The Supreme Court
The case, Bridge et al v. Phoenix Bond & Indemnity Co. et al, involved an annual public auction held by the Cook County, Ill., Treasurer's Office, to sell its tax liens on delinquent taxpayers' property. To prevent any single buyer from obtaining a disproportionate share of the liens, the county adopted a "single, simultaneous bidder rule" that requires each buyer to submit bids in its own name, prohibits a buyer from using "apparent agents, employees or related entities" to submit simultaneous bids for the same parcel, and requires a registered bidder to submit a sworn affidavit affirming its compliance with the rule.
Phoenix and another business, BCS Services, filed suit, alleging that the Sabre Group, its registered tax bidder John Bridge, along with others, arranged for several related firms to bid on Sabre's behalf and directed them to file false attestations that they complied with the rule. Once they had the opportunity to participate in the auction, the related firms collusively bid on the same properties.
As a result, when the county allocated liens on a rotating basis, it treated the related firms as independent entities, allowing them collectively to acquire a greater number of liens than would have been granted to a single bidder acting alone. The related firms then purchased the liens and transferred the certificates of purchase to Sabre. In this way, according to Phoenix and BCS, Sabre deprived them and other bidders of their fair share of liens and the attendant financial benefits.
They claimed that Sabre violated the RICO statute through a pattern of racketeering activity involving mail fraud, which occurred when Sabre sent property owners various notices required by Illinois law. The District Court dismissed the RICO claims for lack of standing. The Seventh Circuit Court of Appeals reversed that decision, and based the standing on the injury that Phoenix and BCS suffered when they lost the chance to obtain more liens. The court rejected Sabre's argument that Phoenix and BCS were not entitled to relief under RICO because they had not received, and therefore had not relied on, any false statements.
The Supreme Court agreed, holding that a plaintiff asserting a RICO claim predicated on mail fraud need not show that it relied on the defendant's alleged misrepresentations.
