Case Information
*1 Before B AUER , P OSNER , M ANION , Circuit Judges . P OSNER Circuit Judge
. These consolidated appeals se quels our decision BCS Services, Inc. Heartwood LLC 2011), reversed judgments dismissing two suits simplicity we treated will continue treat one. plaintiffs, BCS Services, *2 ‐ et and Phoenix Bond & Indemnity Co., seek for mail under the Racketeer Influenced and Corrupt Organi ‐ zations Act (RICO), U.S.C. §§ seq for interfer ence a prospective business advantage under Illinois tort law. The ground dismissal we rejected when last the was before us was the prove the alleged wrongdoing, even proved, a “proximate cause” alleged losses. at 756.
When owner property Cook County, Illinois, fails to pay his property tax on time, the amount tax past due becomes a lien the property. The County sells tax liens auctions. The bids the auctions are stated per centages the taxes past due. bidder bids, multiplied amount past ‐ due taxes (plus any interest due them), is “penalty” bidder de mands owner to clear lien. winning bidder is bidder who bids (that is, is willing to accept) low est penalty—often zero percent tax due, meaning bidder offering pay County entire past ‐ due taxes receive exchange lien. taxpayer two three years erase
lien paying winner auction (and hence new owner lien) past due taxes winner paid County, plus penalty (if any). If taxpayer fails redeem paying he owes, purchaser lien can obtain tax deed property thus become property’s owner. In deciding tax being auc tioned how much bid (whether zero per cent penalty, percent penalty, or any percent), lienor looking properties whose owners unlikely redeem them paying past due *3 ‐ taxes during the redemption period and which are worth more than the past ‐ due taxes on them. auctions are conducted in rapid ‐ fire fashion in a
room in the bidders raising a card with their bidder ID number and shouting out the penalty are bidding. Almost percent of the winning bids are the zero ‐ percent penalty level; is, most bids are identical zero ‐ percent bids. How auctioneer to pick the winner in such a case? Because bids are identical, auctioneer tries award lien bidder who raised his hand first. many bidders raise hands as soon as bidding begins, auctioneer may find impossible determine who raised his hand first, in event he’ll probably pick one of zero ‐ percent bidders random. County’s rules permit only one agent a potential buyer, or a group cooperating buyers (“related enti ties”), bid. Otherwise potential buyer increase likelihood winning packing room. He likely some fast hands some ringside seats, as well as having advantage just virtue number his hands, when auctioneer threw up his hands liens randomly among zero ‐ percent bidders, tried rotate them among bidders interest “fairness.” If company’s violation prohibition bidding multiple bidders concealed thus operated fraud armed bidders (that is, bidders who complied single bidder rule), com pany engaged pattern mail vio lation RICO County uses mails notify property owners County sold property unless past due taxes paid property will forfeited lienor.
The case a little more complicated than we’ve let so far because several groups each composed of entities related each accused of fraud. Only two groups re main in case, however, Sass Gray, others (or principals) having settled with plaintiffs. Each group had only arm each auction session; instead each had many arms as it had members. Each group had (offstage) a kingpin who financed group’s bidding activity. When a member group won a lien, kingpin buy from him.
On remand from our decision reversing district court, tried end four week tri al found in favor plaintiffs two remaining groups totaling, after various ad justments, some $7 million, added some $13 million in plaintiffs attorneys’ fees related expenses. make number arguments revers ing (not all merit discussion).
They were victims mail fraud they no property interest they prevented fraud from buying. premise true but irrelevant. “Any person injured his business property reason violation section chapter may sue therefor any appropriate United States district court shall recover threefold he sustains … .” U.S.C. § 1964(c) (emphasis added); see also Maiz Virani 2001); Terminate Control Corp. Horowitz (2d deprived profit made prevented them *5 12 3235, 5 being awarded as many tax as they been otherwise.
It true criminal act which RICO claim is based—mail fraud—requires defendants ob tained “money or property” by fraud. 18 U.S.C. § 1341. liens, defendants obtained, are proper ty. United States v. Security Industrial Bank, 459 U.S. 70, 76–77 (1982); In re Tarnow , 749 F.2d 464, 466 (7th Cir. 1984). In they are property Cook County. The property section refers need not plaintiffs’, provid ed they directly injured defendants’ unlawful ac quisition property. See Phoenix Bond & Indemnity Co. Bridge F.3d 928, (7th Cir. 2007), affirmed, U.S. (2008); Commercial Cleaning Services, L.L.C. Colin Service Systems, Inc (2d 2001); Mid At lantic Telecom, Long Distance Services, Inc. As they were: took City property that, they not taken it, been obtained plaintiffs same time same place—the auction room.
The correct deny request instruct find “if there only a deprivation intangible rights a fair opportunity obtain money property.” instruc tion irrelevant. complaining about deprivation intangible rights, such as a right honest service agent; complaining about caused them money loss. County’s rule bids multiple agents same principal (the “single bidder” rule) defines “principal” “tax buying entity,” term *6 ‐ limited to bidders ‐ lien sale, distinct some distant puppet master. There’s no basis such a narrow definition, would deprive rule any bite. There was additional evidence that elabo rately concealed multiple agent bidding scheme was contra ry County’s policy and that defendants knew this.
They had County known their fraud it might nevertheless have done nothing about it, event would not have made worse off. Cf. United States Fenzl (7th a County official testified County would have barred bidders found violation single bidder rule. There also evidence defendants aware this possibility it a motive their attempt conceal fraud.
And suppose County not have enforced rule, knowing concealed violation it. raised a storm, brought pressure bear County (and County said defense its refusal enforce its rule? It is perfectly sensible rule), might sued en force rule ground its intended ben eficiaries harmed violation. object judge’s refusing instruct “statements made when there is good faith
disagreement about applicable governing law when law unclear false.” That’s preposterous. A statement can false even though person making it good faith belief, even perfectly reasonable belief, true. Good faith does negate intent defraud, United States Dunn 1992); South Atlan *7 tic Limited Partnership of Tennessee, L.P. Riese 2002)—but the judge correctly so instructed the jury.
The complain about adjustment that plaintiffs’ damages expert made concerning number of tax liens on plaintiffs bid in competition defendants. He made adjustment after seeing video part auction, auctions embraced by suit. The video revealed that plaintiffs had bid all that their records stated they intended on. expert revised his report reduce his estimate plaintiffs’ bids at all auctions in period covered suit same percentage video required him reduce his estimate number bids each plaintiff auction. reduction 19.3 per cent BCS 22.3 percent for Phoenix. district should have
subjected this adjustment Daubert examination de termine whether expert been permitted offer his revised estimate trial. would been waste time, clear adjustment expert made basis video reasona ble. What choice had he? Not knowing they being defrauded, no reason think needed make retain good records unsuccessful bids— use such records been there no thus no lawsuit?
So misconduct pre vented calculating accurately— such cases can estimated methods deemed impermissibly speculative con *8 8 12 3235, texts. E.g., J. Truett Payne Co. v. Chrysler Motors Corp ., 451 U.S. 557, 566–67 (1981); Story Parchment Co. v. Paterson Parchment Paper Co. 282 U.S. 555, (1931); Haslund v. Simon Property Group, Inc. F.3d (7th Cir. 2004). “Once plaintiff proves injury, broad latitude allowed quantifying damages, especially when defendant’s own conduct impedes quantification.” Id . Even “speculation place estimating damages, doubts resolved wrongdoer.” Mid America Tablewares, Mogi Trading Co ., (7th 1996), quoting Olympia Equipment Leasing Co. Western Union Tele ‐ graph Co ., Otherwise “the more grievous wrong done, less likelihood there of recovery.” Bigelow RKO Radio Pictures, Inc U.S. (1946). unavoidable element specula tion adjustment basis video within permissible bounds. defendants also object expert’s method calculating exaggerated each defendant’s proper share. expert divided number liens plain tiffs had won number liens won all eligible bid ders, thus excluding liens won (in cluding who had settled before trial). This procedure yielded expert termed “bid win per centage,” an estimate how well done bidding completely honest—no multi ple bidders. He then multiplied number liens each defendant won win percentage. Since bid win percentage percentage honest bidder expect win, any lower percentage, such won, presumably reflected unfair competition multiple bidders. *9 3235, 9
Each defendant argues that computing bid win expert should have excluded by one rather than as group. For example, expert calculated bid win for plaintiff BCS auction been 12.45 percent. Defendant Gray argues it been 5.2 percent. (The lower percentage, lower BCS’s damages, because damages are based its failure obtained bid win percentage—the per ‐ centage it expect win non rigged auction liens.) Gray arrives figure by dividing number won by BCS by number liens won by all hon ‐ est bidders but number won all bidders minus Gray—a group includes multiple bidders. That’s improper procedure, because depresses BCS’s (and Phoenix’s) win percentages bids won dishonest as well as honest bidding methods. plaintiffs’ state law claim for tortious interfer ‐
ence business opportunity, awarded pu nitive damages for tort. this double counting, because damages same ac tivity violation RICO treble loss violation inflicted plaintiffs, yet same acts charged as viola tions both RICO state tort law. To respond trebled under RICO pun ishment but ordinary methods calculating compensatory undercompensate. And so Su preme Court held. PacifiCare Health Systems, Inc. v. Book , U.S. 405–06 (2003); Cook County United States ex rel. Chandler , U.S. 129–31 (2003); Shearson/American Ex press, McMahon U.S. (1987); see also Liquid Air Corp. Rogers n. *10 ‐ 1987). The holding can be questioned. It’s true under ‐ compensation is one of reasons awarding punitive damages, Mathias Accor Economy Lodging, F.3d (7th Cir. 2003), though main reason is pun ‐ ishment (deterrence). But even methods used to calcu ‐ late compensatory damages systematically undercompen ‐ sate plaintiffs, can’t right in RICO cases those methods always yield exactly one third damages actu ‐ ally sustained plaintiff, in event trebling indeed necessary provide him full compensation. course we’re bound Supreme Court’s interpre tation RICO’s treble ‐ damages remedy being compensa tory rather than punitive, defeats argument.
Sass makes somewhat related argument, dis trict judge violated “one satisfaction” rule not allow ing Sass set off against damages liability full amount received in settlement claims against participants in lien fraud. The judge did allow setoff, but only after deducting his estimate how much total amount settlements respect liability pay punitive damages, pursuant rule money paid settlement punitive claims subject setoff. Bosco Serhant (7th 1987); Ratner Sioux Natural Gas Corp satisfaction rule intended prevent compensation excess plaintiff’s loss; punitive dam ages, extent intended remedy undercompensa tion, deliberately excess compensation. district set off more than half settlement
payments awarded trial. both untrebled compensatory *11 damages and punitive damages, the latter limited the state law claim for tortious interference the plaintiffs’ chances for buying the auctions. Of the total damages awarded the jury percent represented puni ‐ tive damages, the percent compensatory damages, and it was the latter percentage that the judge used decide settlement moneys received the should be set off judgment. de ‐ fendants point out that percent allocation punitive damages dropped 9.6 percent when, after jury deliv ‐ ered verdict, trebled compensatory damages that jury awarded RICO violations and add ‐ ed attorneys’ fees and costs (without these additions pu ‐ nitive damages would dropped from 22.1 percent total settlement moneys). And remember en tire trebled damages deemed compensatory. settle ments do not distinguish between punitive compensato ry damages. since settling parties must foreseen damages RICO violations be trebled be entitled an award attorneys’ fees costs, more realistic guess shade more than percent settlement amount settling parties’ estimate likely award compensatory went trial.
That not bad argument, but vitiated de fendants’ refusal acknowledge implication 9.6 percent amount settlement sub tracted judgment. They insist set tlement agreements do mention punitive entire amount settlements must compensatory. That’s wrong. parties negotiating settlements sophisticated must aware award *12 punitive would be likely if there were trial. That awareness would influence amount the set tlement.
An appellant cannot prevail making unreasonable argument while forfeiting only reasonable he have made.
Last defendants complain about amount attor neys’ fees expenses district judge plaintiffs. They argue award includes fees plaintiffs’ lawyers expended in investigating other actually or possibly ineligible bidders lien auctions plaintiffs participated. Yet these investigations essential. Without them would not known whether harm they suffered was attributable ly others as well, they would entitled as large award defendants. See Uniroyal Goodrich Tire Co. Mutual Trading Corp. F.3d Cir. 1995); Baughman Wilson Freight Forwarding Co (3d 1978); Rode Dellarciprete (3d further been required allocate portion attorneys’ fees settlements made parties accused ineligible bidding. That correct settlements reduced injury ineligible ding inflicted plaintiffs, then fees allocable, part anyway, present suit. found, clearly erroneously, injuries separate.
And finally we reject did district court argu ment fee award excessive almost *13 3235, 13 twice awarded plaintiffs trial. Plaintiffs cannot know advance how much they’ll win trial, or how elaborate defense will mount, so they cannot estimate with any precision either cost winning whether they will win. asked jury roughly twice compensatory them, if reasonable albeit un successful request, legal fees costs incurred unreasonable.
How much spend liti gation depend part stubbornness de fense—and turned out enormously though futilely stubborn. Attorney fee shifting, under RICO, is intended facilitate suit victims unlawful behavior, see, e.g., Agency Holding Corp. v. Malley Duff & Associates, , U.S. (1987); PrimeCo Personal Communications, Lim ited Partnership City Mequon , (7th 2003), awarding legal fees reasonably incurred ex ante even excessive seeming ex post (which say wisdom hindsight) necessary achieve objective. See City Riverside Rivera U.S. 573–76, (1986) (plurality opinion); FMC Corp. Varonos hyperaggres sive adversaries. They drove up plaintiffs’ legal costs without justification.
A FFIRMED .