HEMI GROUP, LLC v. CITY OF NEW YORK
- Syllabus [HTML] [PDF]
- Opinion, Roberts [HTML] [PDF]
- Concurrence, Ginsburg [HTML] [PDF]
- Dissent, Breyer [HTML] [PDF]
HEMI GROUP, LLC, et al. v . CITY OF NEW YORK, NEW YORK
certiorari to the united states court of appeals for the second circuit
Respondent New York City taxes the possession of cigarettes. Petitioner Hemi Group, based in New Mexico, sells cigarettes online to residents of the City. Neither state nor city law requires out-of-state sellers such as Hemi to charge, collect, or remit the Citys tax; instead, the City must recover its tax on out-of-state sales directly from the purchasers. But the Jenkins Act, 15 U. S. C. §§375378, requires out-of-state sellers to submit customer information to the States into which they ship cigarettes, and New York State has agreed to forward that information to the City. That information helps the City track down cigarette purchasers who do not pay their taxes. Against that backdrop, the City filed this lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that Hemis failure to file the Jenkins Act reports with the State constituted mail and wire fraud, which are defined as racketeering activit[ies], 18 U. S. C. §1961(1), subject to enforcement under civil RICO, §1964(c). The District Court dismissed the claims, but the Second Circuit vacated the judgment and remanded. Among other things, the Court of Appeals held that the Citys asserted injurylost tax revenuecame about by reason of the predicate mail and wire frauds. It accordingly determined that the City had stated a valid RICO claim.
Held: The judgment is reversed, and the case is remanded.
541 F. 3d 425, reversed and remanded.
Chief Justice Roberts delivered the opinion of the Court in part, concluding that because the City cannot show that it lost tax revenue by reason of the alleged RICO violation, it cannot state a RICO claim. Pp. 515.
(a) To establish that an injury came about by reason of a RICO violation, a plaintiff must show that a predicate offense not only was a but for cause of his injury, but was the proximate cause as well. Holmes v. Securities Investor Protection Corporation , 503 U. S. 258. Proximate cause for RICO purposes should be evaluated in light of its common-law foundations; it thus requires some direct relation between the injury asserted and the injurious conduct alleged. Ibid . A link that is too remote, purely contingent, or indirec[t] is insufficient. Id ., at 271, 274.
The Citys causal theory cannot satisfy RICOs direct relationship requirement. Indeed, the causal link here is far more attenuated than the one the Court rejected as purely contingent and too remote in Holmes . Id ., at 271. According to the City, Hemi committed fraud by selling cigarettes to city residents and failing to submit the required customer information to the State. Without the reports from Hemi, the State could not pass on the information to the City, even if it had been so inclined. Some of the customers legally obligated to pay the cigarette tax to the City failed to do so. Because the City did not receive the customer information, it could not determine which customers had failed to pay the tax. The City thus could not pursue those customers for payment. The City thereby was injured in the amount of the portion of back taxes that were never collected. As the Court reiterated in Holmes , [t]he general tendency of the law, in regard to damages at least, is not to go beyond the first step, id., at 271272, and that general tendency applies with full force to proximate cause inquiries under RICO, e.g., ibid . Because the Citys causation theory requires the Court to move well beyond the first step, that theory cannot satisfy RICOs direct relationship requirement.
The Citys claim suffers from the same defect as the RICO claim rejected in Anza v. Ideal Steel Supply Corp. , 547 U. S. 451, where the conduct directly causing the harm was distinct from the conduct giving rise to the fraud, see id ., at 458. Indeed, the disconnect between the asserted injury and the alleged fraud in this case is even sharper. In Anza, the same party had both engaged in the harmful conduct and committed the fraudulent act. Here, the Citys theory of liability rests not just on separate actions , but separate actions carried out by separate parties . The Citys theory thus requires that the Court extend RICO liability to situations where the defendants fraud on the third party (the State) has made it easier for a fourth party (the taxpayer) to cause harm to the plaintiff (the City). Indeed, the fourth-party taxpayers here only caused harm to the City in the first place if they decided not to pay taxes they were legally obligated to pay. Put simply, Hemis obligation was to file Jenkins Act reports with the State, not the City, and the Citys harm was directly caused by the customers, not Hemi. The Court has never before stretched the causal chain of a RICO violation so far, and declines to do so today. See, e.g., id., at 460461. Pp. 59.
(b) The City attempts to avoid this conclusion by characterizing the violation not merely as Hemis failure to file Jenkins Act reports with the State, but as a more general systematic scheme to defraud the City of tax revenue. But if the City could escape the proximate-cause requirement merely by alleging that the fraudulent scheme embraced all those indirectly harmed by the alleged conduct, the Courts RICO proximate cause precedent would become a mere pleading rule. That precedent makes clear that the compensable injury flowing from a [RICO] violation … necessarily is the harm caused by [the] predicate acts. Anza, supra, at 457. Because the only fraudulent conduct alleged here is a violation of the Jenkins Act, the City must, but cannot, show that Hemis failure to file the Jenkins Act reports led directly to its injuries.
The City also errs in relying on Bridge v. Phoenix Bond & Indemnity Co. , 553 U. S. ___. There, the plaintiffs causation theory was straightforward: The causal link in Bridge involved a direct and easily identifiable connection between the fraud at issue and the plaintiffs injury, id., at ___; the plaintiffs there were the only parties injured by petitioners misrepresentations, id ., at ___; and there were no independent factors that account[ed] for [the] injury, id., at ___. The Citys theory in this case is anything but straightforward: Multiple steps separate the alleged fraud from the asserted injury. And in contrast to Bridge , where there were no independent factors that account[ed] for [the plaintiffs] injury, id ., at ___, here there certainly were: The Citys theory of liability rests on the independent actions of third and even fourth parties. Pp. 1014.
Roberts, C. J., delivered the opinion of the Court in part, in which Scalia, Thomas, and Alito, JJ., joined, and in which Ginsburg, J., joined in part. Ginsburg , J., filed an opinion concurring in part and concurring in the judgment. Breyer, J., filed a dissenting opinion, in which Stevens and Kennedy, JJ., joined. Sotomayor, J., took no part in the consideration or decision of the case.
HEMI GROUP, LLC
PETITIONERS v. CITY OF NEW YORK,
on writ of certiorari to the united states court of appeals for the second circuit
Chief Justice Roberts delivered the opinion of the Court in part.
The City of New York taxes the possession of cigarettes. Hemi Group, based in New Mexico, sells cigarettes online to residents of the City. Neither state nor city law requires Hemi to charge, collect, or remit the tax, and the purchasers seldom pay it on their own. Federal law, however, requires out-of-state vendors such as Hemi to submit customer information to the States into which they ship the cigarettes.
Against that backdrop, the City filed this lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging that Hemi failed to file the required customer information with the State. That failure, the City argues, constitutes mail and wire fraud, which caused it to lose tens of millions of dollars in unrecovered cigarette taxes. Because the City cannot show that it lost the tax revenue by reason of the alleged RICO violation, 18 U. S. C. §1964(c), we hold that the City cannot state a claim under RICO. We therefore reverse the Court of Appeals decision to the contrary.
This case arises from a motion to dismiss, and so we accept as true the factual allegations in the Citys second amended complaint. See Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit , 507 U. S. 163, 164 (1993) .
New York State authorizes the City of New York to impose its own taxes on cigarettes. N. Y. Unconsol. Law Ann. §9436(1) (West Supp. 2009). Under that authority, the City has levied a $1.50 per pack tax on each standard pack of cigarettes possessed within the City for sale or use. N. Y. C. Admin. Code §111302(a) (2008); see also Record A1016. When purchasers buy cigarettes from in-state vendors, the seller is responsible for charging, collecting, and remitting the tax. N. Y. Tax Law Ann. §471(2) (West Supp. 2009). Out-of-state vendors, however, are not. Ibid .; see City of New York v. Smokes-Spirits.com, Inc. , 541 F. 3d 425, 432433 (CA2 2008). Instead, the City is responsible for recovering, directly from the customers, use taxes on cigarettes sold outside New York. That can be difficult, as those customers are often reluctant to pay and tough to track down. One way the City can gather information that would assist it in collecting the back taxes is through the Jenkins Act, 63Stat. 884, as amended by 69Stat. 627. That Act requires out-of-state cigarette sellers to register and to file a report with state tobacco tax administrators listing the name, address, and quantity of cigarettes purchased by state residents. 15 U. S. C. §§375378.
New York State and the City have executed an agreement under which both parties undertake to cooperate fully with each other and keep each other fully and promptly informed with reference to any person or transaction subject to both State and City cigarette taxes including [i]nformation obtained which may result in additional cigarette tax revenue to the State or City provided that the disclosure of that information is permissible under existing laws and agreements. Record A1003. The City asserts that under that agreement, the State forwards Jenkins Act information to the City. Id., at A998; Second Amended Compl. ¶54. That information helps the City track down purchasers who do not pay their taxes. Id ., ¶¶5859.
Hemi Group is a New Mexico company that sells cigarettes online. Hemi, however, does not file Jenkins Act information with the State. The City alleges that this failure has cost it tens if not hundreds of millions of dollars a year in cigarette excise tax revenue. Record A996. Based on Hemis failure to file the information with the State, the City filed this federal RICO claim.
RICO provides a private cause of action for [a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter. 18 U. S. C. §1964(c). Section 1962, in turn, contains RICOs criminal provisions. Specifically, §1962(c), which the City invokes here, makes it unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate … commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprises affairs through a pattern of racketeering activity. [R]acketeering activity is defined to include a number of so-called predicate acts, including the two at issue in this casemail and wire fraud. See §1961(1).
The City alleges that Hemis interstate sale of cigarettes and the failure to file Jenkins Act reports identifying those sales constitute the RICO predicate offenses of mail and wire fraud in violation of §1962(c), for which §1964(c) provides a private cause of action. Record A980. Invoking that private cause of action, the City asserts that it has suffered injury in the form of lost tax revenueits business or property in RICO termsby reason of Hemis fraud.
Hemi does not contest the Citys characterization of the Jenkins Act violations as predicate offenses actionable under §1964(c). (We therefore assume, without deciding, that failure to file Jenkins Act material can serve as a RICO predicate offense.) Instead, Hemi argues that the Citys asserted injurylost tax revenueis not business or property under RICO, and that the City cannot show that it suffered any injury by reason of the failure to file Jenkins Act reports.
The District Court dismissed the Citys RICO claims, determining that Hemi owner and officer Kai Gachupin did not have an individual duty to file Jenkins Act reports, and thus could not have committed the alleged predicate acts. City of New York v. Nexicon, Inc. , No. 03 CV 383 (DAB), 2006 WL 647716, *7*8 (SDNY, Mar. 15, 2006). The District Court therefore held that the City could not establish that Hemi and Gachupin formed an enterprise as required to establish RICO liability. Id ., at *7*10. Because it dismissed on that ground, the District Court did not address whether the Citys loss of tax revenue constitutes an injury to its business or property under §1964, or whether that injury was caused by reason of Hemis failure to file the Jenkins Act reports.
The Second Circuit vacated the District Courts judgment and remanded for further proceedings. The Court of Appeals held that the City had established that Gachupin and Hemi operated as an enterprise and that the enterprise committed the predicate RICO acts of mail and wire fraud, based on the failure to file the Jenkins Act material with the State. 541 F. 3d, at 447448. The court also determined that the Citys asserted injury, lost tax revenue, was business or property under RICO. Id ., at 444445. And that injury, the court concluded, came about by reason of the predicate mail and wire frauds. Id ., at 440444. The City thus had stated a viable RICO claim. Judge Winter dissented on the ground that the alleged RICO violation was not the proximate cause of the Citys injury. Id ., at 458461.
Hemi filed a petition for certiorari, asking this Court to determine whether the City had been directly injured in its business or property by reason of the alleged mail and wire frauds. Pet. for Cert. i. We granted that petition. 556 U. S. __ (2009).
Though framed as a single question, Hemis petition for certiorari raises two distinct issues: First, whether a loss in tax revenue is business or property under 18 U. S. C. §1964(c); and second, whether the Citys asserted injury came about by reason of the allegedly fraudulent conduct, as required by §1964(c). We determine that the City cannot satisfy the causation requirementthat any injury the City suffered must be by reason of the alleged fraudsand therefore do not decide whether the Citys allegations of lost tax revenue constitute an injury to its business or property.
In Holmes v. Securities Investor Protection Corporation , 503 U. S. 258 (1992) , we set forth the standard of causation that applies to civil RICO claims. In that case, we addressed a RICO claim brought by Securities Investor Protection Corporation (SIPC) against defendants whom SIPC alleged had manipulated stock prices. Id., at 262263. SIPC had a duty to reimburse customers of certain registered broker-dealers in the event the broker-dealers were unable to meet their financial obligations. Id ., at 261. When the conspiracy by the stock manipulators was detected, stock prices collapsed, and two broker-dealers were unable to meet their obligations to their customers. SIPC, as insurer against that loss, ultimately was on the hook for nearly $13 million to cover the customers claims. The Court held that SIPC could not recover against the conspirators because it could not establish that it was injured by reason of the alleged fraud, as that phrase is used in RICO.
We explained that, to state a claim under civil RICO, the plaintiff 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 made clear, should be evaluated in light of its common-law foundations; proximate cause thus requires some direct relation between the injury asserted and the injurious conduct alleged. Ibid . A link that is too remote, purely contingent, or indirec[t] is insufficient. Id ., at 271, 274.
Applying that standard, we rejected SIPCs RICO claim. The alleged conspiracy, we held, directly harmed only the broker-dealers; SIPCs injury, on the other hand, was purely contingent on that harm. Id ., at 271. The connection between the alleged conspiracy and SIPCs injury was therefore too remote to satisfy RICOs direct relationship requirement. Ibid .
The Citys causal theory is far more attenuated than the one we rejected in Holmes . According to the City, Hemi committed fraud by selling cigarettes to city residents and failing to submit the required customer information to the State. Without the reports from Hemi, the State could not pass on the information to the City, even if it had been so inclined. Some of the customers legally obligated to pay the cigarette tax to the City failed to do so. Because the City did not receive the customer information, the City could not determine which customers had failed to pay the tax. The City thus could not pursue those customers for payment. The City thereby was injured in the amount of the portion of back taxes that were never collected. See Record A996.
But as we reiterated in Holmes , [t]he general tendency of the law, in regard to damages at least, is not to go beyond the first step. 503 U. S., at 271272 (quoting Associated Gen. Contractors of Cal., Inc. v . Carpenters, 459 U. S. 519, 534 (1983) , in turn quoting Southern Pacific Co. v. Darnell-Taenzer Lumber Co. , 245 U. S. 531, 533 (1918) , internal quotation marks omitted). Our cases confirm that the general tendency applies with full force to proximate cause inquiries under RICO. Holmes , supra, at 271272; see also Bridge v. Phoenix Bond & Indemnity Co. , 553 U. S. __, __ (2008) (slip op., at 1819); Anza v. Ideal Steel Supply Corp. , 547 U. S. 451, 460461 (2006) . Because the Citys theory of causation requires us to move well beyond the first step, that theory cannot meet RICOs direct relationship requirement.
Our decision in Anza , supra , confirms that the Citys theory of causation is far too indirect. There we considered a RICO claim brought by Ideal Steel Supply against its competitor, National Steel Supply. Ideal alleged that National had defrauded New York State by failing to charge and remit sales taxes, and that National was thus able to undercut Ideals prices. The lower prices offered by National, Ideal contended, allowed National to attract customers at Ideals expense. Id ., at 458.
Finding the link between the fraud alleged and injury suffered to be attenuated, we rejected Ideals claim. Id ., at 459. The direct victim of this conduct, we held, was the State of New York, not Ideal. Id ., at 458. It was the State that was being defrauded and the State that lost tax revenue as a result. Ibid . We recognized that Ideal had asserted its own harms when [National] failed to charge customers for the applicable sales tax. Ibid . But the cause of Ideals harm was a set of actions (offering lower prices) entirely distinct from the alleged RICO violation (defrauding the State). Ibid . The alleged violation therefore had not led directly to the plaintiffs injuries, and Ideal accordingly had failed to meet RICOs requirement of a direct causal connection between the predicate offense and the alleged harm. Id ., at 460461.
The Citys claim suffers from the same defect as the claim in Anza . Here, the conduct directly responsible for the Citys harm was the customers failure to pay their taxes. And the conduct constituting the alleged fraud was Hemis failure to file Jenkins Act reports. Thus, as in Anza , the conduct directly causing the harm was distinct from the conduct giving rise to the fraud. See id ., at 458.
Indeed, the disconnect between the asserted injury and the alleged fraud in this case is even sharper than in Anza . There, we viewed the point as important because the same partyNational Steelhad both engaged in the harmful conduct and committed the fraudulent act. We nevertheless found the distinction between the relevant acts sufficient to defeat Ideals RICO claim. Here, the Citys theory of liability rests not just on separate actions , but separate actions carried out by separate parties .
The Citys theory thus requires that we extend RICO liability to situations where the defendants fraud on the third party (the State) has made it easier for a fourth party (the taxpayer) to cause harm to the plaintiff (the City). Indeed, the fourth-party taxpayers here only caused harm to the City in the first place if they decided not to pay taxes they were legally obligated to pay. Put simply, Hemis obligation was to file the Jenkins Act reports with the State, not the City, and the Citys harm was directly caused by the customers, not Hemi. We have never before stretched the causal chain of a RICO violation so far, and we decline to do so today. See id., at 460461; cf. Associated Gen. Contractors , supra, at 541, n. 46 (finding no proximate cause in the antitrust context where the plaintiffs harm stems most directly from the conduct of persons who are not victims of the conspiracy).
One consideration we have highlighted as relevant to the RICO direct relationship requirement is whether better situated plaintiffs would have an incentive to sue. See Holmes , supra, at 269270. The State certainly is better situated than the City to seek recovery from Hemi. And the State has an incentive to suethe State imposes its own $2.75 per pack tax on cigarettes possessed within the State, nearly double what the City charges. N. Y. Tax Law Ann. §471(1) (West Supp. 2009). We do not opine on whether the State could bring a RICO action for any lost tax revenue. Suffice it to say that the State would have concrete incentives to try. See Anza , supra, at 460 (Ideal accuses the Anzas of defrauding the State of New York out of a substantial amount of money. If the allegations are true, the State can be expected to pursue appropriate remedies).
The dissent would have RICOs 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 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 prevent. Post , at 6 (opinion of Breyer, 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 criticized the majoritys view for permit[ting] a defendant to evade liability for harms that are not only foreseeable, but the intended consequences of the defendants unlawful behavior. 547 U. S., at 470 (T homas, J., concurring in part and dissenting in part). But the dissent there did not carry the day, and no one has asked us to revisit Anza .
The concepts of direct relationship and foreseeability are of course two of the many shapes [proximate cause] took at common law, Holmes , supra , at 268. Our precedents make clear that in the RICO context, the focus is on the directness of the relationship between the conduct and the harm. Indeed, Anza and Holmes never even mention the concept of foreseeability.
The City offers a number of responses. It first challenges our characterization of the violation at issue. In the Citys view, the violation is not merely Hemis failure to file Jenkins Act information with the State, but a more general systematic scheme to defraud the City of tax revenue. Brief for Respondent 42. Having broadly defined the violation, the City contends that it has been directly harmed by reason of that systematic scheme. Ibid .
But the City cannot escape the proximate cause requirement merely by alleging that the fraudulent scheme embraced all those indirectly harmed by the alleged conduct. Otherwise our RICO proximate cause precedent would become a mere pleading rule. In Anza , for example, Ideal alleged that Nationals scheme was to give National a competitive advantage over Ideal. 547 U. S., at 454455. But that allegation did not prevent the Court from concluding that Nationals fraud directly harmed only the State, not Ideal. As the Court explained, Ideal could not circumvent the proximate-cause requirement simply by claiming that the defendants aim was to increase market share at a competitors expense. Id ., at 460. 1
Our precedent makes clear, moreover, that the compensable injury flowing from a [RICO] violation … necessarily is the harm caused by [the] predicate acts. Id., at 457 (quoting Sedima, S. P. R. L. v. Imrex Co. , 473 U. S. 479, 497 (1985) ). In its RICO statement, the City alleged that Hemis failure to file Jenkins Act reports constituted the predicate act of mail and wire fraud. Record A980. The City went on to allege that this predicate act directly caused its harm, id., at A996, but that assertion is a legal conclusion about proximate causeindeed, the very legal conclusion before us. The only fraudulent conduct alleged here is a violation of the Jenkins Act. See 541 F. 3d, at 459 (Winter, J., dissenting). Thus, the City must show that Hemis failure to file the Jenkins Act reports with the State led directly to its injuries. This it cannot do.
The City also relies on Bridge , 553 U. S. ___. Bridge reaffirmed the requirement that there must be a sufficiently direct relationship between the defendants wrongful conduct and the plaintiffs injury. Id ., at ___ (slip op., at 18). The case involved competing bidders at a county tax-lien auction. Because the liens were profitable even at the lowest possible bid, multiple bidders offered that low bid. (The bidding took the form of the percentage tax penalty the bidder would require the property owner to pay, so the lowest possible bid 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 ., at ___ (slip op., at 3) (internal quotation marks omitted). But as we noted in that case, this created a perverse incentive: Bidders who, in addition to bidding themselves, sen[t] agents to bid on their behalf [would] obtain a disproportionate share of liens. Ibid . The county therefore prohibited bidders from using such agents. Ibid .
A losing bidder alleged that a competitor had defrauded 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 RICOs causation requirement. Distinguishing that claim from the one at issue in Anza , we noted that the plaintiffs theory of causation in Bridge was straightforward: Because of the zero-sum nature of the auction, and because the county awarded bids on a rotational basis, each time a fraud-induced bid was awarded, a particular legitimate bidder was necessarily passed over. 553 U. S., at ___ (slip op., at 18). The losing bidders, moreover, were the only parties injured by petitioners misrepresentations. Ibid . The county was not; it received the same revenue regardless of which bidder prevailed.
The Citys theory in this case is anything but straightforward: Multiple steps, as we have detailed, separate the alleged fraud from the asserted injury. And in contrast to Bridge , where there were no independent factors that account[ed] for [the plaintiffs] injury, ibid., here there certainly were: The Citys theory of liability rests on the independent actions of third and even fourth parties.
The City at various points during the proceedings below described its injury as the lost opportunity to tax rather than lost tax revenue. It is not clear that there is a substantive distinction between the two descriptions. In any event, before this Court, the Citys argument turned on lost revenue, not a lost opportunity to collect it. See, e.g. , Brief for Respondent i (Counter-Question Presented[:] Does the City of New York have standing under RICO because lost tax revenue constitutes a direct injury to the Citys business or property in accord with the statute, 18 U. S. C. §1964(c), and this Courts authority?); id ., at 40 ([T]he City alleges that it has been injured (the loss of tax revenues) by defendants RICO violations). Indeed, in its entire brief on the merits, the City never uses the word opportunity (or anything similar) to describe its injury.
Perhaps the City articulated its argument in terms of the lost revenue itself to meet Hemis contention that an injury to the mere opportunity to collect taxes fell short of RICOs injury to property requirement. Brief for Petitioners 25 (The opportunity to collect taxes from those who did owe them … falls within a class of expectation interests that do not qualify as injury to business or property and therefore do not confer civil RICO standing (internal quotation marks omitted)); see Cleveland v. United States , 531 U. S. 12, 15 (2000) (It does not suffice … that the object of the fraud may become property in the recipients hands; for purposes of the mail fraud statute, the thing obtained must be property in the hands of the victim).
That is not to say, however, that the City would fare any better on the causation question had it framed its argument in terms of a lost opportunity. Hemis filing obligation would still be to the State, and any harm to the City would still be caused directly by the customers failure to pay their taxes. See 541 F. 3d, at 461 (Winter, J., dissenting). Whatever the Citys reasons for framing its merits arguments as it has, we will not reformulate them for it now. 2
In a final effort to save its claim, the City has shifted course before this Court. In its second amended complaint and RICO statement, the City relied solely on Hemis failure to file Jenkins Act reports with the State to form the basis of the predicate act mail and wire frauds. See Second Amended Compl. ¶¶99, 101, 118, 125; Record A980A982. Before this Court, however, the City contends that Hemi made affirmative misrepresentations to City residents, which, the City now argues, comprise part of the RICO predicate mail and wire frauds. See Brief for Respondent 4243. The Citys counsel pressed the point at oral argument, asserting that the Citys injury was caused by the sellers misrepresentation, which encourages the purchasers not to pay taxes. Tr. of Oral Arg. 44.
The City, however, affirmatively disavowed below any reliance on misrepresentations to form the predicate RICO violation. The alleged false statements, the City there stated, are evidence of the scheme to defraud, but are not part of the fraud itself. … [T]he scheme to defraud would exist even absent the statements. Record A980. The City reiterated the point: The scheme consists of the interstate sale of cigarettes and the failure to file Jenkins Act reports indentifying those sales. Ibid . Related to the fraud, but not a circumstance constituting the fraud, the defendants inform customers that [their] purchases will be concealed, and also seek to convince their customers that no taxes are owed by claiming, falsely, that the sales are tax-free. Id., at A982. Not only did the City disclaim any reliance upon misrepresentations to the customers to form the predicate acts under RICO, but the City made clear in its second amended complaint that its two RICO claims rested solely on the Jenkins Act violations as the predicate acts. See Second Amended Compl. ¶¶ 118, 125. Because the City defined the predicate act before the District Court as Hemis failure to file the Jenkins Act reports, and expressly disavowed reliance on the alleged misrepresentations themselves as predicate acts, we decline to consider Hemis alleged misstatements as predicate acts at this late 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, which harmed a party to whom it owed no duty. It is about imposing such liability to substitute for or complement a governing bodys uncertain ability or desire to collect taxes directly from those who owe them. And it is about the fact that the liability comes with treble damages and attorneys fees attached. This Court has interpreted RICO broadly, consistent with its terms, but we have also held that its reach is limited by the requirement of a direct causal connection between the predicate wrong and the harm. Anza , 547 U. S., at 460. The Citys injuries here were not caused directly by the alleged fraud, and thus were not caused by reason of it. The City, therefore, has no RICO claim.
The judgment of the Court of Appeals for the Second Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice Sotomayor took no part in the consideration or decision of this case.
1 Even if we were willing to look to Hemis intent, as the dissent suggests we should, the City would fare no better. Hemis aim was not to defraud the City (or the State, for that matter) of tax revenue, but to sell more cigarettes. Hemi itself neither owed taxes nor was obliged to collect and remit them. This all suggests that Hemis alleged fraud was aimed at Hemis competitors, not the City. But Anza teaches that the competitors injuries in such a case are too attenuated to state a RICO claim.
2 The dissent recognizes that its position poses the troubling specter of turning RICO into a tax collection statute. Post, at 1112 (opinion of Breyer, J.). The dissents answer looks largely to prosecution policy set forth in the Federal Department of Justice Guidelines, which are, of course, not only changeable, but have no applicability whatever to state or local governments. Under the decision below and the dissents position, RICO could be used as a tax collection device based solely on the failure to file reports under the Jenkins Act, which itself provides quite limited remedies. See 15 U. S. C. §377 (providing that a violation of the Jenkins Act may be punished as a misdemeanor with a fine up to $1,000 and imprisonment for no more than six months). And that device would be available not only to the State, to which the reports were due, but also to the City, to which Hemi owed no duty under the Act and to which it owed no taxes.
Even if we were willing to look to Hemis intent, as the dissent suggests we should, the City would fare no better. Hemis aim was not to defraud the City (or the State, for that matter) of tax revenue, but to sell more cigarettes. Hemi itself neither owed taxes nor was obliged to collect and remit them. This all suggests that Hemis alleged fraud was aimed at Hemis competitors, not the City. But Anza teaches that the competitors injuries in such a case are too attenuated to state a RICO claim.
The dissent recognizes that its position poses the troubling specter of turning RICO into a tax collection statute. Post, at 1112 (opinion of Breyer, J.). The dissents answer looks largely to prosecution policy set forth in the Federal Department of Justice Guidelines, which are, of course, not only changeable, but have no applicability whatever to state or local governments. Under the decision below and the dissents position, RICO could be used as a tax collection device based solely on the failure to file reports under the Jenkins Act, which itself provides quite limited remedies. See 15 U. S. C. §377 (providing that a violation of the Jenkins Act may be punished as a misdemeanor with a fine up to $1,000 and imprisonment for no more than six months). And that device would be available not only to the State, to which the reports were due, but also to the City, to which Hemi owed no duty under the Act and to which it owed no taxes.
HEMI GROUP, LLC
PETITIONERS v. CITY OF NEW YORK,
on writ of certiorari to the united states court of appeals for the second circuit
Justice Ginsburg , concurring in part and concurring in the judgment.
As the Court points out, this is a case about the RICO liability of a company for lost taxes it had no obligation to collect, remit, or pay. Ante , at 15. New York City (or City) cannot, consistent with the Commerce Clause, compel Hemi Group, an out-of-state seller, to collect a City sales or use tax. See Quill Corp. v. North Dakota , 504 U. S. 298, 301 (1992) ; National Bellas Hess, Inc. v. Department of Revenue of Ill. , 386 U. S. 753, 758 (1967) . Unable to impose its tax on Hemi Group, or to require Hemi Group to collect its tax, New York City is attempting to use the Racketeer Influenced and Corrupt Act (RICO), 18 U. S. C. §1964(c), in combination with the Jenkins Act, 15 U. S. C. §§375378, to overcome that disability.
Hemi Group committed fraud only insofar as it violated the Jenkins Act by failing to report the names and addresses of New York purchasers to New York State. There is no other grounding for the Citys charge that it was defrauded by Hemi Group. Absent the Jenkins Act, [Hemi Group] would have owed no duty to disclose [its] sales to anyone, and [its] failure to disclose could not conceivably be deemed fraud of any kind. City of New York v. Smokes-Spirits.com, Inc. , 541 F. 3d 425, 460 (CA2 2008) (Winter, J., dissenting in part and concurring in part).
Because the alleged fraud is based on violations of … the Jenkins Act, … the nature and consequences of the fraud are [properly] determined solely by the scope of that Act. Id., at 459. But conspicuously absent from the Citys pleadings is any claim brought pursuant to the Jenkins Act itself, rather than RICO, seeking enforcement of the Jenkins Act. Id., at 460. The City thus effectively admits that its claim is outside the scope of the very statute on which it builds its RICO suit.
I resist reading RICO to allow the City to end-run its lack of authority to collect tobacco taxes from Hemi Group or to reshape the quite limited remedies Congress has provided for violations of the Jenkins Act, see ante , at 13, n. 2. Without subscribing to the broader range of the Courts proximate cause analysis, I join the Courts opinion to the extent it is consistent with the above-stated view, and I concur in the Courts judgment.
HEMI GROUP, LLC
PETITIONERS v. CITY OF NEW YORK,
on writ of certiorari to the united states court of appeals for the second circuit
Justice Breyer , with whom Justice Stevens and Justice Kennedy join, dissenting.
In my view, the Hemi Groups failure to provide New York State with the names and addresses of its New York City cigarette customers proximately caused New York City to lose tobacco tax revenue. I dissent from the Courts contrary holding.
Although the ultimate legal issue is a simple one, the statutory framework within which it arises is complex. As the majority points out, ante , at 3, the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U. S. C. §§19611968, provides a private cause of action (and treble damages) to [a]ny person injured in that persons business or property by reason of conduct that involves a pattern of racketeering activity. §§1964(c) (emphasis added), 1962. RICO defines racketeering activity to include violations of various predicate criminal statutes including mail and wire fraud. §1961(1). The pattern of racketeering at issue here consists of repeated instances of mail fraud, which in turn consist largely of violations of the federal Jenkins Act, 15 U. S. C. §§375378 . That Act seeks to help States collect tobacco taxes by requiring out-of-state cigarette sellers, such as Hemi, to file reports with state tobacco tax administrators identifying the names and addresses of in-state customers and the amounts they purchased. The violations consist of Hemis intentional failure to do so.
As the majority points out, we must assume for present purposes that an intentional failure to file Jenkins Act reports counts as mail fraud (at least where the failure is part of a scheme that includes use of the mails). Ante , at 4. Lower courts have sometimes so held. See United States v. Melvin , 544 F. 2d 767, 773777 (CA5 1977); United States v. Brewer , 528 F. 2d 492, 497498 (CA4 1975). The Court of Appeals here so held. City of New York v. Smokes-Spirits.com, Inc. , 541 F. 3d 425, 446 (CA2 2008). And no one has challenged that holding.
We must also assume that Hemis 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 customers. See Restatement (Second) of Torts §551, p. 119 (1976) (a person who fails to disclose … a fact may be subject to … liability as if he had represented the nonexistence of the matter that he has failed to disclose); cf. Stewart v. Wyoming Cattle Ranche Co. , 128 U. S. 383, 388 (1888) (concealment or suppression of material fact equivalent to a false representation). On these assumptions, the question before us is whether New York Citys loss of tax revenues constitutes an injury to its business or property by reason of Hemis Jenkins Act misrepresentations.
The case arises as a result of the District Courts dismissal of New York Citys RICO complaint. Fed. Rule Civ. Proc. 12(b)(6). Hence we must answer the question in light of the facts alleged, taking as true the facts pleaded in the complaint (along with the RICO statement submitted pursuant to the District Courts rule). Bridge v. 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) and New York City (or City) both impose tobacco taxes on New York cigarette buyers. Second Am. Compl. ¶37.
2.Both City and State normally collect the taxes from in-state cigarette sellers, who, in turn, charge 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. The difference in price is almost entirely attributable to the fact that Hemis prices do not include any charge for New York taxes. Hemi advertises its cigarettes as tax free and often adds that it does not report any sales activity to any State taxing authority. Id., ¶¶2, 6, 108b (internal quotation marks omitted; emphasis deleted).
4.New York State normally receives Jenkins Act reports from out-of-state sellers. It is contractually obliged to pass the information on to New York City (and I assume it normally does so). Id., ¶¶89, 11, 5457.
5.When it receives Jenkins-Act-type information, New York City writes letters to resident customers asking them to pay the tobacco tax they owe. 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., ¶¶5859.
6.Hemi has consistently and intentionally failed to file Jenkins Act reports in order to prevent both State and City from collecting the tobacco taxes that Hemis in-state customers owe and which otherwise many of those customers would pay. Id., ¶¶13, 24, 58.
The majority asks whether New York City stated a valid cause of action in alleging that it lost tobacco tax revenue by reason of Hemis unlawful misrepresentations. The facts just set forth make clear that we must answer that question affirmatively. For one thing, no one denies that Hemis misrepresentation was a but-for condition of New York Citys loss. In the absence of the misrepresentation, i.e. , had Hemi told New York State the truth about its New York City customers, New York City would have written letters to the purchasers and obtained a significant share of the tobacco taxes buyers owed.
For another thing, New York Citys losses are reasonably foreseeable results of the misrepresentation. It is foreseeable that, without the name/address/purchase information, New York City would not be able 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 complaints assertion that Hemi advertised that it did not report sales information to State taxing authorit[ies]. See, e.g., Smith v. Bolles , 132 U. S. 125, 130 (1889) (for causation purposes, those results are proximate which the wrong-doer from his position must have contemplated as the probable consequence of his fraud or breach of contract (quoting Crater v. Binninger , 33 N. J. L. 513, 518 (Ct. Errors and Appeals 1869)); see also W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts §110, p. 767 (5th ed. 1984) (hereinafter Prosser and Keeton); 3 S. Speiser, C. Krause, & A. Gans, The American Law of Torts §11:3, p. 68 (2003) (By far the most treated and most discussed aspect of the law of proximate or legal cause is the so-called doctrine of foreseeability). But cf. ante, at 9 (The dissent would have RICOs proximate cause requirement turn on foreseeability …).
Further, Hemi misrepresented the relevant facts in order to bring about New York Citys relevant loss. It knew the loss would occur; it intended the loss to occur; one might even say it desired the loss to occur. It is difficult to find common-law cases denying liability for a wrongdoers intended consequences, particularly where those consequences are also foreseeable. Cf. Bridge, supra , at ______ (slip op., at 910) ([S]uppose an enterprise that wants to get rid of rival businesses mails representations about them to their customers and suppliers, but not to the rivals themselves. If the rival businesses lose money as a result of the misrepresentations, it would certainly seem that they were injured in their business by reason of a pattern of mail fraud …); N. M. ex rel. Caleb v. Daniel E. , 2008 UT 1, ¶7, n. 3, 175 P. 3d 566, 569, n. 3 ([I]f an unskilled marksman were to shoot a single bullet at a distant individual with the intent of killing her, that individuals injury or death may not be the natural and probable consequence of the [shooters] act[,] … [but] the harm would not be an accident because the shooter intended the harm, even though the likelihood of success was improbable); 1 F. Harper & F. James, The Law of Torts, §7.13, p. 584 (1956) (explaining that, ordinarily, all intended consequences of an intentional act are proximate).
In addition, New York Citys revenue loss falls squarely within the bounds of the kinds of harms that the Jenkins Act (essentially the predicate statute) seeks to prevent. The statute is entitled An Act To assist States in collecting sales and use taxes on cigarettes. 63Stat. 884. I have no reason to believe the Act intends any different result with respect to collection of a citys tobacco tax assessed under the authority of state law. See N. Y. Unconsol. Law Ann. §9436(1) (West Supp. 2009) (authorizing cities with over one million inhabitants to impose their own cigarette taxes). The Restatement (Second) of Torts explains that where
a statute requires information to be furnished … for the protection of a particular class of persons, one who makes a fraudulent misrepresentation … is subject to liability to the persons for pecuniary loss … in a transaction of the kind in which the statute is intended to protect them. §536, at 77 (1976).
See also §536, Appendix (citing supporting cases in the Reporters Note).
Finally, we have acknowledged that Congress modeled §1964(c) on the civil-action provision of the federal antitrust laws, and we have therefore looked to those laws as an interpretive aid in RICO cases. Holmes v. Securities Investor Protection Corporation , 503 U. S. 258, 267, 268 (1992) . I can find no antitrust analogy that suggests any lack of causation here, nor has the majority referred to any such analogical antitrust circumstance.
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 prevent. Neither antitrust analogy nor any statutory policy of which I am aware precludes a finding of proximate cause. I recognize that some of our opinions may be read to suggest that the words by reason of in RICO do not perfectly track common-law notions of proximate cause. See, e.g. , Bridge , 553 U. S., at ______ (slip op., at 1416). But where so much basic common law argues in favor of such a finding, how can the Court avoid that conclusion here?
The majority bases its contrary conclusion upon three special circumstances and its reading of two of this Courts prior cases. In my view, none of the three circumstances precludes finding causation (indeed two are not even relevant to the causation issue). Nor can I find the two prior cases controlling.
The three circumstances are the following: First, the majority seems to argue that the intervening voluntary acts of third parties, namely, the customers own independent failures to pay the tax, cuts the causal chain. Ante , at 8 ([T]he Citys harm was directly caused by the customers, not Hemi); see Saugerties Bank v. Delaware & Hudson Co. , 236 N. Y. 425, 430, 141 N. E. 904, 905 (1923) (third partys forgery of a bill of lading an intervening cause); Prosser and Keeton §44, at 313314 (collecting cases on intervening intentional or criminal acts). But an intervening third-party act, even if criminal, does not cut a causal chain where the intervening act is foreseeable and the defendants conduct increases the risk of its occurrence. See Lillie v. Thompson , 332 U. S. 459, 462 (1947) (per curiam); Horan v. Watertown , 217 Mass. 185, 186, 104 N. E. 464, 465 (1914); see also Restatement (Second) of Torts §435A, at 454 (19631964) (intentional tortfeasor liable for intended harm except where the harm results from an outside force the risk of which is not increased by the defendants act). Hemis act here did increase the risk that New York City would not be paid; and not only was the risk foreseeable, but Hemis advertising strongly suggests that Hemi actually knew nonreporting would likely bring about this very harm.
The majority claims that directness, rather than foreseeability, should be our guide in assessing proximate cause, and that the lack of a direct relationship in this case precludes a finding of proximate causation. Ante , at 910. But courts used this concept of directness in tort law to expand liability (for direct consequences) beyond what was foreseeable, not to eliminate liability for what was foreseeable. Thus, under the directness theory of proximate causation, there is liability for both all direct (or directly traceable) consequences and those indirect consequences that are foreseeable . Prosser and Keeton §42, at 273 (emphasis added); see also id., §43, at 294, and n. 17 (citing Nunan v. Bennett , 184 Ky. 591, 212 S. W. 570 (1919)). I do not read this Courts opinions in Holmes or Anza v. Ideal Steel Supply Corp. , 547 U. S. 451 (2006) , to invoke anything other than this traditional understanding.
Second, the majority correctly points out that Hemi misrepresented the situation to the State, not to the Citya circumstance which, the majority believes, significantly separates misrepresentation from harm. Ante , at 8. But how could that be so? New York State signed a contract promising to relay relevant information to the City. In respect to that relevant information, the State is a conduit, indeed roughly analogous to a postal employee. This Court has recognized specifically that under the common law 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 States , 483 U. S. 107, 129 (1987) . The treatises say the same. See, e.g., Prosser and Keeton §107, at 743745; 26 C. J. S., Fraud §47, p. 1121 (1921) (collecting cases); see also Prosser, Misrepresentation and Third Parties, 19 Vand. L. Rev. 231, 240241, and nn. 5659, 6264 (1966) (collecting cases). This Court has never suggested the contrary, namely, that a defendant is not liable for (foreseeable) harm (intentionally) caused to the target of a scheme to defraud simply because the misrepresentation was transmitted via a third (or even a fourth or fifth) party. Cf. Terry, Intent to Defraud, 25 Yale L. J. 87, 93 (1915) (When a representation is communicated through one person to another in such circumstances that it can be deemed to be directed to the latter, it makes no difference through how many persons or by how circuitous a route it reaches the latter …).
Third, the majority places great weight upon its view that Hemi tried to defraud the State, not the City. Ante, at 89. Hemi, however, sought to defraud both. Third Amended RICO Statement ¶d (explaining that [e]very other State or local government that imposes a use tax on cigarettes and whose residents purchase cigarettes from Hemi is a victim of its scheme to defraud). Hemi sought to prevent the State from collecting state taxes; and it sought to prevent the City from collecting city taxes. Here we are concerned only with the latter. In respect to the latter, the State was an information conduit. The fact that state taxes were also involved is beside the point.
The two Supreme Court cases to which the majority refers involve significantly different causal circumstances. Ante, at 58. The predicate acts in Holmes the defendants acts that led to the plaintiffs harmconsisted 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 stock of another. When the truth came out, stock prices fell, investors (specifically, stockbrokers) lost money, and since the stockbrokers could not pay certain creditors, those creditors also lost money. 503 U. S., at 262263. Claiming subrogation to stand in the shoes of the creditors, the Securities Investor Protection Corporation sued. Id., at 270271.
Since the creditors had not bought the securities, there was little reason to believe the defendant intended their harm. And the securities statutes seek, first and foremost, to protect investors, not creditors of those who sell stock to those investors. The latter harm (a brokers creditors loss) differs in kind from the harm that the predicate act statute primarily seeks to avoid and that its violation would ordinarily cause (namely, investors stock-related monetary losses). As Part IIA, supra, points out, neither of these circumstances is present here.
In Anza , the plaintiff was a business competitor of the defendants. The plaintiff claimed that the defendants falsely told state officials that they did not owe sales tax. The plaintiff added that, had the defendants paid the tax they owed, the defendants would have had less money available to run their business, and the plaintiff consequently would have been able to compete against them more effectively. 547 U. S., at 454, 457458.
Again, in Anza the kind of harm that the plaintiff alleged is not the kind of harm that the tax statutes primarily seek to prevent. Rather, it alleged a kind of harm (competitive injury) that tax violations do not ordinarily cause and which ordinarily flows from the regular operation of a competitive marketplace. Thus, in both Holmes and Anza, unlike the present case, plaintiffs alleged special harm, neither squarely within the class of harms at which the relevant statutes were directed, nor of a kind that typical violators would intend or even foresee.
Bridge, which the majority seeks to distinguish, ante, at 1112, is a more closely analogous case. The defendants in that case directed agents to misrepresent to a county that they qualified as independent bidders at a county-run property auction. They consequently participated in the auction. And the plaintiffs, facing additional bidders, lost some of the property that they otherwise would have wonall to their financial disadvantage. 553 U. S., at ______ (slip op., at 34). The harm was foreseeable; it was intended; and it was precisely the kind of harm that the countys bidding rules sought to prevent. Thus this Court held that the harm was a foreseeable and natural consequence of [the defendants] scheme. Id., at ___ (slip op., at 18).
In sum, the majority recognizes that [p]roximate cause for RICO purposes … should be evaluated in light of its common law foundations, ante , at 6, but those foundations do not support the majoritys view. Moreover, the majoritys rationale would free from RICO liability defendants who would appear to fall within its intended scope. Consider, for example, a group of defendants who use a marketing firm (in RICO terms, an enterprise) to perpetrate a variation on a pump and dump scheme. See, e.g., United States v. Salmonese , 352 F. 3d 608, 612 (CA2 2003). They deliberately and repeatedly make egregiously fraudulent misrepresentations to inflate the price of securities that, unbeknownst to investors, they own. After the stock price rises, the defendants sell at an artificial profit. When the fraud is revealed, the price crashes, to the investors detriment. Suppose the defendants have intentionally spoken directly only to intermediaries who simply repeated the information to potential investors, and have not had any contact with the investors themselves. Under the majoritys reasoning, these defendants apparently did not proximately cause the investors losses and are not liable under RICO.
If there is causation, we must decide whether, for RICO purposes, the Citys loss of tax revenue is business or property under 18 U. S. C. §1964(c). Ante, at 5 (acknowledging, but not reaching, this second issue). The question has led to concern among the lower courts. Some fear that an affirmative answer would turn RICO into a tax collection statute, permitting States to bring RICO actions and recover treble damages for behavior that amounts to no more than a failure to pay taxes due. See, e.g., Michigan, Dept. of Treasury, Revenue Div. v. Fawaz , No. 861809, 1988 WL 44736, *2 (CA6 1988) (holding that tax revenue is not RICO property lest district courts become collection agencies for unpaid state taxes); Illinois Dept. of Revenue v. Phillips , 771 F. 2d 312, 316, 312 (CA7 1985) (holding, reluctantly, that a states Department of Revenue may file suit in federal court for treble damages under [RICO] against a retailer who files fraudulent state sales tax returns).
In a related context, however, the Department of Justice has taken steps to avoid the tax collection agency problem without reading all tax-related frauds out of similar federal criminal statutes. The Departments prosecution guidelines require prosecutors considering a tax-related mail fraud or wire fraud or bank fraud prosecution (or a related RICO prosecution) to obtain approval from high-level Department officials. And those guidelines specify that the Department will grant that approval only where there is at issue a large fraud loss or a substantial pattern of conduct and will not do so, absent unusual circumstances, in cases involving simply one persons tax liability. Dept. of Justice, United States Attorneys Manual §64.210(A) (2007), online at http://www.justice. gov/usao/eousa/foia_reading_room/usam/title6/4mtax.htm (as visited Jan. 20, 2010, and available in Clerk of Courts case file); see also §64.210(B) (explaining that the Department will not authorize the use of mail, wire or bank fraud charges to convert routine tax prosecutions into RICO … cases).
This case involves an extensive pattern of fraudulent conduct, large revenue losses, and many different unrelated potential taxpayers. The Departments guidelines would appear to authorize prosecution in these circumstances. And limiting my consideration to these circumstances, I would find that this RICO complaint asserts a valid harm to business or property. I need not and do not express a view as to how or whether RICOs civil action provisions apply to simpler instances of individual tax liability.
This conclusion is virtually compelled by Pasquantino v. United States , 544 U. S. 349 (2005) , a case that we decided only five years ago. We there pointed out that the right to uncollected taxes is an entitlement to collect money . . . , the possession of which is something of value. Id., at 355 (quoting McNally v. United States , 483 U. S. 350, 358 (1987) ). Such an entitlement has long been thought to be a species of property. 544 U. S., at 356 (citing 3 W. Blackstone, Commentaries on the Laws of England 153155 (1768)). And fraud at common law included a scheme to deprive a victim of his entitlement to money. 544 U. S., at 356. We observed that tax evasion inflict[s] an economic injury no less than the embezzle[ment] [of] funds from the … treasury. Ibid. And we consequently held that Canadas right to uncollected excise taxes on the liquor petitioners imported into Canada is property within the terms of the mail fraud statute. Id., at 355.
Hemi points in reply to our decision in Hawaii v. Standard Oil Co. of Cal. , 405 U. S. 251 (1972) . But that case involved not a loss of tax revenues, but injury to the general economy of a Stateinsofar as it was threatened by violations of antitrust law. Id., at 260. Hawaiis interest, both more general and derivative of harm to individual businesses, differs significantly from the particular tax loss at issue in Pasquantino and directly at issue here.
We have previously made clear that the compensable injury for RICO purposes is the harm caused by the predicate acts. See generally Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 495496 (1985) ; cf. Cleveland v. United States , 531 U. S. 12, 25 (2000) . I can find no convincing reason in the context of this case to distinguish in the circumstances present here between property as used in the mail fraud statute and property as used in RICO. 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 respondents favor here.
With respect, I dissent.