Beck v. Prupis - Oral Argument

Argument of Jay Starkman

Chief Justice Rehnquist: We'll hear argument first this morning in Number 98-1480, Robert A. Beck v. Ronald Prupis.

Mr. Starkman.

Mr. Starkman: Mr. Chief Justice, and may it please the Court:

This case, like many cases previously before this Court, begins and ends with the language that Congress chose to use in RICO.

Section 1964(c) does not provide a civil remedy only for predicate acts as defined in section 1961.

Congress also did not draft section 1964(c) to provide civil remedies only for violations of 1962(a), (b), and (c), or, for that matter, only for violations of 1962(c).

Congress drafted section 1964(c) in plain and unambiguous terms to provide a civil remedy for all four of the subsections of section 1962, and that includes 1962(d), conspiracies to violate RICO.

The petitioner here, Robert Beck, was injured by reason of a violation of section 1962(b), a conspiracy to violate RICO, and under the plain and unambiguous terms of that statute, that is all that is required to provide him with a civil remedy.

Justice Kennedy: Well, he wasn't injured by the formation of the agreement, and that was the conspiracy.

Mr. Starkman: Yes, that's correct, he's not injured...

Justice Kennedy: And that's all the conspiracy was.

Mr. Starkman: The conspiracy itself, though, has several objects.

l One of the objects... well, the objects are obviously to violate the substantive sections of that statute, but overall the conspiracy was, let's shake down contractors, let's commit fraud, and let's hide it all, get money, invest it in the enterprise.

As that conspiracy develops, though, as with all conspiracies, the object has to expand, and it has to include getting rid of Beck, who stood in the way of that conspiracy continually.

He was a threat to the very existence of the conspiracy.

He actually was more important than one of the victims of the 100 of predicate acts.

I mean, one contractor who's shaken down, he could sue through RICO, but which is more vital to the continuance of the conspiracy, that person, or Beck, a person who could have brought the entire conspiracy down.

Justice Kennedy: Well, let's say that we rule against you on this point.

Predicate acts still are committed sometimes in concert with others, in joint participation.

The standard law of torts would give recovery for that in most instances, so you wouldn't really need the conspiracy section for vicarious liability, or for joint liability.

Mr. Starkman: But here, the way that the statute was drafted, Justice Kennedy, the statute itself created four separate causes of action, and this Court in Salinas defined the words, to conspire, which only appear in the statute once, as being this criminal animal.

Chief Justice Rehnquist: Well, that was a criminal case, was it not, Salinas?

Mr. Starkman: Yes, sir, but just because those words are defined in a criminal context, they shouldn't have a different meaning in another section when that other section refers to them.

Justice Kennedy: Well, you say it creates four separate causes of action, but that's the issue, does it?

Mr. Starkman: It is the... well, it's the way the statute's written, though.

The plain language of the statute provides a forbidden activities, or prohibited activities in (a), (b), (c), and (d), and all of these were new causes of action that had to be created.

In Commonwealth, for example, there was no civil action for investment of proceeds from racketeering activity to acquire control in an entity.

Justice Kennedy: Well, all of those were criminal acts.

The question here is whether they were all causes of action.

Mr. Starkman: The question here...

Justice Kennedy: I mean, you're just stating the conclusion when you say that.

Mr. Starkman: The question here, Justice Kennedy, is whether or not 1964(c) provides a civil remedy for each of those causes of action.

Justice Scalia: Well, they could provide a remedy for (d) without necessarily providing a remedy that gives you recovery here.

You use the word conspiracy as what is outlawed by 1962(d).

The noun conspiracy really can have two different meanings.

It can refer to the act of conspiring, or it could refer to the confederation formed by the act of conspiring, you see.

You know, saying he's part of the conspiracy, the group of... 1962(d) does not use the noun conspiracy.

It uses the verb, which really has only one meaning.

It shall be unlawful for any person to conspire to violate, so the act of violating (d) is the act of conspiring.

Mr. Starkman: Yes, sir.

Justice Scalia: Now, how has your client been harmed by the act of conspiring, directly harmed by the act of conspiring?

Mr. Starkman: Section 1964(c) requires an injury committed by reason of this section.

Justice Scalia: By reason of a violation of 62.

Mr. Starkman: Yes, and that violation, the conspiracy...

Justice Scalia: You're using the noun again.

Justice Stevens: Stick with the verb.

Justice Scalia: How did the conspiring, the formation of that agreement harm your client?

Mr. Starkman: There had to be overt acts that are performed as a result of that these people conspire in order to trigger 1964(c)'s injury requirement.

Justice Scalia: That may well be, and he may have been injured by the overt act, but I don't see how he was injured by the violation of (d), which is the conspiring.

Mr. Starkman: In order to have this conspiring of people, they have to have an object, which is the three subsections of... the three prior subsections of 1962.

That object expands.

The conspiring has as one of its goals, let's get rid of this guy, who is in the way of this conspiracy.

It is one of the agreements that they make.

They put that agreement into action by getting rid of Beck, and once they do that...

Justice Scalia: Well, that's further down the line, though.

I mean, we're talking about directly injured, and you could say, sure, you know, the act of conspiring had as its object this, and in pursuing that object they injured your client, but that's further down the line.

Mr. Starkman: No, it's directly down the line, Justice Scalia, from the decision that's made in the conspiracy that we have to continue with this conspiracy, and to do that we have to get rid of this person.

In order to get rid of him, they have to terminate him, and wrongfully.

Once they do that, he is injured by the act of conspiring, by the agreement that they have made to continue this pattern of criminal acts, the pattern of racketeering, to do all of the things that they were doing.

This injury is directly related to the conspiracy.

This is not some incidental bystander.

For example, I think in the Seventh Circuit they use the example of somebody driving to rob a bank and hitting one of the...

Justice Scalia: But it wasn't one of the predicate acts.

Mr. Starkman: No.

Justice Scalia: I mean, your argument for direct results of the conspiracy would be much stronger if, indeed, it was one of the predicate acts.

Mr. Starkman: Yes, it would, Justice Scalia, but there's no basis to make a distinction between overt acts committed in furtherance of the conspiracy and predicate acts committed in furtherance of the conspiracy when we're under 1962(d).

Justice Scalia: If we're under (d), right?

Mr. Starkman: If we're under (d), and here that's all that we're under.

Here, we are arguing whether or not the 1962(d) violation proximately caused injury to this individual, and under any of the definitions of proximate cause, whether it be direct, as was articulated in Holmes, or foreseeable consequences, intended consequences, lack of intervening causes, all of those tests are satisfied when the injury is directly related to the core, if you will, of this conspiracy.

Justice Breyer: What do you say about, is the... the language of 1964(c) is very similar to the private treble damage antitrust suit.

Mr. Starkman: Yes, sir.

Justice Breyer: And can a whistleblower bring an antitrust suit against a group of price fixers?

Mr. Starkman: Probably not.

Justice Breyer: Not, all right, so how... what's the distinction?

Mr. Starkman: The distinction is an antitrust.

The rationale used by all of the lower courts that fits is that there is a requirement of antitrust injury in an antitrust action.

Antitrust injury requires an analysis to make sure that the violation is being caused by that which the antitrust laws...

Justice Breyer: So I thought perhaps this... your opponents are basically saying... it's the same concept that's here.

It's not literally the same, but it's the same idea.

It's really... this statute's aimed at substantive violations, giving people treble damages for those, not for these other things.

Mr. Starkman: That is what my opponents are saying in this case.

However, that policy rationale that underlies the reasons for not allowing antitrust whistleblowers to sue doesn't apply in RICO.

There is no countervailing policy to...

Justice Ginsburg: But Mr. Starkman, it does undercut your plain meaning.

If it doesn't have a plain meaning in an antitrust concept, context, if there is the four antitrust injury explanation, then why can't there also be here a RICO-related interpretation?

In other words, if we reject your plain meaning, isn't it appropriate for the Court to take into account the presumption that Congress does not mean to sweep too deeply into what is traditionally a domain of State law?

Mr. Starkman: There are three answers to that, Justice Ginsburg.

First, it was not Congress' desire to only eliminate predicate acts.

Those were already illegal.

Congress was going further, to supplement existing State remedies, and attacking organized crime.

There was a need, Congress felt, to go beyond what was already existing, so it only federalized the RICO enterprise itself, and it used language that was broad but not ambiguous.

Justice Scalia: I find it ironic that you're appealing to what Congress intended, and you tell us it intended to reach organized crime, which indeed I think it did, which... you know, I view that as people in pin-striped suits carrying machine guns, and here you're going after people in doctor's robes carrying scalpels.

I... why should I interpret RICO any more broadly than I absolutely must, given the fact that it has misfired so much from what it was aimed at?

Mr. Starkman: We only need to go so far as what the language itself says.

This Court has repeatedly refused to write in requirements that don't exist in the statute in order to satisfy this concern that this statute is misfiring.

For example, in National Organization of Women v. Scheidler, this Court refused to write in an economic motive requirement because the statute... and the lower court did, because it was concerned for this very reason, that the statute was going too far.

But the language of RICO didn't require that, and in Sedima this Court refused to put into RICO the requirement that we're talking about here, which is the racketeering injury.

Justice Scalia: I don't think it reads in anything to say that you have not been hurt by the conspiring.

I think it reads in something to say, well, you may not have been hurt by the conspiring, but the conspiring had as its purpose something else, and you have been hurt by the furtherance of that purpose.

If I read it as narrowly as it must be read, it seems to me you haven't been hurt by the conspiring.

Mr. Starkman: But the conspiring is not just the conspiring to commit the predicate acts that happens when they first sit down, Justice Scalia.

The conspiring has to continue throughout the life of this conspiracy, and this person that is injured is injured directly by the conspiring.

He is injured because the conspiring has had to make one its goals, we need to get rid of this guy, because if we don't, this conspiring is not going to be able to continue.

Justice Scalia: Well, I think you're right, I think the strongest argument... incidentally, I don't think it's your opponent who makes the argument about the conspiring.

It's one of the amicus, as I recall.

Mr. Starkman: Yes, sir, Washington Law Foundation.

Justice Scalia: And the weakest point of that argument, it seems to me, which the amicus is willing to accept, is that if that argument is right, you would not only... your client would not only be not able to recover for a... an act that is in furtherance of the conspiracy but not one of the predicate acts...

Mr. Starkman: Uh-huh.

Justice Scalia: your client wouldn't even be able to recover for a predicate act.

Mr. Starkman: Yes.

Justice Scalia: And you say that deprives (d) of all of its meaning.

Mr. Starkman: Which it does.

Justice Scalia: But why does it deprive (d) of all of its meaning?

I mean, it seems to me conspiracy law has two effects.

Number 1, it makes the act of conspiring unlawful, so that you can prosecute even before there's been any crime.

The act of conspiring becomes a crime.

That's one effect.

The second effect is that all of the people who are in the conspiracy can be held liable for the effects of the conspiracy.

Now, why doesn't it give (d) enough of an effect to say that it continues to have in the civil context that second consequence?

Mr. Starkman: Because, Justice Scalia, in order to do that, we have to take the words, to conspire, and give them two completely different meanings in two different sections.

Those words, to conspire, are defined as being the first of the two situations that Your Honor described, the act of conspiring, this conspiracy animal, and what 1964(c) does is gives a civil remedy for that conspiracy that is pernicious and overrides the...

Justice Scalia: But I'm not giving them two different meanings.

I'm perfectly willing to say that it means the same thing.

I am just responding to your argument that (d) has no effect, and I think you're right that one of the consequences of conspiracy law would have very little effect under (d).

It would be very rare that the mere conspiring would harm anybody.

I concede that.

However, the other effect of (d) would still be considerable, namely, where there is an injury under (a), (b), and (c), it's not only the person who actually committed that injury who is held liable under RICO, but all of the co-conspirators.

That seems to me to be quite an adequate scope of operation for (d).

Mr. Starkman: It is a procedural device, then.

We are then relegating 1962(d), rather than providing a civil remedy that expands plaintiffs' abilities to bring suits, we are changing it to be a procedural device that identifies defendants that can be named, and that is not what 1964(c) provides.

1964(c) by its title provides civil remedies, and identifies any person who is able to sue under its provisions, and here any...

Justice Scalia: Although that is the usual consequence of conspiracy law in the civil context.

Mr. Starkman: Yes.

Justice Scalia: It renders more people liable.

It doesn't render acts unlawful that are otherwise not unlawful.

Mr. Starkman: Yes, Justice Scalia, but here, 1962(d) is identified as one of the prohibited conduct, areas of conduct, and in Salinas this Court defined what that was, and all 1964(c) says, its plain language is that we are going to recognize a civil remedy, a civil action for that criminal violation.

That's the plain meaning of this statute.

That is what it says.

And in Holmes this Court restricted the reach of 1962(d), as well as all of RICO, by placing in the time-tested solution for this problem of endless ripples of civil liability, proximate cause.

There is no need to make a distinction between predicate acts committed in furtherance of a conspiracy and overt acts committed in furtherance of a conspiracy.

Justice Stevens: May I ask in that connection, how significant to your case is it that there may be a whistleblower involved?

On your theory, does it matter whether he's a whistleblower or not?

Mr. Starkman: I think it does, Justice Stevens, but it's not crucial.

The crucial point is that he is a threat to the continuing viability of this conspiracy.

Justice Stevens: Is that because he's a whistleblower, or independent of his possibility of doing any whistleblowing?

Mr. Starkman: It's independent, because for example, if they were just retaliating, and this whistleblower... for blowing the whistle, first it's not in furtherance of the conspiracy, but it's also not proximately caused by the conspiracy, so it's not the fundamental issue of whistleblowing.

It is that this person has become a threat, and in order to deal with...

Justice Stevens: What under the allegations of the complaint, what was the nature of his threat?

Mr. Starkman: That he could cause the conspiracy to cease to exist.

He stood in the way of predicate acts being committed.

He stood in the way of the continuation of the conspiracy.

The directors...

Justice Stevens: Would you translate that to facts instead of sort of a general... what did he do that prevented the conspiracy from being consummated?

Mr. Starkman: Well, one thing he did was, report this to the regulators.

Another thing he did...

Justice Stevens: But if he's already done that...

Mr. Starkman: He began to report it to the regulators.

He had not finished reporting everything, and...

Justice Stevens: And your notion is that by firing him they would prevent him from reporting facts to the regulators?

Mr. Starkman: No.

No, Justice Stevens.

My notion is that what happened here, one of the key facts is that they wanted to start looting this company.

They wanted to start taking money out, and Mr. Beck stood in the way of that.

He said no, you can't do that, and I'm not going to let you, and what they did thereafter was get rid of him, and then right after they got rid of him, within months, they commit these very predicate acts that he was preventing before, this theft of money from the lower... from the subsidiaries, this... and they were then able to continue the things that he was starting...

Justice Stevens: Would you say, in an analogy, as Justice Breyer suggested to the antitrust cases, is this like firing a salesman who refuses to go to price-fixing meetings?

Mr. Starkman: No, it's not, because there you again have... well, it is on some levels, but the analogy isn't apropos because you have the antitrust injury requirement, which this Court has rejected in the RICO context.

The reason that that salesperson who doesn't go to the meetings doesn't have standing under the antitrust...

Chief Justice Rehnquist: Well, you say that we've rejected the antitrust injury concept in RICO.

Have we expressly rejected it?

Mr. Starkman: Yes, sir.

Chief Justice Rehnquist: In Sedima?

Mr. Starkman: In Holmes.

Justice Breyer: In Holmes?

Mr. Starkman: It was actually stated in a footnote that... and this is almost a literal quote... the antitrust injury requirement has no analogue to the... to RICO, and it was for this very reason that there is no underlying, or there's no countervailing policy to promote racketeering that would work in the RICO setting.

Justice Scalia: So it's any injury that is a consequence of an act that's necessary for the completion of the conspiracy.

Mr. Starkman: If that satisfies proximate cause.

Justice Scalia: Yes, well, okay.

Mr. Starkman: Because proximate cause can go further.

Justice Scalia: Let's assume that in order to complete their scheme they have to close one factory and give the business of that factory to another factory, and they do it.

They shut down the factory.

I assume that everyone who loses a job in factory A has a RICO cause of action.

Mr. Starkman: No.

Justice Scalia: Why not?

Mr. Starkman: Because they would not be direct victims.

Justice Scalia: Why wouldn't they be direct victims?

Mr. Starkman: Because...

Justice Scalia: It is essential to the scheme that you close A, just as it was essential to their scheme here, according to your complaint, that they get rid of your client.

Mr. Starkman: The factory is the nearest analogy to Beck.

The employees at the factory are one step removed.

They're incidental.

They are not the direct victims, so if the factory...

Justice Scalia: They hurt the factory?

Mr. Starkman: Let's assume the factory was a separate subsidiary, because then I think it makes a little more sense.

Otherwise, we get into these proximate cause problems.

But what Your Honor is flushing out is whether or not the overt act has to be wrongful, if it is crucial...

Justice Scalia: Take the factory out of the picture.

In order to effectuate the scheme, they have to get rid of one group of executives and put the business in question with another group of executives, so they get rid of the first group of executives.

All of those executives who were fired were fired by an act in furtherance of the conspiracy.

They would all have a cause of action.

Mr. Starkman: Yes, because they are proximately injured by the act of conspiring.

Justice Scalia: But if they were executives of the factory...

Mr. Starkman: If the...

Justice Scalia: they wouldn't have a cause of action.

Mr. Starkman: Assuming the factory is a separate animal, that it's a separate company, then the company would have that action.

For example, let's assume in your hypothetical...

Justice Scalia: I assume these were executives of a separate company.

Mr. Starkman: No, because...

Justice Scalia: Then they wouldn't have a cause of action.

Mr. Starkman: No, I don't believe so, sir, because I don't think that their injury is direct.

I believe at that point there are attenuating circumstances in the chain of causation, and that is the proper analysis.

The distinction is not whether or not it's an overt act, or whether or not it's a predicate act.

The distinction is whether or not their injury is proximately caused by the conspiracy.

Justice Souter: But I take it on Justice Scalia's hypothetical if you don't interpose the subsidiary structure, if they simply close the factory that's part of their operation, every employee in the factory would have the RICO cause, for the same reason that the executives would in the second hypo.

Mr. Starkman: I think so, Justice Souter.

Justice Kennedy: Yes.

Mr. Starkman: I think so under the plain language of the statute.

The statute provides that any person injured by reason of, which is proximately injured, by the violation, here the violation is the conspiracy, and the only analysis then, I think, under the plain meaning of the statute, is whether or not those people who lose their jobs proximately lost their jobs as a result of the conspiracy, not as a result of the overt act of closing the factory, because if that's the analysis, then everything would fall into this category.

The question is whether or not it is proximately caused by the violation.

Here, the violation is the act of conspiring.

Justice Kennedy: I find it...

Justice Scalia: I'm sorry.

No, no, it's your question.

Justice Souter: As I understand it, when you say the conspiracy, you mean by conspiracy an agreement to do everything that is necessary, ultimately to effect a predicate act.

Mr. Starkman: Ultimately to effect the objects of the conspiracy.

Justice Souter: Which is ultimately a predicate act.

Mr. Starkman: Maybe, and maybe not.

Justice Souter: Well, it must include a predicate act.

Justice Scalia: All right, I... yes.

Yes, I understand your point.

Chief Justice Rehnquist: Yes.

Mr. Starkman: Ultimately...

Justice Breyer: Yes.

Mr. Starkman: the object has to be to invest the proceeds, for example, of the predicate acts.

Justice Ginsburg: Yes.

Mr. Starkman: Or to acquire control of the enterprise, or the situation which would come the closest here, 1962(c), which is the conducting of the affairs of the enterprise through a pattern.

As long as those are the objects... those have to be the objects.

Justice Kennedy: Yes.

Mr. Starkman: Then the overt acts, or... that are taken, that are necessary, to use Your Honor's words, or the heart, or the goal, would...

Justice Souter: Reasonably necessary.

Mr. Starkman: Reasonably.

Justice Scalia: Yes.

Mr. Starkman: But I don't want to get into a debate about what is the most efficient one.

We're not rewarding efficiency here.

We're just following the language of the statute.

Justice Kennedy: Mm-hmm.

Justice Scalia: Mr. Starkman, don't you see any inconsistency between your insistence upon absolute proximity of causation with respect to the issue we've just been talking about, who can sue because of a nonpredicate act, and your willingness to allow quite extensive causation, not at all proximate, on the very basic issue of whether (d) makes unlawful the consequences of a conspiracy, or just the conspiring?

Mr. Starkman: No.

Justice Scalia: I mean, on that issue, you know, when I put it to you that all it makes unlawful is the conspiring, you say, well, the conspiring, that automatically includes not only the predicate acts, but any acts that are ultimately necessary to conduct the conspiracy.

I mean, that's really stretching out the causation from the mere language, to conspire.

Mr. Starkman: No, I don't think it is, because we're not focusing then on the language, to conspire.

We're focusing on the proximate cause of...

Justice Breyer: I'm still curious, while you have a chance...

Mr. Starkman: Yes, sir.

Justice Breyer: why isn't it just like the antitrust laws?

Mr. Starkman: Again...

Justice Breyer: I mean, the policy of the antitrust laws are simply, treble damages is a very big gun...

Mr. Starkman: Right.

Justice Breyer: and since it's a huge gun, we're going to keep the court's attention fixed on the real harm that flows from this, not side issues, where there are other laws that can help the people.

Why isn't that reasoning exactly the same here?

Mr. Starkman: Because there's no countervailing policy...

Justice Breyer: I just said what the policy was.

The policy is to help people who are hurt by the racketeering, you know, directly.

Racketeering is what's bad, the predicate acts, just as the antitrust thing is especially bad, the price-fixing, and side issues of whistleblowers and so forth are dealt by other laws.

That would be the policy.

Mr. Starkman: I don't think that's accurate, though, because the evil here that we're combatting is not the racketeering activity.

That's not what Congress was targeting.

Those were already unlawful.

What Congress was doing was seeking to eradicate organized crime, and organized crime has no countervailing policy.

If I could, I'd like to reserve the rest of my time for rebuttal.

Justice Souter: Mr. Starkman, I'm sorry, but I would like to ask you a question.

Going back to your answer to Justice Scalia the last time, let me put it this way.

The object of a proximate cause concept is, as you put it, to prevent the ripple effect of causation from going on infinitely, but it seems to me that what you are doing in your argument is avoiding the proximate cause requirement simply by expanding the concept of the conspiracy.

We apply proximate cause between the appropriate act and the effect.

You're saying, we're going to broaden the class of appropriate acts, and we're going to end up with the same kind, it seems to me, the same breadth of scope for subsection (d) that we would have if we didn't have the proximate cause requirement.

Mr. Starkman: No, sir.

Justice Souter: Why isn't that what you're doing?

Mr. Starkman: Because proximate cause is the limiting factor.

It is not overt act versus predicate act.

Justice Souter: Yes, but I'm saying... forget the labels, overt, predicate for a minute, just, act that causes injury which is actionable under the statute.

I couldn't care less about proximate cause if I have carte blanche to expand the scope of the conspiracy to include all subsidiary acts which may be necessary.

In other words, I'm... you know, I'm getting at the front end what I would otherwise lose at the rear end.

Mr. Starkman: It has to be at the heart of the conspiracy, though.

It has to be necessary to effect the object, the object, again, being those three first subsections, and the object here was being prevented by Beck.

Nobody should have more of an appropriate... there's no more appropriate person to bring this suit than...

Justice Souter: You're saying, in effect, you... when you conspire to rob a bank, you conspire to get by the guard, and you're saying, that's pretty darned close to the core of it.

That's the nub of your argument.

Mr. Starkman: Yes.

Justice Ginsburg: Yes.

Mr. Starkman: That guard... there's a question about whether the guard's incidental, but if the conspiracy was, we've got to get past that guard also, because he's stopped all of these things, and we're going to take care of him one way or another, then that would be act...

Justice Ginsburg: Suppose, as a matter of fact, Beck was not all that essential.

It would be nice to get rid of him, but we can carry on this conspiracy even if he stays there, after all, look at all the years he was there and didn't even know what was going on, how harmful could he be.

Mr. Starkman: Essentiality shouldn't really be the question here, because, for example, what if they could have just intercepted his mail to prevent it from going to the regulators.

The test is, though, whether or not it was at the core of the conspiracy, and whether or not it was necessary to effect its object.

Argument of Michael M. Rosenbaum

Chief Justice Rehnquist: Thank you, Mr. Starkman.

Mr. Rosenbaum, we'll hear from you.

Mr. Rosenbaum: Mr. Chief Justice, if it please the Court:

In response to a question posed to Mr. Starkman as to why there should not be RICO-type injury, just as there is in antitrust law, antitrust-type injury, he referred to the Holmes decision and suggested that the... the Holmes decision, at least in a footnote, stands for the proposition that RICO injury is not necessary.

What Mr. Starkman is referring to is... excuse me... footnote 15 in the Holmes case, which he misreads in its entirety.

Footnote 15 to the Holmes case simply says, based upon Sedima, that we don't require... the Court in that case said, we don't require the amorphous concept of racketeering-type injury, because that was the holding in Sedima.

The holding in Sedima also was, however, pursuant to a 1962(c) substantive claim, that there must be, not racketeering injury, because the term is too amorphous.

There must be predicate act injury.

So when you read the footnote that Mr. Starkman is referring to in the context of the questions posed to him as to why there shouldn't have to be RICO-type injury, what comes from it, what flows from it is the necessity, at the very least, that there be predicate act injury.

Justice Kennedy: Sedima did say, though, that Congress did not want to have the standing problems that antitrust cases had.

Sedima did say that, did it not?

Mr. Rosenbaum: In a way, Your Honor, but Sedima ultimately stands for the proposition that there must be predicate act-type injury as opposed to the more amorphous concept of racketeering injury.

Justice Breyer: Correct.

Mr. Rosenbaum: Holmes, which flows from Sedima, comes to a similar conclusion, comes to a...

Justice Breyer: His better argument I think was that the essential nature of RICO is to talk about an enterprise, and the harm involved is a certain kind of a company.

The harm involved in the antitrust area is a certain thing that happens in the world, and firing and hiring people is part of the operations of the company.

Firing and hiring people is not part of the operations of the price fix insofar as it affects the world, and therefore there's no good analogy for purposes of his argument.

I think that was basically his point.

Mr. Rosenbaum: I think the analysis, the analogue to antitrust, applies even in the situation that you described, Your Honor.

Congress delineated no fewer than 50 predicate acts.

The obvious intent of Congress by virtue of the written word was to deter the commission of the predicate acts.

Justice Scalia asked Mr. Starkman about the difference between the verb, to conspire, as opposed to the noun, the existence of the conspiracy.

When you read 1962(d) in context, it simply says, it's unlawful to conspire to violate, in this instance 1962(c), by conducting the affairs of an enterprise through a pattern of racketeering conduct.

Reading the two together, and I'll get to 1964(c) in a moment, I think it's clear that the purpose of the unlawful conspiracy must be to conduct the predicate acts in violation of 1962(c) that shaped, the civil remedy that flows from the conspiracy to violate is shaped by the language in 1964(c).

That language says, anyone injured by reason of, in this instance a violation of 1962(d), has civil RICO standing.

The words, by reason of, cry out for shaping, which is what the Court said in the analogous antitrust case of AGC, Associated General Contractors, which the Court also picked up on, obviously, in Holmes.

Those words cry out for shaping, and the Court shaped those words in the antitrust context in Associated General Contractors.

The Court thereafter shaped those words in the context of RICO by limiting standing to those proximately injured by the unlawful conduct.

What the Court said in Holmes...

Justice Scalia: But that was under a (c), that was under a (c) claim, right...

Mr. Rosenbaum: That's correct.

Justice Scalia: not under a (d) claim.

Mr. Rosenbaum: That's correct, but the...

Justice Scalia: I mean, you had to do it under (c).

I mean...

Mr. Rosenbaum: I think you also have to do it under (d), because 1964 (c) is equally as applicable to (d) as it is to (c).

Therefore, when the Court decided Holmes, it was really deciding the extent, the limitations of the by-reason-of language in 1964(c), whether it's an (a), a (b), a (c), or a (d) violation.

Justice Souter: But his argument is that it makes no sense, as a practical matter, and hence should make no sense in construing the statute, to think of the... to conceptualize the conspiracy to commit the predicate acts without including a conspiracy to do at least what is in some close sense necessary to effect those acts.

I gave him... it wasn't his analogy, but I said, you know, you rob the bank, you include in your conspiracy the knocking off the guard to get out, and he's saying that to construe a conspiracy as narrowly as you would have us do is simply unrealistic in the way people conspire to effect an object, and the statute should reflect that common sense.

What's your answer to that?

Mr. Rosenbaum: My answer to that, Your Honor, is that on this record... on this record, and I think my adversary essentially conceded away his argument when stating that if it is a conspiracy which is interfered with as a result of the termination, you should have standing, but if it's in retaliation for already having blown the whistle... he made that response to one of the questions... then obviously the retaliation is not in furtherance of the conspiracy.

On this record, that's precisely what occurred here based upon the pleadings that the plaintiff, that the petitioner filed in the lower courts...

Justice Scalia: Okay, but that's...

Justice Souter: That's your only response to that argument?

That in effect is saying, even if he's right, I will still win, and my question is, why isn't he right in his claim that to conspire under (d) must be read as broadly as he says?

Mr. Rosenbaum: Because, aside from the factual basis on which this case came to this Court, the injury sustained by the whistleblower, even if it was allegedly in furtherance of the conspiracy, are tangential to, are tangential to the principle goal of the conspiracy, which was to commit the predicate acts...

Justice Souter: Yes, but you're... that... it seems... maybe I misunderstand you, but it seems to me that you're in effect just denying the predicate of his argument.

You're saying, well, this would not fall within what is necessary to effect the conspiracy.

This is too tangential to it.

What about his argument that, in fact, the conspiracy has got to include something more than simply the agreement to commit a predicate act, and the more has got to be, whatever is in some close sense, narrow sense necessary to effectively, to commit the predicate acts.

What's your answer to that?

Mr. Rosenbaum: My answer to that lies in the Holmes analysis.

While there may be injuries that flow from the conspiracy, and perhaps cause...

Justice Souter: Yes, but that's a proximate cause analysis, and you apply proximate cause analysis once you... once you have identified the acts which are wrongful.

He is saying, we are now at the stage when we're trying to identify the acts that are wrongful, we'll get to proximate cause later, and he's saying, wrongful acts must include those acts which in a narrow sense are necessary to commit the predicates.

Mr. Rosenbaum: Every wrongful act under this statute does not necessarily result in standing.

If I concede for the purposes of argument that the termination was unlawful and was in furtherance of the conspiracy, that does not necessarily lead to the conclusion that a whistleblower has RICO standing.

Justice Souter: Does it... does your argument assume that there may be... I think your argument, however, as you're making it now, assumes that there may be some nonpredicate acts which are within the concept of the conspiracy and, hence, actionable.

You're saying not everything is.

He would agree with you.

How about some, and the some that he proposes to be within the concept of the conspiracy are those without which you can't effect your conspiracy.

Mr. Rosenbaum: I tried to think of examples, prior to coming here today, of where some nonpredicate acts could be the basis of RICO standing, and I, at least within my own thinking, have been unable to come up with any, based upon the underlying theme in my argument that any act not a predicate act, even an act which may be necessary for...

Justice Scalia: Well, take a simple... no, you go.

I think I know what your problem is, Mr. Rosenbaum.

It's the statement you made earlier that these nonpredicate acts have nothing to do with the goal of the conspiracy, which is to commit the predicate acts.

That's simply not true.

The goal of the conspiracy is not necessarily to commit the predicate acts.

Most of the predicate acts are simply means along the end to the goal.

Some of the means along the end to that goal, killing the bank guard, happen to be unlawful acts covered by RICO, and therefore they become predicate acts, not because they are the goal of the conspiracy... they didn't intend to kill... the object wasn't to kill the guard.

It was to get the money in the bank.

So whether something is a predicate act or not a predicate act has nothing to do, whether it is central to the object of the conspiracy.

Something can be just as central, in fact more central, more essential to the furtherance of the conspiracy than a predicate act is and not be a predicate act.

Mr. Rosenbaum: That may be so, Justice Scalia, but the answer to the question that I think is being posed to me is whether or not that goal, albeit essential to the completion of the conspiracy, still provides a basis for RICO standing.

You can draw inferences from the antitrust analogue that while there is an injury that is essential to the outcome of the conspiracy to violate in this instance, or in the antitrust instances antitrust law, that injury, so says this Court in several cases, is not necessarily compensable under the statutory scheme that the Court is being asked to consider.

That was the result in Associated General Contractors, where the very goal of the conspiracy was to injure the labor union.

This Court said that we don't look at the necessary intent of the respondents in that case, the defendants in that case, to injure the plaintiff.

He may be injured, and he may have other remedies, but at least within the statutory scheme of antitrust law, which this Court essentially looked at in the Holmes case, he doesn't suffer the necessary type of injury, even in the existence of a conspiracy to make it actionable under the Federal statute.

Justice Scalia: I don't see how you get there through the text, is my problem.

Mr. Rosenbaum: I'm sorry, Justice...

Justice Scalia: I don't see how you get there through the text.

I mean, it may be a very nice disposition, but how do you get there through the text of 1964 and 1962?

Mr. Rosenbaum: I get...

Justice Scalia: 1964 makes a violation of (a), (b), (c), and (d) unlawful.

(d), it shall be unlawful to conspire.

Once you say that the... that you have committed the unlawful act of conspiring, and once you acknowledge that the unlawful act of conspiring has as its direct consequence some predicate acts but also some nonpredicate acts, it seems to me you've been injured by a violation of (d).

Mr. Rosenbaum: I get there this way.

I distinguish, firstly, the difference between civil conspiracy, which is just the existence of the agreement which in and of itself is unlawful, whether or not it injures anyone, and a civil conspiracy which requires more than just the existence of a conspiracy, because nobody's injured just by virtue of the existence of the conspiracy.

The law of civil conspiracy is that the act that becomes actionable must be a tortious act, and in cases from this Court going back to the late 1800's in the case of Adler, in the case of Nalle, this Court said that the act that gives standing must be the act that... for which the conspiracy was formed.

In an interesting opinion from the D.C. Circuit, Justice Scalia, that... the Halberstam opinion, there was some interesting language.

You were on the panel together with Judge Bork and Judge Wall to issue the opinion.

That was the case where a prominent Washington physician was murdered during the course of a burglary.

His estate brought suit against a coconspirator who did not participate in the burglary, the wife of the principal culprit.

Justice Scalia: Cat burglar in suburban Virginia.

It was a very prominent case around...

Mr. Rosenbaum: I thought you might remember it.

In any event, what the Court held in that case, similar to what... to the language in the late 1800 cases, in Adler and Nalle, was that: one, the purpose of the conspiracy, to give standing to a civil plaintiff, that civil plaintiff must be injured essentially by the purpose of the conspiracy, and the Court said in that opinion that the conspiracy laws are essentially on the books, be it common law or statutory, for the purpose of creating vicarious liability

Essentially, the statute, the common law said the Court there was for the purpose of assuring that all of those within the umbrella of the wrong, the wrong being the intent to commit the particular tortious act there, the burglary, ergo the murder, are held accountable.

Not everybody in the conspiracy is held accountable for every single act done in furtherance of the conspiracy.

It depends upon whether the act was foreseeable within the normal realm of what one might expect based upon the particular type of conspiracy.

In the instance of a whistleblower, someone who allegedly threatens the viability of the conspiracy, I think that falls outside of that circle.

Justice Scalia: Okay, but...

Just foreseeability, I thought your point was that you're only liable for unlawful acts...

Justice Stevens: Yes.

Mr. Rosenbaum: That is my...

Justice Scalia: that are done in furtherance of the conspiracy.

Mr. Rosenbaum: That is my point.

Justice Scalia: Not for foreseeable acts.

Mr. Rosenbaum: That is my point, Justice...

Justice Scalia: That does get you where you want to go.

Well, I'm not sure it does.

Justice Souter: I mean, it may well be that we would still reverse the judgment below on the basis that Mr. Starkman claims, and you would go back to the court to argue whether in fact there was sufficient... sufficiently tortious character in what was done here.

You might... he might win this battle, you might lose the war, but I don't think if we accept your view that necessarily disposes of the case at this point.

Justice Breyer: I'm probably missing... no, go ahead.

Is there... was... did you answer that?

I don't want to...

Mr. Rosenbaum: No, I haven't.

I haven't.

The Court a moment ago asked me for a conceptual answer to that question.

With the Court's permission, I'd like to answer the question based upon what happened in the Eleventh Circuit, and what happened prior to that based upon this record.

I am dealing, obviously, on behalf of my client with respect to this record.

There is no issue of Beck being a stop-gap, him being necessary, his elimination being necessary to allow the conspiracy to go forward.

On this record, the Eleventh Circuit held that this was a retaliatory discharge.

That wasn't its legal conclusion.

The way the case was pleaded, if you look at the joint appendix, page 69, paragraphs 49 through roughly 51, that was the allegation of conspiracy.

In that allegation of conspiracy, the plaintiff contended, Mr. Beck contended that after he notified the Florida Department of Insurance of alleged wrongdoing, he was discharged.

That theme was the theme on the summary judgment motion, Your Honor.

That theme was also the theme in the Eleventh Circuit opinion from which the writ of certiorari was granted, and the Eleventh Circuit said that there was a partial, using the Eleventh Circuit's language, there was a partial disclosure, the cat already being out of the bag.

Ergo, under the facts as pleaded and as argued in the summary judgment motion, there could not be an act in furtherance, even if there was an unlawful conspiracy, and assuming that the purpose of the conspiracy was to continue undetected, because the detection had already occurred by virtue of Mr. Beck's conduct.

He alerted the very agency that had sole jurisdiction over this company to investigate, and did investigate the company, and to determine whether or not there was any improper acts occurring.

So on this record... on this record, as Mr. Starkman said, if, in fact, the whistleblowing had occurred before the termination, which it did, then the act of termination couldn't be in furtherance of the alleged conspiracy.

There's another reason, however, why whistleblowing of this sort cannot be and should not be the basis of RICO standing.

In listing the predicate acts of 196... sorry, 1961(1), several of the predicate acts include obstruction of justice.

Listed as one of the predicate acts is a violation of 18 U.S.C. section 1513, which is a retaliatory aspect of the obstruction of justice statute.

Congress limited conduct to be obstruction of justice, limited it to physical harm to one's person, or harm to tangible personal property.

A precursor, a draft precursor of the statute included within it harm to a person's business, or harm to property nontangible in nature, wrongful discharge.

That was eliminated from the final draft, which to me reflects the fact that Congress at least had in mind potential claims by whistleblowers who were making obstruction of justice a predicate act, and determined that there were too many difficulties... too many difficulties in seeking to enforce that because of the multitude of motives that may exist when terminating somebody.

Was someone terminated because he really was a threat to criminal proceeding, or the prosecution of a criminal proceeding, or the detection of a criminal proceeding, or was he terminated because of legitimate business reasons.

Justice Scalia: We really didn't take this case to determine whether, you know, whether Beck was terminated because what he... of what he had already done, or what he would do.

That's not why the case is up here, and I think the point you're now arguing is precluded by the question presented.

I mean, the question presented is whether an employee who is terminated for both blowing the whistle on and refusing to participate in a pattern of predicate acts may assert a civil RICO conspiracy claim where he has been injured by an overt act in furtherance of the RICO conspiracy.

What you're now arguing to us is that the act was not in furtherance of a RICO conspiracy.

That's not why we took the case.

Let's assume that it was in furtherance of the RICO conspiracy and get on with the argument on that point.

Mr. Rosenbaum: I'm arguing, Justice Scalia, that even if it was in furtherance of, he doesn't have standing, a) because this is not, as I said before, a...

Justice Scalia: Not in furtherance.

Mr. Rosenbaum: Not... no, this is not a whistleblower statute.

There is no specific remedy in this statute for whistleblowers, as there are in other Federal statutes, environmental statutes, civil rights statutes... had Congress intended to create that breadth of a remedy...

Justice Scalia: I thought you were arguing they were punishing him for past conduct.

Mr. Rosenbaum: From a factual standpoint, yes, but I'm trying to respond to Your Honor's question.

Assuming that the facts were different, assuming that he was terminated because he threatened to blow the whistle and was terminated essentially to prevent him from doing so... not the facts in this case, but I'll assume it for Your Honor's question.

Justice Kennedy: That's fine.

Mr. Rosenbaum: Even so, he lacks standing, a) because this is not a whistleblower statute... Congress has enacted whistleblower statutes in other contexts when seeking to enforce violations of other... other violations of other types of statutes, environmental statutes, civil rights statutes, so on and so forth, so had Congress intended to do that, it certainly knew how and could have.

Justice Ginsburg: Mr. Rosenbaum, you keep using the term standing, and I think Mr. Starkman did also, I thought what's presented here is did Congress create a civil right of action of this nature, where the act complained of is not a predicate act.

That sounds to me like a 12(b)(6) question, is there a claim for relief that can be stated, but you keep using the word standing, and to that extent Mr. Starkman is in agreement with you.

Isn't this a question of, did Congress create a private claim for relief?

Mr. Rosenbaum: Yes, it is, Justice Ginsburg.

I think the two go hand-in-glove.

I think, as the Court indicated in Holmes, it used a proximate cause analysis to determine whether someone remotely down the linear chain in effect had standing to seek relief under RICO, so I think the two go together.

It's a question of nomenclature.

I don't think the answer to the question is essential to the outcome.

Justice O'Connor: Mr. Rosenbaum, section 1962(d) I gather has been held to give rise to criminal liability as well as a civil cause of action.

Mr. Rosenbaum: Absolutely, Justice O'Connor.

Absolutely.

Justice O'Connor: And could there be a criminal prosecution brought here without proof of any predicate act?

Mr. Rosenbaum: Absolutely.

Under the criminal concepts of conspiracy, or...

Justice O'Connor: Or overt act...

Mr. Rosenbaum: Yes.

Justice O'Connor: Or an act... proof of an overt act would not be required if it were a criminal prosecution.

Mr. Rosenbaum: That's correct.

All that's necessary for a criminal prosecution is proof of the unlawful agreement.

However, in the criminal context, which distinguishes section (d), the interpretation of section (d) from the similar... a similar interpretation in the civil context, the... if there is an overt act, it may be a completely innocent overt act, but it's demonstrated to the court to show that the conspiracy is at work, so that in a criminal context, a completely innocent overt act... if it's a mail fraud conspiracy I go out and buy stationery to facilitate the mail fraud.

Chief Justice Rehnquist: But is an overt act required for liability in a criminal conspiracy?

Mr. Rosenbaum: No.

Chief Justice Rehnquist: An attempt, yes, but not a criminal conspiracy.

Mr. Rosenbaum: It's not necessary to show, but it's certainly helpful in demonstrating that there is a conspiracy.

Justice O'Connor: But the effect of this is that we have very different rules applicable in the civil action context...

Mr. Rosenbaum: That's correct...

Justice O'Connor: under the very same statute.

Mr. Rosenbaum: That's correct, Justice O'Connor, for a very good reason.

This is both a criminal and a civil statute.

In order to have criminal liability, as I said before, all that's necessary is to show from a criminal standpoint the existence of the conspiracy, but that doesn't provide a civil cause of action, because the mere existence of a conspiracy absent some injury, some tortious conduct directed at someone as a result of the conspiracy doesn't create civil liability because, as this Court has said, as have other, lower courts have said, a conspiracy absent an injury does not provide a civil cause of action.

Justice Stevens: May I ask one question at this point.

You've explained... say you've convinced me that this doesn't apply to whistleblowers.

That's only half of the question presented by the cert petition, which is, he was terminated for both blowing the whistle and refusing to participate in the pattern of activity.

And what if one could show that in order to close the factory, which is the object of the objective, you had to fire executive A, who would otherwise have had sufficient strength to prevent the closing of the factory.

Why isn't that covered?

Mr. Rosenbaum: I'm sorry, Justice, why isn't...

Justice Stevens: Why isn't that covered with... as an overt act in pursuance of the conspiracy, even if the statute has nothing to do with whistleblowers?

Mr. Rosenbaum: For the same reason that it's not covered as a basis of whistleblower standing in antitrust cases, which... in which the Clayton Act uses the same language as 1964(c).

That issue has been presented to circuit courts throughout the country, and except for one circuit court, in an opinion which was later limited in the Ninth Circuit, in the Ostrofe case, all of the circuit courts say that the nature of the injury suffered by the whistleblower, even in the context that you gave me, is not compensable based on the statutory scheme, which requires, in an antitrust concept, antitrust injury.

All of the courts have said... all of the courts have said that even though there may be wrongful conduct in terminating the employee because of his threat, that isn't enough to give that person standing.

By analogy, by analogy that logic seems applicable here.

The only court that has held that such a whistleblower in that situation has standing is the Ninth Circuit, in which Justice Kennedy dissented, and that decision in Ostrofe, which was a Ninth Circuit decision, was then about a year or two later, severely limited to say that it was... that the case was limited to its facts, and virtually all of the circuits deny standing in an antitrust concept based upon that.

Justice O'Connor: You know, I thought we had gotten over the use of the standing point.

Justice Ginsburg directed your attention to whether it's a violation of the statute.

I don't see how we're getting into standing,...

Mr. Rosenbaum: It's a violation of the statute, Justice O'Connor, to unlawfully conspire.

In a civil context, absent injury, absent injury, the mere existence of the conspiracy does not provide a civil cause of action.

The question therefore becomes, what type of injury must be sustained in order to have a claim under 1962(d).

It's our position that the only type of injury that must be sustained where it's a 1962(d) claim related to a 1962(c) violation, the only type of injury is a predicate act injury, because the unlawful conspiracy is formed for the purpose of committing the predicate acts, that there may...

Justice Kennedy: I disagree with that.

Justice Scalia: That is simply wrong.

It is not formed for the purpose of committing the predicate acts.

Indeed, some predicate acts may not even be foreseen.

It is formed for the purpose of robbing the bank, and the... now, that larceny, it may be one of the predicate acts, but other predicate acts on the way to it, such as killing the bank guard who unexpectedly shows up to try to prevent... that's not the object of the conspiracy at all.

It's an overt act in furtherance of it, and it happens also to be a racketeering act, but there are other overt acts in furtherance of it which will not be racketeering acts, such as firing people.

Mr. Rosenbaum: That's correct, Justice Scalia.

Justice Breyer: If that's correct, then... your language permits your interpretation and his, in my view.

Absolutely ambiguous, same as the antitrust laws.

Your... I understood your argument all to the point, the reason is, I would have thought the reason is, it has to be matters of policy.

Is it more like the antitrust laws, or isn't it, and he gave a reason why it wasn't, and you know, and what's your response to that?

Mr. Rosenbaum: My...

Justice Breyer: I can't get anywhere beyond the policy.

It either is like the antitrust laws, or it isn't.

Mr. Rosenbaum: It certainly is like the anti...

Justice Breyer: Because?

Mr. Rosenbaum: It certainly is like the antitrust laws, because section 4 of the Clayton Act, the language is...

Justice Breyer: No, the language is identical.

I just pointed out to you initially, he gave a reason of policy, why the policies would be different, and what I'm trying to get at is your response to his reason of policy.

Mr. Rosenbaum: If the law is to protect those who are improperly terminated, there are more than adequate State law remedies to protect that.

Virtually all, short of all of the States have wrongful discharge statutes, or have wrongful discharge common law that basically says that it's tortious to discharge someone for the type of conduct that's alleged here.

To incorporate that State common law into the RICO statute would essentially be to federalize what are otherwise State law claims, so that's my direct answer to your question, Your Honor.

Justice Souter: But that answer leaves open, it seems to me, the basic policy, the broader policy question that Justice Breyer's question to you raises.

Let's say in this particular instance you're right, there is no policy reason, perfectly adequate State law.

That leaves open the question whether, on the broader sense, the... we should construe (d) to include nothing but predicate acts, and there may be lots of instances in which the conduct isn't adequately dealt with at State law.

Mr. Rosenbaum: May I respond to your question?

The red light...

Chief Justice Rehnquist: Yes, shortly.

Mr. Rosenbaum: I think the answer to that question, the policy reasons lies in this Court's opinion in Holmes.

Determining whether or not there is injury by reason of, you look at the notions of what's judicially or administratively convenient.

Using that test, the Court, as you know, then basically said that there must be direct injury.

Chief Justice Rehnquist: Thank you.

Mr. Rosenbaum: Thank you, Your Honor.

Chief Justice Rehnquist: Thank you, Mr. Rosenbaum.

The case is submitted.