Wednesday, June 29, 2005

Two Cert. Grants of Interest

The Supreme Court granted cert. at the end of the term earlier this week in two civil RICO cases that are of interest.  On Monday, the Court granted cert in Bank of China v. NBM LLC, on the following question: Did the Court of Appeals for the Second Circuit err when it held that civil RICO plaintiffs alleging mail and wire fraud as predicate acts must establish "reasonable reliance" under 18 U.S.C. §1964(c)?  The plaintiff, Bank of China, won a $106 million RICO verdict in the district court based on claims of mail and wire fraud related to a scheme to defraud the bank.  The defendants alleged that employees and officers of the bank were aware of the false statements, and therefore the reliance element for a common law fraud could not be met.  The Second Circuit held (opinion below) that the proximate cause requirement to prove a RICO injury to business or property under § 1964(c), when based on mail or wire fraud, requires proof that the plaintiff reasonably relied on the misstatements or omissions, and the trial judge's instructions did not include that requirement, and therefore the verdict had to be vacated.  Although the Supreme Court held in Holmes v. SIPC that RICO requires proof of proximate cause from the pattern of racketeering activity, it has not explained that position in any detail, and the circuits have taken different approaches to that requirement.  Interestingly, the Solicitor General opposed the cert. grant, a position the Court chose to ignore after inviting the Government's view on the petition (SG Brief here).

On Tuesday, the Court announced the cert. grant in a familiar case, the third trip to the Supreme Court in the civil RICO abortion clinic access case, Scheidler v. NOW.  Earlier opinions in 1994, on whether RICO requires an economic motive or purpose (it does not), and whether extortion under the Hobbs Act (as a predicate RICO racketeering act) requires that the defendants obtain or attempt to obtain property from the victim (it does).  The question presented in the third iteration of the case is: Did the Seventh Circuit err when it  held, on remand from the Supreme Court, that properly tailored injunctive relief may be available to redress Racketeer Influenced and Corrupt Organizations Act violations by abortion protesters based on jury findings that they committed predicate acts of violence and threats of violence in violation of the Hobbs Act?  This round takes us to the remedy portion of RICO, outside of treble damages and attorney's fees that are provided in the statute, to the issue of the court's power to issue equitable relief even when it is not mentioned in the statute.  An earlier post (here) discusses the cert. petition and contains a link to the petition filed by Scheidler. 

In case anyone knows the answer to this trivia question, how many cases have gone to the Supreme Court three times?  The winner gets my heartfelt congratulations on being a bigger geek than I am. (ph)

Download bank_of_china_v. NBM.pdf

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