Reves v. Ernst & Young, 507 U.S. 170, 7 (1993)

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176

REVES v. ERNST & YOUNG

Opinion of the Court

The court then granted summary judgment in favor of Arthur Young on the RICO claim. See Robertson v. White, Nos. 85-2044, 85-2096, 85-2155, and 85-2259 (WD Ark., Oct. 15, 1986), App. 198-200. The District Court applied the test established by the Eighth Circuit in Bennett v. Berg, 710 F. 2d 1361, 1364 (en banc), cert. denied sub nom. Prudential Ins. Co. of America v. Bennett, 464 U. S. 1008 (1983), that § 1962(c) requires "some participation in the operation or management of the enterprise itself." App. 198. The court ruled: "Plaintiffs have failed to show anything more than that the accountants reviewed a series of completed transactions, and certified the Co-Op's records as fairly portraying its financial status as of a date three or four months preceding the meetings of the directors and the shareholders at which they presented their reports. We do not hesitate to declare that such activities fail to satisfy the degree of management required by Bennett v. Berg." Id., at 199-200.

The case went to trial on the state and federal securities fraud claims. The jury found that Arthur Young had committed both state and federal securities fraud and awarded approximately $6.1 million in damages. The Court of Appeals reversed, concluding that the demand notes were not securities under federal or state law. See Arthur Young & Co. v. Reves, 856 F. 2d 52, 55 (CA8 1988). On writ of certiorari, this Court ruled that the notes were securities within the meaning of § 3(a)(10) of the Securities Exchange Act of 1934, 48 Stat. 882, as amended, 15 U. S. C. § 78c(a)(10). Reves v. Ernst & Young, 494 U. S. 56, 70 (1990).

On remand, the Court of Appeals affirmed the judgment of the District Court in all major respects except the damages award, which it reversed and remanded for a new trial. See 937 F. 2d, at 1339-1340. The only part of the Court of Appeals' decision that is at issue here is its affirmance of summary judgment in favor of Arthur Young on the RICO claim. Like the District Court, the Court of Appeals applied the "operation or management" test articulated in Ben-

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