Anza, et al. v. Ideal Steel Corporation

Case Updates

NCLC urged the U.S. Supreme Court to agree to hear this case in order to clarify whether a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim by a company against its competitor, alleging injury from the competitor’s alleged reinvestment of so-called “racketeering proceeds” into its business, establishes the required element of proximate cause. The case arises out of a civil RICO claim brought by a steel company against its competitor alleging that the defendant corporation engaged in a “pattern of racketeering activity” by submitting fraudulent sales tax returns in an effort to conceal failures to charge or pay sales tax for cash sales, and that the company “use[d] or invest[ed]” income from the alleged racketeering activity back into its store. In its amicus brief, NCLC explains that the proximate cause requirement in civil RICO claims ensures that a plaintiff’s claimed injuries are the direct result of the alleged RICO violation. NCLC argued that the Second Circuit’s decision substantially weakens the proximate cause requirement by enabling a business to claim lost profits from the choice of its competitor to open a competing business with proceeds allegedly derived from racketeering activity. Allowing such claims would enable competitors to punish pro-competitive activity that the law otherwise should and does encourage. Allowing such claims would also permit competitors who do not succeed in the marketplace to harass their rivals with RICO lawsuits in the courtroom—impairing the very “free competition” RICO was intended to protect.