The Racketeer Influenced and Corrupt Organizations Act (RICO) is a sweeping statute that allows individuals to sue any person associated with an enterprise that engages in
a pattern of racketeering activity, which includes mail or wire fraud. This case involves whether a plaintiff must prove that he or she relied on an allegedly fraudulent act in order to sue.
The defendants were alleged to have submitted false information to Cook County, Illinois, in connection with county tax lien auctions, but the plaintiffs who sued them never saw or relied on that information. The Seventh Circuit allowed the suit to proceed anyway. Other circuits have required a showing a reliance on a material misrepresentation.
The Supreme Court ruled unanimously on 6/9/2008 that RICO does not require proof of reliance. All that is required is proof that the plaintiff's business or property was injured by an act prohibited by RICO. Congress made mail fraud a violation, but did not incorporate the usual state common law requirement that someone rely on the fraud to their detriment. The decision will encourage further RICO-based litigation.