One of the most challenging issues to pin down in many legal and policy discussions is causation.
When thinking of causation, we often fall for the fallacy of post hoc ergo propter hoc (in other words, since event Y followed event X, event Y must have been caused by event X).
However, real life is often more complex and this is also true in many Foreign Corrupt Practices Act enforcement actions.
For instance, can it really be said that the “only” reason a company got business was because an employee or agent treated a customer to a round of golf or offered tickets to a sporting event? Perhaps it was mostly because the company offered the best product for the best price? Asking the question is not justifying the underlying conduct (although there is nothing inherently wrong with golfing or going to sporting events), it is simply taking a broader (much needed) view of the underlying facts and circumstances.
Against this backdrop, it is worthwhile to analyze this recent federal court decision concerning a high-profile instance of domestic bribery.
The general factual background is that ComEd bribed Michael Madigan (the long-time speaker of the Illinois House of Representatives) by providing three favors: “1) ComEd made payments of more than $1,000,000.00 to Madigan cronies; 2) ComEd gave legal work to a law firm that was run by a Madigan crony and that donated more than $100,000.00 to funds controlled by Madigan; and 3) ComEd gave a seat on its Board of Directors to a Madigan crony.” In July 2000, ComEd resolved an enforcement concerning this alleged conduct by agreeing to pay $200 million (see here).
As stated in the beginning of the court’s decision:
“From Greylord to guilty governors, the citizens of Illinois have suffered their share of corrupt behavior by elected government officials. This case involves more appalling behavior by an elected official; but, here, the defendant is not the government official who allegedly took the bribes but instead the two deep-pocketed corporations, Commonwealth Edison Company (“ComEd”) and Exelon Corporation (“Exelon”), whose employees allegedly agreed to pay the bribes.
Plaintiffs Lawrence H. Gress (“Gress”), Steven Brooks, David Chavez, 1540 Milwaukee LLC, South Branch LLC, TFO Golub Burnham LLC, TFO Golub IT 2.0 LLC, Rockwell on the River LLC and Carmichael Leasing Co., Inc., believing that bribery led to the passage of several laws that resulted in increased rates for the electricity they purchased, filed a consolidated complaint, seeking relief from defendants under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Illinois Consumer Fraud and Deceptive Trade Practices Act (“ICFA”), as well as for conspiracy and unjust enrichment under Illinois law. Intervenor Citizens Utility Board (“CUB”) filed a complaint in intervention with similar claims. Defendants have filed a motion to dismiss.”
In its motion to dismiss, the defendants argued that to state a claim under RICO plaintiffs must allege that a RICO violation “not only was a ‘but for’ cause of his injury, but was the proximate cause as well.”
Plaintiffs believed that they established causation by alleging that Madigan used his immense power to permit the laws to be passed and to ensure that other legislators would vote for the laws.
However, the court did not take the causation bait.
Rather, it stated:
“In this case, defendants argue that plaintiffs have not stated a claim under RICO, because they have not alleged that their injury was proximately caused by ComEd’s alleged bribe of Madigan. Defendants, rightly, concede that plaintiffs have alleged but-for causation. Plaintiffs have, for example, alleged that Madigan had the “de facto ability to control which bills get voted on and which ones do not.” That is enough to allege the bills would not have passed but-for Madigan. It is not, however, enough to allege proximate causation, because it is not enough to show that the bribery of Madigan was the proximate cause of the bills’ ultimate passage. Plaintiffs’ allegations are different as to each bill, so the Court considers each bill in turn. With respect to [one bill], plaintiffs allege the bill was “controversial” and “would not have passed without Madigan’s involvement.” That is enough to allege but-for causation, but it is not enough to establish proximate causation. True, Madigan brought [the bill] up for vote, but two more things had to happen before the bill became law, and plaintiffs do not allege the bribe of Madigan caused those other things to happen. First, plaintiffs allege that, in late 2016, the bill passed the Illinois House (of which Madigan constitutes a single member) with 63 votes (Madigan did not vote) and the Illinois Senate (of which Madigan is not a member) with 32 votes. Plaintiffs have not alleged that the bribe of Madigan caused the members to vote in favor, because … plaintiffs have not plausibly alleged that Madigan improperly influenced the other legislators who voted to pass the bill. Although plaintiff has alleged that Madigan had power over committee assignments, endorsements and fundraising, these allegations are consistent with lawful conduct. […] As the Seventh Circuit explained in [another case]:
[T]he usual give-and-take of legislative lawmaking might explain the change in outcome. . . . If the promise referred to support for re-election, or a commitment to co-sponsor a bill, without any taint of bribery, nothing would be wrong. […] “[S]imple logrolling . . . falls short of evidence that could support a RICO claim.”
The second thing that happened before the bill became law is the governor’s signature on the bill. Plaintiffs omit from their complaint any mention of whether anything else was involved in the process of passing [the bill], but the Court can take judicial notice of the fact that then-Governor Bruce Rauner signed [the bill] into law. Plaintiffs have not alleged that the bribery of Madigan caused Governor Rauner to sign [the bill] into law.
Next, plaintiffs allege that Madigan was a but-for cause with respect to the passage of [another bill] and [its] Amendments. Once again, though, plaintiffs’ allegations fall short of proximate causation. Although plaintiffs allege Madigan brought the bill to the legislature, plaintiffs fail to allege that the bribe of Madigan caused the members of the Illinois House and Senate to vote in favor of [the bill]. Plaintiffs also allege that the Illinois legislature had to override a veto by then-Governor Quinn. Plaintiffs allege that, in “order to override the veto, Speaker Madigan, ComEd, and Exelon successfully pressured ten members of the House Democratic caucus and four members of the Senate Democratic caucus who had not originally supported the bill to vote to override the veto.” What plaintiffs fail to allege is what pressure was put on legislators. If, by pressure, plaintiffs mean logrolling, committee assignments or help with reelection, then that does not suffice. Plaintiffs fail to allege that Madigan put any improper pressure on those lawmakers.
The same is true of plaintiffs’ allegations as to the […] Amendments. Plaintiffs allege only that Madigan “provided the votes to override” then-Governor Quinn’s veto of the […] amendments. Plaintiffs do not, however, say how. Once again, if plaintiffs mean merely that Madigan logrolled or used the usual give-and-take of the legislative process, it is not sufficient. To state a claim, plaintiffs need to allege Madigan provided the votes by placing improper pressure on lawmakers. In short, plaintiffs have not included in their complaint sufficient allegations to allege plausibly that the RICO violation was a proximate cause of their injuries.”