Reves v. Ernst & Young

Summary

The Court, in an opinion by Justice Blackmun, held that liability under 18 U.S.C. § 1962(c) requires participation in the operation or management of the enterprise itself. This requirement does not restrict liability to upper management or persons holding formal positions, but does require some part in directing the enterprise's affairs. RICO's liberal-construction clause does not eliminate that requirement. The Court affirmed summary judgment for Arthur Young because its auditing activities and failure to disclose the appropriate valuation of the gasohol plant did not constitute participation in operating or managing the cooperative. Chief Justice Rehnquist and Justices Stevens, O'Connor, and Kennedy joined the entire opinion; Justices Scalia and Thomas joined all but the legislative-history discussion in Part IV–A. Justice Souter, joined by Justice White, dissented, arguing that the statutory language and liberal-construction clause support broader liability and that, even under the Court's test, evidence that Arthur Young independently made valuation decisions and created financial statements precluded summary judgment.