeable and natura l consequenc e of [the defendants’] scheme.” Id
., at ___ (sli p op., at 18). In sum, the majority recognizes that “[p]roxi mate cause for RICO purposes .

. . should be evaluated in light of its common la w foundations,” ante , at 6, but those f o undations do not support t h e majority’s view. M o reover, the majority’s rationale would free from RICO liability defen­11 Cite as: 55 9 U

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B REYER , J., diss enting
dants who would appear to fall within its intended scope. Consider, for example, a group of defendants who use a marketing f i rm (in RIC O terms, an “enterprise”) to perpetrate a variation on a“pump and dump” scheme. See, e.g., United S t a t es v. Sal m onese , 352 F. 3d 60 8, 612 (CA2 2003). They deliberately and repe atedly make egregiously fraudulent misrepresentations to inflate the price of securities that, unbeknownst to invest ors, they own. After th e stock price rises, the defendants sell at an artificial profit.When the fraud is revealed, the price crashes, to the investors’ detrim e nt. Suppo s e the defendants have intentionally spoken directlyonly to intermediaries who simp ly repe a ted th e information to poten t ial investors, and have not had any contact wi th the investors themselves. Under the majority’s reasoning, these defendants apparently di d not proximately cause the investors’ losses and are not liable underRICO.
III If there is c ausation, we must decide whether, for RICO purposes, the City’s loss of tax revenue is “ ‘business or property’ u n der 18 U. S. C. §1964(c).” Ante, a t5 (ackno wledging, but not reachin g , this seco nd issue). The question has ledto c o ncern among the lo wer courts. Some fear that an affirmative answer would tu rn RICO into a tax collection statute, permitting States to bring RICO actions an d recover treble damages for be havior that a m ounts to no more than a failure to pay ta xes due. See, e.g

. , Michigan, Dep t . of Tr easury, Rev e nue Div. v. Fawaz , No. 86–1809, 1988 WL 4 4736, *2 (CA6 1988) (holding that tax revenue is not RICO “p roperty” lest district courts be come “collec

tion agencies for unpaid state taxes”); Illinois Dept. of Revenuev. Phillips , 77 1 F. 2d 312, 316, 312 (CA7 1985) (holding, “reluctantly, ” that“a state’s Department of Revenue may file suit in fe deral court for tre ble damages under [RICO] against a retailer who files fra u dulent state12 HEMI GROU P, LLC v. CITY OF NEW Y O RK

B REYER , J., diss enting sales tax returns”). In a related context, howeve r, the Departmen t of Justice has taken s t eps to avoi d the “ t ax c o llection agency” p r oblem without reading a ll tax-relat e d frauds o u t of similar federal criminal statutes. The Department’s prosecution guidelines require pro s ecutors co nsidering a tax- related mail fraud or wire fraud or bank fraud prosecution (or a related RICO prosecution) to obt a in approval from high

level Department officials. And those guidel ines specify that the De partment will grant that approvalonly where there is at issue “a large fraud loss or a substantial pattern of conduct” a n d will notdo so, absent “unusual circumstan ces,” in cases involving simply “one person’s tax liability.” Dept. of Justice, United State s Attorneys ’ Manual §6–4.210(A) (2007), online at http://www.justice. gov/u s a o / e ousa/f oia_r e ading

_r o om/usam/t i tle6/4mt ax.ht m (as visited Jan. 20, 2010, and ava ilable in Clerk of Court’s case file); s ee als o §6– 4 .210(B) (explaining that the Department “will not authorize the use of mail, wire or bank fraud charges to convert routin e tax pros ecutions into RICO . . . ca ses”). This case involves an extensive pattern of fraudulent conduct, large revenu e loss es, a n d many different unrelated potential taxpay ers. The Departmen t’s guidelineswould appear to authorize prosecution in these circumstances. And limiting my consideration to these circumstances, I would find that this RICO compl a int asserts a valid harm to “business or property.” I need not and do not express a view as to how orwhether RICO’s ci vil action provisions appl y to simpler instances of individual tax liability. This conclusion is virt ually compelled by Pasquantinov. United Sta t es , 544 U. S. 349 (2005)
, a case that we decided only five ye ars ago. W e there pointed out tha tthe righ t t o uncollected taxes is an “entitle men tto collect money . . . , the possess ion of which is ‘somet hing of val u e.’ ” Id., at13 Cite as: 55 9 U

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B REYER , J., diss enting 355 (quoting McNallyv. Uni t ed S t ates , 483 U. S. 350, 3 58 (1987)). Su ch an entitlement “has long been thought to b e a species of property. ” 544 U. S., at 356 (citing 3 W. Blackstone, Commentaries on the Laws of En gland 153–155 (1768)). And “fraud at common la w included a scheme t o deprive a victim of his entitlemen t to money. ” 544 U. S.
, at 356. We observed that tax evasion “inflict[s] an economic injury no less th an” the “em b ezzle[ment] [of] funds from the .

. . treasury.” Ibid. An d we consequently held that “Cana da’s right to uncollected excise taxes on the liquor petitioners imp o rted into Canada” is “ ‘p roperty ’ ” within the terms of the mail fraud statute. Id., at 355. Hemi points in reply t o our decision in Ha wa iiv. St a n

dard Oil Co. of Cal. , 4 05 U. S. 25 1 (1972). But that ca se involved not a loss of tax reven u es, but “injury to th e general economy of a State”—insofar as it was threatened by violations of antitru st law. Id., at 260. Hawaii’s interest, both more general and de riva tive of harm to individual businesses, differs significantly from the particular t a x loss at issu e in Pasquantino and directly at issue here. We have p r eviously made clear that the compensable injury for RICO purposes is the harm caused by the predicate acts. See generally Sedim a, S. P. R. L. v. Imrex Co., 473 U. S. 479, 495–496 (1985); cf. Cl evela n dv. United Sta t es , 531 U. S. 12, 25 (2000). I can find no convincing reason in the context of this cas e to distin guish in th e circumstan ces present here between “propert y” as used i n the mail fr aud statute and “property” as used in RIC O

. Hence, I would postpone for another day the question whether RICO covers instances where little more than the liability of an individual taxpayer is at issue. And I would find in the respondent’s favor here. With respect, I dissent.