Document: 547 U.S. 451 (2006) ANZA et al. v. IDEAL STEEL SUPPLY CORP. No. 04-433. Supreme Court of United States. Argued March 27, 2006. Decided June 5, *453 David C. Frederick argued the cause for petitioners. With him on briefs were Richard L. Huffman, William M. Brodsky, and V. Rivkin. Kevin P. Roddy filed a brief respondent.[*] JUSTICE KENNEDY delivered opinion Court. The Racketeer Influenced Corrupt Organizations Act (RICO), 18 §§ 1961-1968 (2000 ed. Supp. III), prohibits certain conduct involving "pattern racketeering activity." § 1962 ed.). One RICO's enforcement mechanisms is private right action, available to "[a]ny person injured in his business or property by reason violation" substantive restrictions. 1964(c). In Holmes Securities Investor Protection Corporation, 503 258, 268 (1992), this held that plaintiff may sue under 1964(c) only if alleged RICO violation was proximate plaintiff's injury. instant case requires us apply principles discussed dispute between two competing businesses. I Because arises from motion dismiss, we accept as true factual allegations amended complaint. See Leatherman Tarrant County Narcotics Intelligence Coordination Unit, 507 163, 164 (1993). Respondent Ideal Steel Supply Corporation (Ideal) sells steel mill products along with related supplies services. It operates store locations New York, one Queens other Bronx. Petitioner National Supply, *454 Inc. (National), owned petitioners Joseph Vincent Anza, Ideal's principal competitor. offers similar array services, it, too, sued States District Southern York. claimed engaged an unlawful scheme aimed at "gain[ing] sales market share expense." App. 7. According Ideal, adopted practice failing charge requisite York tax cashpaying customers, even when conducting transactions not exempt state law. This allowed reduce its prices without affecting profit margin. Petitioners allegedly submitted fraudulent returns State Department Taxation Finance effort conceal their conduct. complaint contains, relevant here, claims. claims assert petitioners, submitting returns, committed various acts mail fraud (when they sent mail) wire them electronically). 1341, 1343 ed., III). Mail are forms "racketeering activity" purposes RICO. 1961(1)(B). Petitioners' constituted activity," see 1961(5) ed.), because ongoing regular basis. asserts first action Anza violated 1962(c), which makes it "any employed associated any enterprise in, activities affect, interstate foreign commerce, participate, directly indirectly, such enterprise's affairs through pattern activity collection debt." states Anzas' goal, *455 achieved, give competitive advantage over Ideal. second asserted against all three alleges 1962(a), who has received income derived "to use invest" "in acquisition interest establishment operation of," commerce. As described complaint, used funds generated open National's Bronx location. opening new facility caused lose "significant share." 18. moved dismiss Federal Rules Civil Procedure 12(b)(6) 9(b). granted Rule motion, holding failed claim upon relief could be granted. court began proposition predicated fraud, must have relied defendant's misrepresentations. having petitioners' false concluded go forward appealed, Appeals Second Circuit vacated Court's judgment. 373 F.3d 251 (2004). Addressing 1962(c) claim, where "that intended did defendant plaintiff, adequately pleads cause, standing pursue civil claim." Id., 263. case, explained, "even depended communications directed third party rather than plaintiff." Ibid. reached same conclusion respect 1962(a) claim. reasoned *456 pleaded injury investment proceeds, "as distinct traceable simply predicate alone enterprise." 264. We certiorari. 546 1029 (2005). II Our analysis beginsand, will become evident, largely endswith Holmes. That arose (SIPC), corporation duty reimburse customers registered broker-dealers became unable meet financial obligations. SIPC petitioner, Robert Holmes, conspired others manipulate stock prices. When detected plummeted, "decline [two] broker-dealers' difficulties resulting eventual liquidation SIPC's advance nearly $13 million cover customers' claims." U.S., 262, several theories, including participated do so 1962(d). maintain role scheme. decision careful interpretation 1964(c), provides persons "by of" violation. recognized phrase read broadly require merely "but for" 265-266. rejected reading, however, noting "unlikelihood Congress meant allow factually plaintiffs recover." 266. *457 Proper required consideration statutory history, revealed "Congress modeled civil-action provision federal anti-trust laws, 4 Clayton Act." 267. Associated Gen. Contractors Cal., Carpenters, 459 519 (1983), "a showing `but for' injury, but well." supra, (citing Contractors, 534). reasoning, noted "applies just readily 1964(c)." 268. turned common-law foundations proximate-cause requirement, specifically "demand some direct relation injurious alleged." subrogated rights aggrieved satisfy requirement directness. deficiency, "the link too remote manipulation harm, being purely contingent harm suffered broker-dealers." 271. Applying present conclude cannot based 1962(c). Section above, forbids participating activity. indicated compensable flowing "necessarily sufficiently constitute pattern, essence commission those connection Sedima, S. R. Imrex Co., 473 479, 497 (1985). theory harmed defrauding authority using *458 proceeds offer lower designed attract more customers. Anzas conducted fraud. victim defrauded lost revenue result. proper referent State. To sure, own harms applicable tax. harms, set actions (offering prices) entirely (defrauding State). attenuation different source violations linked inability Nevertheless, absence causation equally clear both cases. confirmed considering directness requirement's underlying premises. 269-270. motivating principle difficulty can arise attempts ascertain damages action. id., 269 ("[T]he less is, difficult becomes amount attributable violation, other, independent, factors"). illustrative. loss decreased National, lowered number reasons unconnected cash inflow additional would justify smaller Its lowering *459 no sense defraud authority. Likewise, fact company commits does mean prices; anywhere asset research development dividend payouts. Cf. 271 ("The pay bills, intervening insolvency connects conspirators' losses nonpurchasing general creditors"). There addition, discontinuity resulted factors Businesses gain many reasons, complex assessment establish what portion product 272-273 ("If sue, district need determine extent collect result conspiracy manipulate, opposed to, say, poor practices failures anticipate developments markets"). attenuated thus implicates fundamental concerns expressed Notwithstanding lack appreciable risk duplicative recoveries, another inquiry, 269, these help illustrate why Further illustrating point speculative nature proceedings follow permitted A begin calculating price drop next calculate part drop. *460 element prevent types intricate, uncertain inquiries overrunning litigation. particular resonance applied brought economic competitors, which, left unchecked, blur line antitrust laws. causal especially warranted immediate victims expected vindicate laws pursuing 269-270 ("[D]irectly generally counted law attorneys general, problems attendant suits remotely"). Again, instructive. accuses out substantial money. If true, appropriate remedies. adjudication State's claims, moreover, relatively straightforward; while facts due practices, considerably easier make initial calculation how much withheld broaden universe actionable permit parties been indirectly. contrary conclusion, apparently reasoning sought immaterial whether took indirect route accomplish goal. F.3d, rationale accord circumvent claiming aim increase competitor's expense. U. S., 537 ("We also satisfied allegation improper motive *461. . panacea enable withstand dismiss"). evaluates causation, central question ask led injuries. answer no. hold causation. alternatively hold, granting unless demonstrates They argue interpreted light principles, common prove reliance. articulated occasion address reliance required. 275-276. III 1962(a). provided Bronx, attracted otherwise purchased contend should function identically (Petitioners plead proximately alleging corporate reinvested profits back into itself," Brief 20, n. argument developed, decline it.) like *462 likewise cognizable "relation forth prohibitions, least debatable analyzed identical fashion purposes. 264, consider benefit Appeals' analysis, particularly given devoted attention therefore vacate judgment On remand, injuries asserts. * reversed part. remanded further consistent opinion. ordered. SCALIA, concurring. join note inconceivable issue here within zone interests protected perpetrated 286-290 (1992) (Scalia, J., concurring judgment). *463 THOMAS, dissenting today limits lawsuits (RICO Act), 1961 seq. adopting supported neither nor our principally relies. stringent proximate-causation succeeds precluding recovery cases that, one, nothing organized crime, target statute. However, approach eliminates whose precisely remedy authorization suits. frustration congressional intent broad language confer respectfully dissent Part provision, permits Act's restrictions, plainly covers lawsuit respondent. business, 1962(c).[1] 12-17. *464 show "not term "`proximate cause' label generically judicial tools limit person's responsibility consequences acts." These reflect "`ideas justice demands, administratively possible convenient.'" (quoting W. Keeton, D. Dobbs, & Owen, Prosser Keeton Law Torts 41, p. 264 (5th 1984) (hereinafter Keeton)). Invoking considerations, "some Today applies formulation "attenuated relationship" "implicates Holmes" "absence cases." Ante, 459, 458. But determination relies "directness" explained complained misfortunes visited said stand distance 268-269. sense. disabled meeting obligations Accordingly, had broker-dealers. attempted purchase manipulated securities. *465 conduct, conspirators insofar wherewithal 271.[2] Here, contrast, York's respondent's damages; rather, conductnamely, underpayment taxthat undercut thereby take away business. Indeed, acknowledgment there contrast ante, effectively concession indirect, ("[R]ecognizing indirectly force courts adopt complicated rules apportioning among removed levels violative acts, obviate multiple recoveries"). mere preclude victim. bar recovery. nonetheless contends respondent demonstrate cause. relying observation "`[t]he *466 factors.'" 458 turn, citing (1983)). hard failure success. 273-274. "ascertain action." ascertaining misguided. General ascertain. 269; 542. converse classified determining causation.[3] Proximate certainty damages, he seeks fairly defendant, requirements tort.[4] Restatement *467 (Second) 912 (1977) (certainty damages); 2 430-431 (1963-1964) (proximate causation). recover, connected tort moral practical mankind [will] recognize domain morals," Sutherland 18, specific pecuniary advantages, "would resulted, and, therefore, act prevented them," 106-107. dealt primarily former showing. discussion union's "highly speculative" focused proving precise tenuous character relationship Union's injury." 545. clear: underpaid tax, permitting undercharge inflicting expresses concernwhether actual "with sufficient certainty," 106, 107, recoveryis before worth overstates proof faced case. Certainly damage tort, external conditions. 130, 1014-1015, nn. 92-99 (gathering authorizing liability torts "depriv[e] prospects"); cf. Dura Pharmaceuticals, Broudo, 544 *468 336, 342 (2005) ("[A]n inflated itself loss," absent evidence actually harm). prices, inquire reasons," 458, might done so.[5] Instead, ceased charging sales, allegedly, logically, reporting accordingly paying them. 11-13. Nor fatal continued taxes invested money elsewhere. 459. Had so, investment. ascertainable necessarily undoubtedly correct "Ideal's fraud." means carried outwith charged noncash salesrenders typical event, well expertise evaluate testimony *469 factors. gave limiting victimsnamely, "[t]he 460 269-270). Certainly, law, rendering necessary illegal recognition undermine deterrence support unnecessary plaintiffs, single suffice unjust declare deterrence, basis doing injuries, recover equal Application beyond supports finding Though "one [the] elements" considered evaluating "many shapes" 268, 269. 42, 273 (noting "two contrasting theories legal cause," extending beyond, scope `foreseeable risks,'" "`directly traceable'" *470 foreseeable).[6] limitation serves ensure answerable anything natural, ordinary reasonable conduct." 57. "If one's fault happens concur something extraordinary, likely foreseen, unexpected result." Based principle, historically found natural causes, wrongful "rendered probable occur," 62; long "reasonably induced prior misconduct defendant," 62, 63; innocent intervenes tortfeasor victim, "contributed effectually [the injury] regarded efficient concurrent responsible 64, 65 (emphasis deleted). Appeals, "`the targets, competitors enterprise,'" 251, 260 (CA2 2004) Lerner Fleet Bank, N. A., 318 113, 124 2003)), outlined standard falls behind all, traditional applications tortfeasors two-step process. Court, evade foreseeable, behavior. concocting further, lawful *471 intentional step inflict Such rule precludes morally easily identifiable plaintiffs. statute, reaching plain precedent holding, rejected. noting, litigation area far about crime enactment, sustained quintessential criminal activity, indisputably reach. enacted problem state-law violations. H. J. Northwestern Bell Telephone 492 229, 245 (1989). evidence, drafters knew potential sweep find problematic. 246-248. version, evolving quite original conception enactors." 500 Judicial sentiment evolution undesirable widespread.[7] Numerous Justices dissatisfaction *472 either breadth application, 501 (Marshall, joined Brennan, Blackmun, Powell, JJ., dissenting) statute revolutionizes litigation; validates federalization areas frauds, approves displacement well-established remedial provisions. [T]here indication considered, approved, defines"), vagueness outlining prohibit, Inc., 255-256 Rehnquist, O'Connor Kennedy, judgment) ("No constitutional challenge raised highest land derive today's meager guidance bodes ill day presented"). proposals curtailing introduced Congress; example, Private Litigation Reform Act, 1995, securities Pub. 104-67, 109 Stat. 758, amending 1964(c); Abrams, Crime Legislation Public Interest: Lessons RICO, 50 SMU Rev. 33, 34 (1996). majority cases, apparent crime. 499, 16 ABA Task Force period reviewed, 9% trial level involved "`allegations type professional criminals'"). Given lie *473 prototypical tempting keep court. attempt exclude reach eliminating outside correct, core Congress' concern enacting unanimously Sedima reasonand, dissent, reasonCongress protect businesses 500-523 (concluding conferring individual "principal power racketeers, toll legitimate businessmen"); 494-500. unanimous view correct. sponsor Senate precursor evil curbed unfair inherent large illicit crime.'" 514 113 Cong. Rec. 17999 (1967) (remarks Sen. Hruska); emphasis deleted); 515 ("`When moves brings techniques violence intimidation Competitors eliminated confined sponsored suppliers'"). Upon adding subsequently proposed bill, Senator Hruska noted: "`[This] bill creates remedies honest businessman damaged competition racketeer businessman. Despite willingness Sherman Anti-Trust activities, matter adequate act. fills *474 gap.'" 516 115 6993 (1969); bills ultimately included attached Title IX Organized Control Act. Committee Report "has purpose elimination infiltration organizations operating commerce." Rep. 91-617, 76 (1969). observations President's Commission Enforcement Administration Justice, statements. chapter "organized extensively deeply [I]t employs illegitimate methodsmonopolization, terrorism, extortion, evasionto drive control ownership leadership exact public." Challenge Free Society 187 (1967). report millions dollars [organized crime] throw system gives shares market, raise retail merchandise, entire industries union nonunion, harder businessmen continue business." imagine kind Congress, yet fail restrictive test. For group, running could, threats violence, persuade supplier sell goods cost, resell competitor Honest compete, engage *475 costs. 521-522 dissenting). Yet respondent, themselves threats; supplier. Like most immediately competition, threatening view, "indirect" violation.[8] himself suffer harm. result, after today, motivated adoption obtain relief. compelled text interference unavoidable. susceptible agree intent. proceed reach: plaintiff. required, proven misrepresentations person, *476 disagree all. my happen offenses reliance, incorporated justifiable Neder States, 527 1, 24-25 (1999); 105, 728. defendants commonlaw fraud; instead, includes, indictable [18 §] 1341 (relating fraud) [and fraud)." 1961(1) And statutes "did incorporate elements Neder, 24. anyone who, "having devised intending devise artifice executing attempting do, places post office thing whatever Postal Service ." 1341. (similar fraud). "[b]y prohibiting `scheme defraud,' completed clearly inconsistent enacted." 25. commit 1962, disputed Government prosecute terms authorize suit *477 section 1962," violator. justified "very unlikelihood stems, part, condition almost essential shape delimit rational remedy." Systems Management, Loiselle, 303 100, 104 (CA1 2002). decided words impose 7 26 210, implied limitation. fair interpret meaning, cause-in-fact always Reliance tort; "is specialized grown up 104. violations, civilly actionable, words, ed.) add only. believe defined include statutes, fraud-related *478 1343, itself, say someone If, believed misrepresentation scheme, faltered step. functions prerequisite establishing 29. often transform ("Reliance doubtless obvious way way"). allege misrepresentations, 16, sufficient. never us, "federalize[d] great deal law" intention "produc[ing] far-reaching results." 506 refused ignore archetypal, intimidating mobster," instead "[i]t judiciary eliminate situations taking applications." 499-500. *479 Today, inadvertently regulated, substantially ability enactment place. dissent. BREYER, procompetitive causes consequently issue. essentially criminals language, extends begins listing called "`racketeering activity,'" consist crimes, ranging copyright facilitation gambling, arson, kidnaping, murder. then defines "`pattern activity'" engaging "at two" 10-year period. business-related "pattern" "enterprise." forbidden acquiring, establishing, enterprise, pattern." (c). *480 foresees Government. 1963 sets 1964 "have jurisdiction restrain [RICO] violations." 1964(a). "injured seek treble attorney's fees. B treble-damages supply company, Steel, owners, (to whom shall refer collectively "National"). says regularly filing order avoid owedactivity amounts enabled reducing margins. excess fund building store. Both outlet injuring Hence, [its] provisions, "enterprise's affairs" investing (a), bring "demand[ed] determined *481 requirement. believes Holmes' virtually dictates here. "causal connection" key ways, surrogate creditors went bankrupt losing stocks overvalued statements made others. Put "proximate (an creditor loss) differed "predicate acts" (securities ordinarily (stock-related monetary losses). derivative broker-dealers; steps (misrepresentationbroker-dealer lossesbroker-dealer failureordinary loss). (lost customers) flows outletactions forbid (conducting "pattern"). sense, links "direct" 464-465 (Thomas, part). Nonetheless, points way. contains important limitations specifies provide "simply injured, 265-266 *482 (footnote omitted). Pointing very recover," 266 added), concludes imposes "label[s] acts," recognizes discern "`what 1984)). explains cause" demands "directness," specifying shapes concept law." trebledamages provisions aid interpretation. "antitrust" provision's source, taken together basic objectives administrative concerns, implies "indirect," i. e., chain business' physical metaphor, undertaken cut acts. objective encourage particular, encourages compete offering better products, methods production, systems distribution. See, e. g., 1 Areeda Hovenkamp, Antitrust Law: An Analysis Principles Their ¶ 100a, pp. 3-4 (2d 2000). explain, suggest solely *483 suffers able normal methods, "proximate-cause" imposes. funded (or enabled) distant. "direct." At time, protective ambit within, outside, limits. Where, attracts ways involve means, still lie. Claims objectively competitor, bribing official harass actionable. Several considerations lead conclusion. First, (outside Circuit, arose) authorized (even financed act). Second, serious administrability. 458-460 (majority opinion); profits) happened absence. Would changed suppliers irrespective change differences suppliers? firms prices? higher *484 entry? demand industry's product, geographic changed? how? questions circumstances apportion trying trace defendants' anti-competitive 519, 542, (1983) (the possibility "may produced independent factors" danger apportionment damages" weigh case). context functioning markets, typically conditions, difficult. Third, victims, present, pressing Those alternative (here York) "could law's vindication." 273. fulfill "turn[ing victims] prosecutors, `private general,' dedicated Rotella Wood, 528 549, 557 (2000) Klehr A. O. Smith Corp., 521 179, (1997)). Fourth, retain heart concerns. sponsors, supporting emphasized, fair, infiltrated corruptly, exercising competition. 76-78 Cedric Kushner Promotions, Ltd. King, 533 158, 165 (2001). focuses "infiltration crime," significant because, "`organized *485 businesses.'" 517, (1985) (1967)). My four mentioned Justice Marshall, describes objectives. investors racketeer, "uses `[t]hreats, arson assault business'"; induce protection money, goods, hire workers"; "displace[s]" "honest investor" "infiltrates obtains fraud" like. 521, 522. concede "infiltrated enterprise" businessman's disadvantage helped build "strong base." latter arguably helpful Sedima's prevailed. (arguing acts); 523-530 (Powell, (same). prevail, weakened reading authorizes category. Fifth, limitation, policy collide. Firms battle bases attack successful comparatively minor misdeeds *486 fear hesitate vigorously, concentrated traced consumer's vigorous strong. ultimate tendency pull punches course consumer. Although intend simple copy laws' remedies, see, 498-499, sound counterpart cross-purposes. form counts Another available. distribution system, production method. count (1) (2) (3) financing benefits firm opens making convenient process describes. *487 II, storeeven activitiesis create look bringing Attorney presents question. passed savings attracting Is caused, itself? "no." "charge" "pay" accurately "report" figures tell "We taxes." Rather, customer price, $100 plus $8 Consider retailer advertises table adds, telling $92. he, retailer, State, owed paid item. more. effect item kept passing savings, *488 beside legitimate. suggests not. reverse counts. NOTES [*] Gene Schaerr, Linda T. Coberly, Charles B. Klein, Robin Conrad, Amar Sarwal Chamber Commerce America amicus curiae urging reversal. Henry Rossbacher G. Blakey Association Shareholder Consumer Attorneys affirmance. [1] although dedicate little disposition limited parties, opportunity reconsider [2] Sutherland's treatise labels indirect: injuryand behavior tortfeasorthat Sutherland, Damages 55 (1882) Sutherland). every example cited illustration parallels Holmes; 55-56. [3] squarely ascertainable; empirical "[p]artly partly effects Union factors, highly speculative." [4] interrelation concepts: "A uncertainty infect provable, established whole So exist known provable wrong contract appears, certainly shown." 94. [5] stage. "pass `savings' realizes returns." 16. matter, suffices survive [6] appear broader 43, 273, 293-297. [7] Remarks Chief 21 St. Mary's 13 (1989) ("I think time arrived enact amendments sort wrongs court"); Sentelle, RICO: Judges' Perspective, Some Notes Practice North Carolina Lawyers, 12 Campbell 145, 148 (1990) ("[E]very judge subject (and I'm talking dozens judges across country) echoes entreaty Justice's title Wall Street Journal[, Get Cases Out Courtroom, May 19, 1989, A14, col. 4]"). [8] Scalia's threatened, consequence. 462 (concurring opinion).

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