Decisions: Court rules on RICO claim, 3 other cases

UPDATE: 1:58 p.m.

The Supreme Court on Monday clarified the requirement under the anti-racketeering law (RICO) that there must be proof that business injury was caused by the claimed wrongdoing. It is not enough, the Court ruled, for one company to complain that a competitor’s tactics gave the rival a competitive advantage. For the RICO claim to go forward, the decision said, the suing company must show that there is “some direct relation between the injury asserted and the injurious conduct challenged.” The ruling came in Anza v. Ideal Steel Supply Corp. (04-433).

The case involved competition in the sale of steel mill products to ornamental iron workers and small steel fabricators, as well as do-it-yourself homeowners. The companies involved were Ideal Steel Supply Copr. and National Steel Supply, Inc., competitors in the New York City area. Ideal contended that National failed to collect sales taxes on sales to cash-paying customers and failed to report those sales to New York taxing authorities, thus putting Ideal at a competitive disadvantage. Ideal said that the failure to collect the taxes and filing false returns amounted to mail and wire fraud, as underlying acts for a RICO violation. Ideal also contended that National used the money saved on the tax avoidance scheme to open a new location, causing Ideal to lose business. In its decision Monday, the Court ruled that Ideal could not show that the failure to collect taxes and filing false returns was the “proximate cause” of any business harm to Ideal. The direct victim of such a tax scheme, it said, was New York State, which could pursue its own remedies. The Court’s decision can be found here.

As a result of that decision, the Court, in another argued case, ordered the Eleventh Circuit to reconsider the case of Mohawk Industries v. Willliams (05-465). Last December, the Court had agreed to hear one issue raised in that case — that is, whether RICO applies to a corporation and agents that work for it on the theory they were part of a racketeering enterprise. At that time, the Court had refused to hear a second issue, on the same issue as in the Anza case on the necessary link between harmful conduct and injury under RICO. On Monday, it dismissed its grant of review on the definition of enterprise under RICO, and ordered the Eleventh Circuit to reconsider the case under Monday’s decision in the Anza case. That was done in a per curiam decision — unsigned but announced by Chief Justice John G. Roberts, Jr.

In a second per curiam decision announced by the Chief Justice, the Court sent back to the Ninth Circuit a granted case on federal employees’ rights to sue over personnel actions, rather than pursue them through union grievance machinery. The case is Whitman v. U.S. Department of Transportation (04-1131). The remand will require the lower court to sort out jurisdictional questions under two federal statutes — the general federal question statute, and a special statute on jurisdiction over employment-related claims covered by collective bargaining procedures for federal workers.

In the fourth decision of the day Monday, the Court sought to sort out the remedies that courts are to impose for violations of the federal Speedy Trial Act. The decision covered issues of waiver of rights under the Act, and whether a judge’s failure to make findings on a delay in the proceedings was harmless error. The ruling came in the case of Zedner v. U.S. (05-5992). Justice Samuel A. Alito, Jr., wrote the main opinion. Justice Scalia wrote a concurrence objecting to Justice Alito’s use of legislative history.

The Court’s next likely date for opinions will be next Monday.