Competitor Standing Under RICO

Posted on February 14, 2016February 21, 2016 by Howard Gutman

Summary : A competitor is damaged by unlawful conduct. Can it sue. Anza v. Ideal Supply sets forth the standard for competitor standing.

JUSTICE KENNEDY delivered the opinion of the Court.

Anza v. Ideal Supply, 547 U.S. 451 (2006)

The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U. S. C. §§ 1961-1968 (2000 ed. and Supp. III), prohibits certain conduct involving a “pattern of racketeering activity.” § 1962 (2000 ed.). One of RICO’s enforcement mechanisms is a private right of action, available to “[a]ny person injured in his business or property by reason of a violation” of RICO’s substantive restrictions. § 1964(c)

In Holmes v. Securities Investor Protection Corporation, 503 U. S. 258, 268 (1992), this Court held that a plaintiff may sue under § 1964(c) only if the alleged RICO violation was the proximate cause of the plaintiff’s injury. The instant case requires us to apply the principles discussed in Holmes to a dispute between two competing businesses.

Because this case arises from a motion to dismiss, we accept as true the factual allegations in the amended complaint. See Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U. S. 163, 164 (1993).

Respondent Ideal Steel Supply Corporation (Ideal) sells steel mill products along with related supplies and services. It operates two store locations in New York, one in Queens and the other in the Bronx. Petitioner National Steel Supply, Inc. (National), owned by petitioners Joseph and Vincent Anza, is Ideal’s principal competitor. National offers a similar array of products and services, and it, too, operates one store in Queens and one in the Bronx.

deal sued petitioners in the United States District Court for the Southern District of New York. It claimed petitioners were engaged in an unlawful racketeering scheme aimed at “gain[ing] sales and market share at Ideal’s expense.” App. 7. According to Ideal, National adopted a practice of failing to charge the requisite New York sales tax to cashpaying customers, even when conducting transactions that were not exempt from sales tax under state law. This practice allowed National to reduce its prices without affecting its profit margin. Petitioners allegedly submitted fraudulent tax returns to the New York State Department of Taxation and Finance in an effort to conceal their conduct.

Ideal’s amended complaint contains, as relevant here, two RICO claims. The claims assert that petitioners, by submitting the fraudulent tax returns, committed various acts of mail fraud (when they sent the returns by mail) and wire fraud (when they sent them electronically). See 18 U. S. C. §§ 1341, 1343 (2000 ed., Supp. III). Mail fraud and wire fraud are forms of “racketeering activity” for purposes of RICO. § 1961(1)(B). Petitioners’ conduct allegedly constituted a “pattern of racketeering activity,” see § 1961(5) (2000 ed.), because the fraudulent returns were submitted on an ongoing and regular basis.

Ideal asserts in its first cause of action that Joseph and Vincent Anza violated § 1962(c), which makes it unlawful for “any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” The complaint states that the Anzas’ goal, which 455*455 they achieved, was to give National a competitive advantage over Ideal.

The second cause of action is asserted against all three petitioners. It alleges a violation of § 1962(a), which makes it unlawful for any person who has received income derived from a pattern of racketeering activity “to use or invest” that income “in acquisition of any interest in, or the establishment or operation of,” an enterprise engaged in or affecting interstate or foreign commerce. As described in the complaint, petitioners used funds generated by their fraudulent tax scheme to open National’s Bronx location. The opening of this new facility caused Ideal to lose “significant business and market share.” App. 18.

Petitioners moved to dismiss Ideal’s complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b). The District Court granted the Rule 12(b)(6) motion, holding that the complaint failed to state a claim upon which relief could be granted. The court began from the proposition that to assert a RICO claim predicated on mail fraud or wire fraud, a plaintiff must have relied on the defendant’s misrepresentations. Ideal not having alleged that it relied on petitioners’ false tax returns, the court concluded Ideal could not go forward with its RICO claims.

Ideal appealed, and the Court of Appeals for the Second Circuit vacated the District Court’s judgment. 373 F. 3d 251 (2004). Addressing Ideal’s § 1962(c) claim, the court held that where a complaint alleges a pattern of racketeering activity “that was intended to and did give the defendant a competitive advantage over the plaintiff, the complaint adequately pleads proximate cause, and the plaintiff has standing to pursue a civil RICO claim.” Id., at 263. This is the case, the court explained, “even where the scheme depended on fraudulent communications directed to and relied on by a third party rather than the plaintiff.” Ibid.

The court reached the same conclusion with respect to Ideal’s § 1962(a) claim. It reasoned that Ideal adequately pleaded its claim because it alleged an injury by reason of petitioners’ use and investment of racketeering proceeds, “as distinct from injury traceable simply to the predicate acts of racketeering alone or to the conduct of the business of the enterprise.” Id., at 264.

We granted certiorari. 546 U. S. 1029 (2005).

Our analysis begins—and, as will become evident, largely ends—with Holmes. That case arose from a complaint filed by the Securities Investor Protection Corporation (SIPC), a private corporation with a duty to reimburse the customers of registered broker-dealers who became unable to meet their financial obligations. SIPC claimed that the petitioner, Robert Holmes, conspired with others to manipulate stock prices. When the market detected the fraud, the share prices plummeted, and the “decline caused [two] broker-dealers’ financial difficulties resulting in their eventual liquidation and SIPC’s advance of nearly $13 million to cover their customers’ claims.” 503 U. S., at 262, 263. SIPC sued on several theories, including that Holmes participated in the conduct of an enterprise’s affairs through a pattern of racketeering activity in violation of § 1962(c) and conspired to do so in violation of § 1962(d).

The Court held that SIPC could not maintain its RICO claims against Holmes for his alleged role in the scheme. The decision relied on a careful interpretation of § 1964(c), which provides a civil cause of action to persons injured “by reason of” a defendant’s RICO violation. The Court recognized the phrase “by reason of” could be read broadly to require merely that the claimed violation was a “but for” cause of the plaintiff’s injury. Id., at 265-266. It rejected this reading, however, noting the “unlikelihood that Congress meant to allow all factually injured plaintiffs to recover.” Id., at 266.

457*457 Proper interpretation of § 1964(c) required consideration of the statutory history, which revealed that “Congress modeled § 1964(c) on the civil-action provision of the federal anti-trust laws, § 4 of the Clayton Act.” Id., at 267. In Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519 (1983), the Court held that “a plaintiff’s right to sue under § 4 required a showing that the defendant’s violation not only was a `but for’ cause of his injury, but was the proximate cause as well.” Holmes, supra, at 268 (citing Associated Gen. Contractors, supra, at 534). This reasoning, the Court noted in Holmes, “applies just as readily to § 1964(c).” 503 U. S., at 268.

The Holmes Court turned to the common-law foundations of the proximate-cause requirement, and specifically the “demand for some direct relation between the injury asserted and the injurious conduct alleged.” Ibid. It concluded that even if SIPC were subrogated to the rights of certain aggrieved customers, the RICO claims could not satisfy this requirement of directness. The deficiency, the Court explained, was that “the link is too remote between the stock manipulation alleged and the customers’ harm, being purely contingent on the harm suffered by the broker-dealers.” Id., at 271.

Applying the principles of Holmes to the present case, we conclude Ideal cannot maintain its claim based on § 1962(c). Section 1962(c), as noted above, forbids conducting or participating in the conduct of an enterprise’s affairs through a pattern of racketeering activity. The Court has indicated the compensable injury flowing from a violation of that provision “necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise.” Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 497 (1985).

Ideal’s theory is that Joseph and Vincent Anza harmed it by defrauding the New York tax authority and using the 458*458 proceeds from the fraud to offer lower prices designed to attract more customers. The RICO violation alleged by Ideal is that the Anzas conducted National’s affairs through a pattern of mail fraud and wire fraud. The direct victim of this conduct was the State of New York, not Ideal. It was the State that was being defrauded and the State that lost tax revenue as a result.

The proper referent of the proximate-cause analysis is an alleged practice of conducting National’s business through a pattern of defrauding the State. To be sure, Ideal asserts it suffered its own harms when the Anzas failed to charge customers for the applicable sales tax. The cause of Ideal’s asserted harms, however, is a set of actions (offering lower prices) entirely distinct from the alleged RICO violation (defrauding the State). The attenuation between the plaintiff’s harms and the claimed RICO violation arises from a different source in this case than in Holmes, where the alleged violations were linked to the asserted harms only through the broker-dealers’ inability to meet their financial obligations. Nevertheless, the absence of proximate causation is equally clear in both cases.

This conclusion is confirmed by considering the directness requirement’s underlying premises. See 503 U. S., at 269-270. One motivating principle is the difficulty that can arise when a court attempts to ascertain the damages caused by some remote action. See id., at 269 (“[T]he less direct an injury is, the more difficult it becomes to ascertain the amount of a plaintiff’s damages attributable to the violation, as distinct from other, independent, factors”). The instant case is illustrative. The injury Ideal alleges is its own loss of sales resulting from National’s decreased prices for cashpaying customers. National, however, could have lowered its prices for any number of reasons unconnected to the asserted pattern of fraud. It may have received a cash inflow from some other source or concluded that the additional sales would justify a smaller profit margin. Its lowering of prices 459*459 in no sense required it to defraud the state tax authority. Likewise, the fact that a company commits tax fraud does not mean the company will lower its prices; the additional cash could go anywhere from asset acquisition to research and development to dividend payouts. Cf. id., at 271 (“The broker-dealers simply cannot pay their bills, and only that intervening insolvency connects the conspirators’ acts to the losses suffered by the nonpurchasing customers and general creditors”).

There is, in addition, a second discontinuity between the RICO violation and the asserted injury. Ideal’s lost sales could have resulted from factors other than petitioners’ alleged acts of fraud. Businesses lose and gain customers for many reasons, and it would require a complex assessment to establish what portion of Ideal’s lost sales were the product of National’s decreased prices. Cf. id., at 272-273 (“If the nonpurchasing customers were allowed to sue, the district court would first need to determine the extent to which their inability to collect from the broker-dealers was the result of the alleged conspiracy to manipulate, as opposed to, say, the broker-dealers’ poor business practices or their failures to anticipate developments in the financial markets”).

The attenuated connection between Ideal’s injury and the Anzas’ injurious conduct thus implicates fundamental concerns expressed in Holmes. Notwithstanding the lack of any appreciable risk of duplicative recoveries, which is another consideration relevant to the proximate-cause inquiry, see id., at 269, these concerns help to illustrate why Ideal’s alleged injury was not the direct result of a RICO violation. Further illustrating this point is the speculative nature of the proceedings that would follow if Ideal were permitted to maintain its claim. A court considering the claim would need to begin by calculating the portion of National’s price drop attributable to the alleged pattern of racketeering activity. It next would have to calculate the portion of Ideal’s lost sales attributable to the relevant part of the price drop. 460*460 The element of proximate causation recognized in Holmes is meant to prevent these types of intricate, uncertain inquiries from overrunning RICO litigation. It has particular resonance when applied to claims brought by economic competitors, which, if left unchecked, could blur the line between RICO and the antitrust laws.

The requirement of a direct causal connection is especially warranted where the immediate victims of an alleged RICO violation can be expected to vindicate the laws by pursuing their own claims. See id., at 269-270 (“[D]irectly injured victims can generally be counted on to vindicate the law as private attorneys general, without any of the problems attendant upon suits by plaintiffs injured more remotely”). Again, the instant case is instructive. Ideal accuses the Anzas of defrauding the State of New York out of a substantial amount of money. If the allegations are true, the State can be expected to pursue appropriate remedies. The adjudication of the State’s claims, moreover, would be relatively straightforward; while it may be difficult to determine facts such as the number of sales Ideal lost due to National’s tax practices, it is considerably easier to make the initial calculation of how much tax revenue the Anzas withheld from the State. There is no need to broaden the universe of actionable harms to permit RICO suits by parties who have been injured only indirectly.

The Court of Appeals reached a contrary conclusion, apparently reasoning that because the Anzas allegedly sought to gain a competitive advantage over Ideal, it is immaterial whether they took an indirect route to accomplish their goal. See 373 F. 3d, at 263. This rationale does not accord with Holmes. A RICO plaintiff cannot circumvent the proximate-cause requirement simply by claiming that the defendant’s aim was to increase market share at a competitor’s expense. See Associated Gen. Contractors, 459 U. S., at 537 (“We are also satisfied that an allegation of improper motive 461*461. . . is not a panacea that will enable any complaint to withstand a motion to dismiss”). When a court evaluates a RICO claim for proximate causation, the central question it must ask is whether the alleged violation led directly to the plaintiff’s injuries. In the instant case, the answer is no. We hold that Ideal’s § 1962(c) claim does not satisfy the requirement of proximate causation.

Petitioners alternatively ask us to hold, in line with the District Court’s decision granting petitioners’ motion to dismiss, that a plaintiff may not assert a RICO claim predicated on mail fraud or wire fraud unless it demonstrates it relied on the defendant’s misrepresentations. They argue that RICO’s private right of action must be interpreted in light of common-law principles, and that at common law a fraud action requires the plaintiff to prove reliance. Because Ideal has not satisfied the proximate-cause requirement articulated in Holmes, we have no occasion to address the substantial question whether a showing of reliance is required. Cf. 503 U. S., at 275-276.

III

The amended complaint also asserts a RICO claim based on a violation of § 1962(a). The claim alleges petitioners’ tax scheme provided them with funds to open a new store in the Bronx, which attracted customers who otherwise would have purchased from Ideal.

In this Court petitioners contend that the proximate-cause analysis should function identically for purposes of Ideal’s § 1962(c) claim and its § 1962(a) claim. (Petitioners also contend that “a civil RICO plaintiff does not plead an injury proximately caused by a violation of § 1962(a) merely by alleging that a corporate defendant reinvested profits back into itself,” Brief for Petitioners 20, n. 5, but this argument has not been developed, and we decline to address it.) It is true that private actions for violations of § 1962(a), like actions for violations of § 1962(c), must be asserted under 462*462 § 1964(c). It likewise is true that a claim is cognizable under § 1964(c) only if the defendant’s alleged violation proximately caused the plaintiff’s injury. The proximate-cause inquiry, however, requires careful consideration of the “relation between the injury asserted and the injurious conduct alleged.” Holmes, supra, at 268. Because § 1962(c) and § 1962(a) set forth distinct prohibitions, it is at least debatable whether Ideal’s two claims should be analyzed in an identical fashion for proximate-cause purposes.

The Court of Appeals held that Ideal adequately pleaded its § 1962(a) claim, see 373 F. 3d, at 264, but the court did not address proximate causation. We decline to consider Ideal’s § 1962(a) claim without the benefit of the Court of Appeals’ analysis, particularly given that the parties have devoted nearly all their attention in this Court to the § 1962(c) claim. We therefore vacate the Court of Appeals’ judgment with respect to Ideal’s § 1962(a) claim. On remand, the court should determine whether petitioners’ alleged violation of § 1962(a) proximately caused the injuries Ideal asserts.

* * *

The judgment of the Court of Appeals is reversed in part and vacated in part. The case is remanded for further proceedings consistent with this opinion.

JUSTICE KENNEDY delivered the opinion of the Court.

Respondent Ideal Steel Supply Corporation (Ideal) sells steel mill products along with related supplies and services. It operates two store locations in New York, one in Queens and the other in the Bronx. Petitioner National Steel Supply, 454*454 Inc. (National), owned by petitioners Joseph and Vincent Anza, is Ideal’s principal competitor. National offers a similar array of products and services, and it, too, operates one store in Queens and one in the Bronx.

Ideal sued petitioners in the United States District Court for the Southern District of New York. It claimed petitioners were engaged in an unlawful racketeering scheme aimed at “gain[ing] sales and market share at Ideal’s expense.” App. 7. According to Ideal, National adopted a practice of failing to charge the requisite New York sales tax to cashpaying customers, even when conducting transactions that were not exempt from sales tax under state law. This practice allowed National to reduce its prices without affecting its profit margin. Petitioners allegedly submitted fraudulent tax returns to the New York State Department of Taxation and Finance in an effort to conceal their conduct.

The court reached the same conclusion with respect to Ideal’s § 1962(a) claim. It reasoned that Ideal adequately 456*456 pleaded its claim because it alleged an injury by reason of petitioners’ use and investment of racketeering proceeds, “as distinct from injury traceable simply to the predicate acts of racketeering alone or to the conduct of the business of the enterprise.” Id., at 264.

We granted certiorari. 546 U. S. 1029 (2005).

III

* * *

The judgment of the Court of Appeals is reversed in part and vacated in part. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Boyle v. U.S,. definition of a RICO enterprise

Posted on March 8, 2015March 8, 2015 by Howard Gutman

The RICO law is a tough to statute to understand, with multiple requirements and phraseology sometimes difficult to understand. That is particularly true in the definition of a RICO Enterprise. Initially the test seems straightforward. The RICO statute targets group criminal enterprise and a RICO enterprise includes “any union or group of individuals associated in fact although not a legal entity.” But is it sufficient to show the association of a group or must more be demonstrated. The case adopts a broad definition but it is not clear what more than a group involved in criminal conduct generally with the common goal of making money through an unlawful scheme must be shown.

Opinion

Boyle v. U.S. 129 S.Ct. 2237 (2009)

Edmund BOYLE, Petitioner,
v.
UNITED STATES.

No. 07-1309.

Supreme Court of United States.

Argued January 14, 2009.

Decided June 8, 2009.

Justice ALITO delivered the opinion of the Court.

We are asked in this case to decide whether an association-in-fact enterprise under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., must have “an ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages.” Pet. for Cert. i. We hold that such an enterprise must have a “structure” but that an instruction framed in this precise language is not necessary. The District Court properly instructed the jury in this case. We therefore affirm the judgment of the Court of Appeals.

The evidence at petitioner’s trial was sufficient to prove the following: Petitioner and others participated in a series of bank thefts in New York, New Jersey, Ohio, and Wisconsin during the 1990’s. The participants in these crimes included a core group, along with others who were recruited from time to time. Although the participants sometimes attempted bank-vault burglaries and bank robberies, the group usually targeted cash-laden night-deposit boxes, which are often found in banks in retail areas.

Each theft was typically carried out by a group of participants who met beforehand to plan the crime, gather tools (such as crowbars, fishing gaffs, and walkie-talkies), and assign the roles that each participant would play (such as lookout and driver). The participants generally split the proceeds from the thefts. The group was loosely and informally organized. It does not appear to have had a leader or hierarchy; nor does it appear that the participants ever formulated any long-term master plan or agreement.

From 1991 to 1994, the core group was responsible for more than 30 night-deposit-box thefts. By 1994, petitioner had joined the group, and over the next five years, he participated in numerous attempted night-deposit-box thefts and at least two attempted bank-vault burglaries.

In 2003, petitioner was indicted for participation in the conduct of the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. 2242*2242 § 1962(c); conspiracy to commit that offense, in violation of § 1962(d); conspiracy to commit bank burglary, in violation of § 371; and nine counts of bank burglary and attempted bank burglary, in violation of § 2113(a).

In instructing the jury on the meaning of a RICO “enterprise,” the District Court relied largely on language in United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). The court told the jurors that, in order to establish the existence of such an enterprise, the Government had to prove that: “(1) There [was] an ongoing organization with some sort of framework, formal or informal, for carrying out its objectives; and (2) the various members and associates of the association function[ed] as a continuing unit to achieve a common purpose.” App. 112. Over petitioner’s objection, the court also told the jury that it could “find an enterprise where an association of individuals, without structural hierarchy, form[ed] solely for the purpose of carrying out a pattern of racketeering acts” and that “[c]ommon sense suggests that the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure.” Id., at 111-112.[1]

Petitioner requested an instruction that the Government was required to prove that the enterprise “had an ongoing organization, a core membership that functioned as a continuing unit, and an ascertainable structural hierarchy distinct from the charged predicate acts.” Id., at 95. The District Court refused to give that instruction.

Petitioner was convicted on 11 of the 12 counts against him, including the RICO counts, and was sentenced to 151 months’ imprisonment. In a summary order, the Court of Appeals for the Second Circuit affirmed his conviction but vacated the sentence on a ground not relevant to the issues before us. 283 Fed.Appx. 825 (2007). The Court of Appeals did not specifically address the RICO jury instructions, stating only that the arguments not discussed in the order were “without merit.” Id., at 826. Petitioner was then resentenced, 3 and we granted certiorari, 554 U.S. ___, 129 S.Ct. 29, 171 L.Ed.2d 931 (2008), to resolve conflicts among the Courts of Appeals concerning the meaning of a RICO enterprise.

The statute does not specifically define the outer boundaries of the “enterprise” concept but states that the term “includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” § 1961(4).[2] This enumeration of included enterprises is obviously broad, encompassing “any … group of individuals associated in fact.” Ibid. (emphasis added). The term “any” ensures that the definition has a wide reach, see, e.g., Ali v. Federal Bureau of Prisons, 552 U.S. 214, ___, 128 S.Ct. 831, 833, 169 L.Ed.2d 680 (2008) and the very concept of an association in fact is expansive. In addition, the RICO statute provides that its terms are to be “liberally construed to effectuate its remedial purposes.” § 904(a), 84 Stat. 947, note following 18 U.S.C. § 1961; see also, e.g., National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 257, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994) (“RICO broadly defines `enterprise'”); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497, 105 S.Ct. 3275, 87 L.Ed.2d 346(1985) (“RICO is to be read broadly”); Russello v. United States, 464 U.S. 16, 21, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (noting “the pattern of the RICO statute in utilizing terms and concepts of breadth”).

In light of these statutory features, we explained in Turkette that “an enterprise includes any union or group of individuals associated in fact” and that RICO reaches “a group of persons associated together for a common purpose of engaging in a course of conduct.” 452 U.S., at 580, 583, 101 S.Ct. 2524. Such an enterprise, we said, “is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.” Id., at 583, 101 S.Ct. 2524.

Notwithstanding these precedents, the dissent asserts that the definition of a RICO enterprise is limited to “business-like entities.” See post, at 2247-2250 (opinion of STEVENS, J.). We see no basis to impose such an extratextual requirement.[3]

As noted, the specific question on which we granted certiorari is whether an association-in-fact enterprise must have “an ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages.” Pet. for Cert. i. We will break this question into three parts. First, must an association-in-fact enterprise have a “structure”? Second, must the structure be “ascertainable”? Third, must the “structure” go “beyond that inherent in the pattern of racketeering activity” in which its members engage?

“Structure.” We agree with petitioner that an association-in-fact enterprise must have a structure. In the sense relevant here, the term “structure” means “[t]he way in which parts are arranged or put together to form a whole” and “[t]he interrelation or arrangement of parts in a complex entity.” American Heritage Dictionary 1718 (4th ed.2000); see also Random House Dictionary of the English Language 1410 (1967) (defining structure to mean, among other things, “the pattern of relationships, as of status or friendship, existing among the members of a group or society”).

From the terms of RICO, it is apparent that an association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose. As we succinctly put it in Turkette, an association-in-fact enterprise is “a group of persons associated together for a common purpose of engaging in a course of conduct.” 452 U.S., at 583, 101 S.Ct. 2524.

That an “enterprise” must have a purpose is apparent from meaning of the term in ordinary usage, i.e., a “venture,” “undertaking,” or “project.” Webster’s Third New International Dictionary 757 (1976). The concept of “associat[ion]” requires both interpersonal relationships and a common interest. See id., at 132 (defining “association” as “an organization of persons having a common interest”); Black’s Law Dictionary 156 (rev. 4th ed.1968) (defining “association” as a “collection of persons who have joined together for a certain object”). Section 1962(c) reinforces this conclusion and also shows that an “enterprise” must have some longevity, since the offense proscribed by that provision demands proof that the enterprise had “affairs” of sufficient duration to permit an associate to “participate” in those affairs through “a pattern of racketeering activity.”

Although an association-in-fact enterprise must have these structural features, it does not follow that a district court must use the term “structure” in its jury instructions. A trial judge has considerable discretion in choosing the language of an instruction so long as the substance of the relevant point is adequately expressed.

“Ascertainable.” Whenever a jury is told that it must find the existence of an element beyond a reasonable doubt, that element must be “ascertainable” or else the jury could not find that it was proved. 2245*2245 Therefore, telling the members of the jury that they had to ascertain the existence of an “ascertainable structure” would have been redundant and potentially misleading.

“Beyond that inherent in the pattern of racketeering activity.” This phrase may be interpreted in least two different ways, and its correctness depends on the particular sense in which the phrase is used. If the phrase is interpreted to mean that the existence of an enterprise is a separate element that must be proved, it is of course correct. As we explained in Turkette, the existence of an enterprise is an element distinct from the pattern of racketeering activity and “proof of one does not necessarily establish the other.”[4] 452 U.S., at 583, 101 S.Ct. 2524.

On the other hand, if the phrase is used to mean that the existence of an enterprise may never be inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering activity, it is incorrect. We recognized in Turkette that the evidence used to prove the pattern of racketeering activity and the evidence establishing an enterprise “may in particular cases coalesce.” Ibid.

The crux of petitioner’s argument is that a RICO enterprise must have structural features in addition to those that we think can be fairly inferred from the language of the statute. Although petitioner concedes that an association-in-fact enterprise may be an “`informal'” group and that “not `much'” structure is needed, Reply Brief for Petitioner 24, he contends that such an enterprise must have at least some additional structural attributes, such as a structural “hierarchy,” “role differentiation,” a “unique modus operandi,” a “chain of command,” “professionalism and sophistication of organization,” “diversity and complexity of crimes,” “membership dues, rules and regulations,” “uncharged or additional crimes aside from predicate acts,” an “internal discipline mechanism,” “regular meetings regarding enterprise affairs,” an “enterprise `name,'” and “induction or initiation ceremonies and rituals.” Id., at 31-35; see also Brief for Petitioner 26-28, 33; Tr. of Oral Arg. 6, 8, 17.

We see no basis in the language of RICO for the structural requirements that petitioner asks us to recognize. As we said in Turkette, an association-in-fact enterprise is simply a continuing unit that functions with a common purpose. Such a group need not have a hierarchical structure or a “chain of command”; decisions may be made on an ad hoc basis and by any number of methods—by majority vote, consensus, a show of strength, etc. Members of the group need not have fixed roles; different members may perform different roles at different times. The group need not have a name, regular meetings, dues, established rules and regulations, disciplinary procedures, or induction or initiation ceremonies. While the group must function as a continuing unit and remain in existence long enough to pursue a course of conduct, nothing in RICO exempts an enterprise whose associates engage in spurts of activity punctuated by periods of quiescence. Nor is the statute limited to groups whose crimes are sophisticated, diverse, 2246*2246 complex, or unique; for example, a group that does nothing but engage in extortion through old-fashioned, unsophisticated, and brutal means may fall squarely within the statute’s reach.

The breadth of the “enterprise” concept in RICO is highlighted by comparing the statute with other federal statutes that target organized criminal groups. For example, 18 U.S.C. § 1955(b), which was enacted together with RICO as part of the Organized Crime Control Act of 1970, 84 Stat. 922, defines an “illegal gambling business” as one that “involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business.” A “continuing criminal enterprise,” as defined in 21 U.S.C. § 848(c), must involve more than five persons who act in concert and must have an “organizer,” supervisor, or other manager. Congress included no such requirements in RICO.

III

Contrary to petitioner’s claims, rejection of his argument regarding these structural characteristics does not lead to a merger of the crime proscribed by 18 U.S.C. § 1962(c) (participating in the affairs of an enterprise through a pattern of racketeering activity) and any of the following offenses: operating a gambling business, § 1955; conspiring to commit one or more crimes that are listed as RICO predicate offenses, § 371; or conspiring to violate the RICO statute, § 1962(d).

Proof that a defendant violated § 1955 does not necessarily establish that the defendant conspired to participate in the affairs of a gambling enterprise through a pattern of racketeering activity. In order to prove the latter offense, the prosecution must prove either that the defendant committed a pattern of § 1955 violations or a pattern of state-law gambling crimes. See § 1961(1). No such proof is needed to establish a simple violation of § 1955.

Likewise, proof that a defendant conspired to commit a RICO predicate offense—for example, arson—does not necessarily establish that the defendant participated in the affairs of an arson enterprise through a pattern of arson crimes. Under § 371, a conspiracy is an inchoate crime that may be completed in the brief period needed for the formation of the agreement and the commission of a single overt act in furtherance of the conspiracy. See United States v. Feola, 420 U.S. 671, 694, 95 S.Ct. 1255, 43 L.Ed.2d 541 (1975). Section 1962(c) demands much more: the creation of an “enterprise”—a group with a common purpose and course of conduct—and the actual commission of a pattern of predicate offenses.[5]

Finally, while in practice the elements of a violation of §§ 1962(c) and (d) are similar, this overlap would persist even if petitioner’s conception of an association-in-fact enterprise were accepted.

Because the statutory language is clear, there is no need to reach petitioner’s remaining arguments based on statutory purpose, legislative history, or the rule of lenity. In prior cases, we have rejected similar arguments in favor of the clear but 2247*2247 expansive text of the statute. See National Organization for Women, 510 U.S., at 262, 114 S.Ct. 798 (“The fact that RICO has been applied in situations not expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth” (quoting Sedima, 473 U.S., at 499, 105 S.Ct. 3275, brackets and internal quotation marks omitted)); see also Turkette, 452 U.S., at 589-591, 101 S.Ct. 2524. “We have repeatedly refused to adopt narrowing constructions of RICO in order to make it conform to a preconceived notion of what Congress intended to proscribe.” Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. ___, ___, 128 S.Ct. 2131, 2145, 170 L.Ed.2d 1012 (2008); see also, e.g., National Organization for Women, supra, at 252, 114 S.Ct. 798 (rejecting the argument that “RICO requires proof that either the racketeering enterprise or the predicate acts of racketeering were motivated by an economic purpose”); H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 244, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (declining to read “an organized crime limitation into RICO’s pattern concept”); Sedima, supra, at 481, 105 S.Ct. 3275 (rejecting the view that RICO provides a private right of action “only against defendants who had been convicted on criminal charges, and only where there had occurred a `racketeering injury'”).

The instructions the District Court judge gave to the jury in this case were correct and adequate. These instructions explicitly told the jurors that they could not convict on the RICO charges unless they found that the Government had proved the existence of an enterprise. See App. 111. The instructions made clear that this was a separate element from the pattern of racketeering activity. Ibid.

The instructions also adequately told the jury that the enterprise needed to have the structural attributes that may be inferred from the statutory language. As noted, the trial judge told the jury that the Government was required to prove that there was “an ongoing organization with some sort of framework, formal or informal, for carrying out its objectives” and that “the various members and associates of the association function[ed] as a continuing unit to achieve a common purpose.” Id., at 112.

Finally, the trial judge did not err in instructing the jury that “the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure.” Id., at 111-112. This instruction properly conveyed the point we made in Turkette that proof of a pattern of racketeering activity may be sufficient in a particular case to permit a jury to infer the existence of an association-in-fact enterprise.

We therefore affirm the judgment of the Court of Appeals.

It is so ordered.

Justice STEVENS, with whom Justice BREYER joins, dissenting.

In my view, Congress intended the term “enterprise” as it is used in the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., to refer only to business-like entities that have an existence apart from the predicate acts committed by their employees or associates. The trial judge in this case committed two significant errors relating to the meaning of that term. First, he instructed the jury that “an association of individuals, without structural hierarchy, form[ed] solely for the purpose of carrying out a pattern of racketeering acts” can constitute an enterprise. App. 112. And he 2248*2248 allowed the jury to find that element satisfied by evidence showing a group of criminals with no existence beyond its intermittent commission of racketeering acts and related offenses. Because the Court’s decision affirming petitioner’s conviction is inconsistent with the statutory meaning of the term enterprise and serves to expand RICO liability far beyond the bounds Congress intended, I respectfully dissent.

RICO makes it “unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” § 1962(c). The statute defines “enterprise” to include “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” § 1961(4).

It is clear from the statute and our earlier decisions construing the term that Congress used “enterprise” in these provisions in the sense of “a business organization,” Webster’s Third New International Dictionary 757 (1976), rather than “a `venture,’ `undertaking,’ or `project,'” ante, at 2244 (quoting Webster’s Third New International Dictionary, at 757). First, the terms “individual, partnership, corporation, association, or other legal entity” describe entities with formal legal structures most commonly established for business purposes. § 1961(4). In context, the subsequent reference to any “union or group of individuals associated in fact although not a legal entity” reflects an intended commonality between the legal and nonlegal entities included in the provision. Ibid. (emphasis added). “The juxtaposition of the two phrases suggests that `associated in fact’ just means structured without the aid of legally defined structural forms such as the business corporation.” Limestone Development Corp. v. Lemont, 520 F.3d 797, 804-805 (C.A.7 2008).[1]

That an enterprise must have business-like characteristics is confirmed by the text of § 1962(c) and our decision in Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). Section 1962(c) creates liability for “conduct[ing] or participat[ing] … in the conduct of [an] enterprise’s affairs through a pattern of racketeering activity.” In Reves, we examined that provision’s meaning and held that, “[i]n order to `participate, directly or indirectly, in the conduct of such enterprise’s affairs,’ one must have some part in directing those affairs.” Id., at 179, 113 S.Ct. 1163 (quoting § 1962(c)). It is not enough for a defendant to “carry on” or “participate in” an enterprise’s affairs 2249*2249 through a pattern of racketeering activity; instead, evidence that he operated, managed, or directed those affairs is required. See id., at 177-179, 113 S.Ct. 1163. This requirement confirms that the enterprise element demands evidence of a certain quantum of business-like organization— i.e., a system of processes, dealings, or other affairs that can be “directed.”

Our cases also make clear that an enterprise “is an entity separate and apart from the pattern of activity in which it engages.” United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). As with the requirement that an enterprise have business-like characteristics, that an enterprise must have a separate existence is confirmed by § 1962(c) and Reves. If an entity’s existence consisted solely of its members’ performance of a pattern of racketeering acts, the “enterprise’s affairs” would be synonymous with the “pattern of racketeering activity.” Section 1962(c) would then prohibit an individual from conducting or participating in “the conduct of [a pattern of racketeering activity] through a pattern of racketeering activity”—a reading that is unbearably redundant, particularly in a case like this one in which a single pattern of activity is alleged. The only way to avoid that result is to require that an “enterprise’s affairs” be something other than the pattern of racketeering activity undertaken by its members.[2]

Recognizing an enterprise’s business-like nature and its distinctness from the pattern of predicate acts, however, does not answer the question of what proof each element requires. In cases involving a legal entity, the matter of proving the enterprise element is straightforward, as the entity’s legal existence will always be something apart from the pattern of activity performed by the defendant or his associates. Cf. Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001). But in the case of an association-in-fact enterprise, the Government must adduce other evidence of the entity’s “separate” existence and “ongoing organization.” Turkette, 452 U.S., at 583, 101 S.Ct. 2524. There may be cases in which a jury can infer that existence and continuity from the evidence used to establish the pattern of racketeering activity. Ibid. But that will be true only when the pattern of activity is so complex that it could not be performed in the absence of structures or processes for planning or concealing the illegal conduct beyond those inherent in performing the predicate acts. More often, proof of an enterprise’s separate existence will require different evidence from that used to establish the pattern of predicate acts.

Precisely what proof is required in each case is a more difficult question, largely 2250*2250 due to the abundant variety of RICO predicates and enterprises. Because covered enterprises are necessarily business-like in nature, however, proof of an association-in-fact enterprise’s separate existence will generally require evidence of rules, routines, or processes through which the entity maintains its continuing operations and seeks to conceal its illegal acts. As petitioner suggests, this requirement will usually be satisfied by evidence that the association has an “ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages.” Pet. for Cert. i. Examples of such structure include an organizational hierarchy, a “framework for making decisions,” an “internal discipline mechanism,” “regular meetings,” or a practice of “reinvest[ing] proceeds to promote and expand the enterprise.” Reply Brief for Petitioner 31-34. In other cases, the enterprise’s existence might be established through evidence that it provides goods or services to third parties, as such an undertaking will require organizational elements more comprehensive than those necessary to perform a pattern of predicate acts. Thus, the evidence needed to establish an enterprise will vary from case to case, but in every case the Government must carry its burden of proving that an alleged enterprise has an existence separate from the pattern of racketeering activity undertaken by its constituents.

In some respects, my reading of the statute is not very different from that adopted by the Court. We agree that “an association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Ante, at 2244. But the Court stops short of giving content to that requirement. It states only that RICO “demands proof that the enterprise had `affairs’ of sufficient duration to permit an associate to `participate’ in those affairs through `a pattern of racketeering activity,'” before concluding that “[a] trial judge has considerable discretion in choosing the language of an instruction” and need not use the term “structure.” Ante, at 2244. While I agree the word structure is not talismanic, I would hold that the instructions must convey the requirement that the alleged enterprise have an existence apart from the alleged pattern of predicate acts. The Court’s decision, by contrast, will allow juries to infer the existence of an enterprise in every case involving a pattern of racketeering activity undertaken by two or more associates.

By permitting the Government to prove both elements with the same evidence, the Court renders the enterprise requirement essentially meaningless in association-in-fact cases. It also threatens to make that category of § 1962(c) offenses indistinguishable from conspiracies to commit predicate acts, see § 371, as the only remaining difference is § 1962(c)’s pattern requirement. The Court resists this criticism, arguing that § 1962(c) “demands much more” than the inchoate offense defined in § 371. Ante, at 2246. It states that the latter “may be completed in the brief period needed for the formation of the agreement and the commission of a single overt act in furtherance of the conspiracy,” whereas the former requires the creation of “a group with a common purpose and course of conduct—and the actual commission of a pattern of predicate offenses.” Ibid. Given that it is also unlawful to conspire to violate § 1962(c), see § 1962(d), this comment provides no assurance that RICO and § 371 offenses remain distinct. Only if proof of the enterprise element—the “group with a common purpose 2251*2251 and course of conduct”—requires evidence of activity or organization beyond that inherent in the pattern of predicate acts will RICO offenses retain an identity distinct from § 371 offenses.

This case illustrates these concerns. The trial judge instructed the jury that an enterprise need have only the degree of organization necessary “for carrying out its objectives” and that it could “find an enterprise where an association of individuals, without structural hierarchy, forms solely for the purpose of carrying out a pattern of racketeering acts.” App. 112.[3] These instructions were plainly deficient, as they did not require the Government to prove that the alleged enterprise had an existence apart from the pattern of predicate acts. Instead, they permitted the Government’s proof of the enterprise’s structure and continuing nature—requirements on which all agree—to consist only of evidence that petitioner and his associates performed a pattern of racketeering activity.

Petitioner’s requested instruction would have required the jury to find that the alleged enterprise “had an ongoing organization, a core membership that functioned as a continuing unit, and an ascertainable structural hierarchy distinct from the charged predicate acts.” Id., at 95. That instruction does not precisely track my understanding of the statute; although evidence of “structural hierarchy” can evidence an enterprise, it is not necessary to establish that element. Nevertheless, the proposed instruction would have better directed the jury to consider whether the alleged enterprise possessed the separate existence necessary to expose petitioner to liability under § 1962(c), and the trial judge should have considered an instruction along those lines.

The trial judge also erred in finding the Government’s evidence in this case sufficient to support petitioner’s RICO convictions. Petitioner was alleged to have participated and conspired to participate in the conduct of an enterprise’s affairs through a pattern of racketeering activity consisting of one act of bank robbery and three acts of interstate transportation of stolen funds. Id., at 15-19. The “primary goals” of the alleged enterprise “included generating money for its members and associates through the commission of criminal activity, including bank robberies, bank burglaries and interstate transportation of stolen money.” Id., at 14. And its modus operandi was to congregate periodically when an associate had a lead on a night-deposit box that the group could break into. Whoever among the associates was available would bring screwdrivers, crowbars, and walkie-talkies to the location. Some acted as lookouts, while others retrieved the money. When the endeavor was successful, the participants would split the proceeds. Thus, the group’s purpose and activities, and petitioner’s participation therein, were limited to sporadic acts of taking money from bank deposit boxes. There is no evidence in RICO’s text or history that Congress intended it to reach such ad hoc associations of thieves.

III

Because the instructions and evidence in this case did not satisfy the requirement that an alleged enterprise have an existence separate and apart from the pattern of activity in which it engages, I respectfully dissent.

[1] The relevant portion of the instructions was as follows:

“The term `enterprise’ as used in these instructions may also include a group of people associated in fact, even though this association is not recognized as a legal entity. Indeed, an enterprise need not have a name. Thus, an enterprise need not be a form[al] business entity such as a corporation, but may be merely an informal association of individuals. A group or association of people can be an `enterprise’ if, among other requirements, these individuals `associate’ together for a purpose of engaging in a course of conduct. Common sense suggests that the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure.

“Moreover, you may find an enterprise where an association of individuals, without structural hierarchy, forms solely for the purpose of carrying out a pattern of racketeering acts. Such an association of persons may be established by evidence showing an ongoing organization, formal or informal, and … by evidence that the people making up the association functioned as a continuing unit. Therefore, in order to establish the existence of such an enterprise, the government must prove that: (1) There is an ongoing organization with some sort of framework, formal or informal, for carrying out its objectives; and (2) the various members and associates of the association function as a continuing unit to achieve a common purpose.

“Regarding `organization,’ it is not necessary that the enterprise have any particular or formal structure, but it must have sufficient organization that its members functioned and operated in a coordinated manner in order to carry out the alleged common purpose or purposes of the enterprise.” App. 111-113 (emphasis added).

[2] This provision does not purport to set out an exhaustive definition of the term “enterprise.” Compare §§ 1961(1)-(2) (defining what the terms “racketeering activity” and “State” mean) with §§ 1961(3)-(4) (defining what the terms “person” and “enterprise” include). Accordingly, this provision does not foreclose the possibility that the term might include, in addition to the specifically enumerated entities, others that fall within the ordinary meaning of the term “enterprise.” See H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 238, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (explaining that the term “pattern” also retains its ordinary meaning notwithstanding the statutory definition in § 1961(5)).

[3] The dissent claims that the “business-like” limitation “is confirmed by the text of § 1962(c) and our decision in Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993).” Post, at 2248. Section 1962(c), however, states only that one may not “conduct or participate, directly or indirectly, in the conduct of [an] enterprise’s affairs through a pattern of racketeering activity.” Whatever business-like characteristics the dissent has in mind, we do not see them in § 1962(c). Furthermore, Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993), is inapposite because that case turned on our interpretation of the participation requirement of § 1962, not the definition of “enterprise.” See id., at 184-185, 113 S.Ct. 1163. In any case, it would be an interpretive stretch to deduce from the requirement that an enterprise must be “directed” to impose the much broader, amorphous requirement that it be “business-like.”

[4] It is easy to envision situations in which proof that individuals engaged in a pattern of racketeering activity would not establish the existence of an enterprise. For example, suppose that several individuals, independently and without coordination, engaged in a pattern of crimes listed as RICO predicates—for example, bribery or extortion. Proof of these patterns would not be enough to show that the individuals were members of an enterprise.

[5] The dissent states that “[o]nly if proof of the enterprise element … requires evidence of activity or organization beyond that inherent in the pattern of predicate acts will RICO offenses retain an identity distinct from § 371 offenses.” Post, at 2250-2251 (opinion of STEVENS, J.). This is incorrect: Even if the same evidence may prove two separate elements, this does not mean that the two elements collapse into one.

[1] To be sure, we have read RICO’s enterprise term broadly to include entities with exclusively noneconomic motives or wholly unlawful purposes. See National Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 252, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994) (NOW); United States v. Turkette, 452 U.S. 576, 580-581, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). But those holdings are consistent with the conclusion that an enterprise is a business-like entity. Indeed, the examples of qualifying associations cited in Turkette—including loan-sharking, property-fencing, drug-trafficking, and counterfeiting operations—satisfy that criterion, as each describes an organization with continuing operations directed toward providing goods or services to its customers. See id., at 589-590, 101 S.Ct. 2524 (citing 84 Stat. 923; 116 Cong. Rec. 592 (1970)). Similarly, the enterprise at issue in NOW was a nationwide network of antiabortion groups that had a leadership counsel and regular conferences and whose members undertook an extensive pattern of extortion, arson, and other racketeering activity for the purpose of “shut[ting] down abortion clinics.” 510 U.S., at 253, 114 S.Ct. 798.

[2] The other subsections of 18 U.S.C. § 1962 further demonstrate the business-like nature of the enterprise element and its necessary distinctness from the pattern of racketeering activity. Subsection (a) prohibits anyone who receives income derived from a pattern of racketeering activity from “us[ing] or invest[ing], directly or indirectly, any part of such income … in acquisition of any interest in, or the establishment or operation of, any enterprise.” And subsection (b) prohibits anyone from “acquir[ing] or maintain[ing]” any interest in or control of an enterprise through a pattern of racketeering activity. We noted in NOW that the term enterprise “plays a different role in the structure” of those subsections than it does in subsection (c) because the enterprise in those subsections is the victim. 510 U.S., at 258-259, 114 S.Ct. 798. We did not, however, suggest that the term has a substantially different meaning in each subsection. To the contrary, our observation that the enterprise in subsection (c) is “the vehicle through which the unlawful pattern of racketeering activity is committed,” id., at 259, 114 S.Ct. 798, indicates that, as in subsections (a) and (b), the enterprise must have an existence apart from the pattern of racketeering activity.

[3] For the full text of the relevant portion of the instructions, see ante, at 2242, n. 1.

Anza v. Ideal Steel- competitor cannot sue under RICO

Posted on March 5, 2015March 5, 2015 by Howard Gutman

Anza v. Ideal Steel Supply, 547 U.S. 451 (2006)
Plaintiff’s competitor allegedly failed to charge sales tax on many transactions, giving it an advantage. The Court rejected the claim finding several problems. The Court suggested precedent required “limiting recovery to direct victims.” Causation was another issue, “Ideal’s lost sales could have resulted from factors other than petitioners’ alleged acts of fraud. Businesses lose and gain customers for many reasons, and it would require a complex assessment to establish what portion of Ideal’s lost sales were the product of National’s decreased prices.”

Decision
__________
ANZA et al.
v.
IDEAL STEEL SUPPLY CORP.

No. 04-433.

Supreme Court of United States.

Argued March 27, 2006.

Decided June 5, 2006.

David C. Frederick argued the cause for petitioners. With him on the briefs were Richard L. Huffman, William M. Brodsky, and V. David Rivkin.

Kevin P. Roddy argued the cause and filed a brief for respondent.[*]

JUSTICE KENNEDY delivered the opinion of the Court.

Ideal asserts in its first cause of action that Joseph and Vincent Anza violated § 1962(c), which makes it unlawful for “any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” The complaint states that the Anzas’ goal, which they achieved, was to give National a competitive advantage over Ideal.

We granted certiorari. 546 U. S. 1029 (2005).

Proper interpretation of § 1964(c) required consideration of the statutory history, which revealed that “Congress modeled § 1964(c) on the civil-action provision of the federal anti-trust laws, § 4 of the Clayton Act.” Id., at 267. In Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519 (1983), the Court held that “a plaintiff’s right to sue under § 4 required a showing that the defendant’s violation not only was a `but for’ cause of his injury, but was the proximate cause as well.” Holmes, supra, at 268 (citing Associated Gen. Contractors, supra, at 534). This reasoning, the Court noted in Holmes, “applies just as readily to § 1964(c).” 503 U. S., at 268.

Ideal’s theory is that Joseph and Vincent Anza harmed it by defrauding the New York tax authority and using the proceeds from the fraud to offer lower prices designed to attract more customers. The RICO violation alleged by Ideal is that the Anzas conducted National’s affairs through a pattern of mail fraud and wire fraud. The direct victim of this conduct was the State of New York, not Ideal. It was the State that was being defrauded and the State that lost tax revenue as a result.

This conclusion is confirmed by considering the directness requirement’s underlying premises. See 503 U. S., at 269-270. One motivating principle is the difficulty that can arise when a court attempts to ascertain the damages caused by some remote action. See id., at 269 (“[T]he less direct an injury is, the more difficult it becomes to ascertain the amount of a plaintiff’s damages attributable to the violation, as distinct from other, independent, factors”). The instant case is illustrative. The injury Ideal alleges is its own loss of sales resulting from National’s decreased prices for cashpaying customers. National, however, could have lowered its prices for any number of reasons unconnected to the asserted pattern of fraud. It may have received a cash inflow from some other source or concluded that the additional sales would justify a smaller profit margin. Its lowering of prices in no sense required it to defraud the state tax authority. Likewise, the fact that a company commits tax fraud does not mean the company will lower its prices; the additional cash could go anywhere from asset acquisition to research and development to dividend payouts. Cf. id., at 271 (“The broker-dealers simply cannot pay their bills, and only that intervening insolvency connects the conspirators’ acts to the losses suffered by the nonpurchasing customers and general creditors”).

III

* * *

The judgment of the Court of Appeals is reversed in part and vacated in part. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

JUSTICE SCALIA, concurring.

I join the opinion of the Court. I also note that it is inconceivable that the injury alleged in the 18 U. S. C. § 1962(c) claim at issue here is within the zone of interests protected by the RICO cause of action for fraud perpetrated upon New York State. See Holmes v. Securities Investor Protection Corporation, 503 U. S. 258, 286-290 (1992) (Scalia, J., concurring in judgment).

JUSTICE THOMAS, concurring in part and dissenting in part.

The Court today limits the lawsuits that may be brought under the civil enforcement provision of the Racketeer Influenced and Corrupt Organizations Act (RICO or Act), 18 U. S. C. § 1961 et seq. (2000 ed. and Supp. III), by adopting a theory of proximate causation that is supported neither by the Act nor by our decision in Holmes v. Securities Investor Protection Corporation, 503 U. S. 258, 268 (1992), on which the Court principally relies. The Court’s stringent proximate-causation requirement succeeds in precluding recovery in cases alleging a violation of § 1962(c) that, like the present one, have nothing to do with organized crime, the target of the RICO statute. However, the Court’s approach also eliminates recovery for plaintiffs whose injuries are precisely those that Congress aimed to remedy through the authorization of civil RICO suits. Because this frustration of congressional intent is directly contrary to the broad language Congress employed to confer a RICO cause of action, I respectfully dissent from Part II of the Court’s opinion.

The language of the civil RICO provision, which broadly permits recovery by “[a]ny person injured in his business or property by reason of a violation” of the Act’s substantive restrictions, § 1964(c) (2000 ed.), plainly covers the lawsuit brought by respondent. Respondent alleges that it was injured in its business, and that this injury was the direct result of petitioners’ violation of § 1962(c).[1] App. 12-17. In 464*464 Holmes, however, we held that a RICO plaintiff is required to show that the RICO violation “not only was a `but for’ cause of his injury, but was the proximate cause as well.” 503 U. S., at 268. We employed the term “`proximate cause’ to label generically the judicial tools used to limit a person’s responsibility for the consequences of that person’s own acts.” Ibid. These tools reflect “`ideas of what justice demands, or of what is administratively possible and convenient.'” Ibid. (quoting W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 41, p. 264 (5th ed. 1984) (hereinafter Prosser & Keeton)).

Invoking one of the common-law proximate-cause considerations, we held that a RICO plaintiff must prove “some direct relation between the injury asserted and the injurious conduct alleged.” 503 U. S., at 268. Today the Court applies this formulation to conclude that the “attenuated relationship” between the violation of § 1962(c) and Ideal’s injury “implicates fundamental concerns expressed in Holmes” and that the “absence of proximate causation is equally clear in both cases.” Ante, at 459, 458. But the Court’s determination relies on a theory of “directness” distinct from that adopted by Holmes.

In Holmes, the Court explained that “a plaintiff who complained of harm flowing merely from the misfortunes visited upon a third person by the defendant’s acts was generally said to stand at too remote a distance to recover.” 503 U. S., at 268-269. The plaintiff in Holmes was indirect in precisely this sense. The defendant was alleged to have participated in a stock manipulation scheme that disabled two broker-dealers from meeting their obligations to customers. Accordingly, the plaintiff, Securities Investor Protection Corporation (SIPC), had to advance nearly $13 million to cover the claims of customers of those broker-dealers. SIPC attempted to sue based on the claim that it was subrogated to the rights of those customers of the broker-dealers who did not purchase manipulated securities. We held that 465*465 the nonpurchasing customers’ injury was not proximately caused by the defendant’s conduct, because “the conspirators have allegedly injured these customers only insofar as the stock manipulation first injured the broker-dealers and left them without the wherewithal to pay customers’ claims.” Id., at 271.[2]

Here, in contrast, it was not New York’s injury that caused respondent’s damages; rather, it was petitioners’ own conduct—namely, their underpayment of tax—that permitted them to undercut respondent’s prices and thereby take away its business. Indeed, the Court’s acknowledgment that there is no appreciable risk of duplicative recovery here, in contrast to Holmes, ante, at 459, is effectively a concession that petitioners’ damages are not indirect, as that term is used in Holmes. See 503 U. S., at 269 (“[R]ecognizing claims of the indirectly injured would force courts to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, to obviate the risk of multiple recoveries”). The mere fact that New York is a direct victim of petitioners’ RICO violation does not preclude Ideal’s claim that it too is a direct victim. Because the petitioners’ tax underpayment directly caused respondent’s injury, Holmes does not bar respondent’s recovery.

The Court nonetheless contends that respondent has failed to demonstrate proximate cause. It does so by relying on our observation in Holmes that the directness requirement is appropriate because “`[t]he less direct an injury is, the more difficult it becomes to ascertain the amount of a 466*466 plaintiff’s damages attributable to the violation, as distinct from other, independent, factors.'” Ante, at 458 (quoting Holmes, supra, at 269, in turn, citing Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519 (1983)). In Holmes, we noted that it would be hard for the District Court to determine how much of the broker-dealers’ failure to pay their customers was due to the fraud and how much was due to other factors affecting the broker-dealers’ business success. 503 U. S., at 273-274. The Court contends that here, as in Holmes, it is difficult to “ascertain the damages caused by some remote action.” Ante, at 458.

The Court’s reliance on the difficulty of ascertaining the amount of Ideal’s damages caused by petitioners’ unlawful acts to label those damages indirect is misguided. Holmes and Associated General Contractors simply held that one reason that indirect injuries should not be compensable is that such injuries are difficult to ascertain. Holmes, supra, at 269; Associated Gen. Contractors, supra, at 542. We did not adopt the converse proposition that any injuries that are difficult to ascertain must be classified as indirect for purposes of determining proximate causation.[3]

Proximate cause and certainty of damages, while both related to the plaintiff’s responsibility to prove that the amount of damages he seeks is fairly attributable to the defendant, are distinct requirements for recovery in tort.[4] See 4 Restatement 467*467 (Second) of Torts § 912 (1977) (certainty of damages); 2 id., §§ 430-431 (1963-1964) (proximate causation). That is, to recover, a plaintiff must show both that his injury is sufficiently connected to the tort that “the moral judgment and practical sense of mankind [will] recognize responsibility in the domain of morals,” Sutherland 18, and that the specific pecuniary advantages, the loss of which is alleged as damages, “would have resulted, and, therefore, that the act complained of prevented them,” id., at 106-107. Holmes and Associated General Contractors dealt primarily with the former showing. The Court’s discussion of the union’s “highly speculative” damages in Associated General Contractors focused not on the difficulty of proving the precise amount of damages, but with “the tenuous and speculative character of the relationship between the alleged antitrust violation and the Union’s alleged injury.” 459 U. S., at 545. Here, the relationship between the alleged RICO violation and the alleged injury is clear: Petitioners underpaid sales tax, permitting them to undercharge sales tax, inflicting competitive injury on respondent. The question with which the Court expresses concern—whether Ideal can prove the amount of its actual damages “with sufficient certainty,” Sutherland 106, 107, to permit recovery—is simply not before the Court.

It is nonetheless worth noting that the Court overstates the difficulties of proof faced by respondent in this case. Certainly the plaintiff in this case, as in all tort cases involving damage to business, must demonstrate that he suffered a harm caused by the tort, and not merely by external market conditions. See generally Prosser & Keeton § 130, at 1014-1015, and nn. 92-99 (gathering cases authorizing liability for torts that “depriv[e] the plaintiff of customers or other prospects”); cf. Dura Pharmaceuticals, Inc. v. Broudo, 544 U. S. 468*468 336, 342 (2005) (“[A]n inflated purchase price will not itself constitute or proximately cause the relevant economic loss,” absent evidence that it was the inflated price that actually caused harm). But under the facts as alleged by Ideal, National did not generally lower its prices, so the Court need not inquire into “any number of reasons,” ante, at 458, that it might have done so.[5] Instead, it simply ceased charging tax on cash sales, allegedly, and logically, because it had ceased reporting those sales and accordingly was not itself paying sales tax on them. App. 11-13. Nor is it fatal to Ideal’s proof of damages that National could have continued to charge taxes to its customers and invested the additional money elsewhere. Ante, at 459. Had National actually done so, it might be difficult to ascertain the damages suffered by Ideal as a result of that investment. But the mere fact that National could have committed tax fraud without readily ascertainable injury to Ideal does not mean that its tax fraud necessarily caused no readily ascertainable injury in this case. Likewise, the Court is undoubtedly correct that “Ideal’s lost sales could have resulted from factors other than petitioners’ alleged acts of fraud.” Ibid. However, the means through which the fraudulent scheme was carried out—with sales tax charged on noncash sales, but no tax charged on cash sales—renders the damages more ascertainable than in the typical case of lost business. In any event, it is well within the expertise of a district court to evaluate testimony and evidence and determine what portion of 469*469 Ideal’s lost sales are attributable to National’s lower prices and what portion to other factors.

The Court also relies on an additional reason Holmes gave for limiting recovery to direct victims—namely, that “[t]he requirement of a direct causal connection is especially warranted where the immediate victims of an alleged RICO violation can be expected to vindicate the laws by pursuing their own claims.” Ante, at 460 (citing Holmes, 503 U. S., at 269-270). Certainly, New York can sue here and vindicate the law, rendering respondent’s enforcement of the law less necessary than it would be if respondent were the only direct victim of the illegal activity. But our recognition in Holmes that limiting recovery to direct victims would not undermine deterrence does not support the conclusion that any victim whose lawsuit is unnecessary for deterrence is an indirect victim. Indeed, in any tort case with multiple possible plaintiffs, a single plaintiff’s lawsuit could suffice to vindicate the law. If multiple plaintiffs are direct victims of a tort, it would be unjust to declare some of their lawsuits unnecessary for deterrence, absent any basis for doing so in the relevant statute. Because respondent’s injuries result from petitioners’ fraud, and not from New York’s injuries, respondent has a right to recover equal to that of New York.

Application of common-law principles of proximate causation beyond the directness requirement likewise supports a finding that causation was sufficiently pleaded in this case. Though the Holmes Court noted that directness was “one of [the] central elements” it had considered in evaluating causation, it recognized that proximate causation took “many shapes” at common law. Id., at 268, 269. Cf. Prosser & Keeton § 42, at 273 (noting “two contrasting theories of legal cause,” one extending liability to, but not beyond, “the scope of the `foreseeable risks,'” and the other extending liability to, but not beyond, all “`directly traceable'” consequences 470*470 and those indirect consequences that are foreseeable).[6] The proximate-cause limitation serves to ensure that “a defendant is not answerable for anything beyond the natural, ordinary and reasonable consequences of his conduct.” Sutherland 57. “If one’s fault happens to concur with something extraordinary, and therefore not likely to be foreseen, he will not be answerable for such unexpected result.” Ibid. Based on this principle, courts have historically found proximate causation for injuries from natural causes, if a wrongful act “rendered it probable that such an injury will occur,” id., at 62; for injuries where the plaintiff’s reliance is the immediate cause, such as in an action for fraud, so long as the reliance was “reasonably induced by the prior misconduct of the defendant,” id., at 62, 63; and for injuries where an innocent third party intervenes between the tortfeasor and the victim, such that the innocent third party is the immediate cause of the injury, so long as the tortfeasor “contributed so effectually to [the injury] as to be regarded as the efficient or at least concurrent and responsible cause,” id., at 64, 65 (emphasis deleted).

The Court of Appeals, by limiting RICO plaintiffs to those who are “`the targets, competitors and intended victims of the racketeering enterprise,'” 373 F. 3d 251, 260 (CA2 2004) (quoting Lerner v. Fleet Bank, N. A., 318 F. 3d 113, 124 (CA2 2003)), outlined a proximate-causation standard that falls well in line both with the reasoning behind having a proximate-cause requirement at all, and with the traditional applications of this standard to tortfeasors who caused injury only through a two-step process. The Court, in contrast, permits a defendant to evade liability for harms that are not only foreseeable, but the intended consequences of the defendant’s unlawful behavior. A defendant may do so simply by concocting a scheme under which a further, lawful and 471*471 intentional step by the defendant is required to inflict the injury. Such a rule precludes recovery for injuries for which the defendant is plainly morally responsible and which are suffered by easily identifiable plaintiffs. There is no basis in the RICO statute, in common-law tort, or in Holmes for reaching this result.

Because neither the plain language of the civil RICO provision nor our precedent supports the Court’s holding, it must be rejected. It is worth noting, however, that while the Court’s holding in the present case may prevent litigation in an area far removed from the concerns about organized crime that led to RICO’s enactment, that holding also precludes civil recovery for losses sustained by business competitors as a result of quintessential organized criminal activity, cases Congress indisputably intended its broad language to reach.

Congress plainly enacted RICO to address the problem of organized crime, and not to remedy general state-law criminal violations. See H. J. Inc. v. Northwestern Bell Telephone Co., 492 U. S. 229, 245 (1989). There is some evidence, to be sure, that the drafters knew that RICO would have the potential to sweep more broadly than organized crime and did not find that problematic. Id., at 246-248. Nevertheless, the Court has recognized that “in its private civil version, RICO is evolving into something quite different from the original conception of its enactors.” Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 500 (1985).

Judicial sentiment that civil RICO’s evolution is undesirable is widespread.[7] Numerous Justices have expressed dissatisfaction with either the breadth of RICO’s application, id., at 501 (Marshall, J., joined by Brennan, Blackmun, and Powell, JJ., dissenting) (“The Court’s interpretation of the civil RICO statute quite simply revolutionizes private litigation; it validates the federalization of broad areas of state common law of frauds, and it approves the displacement of well-established federal remedial provisions. . . . [T]here is no indication that Congress even considered, much less approved, the scheme that the Court today defines”), or its general vagueness at outlining the conduct it is intended to prohibit, H. J. Inc., supra, at 255-256 (Scalia, J., joined by Rehnquist, C. J., and O’Connor and Kennedy, JJ., concurring in judgment) (“No constitutional challenge to this law has been raised in the present case . . . . That the highest Court in the land has been unable to derive from this statute anything more than today’s meager guidance bodes ill for the day when that challenge is presented”). Indeed, proposals for curtailing civil RICO have been introduced in Congress; for example, the Private Securities Litigation Reform Act, enacted in 1995, removed securities fraud as a predicate act under RICO. Pub. L. 104-67, § 107, 109 Stat. 758, amending 18 U. S. C. § 1964(c); see also Abrams, Crime Legislation and the Public Interest: Lessons from Civil RICO, 50 SMU L. Rev. 33, 34 (1996).

This case, like the majority of civil RICO cases, has no apparent connection to organized crime. See Sedima, 473 U. S., at 499, n. 16 (quoting an ABA Task Force determination that, over the period reviewed, only 9% of civil RICO cases at the trial court level involved “`allegations of criminal activity of a type generally associated with professional criminals'”). Given the distance the facts of this case lie 473*473 from the prototypical organized criminal activity that led to RICO’s enactment, it is tempting to find in the Act a limitation that will keep at least this and similar cases out of court.

The Court’s attempt to exclude this case from the reach of civil RICO, however, succeeds in eliminating not only cases that lie far outside the harm RICO was intended to correct, but also those that were at the core of Congress’ concern in enacting the statute. The Court unanimously recognized in Sedima that one reason—and, for the dissent, the principal reason—Congress enacted RICO was to protect businesses against competitive injury from organized crime. See id., at 500-523 (Marshall, J., dissenting) (concluding that the provision conferring a right of action on individual plaintiffs had as its “principal target . . . the economic power of racketeers, and its toll on legitimate businessmen”); id., at 494-500.

The unanimous view of the Sedima Court is correct. The sponsor of a Senate precursor to RICO noted that “`the evil to be curbed is the unfair competitive advantage inherent in the large amount of illicit income available to organized crime.'” Id., at 514 (Marshall, J., dissenting) (quoting 113 Cong. Rec. 17999 (1967) (remarks of Sen. Hruska); some emphasis deleted); see also 473 U. S., at 515 (Marshall, J., dissenting) (“`When organized crime moves into a business, it brings all the techniques of violence and intimidation which it used in its illegal businesses. Competitors are eliminated and customers confined to sponsored suppliers'”). Upon adding a provision for a civil remedy in a subsequently proposed bill, Senator Hruska noted:

“`[This] bill also creates civil remedies for the honest businessman who has been damaged by unfair competition from the racketeer businessman. Despite the willingness of the courts to apply the Sherman Anti-Trust Act to organized crime activities, as a practical matter the legitimate businessman does not have adequate civil remedies available under that act. This bill fills that 474*474 gap.'” Id., at 516 (Marshall, J., dissenting) (quoting 115 Cong. Rec. 6993 (1969); emphasis deleted).

A portion of these bills was ultimately included in RICO, which was attached as Title IX to the Organized Crime Control Act. The Committee Report noted that the Title “has as its purpose the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce.” S. Rep. No. 91-617, p. 76 (1969).

The observations of the President’s Commission on Law Enforcement and Administration of Justice, the source of much of the congressional concern over organized crime, are consistent with these statements. Its chapter on organized crime noted that “organized crime is also extensively and deeply involved in legitimate business . . . . [I]t employs illegitimate methods—monopolization, terrorism, extortion, tax evasion—to drive out or control lawful ownership and leadership and to exact illegal profits from the public.” The Challenge of Crime in a Free Society 187 (1967). The report noted that “[t]he millions of dollars [organized crime] can throw into the legitimate economic system gives it power to manipulate the price of shares on the stock market, to raise or lower the price of retail merchandise, to determine whether entire industries are union or nonunion, to make it easier or harder for businessmen to continue in business.” Ibid.

It is not difficult to imagine a competitive injury to a business that would result from the kind of organized crime that Sedima, Congress, and the Commission all recognized as the principal concern of RICO, yet that would fail the Court’s restrictive proximate-cause test. For example, an organized crime group, running a legitimate business, could, through threats of violence, persuade its supplier to sell goods to it at cost, so that it could resell those goods at a lower price to drive its competitor out of the business. Honest businessmen would be unable to compete, as they do not engage in 475*475 threats of violence to lower their costs. Civil RICO, if it was intended to do anything at all, was intended to give those businessmen a cause of action. Cf. Sedima, 473 U. S., at 521-522 (Marshall, J., dissenting). Yet just like respondent, those businessmen would not themselves be the immediate target of the threats; the target would be the supplier. Like respondent’s injury, their injury would be most immediately caused by the lawful activity of price competition, not the unlawful activity of threatening the supplier. Accordingly, under the Court’s view, the honest businessman competitor would be just an “indirect” victim, whose injury was not proximately caused by the RICO violation.[8] Civil RICO would thus confer no right to sue on the individual who did not himself suffer the threats of violence, even if the threats caused him harm.

As a result, after today, civil RICO plaintiffs that suffer precisely the kind of injury that motivated the adoption of the civil RICO provision will be unable to obtain relief. If this result was compelled by the text of the statute, the interference with congressional intent would be unavoidable. Given that the language is not even fairly susceptible of such a reading, however, I cannot agree with this frustration of congressional intent.

III

Because I conclude that Ideal has sufficiently pleaded proximate cause, I must proceed to the question which the Court does not reach: whether reliance is a required element of a RICO claim predicated on mail or wire fraud and, if it is, whether that reliance must be by the plaintiff. The Court of Appeals held that reliance is required, but that “a RICO claim based on mail fraud may be proven where the misrepresentations were relied on by a third person, rather than 476*476 by the plaintiff.” 373 F. 3d, at 262, 263. I disagree with the conclusion that reliance is required at all. In my view, the mere fact that the predicate acts underlying a particular RICO violation happen to be fraud offenses does not mean that reliance, an element of common-law fraud, is also incorporated as an element of a civil RICO claim.

Petitioners are correct that the common law generally required a showing of justifiable reliance before a plaintiff could recover for damages caused by fraud. See Neder v. United States, 527 U. S. 1, 24-25 (1999); Prosser & Keeton § 105, at 728. But RICO does not confer on private plaintiffs a right to sue defendants who engage in any act of commonlaw fraud; instead, racketeering activity includes, as relevant to this case, “any act which is indictable under [18 U. S. C. §] 1341 (relating to mail fraud) [and §] 1343 (relating to wire fraud).” § 1961(1) (2000 ed., Supp. III). And we have recognized that these criminal fraud statutes “did not incorporate all the elements of common-law fraud.” Neder, 527 U. S., at 24. Instead, the criminal mail fraud statute applies to anyone who, “having devised or intending to devise any scheme or artifice to defraud . . . for the purpose of executing such scheme or artifice or attempting so to do, places in any post office . . . any matter or thing whatever to be sent or delivered by the Postal Service . . . .” § 1341. See § 1343 (similar language for wire fraud). We have specifically noted that “[b]y prohibiting the `scheme to defraud,’ rather than the completed fraud, the elements of reliance . . . would clearly be inconsistent with the statutes Congress enacted.” Id., at 25.

Because an individual can commit an indictable act of mail or wire fraud even if no one relies on his fraud, he can engage in a pattern of racketeering activity, in violation of § 1962, without proof of reliance. Accordingly, it cannot be disputed that the Government could prosecute a person for such behavior. The terms of § 1964(c) (2000 ed.), which broadly authorize suit by “[a]ny person injured in his business or property by reason of a violation of section 1962,” permit no different conclusion when an individual brings a civil action against such a RICO violator.

It is true that our decision in Holmes to apply the common-law proximate-cause requirement was likewise not compelled by the broad language of the statute. But our decision in that case was justified by the “very unlikelihood that Congress meant to allow all factually injured plaintiffs to recover.” 503 U. S., at 266. This unlikelihood stems, in part, from the nature of proximate cause, which is “not only a general condition of civil liability at common law but is almost essential to shape and delimit a rational remedy.” Systems Management, Inc. v. Loiselle, 303 F. 3d 100, 104 (CA1 2002). We also decided Holmes in light of Congress’ decision to use the same words to impose civil liability under RICO as it had in § 7 of the Sherman Act, 26 Stat. 210, into which federal courts had implied a proximate-cause limitation. 503 U. S., at 268. Accordingly, it was fair to interpret the broad language “by reason of” as meaning, in all civil RICO cases, that the violation must be both the cause-in-fact and the proximate cause of the plaintiff’s injury.

Here, by contrast, the civil action provision cannot be read to always require that the plaintiff have relied on the defendant’s action. Reliance is not a general limitation on civil recovery in tort; it “is a specialized condition that happens to have grown up with common law fraud.” Loiselle, supra, at 104. For most of the predicate acts underlying RICO violations, it cannot be argued that the common law, if it even recognized such acts as civilly actionable, required proof of reliance. See § 1961 (2000 ed., Supp. III). In other words, there is no language in § 1964(c) (2000 ed.) that could fairly be read to add a reliance requirement in fraud cases only. Nor is there any reason to believe that Congress would have defined “racketeering activity” to include acts indictable under the mail and wire fraud statutes, if it intended fraud-related acts to be predicate acts under RICO only 478*478 when those acts would have been actionable under the common law.

Because reliance cannot be read into §§ 1341 and 1343, nor into RICO itself, it is not an element of a civil RICO claim. This is not to say that, in the general case, a plaintiff will not have to prove that someone relied on the predicate act of fraud as part of his case. If, for example, New York had not believed petitioners’ misrepresentation with respect to their sales, Ideal may well not have been injured by petitioners’ scheme, which would have faltered at the first step. Indeed, petitioners recognize that “in the ordinary misrepresentation case, the reliance requirement simply functions as a necessary prerequisite to establishing the causation required by the language of § 1964(c).” Brief for Petitioners 29. But the fact that proof of reliance is often used to prove an element of the plaintiff’s cause of action, such as the element of causation, does not transform reliance itself into an element of the cause of action. See Loiselle, supra, at 104 (“Reliance is doubtless the most obvious way in which fraud can cause harm, but it is not the only way”). Because respondent need not allege reliance at all, its complaint, which alleges that New York relied on petitioners’ misrepresentations, App. 16, is more than sufficient.

* * *

The Congress that enacted RICO may never have intended to reach cases like the one before us, and may have “federalize[d] a great deal of state common law” without any intention of “produc[ing] these far-reaching results.” Sedima, 473 U. S., at 506 (Marshall, J., dissenting). But this Court has always refused to ignore the language of the statute to limit it to “the archetypal, intimidating mobster,” and has instead recognized that “[i]t is not for the judiciary to eliminate the private action in situations where Congress has provided it simply because plaintiffs are not taking advantage of it in its more difficult applications.” Id., at 499-500. 479*479 Today, however, the Court not only eliminates private RICO actions in some situations Congress may have inadvertently regulated, but it substantially limits the ability of civil RICO to reach even those cases that motivated Congress’ enactment of this provision in the first place. I respectfully dissent.

JUSTICE BREYER, concurring in part and dissenting in part.

In my view, the civil damages remedy in the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U. S. C. §§ 1961-1968 (2000 ed. and Supp. III), does not cover claims of injury by one competitor where the legitimate procompetitive activity of another competitor immediately causes that injury. I believe that this is such a case and would consequently hold that RICO does not authorize the private action here at issue.

RICO essentially seeks to prevent organized criminals from taking over or operating legitimate businesses. Its language, however, extends its scope well beyond those central purposes. RICO begins by listing certain predicate acts, called “`racketeering activity,'” which consist of other crimes, ranging from criminal copyright activities, the facilitation of gambling, and mail fraud to arson, kidnaping, and murder. § 1961(1) (2000 ed., Supp. III). It then defines a “`pattern of racketeering activity'” to include engaging in “at least two” predicate acts in a 10-year period. § 1961(5) (2000 ed.). And it forbids certain business-related activities involving such a “pattern” and an “enterprise.” The forbidden activities include using funds derived from a “pattern of racketeering activity” in acquiring, establishing, or operating any enterprise, and conducting the affairs of any enterprise through such “a pattern.” §§ 1962(a), (c).

480*480 RICO, a federal criminal statute, foresees criminal law enforcement by the Federal Government. § 1963 (2000 ed., Supp. III). It also sets forth civil remedies. § 1964 (2000 ed.). District courts “have jurisdiction to prevent and restrain [RICO] violations.” § 1964(a). And a person “injured in his business or property by reason of a [RICO] violation” may seek treble damages and attorney’s fees. § 1964(c).

The present case is a private RICO treble-damages action. A steel supply company, Ideal Steel, has sued a competing steel supply company, National Steel, and its owners, Joseph and Vincent Anza (to whom I shall refer collectively as “National”). Ideal says that National committed mail fraud by regularly filing false New York state sales tax returns in order to avoid paying sales tax that it owed—activity that amounts to a “pattern of racketeering activity.” This activity enabled National to charge lower prices without reducing its profit margins. Ideal says National used some of these excess profits to fund the building of a new store. Both the lower prices and the new outlet attracted Ideal customers, thereby injuring Ideal. Hence, says Ideal, it was injured “in [its] business . . . by reason of” violations of two RICO provisions, the provision that forbids conducting an “enterprise’s affairs” through a “pattern of racketeering activity” and the provision that forbids investing funds derived from such a “pattern” in an “enterprise.” §§ 1962(c), (a), 1964(c). The question before us is whether RICO permits Ideal to bring this private treble-damages claim.

This Court, in Holmes v. Securities Investor Protection Corporation, 503 U. S. 258, 268 (1992), held that RICO’s private treble-damages provision “demand[ed] . . . some direct relation between the injury asserted and the injurious conduct alleged.” The Court then determined that the injury 481*481 alleged by the plaintiff in that case was too remote from the injurious conduct to satisfy this requirement.

I do not agree with the majority insofar as it believes that Holmes’ holding in respect to the fact pattern there at issue virtually dictates the answer to the question here. In my view, the “causal connection” between the forbidden conduct and plaintiff’s harm is, in certain key ways, more direct here than it was in Holmes. In Holmes, the RICO plaintiff was a surrogate for creditors of broker-dealers that went bankrupt after losing money in stocks that had been overvalued due to fraudulent statements made by the RICO defendant and others. Put in terms of “proximate cause,” the plaintiff’s harm (an ordinary creditor loss) differed in kind from the harm that the “predicate acts” (securities fraud) would ordinarily cause (stock-related monetary losses). The harm was “indirect” in the sense that it was entirely derivative of the more direct harm the defendant’s actions had caused the broker-dealers; and, there were several steps between the violation and the harm (misrepresentation—broker-dealer losses—broker-dealer business failure—ordinary creditor loss). Here, however, the plaintiff alleges a harm (lost customers) that flows directly from the lower prices and the opening of a new outlet—actions that were themselves allegedly caused by activity that Congress designed RICO to forbid (conducting a business through a “pattern” of “predicate acts” and investing in business funds derived from such a “pattern”). In this sense, the causal links before us are more “direct” than those in Holmes. See ante, at 464-465 (Thomas, J., concurring in part and dissenting in part).

Nonetheless, I agree with the majority that Holmes points the way. That case makes clear that RICO contains important limitations on the scope of private rights of action. It specifies that RICO does not provide a private right of action “simply on showing that the defendant violated § 1962, the plaintiff was injured, and the defendant’s violation was a `but for’ cause of [the] plaintiff’s injury.” 503 U. S., at 265-266 482*482 (footnote omitted). Pointing out “the very unlikelihood that Congress meant to allow all factually injured plaintiffs to recover,” id., at 266 (emphasis added), Holmes concludes that RICO imposes a requirement of “proximate cause,” a phrase that “label[s] generically the judicial tools used to limit a person’s responsibility for the consequences of that person’s own acts,” id., at 268. It recognizes that these tools seek to discern “`what justice demands, or . . . what is administratively possible and convenient.'” Ibid. (quoting W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 41, p. 264 (5th ed. 1984)). It also explains that “proximate cause” demands “directness,” while specifying that “directness” is only one of “the many shapes this concept took at common law.” 503 U. S., at 268, 269. And it points to antitrust law, both as a source of RICO’s trebledamages provisions and as an aid to their interpretation. Ibid.

In my view, the “antitrust” nature of the treble-damages provision’s source, taken together with both RICO’s basic objectives and important administrative concerns, implies that a cause is “indirect,” i. e., it is not a “proximate cause,” if the causal chain from forbidden act to the injury caused a competitor proceeds through a legitimate business’ ordinary competitive activity. To use a physical metaphor, ordinary competitive actions undertaken by the defendant competitor cut the direct causal link between the plaintiff competitor’s injuries and the forbidden acts.

The basic objective of antitrust law is to encourage the competitive process. In particular, that law encourages businesses to compete by offering lower prices, better products, better methods of production, and better systems of distribution. See, e. g., 1 P. Areeda & H. Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 100a, pp. 3-4 (2d ed. 2000). As I shall explain, these principles suggest that RICO does not permit private action based solely upon this competitive type of harm, i. e., 483*483 harm a plaintiff suffers only because the defendant was able to attract customers through normal competitive methods, such as lower prices, better products, better methods of production, or better systems of distribution. In such cases, the harm falls outside the limits that RICO’s private trebledamages provision’s “proximate-cause” requirement imposes. In such cases the distance between the harm and the predicate acts that funded (or otherwise enabled) such ordinary competitive activity is too distant. The harm is not “direct.”

At the same time, those principles suggest that other types of competitive injuries not within their protective ambit could lie within, not outside, “proximate-cause” limits. Where, for example, a RICO defendant attracts customers in ways that involve illegitimate competitive means, e. g., by threatening violence, a claim may still lie. Claims involving RICO violations that objectively target a particular competitor, e. g., bribing an official to harass a competitor, could also be actionable.

Several considerations lead to this conclusion. First, I have found no case (outside the Second Circuit, from which this case arose) in which a court has authorized a private treble-damages suit based upon no more than a legitimate business’ ordinary procompetitive activity (even where financed by the proceeds of a RICO predicate act).

Second, an effort to bring harm caused by ordinary competitive activity within the scope of RICO’s private trebledamages action provision will raise serious problems of administrability. Ante, at 458-460 (majority opinion); see also Holmes, supra, at 269. To demonstrate that a defendant’s lower price caused a plaintiff to lose customers (or profits) requires the plaintiff to show what would have happened in its absence. Would customers have changed suppliers irrespective of the price change because of other differences in the suppliers? Would other competing firms have lowered their prices? Would higher prices have attracted 484*484 new entry? Would demand for the industry’s product, or the geographic scope of the relevant market, have changed? If so, how? To answer such questions based upon actual market circumstances and to apportion damages among the various competitors harmed is difficult even for plaintiffs trying to trace harm caused by a defendants’ anti-competitive behavior. Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519, 542, 544 (1983) (the possibility that harm “may have been produced by independent factors” and “the danger of complex apportionment of damages” weigh against finding the requisite causal connection in an antitrust case). To answer such questions in the context of better functioning markets, where prices typically reflect competitive conditions, would likely prove yet more difficult.

Third, where other victims, say, victims of the underlying RICO “predicate acts” are present, there is no pressing need to provide such an action. Those alternative victims (here the State of New York) typically “could be counted on to bring suit for the law’s vindication.” Holmes, supra, at 273. They could thus fulfill Congress’ aim in adopting the civil remedy of “turn[ing victims] into prosecutors, `private attorneys general,’ dedicated to eliminating racketeering activity.” Rotella v. Wood, 528 U. S. 549, 557 (2000) (citing Klehr v. A. O. Smith Corp., 521 U. S. 179, 187 (1997)).

Fourth, this approach to proximate cause would retain private actions aimed at the heart of Congress’ relevant RICO concerns. RICO’s sponsors, in reporting their underlying reasons for supporting RICO, emphasized, not the fair, ordinary competition that an infiltrated business might offer its competitors, but the risk that such a business would act corruptly, exercising unfair methods of competition. S. Rep. No. 91-617, pp. 76-78 (1969); see also Cedric Kushner Promotions, Ltd. v. King, 533 U. S. 158, 165 (2001). RICO focuses upon the “infiltration of legitimate business by organized crime,” in significant part because, when “`organized crime moves into a business, it brings all the techniques of 485*485 violence and intimidation which it used in its illegal businesses.'” Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 517, 515 (1985) (Marshall, J., dissenting) (quoting 113 Cong. Rec. 17999 (1967)).

My approach would not rule out private actions in such cases. Nor would it rule out three of the four suits mentioned by Justice Marshall, dissenting in Sedima, when he describes RICO’s objectives. It would not rule out lawsuits by injured competitors or legitimate investors if a racketeer, “uses `[t]hreats, arson and assault . . . to force competitors out of business'”; “uses arson and threats to induce honest businessmen to pay protection money, or to purchase certain goods, or to hire certain workers”; or “displace[s]” an “honest investor” when he “infiltrates and obtains control of a legitimate business . . . through fraud” or the like. 473 U. S., at 521, 522.

I concede that the approach would rule out a competitor’s lawsuit based on no more than an “infiltrated enterprise” operating a legitimate business to a businessman’s competitive disadvantage because unlawful predicate acts helped that legitimate business build a “strong economic base.” And I recognize that this latter kind of suit at least arguably would have provided helpful deterrence had the view of Sedima’s dissenting Justices prevailed. Id., at 500-523 (Marshall, J., dissenting) (arguing that RICO’s private action provision did not authorize suits based on harm flowing directly from predicate acts); id., at 523-530 (Powell, J., dissenting) (same). But the dissent did not prevail, and the need for deterrence consequently offers only weakened support for a reading of RICO that authorizes private suits in this category.

Fifth, without this limitation, RICO enforcement and basic antitrust policy could well collide. Firms losing the competitive battle might find bases for a RICO attack on their more successful competitors in claimed misrepresentations or even comparatively minor misdeeds by that competitor. Firms 486*486 that fear such treble-damages suits might hesitate to compete vigorously, particularly in concentrated industries where harm to a competitor is more easily traced but where the consumer’s need for vigorous competition is particularly strong. The ultimate victim of any such tendency to pull ordinary competitive punches of course would be not the competing business, but the consumer. Although Congress did not intend its RICO treble-damages provision as a simple copy of the antitrust laws’ similar remedies, see, e. g., Sedima, supra, at 498-499, there is no sound reason to interpret RICO’s treble-damages provision as if Congress intended to set it and its antitrust counterpart at cross-purposes.

For these reasons, I would read into the private trebledamages provision a “proximate-cause” limitation that places outside the provision harms that are traceable to an unlawful act only through a form of legitimate competitive activity.

III

Applying this approach to the present case, I would hold that neither of Ideal’s counts states a RICO private trebledamages claim. National is a legitimate business. Another private plaintiff (the State of New York) is available. The question is whether Ideal asserts a harm caused directly by something other than ordinary competitive activity, i. e., lower prices, a better product, a better distribution system, or a better production method.

Ideal’s second count claims injury caused by National’s (1) having taken customers (2) attracted by its new store (3) that it financed in part through profits generated by the tax fraud scheme, and the financing is the relevant violation. § 1962(a). The opening of a distribution outlet is a legitimate competitive activity. It benefits the firm that opens it by making it more convenient for customers to purchase from that supplier. That ordinary competitive process is all the complaint describes. And for the reasons I have given 487*487 in Part II, supra, I believe that the financing of a new store—even with funds generated by unlawful activities—is not sufficient to create a private cause of action as long as the activity funded amounts to legitimate competitive activity. Ideal must look for other remedies, e. g., bringing the facts to the attention of the United States Attorney or the State of New York.

Ideal’s first count presents a more difficult question. It alleges that National filed false sales tax returns to the State of New York. As an action indictable under the federal mail fraud statute, that action is a predicate act under RICO. See § 1961(1) (2000 ed., Supp. III). National passed these savings on to its cash customers by not charging them sales tax, thereby attracting more cash customers than it would have without the scheme. Is this a form of injury caused, not by ordinary competitive activity, but simply by the predicate act itself?

In my view, the answer to this question is “no.” The complaint alleges predicate acts that amount simply to the facts that National did not “charge” or “pay” sales taxes or accurately “report” sales figures to the State. National did not tell its customers, “We shall not pay sales taxes.” Rather, it simply charged the customer a lower price, say, $100 rather than $100 plus $8 tax. Consider a retailer who advertises to the customer a $100 table and adds, “We pay all sales taxes.” Such a retailer is telling the customer that he will charge the customer a lower price by the amount of the tax, i. e., about $92. The retailer implies that he, the retailer, will pay the tax to the State, taking the requisite amount owed to the State from the $100 the customer paid for the item.

The defendants here have done no more. They have in effect cut the price of the item by the amount of the sales tax and then kept the money instead of passing it on to the State. They funded the price cut from the savings, but the 488*488 source of the savings is, in my view, beside the point as long as the price cut itself is legitimate. I can find nothing in the complaint that suggests it is not.

For these reasons, I would reverse the decision of the Court of Appeals on both counts.

[*] Gene C. Schaerr, Linda T. Coberly, Charles B. Klein, Robin S. Conrad, and Amar D. Sarwal filed a brief for the Chamber of Commerce of the United States of America as amicus curiae urging reversal.

Henry H. Rossbacher and G. Robert Blakey filed a brief for the National Association of Shareholder and Consumer Attorneys as amicus curiae urging affirmance.

[1] Respondent also alleges that petitioners injured its business through a violation of § 1962(a), although the parties dedicate little attention to this issue. In light of the Court’s disposition of the § 1962(c) claim and the limited discussion of § 1962(a) by the parties, I agree with the Court that we should give the Court of Appeals the first opportunity to reconsider the § 1962(a) claim. Accordingly, I join Part III of the Court’s opinion.

[2] Sutherland’s treatise on damages, on which the Court relied in Holmes, labels the same type of claims indirect: those where one party is injured, and it is that very injury—and not the wrongful behavior by the tortfeasor—that causes the injury to the plaintiff. See 1 J. Sutherland, Law of Damages 55 (1882) (hereinafter Sutherland). Indeed, every example cited in Sutherland in illustration of this principle parallels Holmes; the plaintiff would not be injured absent the injury to another victim. See Sutherland 55-56.

[3] Indeed, in Associated General Contractors, we did not even squarely hold that the reason that indirect damages are not compensable was that the damages were not easily ascertainable; instead, we merely recognized the empirical fact that “[p]artly because it is indirect, and partly because the alleged effects on the Union may have been produced by independent factors, the Union’s damages claim is also highly speculative.” 459 U. S., at 542.

[4] Sutherland described the interrelation between the two concepts: “A fatal uncertainty may infect a case where an injury is easily provable, but the alleged responsible cause cannot be sufficiently established as to the whole or some part of that injury. So it may exist where a known and provable wrong or violation of contract appears, but the alleged loss or injury as a result of it cannot be certainly shown.” Sutherland 94.

[5] Nor is it fair to require a plaintiff to prove that the tort caused the lowering of prices at the motion to dismiss stage. Ideal’s complaint alleges that petitioners “pass on to National’s customers the sales tax `savings’ that National realizes as a result of its false returns.” App. 16. This allegation that, as a factual matter, National was able to charge a lower price after tax because of its fraud suffices to permit Ideal to survive a motion to dismiss on the question whether the prices were lowered due to the fraud, as opposed to other factors.

[6] Prosser and Keeton appear to use “direct” in a broader sense than that adopted by the Court in Holmes. See Prosser & Keeton § 43, at 273, 293-297.

[7] See Rehnquist, Remarks of the Chief Justice, 21 St. Mary’s L. J. 5, 13 (1989) (“I think that the time has arrived for Congress to enact amendments to civil RICO to limit its scope to the sort of wrongs that are connected to organized crime, or have some other reason for being in federal court”); Sentelle, Civil RICO: The Judges’ Perspective, and Some Notes on Practice for North Carolina Lawyers, 12 Campbell L. Rev. 145, 148 (1990) (“[E]very single district judge with whom I have discussed the subject (and I’m talking in the dozens of district judges from across the country) echoes the entreaty expressed in the Chief Justice’s title in The Wall Street Journal[, Get RICO Cases Out of My Courtroom, May 19, 1989, p. A14, col. 4]”).

[8] The honest businessman would likewise fail Justice Scalia’s theory of proximate causation, because laws against threats of violence are intended to protect those who are so threatened, not other parties

Sedima v. Imrex

Posted on February 18, 2015February 19, 2015 by Howard Gutman

Sedima, SP RL v. Imrex Co., 473 U.S. 479 (1985)

SEDIMA, S. P. R. L.
v.
IMREX CO., INC., ET AL.

No. 84-648.

Supreme Court of United States.

Argued April 17, 1985

Decided July 1, 1985
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Franklyn H. Snitow argued the cause for petitioner. With him on the brief was William H. Pauley III.

Richard Eisenberg argued the cause for respondents. With him on the brief were Alfred Weintraub and Joel I. Klein.

JUSTICE WHITE delivered the opinion of the Court.

The Racketeer Influenced and Corrupt Organizations Act (RICO), Pub. L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U. S. C. §§ 1961-1968, provides a private civil action to recover treble damages for injury “by reason of a violation of” its substantive provisions. 18 U. S. C. § 1964(c). The initial dormancy of this provision and its recent greatly increased utilization[1] are now familiar history.[2] In response to what it perceived to be misuse of civil RICO by private plaintiffs, the court below construed § 1964(c) to permit private actions only against defendants who had been convicted on criminal charges, and only where there had occurred a “racketeering injury.” While we understand the court’s concern over the consequences of an unbridled reading of the statute, we reject both of its holdings.

RICO takes aim at “racketeering activity,” which it defines as any act “chargeable” under several generically described state criminal laws, any act “indictable” under numerous specific federal criminal provisions, including mail and wire fraud, and any “offense” involving bankruptcy or securities 482*482 fraud or drug-related activities that is “punishable” under federal law. § 1961(1).[3] Section 1962, entitled “Prohibited Activities,” outlaws the use of income derived from a “pattern of racketeering activity” to acquire an interest in or establish an enterprise engaged in or affecting interstate commerce; the acquisition or maintenance of any interest in an enterprise “through” a pattern of racketeering activity; 483*483 conducting or participating in the conduct of an enterprise through a pattern of racketeering activity; and conspiring to violate any of these provisions.[4]

Congress provided criminal penalties of imprisonment, fines, and forfeiture for violation of these provisions. § 1963. In addition, it set out a far-reaching civil enforcement scheme, § 1964, including the following provision for private suits:

“Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.” § 1964(c).

In 1979, petitioner Sedima, a Belgian corporation, entered into a joint venture with respondent Imrex Co. to provide electronic components to a Belgian firm. The buyer was to order parts through Sedima; Imrex was to obtain the parts 484*484 in this country and ship them to Europe. The agreement called for Sedima and Imrex to split the net proceeds. Imrex filled roughly $8 million in orders placed with it through Sedima. Sedima became convinced, however, that Imrex was presenting inflated bills, cheating Sedima out of a portion of its proceeds by collecting for nonexistent expenses.

In 1982, Sedima filed this action in the Federal District Court for the Eastern District of New York. The complaint set out common-law claims of unjust enrichment, conversion, and breach of contract, fiduciary duty, and a constructive trust. In addition, it asserted RICO claims under § 1964(c) against Imrex and two of its officers. Two counts alleged violations of § 1962(c), based on predicate acts of mail and wire fraud. See 18 U. S. C. §§ 1341, 1343, 1961(1)(B). A third count alleged a conspiracy to violate § 1962(c). Claiming injury of at least $175,000, the amount of the alleged overbilling, Sedima sought treble damages and attorney’s fees.

The District Court held that for an injury to be “by reason of a violation of section 1962,” as required by § 1964(c), it must be somehow different in kind from the direct injury resulting from the predicate acts of racketeering activity. 574 F. Supp. 963 (1983). While not choosing a precise formulation, the District Court held that a complaint must allege a “RICO-type injury,” which was either some sort of distinct “racketeering injury,” or a “competitive injury.” It found “no allegation here of any injury apart from that which would result directly from the alleged predicate acts of mail fraud and wire fraud,” id., at 965, and accordingly dismissed the RICO counts for failure to state a claim.

A divided panel of the Court of Appeals for the Second Circuit affirmed. 741 F. 2d 482 (1984). After a lengthy review of the legislative history, it held that Sedima’s complaint was defective in two ways. First, it failed to allege an injury “by reason of a violation of section 1962.” In the court’s view, 485*485 this language was a limitation on standing, reflecting Congress’ intent to compensate victims of “certain specific kinds of organized criminality,” not to provide additional remedies for already compensable injuries. Id., at 494. Analogizing to the Clayton Act, which had been the model for § 1964(c), the court concluded that just as an antitrust plaintiff must allege an “antitrust injury,” so a RICO plaintiff must allege a “racketeering injury” — an injury “different in kind from that occurring as a result of the predicate acts themselves, or not simply caused by the predicate acts, but also caused by an activity which RICO was designed to deter.” Id., at 496. Sedima had failed to allege such an injury.

The Court of Appeals also found the complaint defective for not alleging that the defendants had already been criminally convicted of the predicate acts of mail and wire fraud, or of a RICO violation. This element of the civil cause of action was inferred from § 1964(c)’s reference to a “violation” of § 1962, the court also observing that its prior-conviction requirement would avoid serious constitutional difficulties, the danger of unfair stigmatization, and problems regarding the standard by which the predicate acts were to be proved.

The decision below was one episode in a recent proliferation of civil RICO litigation within the Second Circuit[5] and 486*486 in other Courts of Appeals.[6] In light of the variety of approaches taken by the lower courts and the importance of the issues, we granted certiorari. 469 U. S. 1157 (1984). We now reverse.

As a preliminary matter, it is worth briefly reviewing the legislative history of the private treble-damages action. RICO formed Title IX of the Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat. 922. The civil remedies in the bill passed by the Senate, S. 30, were limited to injunctive actions by the United States and became §§ 1964(a), (b), and 487*487 (d). Previous versions of the legislation, however, had provided for a private treble-damages action in exactly the terms ultimately adopted in § 1964(c). See S. 1623, 91st Cong., 1st Sess., § 4(a) (1969); S. 2048 and S. 2049, 90th Cong., 1st Sess. (1967).

During hearings on S. 30 before the House Judiciary Committee, Representative Steiger proposed the addition of a private treble-damages action “similar to the private damage remedy found in the anti-trust laws. . . . [T]hose who have been wronged by organized crime should at least be given access to a legal remedy. In addition, the availability of such a remedy would enhance the effectiveness of title IX’s prohibitions.” Hearings on S. 30, and Related Proposals, before Subcommittee No. 5 of the House Committee on the Judiciary, 91st Cong., 2d Sess., 520 (1970) (hereinafter House Hearings). The American Bar Association also proposed an amendment “based upon the concept of Section 4 of the Clayton Act.” Id., at 543-544, 548, 559; see 116 Cong. Rec. 25190-25191 (1970). See also H. R. 9327, 91st Cong., 1st Sess. (1969) (House counterpart to S. 1623).

Over the dissent of three members, who feared the treble-damages provision would be used for malicious harassment of business competitors, the Committee approved the amendment. H. R. Rep. No. 91-1549, pp. 58, 187 (1970). In summarizing the bill on the House floor, its sponsor described the treble-damages provision as “another example of the antitrust remedy being adapted for use against organized criminality.” 116 Cong. Rec. 35295 (1970). The full House then rejected a proposal to create a complementary treble-damages remedy for those injured by being named as defendants in malicious private suits. Id., at 35342. Representative Steiger also offered an amendment that would have allowed private injunctive actions, fixed a statute of limitations, and clarified venue and process requirements. Id., at 35346; see id., at 35226-35227. The proposal was greeted with some hostility because it had not been reviewed in Committee, 488*488 and Steiger withdrew it without a vote being taken. Id., at 35346-35347. The House then passed the bill, with the treble-damages provision in the form recommended by the Committee. Id., at 35363-35364.

The Senate did not seek a conference and adopted the bill as amended in the House. Id., at 36296. The treble-damages provision had been drawn to its attention while the legislation was still in the House, and had received the endorsement of Senator McClellan, the sponsor of S. 30, who was of the view that the provision would be “a major new tool in extirpating the baneful influence of organized crime in our economic life.” Id., at 25190.

III

The language of RICO gives no obvious indication that a civil action can proceed only after a criminal conviction. The word “conviction” does not appear in any relevant portion of the statute. See §§ 1961, 1962, 1964(c). To the contrary, the predicate acts involve conduct that is “chargeable” or “indictable,” and “offense[s]” that are “punishable,” under various criminal statutes. § 1961(1). As defined in the statute, racketeering activity consists not of acts for which the defendant has been convicted, but of acts for which he could be. See also S. Rep. No. 91-617, p. 158 (1969): “a racketeering activity . . . must be an act in itself subject to criminal sanction” (emphasis added). Thus, a prior-conviction requirement cannot be found in the definition of “racketeering activity.” Nor can it be found in § 1962, which sets out the statute’s substantive provisions. Indeed, if either § 1961 or § 1962 did contain such a requirement, a prior conviction would also be a prerequisite, nonsensically, for a criminal prosecution, or for a civil action by the Government to enjoin violations that had not yet occurred.

The Court of Appeals purported to discover its prior-conviction requirement in the term “violation” in § 1964(c). 741 F. 2d, at 498-499. However, even if that term were 489*489 read to refer to a criminal conviction, it would require a conviction under RICO, not of the predicate offenses. That aside, the term “violation” does not imply a criminal conviction. See United States v. Ward, 448 U. S. 242, 249-250 (1980). It refers only to a failure to adhere to legal requirements. This is its indisputable meaning elsewhere in the statute. Section 1962 renders certain conduct “unlawful”; § 1963 and § 1964 impose consequences, criminal and civil, for “violations” of § 1962. We should not lightly infer that Congress intended the term to have wholly different meanings in neighboring subsections.[7]

The legislative history also undercuts the reading of the court below. The clearest current in that history is the reliance on the Clayton Act model, under which private and governmental actions are entirely distinct. E. g., United States v. Borden Co., 347 U. S. 514, 518-519 (1954).[8] The only 490*490 specific reference in the legislative history to prior convictions of which we are aware is an objection that the treble-damages provision is too broad precisely because “there need not be a conviction under any of these laws for it to be racketeering.” 116 Cong. Rec. 35342 (1970) (emphasis added). The history is otherwise silent on this point and contains nothing to contradict the import of the language appearing in the statute. Had Congress intended to impose this novel requirement, there would have been at least some mention of it in the legislative history, even if not in the statute.

The Court of Appeals was of the view that its narrow construction of the statute was essential to avoid intolerable practical consequences.[9] First, without a prior conviction to rely on, the plaintiff would have to prove commission of the predicate acts beyond a reasonable doubt. This would require instructing the jury as to different standards of proof for different aspects of the case. To avoid this awkwardness, 491*491 the court inferred that the criminality must already be established, so that the civil action could proceed smoothly under the usual preponderance standard.

We are not at all convinced that the predicate acts must be established beyond a reasonable doubt in a proceeding under § 1964(c). In a number of settings, conduct that can be punished as criminal only upon proof beyond a reasonable doubt will support civil sanctions under a preponderance standard. See, e. g., United States v. One Assortment of 89 Firearms, 465 U. S. 354 (1984); One Lot Emerald Cut Stones v. United States, 409 U. S. 232, 235 (1972); Helvering v. Mitchell, 303 U. S. 391, 397 (1938); United States v. Regan, 232 U. S. 37, 47-49 (1914). There is no indication that Congress sought to depart from this general principle here. See Measures Relating to Organized Crime, Hearings on S. 30 et al. before the Subcommittee on Criminal Laws and Procedures of the Senate Committee on the Judiciary, 91st Cong., 1st Sess., 388 (1969) (statement of Assistant Attorney General Wilson); House Hearings, at 520 (statement of Rep. Steiger); id., at 664 (statement of Rep. Poff); 116 Cong. Rec. 35313 (1970) (statement of Rep. Minish). That the offending conduct is described by reference to criminal statutes does not mean that its occurrence must be established by criminal standards or that the consequences of a finding of liability in a private civil action are identical to the consequences of a criminal conviction. Cf. United States v. Ward, supra, at 248-251. But we need not decide the standard of proof issue today. For even if the stricter standard is applicable to a portion of the plaintiff’s proof, the resulting logistical difficulties, which are accepted in other contexts, would not be so great as to require invention of a requirement that cannot be found in the statute and that Congress, as even the Court of Appeals had to concede, 741 F. 2d, at 501, did not envision.[10]

492*492 The court below also feared that any other construction would raise severe constitutional questions, as it “would provide civil remedies for offenses criminal in nature, stigmatize defendants with the appellation `racketeer,’ authorize the award of damages which are clearly punitive, including attorney’s fees, and constitute a civil remedy aimed in part to avoid the constitutional protections of the criminal law.” Id., at 500, n. 49. We do not view the statute as being so close to the constitutional edge. As noted above, the fact that conduct can result in both criminal liability and treble damages does not mean that there is not a bona fide civil action. The familiar provisions for both criminal liability and treble damages under the antitrust laws indicate as much. Nor are attorney’s fees “clearly punitive.” Cf. 42 U. S. C. § 1988. As for stigma, a civil RICO proceeding leaves no greater stain than do a number of other civil proceedings. Furthermore, requiring conviction of the predicate acts would not protect against an unfair imposition of the “racketeer” label. If there is a problem with thus stigmatizing a garden variety defrauder by means of a civil action, it is not reduced by making certain that the defendant is guilty of fraud beyond a reasonable doubt. Finally, to the extent an 493*493 action under § 1964(c) might be considered quasi-criminal, requiring protections normally applicable only to criminal proceedings, cf. One 1958 Plymouth Sedan v. Pennsylvania, 380 U. S. 693 (1965), the solution is to provide those protections, not to ensure that they were previously afforded by requiring prior convictions.[11]

Finally, we note that a prior-conviction requirement would be inconsistent with Congress’ underlying policy concerns. Such a rule would severely handicap potential plaintiffs. A guilty party may escape conviction for any number of reasons — not least among them the possibility that the Government itself may choose to pursue only civil remedies. Private attorney general provisions such as § 1964(c) are in part designed to fill prosecutorial gaps. Cf. Reiter v. Sonotone Corp., 442 U. S. 330, 344 (1979). This purpose would be largely defeated, and the need for treble damages as an incentive to litigate unjustified, if private suits could be maintained only against those already brought to justice. See also n. 9, supra.

In sum, we can find no support in the statute’s history, its language, or considerations of policy for a requirement that a private treble-damages action under § 1964(c) can proceed only against a defendant who has already been criminally convicted. To the contrary, every indication is that no such requirement exists. Accordingly, the fact that Imrex and the individual defendants have not been convicted under RICO or the federal mail and wire fraud statutes does not bar Sedima’s action.

In considering the Court of Appeals’ second prerequisite for a private civil RICO action — “injury . . . caused by an 494*494 activity which RICO was designed to deter” — we are somewhat hampered by the vagueness of that concept. Apart from reliance on the general purposes of RICO and a reference to “mobsters,” the court provided scant indication of what the requirement of racketeering injury means. It emphasized Congress’ undeniable desire to strike at organized crime, but acknowledged and did not purport to overrule Second Circuit precedent rejecting a requirement of an organized crime nexus. 741 F. 2d, at 492; see Moss v. Morgan Stanley, Inc., 719 F. 2d 5, 21 (CA2 1983), cert. denied sub nom. Moss v. Newman, 465 U. S. 1025 (1984). The court also stopped short of adopting a “competitive injury” requirement; while insisting that the plaintiff show “the kind of economic injury which has an effect on competition,” it did not require “actual anticompetitive effect.” 741 F. 2d, at 496; see also id., at 495, n. 40.

The court’s statement that the plaintiff must seek redress for an injury caused by conduct that RICO was designed to deter is unhelpfully tautological. Nor is clarity furnished by a negative statement of its rule: standing is not provided by the injury resulting from the predicate acts themselves. That statement is itself apparently inaccurate when applied to those predicate acts that unmistakably constitute the kind of conduct Congress sought to deter. See id., at 496, n. 41. The opinion does not explain how to distinguish such crimes from the other predicate acts Congress has lumped together in § 1961(1). The court below is not alone in struggling to define “racketeering injury,” and the difficulty of that task itself cautions against imposing such a requirement.[12]

495*495 We need not pinpoint the Second Circuit’s precise holding, for we perceive no distinct “racketeering injury” requirement. Given that “racketeering activity” consists of no more and no less than commission of a predicate act, § 1961(1), we are initially doubtful about a requirement of a “racketeering injury” separate from the harm from the predicate acts. A reading of the statute belies any such requirement. Section 1964(c) authorizes a private suit by “[a]ny person injured in his business or property by reason of a violation of § 1962.” Section 1962 in turn makes it unlawful for “any person” — not just mobsters — to use money derived from a pattern of racketeering activity to invest in an enterprise, to acquire control of an enterprise through a pattern of racketeering activity, or to conduct an enterprise through a pattern of racketeering activity. §§ 1962(a)-(c). If the defendant engages in a pattern of racketeering activity in a manner forbidden by these provisions, and the racketeering activities injure the plaintiff in his business or property, the plaintiff has a claim under § 1964(c). There is no room in the statutory language for an additional, amorphous “racketeering injury” requirement.[13]

496*496 A violation of § 1962(c), the section on which Sedima relies, requires (1) conduct (2) of an enterprise (3) through a pattern[14] (4) of racketeering activity. The plaintiff must, of course, allege each of these elements to state a claim. Conducting an enterprise that affects interstate commerce is obviously not in itself a violation of § 1962, nor is mere commission of the predicate offenses. In addition, the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation. As the Seventh Circuit has stated, “[a] defendant who violates section 1962 is not liable 497*497 for treble damages to everyone he might have injured by other conduct, nor is the defendant liable to those who have not been injured.” Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F. 2d 384, 398 (1984), aff’d, post, p. 606.

But the statute requires no more than this. Where the plaintiff alleges each element of the violation, the compensable injury necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise. Those acts are, when committed in the circumstances delineated in § 1962(c), “an activity which RICO was designed to deter.” Any recoverable damages occurring by reason of a violation of § 1962(c) will flow from the commission of the predicate acts.[15]

This less restrictive reading is amply supported by our prior cases and the general principles surrounding this statute. RICO is to be read broadly. This is the lesson not only 498*498 of Congress’ self-consciously expansive language and overall approach, see United States v. Turkette, 452 U. S. 576, 586-587 (1981), but also of its express admonition that RICO is to “be liberally construed to effectuate its remedial purposes,” Pub. L. 91-452, § 904(a), 84 Stat. 947. The statute’s “remedial purposes” are nowhere more evident than in the provision of a private action for those injured by racketeering activity. See also n. 10, supra. Far from effectuating these purposes, the narrow readings offered by the dissenters and the court below would in effect eliminate § 1964(c) from the statute.

RICO was an aggressive initiative to supplement old remedies and develop new methods for fighting crime. See generally Russello v. United States, 464 U. S. 16, 26-29 (1983). While few of the legislative statements about novel remedies and attacking crime on all fronts, see ibid., were made with direct reference to § 1964(c), it is in this spirit that all of the Act’s provisions should be read. The specific references to § 1964(c) are consistent with this overall approach. Those supporting § 1964(c) hoped it would “enhance the effectiveness of title IX’s prohibitions,” House Hearings, at 520, and provide “a major new tool,” 116 Cong. Rec. 35227 (1970). See also id., at 25190; 115 Cong. Rec. 6993-6994 (1969). Its opponents, also recognizing the provision’s scope, complained that it provided too easy a weapon against “innocent businessmen,” H. R. Rep. No. 91-1549, p. 187 (1970), and would be prone to abuse, 116 Cong. Rec. 35342 (1970). It is also significant that a previous proposal to add RICO-like provisions to the Sherman Act had come to grief in part precisely because it “could create inappropriate and unnecessary obstacles in the way of . . . a private litigant [who] would have to contend with a body of precedent — appropriate in a purely antitrust context — setting strict requirements on questions such as `standing to sue’ and `proximate cause.’ ” 115 Cong. Rec. 6995 (1969) (ABA comments on S. 2048); see also id., at 6993 (S. 1623 proposed as an amendment to Title 18 to avoid these problems). In borrowing its “racketeering 499*499 injury” requirement from antitrust standing principles, the court below created exactly the problems Congress sought to avoid.

Underlying the Court of Appeals’ holding was its distress at the “extraordinary, if not outrageous,” uses to which civil RICO has been put. 741 F. 2d, at 487. Instead of being used against mobsters and organized criminals, it has become a tool for everyday fraud cases brought against “respected and legitimate `enterprises.’ ” Ibid. Yet Congress wanted to reach both “legitimate” and “illegitimate” enterprises. United States v. Turkette, supra. The former enjoy neither an inherent incapacity for criminal activity nor immunity from its consequences. The fact that § 1964(c) is used against respected businesses allegedly engaged in a pattern of specifically identified criminal conduct is hardly a sufficient reason for assuming that the provision is being misconstrued. Nor does it reveal the “ambiguity” discovered by the court below. “[T]he fact that RICO has been applied in situations not expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth.” Haroco, Inc. v. American National Bank & Trust Co. of Chicago, supra, at 398.

It is true that private civil actions under the statute are being brought almost solely against such defendants, rather than against the archetypal, intimidating mobster.[16] Yet this defect — if defect it is — is inherent in the statute as written, and its correction must lie with Congress. It is not for the judiciary to eliminate the private action in situations 500A*500A where Congress has provided it simply because plaintiffs are not taking advantage of it in its more difficult applications.

We nonetheless recognize that, in its private civil version, RICO is evolving into something quite different from the original conception of its enactors. See generally ABA Report, at 55-69. Though sharing the doubts of the Court of Appeals about this increasing divergence, we cannot agree with either its diagnosis or its remedy. The “extraordinary” uses to which civil RICO has been put appear to be primarily the result of the breadth of the predicate offenses, in particular the inclusion of wire, mail, and securities fraud, and the failure of Congress and the courts to develop a meaningful concept of “pattern.” We do not believe that the amorphous standing requirement imposed by the Second Circuit effectively responds to these problems, or that it is a form of statutory amendment appropriately undertaken by the courts.

Sedima may maintain this action if the defendants conducted the enterprise through a pattern of racketeering activity. The questions whether the defendants committed the requisite predicate acts, and whether the commission of those acts fell into a pattern, are not before us. The complaint is not deficient for failure to allege either an injury separate from the financial loss stemming from the alleged acts of mail and wire fraud, or prior convictions of the defendants. The judgment below is accordingly reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

500B*500B JUSTICE MARSHALL, with whom JUSTICE BRENNAN, JUSTICE BLACKMUN, and JUSTICE POWELL join, dissenting.[*]

The Court today recognizes that “in its private civil version, RICO is evolving into something quite different from 501*501 the original conception of its enactors.” Ante, at 500. The Court, however, expressly validates this result, imputing it to the manner in which the statute was drafted. I fundamentally disagree both with the Court’s reading of the statute and with its conclusion. I believe that the statutory language and history disclose a narrower interpretation of the statute that fully effectuates Congress’ purposes, and that does not make compensable under civil RICO a host of claims that Congress never intended to bring within RICO’s purview.

The Court’s interpretation of the civil RICO statute quite simply revolutionizes private litigation; it validates the federalization of broad areas of state common law of frauds, and it approves the displacement of well-established federal remedial provisions. We do not lightly infer a congressional intent to effect such fundamental changes. To infer such intent here would be untenable, for there is no indication that Congress even considered, much less approved, the scheme that the Court today defines.

The single most significant reason for the expansive use of civil RICO has been the presence in the statute, as predicate acts, of mail and wire fraud violations. See 18 U. S. C. § 1961(1) (1982 ed., Supp. III). Prior to RICO, no federal statute had expressly provided a private damages remedy based upon a violation of the mail or wire fraud statutes, which make it a federal crime to use the mail or wires in furtherance of a scheme to defraud. See 18 U. S. C. §§ 1341, 1343. Moreover, the Courts of Appeals consistently had held that no implied federal private causes of action accrue to victims of these federal violations. See, e. g., Ryan v. Ohio Edison Co., 611 F. 2d 1170, 1178-1179 (CA6 1979) (mail fraud); Napper v. Anderson, Henley, Shields, Bradford & Pritchard, 500 F. 2d 634, 636 (CA5 1974) (wire fraud), cert. denied, 423 U. S. 837 (1975). The victims normally were restricted to bringing actions in state court under common-law fraud theories.

502*502 Under the Court’s opinion today, two fraudulent mailings or uses of the wires occurring within 10 years of each other might constitute a “pattern of racketeering activity,” § 1961 (5), leading to civil RICO liability. See § 1964(c). The effects of making a mere two instances of mail or wire fraud potentially actionable under civil RICO are staggering, because in recent years the Courts of Appeals have “tolerated an extraordinary expansion of mail and wire fraud statutes to permit federal prosecution for conduct that some had thought was subject only to state criminal and civil law.” United States v. Weiss, 752 F. 2d 777, 791 (CA2 1985) (Newman, J., dissenting). In bringing criminal actions under those statutes, prosecutors need not show either a substantial connection between the scheme to defraud and the mail and wire fraud statutes, see Pereira v. United States, 347 U. S. 1, 8 (1954), or that the fraud involved money or property. Courts have sanctioned prosecutions based on deprivations of such intangible rights as a shareholder’s right to “material” information, United States v. Siegel, 717 F. 2d 9, 14-16 (CA2 1983); a client’s right to the “undivided loyalty” of his attorney, United States v. Bronston, 658 F. 2d 920, 927 (CA2 1981), cert. denied, 456 U. S. 915 (1982); an employer’s right to the honest and faithful service of his employees, United States v. Bohonus, 628 F. 2d 1167, 1172 (CA9), cert. denied, 447 U. S. 928 (1980); and a citizen’s right to know the nature of agreements entered into by the leaders of political parties, United States v. Margiotta, 688 F. 2d 108, 123-125 (CA2 1982), cert. denied, 461 U. S. 913 (1983).

The only restraining influence on the “inexorable expansion of the mail and wire fraud statutes,” United States v. Siegel, supra, at 24 (Winter, J., dissenting in part and concurring in part), has been the prudent use of prosecutorial discretion. Prosecutors simply do not invoke the mail and wire fraud provisions in every case in which a violation of the relevant statute can be proved. See U. S. Dept. of Justice, United States Attorney’s Manual § 9-43.120 (Feb. 16, 1984). 503*503 For example, only where the scheme is directed at a “class of persons or the general public” and includes “a substantial pattern of conduct,” will “serious consideration . . . be given to [mail fraud] prosecution.” In all other cases, “the parties should be left to settle their differences by civil or criminal litigation in the state courts.” Ibid.

The responsible use of prosecutorial discretion is particularly important with respect to criminal RICO prosecutions — which often rely on mail and wire fraud as predicate acts — given the extremely severe penalties authorized by RICO’s criminal provisions. Federal prosecutors are therefore instructed that “[u]tilization of the RICO statute, more so than most other federal criminal sanctions, requires particularly careful and reasoned application.” Id., § 9-110.200 (Mar. 9, 1984). The Justice Department itself recognizes that a broad interpretation of the criminal RICO provisions would violate “the principle that the primary responsibility for enforcing state laws rests with the state concerned.” Ibid. Specifically, the Justice Department will not bring RICO prosecutions unless the pattern of racketeering activity required by 18 U. S. C. § 1962 has “some relation to the purpose of the enterprise.” United States Attorney’s Manual § 9-110.350 (Mar. 9, 1984).

Congress was well aware of the restraining influence of prosecutorial discretion when it enacted the criminal RICO provisions. It chose to confer broad statutory authority on the Executive fully expecting that this authority would be used only in cases in which its use was warranted. See Measures Relating to Organized Crime: Hearings on S. 30 et al. before the Subcommittee on Criminal Laws and Procedures of the Senate Committee on the Judiciary, 91st Cong., 1st Sess., 346-347, 424 (1969) (hereinafter cited as Senate Hearings). Moreover, in seeking a broad interpretation of RICO from this Court in United States v. Turkette, 452 U. S. 576 (1981), the Government stressed that no “extreme cases” would be brought because the Justice Department would exercise 504*504 “sound discretion” through a centralized review process. See Brief for United States in No. 80-808, O. T. 1980, p. 25, n. 20.

In the context of civil RICO, however, the restraining influence of prosecutors is completely absent. Unlike the Government, private litigants have no reason to avoid displacing state common-law remedies. Quite to the contrary, such litigants, lured by the prospect of treble damages and attorney’s fees, have a strong incentive to invoke RICO’s provisions whenever they can allege in good faith two instances of mail or wire fraud. Then the defendant, facing a tremendous financial exposure in addition to the threat of being labeled a “racketeer,” will have a strong interest in settling the dispute. See Rakoff, Some Personal Reflections on the Sedima Case and on Reforming RICO, in RICO: Civil and Criminal 400 (Law Journal Seminars-Press 1984). The civil RICO provision consequently stretches the mail and wire fraud statutes to their absolute limits and federalizes important areas of civil litigation that until now were solely within the domain of the States.

In addition to altering fundamentally the federal-state balance in civil remedies, the broad reading of the civil RICO provision also displaces important areas of federal law. For example, one predicate offense under RICO is “fraud in the sale of securities.” 18 U. S. C. § 1961(1) (1982 ed., Supp. III). By alleging two instances of such fraud, a plaintiff might be able to bring a case within the scope of the civil RICO provision. It does not take great legal insight to realize that such a plaintiff would pursue his case under RICO rather than do so solely under the Securities Act of 1933 or the Securities Exchange Act of 1934, which provide both express and implied causes of action for violations of the federal securities laws. Indeed, the federal securities laws contemplate only compensatory damages and ordinarily do not authorize recovery of attorney’s fees. By invoking RICO, in contrast, a successful 505*505 plaintiff will recover both treble damages and attorney’s fees.

More importantly, under the Court’s interpretation, the civil RICO provision does far more than just increase the available damages. In fact, it virtually eliminates decades of legislative and judicial development of private civil remedies under the federal securities laws. Over the years, courts have paid close attention to matters such as standing, culpability, causation, reliance, and materiality, as well as the definitions of “securities” and “fraud.” See, e. g., Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723 (1975) (purchaser/seller requirement). All of this law is now an endangered species because plaintiffs can avoid the limitations of the securities laws merely by alleging violations of other predicate acts. For example, even in cases in which the investment instrument is not a “security” covered by the federal securities laws, RICO will provide a treble-damages remedy to a plaintiff who can prove the required pattern of mail or wire fraud. Cf. Crocker National Bank v. Rockwell International Corp., 555 F. Supp. 47 (ND Cal. 1982). Before RICO, of course, the plaintiff could not have recovered under federal law for the mail or wire fraud violation.

Similarly, a customer who refrained from selling a security during a period in which its market value was declining could allege that, on two occasions, his broker recommended by telephone, as part of a scheme to defraud, that the customer not sell the security. The customer might thereby prevail under civil RICO even though, as neither a purchaser nor a seller, he would not have had standing to bring an action under the federal securities laws. See also 741 F. 2d 482, 499 (1984) (“two misstatements in a proxy solicitation could subject any director in any national corporation to `racketeering’ charges and the threat of treble damages and attorneys’ fees”).

The effect of civil RICO on federal remedial schemes is not limited to the securities laws. For example, even though 506*506 commodities fraud is not a predicate offense listed in § 1961, the carefully crafted private damages causes of action under the Commodity Exchange Act may be circumvented in a commodities case through civil RICO actions alleging mail or wire fraud. See, e. g., Parnes v. Heinold Commodities, Inc., 487 F. Supp. 645 (ND Ill. 1980). The list goes on and on.

The dislocations caused by the Court’s reading of the civil RICO provision are not just theoretical. In practice, this provision frequently has been invoked against legitimate businesses in ordinary commercial settings. As the Court recognizes, the ABA Task Force that studied civil RICO found that 40% of the reported cases involved securities fraud and 37% involved common-law fraud in a commercial or business setting. See ante, at 499, n. 16. Many a prudent defendant, facing ruinous exposure, will decide to settle even a case with no merit. It is thus not surprising that civil RICO has been used for extortive purposes, giving rise to the very evils that it was designed to combat. Report of the Ad Hoc Civil RICO Task Force of the ABA Section of Corporation, Banking and Business Law 69 (1985) (hereinafter cited as ABA Report).

Only 9% of all civil RICO cases have involved allegations of criminal activity normally associated with professional criminals. See ante, at 499, n. 16. The central purpose that Congress sought to promote through civil RICO is now a mere footnote.

In summary, in both theory and practice, civil RICO has brought profound changes to our legal landscape. Undoubtedly, Congress has the power to federalize a great deal of state common law, and there certainly are no relevant constraints on its ability to displace federal law. Those, however, are not the questions that we face in this case. What we have to decide here, instead, is whether Congress in fact intended to produce these far-reaching results.

507*507 Established canons of statutory interpretation counsel against the Court’s reading of the civil RICO provision. First, we do not impute lightly a congressional intention to upset the federal-state balance in the provision of civil remedies as fundamentally as does this statute under the Court’s view. For example, in Santa Fe Industries, Inc. v. Green, 430 U. S. 462 (1977), we stated that “[a]bsent a clear indication of congressional intent, we are reluctant to federalize the substantial portion of the law of corporations that deals with transactions in securities.” Id., at 479. Here, with striking nonchalance, the Court does what it declined to do in Santa Fe Industries — and much more as well. Second, with respect to effects on the federal securities laws and other federal regulatory statutes, we should be reluctant to displace the well-entrenched federal remedial schemes absent clear direction from Congress. See, e. g., Train v. Colorado Public Interest Research Group, Inc., 426 U. S. 1, 23-24 (1976); Radzanower v. Touche Ross & Co., 426 U. S. 148, 153 (1976).

In this case, nothing in the language of the statute or the legislative history suggests that Congress intended either the federalization of state common law or the displacement of existing federal remedies. Quite to the contrary, all that the statute and the legislative history reveal as to these matters is what Judge Oakes called a “clanging silence,” 741 F. 2d, at 492.

Moreover, if Congress had intended to bring about dramatic changes in the nature of commercial litigation, it would at least have paid more than cursory attention to the civil RICO provision. This provision was added in the House of Representatives after the Senate already had passed its version of the RICO bill; the House itself adopted a civil remedy provision almost as an afterthought; and the Senate thereafter accepted the House’s version of the bill without even requesting a Conference. See infra, at 518-519. Congress simply does not act in this way when it intends to effect fundamental changes in the structure of federal law.

508*508 II

The statutory language and legislative history support the view that Congress did not intend to effect a radical alteration of federal civil litigation. In fact, the language and history indicate a congressional intention to limit, in a workable and coherent manner, the type of injury that is compensable under the civil RICO provision. As the following demonstrates, Congress sought to fill an existing gap in civil remedies and to provide a means of compensation that otherwise did not exist for the honest businessman harmed by the economic power of “racketeers.”

I begin with a review of the statutory language. Section 1964(c) grants a private right of action to any person “injured in his business or property by reason of a violation of section 1962.” Section 1962, in turn, makes it unlawful to invest, in an enterprise engaged in interstate commerce, funds “derived . . . from a pattern of racketeering activity,” to acquire or operate an interest in any such enterprise through “a pattern of racketeering activity,” or to conduct or participate in the conduct of that enterprise “through a pattern of racketeering activity.” Section 1961 defines “racketeering activity” to mean any of numerous acts “chargeable” or “indictable” under enumerated state and federal laws, including state-law murder, arson, and bribery statutes, federal mail and wire fraud statutes, and the antifraud provisions of federal securities laws. It states that “a pattern” of racketeering activity requires proof of at least two acts of racketeering within 10 years.

By its terms, § 1964(c) therefore grants a cause of action only to a person injured “by reason of a violation of § 1962.” The Court holds today that the only injury a plaintiff need allege is injury occurring by reason of a predicate, or racketeering, act — i. e., one of the offenses listed in § 1961. But § 1964(c) does not by its terms provide a remedy for injury by 509*509 reason of § 1961; it requires an injury by reason of § 1962. In other words:

“While section 1962 prohibits the involvement of an `enterprise’ in `racketeering activity,’ racketeering itself is not a violation of § 1962. Thus, a construction of RICO permitting recovery for damages arising out of the racketeering acts simply does not comport with the statute as written by Congress. In effect, the broad construction replaces the rule that treble damages can be recovered only when they occur `by reason of a violation of section 1962,’ with a rule permitting recovery of treble damages whenever there has been a violation of section 1962. Such unwarranted judicial interference with the Act’s plain meaning cannot be justified.” Comment, 76 Nw. U. L. Rev. 100, 128 (1981) (footnotes omitted).

See also Bridges, Private RICO Litigation Based Upon “Fraud in the Sale of Securities,” 18 Ga. L. Rev. 43, 67 (1983).

In addition, the statute permits recovery only for injury to business or property. It therefore excludes recovery for personal injuries. However, many of the predicate acts listed in § 1961 threaten or inflict personal injuries — such as murder and kidnaping. If Congress in fact intended the victims of the predicate acts to recover for their injuries, as the Court holds it did, it is inexplicable why Congress would have limited recovery to business or property injury. It simply makes no sense to allow recovery by some, but not other victims of predicate acts, and to make recovery turn solely on whether the defendant has chosen to inflict personal pain or harm to property in order to accomplish its end.

In summary, the statute clearly contemplates recovery for injury resulting from the confluence of events described in § 1962 and not merely from the commission of a predicate act. The Court’s contrary interpretation distorts the statutory language under the guise of adopting a plain-meaning definition, and it does so without offering any indication of congressional 510*510 intent that justifies a deviation from what I have shown to be the plain meaning of the statute. However, even if the statutory language were ambiguous, see Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F. 2d 384, 389 (CA7 1984), aff’d, post, p. 606, the scope of the civil RICO provision would be no different, for this interpretation of the statute finds strong support in the legislative history of that provision.

In reviewing the legislative history of civil RICO, numerous federal courts have become mired in controversy about the extent to which Congress intended to adopt or reject the federal antitrust laws as a model for the RICO provisions. The basis for the dispute among the lower courts is the language of the treble-damages provision, which tracks virtually word for word the treble-damages provision of the antitrust laws, § 4 of the Clayton Act;[1] given this parallel, there can be little doubt that the latter served as a model for the former. Some courts have relied heavily on this congruity to read an antitrust-type “competitive injury” requirement into the civil RICO statute. See, e. g., North Barrington Development, Inc. v. Fanslow, 547 F. Supp. 207 (ND Ill. 1980). Other courts have rejected a competitive-injury requirement, or any antitrust analogy, relying in significant part on what 511*511 they perceive as Congress’ rejection of a wholesale adoption of antitrust precedent. See, e. g., Yancoski v. E. F. Hutton & Co., Inc., 581 F. Supp. 88 (ED Pa. 1983); Mauriber v. Shearson/American Express, Inc., 567 F. Supp. 1231, 1240 (SDNY 1983).

Many of these courts have read far too much into the antitrust analogy. The legislative history makes clear that Congress viewed the form of civil remedies under RICO as analogous to such remedies under the antitrust laws, but that it did not thereby intend the substantive compensable injury to be exactly the same. The legislative history also suggests that Congress might have wanted to avoid saddling the civil RICO provisions with the same standing requirements that at the time limited standing to sue under the antitrust laws. However, the Committee Reports and hearings in no way suggest that Congress considered and rejected a requirement of injury separate from that resulting from the predicate acts. Far from it, Congress offered considerable indication that the kind of injury it primarily sought to attack and compensate was that for which existing civil and criminal remedies were inadequate or nonexistent; the requisite injury is thus akin to, but broader than, that targeted by the antitrust laws and different in kind from that resulting from the underlying predicate acts.

A brief look at the legislative history makes clear that the antitrust laws in no relevant respect constrain our analysis or preclude formulation of an independent RICO-injury requirement. When Senator Hruska first introduced to Congress the predecessor to RICO, he proposed an amendment to the Sherman Act that would have prohibited the investment or use of intentionally unreported income from one line of business to establish, operate, or invest in another line of business. S. 2048, 90th Cong., 1st Sess. (1967). After studying the provision, the American Bar Association issued a report that, while acknowledging the effects of organized crime’s infiltration of legitimate business, stated a preference for a 512*512 provision separate from the antitrust laws. See 115 Cong. Rec. 6994 (1969). According to the report:

“By placing the antitrust-type enforcement and recovery procedures in a separate statute, a commingling of criminal enforcement goals with the goals of regulating competition is avoided.

…..

“Moreover, the use of antitrust laws themselves as a vehicle for combating organized crime could create inappropriate and unnecessary obstacles in the way of persons injured by organized crime who might seek treble damage recovery. Such a private litigant would have to contend with a body of precedent — appropriate in a purely antitrust context — setting strict requirements on questions such as `standing to sue’ and `proximate cause.’ ” Id., at 6995.

Congress subsequently decided not to pursue an addition to the antitrust laws but instead to fashion a wholly separate criminal statute. If in fact that decision was made in response to the ABA’s statement and not to other political concerns, it may be interpreted at most as a rejection of antitrust standing requirements. Court-developed standing rules define the requisite proximity between the plaintiff’s injury and the defendant’s antitrust violation. See Blue Shield of Virginia v. McCready, 457 U. S. 465, 476 (1982) (discussing antitrust standing rules developed in the Federal Circuits). Thus, at most we may read the early legislative history to eschew wholesale adoption of the particular nexus requirements that limit the class of potential antitrust plaintiffs. Courts that read this history to bar any analogy to the antitrust laws simply read too much into the scant evidence available to us. In particular, courts that read this history to bar an injury requirement akin to “antitrust” injury are in error. The requirement of antitrust injury, as articulated in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477 (1977), differs in kind from the standing requirement to 513*513 which the ABA referred and, in fact, had not been articulated at the time of the ABA comments.

At the same time, courts that believe civil RICO doctrine should mirror civil antitrust doctrine also read too much into the legislative history. It is absolutely clear that Congress intended to adopt antitrust remedies, such as civil actions by the Government and treble damages. The House of Representatives added the civil provision to Title IX in response to suggestions from the ABA and Congressmen that there be a remedy “similar to the private damage remedy found in the anti-trust laws,” Organized Crime Control: Hearings on S. 30 and Related Proposals, before Subcommittee No. 5 of the House Committee on the Judiciary, 91st Cong., 2d Sess., 520 (1970) (statement of Rep. Steiger) (hereinafter House Hearings); see also id., at 543 (statement of Edward L. Wright, ABA president-elect) (suggesting an amendment “to include the additional civil remedy of authorizing private damage suits based upon the concept of Section 4 of the Clayton (Antitrust) Act”); 116 Cong. Rec. 35295 (1970) (remarks of Rep. Poff, chief spokesman for the bill) (explaining bill’s adoption of the antitrust remedy for use against organized crime). The decision to adopt antitrust remedies does not, however, compel the conclusion that Congress intended to adopt substantive antitrust doctrine. Courts that construe these references to the antitrust laws as indications of Congress’ intent to adopt the substance of antitrust doctrine also read too much into too little language.

While the foregoing establishes that Congress sought to adopt remedies akin to those used in antitrust law — such as civil government enforcement — and to reject antitrust standing rules, other portions of the legislative history reveal just what Congress intended the substantive dimensions of the civil action to be. Quite simply, its principal target was the economic power of racketeers, and its toll on legitimate businessmen. 514*514 To this end, Congress sought to fill a gap in the civil and criminal laws and to provide new remedies broader than those already available to private or government antitrust plaintiffs, different from those available to government and private citizens under state and federal laws, and significantly narrower than those adopted by the Court today.

In 1967, Senator Hruska proposed two bills, S. 2048 and S. 2049, 90th Cong., 1st Sess., which were designed in part to implement recommendations of the President’s Commission on Law Enforcement and the Administration of Justice (the Katzenbach Commission) on the fight against organized crime. See 113 Cong. Rec. 17998-18001 (1967). The former bill proposed an amendment to the Sherman Act prohibiting the investment or use of unreported income derived from one line of business in another business. Id., at 17999. The latter bill, which was separate from the Sherman Act, prohibited the acquisition of a business interest with income derived from criminal activity. Ibid. Representative Poff introduced similar bills in the House of Representatives. See H. R. 11266, H. R. 11268, 90th Cong., 1st Sess. (1967); 113 Cong. Rec. 17976 (1967).

Introducing S. 2048, Senator Hruska explained that “[b]y limiting its application to intentionally unreported income, this proposal highlights the fact that the evil to be curbed is the unfair competitive advantage inherent in the large amount of illicit income available to organized crime.” Id., at 17999 (emphasis added). He described how organized crime had infiltrated a wide range of businesses, and he observed that “[i]n each of these instances, large amounts of cash coupled with threats of violence, extortion, and similar techniques were utilized by mobsters to achieve their desired objectives: monopoly control of these enterprises.” Id., at 17998 (emphasis added). He identified four means by which control of legitimate business had been acquired:

“First. Investing concealed profits acquired from gambling and other illegal enterprises.

515*515 “Second. Accepting business interests in payment of the owner’s gambling debts.

“Third. Foreclosing on usurious loans.

“Fourth. Using various forms of extortion.” Id., at 17998-17999.

The Senator then explained how this infiltration takes its toll:

“The proper functioning of a free economy requires that economic decisions be made by persons free to exercise their own judgment. Force or fear limits choice, ultimately reduces quality, and increases prices. When organized crime moves into a business, it brings all the techniques of violence and intimidation which it used in its illegal businesses. Competitors are eliminated and customers confined to sponsored suppliers. Its effect is even more unwholesome than other monopolies because its position does not rest on economic superiority.” Id., at 17999.

Congress never took action on these bills.

In 1969, Senator McClellan introduced the Organized Crime Control Act, which altered numerous criminal law areas such as grand juries, immunity, and sentencing, but which contained no provision like that now known as RICO. See S. 30, 91st Cong., 1st Sess.; 115 Cong. Rec. 769 (1969). Shortly thereafter, Senator Hruska introduced the Criminal Activities Profits Act. S. 1623, 91st Cong., 1st Sess.; 115 Cong. Rec. 6995-6996 (1969). He explained that S. 1623 was designed to synthesize the earlier two bills (S. 2048 and S. 2049) while placing the “unified whole” outside the Sherman Act in response to the ABA’s concerns. According to the Senator, the bill was meant to attack “the economic power of organized crime and its exercise of unfair competition with honest businessmen,” and to address “[t]he power of organized crime to establish a monopoly within numerous business fields” and the impact on the free market and honest 516*516 competitors of “a racketeer dominated venture.” Id., at 6993 (emphasis added).

As introduced, S. 1623 contained a provision for a private treble-damages action; the language of that provision was virtually identical to that in § 1964(c), and it likely served as the model for § 1964(c). See id., at 6996. Explaining this provision, Senator Hruska said:

“In addition to this criminal prohibition, the bill also creates civil remedies for the honest businessman who has been damaged by unfair competition from the racketeer businessman. Despite the willingness of the courts to apply the Sherman Anti-Trust Act to organized crime activities, as a practical matter the legitimate businessman does not have adequate civil remedies available under that act. This bill fills that gap.” Id., at 6993 (emphasis added).

The Senate did not act directly on either S. 30 or S. 1623. Instead, Senators McClellan and Hruska jointly introduced S. 1861, the Corrupt Organizations Act of 1969, 91st Cong., 1st Sess.; 115 Cong. Rec. 9568-9571, which combined features of the two other bills and added to them. The new bill expanded the list of offenses that would constitute “racketeering activity” and required that the proscribed conduct be committed through a pattern of “racketeering activity.” It did not, however, contain a private civil remedy provision, but only authorization for an injunctive action brought by the Attorney General. Senator McClellan thereafter requested that the provisions of S. 1861 be incorporated by amendment into the broad Organized Crime Control Act, S. 30. See 115 Cong. Rec. 9566-9571 (1969).

In December 1969, the Senate Judiciary Committee reported on the Organized Crime Control Act, S. 30, as amended to include S. 1861 as Title IX, “Racketeer Influenced and Corrupt Organizations.” Title IX, it is clear, was 517*517 aimed at precisely the same evil that Senator Hruska had targeted in 1967 — the infiltration of legitimate business by organized crime. According to the Committee Report, the Title

“has as its purpose the elimination of the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce. It seeks to achieve this objective by the fashioning of new criminal and civil remedies and investigative procedures.” S. Rep. No. 91-617, p. 76 (1969).

In language taken virtually verbatim from the earlier floor statements of Senator Hruska, the Report described the extraordinary range of legitimate businesses and unions that had been infiltrated by racketeers, and the means by which the racketeers sought to profit from the infiltration. It described “scams” involving bankruptcy and insurance fraud, and the use of “force or fear” to secure a monopoly in the service or product of the business, and it summed up: “When the campaign is successful, the organization begins to extract a premium price from customers.” Id., at 77.

Similarly, Senator Byrd spoke in favor of Title IX and gave other examples of the “awesome power” of racketeers and their methods of operation. He described, for example, how one racketeer had gained a foothold in a detergent company and then had used arson and murder to try to get the A & P Tea Co. to buy a detergent that A & P had tested and rejected. 116 Cong. Rec. 607 (1970). As another example, he explained that racketeers would corner the market on a good or service and then withhold it from a businessman until he surrendered his business or made some other related economic concession. Ibid. In each of these cases, I note, the racketeer engaged in criminal acts in order to accomplish a commercial goal — e. g., to destroy competition, create a monopoly, or infiltrate a legitimate business. See also id., at 602 (statement of Sen. Hruska) (“[Organized crime] employs 518*518 physical brutality, fear and corruption to intimidate competitors and customers to achieve increased sales and profits”) (emphasis added). In sum, “[s]crutiny of the Senate Report. . . establishes without a doubt a single dominating purpose of the Senate in proposing the RICO statute: “Title IX represents the committee’s careful efforts to fashion new remedies to deal with the infiltration of organized crime into legitimate organizations operating in interstate commerce.’ ” ABA Report 105.

The bill passed the Senate after a short debate by a vote of 73 to 1, without a treble-damages provision, and it was then considered by the House. In hearings before the House Judiciary Committee, it was suggested that the bill should include “the additional civil remedy of authorizing private damage suits based upon the concept of Section 4 of the Clayton Act.” House Hearings, at 543-544 (statement of Edward Wright, ABA president-elect); see also id., at 520 (statement of Rep. Steiger) (suggesting addition of a private civil damages remedy). Before reporting the bill favorably in September 1970, the House Judiciary Committee made one change to the civil remedy provision — it added a private treble-damages provision to the civil remedies already available to the Government; the Committee accorded this change only a single statement in the Committee Report: “The title, as amended, also authorizes civil treble damage suits on the part of private parties who are injured.” H. R. Rep. No. 91-1549, p. 35 (1970). Three Congressmen dissented from the Report. Their views are particularly telling because, with language that is narrow compared to the extraordinary scope the civil provision has acquired, these three challenged the possible breadth and abuse of the private civil remedy by plaintiff-competitors:

“Indeed, [§ 1964(c)] provides invitation for disgruntled and malicious competitors to harass innocent businessmen 519*519 engaged in interstate commerce by authorizing private damage suits. A competitor need only raise the claim that his rival has derived gains from two games of poker, and, because this title prohibits even the `indirect use’ of such gains — a provision with tremendous outreach — litigation is begun. What a protracted, expensive trial may not succeed in doing, the adverse publicity may well accomplish — destruction of the rival’s business.” Id., at 187 (emphasis added).

The bill then returned to the Senate, which passed it without a conference, apparently to assure passage during the session. Thus, the private remedy at issue here slipped quietly into the statute, and its entrance evinces absolutely no intent to revolutionize the enforcement scheme, or to give undue breadth to the broadly worded provisions — provisions Congress fully expected Government enforcers to narrow.

Putting together these various pieces, I can only conclude that Congress intended to give to businessmen who might otherwise have had no available remedy a possible way to recover damages for competitive injury, infiltration injury, or other economic injury resulting out of, but wholly distinct from, the predicate acts. Congress fully recognized that racketeers do not engage in predicate acts as ends in themselves; instead, racketeers threaten, burn, and murder in order to induce their victims to act in a way that accrues to the economic benefit of the racketeer, as by ceasing to compete, or agreeing to make certain purchases. Congress’ concern was not for the direct victims of the racketeers’ acts, whom state and federal laws already protected, but for the competitors and investors whose businesses and interests are harmed or destroyed by racketeers, or whose competitive positions decline because of infiltration in the relevant market. Its focus was on the victims of the extraordinary economic power that racketeers are able to acquire through a wide 520*520 range of illicit methods. Indeed, that is why Congress provided for recovery only for injury to business or property — that is, commercial injuries — and not for personal physical or emotional injury.

The only way to give effect to Congress’ concern is to require that plaintiffs plead and prove that they suffered RICO injury — injury to their competitive, investment, or other business interests resulting from the defendant’s conduct of a business or infiltration of a business or a market, through a pattern of racketeering activity. As I shall demonstrate, this requirement is manageable, and it puts the statute to the use to which it was addressed. In addition, this requirement is faithful to the language of the statute, which does not appear to provide recovery for injuries incurred by reason of individual predicate acts. It also avoids most of the “extraordinary uses” to which the statute has been put, in which legitimate businesses that have engaged in two criminal acts have been labeled “racketeers,” have faced treble-damages judgments in favor of the direct victims, and often have settled to avoid the destructive publicity and the resulting harm to reputation. These cases take their toll; their results distort the market by saddling legitimate businesses with uncalled-for punitive bills and undeserved labels. To allow punitive actions and significant damages for injury beyond that which the statute was intended to target is to achieve nothing the statute sought to achieve, and ironically to injure many of those lawful businesses that the statute sought to protect. Under such circumstances, I believe this Court is derelict in its failure to interpret the statute in keeping with the language and intent of Congress.

Several lower courts have remarked, however, that a “RICO injury” requirement, while perhaps contemplated by the statute, defies definition. I disagree. The following series of examples, culled in part from the legislative history of the RICO statute, illustrates precisely what does and does not fall within this definition.

521*521 First. If a “racketeer” uses “[t]hreats, arson and assault. . . to force competitors out of business and obtain larger shares of the market,” House Hearings, at 106 (statement of Sen. McClellan), the threats, arson, and assault represent the predicate acts. The pattern of those acts is designed to accomplish, and accomplishes, the goal of monopolization. Competitors thereby injured or forced out of business could allege “RICO” injury and recover damages for lost profits. So, too, purchasers of the racketeer’s goods or services, who are forced to buy from the racketeer/monopolist at higher prices, and whose businesses therefore are injured, might recover damages for the excess costs of doing business. The direct targets of the predicate acts — whether competitors, suppliers, or others — could recover for damages flowing from the predicate acts themselves, but under state or perhaps other federal law, not RICO.

Second. If a “racketeer” uses arson and threats to induce honest businessmen to pay protection money, or to purchase certain goods, or to hire certain workers, the targeted businessmen could sue to recover for injury to their business and property resulting from the added costs. This would be so if they were the direct victims of the predicate acts or if they had reacted to offenses committed against other businessmen. In each case, the predicate acts were committed in order to accomplish a certain end — e. g., to induce the prospective plaintiffs to take action to the economic benefit of the racketeer; in each case the result would have taken a toll on the competitive position of the prospective plaintiff by increasing his costs of doing business.

At the same time, the plaintiffs could not recover under RICO for the direct damages from the predicate acts. They could not, for example, recover for the cost of the building burned, or for personal injury resulting from the threat. Indeed, compensation for this latter injury is barred already by RICO’s exclusion of personal injury claims. As in the previous 522*522 example, these injuries are amply protected by state-law damages actions.

Third. If a “racketeer” infiltrates and obtains control of a legitimate business either through fraud, foreclosure on usurious loans, extortion, or acceptance of business interests in payment of gambling debts, the honest investor who is thereby displaced could bring a civil RICO action claiming infiltration injury resulting from the infiltrator’s pattern of predicate acts that enabled him to gain control. Thereafter, if the enterprise conducts its business through a pattern of racketeering activity to enhance its profits or perpetuate its economic power, competitors of that enterprise could bring civil RICO actions alleging injury by reason of the enhanced commercial position the enterprise has obtained from its unlawful acts, and customers forced to purchase from sponsored suppliers could recover their added costs of doing business. At the same time, the direct victims of the activity — for example, customers defrauded by an infiltrated bank — could not recover under civil RICO. The bank does not, of course, thereby escape liability. The customers simply must rely on the existing causes of action, usually under state law.

Alternatively, if the infiltrated enterprise operates a legitimate business to a businessman’s competitive disadvantage because of the enterprise’s strong economic base derived from perpetration of predicate acts, the competitor could bring a civil RICO action alleging injury to his competitive position. The predicate acts then would have enabled the “enterprise” to gain a competitive advantage that brought harm to the plaintiff-competitor. Again, the direct victims of the predicate acts whose profits were invested in the “legitimate enterprise,” would not be able to recover damages under civil RICO for injury resulting from the predicate acts alone.

These examples are not exclusive, and if this formulation were adopted, lower courts would, of course, have the opportunity 523*523 to smooth numerous rough edges. The examples are designed simply to illustrate the type of injury that civil RICO was, to my mind, designed to compensate. The construction I describe offers a powerful remedy to the honest businessmen with whom Congress was concerned, who might have had no recourse against a “racketeer” prior to enactment of the statute. At the same time, this construction avoids both the theoretical and practical problems outlined in Part I. Under this view, traditional state-law claims are not federalized; federal remedial schemes are not inevitably displaced or superseded; and, consequently, ordinary commercial disputes are not misguidedly placed within the scope of civil RICO.[2]

III

The Court today permits two civil actions for treble damages to go forward that are not authorized either by the language and legislative history of the civil RICO statute, or by the policies that underlay passage of that statute. In so doing, the Court shirks its well-recognized responsibility to assure that Congress’ intent is not thwarted by maintenance of unintended litigation, and it does so based on an unfounded and ill-considered reading of a statutory provision. Because I believe the provision at issue is susceptible of a narrower interpretation that comports both with the statutory language and the legislative history, I dissent.

JUSTICE POWELL, dissenting.

I agree with JUSTICE MARSHALL that the Court today reads the civil RICO statute in a way that validates uses of the statute that were never intended by Congress, and I join his dissent. I write separately to emphasize my disagreement 524*524 with the Court’s conclusion that the statute must be applied to authorize the types of private civil actions now being brought frequently against respected businesses to redress ordinary fraud and breach-of-contract cases.[1]

In United States v. Turkette, 452 U. S. 576 (1981), the Court noted that in construing the scope of a statute, its language, if unambiguous, must be regarded as conclusive “in the absence of `a clearly expressed legislative intent to the contrary.’ ” Id., at 580 (emphasis added) (quoting Consumer Product Safety Comm’n v. GTE Sylvania, Inc., 447 U. S. 102, 108 (1980)). Accord, Russello v. United States, 464 U. S. 16, 20 (1983). In both Turkette and Russello, we found that the “declared purpose” of Congress in enacting the RICO statute was ” `to seek the eradication of organized crime in the United States.’ ” United States v. Turkette, supra, at 589 (quoting the statement of findings prefacing the Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat. 923); accord, Russello v. United States, supra, at 26-27. That organized crime was Congress’ target is apparent from the Act’s title, is made plain throughout the legislative history of the statute, see, e. g., S. Rep. No. 91-617, p. 76 (1969) (S. Rep.), and is acknowledged by all parties to these two cases. Accord, Report of the Ad Hoc Civil RICO Task Force of the ABA Section of Corporation, Banking and Business Law 70-92 (1985) (ABA Report). The legislative history cited by the Court today amply supports this conclusion, see ante, at 487-488, and the Court concedes that “in its private civil version, RICO is evolving into something quite 525*525 different from the original conception of its enactors. See generally ABA Report 55-69.” Ante, at 500. Yet, the Court concludes that it is compelled by the statutory language to construe § 1964(c) to reach garden-variety fraud and breach of contract cases such as those before us today. Ibid.

As the Court of Appeals observed in this case, “[i]f Congress had intended to provide a federal forum for plaintiffs for so many common law wrongs, it would at least have discussed it.”[2] 741 F. 2d 482, 492 (1984). The Court today concludes that Congress was aware of the broad scope of the statute, relying on the fact that some Congressmen objected to the possibility of abuse of the RICO statute by arguing that it could be used “to harass innocent businessmen.” H. R. Rep. No. 91-1549, p. 187 (1970) (dissenting views of Reps. Conyers, Mikva, and Ryan); 116 Cong. Rec. 35342 (1970) (remarks of Rep. Mikva).

In the legislative history of every statute, one may find critics of the bill who predict dire consequences in the event of its enactment. A court need not infer from such statements by opponents that Congress intended those consequences to occur, particularly where, as here, there is compelling evidence to the contrary. The legislative history reveals that Congress did not state explicitly that the statute would reach only members of the Mafia because it believed there were constitutional problems with establishing such a specific status offense. E. g., id., at 35343-35344 (remarks of Rep. Celler); id., at 35344 (remarks of Rep. Poff). Nonetheless, theless, the legislative history makes clear that the statute was intended to be applied to organized crime, and an influential sponsor of the bill emphasized that any effect it had beyond such crime was meant to be only incidental. Id., at 18914 (remarks of Sen. McClellan).

526*526 The ABA study concurs in this view. The ABA Report states:

“In an attempt to ensure the constitutionality of the statute, Congress made the central proscription of the statute the use of a `pattern of racketeering activities’ in connection with an `enterprise,’ rather than merely outlawing membership in the Mafia, La Cosa Nostra, or other organized criminal syndicates. `Racketeering’ was defined to embrace a potpourri of federal and state criminal offenses deemed to be the type of criminal activities frequently engaged in by mobsters, racketeers and other traditional members of `organized crime.’ The `pattern’ element of the statute was designed to limit its application to planned, ongoing, continuing crime as opposed to sporadic, unrelated, isolated criminal episodes. The `enterprise’ element, when coupled with the `pattern’ requirement, was intended by the Congress to keep the reach of RICO focused directly on traditional organized crime and comparable ongoing criminal activities carried out in a structured, organized environment. The reach of the statute beyond traditional mobster and racketeer activity and comparable ongoing structured criminal enterprises, was intended to be incidental, and only to the extent necessary to maintain the constitutionality of a statute aimed primarily at organized crime.” Id., at 71-72 (footnote omitted).

It has turned out in this case that the naysayers’ dire predictions have come true. As the Court notes, ante, at 499, and n. 16, RICO has been interpreted so broadly that it has been used more often against respected businesses with no ties to organized crime, than against the mobsters who were the clearly intended target of the statute. While I acknowledge that the language of the statute may be read as broadly as the Court interprets it today, I do not believe that it must 527*527 be so read. Nor do I believe that interpreting the statutory language more narrowly than the Court does will “eliminate the [civil RICO] private action,” ante, at 499, in cases of the kind clearly identified by the legislative history. The statute may and should be read narrowly to confine its reach to the type of conduct Congress had in mind. It is the duty of this Court to implement the unequivocal intention of Congress.

The language of this complex statute is susceptible of being read consistently with this intent. For example, the requirement in the statute of proof of a “pattern” of racketeering activity may be interpreted narrowly. Section 1961(5), defining “pattern of racketeering activity,” states that such a pattern “requires at least two acts of racketeering activity.” This contrasts with the definition of “racketeering activity” in § 1961(1), stating that such activity “means” any of a number of acts. The definition of “pattern” may thus logically be interpreted as meaning that the presence of the predicate acts is only the beginning: something more is required for a “pattern” to be proved. The ABA Report concurs in this view. It argues persuasively that “[t]he `pattern’ element of the statute was designed to limit its application to planned, ongoing, continuing crime as opposed to sporadic, unrelated, isolated criminal episodes,” ABA Report 72, such as the criminal acts alleged in the case before us today.

The legislative history bears out this interpretation of “pattern.” Senator McClellan, a leading sponsor of the bill, stated that “proof of two acts of racketeering activity, without more, does not establish a pattern.” 116 Cong. Rec. 18940 (1970). Likewise, the Senate Report considered the “concept of `pattern’ [to be] essential to the operation of the statute.” S. Rep., at 158. It stated that the bill was not aimed at sporadic activity, but that the “infiltration of legitimate business normally requires more than one `racketeering 528*528 activity’ and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern.” Ibid. (emphasis added). The ABA Report suggests that to effectuate this legislative intent, “pattern” should be interpreted as requiring that (i) the racketeering acts be related to each other, (ii) they be part of some common scheme, and (iii) some sort of continuity between the acts or a threat of continuing criminal activity must be shown. ABA Report, at 193-208. By construing “pattern” to focus on the manner in which the crime was perpetrated, courts could go a long way toward limiting the reach of the statute to its intended target — organized crime.

The Court concedes that “pattern” could be narrowly construed, ante, at 496, n. 14, and notes that part of the reason civil RICO has been put to such extraordinary uses is because of the “failure of Congress and the courts to develop a meaningful concept of `pattern,’ ” ante, at 500. The Court declines to decide whether the defendants’ acts constitute such a pattern in this case, however, because it concludes that that question is not before the Court. Ibid. I agree that the scope of the “pattern” requirement is not included in the questions on which we granted certiorari. I am concerned, however, that in the course of rejecting the Court of Appeals’ ruling that the statute requires proof of a “racketeering injury” the Court has read the entire statute so broadly that it will be difficult, if not impossible, for courts to adopt a reading of “pattern” that will conform to the intention of Congress.

The Court bases its rejection of the “racketeering injury” requirement on the general principles that the RICO statute is to be read “broadly,” that it is to be ” `liberally construed to effectuate its remedial purposes,’ ” ante, at 498 (quoting Pub. L. 91-452, § 904(a), 84 Stat. 947), and that the statute was part of “an aggressive initiative to supplement old remedies and develop new methods for fighting crime.” Ante, at 498. Although the Court acknowledges that few of the legislative statements supporting these principles were made 529*529 with reference to RICO’s private civil action, it concludes nevertheless that all of the Act’s provisions should be read in the “spirit” of these principles. Ibid. By constructing such a broad premise for its rejection of the “racketeering injury” requirement, the Court seems to mandate that all future courts read the entire statute broadly.

It is neither necessary to the Court’s decision, nor in my view correct, to read the civil RICO provisions so expansively. We ruled in Turkette and Russello that the statute must be read broadly and construed liberally to effectuate its remedial purposes, but like the legislative history to which the Court alludes, it is clear we were referring there to RICO’s criminal provisions. It does not necessarily follow that the same principles apply to RICO’s private civil provisions. The Senate Report recognized a difference between criminal and civil enforcement in describing proposed civil remedies that would have been available to the Government. It emphasized that although those proposed remedies were intended to place additional pressure on organized crime, they were intended to reach “essentially an economic, not a punitive goal.” S. Rep., at 81 (emphasis added). The Report elaborated as follows:

“However remedies may be fashioned, it is necessary to free the channels of commerce from predatory activities, but there is no intent to visit punishment on any individual; the purpose is civil. Punishment as such is limited to the criminal remedies . . . .” Ibid. (emphasis added; footnote omitted).

The reference in the Report to “predatory activities” was to organized crime. Only a small fraction of the scores of civil RICO cases now being brought implicate organized crime in any way.[3] Typically, these suits are being brought — in the 530*530 unfettered discretion of private litigants — in federal court against legitimate businesses seeking treble damages in ordinary fraud and contract cases. There is nothing comparable in those cases to the restraint on the institution of criminal suits exercised by Government prosecutorial discretion. Today’s opinion inevitably will encourage continued expansion of resort to RICO in cases of alleged fraud or contract violation rather than to the traditional remedies available in state court. As the Court of Appeals emphasized, it defies rational belief, particularly in light of the legislative history, that Congress intended this far-reaching result. Accordingly, I dissent.

[*] Briefs of amici curiae urging reversal were filed for the State of Arizona et al. by the Attorneys General for their respective States as follows: Robert K. Corbin of Arizona, Norman C. Gorsuch of Alaska, John Van de Kamp of California, Duane Woodard of Colorado, Joseph Lieberman of Connecticut, Jim Smith of Florida, Michael Lilly of Hawaii, Jim Jones of Idaho, Neil Hartigan of Illinios, Linley E. Pearson of Indiana, David L. Armstrong of Kentucky, William J. Guste, Jr., of Louisiana, Frank J. Kelley of Michigan, Edward L. Pittman of Mississippi, William L. Webster of Missouri, Mike Greely of Montana, Brian McKay of Nevada, Irwin L. Kimmelman of New Jersey, Paul Bardacke of New Mexico, Lacy H. Thornburg of North Carolina, Nicholas J. Spaeth of North Dakota, Anthony Celebrezze of Ohio, Michael Turpen of Oklahoma, David Fronmayer of Oregon, Dennis J. Roberts II of Rhode Island, T. Travis Medlock of South Carolina, Mark V. Meierhenry of South Dakota, W. J. Michael Cody of Tennessee, David L. Wilkinson of Utah, John J. Easton of Vermont, Kenneth O. Eikenberry of Washington, Charlie Brown of West Virginia, Bronson C. La Follette of Wisconsin, Archie G. McClintock of Wyoming; for the State of New York by Robert Abrams, Attorney General, and Robert Hermann, Solicitor General; for the City of New York et al. by Frederick A. O. Schwarz, Jr., James D. Montgomery, and Barbara W. Mather; and for the County of Suffolk, New York, by Mark D. Cohen.

Briefs of amici curiae urging affirmance were filed for the Alliance of American Insurers et al. by James F. Fitzpatrick and John M. Quinn; for the American Institute of Certified Public Accountants by Philip A. Lacovara, Jay Kelly Wright, Kenneth J. Bialkin, and Louis A. Craco; and for the Securities Industry Association by Joel W. Sternman, Eugene A. Gaer, and William J. Fitzpatrick.

[1] Of 270 District Court RICO decisions prior to this year, only 3% (nine cases) were decided throughout the 1970’s, 2% were decided in 1980, 7% in 1981, 13% in 1982, 33% in 1983, and 43% in 1984. Report of the Ad Hoc Civil RICO Task Force of the ABA Section of Corporation, Banking and Business Law 55 (1985) (hereinafter ABA Report); see also id., at 53a (table).

[2] For a thorough bibliography of civil RICO decisions and commentary, see Milner, A Civil RICO Bibliography, 21 C. W. L. R. 409 (1985).

[3] RICO defines “racketeering activity” to mean

“(A) any act or threat involving murder, kidnaping, gambling, arson, robbery, bribery, extortion, or dealing in narcotic or other dangerous drugs, which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), sections 891-894 (relating to extortionate credit transactions), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1503 (relating to obstruction of justice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to the prohibition of illegal gambling businesses), sections 2312 and 2313 (relating to interstate transportation of stolen motor vehicles), sections 2314 and 2315 (relating to interstate transportation of stolen property), section 2320 (relating to trafficking in certain motor vehicles or motor vehicle parts), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-2424 (relating to white slave traffic), (C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement from union funds), (D) any offense involving fraud connected with a case under title 11, fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in narcotic or other dangerous drugs, punishable under any law of the United States, or (E) any act which is indictable under the Currency and Foreign Transactions Reporting Act.” 18 U. S. C. § 1961(1) (1982 ed., Supp. III).

[4] In relevant part, 18 U. S. C. § 1962 provides:

“(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt . . . to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. . . .

“(b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.

“(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.

“(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section.”

[5] The day after the decision in this case, another divided panel of the Second Circuit reached a similar conclusion. Bankers Trust Co. v. Rhoades, 741 F. 2d 511 (1984), cert. pending, No. 84-657. It held that § 1964(c) allowed recovery only for injuries resulting not from the predicate acts, but from the fact that they were part of a pattern. “If a plaintiff’s injury is that caused by the predicate acts themselves, he is injured regardless of whether or not there is a pattern; hence he cannot be said to be injured by the pattern,” and cannot recover. Id., at 517 (emphasis in original).

The following day, a third panel of the same Circuit, this time unanimous, decided Furman v. Cirrito, 741 F. 2d 524 (1984), cert. pending, No. 84-604. In that case, the District Court had dismissed the complaint for failure to allege a distinct racketeering injury. The Court of Appeals affirmed, relying on the opinions in Sedima and Bankers Trust, but wrote at some length to record its disagreement with those decisions. The panel would have required no injury beyond that resulting from the predicate acts.

[6] A month after the trio of Second Circuit opinions was released, the Eighth Circuit decided Alexander Grant & Co. v. Tiffany Industries, Inc., 742 F. 2d 408 (1984), cert. pending, Nos. 84-1084, 84-1222. Viewing its decision as contrary to Sedima but consistent with, though broader than, Bankers Trust, the court held that a RICO claim does require some unspecified element beyond the injury flowing directly from the predicate acts. At the same time, it stood by a prior decision that had rejected any requirement that the injury be solely commercial or competitive, or that the defendants be involved in organized crime. 742 F. 2d, at 413; see Bennett v. Berg, 685 F. 2d 1053, 1058-1059, 1063-1064 (CA8 1982), aff’d in part and rev’d in part, 710 F. 2d 1361 (en banc), cert. denied, 464 U. S. 1008 (1983).

Two months later, the Seventh Circuit decided Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F. 2d 384 (1984), aff’d, post, p. 606. Dismissing Sedima as the resurrection of the discredited requirement of an organized crime nexus, and Bankers Trust as an emasculation of the treble-damages remedy, the Seventh Circuit rejected “the elusive racketeering injury requirement.” 747 F. 2d, at 394, 398-399. The Fifth Circuit had taken a similar position. Alcorn County v. U. S. Interstate Supplies, Inc., 731 F. 2d 1160, 1169 (1984).

The requirement of a prior RICO conviction was rejected in Bunker Ramo Corp. v. United Business Forms, Inc., 713 F. 2d 1272, 1286-1287 (CA7 1983), and USACO Coal Co. v. Carbomin Energy, Inc., 689 F. 2d 94 (CA6 1982). See also United States v. Cappetto, 502 F. 2d 1351 (CA7 1974), cert. denied, 420 U. S. 925 (1975) (civil action by Government).

[7] When Congress intended that the defendant have been previously convicted, it said so. Title 18 U. S. C. § 1963(f) (1982 ed., Supp. III) states that “[u]pon conviction of a person under this section,” his forfeited property shall be seized. Likewise, in Title X of the same legislation Congress explicitly required prior convictions, rather than prior criminal activity, to support enhanced sentences for special offenders. See 18 U. S. C. § 3575(e).

[8] The court below considered it significant that § 1964(c) requires a “violation of section 1962,” whereas the Clayton Act speaks of “anything forbidden in the antitrust laws.” 741 F. 2d, at 488; see 15 U. S. C. § 15(a). The court viewed this as a deliberate change indicating Congress’ desire that the underlying conduct not only be forbidden, but also have led to a criminal conviction. There is nothing in the legislative history to support this interpretation, and we cannot view this minor departure in wording, without more, to indicate a fundamental departure in meaning. Representative Steiger, who proposed this wording in the House, nowhere indicated a desire to depart from the antitrust model in this regard. See 116 Cong. Rec. 35227, 35246 (1970). To the contrary, he viewed the treble-damages provision as a “parallel private remedy.” Id., at 27739 (letter to House Judiciary Committee). Likewise, Senator Hruska’s discussion of his identically worded proposal gives no hint of any such intent. See 115 Cong. Rec. 6993 (1969). In any event, the change in language does not support the court’s drastic inference. It seems more likely that the language was chosen because it is more succinct than that in the Clayton Act, and is consistent with the neighboring provisions. See §§ 1963(a), 1964(a).

[9] It is worth bearing in mind that the holding of the court below is not without problematic consequences of its own. It arbitrarily restricts the availability of private actions, for lawbreakers are often not apprehended and convicted. Even if a conviction has been obtained, it is unlikely that a private plaintiff will be able to recover for all of the acts constituting an extensive “pattern,” or that multiple victims will all be able to obtain redress. This is because criminal convictions are often limited to a small portion of the actual or possible charges. The decision below would also create peculiar incentives for plea bargaining to non-predicate-act offenses so as to ensure immunity from a later civil suit. If nothing else, a criminal defendant might plead to a tiny fraction of counts, so as to limit future civil liability. In addition, the dependence of potential civil litigants on the initiation and success of a criminal prosecution could lead to unhealthy private pressures on prosecutors and to self-serving trial testimony, or at least accusations thereof. Problems would also arise if some or all of the convictions were reversed on appeal. Finally, the compelled wait for the completion of criminal proceedings would result in pursuit of stale claims, complex statute of limitations problems, or the wasteful splitting of actions, with resultant claim and issue preclusion complications.

[10] The Court of Appeals also observed that allowing civil suits without prior convictions “would make a hash” of the statute’s liberal-construction requirement. 741 F. 2d, at 502; see RICO § 904(a). Since criminal statutes must be strictly construed, the court reasoned, allowing liberal construction of RICO — an approach often justified on the ground that the conduct for which liability is imposed is “already criminal” — would only be permissible if there already existed criminal convictions. Again, we have doubts about the premise of this rather convoluted argument. The strict-construction principle is merely a guide to statutory interpretation. Like its identical twin, the “rule of lenity,” it “only serves as an aid for resolving an ambiguity; it is not to be used to beget one.” Callanan v. United States, 364 U. S. 587, 596 (1961); see also United States v. Turkette, 452 U. S. 576, 587-588 (1981). But even if that principle has some application, it does not support the court’s holding. The strict- and liberal-construction principles are not mutually exclusive; § 1961 and § 1962 can be strictly construed without adopting that approach to § 1964(c). Cf. United States v. United States Gypsum Co., 438 U. S. 422, 443, n. 19 (1978). Indeed, if Congress’ liberal-construction mandate is to be applied anywhere, it is in § 1964, where RICO’s remedial purposes are most evident.

[11] Even were the constitutional questions more significant, any doubts would be insufficient to overcome the mandate of the statute’s language and history. “Statutes should be construed to avoid constitutional questions, but this interpretative canon is not a license for the judiciary to rewrite language enacted by the legislature.” United States v. Albertini, 472 U. S. 675, 680 (1985).

[12] The decision below does not appear identical to Bankers Trust. It established a standing requirement, whereas Bankers Trust adopted a limitation on damages. The one focused on the mobster element, the other took a more conceptual approach, distinguishing injury caused by the individual acts from injury caused by their cumulative effect. Thus, the Eighth Circuit has indicated its agreement with Bankers Trust but not Sedima. Alexander Grant & Co. v. Tiffany Industries, Inc., 742 F. 2d, at 413. See also Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F. 2d, at 396. The two tests were described as “very different” by the ABA Task Force. See ABA Report, at 310.

Yet the Bankers Trust court itself did not seem to think it was departing from Sedima, see 741 F. 2d, at 516-517, and other Second Circuit panels have treated the two decisions as consistent, see Furman v. Cirrito, 741 F. 2d 524 (1984), cert. pending, No. 84-604; Durante Brothers & Sons, Inc. v. Flushing National Bank, 755 F. 2d 239, 246 (1985). The evident difficulty in discerning just what the racketeering injury requirement consists of would make it rather hard to apply in practice or explain to a jury.

[13] Given the plain words of the statute, we cannot agree with the court below that Congress could have had no “inkling of [§ 1964(c)’s] implications.” 741 F. 2d, at 492. Congress’ “inklings” are best determined by the statutory language that it chooses, and the language it chose here extends far beyond the limits drawn by the Court of Appeals. Nor does the “clanging silence” of the legislative history, ibid., justify those limits. For one thing, § 1964(c) did not pass through Congress unnoticed. See Part II, supra. In addition, congressional silence, no matter how “clanging,” cannot override the words of the statute.

[14] As many commentators have pointed out, the definition of a “pattern of racketeering activity” differs from the other provisions in § 1961 in that it states that a pattern “requires at least two acts of racketeering activity,” § 1961(5) (emphasis added), not that it “means” two such acts. The implication is that while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a “pattern.” The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern. As the Senate Report explained: “The target of [RICO] is thus not sporadic activity. The infiltration of legitimate business normally requires more than one `racketeering activity’ and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern.” S. Rep. No. 91-617, p. 158 (1969) (emphasis added). Similarly, the sponsor of the Senate bill, after quoting this portion of the Report, pointed out to his colleagues that “[t]he term `pattern’ itself requires the showing of a relationship . . . . So, therefore, proof of two acts of racketeering activity, without more, does not establish a pattern . . . .” 116 Cong. Rec. 18940 (1970) (statement of Sen. McClellan). See also id., at 35193 (statement of Rep. Poff) (RICO “not aimed at the isolated offender”); House Hearings, at 665. Significantly, in defining “pattern” in a later provision of the same bill, Congress was more enlightening: “[C]riminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” 18 U. S. C. § 3575(e). This language may be useful in interpreting other sections of the Act. Cf. Iannelli v. United States, 420 U. S. 770, 789 (1975).

[15] Such damages include, but are not limited to, the sort of competitive injury for which the dissenters would allow recovery. See post, at 521-522. Under the dissent’s reading of the statute, the harm proximately caused by the forbidden conduct is not compensable, but that ultimately and indirectly flowing therefrom is. We reject this topsy-turvy approach, finding no warrant in the language or the history of the statute for denying recovery thereunder to “the direct victims of the [racketeering] activity,” post, at 522, while preserving it for the indirect. Even the court below was not that grudging. It would apparently have allowed recovery for both the direct and the ultimate harm flowing from the defendant’s conduct, requiring injury “not simply caused by the predicate acts, but also caused by an activity which RICO was designed to deter.” 741 F. 2d, at 496 (emphasis added).

The dissent would also go further than did the Second Circuit in its requirement that the plaintiff have suffered a competitive injury. Again, as the court below stated, Congress “nowhere suggested that actual anti-competitive effect is required for suits under the statute.” Ibid. The language it chose, allowing recovery to “[a]ny person injured in his business or property,” § 1964(c) (emphasis added), applied to this situation, suggests that the statute is not so limited.

[16] The ABA Task Force found that of the 270 known civil RICO cases at the trial court level, 40% involved securities fraud, 37% common-law fraud in a commercial or business setting, and only 9% “allegations of criminal activity of a type generally associated with professional criminals.” ABA Report, at 55-56. Another survey of 132 published decisions found that 57 involved securities transactions and 38 commercial and contract disputes, while no other category made it into double figures. American Institute of Certified Public Accountants, The Authority to Bring Private Treble-Damage Suits Under “RICO” Should be Removed 13 (Oct. 10, 1984).

[*] [This opinion applies also to No. 84-822, American National Bank & Trust Company of Chicago et al. v. Haroco, Inc., et al, post, p. 606.]

[1] Section 1964(c) provides:

Section 4 of the Clayton Act, 15 U. S. C. § 15, provides in relevant part:

“[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover three-fold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.”

[2] The analysis in my dissent would lead to the dismissal of the civil RICO claims at stake here. I thus do not need to decide whether a civil RICO action can proceed only after a criminal conviction. See ante, at 488-493.

[1] The Court says these suits are not being brought against the “archetypal, intimidating mobster” because of a “defect” that is “inherent in the statute.” Ante, at 499. If RICO must be construed as the Court holds, this is indeed a defect that Congress never intended. I do not believe that the statute must be construed in what in effect is an irrational manner.

[2] The force of this observation is accented by RICO’s provision for treble damages — an enticing invitation to litigate these claims in federal courts.

[3] As noted in the ABA Report, of the 270 District Court RICO decisions prior to this year, only 3% (9cases) were decided throughout the entire decade of the 1970’s, whereas 43% (116 cases) were decided in 1984. ABA Report, at 53a (Table). See ante, at 481, n. 1.