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04-433 ANZA V. IDEAL STEEL SUPPLY CORP. DECISION BELOW: 373 F3d 251 CERT. GRANTED 11/28/2005 QUESTION PRESENTED: Whether a competitor is "injured in his business or property by reason of a violation" of the Racketeer Influenced and Corrupt Organizations Act ("RICO") where the alleged predicate acts of racketeering activity were mail fraud but the competitor was not the party defrauded and did not rely on the alleged fraudulent behavior. LOWER COURT CASE NUMBER: 03-7381
In the case of Joseph Anza, et al. v. Ideal Steel Supply Corp., 2005, the Supreme Court ruled on a dispute between two competing steel companies in New York City. The plaintiff, Ideal Steel Supply Corporation (Ideal), accused its competitor National Steel Supply Inc., owned by brothers Joseph and Vincent Anza, of fraudulent business practices that violated the Racketeer Influenced and Corrupt Organizations Act (RICO). According to Ideal's claim, National had been defrauding New York State by not charging sales tax to cash-paying customers thereby undercutting prices and attracting more customers away from Ideal. However, in a unanimous decision led by Justice Kennedy, the Supreme Court held that Ideal could not sue under RICO because it did not directly suffer an injury caused by National’s alleged racketeering activity - tax fraud against state government; thus there was no proximate cause linking defendant's conduct with plaintiff's injury as required under civil provisions of RICO statute.
In the dissenting opinion for Joseph Anza, et al. v. Ideal Steel Supply Corp., Justice Scalia argued that the majority's decision to dismiss Ideal Steel's RICO claim was incorrect and inconsistent with previous rulings of the Court. He contended that proximate cause should not be a requirement in civil RICO cases as it is not explicitly stated in the statute and has never been applied by Congress to any other federal tort law. Furthermore, he disagreed with the majority’s view that National did not directly harm Ideal because their scheme defrauded New York State rather than Ideal itself; instead, he believed direct competition between businesses inherently causes injury regardless of whether fraud occurs against a third party or directly against a competitor. Finally, Justice Scalia criticized how this ruling could potentially limit future applications of RICO laws by requiring plaintiffs to prove they were specifically targeted victims of racketeering activity rather than simply harmed by its effects.