Law School Case Brief
Bridge v. Phx. Bond & Indem. Co. - 553 U.S. 639, 128 S. Ct. 2131 (2008)
Under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.S. §§ 1961 et seq., a person can be injured by reason of a pattern of mail fraud even if he has not relied on any misrepresentations.
Each year the Cook County Treasurer's Office holds a public auction to sell its tax liens on delinquent taxpayers' property. To prevent any one buyer from obtaining a disproportionate share of the liens, the county adopted the "Single, Simultaneous Bidder Rule" (Rule), which requires each buyer to submit bids in its own name, prohibits a buyer from using "apparent agents, employees, or related entities" to submit simultaneous bids for the same parcel, and requires a registered bidder to submit a sworn affidavit affirming its compliance with the Rule. Both parties regularly participate in the tax sales. Plaintiffs, Phoenix Bond & Indemnity Co. and others (Phoenix) filed suit, alleging that Defendants John Bridge and others (Bridge) fraudulently obtained a disproportionate share of liens by filing false compliance attestations. As relevant here, Phoenix claimed that Bridge violated and conspired to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. §§ 1961 et seq., through a pattern of racketeering activity involving mail fraud, which occurred when Bridge sent property owners various notices required by Illinois law. The District Court dismissed the RICO claims for lack of standing, finding that Phoenix were not protected by the mail fraud statute because they did not receive the alleged misrepresentations. Reversing, the Court of Appeals for the Seventh Circuit based standing on the injury Phoenix suffered when they lost the chance to obtain more liens, and found that Phoenix had sufficiently alleged proximate cause because they were immediately injured by the scheme. The appellate court also rejected Bridge's argument that Phoenix was not entitled to relief under RICO because they had not received, and therefore had not relied on, any false statements. The United States Supreme Court granted Bridge's petition for certiorari review.
Must a plaintiff asserting a RICO claim predicated on mail fraud plead and prove that it relied on the defendant's alleged misrepresentations?
The U.S. Supreme Court unanimously held that Phoenix, as the bidders, in asserting the RICO claim predicated on mail fraud, were not required to show, either as an element of their claim or as a prerequisite to establishing proximate causation, that Phoenix relied on Bridge's, its competitors, alleged misrepresentations. A RICO claim based on predicate acts of mail fraud only required use of the mails as a significant part of the alleged pattern of misrepresentations, and reliance by the county was sufficient to support the RICO claim. Further, the bidders could be injured by the pattern of mail fraud through loss of valuable tax liens even if they did not rely on the misrepresentations.
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