Fried v. Sungard Recovery Services, Inc.

• Decision Date: 26 September 1995
• Docket Number: No. 95-CV-0878.,95-CV-0878.
• Citation: 900 F. Supp. 758
• Parties: Sigmund FRIED and Sam Wurst v. SUNGARD RECOVERY SERVICES, INC., Sungard Data Systems, Inc., James Dibrino, Mike Mulholland and Intech Construction, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

900 F. Supp. 758

Sigmund FRIED and Sam Wurst v. SUNGARD RECOVERY SERVICES, INC., Sungard Data Systems, Inc., James Dibrino, Mike Mulholland and Intech Construction, Inc.

No. 95-CV-0878.

United States District Court, E.D. Pennsylvania.

September 26, 1995.

COPYRIGHT MATERIAL OMITTED

Mark R. Cuker, Williams & Cuker, Philadelphia, PA, for plaintiffs.

Roger F. Cox, Kenneth N. Klass, Kerry Nelson, Blank, Rome, Comisky & McCauley, Philadelphia, PA, for defendants Sungard, Dibrino, and Mulholland.

John P. McShea, III, Eckert Seamans Cherin & Mellott, Philadelphia, PA, for Intech Corp.

MEMORANDUM

JOYNER, District Judge.

Plaintiffs Sigmund Fried and Sam Wurst bring this lawsuit on behalf of themselves and persons similarly situated. Fried and Wurst allege that they and the other members of the purported class were exposed to asbestos during the course of renovations that Defendants performed at 401 North Broad Street in Philadelphia, Pennsylvania. Defendants are Sungard Recovery Services (SRS), Sungard Data Systems (SDS), two officers of SRS, James Dibrino and Michael Mulholland, and a construction company hired by SRS and SDS, Intech Construction.

The Second Amended Complaint alleges that Defendants decided to fraudulently conduct the renovations without disclosing to Plaintiffs or the appropriate government authorities the presence, release and disposal of asbestos. Defendants allegedly did this because legal asbestos activities are very expensive and Defendants wished to maintain profits to their respective companies. Mulholland and Dibrino allegedly took part in the fraud because they were participants in SDS's Executive Incentive Compensation Program (EIC), which awards bonuses based on SRS and SDS's income and net revenue.

The Motion to Dismiss filed by SRS, SDS, Mulholland and Dibrino seeks a dismissal or summary judgment on five of the eight counts in the Second Amended Complaint.¹ These five counts seek relief under (1) the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 (1984 & Supp.1995) (RICO), (2) the Clean Air Act, 42 U.S.C. §§ 7401-7671q (1995), (3) the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§ 9601-9675 (1995) (CERCLA), (4) unjust enrichment and restitution and (5) fraud.

STANDARDS FOR MOTIONS TO DISMISS AND FOR SUMMARY JUDGMENT

In considering a Rule 12(b)(6) motion, a court must primarily consider the allegations contained in the complaint, although matters of public record, orders, items appearing in the record of the case and exhibits attached to the complaint may also be taken into account. Chester County Intermediate Unit v. Pennsylvania Blue Shield, 896 F.2d 808, 812 (3d Cir.1990). The Court must accept as true all of the allegations in the pleadings and must give the plaintiff the benefit of every favorable inference that can be drawn from those allegations. Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir.1991); Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990). A complaint is properly dismissed only if it appears certain that the plaintiff cannot prove any set of facts in support of its claim which would entitle it to relief. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988).

If materials outside the pleading are considered by the court, the motion to dismiss shall be treated as one for summary judgment. Fed.R.Civ.P. 12(b)(6). In considering a motion for summary judgment, a court must consider whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue of material fact, and whether the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). The court must determine whether the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

In making this determination, all of the facts must be viewed in the light most favorable to the non-moving party and all reasonable inferences must be drawn in favor of the non-moving party. Id. at 255, 106 S.Ct. at 2513. Once the moving party has met the initial burden of demonstrating the absence of a genuine issue of material fact, the non-moving party must establish the existence of each element of its case. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir.1990), cert. denied, 499 U.S. 921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)).

I. Count One

Count One makes claims under RICO against Mulholland and Dibrino, the Individual Defendants. They move this Court to dismiss Count One on several grounds. We will address each alleged ground for dismissal in turn.

A. Injury to Business or Property

In order to have standing under RICO, a plaintiff must have been "injured in his business or property." 18 U.S.C. § 1964(c); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). The Supreme Court has determined that Congress intended the words "business or property" in the RICO statute to be words of exclusion. Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 2331, 60 L.Ed.2d 931 (1979). For that reason, injury to the person does not grant RICO standing. Id.

Defendants argue that Plaintiffs fail to state a RICO cause of action because they do not allege an injury to their business or property. The Second Amended Complaint alleges that Plaintiffs' pay was kept at artificially low levels because they did not receive the hazard pay they would have demanded had they known of the presence of asbestos in their working environment. Second, the complaint alleges that Plaintiffs will incur medical monitoring expenses in the future because of their exposure to asbestos. 2d Am. Complaint ¶ 36.

Defendants cite numerous cases holding that exposure to toxic chemicals is a personal injury that does not grant standing under RICO. Genty v. RTC, 937 F.2d 899, 918-19 (3d Cir.1991); Doe v. Roe, 958 F.2d 763, 767 (7th Cir.1992); Berg v. First State Ins. Co., 915 F.2d 460, 464 (9th Cir.1990); Rylewicz v. Beaton Servs., 888 F.2d 1175, 1180 (7th Cir. 1989); Grogan v. Platt, 835 F.2d 844, 846 (11th Cir.), cert. denied, 488 U.S. 981, 109 S.Ct. 531, 102 L.Ed.2d 562 (1988); Drake v. B.F. Goodrich Co., 782 F.2d 638 (6th Cir. 1986). The Third Circuit has held that claims for medical monitoring are also claims for personal injury. Genty, 937 F.2d at 918.

Plaintiffs argue that they do not plead personal injury, but economic injury, in that they seek lost wages and reimbursement for medical monitoring. They cite many cases holding that a claim for lost wages is a claim for injury to business. Hunt v. Weatherbee, 626 F.Supp. 1097, 1100-01 (D.Mass.1986); Rodonich v. House Wreckers Union, 627 F.Supp. 176, 180 (S.D.N.Y.1985); Schenk v. Southeast Banking Corp., 725 F.Supp. 1231 (S.D.Fla.1989). See also Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1170 (3d Cir.1989) ("loss of earnings, benefits, and reputation constitute self-evident injury as in any standard wrongful discharge action"); Callan v. State Chem. Mfg. Co., 584 F.Supp. 619 (E.D.Pa.1984) (injury to business when employees forced to pay bribes to customers out of employees' earnings). In each of these cases, the employee seeking lost wages had been discharged from their job as part of the RICO violations. None of the cases mention medical monitoring or involve claims for hazard pay.

We find that Plaintiffs' claim for medical monitoring is a claim for personal injury and not a claim of injury to business or property. Genty, 937 F.2d at 918-19. Although it is a closer question, we find that Plaintiffs' claim for hazard pay is also a claim for injury to the person. The Second Amended Complaint alleges that Plaintiffs would have sought "hazard pay and other wage compensation premiums which would have been required by the Plaintiff-class in order to induce them to go to work in an environment contaminated by dangerous asbestos fibers." 2d Am. Complaint ¶ 21g.

Hazard pay, therefore, appears to be payment made as compensation for the fear of catching a disease. Fear is a type of emotional distress, and is therefore not covered by RICO. Courts have recognized that "recovery for personal injury has pecuniary aspects." Grogan v. Platt, 835 F.2d 844, 847 (11th Cir.1988). But, these courts stress, it is important to distinguish between the pecuniary harm that arises from personal injuries and the pecuniary harm that arises from injury to business or property. Id.

We find that Plaintiffs' claim for hazard pay is somewhat analogous to the claim for expenses the plaintiff incurred in Roe, 958 F.2d at 767. There, plaintiff alleged that defendant, the attorney who represented her in her divorce, defrauded her into paying for his services with sexual relations. Id. at 764. When plaintiff sued the lawyer, he retaliated in part by threatening her physically, which prompted her to buy a security system and caused her to lose work. The Court held that plaintiff'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 compensable under RICO." Id. at 770.

In another analogous case, the Ninth Circuit held that loss of insurance coverage was not an injury to business or property. Berg, 915 F.2d at 464. The Court held that an insurance contract's value is the peace of mind it gives the insured. Therefore, the Court held, the complaint pleaded a claim for emotional distress, not injury to property, and dismissed the RICO claim. Id.

We find that Plaintiffs' claim for hazard pay is at base a claim for emotional distress.² Because injury to the person does not provide standing under RICO, we must dismiss Count One.

B. ...