“Proximate cause” is more frequently litigated in civil RICO cases than in common law torts cases due to the claim-within-a-claim nature of RICO law. See, 18 U.S.C. 1964. Under RICO, a plaintiff must allege a “predicate act”—a violation of one or more of an enumerated list of racketeering-like offenses. Then the plaintiff must also allege a RICO violation, which is, in essence, a scheme to commit a “pattern” of predicate acts.
Plaintiff will almost always allege that he/she is the victim of the RICO scheme itself, but not necessarily the victim of the predicate acts. If plaintiff alleges that the predicate acts victimized, primarily, someone other than plaintiff, defendant is likely to raise a proximate cause challenge.
If a RICO proximate cause challenge is raised, the analysis is usually framed by two U.S. Supreme Court cases, known colloquially as Anza and Bridge—the former resulting in dismissal for lack of RICO proximate causation; the latter finding adequate proximate causation. Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006); Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008). Anza and Bridge draw the boundaries of the playing field.
In the first quarter of 2020, the Ninth Circuit issued two RICO proximate cause rulings—both dismissing the respective cases for want of proximate causation. These can be seen as wins for the RICO defense bar. At the very least, RICO practitioners in the Ninth Circuit have two more fact patterns to analogize or distinguish.
In Ozeran v. Jacobs, 798 Fed.Appx. 120 (9th Cir., Feb. 18, 2020), the plaintiff workers’ compensation attorney sued fellow workers’ comp. attorneys under the RICO statute alleging that their unlawful referral scheme harmed him by way of loss of clients. The Ninth Circuit upheld the District Court’s dismissal of the claim with prejudice, holding that the direct victims of the unlawful referral scheme were the clients of the defendant attorney; that plaintiff at best was indirectly harmed. The Court further explained: “Like the plaintiff in Anza, Ozeran cannot avoid his inability to allege proximate causation by alleging that Defendants’ aim was to increase market share at a competitor’s expense.” Id. at 122.
A month later, the Court would rule again in City of Almaty v. Khrapunov, 956 F.3d 1129 (9th Cir., Apr. 22, 2020), again upholding dismissal. In that case, a city in Kazakhstan alleged that defendant defrauded the city of millions of dollars and subsequently laundered the money in California. The City sought to recover the costs it incurred in tracing the laundered money and other costs in pursuing the money. The Court ultimately held that “The City of Almaty’s expenditure of funds to trace its allegedly stolen funds is a consequential damage of the initial theft suffered in Kazakkstan and is not causally connected to the predicate act of money laundering.” Id. at 1134.
Brodie Smith and Anthony Lanza, litigation and trial attorneys, have developed focused practice areas both prosecuting and defending civil RICO lawsuits in multiple federal courts. They have also been retained by other attorneys to consult on RICO claims in both pending and contemplated lawsuits. They can be contacted at (949) 221-0490 or here.
The information in this blog post does not constitute legal advice, nor create and attorney-client relationship. Laws constantly change, and this information may become outdated; moreover, the information here is only a general overview and may omit some aspects of the law. It is provided for discussion purposes only; not to be relied upon by the reader in making any real-world decisions.
For our article on RICO as an alternative to traditional conspiracy allegations, click here.