Diaz v. Parks

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DAVID DIAZ, 
Plaintiff-Appellant,
v.
DARYL GATES; WILLIE L. WILLIAMS;
RICHARD ALARCON; RICHARD
ALATORRE; HAL BERNSON; MARVIN No. 02-56818
BRAUDE; LAURA CHICK; JOHN
FERRARO; MICHAEL FEUER; RUTH  D.C. No.
CV-01-06400-GAF
GALANTER; NATE HOLDEN, et al., OPINION
Defendants,
and
BERNARD C. PARKS, Chief of Los
Angeles Police Department,
Defendant-Appellee.

Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding

Argued and Submitted
March 22, 2005—San Francisco, California

Filed August 16, 2005

Before: Mary M. Schroeder, Chief Judge, Stephen Reinhardt,
Alex Kozinski, Andrew J. Kleinfeld, Sidney R. Thomas,
Kim McLane Wardlaw, William A. Fletcher,
Ronald M. Gould, Marsha S. Berzon, Jay S. Bybee and
Consuelo M. Callahan, Circuit Judges.

10709
10710 DIAZ v. PARKS
Per Curiam Opinion;
Concurrence by Judge Reinhardt;
Concurrence by Judge Kleinfeld;
Concurrence by Judge Berzon;
Dissent by Judge Gould
 DIAZ v. PARKS 10713

COUNSEL

Stephen Yagman, Yagman & Yagman & Reichmann &
Bloomfield, Venice Beach, California, for the plaintiff-
appellant.

Janet G. Bogigian, Deputy City Attorney, Los Angeles, Cali-
fornia, for the defendant-appellee.

OPINION

PER CURIAM:

We examine whether a false imprisonment that caused the
victim to lose employment and employment opportunities is
an injury to “business or property” within the meaning of
RICO.

Facts

Diaz claims to be a victim of the Los Angeles Police
Department’s infamous Rampart scandal. He sued over two
hundred people connected with the Los Angeles Police
Department (LAPD) or Los Angeles city government under
the Racketeer Influenced and Corrupt Organizations Act
10714 DIAZ v. PARKS
(RICO), 18 U.S.C. §§ 1961-1968, alleging that LAPD officers
had “fabricated evidence” that he had committed assault with
a deadly weapon, and that they had “tampered with witnesses
and conspired to obtain [a] false conviction” against him,
Compl. ¶ 16. As a consequence, Diaz claims, “[a]mong other
forms of injury, [he] lost employment, employment opportu-
nities, and the wages and other compensation associated with
said business, employment and opportunities, in that [he] was
rendered unable to pursue gainful employment while defend-
ing himself against unjust charges and while unjustly incar-
cerated.” Compl. ¶ 31.

Defendant Parks moved to dismiss, arguing, among other
things, that Diaz lacked standing because he did not allege an
injury to “business or property” as required by RICO. See 18
U.S.C. § 1964(c). The district judge agreed and dismissed
without prejudice and with leave to amend. Diaz did not
amend, and the district judge then dismissed with prejudice.
A divided panel of our court affirmed. Diaz v. Gates, 380
F.3d 480 (9th Cir. 2004). We took the case en banc. Diaz v.
Gates, 389 F.3d 869 (9th Cir. 2004).

Analysis

[1] 1. The district judge, citing Oscar v. University Stu-
dents Co-operative Ass’n, 965 F.2d 783 (9th Cir. 1992) (en
banc), reasonably applied the law of RICO standing as it
existed at the time. In Oscar, we held that RICO does not pro-
vide a cause of action for all types of injury to property inter-
ests, but only for injuries resulting in “concrete financial
loss.” Id. at 785. Oscar, a tenant in an apartment building,
alleged that she and her co-plaintiff had “lost the use and
enjoyment of their ‘property’—that is, their rental interest”—
as a result of the racketeering activity in their building, which
included drug dealing, violence and “other crimes, misdemea-
nors, nuisances, and annoyances.” Id. at 784-85. Because
Oscar did not own her interest, we reasoned, the only way she
could suffer a financial loss would be “if she had an interest
 DIAZ v. PARKS 10715
she could sublet and the racketeering enterprise reduced the
rent she could charge to sublet her apartment.” Id. at 787. But
Oscar never alleged that she had wanted or tried to sublet the
apartment—or, for that matter, that she had a right to do so—
rendering “[a]ny supposed loss . . . purely speculative.” Id.
Thus, we concluded that she had not suffered concrete enough
financial injuries for purposes of RICO. The only injuries
Oscar properly alleged—“personal discomfort and annoy-
ance,” id. (quoting Ingram v. City of Gridley, 224 P.2d 798,
803 (Cal. Ct. App. 1950)) (internal quotation marks omitted)
—were personal, and so there was no injury to “business or
property” within the meaning of the statute.

[2] Intervening caselaw, which the district judge obviously
did not have access to, has clarified the Oscar standard. A
month after the district judge dismissed Diaz’s complaint, we
decided Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir.
2002), where a class of agricultural laborers alleged that their
employers had depressed their wages by illegally hiring
undocumented workers at below-market wages. The agricul-
tural workers could not “show a ‘property right’ in the lost
wages, by showing that they were promised or contracted for
higher wages.” But they did allege an injury to a property
interest, the “legal entitlement to business relations unham-
pered by schemes prohibited by the RICO predicate statutes.”
See id. at 1168 n.4. We held this property interest sufficient
to provide standing under RICO. See id. at 1168. Diaz has
alleged just such an interference with his business relations.

[3] 2. Mendoza did not elaborate on the source of the
“legal entitlement to business relations,” relegating its discus-
sion of the nature of the injury to a footnote. We believe the
best-reasoned approach is that of Doe v. Roe, 958 F.2d 763
(7th Cir. 1992), under which we typically look to state law to
determine “whether a particular interest amounts to property,”
id. at 768.

Doe sued her divorce attorney Roe under RICO, alleging
that Roe had defrauded her and misused his position to coerce
10716 DIAZ v. PARKS
her into having sex with him over a period of several years.
Doe, who had little money, had left her original divorce attor-
ney and retained Roe on the understanding that her (soon to
be ex-) husband would pay any fees beyond the retainer fee
she had already paid. She acceded to his sexual overtures
because she was afraid that he would otherwise stop working
on her case, leaving her unable to afford a new lawyer. Doe’s
husband eventually caught Doe and Roe in the act and, under-
standably, refused to pay any of Roe’s fees. Roe nonetheless
demanded full payment for his legal services, but forgave
Doe’s debts to him in exchange for continuing sexual rela-
tions. Id. at 765-66.

Doe argued that Roe’s wrongful exaction of sexual services
was an injury to property and could therefore support her
RICO claim. The Seventh Circuit disagreed: “[W]hether a
particular interest amounts to property is quintessentially a
question of state law.” Id. at 768. And “ ‘sexual labor’ has no
legal value in Illinois, where the courts have long held that
contracts for sexual services are unenforceable as a matter of
public policy.” Id. Thus, the requisite business or property
interest was missing. Doe clearly doesn’t stand for the propo-
sition that employment cannot be property under RICO, or it
would have been superfluous for the Seventh Circuit to hold
that employment as a provider of sexual services was not
property under state law.

Doe had another theory. After the relationship with Roe
turned sour, she alleged, Roe threatened her safety, which
made her invest in a home security system and miss several
days of work. Id. at 769-70; see also Doe v. Roe, 756 F. Supp.
353, 356, 359 (N.D. Ill. 1991). Naturally, she also hired a new
lawyer. Doe argued that the loss of wages, the costs of the
security system and the new lawyer, and other “miscellaneous
expenditures,” 958 F.2d at 769, were injuries to property.
Here, too, the court disagreed:

Doe blurs the distinction between proprietary and
personal injuries. Contrary to what Doe seems to
 DIAZ v. PARKS 10717
suggest, whether she can show a financial loss does
not, by definition, establish that she has suffered a
business or property injury within the meaning of
§ 1964(c). Most personal injuries—loss of earnings,
loss of consortium, loss of guidance, mental anguish,
and pain and suffering, to name a few—will entail
some pecuniary consequences. . . .

Doe’s loss of earnings, her purchase of a security
system and her employment of a new attorney are
plainly derivatives of her emotional distress—and
therefore reflect personal injuries which are not com-
pensable under RICO.

Id. at 770. Again, although Doe alleged “loss of earnings,”
this was deemed insufficient to qualify as a business or prop-
erty interest under RICO “as construed by Illinois law.” Id.
Thus, no injury to a business or property interest was actually
alleged.1

[4] We agree with the Seventh Circuit. Without a harm to
a specific business or property interest—a categorical inquiry
typically determined by reference to state law—there is no
injury to business or property within the meaning of RICO.

[5] Contrary to the dissent’s suggestion, dissent at
10741-42, our approach does not create RICO liability for
every loss of wages resulting from a personal injury. Doe,
1
The dissent claims that “Doe alleged the same injury to business or
property as Diaz: lost employment wages,” dissent at 10740 n.7, but it
confuses the mere loss of something of value (such as wages) with injury
to a property interest (such as the right to earn wages). The Seventh Cir-
cuit gave no indication in Doe that the plaintiff had alleged loss of the
right to earn wages as a property interest recognized by Illinois law. Thus,
Doe does not speak to whether a loss of earnings could be an injury to a
property interest if a plaintiff properly alleges it as such—as Diaz does.
Doe merely teaches that financial losses, including lost wages, are insuffi-
cient by themselves to confer standing under RICO.
10718 DIAZ v. PARKS
unlike Oscar, suffered some tangible financial losses as a
result of her emotional distress, but, like Oscar, failed to
allege harm to any property interest valid under state law.
Diaz, on the other hand, has alleged both the property interest
and the financial loss. The harms he alleges amount to inten-
tional interference with contract and interference with pro-
spective business relations, both of which are established torts
under California law. See Della Penna v. Toyota Motor Sales,
U.S.A., Inc., 902 P.2d 740, 750-51 (Cal. 1995) (discussing
torts of “interference with an existing business contract” and
“interference with commercial relations”); see also Restate-
ment (Second) of Torts § 766A & cmt. e (intentional interfer-
ence with another’s performance of his own contract); id.
§ 766B & cmts. c-d (intentional interference with prospective
contractual relations); Reeves v. Hanlon, 95 P.3d 513, 517
(Cal. 2004) (interference with performance of contract is
intentional if defendant knew “that the interference was cer-
tain or substantially certain to occur as a result of his or her
action”). And his claimed financial loss? He could not fulfill
his employment contract or pursue valuable employment
opportunities because he was in jail.

[6] 3. The three-judge panel tried to distinguish Mendoza
on the theory that Diaz did not allege “that he lost actual
employment, only that he ‘was rendered unable to pursue
gainful employment.’ ” Diaz, 380 F.3d at 484. This distinc-
tion is untenable, for Mendoza speaks generally of a “legal
entitlement to business relations.” 301 F.3d at 1168 n.4. Nor
do we endorse such a distinction today, for California law
protects the legal entitlement to both current and prospective
contractual relations. See page 10718 supra. There may be a
practical difference between current and future employment
for purposes of RICO—for instance, it may be easier to prove
causation or determine damages for a plaintiff who has lost
current employment—but this difference is not relevant to
whether there was an injury to “business or property.”

[7] Similarly, the dissent seeks to distinguish Mendoza on
the theory that the farm workers’ loss of wages was the “di-
 DIAZ v. PARKS 10719
rect target” of the conspiracy, while Diaz’s injury was
“merely derived from,” and a “secondary effect” of, his false
imprisonment. See dissent at 10731, 10734, 10738, 10742.
But this distinction founders on the language of the statute:
The only requirement for RICO standing is that one be a “per-
son injured in his business or property by reason of a violation
of section 1962.” 18 U.S.C. § 1964(c). And the Supreme
Court has already told us that “by reason of” incorporates a
proximate cause standard, see Holmes v. Sec. Investor Prot.
Corp., 503 U.S. 258, 265-68 (1992), which is generous
enough to include the unintended, though foreseeable, conse-
quences of RICO predicate acts, see Palsgraf v. Long Island
R.R. Co., 162 N.E. 99, 100-01 (N.Y. 1928).

Though the dissent is wrong to suggest that our approach
would confer standing on any plaintiff RICO-suave enough to
allege lost employment, it is right to point out that our
approach allows more claims to go forward than its more
restrictive theory. See dissent at 10741-42. But these policy
consequences, assuming they are undesirable, cannot blind us
to the statutory language. In Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479 (1985), the Supreme Court examined the Sec-
ond Circuit’s narrow interpretation of RICO, which, “[i]n
response to what it perceived to be misuse of civil RICO by
private plaintiffs,” read various limitations into section
1964(c), including the requirement that the racketeering activ-
ity have produced a “ ‘racketeering injury.’ ” Id. at 481.
“Racketeering activity” is a broad concept, which “consists of
no more and no less than commission of a predicate act.” Id.
at 495. By contrast, a “racketeering injury,” under the Second
Circuit’s definition, was an injury “different in kind from that
occurring as a result of the predicate acts themselves, or not
simply caused by the predicate acts, but also caused by an
activity which RICO was designed to deter.” Sedima, S.P.R.L.
v. Imrex Co., 741 F.2d 482, 496 (2d Cir. 1984). While the
Supreme Court “underst[ood] the [Second Circuit’s] concern
over the consequences of an unbridled reading of the statute,”
which had expanded far beyond the mob-related concerns that
10720 DIAZ v. PARKS
had originally inspired it, see 473 U.S. at 481, 499, it rejected
such a construction:

If the defendant engages in a pattern of racketeering
activity in a manner forbidden by these provisions,
and the racketeering activities injure the plaintiff in
his business or property, the plaintiff has a claim
under § 1964(c). There is no room in the statutory
language for an additional, amorphous “racketeering
injury” requirement.

Id. at 495.

[8] There is similarly no room in the statutory language for
an additional, amorphous requirement that, for an injury to be
to business or property, the business or property interest have
been the “direct target” of the predicate act. The statute is
broad, but that is the statute we have. Were the standard as the
dissent claims, we would have the anomalous result that one
could be liable under RICO for destroying a business if one
aimed a bomb at it, but not if one aimed at the business
owner, missed and hit the business by accident, or if one
aimed at the business owner who happened to be in the busi-
ness at the time.

The dissent’s flawed approach is similar to that of Grogan
v. Platt, 835 F.2d 844 (11th Cir. 1988). In Grogan, FBI
agents wounded and slain in a shootout sued the criminal sus-
pects responsible for their injuries and deaths. The Eleventh
Circuit denied recovery, even though the plaintiffs had appar-
ently alleged “lost employment opportunities” as one of their
forms of injury, id. at 848:2
2
We say “apparently” because the Eleventh Circuit does not tell us how
the claim for lost employment opportunities was raised in Grogan. It is
entirely possible that the plaintiffs in Grogan, unlike Diaz, failed to allege
a right to employment that was recognized as property under state law.
This may be why the court treated it as part of their personal injury claim.
 DIAZ v. PARKS 10721
We do not hold that plaintiffs may never recover
under RICO for the loss of employment opportuni-
ties. We merely hold that the appellants cannot
recover under RICO for those pecuniary losses that
are most properly understood as part of a personal
injury claim.

Id. The Eleventh Circuit’s “most properly understood as part
of” test is subject to the same critique as the dissent’s “direct
target” test. Diaz suffered two types of injuries: (1) the per-
sonal injury of false imprisonment and (2) the property injury
of interference with current or prospective contractual rela-
tions. Treating the two as separate, and denying recovery for
the first but letting the suit go forward on the second, is both
analytically cleaner and truer to the language of the statute.

[9] 4. If Diaz properly alleges that his injuries were “by
reason of a violation of section 1962,” there is nothing to pre-
vent him from “su[ing] therefor.” See 18 U.S.C. § 1964(c).
Diaz’s complaint tracks the language of section 1962, which
makes it illegal to, among other things, acquire or maintain
control of an “enterprise,” or conduct or participate in its
affairs, through a “pattern of racketeering activity.” Compare
id. § 1962(b)-(c) with Compl. ¶¶ 26-27. Diaz alleges that the

If so, Grogan is consistent with our approach and that of the Seventh Cir-
cuit in Doe. What we do know for certain, however, is that the Eleventh
Circuit does not expressly address the situation where a plaintiff actually
alleges a state-protected property interest, as Diaz does here.
The dissent speculates that Diaz must be in the same position as Gro-
gan, because “[w]e have no clue from Diaz’s complaint what ‘employ-
ment’ Diaz has alleged to have lost.” Dissent at 10741. That misses the
point. We may not know precisely what type of employment Diaz alleges
to have lost, but we know that Diaz alleges that his lost employment is an
injury to a property interest as defined by state law. Reading Grogan, we
know nothing about how Florida law treated the right to earn wages at the
time Grogan brought his lawsuit, nor whether he claimed that his loss
amounted to a property interest.
10722 DIAZ v. PARKS
LAPD and various subdivisions are “enterprises” within the
meaning of 18 U.S.C. § 1961(4). See Compl. ¶ 23. And he
alleges acts that seem to fall within the definition of “racke-
teering activity,” 18 U.S.C. § 1961(1), and seem to form a
“pattern,” id. § 1961(5).3

Whether these allegations of section 1962 violations are
adequate is a matter on which we express no view.4 The dis-
trict judge stated that Diaz’s complaint “suffer[ed] from many
of the same deficiencies . . . previously identified” in another
Rampart-related case, Serrano v. City of Los Angeles, No. CV
00-13356 GAF (AJWx) (C.D. Cal. June 29, 2001) (order dis-
missing RICO claims), but his dispositive ruling on standing
made it unnecessary for him to state precisely which of these
deficiencies applied to Diaz’s case. We need not determine
whether the district judge’s incorporation by reference of
“many” of the deficiencies identified in a different case was
sufficient to provide adequate notice of the particular defi-
ciencies. Cf. Bonanno v. Thomas, 309 F.2d 320, 322 (9th Cir.
1962). Now that we have set aside the district court’s ruling
as to standing, the district judge should, if he wishes to rein-
state the order of dismissal, identify the specific deficiencies
in a supplementary order, and plaintiff should then be given
an opportunity to amend his complaint accordingly.

REVERSED AND REMANDED.
3
Because the district court only addressed whether plaintiff alleged a
proper injury, and not whether the injury was “by reason of” the RICO
violation, we decline to address the RICO causation requirement in the
first instance. See Singleton v. Wulff, 428 U.S. 106, 120 (1976) (“It is the
general rule, of course, that a federal appellate court does not consider an
issue not passed upon below.”).
4
Nor, at this early stage of the litigation, do we deem it appropriate to
speculate as to the merits of Diaz’s claim. Cf. dissent at 10731 n.1 (“An
observer might wonder if there is any substance at all to the RICO claim
asserted by Diaz.”).
 DIAZ v. PARKS 10723
REINHARDT, Circuit Judge, concurring:

I concur in the court’s per curiam opinion as well as in
Judge Kleinfeld’s separate concurrence. I share Judge Klein-
feld’s view that, given the construction that RICO has been
afforded by the Supreme Court, we are no longer free to read
it as an anti-racketeering statute. Rather, starting with Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-500 (1985), it has
been stretched both in scope and meaning far beyond that
which Congress originally intended and has become, through
judicial construction, a wide ranging act that provides treble
damages for all kinds of conduct unrelated to the racketeering
activity that Congress sought to control. Although I disagree
with this construction, we must follow the law as it is deter-
mined by the Supreme Court. In my view, however, it is well
past the time for our lawmakers to take another look at RICO
and consider amending the statute so as to limit it to its origi-
nal purpose.

KLEINFELD, Circuit Judge, with whom REINHARDT and
BERZON, Circuit Judges, join, concurring:

I concur in the result. I write separately because my analy-
sis differs from that in the majority unauthored opinion. I
focus on the language of the statute. Mendoza v. Zirkle Fruit
Co.1 does not bind us, and in any event speaks mostly to cau-
sation rather than standing. Grogan v. Platt2 and Doe v. Roe,3
the Eleventh and Seventh Circuit cases, strain RICO’s statu-
tory language. A careful reading of the statute cannot be rec-
onciled with the “personal injury” exclusion in the Seventh
and Eleventh Circuit cases.
1
Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002).
2
Grogan v. Platt, 835 F.2d 844 (11th Cir. 1988).
3
Doe v. Roe, 958 F.2d 763 (7th Cir. 1992).
10724 DIAZ v. PARKS
The RICO statute tells us what kinds of injuries give rise
to RICO claims. Some are in the nature of “personal injury”
claims, and some are not. The section stating what gives rise
to a claim, section 1964, says “Any person injured in his busi-
ness or property by reason of a violation of section 1962 of
this chapter may sue therefor in any appropriate United States
district court.”4 The words telling us what kind of wrong gives
rise to a claim are “by reason of a violation of section 1962.”
The phrase “injured in his business or property” is a further
limitation, speaking not to the nature of the wrong, but rather
to the nature of the harm caused by the wrong. The word
“therefor” in the phrase “may sue therefor” is a further limita-
tion on the damages that can be awarded. The language telling
us what kind of wrong gives rise to a claim, though, is “by
reason of a violation of section 1962.” That is the only literal
reading possible, and it makes perfect sense.

Section 1962, which section 1964 tells us defines the viola-
tions giving rise to civil claims, says “It shall be unlawful for
any person employed by or associated with any enterprise
engaged in, or the activities of which affect, interstate or for-
eign commerce, to conduct or participate, directly or indi-
rectly, in the conduct of such enterprise’s affairs through a
pattern of racketeering activity or collection of unlawful debt.”5
This language says quite plainly that two kinds of wrongdoing
violate this law: collection of an unlawful debt (not involved
in this case) and “racketeering activity.” Again, this is the
only literal reading possible, and it makes perfect sense.

The phrase “racketeering activity” is defined in section
1961. That extensive definition includes both direct injury to
tangible property, such as “arson,” and also various kinds of
wrongdoing that constitute “personal injury.” Among the
“personal injury” wrongs that can constitute “racketeering
activity” are “murder” and “kidnapping.” “Murder” is not an
4
18 U.S.C. § 1964(c).
5
18 U.S.C. § 1962(c) (emphasis added).
 DIAZ v. PARKS 10725
injury to business or property. It is a personal injury to a
human being. Likewise kidnapping is also a personal injury
to a human being. Murder and kidnapping fall within the
“personal injury” torts of “wrongful death” and “false impris-
onment.” There is no legitimate way to read the statute to
exclude traditional personal injuries from actionable RICO
racketeering conduct, because traditional personal injuries,
including murder and kidnapping, are expressly listed in sec-
tion 1961 as “racketeering” conduct that can give rise to
claims under the statute.

Here is the plain and express logic of the statute: (1) section
1964 establishes a civil cause of action for a violation of sec-
tion 1962; (2) section 1962 uses a term of art defined in sec-
tion 1961 to denote violations; (3) section 1961 expressly
provides that various personal injuries, as well as other kinds
of wrongdoing, constitute the misconduct giving rise to a
cause of action. I see no way around this plain language of the
statute. That is why I part ways from Grogan and Doe, the
Seventh and Eleventh Circuit cases holding that personal
injury claims cannot give rise to RICO standing. If they were
right, then the words “murder” and “kidnapping” in the statute
would have to be wrong, which is impossible. Our tools of
statutory construction do not include an eraser.

That is not the end of the standing inquiry. Conduct “by
reason of” a section 1962 violation is necessary, but not suffi-
cient, for standing.6 For a complaint to state a claim upon
which relief can be granted, the plaintiff must allege not only
a section 1962 violation but also that he was “injured in his
business or property.” This second requirement is more of a
problem for Diaz. The problem, though, is not whether the
6
I have used the word “standing” here because the RICO cases gener-
ally use it. I am among those who prefer to use the term “standing” for
Article III purposes, and would prefer that the analysis be made under the
rubric of “stating a claim upon which relief can be granted under section
1964.” They come to the same thing here.
10726 DIAZ v. PARKS
gravamen of his complaint is “personal injury,” because even
if he alleged nothing but personal injury, that could plainly be
a section 1962 violation. The problem is whether the personal
injury caused injury to business or property. Not everyone
who suffers a racketeering injury denoted by section 1962 can
state a claim under section 1964. Only those to whom the
racketeering conduct caused injury to business or property can
state a claim.

Murder or kidnapping can cause injury to business or prop-
erty, as well as personal injury. Suppose America suffered the
frequent kidnapping for ransom of business executives that
some countries do. If the business pays the ransom, it has
been injured by the kidnapping. Or imagine that a person
whom a business needs to function is murdered — perhaps a
medical researcher who employs himself through an incorpo-
rated laboratory and obtains millions of dollars in research
grants and contracts, and employs dozens of other people. The
murder may well destroy the business, make it unable to pay
its debts, and put all the employees out of work, giving them
claims against the business for breach of their employment
contracts. The laboratory corporation is a “person injured in
his business” “by reason of” a section 1962 violation — mur-
der. In these hypotheticals, I assume, of course, that a racke-
teering enterprise committed the wrongful conduct and that
the section 1962 conduct caused the harm. The significance
of the hypothetical cases is to illustrate that section 1962 per-
sonal injuries, such as murder and kidnapping, may indeed
give rise to “injury to business or property” under section
1964.

Diaz’s claim to be a “person injured in his business or
property” is more tenuous than the victims’ claims in these
hypothetical cases, but sufficient nonetheless. He pleads that,
as a result of the putative RICO wrong, he lost the chance to
get employment because he was in jail or absorbed with
defending himself against the criminal charges he claims were
 DIAZ v. PARKS 10727
the fraudulent result of police racketeering. That states a claim
that he was “injured in his business.”

A person does not have to wear a suit and tie to be engaged
in “business.” A salaried employee might or might not, in
ordinary speech, be characterized as a “businessman,” but a
sole proprietor of a service business unquestionably runs a
“business.” For example, the owner of “AAA Snowplowing”
is a businessman who owns a service business, and makes his
living from it when he comes around with a blade on the front
of his pickup truck after a snowfall. Dentists and lawyers are
also businessmen who own and run businesses. So is a person
who stands on a corner and waits to get picked up to do odd
jobs as an independent contractor. There is no principled way
to sort out who among sole proprietors has a “business” and
who does not. They all do.

What about people who seek only to be employed, in the
common law sense of a master-servant relationship, by some-
one else? Diaz’s complaint is not clear on whether this is all
he meant to do, or whether he meant to sell his services as a
sole proprietor. Sound statutory construction proceeds from
“attributing a rational purpose to Congress.”7 As Judge
Learned Hand wrote, “statutes always have some purpose or
object to accomplish, whose sympathetic and imaginative dis-
covery is the surest guide to their meaning.”8 If the statute as
construed one way makes sense, and as construed another
does not make any sense and is wholly arbitrary, the wholly
arbitrary construction is a dubious attribution of fecklessness
to the legislature. I cannot see what purpose Congress could
have intended to serve by limiting “person injured in his busi-
ness” to some forms of earning a living but not others. Many
firms operate in part with common law employees and in part
with independent contractors, and many individuals work
7
Longview Fibre Co. v. Rasmussen, 980 F.2d 1307, 1311 (9th Cir.
1992).
8
Cabell v. Markham, 148 F.2d 737, 739 (2d Cir. 1945).
10728 DIAZ v. PARKS
sometimes as one, sometimes the other, depending on what
form of work is more attractive or available at the time. The
distinction between “business” and employment is so tenuous
and uncertain that it is hard to see why we should attribute to
Congress a purpose of making it, especially since they did not
make it expressly.

The manifest statutory purpose of requiring not only injury
“by reason of” section 1962 misconduct, but also injury to
“business or property,” is to exclude claims for other kinds of
injuries, even those arising from denoted racketeering con-
duct. For example, a person who suffered physical injury and
mental distress, but no injury to his business or property, on
account of racketeering misconduct of the sort denoted in sec-
tions 1962 and 1961, could not state a claim upon which relief
could be granted under section 1964. Congress likely chose to
address this sort of harm in order to focus upon the harm rack-
eteering does to interstate commerce.

As for our en banc decision in Oscar v. University Students
Co-operative Association,9 it is not much help in resolving
this case. The issue in Oscar was whether the plaintiffs were
“injured in [their] business or property” by drug dealing next
door. The majority in Oscar did not think so because the
reduction in the value of the apartments they rented was not
“financial loss to property”10 or “concrete financial loss.”11 I
dissented, taking the position in dissent that there was injury
to property because a leasehold estate is itself property, and
damage does not have to be “concrete” or “financial” to be
property damage. My thought was that the majority could not
be right that damage has to result in “concrete financial loss”
to give rise to a claim. For example, if racketeering conduct
on the freeway dents someone’s car, the car’s owner has suf-
9
Oscar v. Univ. Students Coop. Ass’n, 965 F.2d 783 (9th Cir. 1992) (en
banc).
10
Id. at 787.
11
Id. at 785.
 DIAZ v. PARKS 10729
fered injury to property, even if he drives with the dent and
neither gets the car fixed nor sells it. He does not suffer any
“concrete financial loss,” because he has the same amount of
money that he did before, but his property was injured.

Judge Gould makes the sensible point that claims such as
this one for police misconduct ordinarily are and should be
brought under 42 U.S.C. section 1983. I do not disagree, but
I also do not see much risk of opening any floodgates by tak-
ing the words of the RICO statute to mean what the Supreme
Court has told us they mean.12 Though the RICO statute
allows treble damages, the damages it allows, and allows to
be trebled, are limited to injury to business or property. That
limitation, particularly in light of the limited business and
property of a considerable proportion of persons who are
arrested, makes section 1983 a more attractive path for relief
in most cases, and there is little practical need for us to put
an artificial dam in the channel.

The lower courts have repeatedly adopted non-literal nar-
rowing interpretations of RICO, so that it would apply only
to what “racketeering” would mean if the word were not con-
verted into a special term of art by the statute as construed by
the Supreme Court. The lower courts’ view has a lot of practi-
cal and linguistic appeal. And who can hear the word “RICO”
without seeing in the mind’s eye, Edward G. Robinson, in Lit-
tle Caesar?13 But the Supreme Court has decided that RICO’s
statutory language just does not permit the courts to limit it
to dishonest businesses that make their money through fraud
and extortion. When it was passed, many ascribed to RICO
the purpose of facilitating remedies against “mobsters and
organized criminals.”14 As the Supreme Court has construed
the words of the statute since then, though,15 there is no way
12
See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-500 (1985).
13
Little Caesar (Warner Bros. 1931).
14
Sedima, 473 U.S. at 499.
15
See Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 256-262;
see also Sedima, 473 U.S. at 499-500.
10730 DIAZ v. PARKS
to corral RICO so that it would apply only to “racketeering”
as that word may initially have been understood and as it is
defined in the dictionary.16 I agree with Judge Gould that,
because of his attempted murder and assault convictions, Diaz
will likely face an uphill battle against a motion for summary
judgment. But this is a motion to dismiss for failure to state
a claim upon which relief can be granted under Federal Rule
of Civil Procedure 12(b)(6). We are limited to the question
whether, if proved, the averments of the complaint would
state a claim under the statute. They do.

BERZON, Circuit Judge, concurring:

I concur in the court’s per curiam opinion as well as in
Judge Kleinfeld’s separate concurrence.

GOULD, Circuit Judge, with whom SCHROEDER, Chief
Judge, BYBEE and CALLAHAN, Circuit Judges, join, dis-
senting:

I respectfully dissent, and would affirm the district court’s
decision that there was no standing under RICO because
Diaz’s complaint did not sufficiently allege an “injury to busi-
ness or property” within the meaning of the statute.

The majority acknowledges that the district court “reason-
ably applied the law of RICO standing as it existed at the
time,” Maj. Op. at 10714, but then concludes that the reason-
ing of our intervening decision in Mendoza v. Zirkle Fruit
Co., 301 F.3d 1163 (9th Cir. 2002), now requires reversal.
16
See The American Heritage Dictionary 1021 (2d ed. 1985) (defining
“racket” as a “dishonest business or practice, esp. one that obtains money
through fraud or extortion”).
 DIAZ v. PARKS 10731
Mendoza’s determination of standing was understandable on
its facts, where the conspiracy challenged under RICO was
aimed directly at suppressing the wages of farm workers.
There the plaintiffs, legal agricultural laborers in eastern
Washington, the heartland of Washington’s fruit industry, in
their RICO complaint had pleaded that the defendant fruit
growers’ scheme was illegally and systematically to hire
undocumented immigrants in order to depress the wages of
documented workers. Id. at 1166-67. But in that case we did
not address the situation we face here, where the alleged loss
of employment is merely an indirect and secondary effect of
a non-compensable personal injury, Diaz’s alleged “false”
imprisonment.1 Thus Mendoza is plainly distinguishable in so
far as the illegality there alleged was aimed at the workers’
wages. The majority errs in improvidently extending Men-
doza, in which the illegal scheme took dead aim at wage
1
Diaz was convicted on charges that he alleges were trumped up, rely-
ing on the Rampart scandal that tarnished the Los Angeles Police Depart-
ment. The premise that he was “unjustly incarcerated”—which is the
underlying basis of his RICO claim—is highly questionable. We granted
the appellee’s motion that we take judicial notice, pursuant to Federal Rule
of Evidence 201, of the post-conviction decisions rendered in appellant
Diaz’s criminal case. The California Court of Appeal affirmed Diaz’s
1999 conviction for “attempted murder, aggravated mayhem, assault by
means likely to produce great bodily injury, and assault with a semiauto-
matic weapon, with enhancements for discharging a firearm causing great
bodily injury, firearm use and infliction of great bodily injury,” and the
California Supreme Court and United States Supreme Court denied his
petitions for further review. See People v. Diaz, 115 Cal. Rptr. 2d 799,
801-02 (Cal. Ct. App. 2002), reh’g denied (Feb. 22, 2002), review denied
(Apr. 17, 2002), & cert. denied, 537 U.S. 907 (2002). Diaz subsequently
filed a federal habeas petition in the United States District Court for the
Central District of California, which has been denied by the district court.
Moreover, in that habeas petition, Diaz argued only that his right to a fair
trial and due process were violated by the removal of a juror; he did not
contest the sufficiency of evidence to support his conviction. An observer
might wonder if there is any substance at all to the RICO claim asserted
by Diaz. Because I conclude the district court correctly found no standing,
I need not address other grounds for affirmance that may be supported by
the record.
10732 DIAZ v. PARKS
levels and workers’ livelihoods, to apply here, in a case noth-
ing like it. In any event, because we sit en banc to review
Diaz’s case, we are not bound by a prior panel opinion, so
Mendoza poses no barrier to the majority analyzing the law of
RICO standing.

I would hold that Diaz’s claim of employment loss was
derived from, and a secondary effect of, his alleged false
imprisonment, and any economic losses are part of Diaz’s
injury to his person, not distinct injuries to his business or
property within the meaning of RICO. By extending Men-
doza, the majority creates a split with the Eleventh Circuit
decision in Grogan v. Platt, 835 F.2d 844 (11th Cir. 1988),
and the Seventh Circuit decision in Doe v. Roe, 958 F.2d 763
(7th Cir. 1992), both of which held that pecuniary losses
incurred as a result of personal injuries were non-
compensable under RICO.

I

The Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961-68, provides a civil remedy of
treble damages to “[a]ny person injured in his business or
property by reason of a violation of section 1962 of this chap-
ter.” Id. at § 1964(c). See Sedima, S.P.R.L. v. Imrex Co., 473
U.S. 479, 496 (1985) (“[T]he plaintiff only has standing if,
and can only recover to the extent that, he has been injured
in his business or property by the conduct constituting the vio-
lation.”). It is well-established that not all injuries are com-
pensable under RICO, id. at 496-97, and a previous en banc
panel of our court held that the language of 18 U.S.C.
§ 1964(c) excluded recovery for personal injuries, Oscar v.
Univ. Students Co-op. Ass’n, 965 F.2d 783, 785 (9th Cir.
1992) (en banc) (“[I]t is clear that personal injuries are not
compensable under RICO.”).2
2
Our holding in Oscar that personal injuries are not compensable under
RICO is in accord with the decisions of our sister circuits, see, e.g., Hamm
 DIAZ v. PARKS 10733
In Oscar, the tenants of an apartment building brought a
RICO action against a neighboring student cooperative seek-
ing to recover for losses due to the students’ unruly behavior
in the neighboring apartment. Id. at 784-85. Our en banc
panel affirmed the district court’s dismissal of the plaintiffs’
claims because the tenants did not allege an injury to business
or property cognizable under RICO. Id. at 785. Our decision
rested on two bases. First, we held that a showing of injury
requires “proof of concrete financial loss” and is “not action-
able under RICO unless [it] result[s] in tangible financial loss
to the plaintiff.” Id. at 785 (citing Berg v. First State Ins. Co.,
915 F.2d 460, 464 (9th Cir. 1990). The plaintiffs failed to
allege any pecuniary injury to their property, because, as rent-
ers, they did not own the property, and therefore could not
allege property value decline because of the alleged acts of
their neighbors. Id. at 786-87.

Second, we concluded that the tenants’ injury was not an
injury to their property; rather, the injury asserted was for “the

v. Rhone-Poulenc Rorer Pharms., Inc., 187 F.3d 941, 954 (8th Cir. 1999);
Bast v. Cohen, Dunn & Sinclair, PC, 59 F.3d 492, 495 (4th Cir. 1995);
Libertad v. Welch, 53 F.3d 428, 437 (1st Cir. 1995); Roe, 958 F.2d at 767;
Genty v. Resolution Trust Corp., 937 F.2d 899, 918-19 (3d Cir. 1991);
Grogan, 835 F.2d at 847; Drake v. B.F. Goodrich, Co., 782 F.2d 638, 644
(6th Cir. 1986), as well as in step with the analogous guidance of the
Supreme Court. See Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258,
268 (1992) (interpreting RICO and the Clayton Act in tandem and stating
that “[Congress] used the same words [in RICO and the Clayton Act], and
we can only assume it intended them to have the same meaning that courts
had already given them.”); Reiter v. Sonotone Corp., 442 U.S. 330, 339
(1979) (construing the same ‘business or property’ language in the Clay-
ton Act and holding that “[t]he phrase “business or property” also retains
restrictive significance. It would, for example, exclude personal injuries
suffered.”); see also Sedima, 473 U.S. at 509 (Marshall, J., dissenting) (“In
addition, the statute permits recovery only for injury to business or prop-
erty. It therefore excludes recovery for personal injuries.”); but cf. Khu-
rana v. Innovative Health Care Sys., Inc., 130 F.3d 143, 149 (5th Cir.
1997). Although three judges of our circuit dissented in Oscar, they, too,
agreed that personal injuries are not compensable under RICO. 965 F.2d
at 789 (Kleinfeld, J., dissenting).
10734 DIAZ v. PARKS
personal discomfort and annoyance” of the defendants’ nui-
sance activities, which, as a “personal injury action,” was not
actionable under RICO. Id. at 787-88 (“It is clear, however,
that any injury [the plaintiffs have] suffered is at core an
intangible personal injury, not a financial loss to property.”).
We held that a personal injury action like nuisance is not
actionable, “even when it flows from a valuable property
interest.” Id.

Under Oscar, then, a claim of false arrest and imprison-
ment, as a personal injury, is not compensable at all in a
RICO action. See, e.g., Owens v. Okure, 488 U.S. 235, 240-
41, 251 (1989) (explaining that § 1983 claims based on false
arrest and imprisonment are “best characterized as personal
injury actions” and are subject to a state’s statute of limita-
tions for personal injuries); Black’s Law Dictionary 790 (7th
ed. 1999) (defining “personal injury” to include “false impris-
onment”). Diaz’s allegation of lost employment wages, even
construed most favorably to Diaz,3 was at best merely derived
from, and a secondary effect of, his underlying injury of
alleged false imprisonment. This circumstance, which was not
raised in Mendoza, squarely presents the question whether an
injury to business or property sufficient for RICO standing
purposes can be derived from a non-compensable personal
injury.

In our prior en banc decision in Oscar, as in Mendoza, we
3
Diaz’s complaint alleged numerous injuries, the relevant one being,
“lost employment, employment opportunities, and the wages and other
compensation associated with said business, employment and opportuni-
ties, in that plaintiff was rendered unable to pursue gainful employment
while defending himself against unjust charges and while unjustly incar-
cerated.” Depending on how one reads the complaint, Diaz either alleged
the loss of employment while he was incarcerated, or he alleged the loss
of the ability to pursue gainful employment, or both. Construing Diaz’s
complaint generously, as we must in reviewing a 12(b)(6) dismissal, see,
e.g., Pegram v. Herdich, 530 U.S. 211, 230 n.10 (2000), the allegation is
sufficient to raise the issue of loss of actual employment.
 DIAZ v. PARKS 10735
did not directly address this question. However, in Oscar we
did cite approvingly two cases from sister circuits that had
answered this question by concluding that a plaintiff’s allega-
tions of lost employment were insufficient for RICO standing
if they were derived from non-compensable personal injuries.
See Oscar, 965 F.2d at 786 (citing Grogan, 835 F.2d at 846-
47); id. at 788 (citing Doe, 958 F.2d at 770).

In Grogan, the estates of deceased federal agents involved
in a shootout with criminal suspects brought an action against
the suspects seeking damages under RICO. The appellants
argued that “injury to business or property” included the eco-
nomic damages that resulted from the injury to the person,
such as lost employment or wages. The Eleventh Circuit con-
cluded that the surviving relatives could not recover under
RICO for the loss of earning power or employment resulting
from their wrongful death claim, holding that the predicate
RICO act of the killing of the officers (murder or wrongful
death) was a personal injury, not an injury to their “business
or property” for purposes of RICO, even though there were
tangible economic consequences that resulted from the deaths.
Id. at 847 (“In our view, the ordinary meaning of the phrase,
‘injured in his business or property’ excludes personal inju-
ries, including the pecuniary losses therefrom.”). The Elev-
enth Circuit in Grogan concluded that if Congress had
intended the derivative economic damages like the loss of
employment to be recoverable under a civil RICO suit, it
would not have used the restrictive “business or property”
language of 18 U.S.C. § 1964(c). Id. (“Had Congress intended
to create a federal treble damages remedy for cases involving
bodily injury, injury to reputation, mental or emotional
anguish, or the like, all of which will cause some financial
loss, it could have enacted a statute referring to injury gener-
ally, without any restrictive language.”) (quoting Morrison v.
Syntex Lab., Inc., 101 F.R.D. 743, 744 (D.D.C. 1984)).

In Doe, the Seventh Circuit considered a case in which a
female client had sued her former divorce attorney under
10736 DIAZ v. PARKS
RICO for damages stemming from misuse of his position to
coerce and intimidate her into having sexual relations with
him. 958 F.2d at 765-67. The plaintiff alleged injury to her
business and property through, inter alia, a loss of employ-
ment wages, which she alleged were cognizable injuries to her
property under RICO. Id. at 766, 769-70. The Seventh Circuit
disagreed, holding that the plaintiff’s claim of lost employ-
ment pay stemmed from emotional distress, a personal injury,
and that “[t]he terms ‘business or property’ are, of course,
words of limitation which preclude recovery for personal inju-
ries and the pecuniary losses incurred therefrom.” Id. at 767,
770. The court concluded:

Doe blurs the distinction between proprietary and
personal injuries. Contrary to what Doe seems to
suggest, whether she can show a financial loss does
not, by definition, establish that she has suffered a
business or property injury within the meaning of
§ 1964(c). Most personal injuries—loss of earnings,
loss of consortium, loss of guidance, mental anguish,
and pain and suffering, to name a few—will entail
some pecuniary consequences. . . . Doe’s loss of
earnings, her purchase of a security system and her
employment of a new attorney are plainly deriva-
tives of her emotional distress—and therefore reflect
personal injuries which are not compensable under
RICO.

Id. at 770.

II

Because we cited both Grogan and Doe favorably in our
previous precedent,4 it is not surprising that the district court
4
See Oscar, 965 F.2d at 786 (citing Grogan in support of its holding
that personal injuries are not compensable under RICO); id. at 788 (citing
Doe); id. at 791 (Kleinfeld, J., dissenting) (citing Grogan for the holding
 DIAZ v. PARKS 10737
relied on them, in conjunction with Oscar, in dismissing
Diaz’s complaint for lack of standing. In my view the district
court properly applied the law. The majority almost recog-
nizes this, but then holds that our decision in Mendoza vitiates
the district court’s reliance. However, as I have mentioned
above and now reiterate, Mendoza did not raise the issue we
face, is distinguishable, and cannot properly be extended to
apply here.

In Mendoza, the documented farm workers who brought
suit asserted a RICO claim alleging that the eastern Washing-
ton fruit grower defendants had conspired to hire undocu-
mented workers in order to depress the documented workers’
wages. Id. at 1166-67. The farm workers’ complaint alleged
that the fruit growers knowingly hired illegal alien workers
because they knew that the undocumented workers would be
forced to accept wages significantly lower than that which
would otherwise be paid to legally authorized workers. Id. We
held that the plaintiff farm workers sufficiently alleged an
injury to their property in the form of lost employment wages.
Id. at 1168 & n.4.5 Relying on Mendoza, the majority now
concludes that Diaz’s claim of lost employment wages when
he was imprisoned is similarly sufficient to allege injury to his
business or property. Maj. Op. at 10715.

that the presence of pecuniary losses cannot transform a personal injury
into an injury to property); see also Berg, 915 F.2d at 463 (quoting Gro-
gan at length and concluding that “[w]e follow the Eleventh Circuit and
hold that, as a matter of law, personal injury, including emotional distress,
is not compensable under section 1964(c) of RICO. Even if the directors
had incurred pecuniary losses from emotional distress, they would not be
compensable under RICO.”).
5
The panel in Mendoza stated: “[W]hat is required [to sufficiently allege
injury to business or property] is precisely what the employees allege here:
a legal entitlement to business relations unhampered by schemes prohib-
ited by the RICO predicate statutes.” Id. at 1168 n.4. In context the rule
of Mendoza does nothing more than give RICO standing when the wages
of employees are directly hampered by an alleged illegal scheme.
10738 DIAZ v. PARKS
Although we said in Mendoza that “[t]he employees
allege[d] an injury to their property in the form of lost
wages,” in that case the loss of the farm workers’ employment
wages was the direct target of the RICO predicate act, a
scheme designed to drive down farm labor prices by using
illegal workers. 301 F.3d at 1168-69 (“[T]he employees allege
that the illegal hiring scheme was divined in order to depress
the normal labor market.”), id. at 1170 (“[T]he alleged
scheme here was intended to give the growers a contract
advantage at the expense of the documented workers, a direct
. . . injury.”). It was not a case, like Diaz’s, where the alleged
loss of employment was solely an indirect effect of a personal
injury to Diaz (his false imprisonment). Stated another way,
the lost income to laborers in Mendoza was not a secondary
or derivative consequence of a personal injury to the farm
workers, but rather the direct result of the scheme that aimed
at lowering their wages. Diaz has not alleged (nor can he) that
his false imprisonment was in any way related to, or directed
at, his business or property. Diaz’s allegation is much more
like that in Grogan, where the employment losses directly
stemmed from another type of personal injury—wrongful
death—than like that in Mendoza, where the loss of wages
alleged as injury had been the precise aim of the alleged ille-
gal conduct and conspiracy of growers.6
6
In any event, we sit en banc and are not bound by the Mendoza panel
decision. See Fed. R. App. P. 35(a); Ninth Cir. R. 35-1; Thompson v. Cal-
deron, 120 F.3d 1045, 1051 (9th Cir. 1997), rev’d on other grounds, 532
U.S. 538 (1998). It might make sense to defer to a previous panel’s per-
suasive analysis of the difficult question posed by Diaz’s case but that is
not the case with Mendoza which neither pondered nor ruled on the stand-
ing issues raised by a claim incidental to personal injury. Further, the
panel in Mendoza’s self-described “key task” was the causation inquiry of
RICO standing: to “determine whether [the farm workers’] injury was ‘by
reason of’ the growers’ alleged violations.” 301 F.3d at 1168. While the
panel discussed causation for four pages, id. at 1168-72, it only touched
upon the “injury to business or property” requirement in one textual sen-
tence and accompanying footnote. Id. at 1168 & n.4. As I have explained,
Mendoza’s statement on injury to business or property can be understood
in the context of a conspiracy to depress wage rates, but did not by its own
terms or reasoning reach the case of lost income resulting from false
imprisonment.
 DIAZ v. PARKS 10739
III

The majority acknowledges that in Mendoza we did not
“elaborate” on the question at bar, “relegating its discussion
of the nature of the injury to a footnote.” Maj. Op. at 10715.
As I have explained above, that case should not be interpreted
to apply, especially where doing so creates a circuit split, runs
against the declared aims of Congress, and is in tension with
Congress’s language of RICO. Instead of extending Mendoza
to the case of Diaz so unlike it, I would simply follow the
Seventh and Eleventh Circuits by holding that Diaz’s claim of
employment loss was derived from, and a secondary effect of,
his allegedly false imprisonment, and any economic losses are
part of Diaz’s injury to his person, not distinct injuries to his
business or property within the meaning of RICO. See Gro-
gan, 835 F.2d at 847 (holding that intertwined economic con-
sequences of personal injuries “are so fundamentally a part of
personal injuries that they should be considered something
other than injury to ‘business or property’ ”); see also Oscar,
965 F.2d at 791 (Kleinfeld, J., dissenting) (citing Grogan for
the proposition that “murder is personal injury, not injury to
property, and pecuniary losses flowing from the wrongful
death could not transform personal injury into injury to prop-
erty”).

Realizing that Mendoza alone cannot support its holding,
the majority purports to rely on Doe, describing the Seventh
Circuit’s approach as the “best-reasoned” one. Maj. Op. at
10715. The majority’s reliance is misplaced, and its reading
of Doe selective and incorrect. The plaintiff in Doe alleged
several different injuries to her business or property, all of
which were found to be non-compensable by the Seventh Cir-
cuit. The Seventh Circuit affirmed the district court’s dis-
missal of some of Doe’s claims because the court determined
that, as an initial matter, the injuries alleged were not injuries
to a business or property interest, as determined by the appli-
cable state law. Doe, 958 F.2d at 767-68 (affirming the dis-
trict court’s dismissal of Doe’s allegation of injury to her
10740 DIAZ v. PARKS
business or property from her divorce lawyer’s coercive
extraction of her sexual services because “sexual labor has no
legal value in Illinois,” and thus Doe’s sexual relations with
her former attorney was not an injury to her business or prop-
erty for purposes RICO). However, Doe also alleged that she
missed days of work—her gainful employment—due to the
defendant’s constant harassment and intimidation of her. Id.
at 766 (“As a result of this pattern of harassment and intimi-
dation, Doe missed work for several days and had to purchase
an enhanced security system for her car and garage.”). The
Seventh Circuit concluded that such an allegation was still
insufficient for standing to bring a RICO claim because such
injury stemmed from a non-compensable personal injury:
“Doe’s loss of earnings, her purchase of a new security sys-
tem and her employment of a new attorney are plainly deriva-
tive of her emotional distress—and therefore reflect personal
injuries which are not compensable under RICO.” Id. at 770
(emphases added) (citing, inter alia, Grogan, 835 F.2d at
847). Thus, although the majority fails to recognize it, in Doe
the Seventh Circuit addressed the same situation we face here
—an allegation of lost employment wages stemming from a
non-compensable personal injury. Diaz allegedly missed work
because he was falsely incarcerated, while Doe allegedly
missed work due to the continuous threats and harassment of
her former divorce attorney. Both plaintiffs alleged injury to
business or property wholly derived from personal injuries
(false imprisonment and emotional distress, respectively).
This inescapable truth belies the majority’s purported reliance
on Doe for its extension of Mendoza; the majority is actually
in conflict with Doe, just as it is in conflict with Grogan.7
7
The majority correctly acknowledges Doe’s allegation of lost employ-
ment, but incorrectly, and confusedly, concludes that “no injury to busi-
ness or property was actually alleged.” Maj. Op. at 10717. Doe alleged the
same injury to business or property as Diaz: lost employment wages. If,
as the majority concludes, Doe did not allege any injury to her business
or property, then neither has the plaintiff in the case at bar alleged an
injury to his business or property.
 DIAZ v. PARKS 10741
The majority denies it creates a circuit split with Grogan,
attempting to disguise, distract, or detract from the circuit
split by claiming that the plaintiffs in Grogan might not have
alleged a loss of employment recognized as property under
the applicable state law. Maj. Op. at 10720-21 n.2. The same
critique can be made of Diaz: We have no clue from Diaz’s
complaint what “employment” Diaz has alleged to have lost,
if any, while he was “unjustly” incarcerated, and whether that
employment would be considered property or business under
California law, or not. By comparison, we can say with some
certainty what loss of employment wages was alleged in Gro-
gan because, unlike in this case, we know for a fact that the
plaintiffs in that case were gainfully employed: They were
former agents of the Federal Bureau of Investigation who nar-
rowly escaped death in a gun battle with suspected bank rob-
bers, and the estates of those FBI agents who were not so
fortunate. Grogan, 835 F.2d at 845. The majority should con-
cede that FBI employment would qualify as a state-protected
property interest under its own test, and this undermines the
majority’s argument, resting on the incorrect premise that in
Grogan no valid state property right was alleged, involved, or
evoked.

IV

In Oscar, we concluded by quoting with approval from the
Seventh Circuit’s Doe: “Perhaps the economic aspects of [a
fundamentally personal injury] could, as a theoretical matter,
be viewed as injuries to ‘business or property,’ but engaging
in such metaphysical speculation is a task best left to philoso-
phers, not the federal judiciary.” Oscar, 965 F.2d at 788
(quoting Doe, 958 F.2d at 770). Following this logic, I would
today hold that an allegation of lost employment that flows
from a personal injury is not a separate injury to business or
property, but rather is a derivative part and parcel of the
underlying non-compensable personal injury. See Grogan,
835 F.2d at 848 (“We do not hold that plaintiffs may never
recover under RICO for the loss of employment opportunities.
10742 DIAZ v. PARKS
We merely hold that the appellants cannot recover under
RICO for those pecuniary losses that are most properly under-
stood as part of a personal injury claim.”). In holding other-
wise, the majority opens the RICO door to any plaintiff’s
lawyer savvy enough to include an allegation that other
wrongs lead to any degree of lost employment, leaving district
courts and appellate panels the undesirable job of “metaphysi-
cal speculation” against which the Oscar and Doe courts
warned. Instead of giving the “injury to business or property”
requirement “restrictive” meaning, see Reiter, 442 U.S. at
339, as did the Eleventh Circuit in Grogan and the Seventh
Circuit in Doe, the majority’s interpretation goes far to read
the “business or property” requirement out of the statute, as
there likely may be an indirect, hypothetical, and derivative
loss of wages whenever there is a personal injury of a person
who is otherwise employed.8 Yet it is wrong in theory and
imprudent in practice for us to ignore the restrictive language
set by Congress. Id. (“In construing a statute we are obliged
to give effect, if possible, to every word Congress used.”). If
Diaz’s complaint has sufficiently stated a claim under RICO,
then the majority’s decision means that there is no meaningful
“injury to business or property” standing limitation at all. The
majority’s view here takes RICO beyond the bounds that were
set by Congress. Indeed, the majority strains to expand RICO
for no good reason as well, because persons with asserted
injuries like those urged by Diaz have a plain and satisfactory
remedy in bringing a 42 U.S.C. § 1983 action, if timely
asserted, for violation of their civil rights. I respectfully dissent.9
8
The majority argues that my position creates a new requirement for
RICO standing that was not set by Congress, but this argument is off the
mark. I merely point out that some direct injury to a business or property
should be required to meet the statutory element set by Congress, which
will be disregarded under the majority’s theory because almost any per-
sonal injury will cause a loss of some actual or potential employment.
9
Statutory standing under 18 U.S.C. § 1964(c) also includes a causation
requirement that encompasses factual and proximate causation, including
as a “central element[ ]” a “direct relation between the injury asserted and
 DIAZ v. PARKS 10743

the injurious conduct alleged.” See Holmes, 503 U.S. at 268-69; see also
Or. Laborers-Employers Health & Welfare Trust Fund v. Philip Morris,
Inc., 185 F.3d 957, 963 (9th Cir. 1999). While the majority does not
address this RICO standing requirement, it is not clear that Diaz’s com-
plaint sufficiently alleged causation. Any allegedly “injurious conduct” of
the defendant-appellee LAPD Chief Parks, was followed by a series of
intervening causes independent of Parks before “causing” Diaz’s loss of
employment: the prosecutor who decided if, when, and how to prosecute
Diaz; the state trial judge who presided over the case; the jury who con-
victed Diaz; and the state courts of appeal that have subsequently affirmed
his conviction. Cf. Anderson v. Ayling, 396 F.3d 265, 270 (3d Cir. 2005)
(holding that there was an insufficient nexus between the alleged RICO
injury and the defendants in part because the defendants’ actions were “fil-
tered through [a] long chain of intervening causes”). Because I conclude
that the district court correctly found no “injury to business or property”
within the meaning of RICO, this compels the conclusion that there is no
RICO standing, and I need not reach whether Diaz has otherwise satisfied
the standing requirement by sufficiently alleging causation. By contrast,
because the majority errs by concluding that there is injury to business or
property, it also then errs by not addressing the standing requirement of
causation.