Brown v. Cassens Transport Co.
| Decision Date | 23 October 2008 |
| Docket Number | No. 05-2089.,05-2089. |
| Citation | 546 F.3d 347 |
| Parties | Paul BROWN, William Fanaly, Charles Thomas, Gary Riggs, Robert Orlikowski, and Scott Way, Plaintiffs-Appellants, v. CASSENS TRANSPORT CO., Crawford & Company, and Dr. Saul Margules, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Marshall D. Lasser, Law Office of Marshall Lasser, Southfield, Michigan, for Appellants. Janet E. Lanyon, Dean & Fulkerson, Troy, Michigan, Joan N. Pierson, The Williams Firm, Grand Blanc, Michigan, for Appellees.
ON BRIEF:
Marshall D. Lasser, Law Office of Marshall Lasser, Southfield, Michigan, for Appellants. Janet E. Lanyon, Dean & Fulkerson, Troy, Michigan, Timothy R. Winship, The Williams Firm, Grand Blanc, Michigan, for Appellees.
Before: MOORE and GIBBONS, Circuit Judges; ACKERMAN, District Judge.*
This case involves the dismissal of the claims of Plaintiffs-Appellants Paul Brown, William Fanaly, Charles Thomas, Gary Riggs, Robert Orlikowski, and Scott Way (collectively referred to as "plaintiffs") against Defendants-Appellees Cassens Transport Company ("Cassens") Crawford & Company ("Crawford"), and Dr. Saul Margules (collectively referred to as "defendants") under Federal Rule of Civil Procedure 12(b)(6). The plaintiffs alleged that the defendants employed mail and wire fraud in a scheme to deny them worker's compensation benefits under the Michigan Worker's Disability Compensation Act ("WDCA"), MICH. COMP. LAWS § 418.301, in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961(1)(B), 1962(c), 1964(c), and that the defendants' conduct constituted intentional infliction of emotional distress ("IIED") under Michigan law. The plaintiffs appealed the district court's dismissal of their RICO claims based on the reverse preemption of the RICO claims under the McCarran-Ferguson Act, 15 U.S.C. § 1012, and for failure to plead certain claims with particularity, for failure to allege a pattern of racketeering activity, and for failure to plead reliance on the defendants' fraud. A divided panel of this court affirmed the district court's dismissal of plaintiffs' RICO claims because plaintiffs had failed to plead detrimental reliance on alleged misrepresentations of defendants. The Supreme Court vacated our judgment and remanded for further consideration in light of Bridge v. Phoenix Bond & Indemnity Co., ___ U.S. ___, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008), which held unanimously that a civil-RICO plaintiff does not need to show that it detrimentally relied on the defendant's alleged misrepresentations.
On remand, we REVERSE the district court's dismissal of plaintiffs' RICO claims because the WDCA does not preempt their RICO claims and because plaintiffs have sufficiently pleaded a pattern of racketeering activity given that reliance is not an element of a civil RICO fraud claim. We REMAND to the district court for further proceedings consistent with this opinion. The plaintiffs also appeal the district court's dismissal of their IIED claims for failure to plead outrageous conduct. We AFFIRM the dismissal of the IIED claims because the alleged conduct of these defendants could not be deemed outrageous under Michigan law.
Plaintiffs are current or former employees of Cassens who have submitted worker's compensation claims to Cassens based on workplace injuries they have each sustained. On June 22, 2004, plaintiffs filed a complaint raising RICO and IIED claims against the defendants. Plaintiffs alleged that Cassens, which was self-insured for purposes of paying benefits under the WDCA, contracted with Crawford to serve as a claims adjuster for the worker's compensation claims of Cassens's employees. They further pleaded that Cassens, Crawford, and Margules, as well as other "cut-off" doctors, engaged in a pattern of racketeering activity that denied the plaintiffs' worker's compensation claims. Specifically, the plaintiffs alleged that Cassens and Crawford deliberately selected and paid unqualified doctors, including Margules, to give fraudulent medical opinions that would support the denial of worker's compensation benefits, and that defendants ignored other medical evidence in denying them benefits. The plaintiffs claimed that the defendants made fraudulent communications amongst themselves and to the plaintiffs by mail and wire in violation of 18 U.S.C. §§ 1341, 1343, which serve as the predicate acts for their RICO claims.
The district court granted the defendants' motion to dismiss pursuant to Rule 12(b)(6) on July 15, 2005. Brown v. Cassens Transp. Co., 409 F.Supp.2d 793 (E.D.Mich.2005). The plaintiffs filed this timely appeal.1 A majority of this panel affirmed the dismissal on the ground that plaintiffs failed to plead that they relied on misrepresentations by defendants. Brown v. Cassens Transp. Co., 492 F.3d 640, 643, 646 (6th Cir.2007). The U.S. Supreme Court granted plaintiffs' petition for a writ of certiorari, vacated our judgment, and remanded the case to us for reconsideration in light of Bridge. Brown v. Cassens Transp. Co., ___ U.S. ___, 128 S.Ct. 2936, ___ L.Ed.2d ___ (2008).
We review de novo a district court's determination dismissing a suit for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). Hill v. Blue Cross & Blue Shield, 409 F.3d 710, 716 (6th Cir.2005). The plaintiffs' factual allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiffs. Id. We will not affirm the district court's dismissal of a complaint on Rule 12(b)(6) grounds "unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim[s] which would entitle [them] to relief." Id. (alteration in original) (internal quotation marks omitted).
RICO makes it a crime "for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c). RICO defines "racketeering activity" to include "any act which is indictable under any of the following provisions of title 18, United States Code: ... section 1341 [18 U.S.C. § 1341] (relating to mail fraud), section 1343 [18 U.S.C. § 1343] (relating to wire fraud)." Id. § 1961(1). Plaintiffs claim that defendants engaged in the racketeering activities of mail and wire fraud.2
RICO states that a "`pattern of racketeering activity' requires at least two acts of racketeering activity, one of which occurred after [October 15, 1970] and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5). On this basis, the district court assumed that alleging two acts of racketeering activity was sufficient to state a pattern, and dismissed the claims of Riggs and Thomas because they sufficiently pleaded only one act each of racketeering activity. The plaintiffs appeal this conclusion, claiming that the district court was instead required "to look at the pattern of defendants' alleged scheme against the group" rather than "the number of predicate acts allegedly committed against each victim." Appellants Br. at 25-26.
RICO's provision authorizing civil suits, 18 U.S.C. § 1964(c), sheds light on the issue of predicate acts. Section 1964(c) states that "[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962]" may bring a RICO suit. RICO specifies only that the defendant must have engaged in a "pattern of racketeering activity" to violate 18 U.S.C. § 1962. As long as the defendant engaged in a pattern of racketeering activity, and the plaintiff was injured by this pattern of activity, this suffices to state a claim under 18 U.S.C. § 1964(c); nowhere does the statute require that the injury to each plaintiff must have independently consisted of a pattern of activity by the defendant. See H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 250, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (); Vild v. Visconsi, 956 F.2d 560, 567 (6th Cir.1992) (). Therefore, the district court erred in assessing the pattern requirement by counting the number of predicate acts alleged by each plaintiff. Rather, the district court should have considered whether the plaintiffs sufficiently pleaded that the defendants were engaged in a "pattern of racketeering activity," and, if so, whether they also sufficiently pleaded that each plaintiff was injured by this pattern of activity.
Although the defendants do not appear to take issue with the district court's holding that two predicate acts constitute a "pattern of racketeering activity," and thus that a pattern was specifically pleaded by Brown, Fanaly, Way, and Orlikowski,3 see Appellees Br. at 16 (), we must consider whether the defendants were engaged in a "pattern of racketeering activity" to determine whether the district court erred in dismissing the claims of...
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