## Facts

- Ideal Steel Supply Corp. and National Steel Supply, Inc. were competing steel suppliers operating in Queens and the Bronx.
- Ideal alleged National failed to charge and remit New York sales tax on certain cash transactions and concealed the practice by filing fraudulent state tax returns.
- Ideal alleged the fraudulent returns (and related communications) constituted RICO predicate acts of mail and wire fraud directed at New York tax authorities.
- Ideal claimed the tax scheme let National lower prices, causing Ideal to lose sales and market share.
- Ideal also alleged National used proceeds from the scheme to finance and open a Bronx location, further harming Ideal competitively.
- The district court dismissed under Rule 12(b)(6), reasoning Ideal had not adequately alleged reliance on the misrepresentations.
- The Second Circuit vacated, holding Ideal sufficiently pleaded proximate cause for both the § 1962(c) and § 1962(a) theories despite the fraud being directed to a third party.
- The Supreme Court granted review.

## Issues

1. Whether a competitor satisfies civil RICO’s “by reason of” requirement under 18 U.S.C. § 1964(c) when the alleged racketeering consists of tax fraud directed at the State, and the competitor’s injury is lost sales from the defendant’s resulting ability to offer lower prices.
2. Whether Ideal adequately alleged injury “by reason of” a § 1962(a) violation based on National’s alleged use or investment of racketeering income to open a new store.

## Decision

- The Court held Ideal could not maintain its § 1962(c) claim because the alleged predicate acts (fraud on the State) did not directly cause Ideal’s asserted competitive injuries.
- The Court reaffirmed that civil RICO proximate cause requires “some direct relation” between the injurious conduct and the plaintiff’s injury, and framed the inquiry as whether the violation “led directly” to the injury.
- The Court emphasized that the State of New York was the direct victim of the alleged tax fraud, while Ideal’s losses were contingent on intervening steps, including National’s pricing choices and customers’ purchasing decisions.
- The Court vacated the Second Circuit’s judgment as to the § 1962(a) claim and remanded for further consideration.

## Legal Principles

- Civil RICO standing under § 1964(c) requires proximate causation, demanding a direct relationship between the RICO violation and the plaintiff’s injury.
- Competitive harm is too remote where the predicate acts are frauds on a third party and the plaintiff’s losses depend on intervening market decisions by the defendant and customers.
- The existence of a more directly injured party (such as the defrauded government entity) weighs against recognizing RICO standing for indirect victims, in part to avoid complex damage apportionment and duplicative recoveries.
- A plaintiff cannot establish RICO proximate cause merely by alleging that racketeering was intended to confer a competitive advantage; the predicate acts must directly cause the plaintiff’s injury.

## Conclusion

The Court limited competitor-based civil RICO suits by requiring direct proximate causation: losses from a rival’s tax fraud against the State were too indirect to satisfy § 1964(c) for a § 1962(c) claim, and the § 1962(a) theory was remanded for reconsideration under the same causation framework.


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