990 F.3d 31
1st Cir.2021Background
- In 2014 the Massachusetts Gaming Commission awarded an Eastern Massachusetts casino license to Wynn MA, LLC (Wynn) for an Everett site; Mohegan Sun Massachusetts (Mohegan) proposed a competing East Boston project that would have leased Sterling Suffolk Racecourse’s (Sterling) East Boston property if awarded the license.
- Sterling sued under the civil RICO statute, alleging Wynn, its executives, and related entities concealed Stephen Wynn’s misconduct, provided false information, and paid kickbacks to secure the license, causing Mohegan to lose and Sterling to lose expected lease revenues (~$3.465 billion over 99 years).
- The district court granted defendants’ motion to dismiss for failure to allege a continuous pattern of racketeering activity.
- On appeal the First Circuit affirmed dismissal but on different grounds: Sterling failed to allege the proximate-causation/direct-injury required by 18 U.S.C. § 1964(c).
- The court held Sterling’s alleged injury was derivative of Mohegan’s (a better‑situated, directly harmed party), contingent on contract conditions, and therefore too remote/purely contingent to satisfy RICO proximate-cause requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sterling suffered a direct injury under 18 U.S.C. § 1964(c) (RICO proximate cause) | Wynn’s alleged RICO conduct caused Mohegan to lose the license, which caused Sterling to lose the lease and its anticipated revenues | Injury is indirect/derivative of Mohegan’s loss; Mohegan is better‑situated to sue; Sterling’s loss was contingent on contractual conditions; risk of double recovery | Held: No. Injury was too remote and purely contingent; proximate-causation requirement not met, so RICO claim fails |
| Whether Sterling adequately alleged a pattern of racketeering activity | Alleged concealment, false statements, nondisclosures, and kickbacks constituted predicate acts showing a pattern | Alleged acts did not establish the required continuous pattern | District court dismissed on pattern grounds; First Circuit affirmed dismissal but on proximate-causation/direct-injury grounds |
Key Cases Cited
- Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258 (requires proximate cause in civil RICO)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (RICO plaintiff must show direct relation between violation and injury)
- Hemi Group, LLC v. City of New York, 559 U.S. 1 (remote or purely contingent link insufficient for RICO proximate causation)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (false statements to one party may directly injure another in some contexts)
- In re Neurontin Mktg. & Sales Pracs. Litig., 712 F.3d 21 (First Circuit articulates three-factor test for RICO proximate causation analysis)
- In re Celexa & Lexapro Mktg. & Sales Practices Litig., 915 F.3d 1 (First Circuit applying direct-injury principles in False Marketing/RICO contexts)