RECENT DEVELOPMENTS IN BUSINESS LITIGATION

18 The court refused to hold, as MLSMK had argued, that the RICO amendment precludes plaintiffs from bringing a civil RICO action when they could bring a private securities fraud claim for the same conduct. 19 The Ninth Circuit reached the opposite conclusion when it determined that the PSLRA was not a bar to the plaintiff's RICO claims based on creation of fraudulent tax shelters in Rezner v. Bayerische Hypo-Und Vereinsbank AG . 20 Notably, however, the Rezner court ultimately denied plaintiff's RICO claim on a separate ground, a lack of proximate cause. 21 In Rezner , the individual plaintiff sued Bayerische Hypo-Und Vereinsbank (HVB) under RICO, claiming HVB engaged in a scheme to defraud the United States by participating in certain unlawful tax shelters, an action that caused injury to the purchasers of the tax shelter, including Rezner. 22 HVB filed a motion for summary judgment on the ground that under the PSLRA, any action involving Rezner's pledge of municipal bonds as part of the tax shelter scheme had to be brought as a securities claim rather than a RICO claim. 23 However, the district court held that because HVB's conduct was not actionable as securities fraud in these circumstances, the PSLRA did not preclude Rezner from bringing a RICO claim. 24 The Ninth Circuit affirmed, holding that where the plaintiff failed to meet the requirements for a § 10(b)(5) claim for securities fraud, it could seek relief through a civil RICO claim. 25 The court held, however, that Rezner failed to state a civil claim for RICO, as he did not show that the racketeering activity was a proximate cause of his injury. 26 Citing the Supreme Court's decision in Hemi Group, LLC v. City of New York , 27 the court noted that a plaintiff cannot show proximate cause when the business's fraudulent conduct is directed at a third party. 28 Here, HVB's conduct was directed not at Rezner, but rather at the United States, which lost revenue as a result of HVB's fraud.\n In finding that a bankruptcy court could not issue a final and binding judgment on a claim like Marshall's, the majority opinion, authored by Chief Justice Roberts, confirmed his commitment to a strong defense of constitutional separation of powers. 227 Most important for bankrupt defendants using fraud as a defense and counterclaim is the Court's holding that counterclaims in bankruptcy are not necessarily core as a matter of law, contradicting the Ninth Circuit. 228 Despite the Court's characterization of the op