Bridge v. Phoenix Bond & Indemnity Co. - Oral Argument - April 14, 2008

Bridge v. Phoenix Bond & Indemnity Co.

Media for Bridge v. Phoenix Bond & Indemnity Co.

Audio Transcription for Opinion Announcement - June 09, 2008 in Bridge v. Phoenix Bond & Indemnity Co.

Audio Transcription for Oral Argument - April 14, 2008 in Bridge v. Phoenix Bond & Indemnity Co.

John G. Roberts, Jr.:

We'll hear argument next in Case 07-210, Bridge versus Phoenix Bond & Indemnity.

Mr. Becker.

Theodore M. Becker:

Thank you, Mr. Chief Justice, and may it please the Court: Both parts of the question presented in this case should be answered "yes".

For a treble damage civil RICO claim based on fraud, someone must rely on the alleged misrepresentation, and that someone must be the plaintiff.

But that's the very nature of a fraud claim.

Plaintiffs here claim that they were injured by reason of a RICO violation, the predicate acts of which involved a scheme or artifice to defraud.

But no one in this case is arguing that a civil RICO claim based on fraud can proceed without someone relying.

So some reliance is required; the only question is who must rely?

And we submit that the natural answer is the plaintiff.

A plaintiff who hasn't relied to his detriment on an alleged misrepresentation hasn't been defrauded; he hasn't been injured by reason of a scheme to defraud.

Plaintiffs here haven't alleged that they relied on any misrepresentation; they haven't even alleged that they received a misrepresentation.

Ruth Bader Ginsburg:

So what about a case, say, you've got organized crime wants to get rid of... an organized crime enterprise wants to get rid of rivals, so it makes misrepresentations about those rivals to customers and suppliers, not to the... to the rival.

So there was no... there is no misrepresentation made to the plaintiff but to the plaintiff's customers and suppliers.

So on your theory, is there no RICO claim because the misrepresentation was made to someone other than the plaintiff?

Theodore M. Becker:

Yes, that's correct, Justice Ginsburg.

There would be a criminal RICO prosecution because, under the Neder case, we know that reliance, justifiable reliance, and injury is not required.

Ruth Bader Ginsburg:

But no civil case in that... in that situation?

Theodore M. Becker:

That's correct, Justice Ginsburg.

Antonin Scalia:

But that doesn't even comport with common-law civil cases.

I mean, for a long time courts have allowed someone who's been euchred by a competitor's misrepresentations to his customers.

An old New York case that was discussed in the briefs that I used to teach in contracts class, where he told somebody that the horse was no longer for sale and it was still for sale, and the person who wanted to sell the horse at the higher price should have... to buy the horse should have had a cause of action, even though the representation was not made to him.

Theodore M. Becker:

Justice Scalia, those cases as well as the Rice versus Manley New York case, the cheese buyer's case, similar situation, do exist, but they are really tortious interference with business expectancy cases.

And we believe that the law makes that clear.

When RICO was enacted in 1970, the law even in New York, as we point out in our reply brief, had evolved to the extent where... where there were some references to fraud in those early cases in the 19th century.

Anthony M. Kennedy:

Suppose in a tortious interference case, the two tort... there are two tort feasors, and they communicate with each other by mail.

Is that a violation of the mail fraud statute?

Theodore M. Becker:

It would be a violation of the mail fraud statutes.

But I will say, Justice Kennedy, that the government's position here seeks to extend the mail fraud statute far beyond what this Court did in Neder.

As a matter of fact, the government made the exact same argument in Neder as it did to this Court, and the Court--

Anthony M. Kennedy:

In my... in my hypothetical, there was no... there was no reliance on anything said.