Supreme Court of the United States · 1993-03-03
18usc1962: author: Fable · not independently reviewed
Case and law context
Role: applied; posture: civil; summary judgment for the outside auditor on the RICO claim, affirmed by CA8; certiorari on the meaning of "conduct or participate ... in the conduct of such enterprise's affairs"; result: claimant-lost; claim: (c)
Uncertainty
None recorded
Misfit
The dispositive holding is statutory construction (the operation-or-management test, a pure question of law); its APPLICATION was not contested here ("Neither petitioners nor the United States have argued that these courts misapplied" the test) and arrives as an affirmed summary judgment. The v1 basis table gives the block [no-evidence], which records the posture but hides that the element failed because of a newly announced legal test; one block cannot be both rule-announcing and applied, and one basis tag cannot carry both.
The rule draws its line by reference to another element (association: "outsiders" associated with the enterprise) and other subsections ((a),(b) cover infiltration by outsiders); cross-element / cross-subsection scoping is not expressible.
Open question expressly reserved (how far down "the ladder of operation" (c) reaches for low-level employees) has no slot; it lives in a footnote appended to the opinion text.
Dissent (Souter, White) would find the element satisfied on the same facts (auditor created the financial statements = management's function) and disputes the "undisputed" record-reliance fact. v1 has `scope dissent`, but no dissent quote was captured and the quote set is frozen, so it is still not represented. Header name is truncated by the IR ("Reves v. Ernst").
B · Case × element grid
Top-level elements follow claim order in panels of up to six elements. Case rows repeat across panels. Every recorded block retains its holding and basis; multiple blocks are not merged into a case-level verdict. ✓ satisfied · ✗ not satisfied · ○ not reached · · not addressed. Muted blocks are not counted. Sub-element evidence remains on case and element pages.
Elements 1–6 of 19
| Case | Culpable person (§ 1961(3)) distinct from the enterprise under (c) | Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity | Racketeering activity (§ 1961(1) enumerated state and federal predicate offenses) | Collection of an unlawful debt (§ 1961(6)) — alternative to pattern of racketeering activity | Use or investment of racketeering income in an enterprise (§ 1962(a)) | Enterprise (§ 1961(4)): legal entity or association-in-fact |
|---|---|---|---|---|---|---|
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed) | · not addressed | ○ not reached · basis not recordedNot counted: applied/merits | ○ not reached · basis not recordedNot counted: applied/merits | · not addressed | · not addressed |
Elements 7–12 of 19
| Case | Interstate or foreign commerce nexus | De minimis open-market securities investment proviso (§ 1962(a)) | Acquire or maintain interest in or control of an enterprise (§ 1962(b)) | Defendant employed by or associated with the enterprise (§ 1962(c)) | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) |
|---|---|---|---|---|---|---|
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed) | · not addressed | · not addressed | · not addressed | ○ not reached · basis not recordedNot counted: applied/merits | · not addressed |
Elements 13–18 of 19
| Case | Civil RICO injury to business or property (18 U.S.C. § 1964(c)) | But-for and proximate causation ("by reason of", 18 U.S.C. § 1964(c)) | Statute of limitations (4-year civil under Agency Holding; 5-year criminal under 18 U.S.C. § 3282) | Claim preclusion / release by prior class-action settlement | Civil aiding and abetting a RICO violation (rejected as a private cause of action) | Fifth Amendment Double Jeopardy bar against successive RICO conspiracy/substantive prosecutions |
|---|---|---|---|---|---|---|
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed) | ○ not reached · basis not recordedNot counted: applied/merits | ○ not reached · basis not recordedNot counted: applied/merits | · not addressed | · not addressed | · not addressed | · not addressed |
Elements 19–19 of 19
| Case | Parol evidence rule raised to bar extrinsic evidence of fraudulent misrepresentations |
|---|---|
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed) | · not addressed |
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Pattern | Exact source quotations |
|---|---|---|---|---|
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not reached (18usc1962: author: Fable · not independently reviewed) | Defendant employed by or associated with the enterprise (§ 1962(c)) | not_reached Excluded from merits counts applied / merits claim: (c) The Court notes "outsiders" may be liable if "associated with" the enterprise AND participating in its operation or management; whether Arthur Young was "associated with" the Co-Op is not separately decided. | Unspecified route | No source quotation recorded for this block. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not reached (18usc1962: author: Fable · not independently reviewed) | But-for and proximate causation ("by reason of", 18 U.S.C. § 1964(c)) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified route | No source quotation recorded for this block. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not · no-evidence (18usc1962: author: Fable · not independently reviewed) | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not Counted merits instance applied / merits basis: no-evidence; claim: (c); party: Arthur Young (outside accounting firm, later Ernst & Young), as to the Co-Op; subject: party=Arthur Young (outside accounting firm, later Ernst & Young), as to the Co-Op Auditor prepared audit reports and condensed statements from the client's own records and failed to disclose an insolvency-determining valuation choice; providing (even deficient) professional services to the enterprise is not taking part in directing it. Basis: summary judgment for the auditor, affirmed on facts the majority calls undisputed, hence [no-evidence] (was [law]); the step that decides the case is the statutory construction in the rule lines. | outside-auditor | Drozal concluded that the Co-Op had owned White Flame from the start and that the plant should be valued at $4.5 million on its books.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [3759:3893] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Arthur Young did not tell the board of its conclusion that the Co-Op always had owned White Flame or that without that conclusion the Co-Op was insolvent.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [4262:4416] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.These included White Flame’s $4.5 million asset value among its total assets but omitted the information contained in the audit’s Note 9.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [4606:4743] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In this case, it is undisputed that Arthur Young relied upon existing Co-Op records in preparing the 1981 and 1982 audit reports.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [24097:24226] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.it is clear that Arthur Young was not acting under the direction of the CoOp’s officers or boardSource: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [29599:29695] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [13559:13706] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.An enterprise is “operated” not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. An enterprise also might be “operated” or “managed” by others “associated with” the enterprise who exert control over it as, for example, by bribery.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [21209:21518] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [23127:23334] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.We think that Arthur Young’s failure in this respect is not sufficient to give rise to liability under § 1962(c).Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [24899:25012] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — satisfied · assumed (18usc1962: author: Fable · not independently reviewed) | Enterprise (§ 1961(4)): legal entity or association-in-fact | satisfied Counted merits instance applied / merits basis: assumed; claim: (c) The victim cooperative is the enterprise; its status as such is not in dispute. | cooperative | The Farmer’s Cooperative of Arkansas and Oklahoma, Inc. (Co-Op), began operating in western Arkansas and eastern Oklahoma in 1946.Source: docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [815:945] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not reached (18usc1962: author: Fable · not independently reviewed) | Civil RICO injury to business or property (18 U.S.C. § 1964(c)) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified route | No source quotation recorded for this block. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not reached (18usc1962: author: Fable · not independently reviewed) | Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified route | No source quotation recorded for this block. |
| Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 — not reached (18usc1962: author: Fable · not independently reviewed) | Racketeering activity (§ 1961(1) enumerated state and federal predicate offenses) | not_reached Excluded from merits counts applied / merits claim: (c) A jury found securities fraud on the non-RICO counts; the predicate question was not before the Court. | Unspecified route | No source quotation recorded for this block. |
Court interpretations recorded from this case
interpretation
An enterprise is “operated” not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. An enterprise also might be “operated” or “managed” by others “associated with” the enterprise who exert control over it as, for example, by bribery.
Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed)
An enterprise is “operated” not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. An enterprise also might be “operated” or “managed” by others “associated with” the enterprise who exert control over it as, for example, by bribery.Source:
docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [21209:21518] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Covers both insiders ("employed by") and outsiders ("associated with") who exert control or participate in directing enterprise affairs, but excludes the enterprise itself.
interpretation
In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.
Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed)
In order to “participate, directly or indirectly, in the conduct of such enterprise’s affairs,” one must have some part in directing those affairs.Source:
docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [13559:13706] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.
interpretation
In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.
Reves v. Ernst — 507 U.S. 170 (1993) · Supreme Court of the United States · 1993 (18usc1962: author: Fable · not independently reviewed)
In sum, we hold that “to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs,” § 1962(c), one must participate in the operation or management of the enterprise itself.Source:
docroot/ir/caselaw/us_507.jsonl#/us/507/0170-01; Unicode character offsets [23127:23334] (end exclusive); SHA-256 2419fe5704d7ee89eb2a2ed333e17382cbc6492e0021af1984bb9a47dcfe95a2.Reves v. Ernst & Young establishes the "operation or management" test: defendant must have some part in directing the enterprise's affairs (including lower-rung participants acting under upper management's direction, or outsiders exerting control via bribery). Merely furnishing professional services is insufficient.