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07-210 BRIDGE V. PHOENIX BOND & INDEMNITY DECISION BELOW: 477 F3d 928 LIMITED TO THE FOLLOWING QUESTION: "WHETHER RELIANCE IS A REQUIRED ELEMENT OF A RICO CLAIM PREDICATED ON MAIL FRAUD AND, IF IT IS, WHETHER THAT RELIANCE MUST BE BY THE PLAINTIFF." EXPEDITED BRIEFING SCHEDULE CERT. GRANTED 1/4/2008 QUESTION PRESENTED: Whether a plaintiff asserting a civil RICO claim predicated on acts of mail fraud must plead and prove reliance on alleged misrepresentations by the defendant? LOWER COURT CASE NUMBER: 06-1160
The U.S. Supreme Court case, John Bridge et al. v. Phoenix Bond & Indemnity Co., involved a dispute over the interpretation of the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs, Phoenix Bond & Indemnity Co., alleged that defendants engaged in mail fraud by submitting false affidavits to win more bids at Cook County's tax lien auctions than they would have otherwise been able to secure under county rules. The defendants argued that since their fraudulent scheme did not directly harm the plaintiffs but rather indirectly through its impact on auction outcomes, it could not be considered a violation of RICO law which requires proof of direct relation between conduct and injury suffered by plaintiff. However, in 2008, the Supreme Court ruled unanimously against this argument stating that nothing in RICO statute required claimants to show they were immediate victims or had relied upon defendant’s misrepresentations for establishing liability under mail fraud provision; instead what mattered was whether plaintiff suffered an injury caused by such fraudulent activity.
In the dissenting opinion for the case of John Bridge, et al. v. Phoenix Bond & Indemnity Co., Justice Thomas argued that a direct relation between the injury asserted and the injurious conduct alleged is an essential element of standing in RICO cases. He disagreed with majority's interpretation of Section 1964(c) to allow recovery by those indirectly injured by mail fraud, stating it was inconsistent with both precedent and statutory text. The justice believed this decision would open floodgates to lawsuits from parties only tangentially affected by fraudulent schemes, thus undermining Congress' intent when drafting RICO laws - targeting those directly harmed by racketeering activities rather than every conceivable victim.