(Reuters) – The U.S. Supreme Court on Tuesday declined to hear McKinsey & Co’s attempt to escape a lawsuit by retired turnaround specialist Jay Alix who accuses the management consulting firm of hiding potential conflicts as it seeks permission from bankruptcy courts to do lucrative work with company restructurings.
The judges rejected McKinsey’s request that they overturn a lower court’s decision that the lawsuit filed by Mr. Alix, who has accused the company of running a “criminal enterprise” by hiding its ties to lenders and its clients’ competitors.
Mr. Alix’s lawsuit accused McKinsey and several current or former employees of violating the Racketeer Influenced and Corrupt Organizations Act, a federal law used to target illegal conspiracies originally designed to target organized crime.
Alix, who has fought McKinsey in several courtrooms since 201
6, sought treble damages under RICO, which allows people to sue if they believe criminal enterprises caused them harm.U.S. District Judge Jesse Furman in Manhattan in 2019 dismissed the lawsuit, saying Alix did not allege a “proximate” connection between McKinsey’s alleged wrongdoing and damage to AlixPartners. Alix reported that he owned 35% of the shares in AlixPartners.
The New York-based 2nd US Circuit Court of Appeals in January revived the case, saying Judge Furman gave “inadequate consideration” to whether McKinsey undermined the integrity of federal judicial proceedings.
McKinsey argued in its petition to the Supreme Court that the 2nd Circuit’s decision contradicted previous Supreme Court rulings that held that RICO suits may only be brought by plaintiffs harmed “directly” by wrongdoing.
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