Proximate Cause and Civil RICO Standing: The Narrowly Restrictive and Mechanical Approach in Lerner v. Fleet Bank and Baisch v. Gallina

The most important and most constant cause of dissatisfaction with all law at all times is to be found in the necessarily mechanical operation of legal rules."Roscoe Pound. 1 7/3/2004 2:11 PM 739] Proximate Cause and Civil RICO Standing 741 Historically, although the Supreme Court has struck down several lower court attempts at fashioning standing requirements, 9 the Court, in the eyes of many other courts, has less successfully provided any concrete guidelines for standing under civil RICO. 10 In 1992, the Supreme Court faced a case that gave ample opportunity to delineate some of the details of civil RICO standing in Holmes v. Securities Investor Protection Corp. 11 The Court, however, read a proximate cause element into the civil RICO statute and decided the case on proximate cause grounds without addressing the exact standing question presented.12 This decision has led the vast majority of courts to adopt proximate cause as the primary tool for judging standing under civil RICO.13 Although the Court discussed proximate cause at length in the Holmes decision, lower courts have found no general standard explicated by the Court 14 and have subsequently employed a variety of proximate cause tests to determine civil RICO standing.15 Courts have principally derived 9. See, e.g., Sedima, 473 U.S. at 493, 495 (rejecting the argument that a plaintiff must allege that the defendant be convicted of the predicate acts and also rejecting "racketeering injury" as a necessary component of standing); H.J., Inc., 492 U.S. at 232 (rejecting a restrictive notion of "pattern" under the civil RICO statute).10. Civil RICO standing, then, may be considered by some as very much in line with the Court's overall standing jurisprudence: "incoherent," "permeated with sophistry," and "a word game."William A. Fletcher, The Structure of Standing, 98 YALE L.J. 221, 221 (1988) (internal quotations and citations omitted).11. 503 U.S. 258 (1992).12. Id. at 265-69.13.See Perry v. Am.Tobacco Co., 324 F.3d 845, 848 (6th Cir.2003); Mendoza v. Zirkle Fruit Co., 301 F.3d 1163, 1168-69 (9th Cir.2002); Potomac Elec.Power Co. v. Elec.Motor & Supply, Inc., 262 F.3d 260, 264 (4th Cir.2001); Maiz v. Virani, 253 F.3d 641, 654-55 (11th Cir.2001); Allegheny Gen. Hosp.v. Philip Morris, Inc., 228 F.3d 429, 443 (3d Cir.2000).14. See Madonia, supra note 2, at 960.The idea that there was no general standard set forth by the Court arises from the fact that circuit courts have developed a variety of different standards for proximate cause under RICO.See, e.g., Sedima, 473 U.S. at 485-86 (noting the "variety of approaches taken by the lower courts" as a reaction to the "proliferation of civil RICO litigation").To the contrary, however, the Supreme Court did provide a standard to decide proximate cause standing for civil RICO.See discussion infra Part III.B.15. See supra note 7. Compare, e.g., Green Leaf Nursery v. E.I. Dupont De Nemours & Co., 341 F.3d 1292 (11th Cir.2003) (requiring some amount of reliance in which fraud is part of the predicate acts of RICO), with Perry, 324 F.3d at 845 (employing common-law principles for proximate cause), and Allegheny Gen. Hosp., 228 F.3d at 443 (using a threefactor test to determine standing under proximate cause), and Newton v. Tyson Foods, Inc., 207 F.3d 444, 447 (8th Cir.2000) (discussing a zone-of-interest test derived from Justice Scalia's concurrence in Holmes), and Abrahams v. Young & Rubicam Inc., 79 F.