Court Opinion

ID: 9631974
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:57:49.122718+00
Date Added: 2024-06-11T18:08:05.560579
License: Public Domain

*648KAREN NELSON MOORE, Circuit Judge,
concurring in part and dissenting in part.
I agree with the majority opinion’s conclusions regarding plaintiffs’ state-law claims for intentional infliction of emotional distress. I disagree, however, with the majority opinion’s conclusion that civil-RICO plaintiffs must plead (and prove) reliance. Accordingly, I respectfully dissent.
I acknowledge that prior opinions of this court have stated that civil-RICO plaintiffs must plead (and then prove) reliance. See, e.g., Cent. Distribs. of Beer, Inc. v. Conn, 5 F.3d 181, 184 (6th Cir.1993), cert. denied, 512 U.S. 1207, 114 S.Ct. 2678, 129 L.Ed.2d 812 (1994); Blount Fin. Servs. v. Walter E. Heller & Co., 819 F.2d 151, 152 (6th Cir.1987); Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir.1984). These opinions, however, are not necessarily binding precedent. To determine whether they have precedential effect, we must consider the origins of the rule requiring reliance and whether those origins comport with preexisting circuit precedent. Salmi v. Sec’y of Health & Human Servs., 774 F.2d 685, 689 (6th Cir.1985) (court’s earliest decision on an issue remains controlling unless overruled by the court sitting en banc or unless the United States Supreme Court requires modification of the decision).
These prior panels could have reached the conclusion that reliance is an element of a civil-RICO cause of action for mail or wire fraud in only one of three possible ways: (1) they could have interpreted the text of the mail- and wire-fraud statutes; (2) they could have interpreted the text of RICO; or (3) they could have decided sua sponte to add an element. I consider these options in reverse order.
After reviewing the cases, I do not think that the prior panels sua sponte added an element to a civil-RICO claim. First, I do not believe those panels had the authority to do so. Although the majority opinion claims that the Central Distributors, Blount Financial Services, and Bender “panels were free to impose a reliance requirement upon civil RICO plaintiffs,” Maj. Op. n. 1, it cites no case in support of this proposition. Indeed, I know of no such case. The Supreme Court recently rejected a nearly identical proposition when it unanimously reversed our Circuit’s adoption of pleading requirements unmoored to a statute’s text. Jones v. Bock, - U.S. -, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007). If courts are not free to impose additional pleading requirements that Congress did not intend, I cannot see how they legitimately can impose new elements. Revising legislation in such a manner is a task for Congress, not the courts, especially when the revision is as significant as adding reliance as an element. See id. at 926 (“[AJdopting different and more onerous pleading rules to deal with particular categories of cases should be done through established rulemaking procedures, and not on a case-by-case basis by the courts.”).
Second, the Central Distributors, Blount Financial Services, and Bender panels apparently did not believe they were adding a new element to a civil-RICO claim. Not one of these cases identifies reliance as a newly added element. Nor do the opinions cite any cases indicating that judges of this court are free to add elements to a congressionally created cause of action (the same proposition for which the majority opinion was unable to find support). If a panel of this court were to venture into such uncharted territory, I would expect the resulting opinion to explain in detail why the panel thought it had the power to revise Congress’s work by adding an element, as well as why the *649panel thought it prudent in that instance to do so. The above-listed opinions contain no such explanation. Considering all this, it seems highly unlikely that the panels intended to create a new element, thereby judicially amending the statute.
Similarly, these prior panels could not have been interpreting the text of the RICO statute. First, not one identifies any language in RICO (or any legislative history) indicating that Congress intended to require that civil-RICO plaintiffs prove reliance. Second, RICO’s text forecloses such a requirement. To establish a civil-RICO cause of action, 18 U.S.C. § 1964(c) requires only (1) an injury to the plaintiff (2) “by reason of’ a violation of § 1962.1 As relevant here, § 1962 requires only that the plaintiff show that the defendant conducted the affairs of an enterprise “through a pattern of racketeering activity.” 18 U.S.C. § 1962(c). And “racketeering activity,” in turn, is defined to include “any act which is indictable under ... [18 U.S.C. § ] 1341 (relating to mail fraud), [and 18 U.S.C. § ] 1343 (relating to wire fraud).” 18 U.S.C. § 1961(1)(B) (emphasis added). Nowhere does the RICO statute suggest that Congress intended to include a reliance requirement applicable to all civil-RICO claims.
After these two possibilities have been eliminated, it becomes clear that the panels in the above-listed opinions construed the mail- and wire-fraud statutes as requiring that plaintiffs prove reliance. Bender’s analysis demonstrates as much.
The Bender panel concluded that the district court properly dismissed the plaintiffs civil RICO claim because “the plaintiffs’ complaint [did] not allege what misrepresentations (or omissions) of material fact Southland made to the plaintiffs that they reasonably relied upon to their detriment.” 749 F.2d at 1216 (emphasis added). Bender cites a criminal mail-fraud case for this proposition, see id. (citing United States v. VanDyke, 605 F.2d 220, 225 (6th Cir.), cert. denied, 444 U.S. 994, 100 S.Ct. 529, 62 L.Ed.2d 425 (1979)),2 *650which reveals that the Bender panel interpreted the federal mail-fraud statute to require a showing of reliance. However, prior panels of this court had held even earlier that prosecutions under the federal fraud statutes do not require a showing of reliance. Norman v. United States, 100 F.2d 905, 907 (6th Cir.1939) (a mail-fraud offense “is complete when the scheme has been devised and when in pursuance of it, the mails have been used”); Hyney v. United States, 44 F.2d 134, 136 (6th Cir.1930).
Although it is over seventy-five years old, this early holding—that reliance is not required under the federal fraud statutes—has remained constant over time. Within the past decade, the Supreme Court has echoed this holding, noting that a reliance requirement “plainly ha[s] no place in the federal fraud statutes.” Neder v. United States, 527 U.S. 1, 24-25, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999).3 Subsequently, we have also echoed the rule of Norman and Hyney. United States v. Daniel, 329 F.3d 480, 486 (6th Cir.2003) (noting that Neder “makes it even clearer that actual reliance is not required for mail or wire fraud”). Even the majority opinion notes as much. Maj. Op. at 644 (“we are aware of no court taking a contrary position” to the rule that the government need not establish reliance in a prosecution under the federal mail- and wire-fraud statutes).
The relevant point here is not that Bender was wrong (although indeed it. was wrong). Instead, the point is that because the Bender panel interpreted the mail-fraud statute to require a showing of reliance (and then applied this requirement in a civil-RICO case), its holding created a direct conflict with Hyney and Norman, which had previously held that the federal mail-fraud statute has no reliance requirement. Accordingly, in applying the federal mail-fraud statute through a civil-RICO action, we are bound to follow Hyney and Norman, not Bender. United States v. Abboud, 438 F.3d 554, 567 (6th Cir.2006) (in case of conflict between two cases, holding of the earlier case is binding); see also Maj. Op. n. 1 (noting that when a decision contravenes prior precedent, “[subsequent panels [a]re ... under no obligation to follow it”). The fact that intervening panels have failed to follow our earliest published decision (Hyney) is of no moment, as no case holds that, even though one panel cannot overrule a prior panel’s decision, multiple subsequent decisions are sufficient to undermine a prior panel’s holding. Accordingly, it is unsurprising that the majority opinion musters no support for its contention that the reliance requirement may stand, notwith*651standing its origins in Epstein, because “various panels of our court have reaffirmed the requirement.” Maj. Op. n. 1.
The prior-panel rule exists to prevent Bender’s unjustified departure from Hy-ney and Norman, not to ossify Benders error once rendered. Because Bender refused to hew to our prior precedent, the criminal mail- and wire-fraud statutes mean two different things in this circuit, depending on the context. In the criminal context, they contain no reliance element. E.g., Daniel, 329 F.3d at 486. But when Congress incorporates these statutes by reference into a civil cause of action, a reliance requirement magically appears, notwithstanding that in both contexts, courts are interpreting the same text. I know of no rule of construction permitting a statute’s text to take on such chameleon-like qualities. Tellingly, the majority opinion cites none.
Bender was inconsistent with our precedent interpreting the mail- and wire-fraud statutes when it was decided, and this inconsistency remains today. Yet the majority opinion continues down this errant path, rather than acknowledging the conflict with preexisting circuit precedent. To prevent the error begun in Bender and extended today from snowballing any further, we should convene the en banc court to reexamine the whether a civil-RICO claim incorporates the element of reliance. Notably, in a case in which the Supreme Court declined to decide whether a showing of reliance is required, Anza v. Ideal Steel Supply Corp., - U.S. -, 126 S.Ct. 1991, 1998, 164 L.Ed.2d 720 (2006), the only Justice to address the issue (Justice Thomas) wrote separately to express his conclusion that reliance is not an element of a civil-RICO claim. Id. at 2007-08 (2006) (Thomas, J., dissenting in part).4
For these reasons, I respectfully dissent.

. The Supreme Court has interpreted § 1964(c)’s "by reason of” language to establish that proximate causation is an element to a civil-RICO claim. Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992). This decision, however, does not establish in any way a requirement that the plaintiff relied on a statement offered by the defendant.
Additionally, § 1964(c)’s requirement that a civil-RICO plaintiff have been "injured in his business or property" establishes RICO's only standing requirement. See Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (“the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation”). Although our unpublished opinion in Chaz Construction, LLC v.Codell, 137 Fed.Appx. 735 (6th Cir.2005) (unpublished), mistakenly cited Central Distributors for the proposition that reliance was part of the standing inquiry in a RICO case, id. at 738-39, Central Distributors said nothing of the sort. Instead, Central Distributors cited Bender for the proposition that reliance is an element of a civil-RICO claim. Cent. Distribs., 5 F.3d at 184. Nevertheless, Chaz Construction is unpub- , lished and accordingly not binding on us.

. Bender also cites another criminal mail-fraud case; Epstein v. United States, 174 F.2d 754 (6th Cir.1949). It appears that Epstein may have been the ultimate source of Bender's assertion that reliance is required, as VanDyke says nothing about reliance. VanDyke noted that "the schéme must involve some sort of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension.” 605 F.2d at 225. Accordingly, it did not address reliance, as the quoted passage pertains only to the defendant's state of mind, whereas reliance speaks to the plaintiff’s state of mind.
Bender cites Epstein for two propositions: (1) showing a "scheme to defraud” (an element of mail fraud) requires showing intent to defraud; and (2) the scheme must "accomplish ] the end designed.” Bender, 749 F.2d *650at 1216 (quoting Epstein, 174 F.2d at 765). These propositions, taken together, were the source of Bender's conclusion that reliance is required: the "end designed" could not be accomplished unless the plaintiff relied on the representations. As the majority opinion notes, Epstein’s position regarding accomplishment’ of the fraud's ultimate ’goal is "simply wrong and contrary to our prior precedent," and accordingly unworthy of deference. Maj. Op. n. 1.
Tracing the civil-RICO precedents back to their origins in "simply wrong” decisions in criminal mail-fraud cases thus demonstrates the ultimate bankruptcy of the majority opinion’s position. Even the majority itself recognizes that the genesis of the rule requiring reliance conflicts with prior -precedent and accordingly should not be followed. ’

. The majority opinion's attempt to duck Ned-er by acknowledging that it "is a criminal case,” Maj. Op. at 644, is unconvincing. As noted above, RICO's civil provisions define the predicate acts of racketeering activity as acts indictable under certain federal criminal statutes, and the list specifically includes §§ 1341 and 1343. Accordingly, Neder interpreted the same text that the majority opinion purports to interpret today.

. Indeed, one of the judges in the majority appears to agree with this statement of the law. Prudential Ins. Co. of Am. v. United States Gypsum Co., 828 F.Supp. 287, 296 (D.NJ.1993) (“Specific detrimental reliance is a sufficient but not necessary element of a [civil] RICO cause of action.”).