District Court Erred When It Required Plaintiffs To Prove The Absence Of A Superseding Cause
BCS SERVICES v. HEARTWOOD 88 (March 24, 2011)
Cook County, Illinois obtains tax liens on properties whose owners fail to pay their taxes on time. The County, in turn, sells the liens at auction. The bidders at the auction must agree to pay the amount of the lien and can bid a percentage penalty in addition. In theory, the lien is sold to the bidder who bids the lowest penalty. In actuality, almost 85% of the bids include no penalty. The auctioneer is supposed to award the bid to the first bidder to raise her hand but, given the speed with which the bids are made, it is unlikely that she is able to do that. One way the County attempted to ensure that the bids are fair is to allow only one bidder to represent a buyer or group of buyers. Therefore, a buyer cannot increase his chances of getting a lien by flooding the room with bidders. One of the bidders at these auctions brought suit against three groups of bidders who allegedly sent multiple agents to each auction in violation of the County's rules. The plaintiffs alleged RICO violations. The district court dismissed for lack of standing because the plaintiffs had not relied on the fraud. The Seventh Circuit reversed and the Supreme Court affirmed the reversal. On remand, Chief Judge Holderman (N.D. Ill.) granted summary judgment to the defendants on the ground the plaintiffs failed to prove proximate cause. Again, the plaintiffs appeal.
In their opinion, Judges Bauer, Posner, and Manion reversed and remanded. The Court discussed, at some length, the doctrine and background of the concept of proximate cause. It concluded that discussion by noting that the concept helps the principal tort victims get compensation, simplifies litigation, appreciates the fact that people do not make decisions based on the unforeseeable consequences of their conduct, and eliminates liability in some situations where the act is only a minor clause of an injury. On the record before it, the Court then concluded that the concept had no application. The only injury was to the plaintiffs. The district court was wrong when it required the plaintiffs to prove the absence of a superseding cause rather than requiring the defendants to present evidence of the existence of such causes. Here, the defendants failed to do so. The Court also rejected defendants' alternate argument that plaintiffs could not prove damages. Relying on statistical evidence, the Court concluded that plaintiffs met their burden, at least at this stage of the case. Finally, the Court also disagreed with the district court's conclusion that plaintiffs’ inability to show an actual expectancy of a particular lien purchase doomed their intentional interference claim. On the contrary, the plaintiffs met their burden. The expectancy identified was their expectation that they would be allowed to purchase liens at a County auction conducted without fraud.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select