Iron Workers Local Union No. 17 v. Philip Morris, 1:97-CV-1422.

• Citation: 23 F.Supp.2d 771
• Decision Date: 10 September 1998
• Docket Number: No. 1:97-CV-1422.,1:97-CV-1422.
• Parties: IRON WORKERS LOCAL UNION NO. 17 INSURANCE FUND and its Trustees, et al., Plaintiffs, v. PHILIP MORRIS INCORPORATED, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

23 F.Supp.2d 771

IRON WORKERS LOCAL UNION NO. 17 INSURANCE FUND and its Trustees, et al., Plaintiffs, v. PHILIP MORRIS INCORPORATED, et al., Defendants.

No. 1:97-CV-1422.

United States District Court, N.D. Ohio, Eastern Division.

September 10, 1998.

As Amended September 21, 1998.

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Eben O. McNair, Timothy Joseph Gallagher, Schwarzwald & Rock, Cleveland, OH, Jack Landskroner, Landskroner Law Firm, Cleveland, OH, John M. Broaddus, Robert J. Connerton, Connerton, Ray & Simon, Washington, DC, Michael C. Spencer, Milberg, Weiss, Bershad, Hynes & Lerach, New York, NY, Patrick J. Coughlin, Frank J. Janecek, Jr., Scott H. Saham, Milberg, Weiss, Bershad, Hynes & Lerach, San Diego, CA, Lembhard G. Howell, Richard G. Piccioni, C. Cleveland Stockmeyer, Michael E. Withey, Paul L. Stritmatter, Philip G. Arnold, Kevin Coluccio, Keith L. Kessler, J. Murray Kleist, Stritmatter, Kessler, Whelan & Withey, Seattle, WA, George Kargianis, Kargianis, Watkins, Marler, Seattle, WA, Roger M. Adelman, Washington, DC, G. Robert Blakey, Notre Dame Law School, Notre Dame, IN, Einer R. Elhauge, Harvard Law School, Cambridge, MA, for Local 17 Intl Assoc of Bridge, & Iron Workers Insurance Fund, Local 38 International Brotherhood of Electrical Workers, Ohio Laborers Insurance Fund, Dealers-Unions Insurance Fund, Philip M. Zannella, Jr., Gary S. Adams and Mark A. Frey, Local 47 Welfare Fund No. 1, Michael P. Murphy, Mark Davis, Dennis Dingow, Cheryl DeLauer, Martin Presser, Fred A. Scharler, Robert Pfhal and Richard Green, Toledo Electrical Welfare Fund, Todd Michaelson, Dennis C. Duffey, Jerry R. Porter Thomas J. Sigurdson, Gerald W. Hasley, Robert Colgan, Jr., James J. Kozlowski and Patrick J. Jones.

Lawrence R. Desideri, Thomas J. Frederick, Dan K. Webb, Kevin J. Narko, Winston & Strawn, Chicago, IL, Hugh E. McKay, Robert D. Anderle, Porter, Wright, Morris & Arthur, Cleveland, OH, for Philip Morris, Inc.

Roger Allen Hipp, Jones, Day, Reavis & Pogue, Cleveland, OH, Matthew A. Kairis, Jeffrey J. Jones, Melanie S. Fahey, Jones, Day, Reavis & Pogue, Columbus, OH, Daniel F. Kolb, Davis, Polk & Wardwell, New York, NY, for RJR Nabisco, Inc., Nabisco Holdings Corp. and R.J. Reynolds Tobacco Co.

Phillip J. Campanella, Calfee, Halter & Griswold, Cleveland, OH, Kenneth N. Bass, Paul Taylor, Kirkland & Ellis, Washington, DC, for Brown & Williamson Tobacco Corp. and American Tobacco Co.

John Winship Read, Amanda Martinsek, Vorys, Sater, Seymour & Pease, Cleveland, OH, for British American Tobacco Co.

Percy Squire, Thomas D. Lambros, Lloyd Pierre-Louis, Bricker & Eckler, Columbus, OH, Mark G. Cunha, Patrick D. Bonner, Jr., Randall Rainer, Simpson, Thacher & Bartlett, New York, NY, for B.A.T. Industries P.L.C.

Craig E. Gustafson, William J. Crampton, Bruce R. Tepekian, Shook, Hardy & Bacon, Kansas City, MO, Samuel R. Martillotta, Mansour, Gavin, Gerlack & Manos, Cleveland, OH, Patrick M. McLaughlin, John F. McCaffrey, McLaughlin & Caffrey, Cleveland, OH, for Lorillard Tobacco Co.

Thomas P. Meaney, Jr., Kenneth J. Walsh, Tyler Lee Mathews, McDonald, Hopkins, Burke & Haber, Cleveland, OH, Marc E. Kasowitz, Marie V. Santacroce, Michael M. Fay, Julie R. Fischer, Marie V. Santocroce, Kasowitz, Benson, Torres & Friedman, New York, NY, for Liggett Group, Inc.

Steven D. Bell, Ulmer & Berne, Cleveland, OH, for U.S. Tobacco Sales and Marketing Co.

David J. Hooker, Thomas J. Collin, Robert Francis Ware, Jr., Thompson, Hine & Flory, Cleveland, OH, Steven Klugman, Harry Zirlin, Anne E. Cohen, Debevoise & Plimpton, New York, NY, for Tobacco Research U.S.A., Inc.

Charna E. Sherman, David J. Michalski, James M. Drozdowski, Kathleen Balthrop Havener, Hahn, Loeser & Parks, Cleveland, OH, for Tobacco Institute, Inc.

Susan V. Belanger, Arter & Hadden, Cleveland, OH, John P. Gartland, Arter & Hadden, Columbus, OH, Michael C. Lasky, Davis & Gilbert, New York, NY, Hill & Knowlton, Inc., pro se, for Hill & Knowlton, Inc.

Timothy D. Johnson, Forrest A. Norman, III, Weston, Hurd, Fallon, Paisley & Howley, Cleveland, OH, for Smokeless Tobacco Council, Inc.

OPINION AND ORDER

GWIN, District Judge.

On January 8, 1998, defendants¹ moved this Court to dismiss plaintiffs' First Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(6) [Doc. 27].² In ruling on defendants' motion to dismiss for failure to state a claim upon which relief can be granted, the Court first examines defendants' general defense that plaintiffs' claims are too remote to allow recovery. To decide this, the Court reviews the principles underlying the remoteness doctrine and the proximate cause doctrine. After having made this review, the Court concludes that plaintiffs' claims are not generally stopped as too remote.

The Court then decides whether plaintiffs state claims for violations of the Racketeer Influenced Corrupt Organizations Act ("RICO") and the Ohio Pattern of Corrupt Activity Act ("Ohio Corrupt Activity Act"), Ohio Rev.Code §§ 2923.31, et seq. In deciding this, the Court examines the federal and Ohio statutory schemes and determines whether the Ohio Corrupt Activity Act is broader than RICO. After considering the federal and Ohio schemes, the Court determines whether plaintiffs state causes under either or both. After making this review, the Court finds that plaintiffs state causes of action under both RICO and the Ohio Corrupt Activity Act.

After determining whether plaintiffs state RICO claims under federal or state law, the Court addresses plaintiffs' antitrust claims under federal and state law. Again, the Court decides whether plaintiffs' claims are too remote and whether the damages claimed by plaintiffs have proximately resulted from defendants' conduct. The Court also looks to whether plaintiffs have standing to make antitrust claims. After making this review the Court finds that plaintiffs have sufficiently stated causes of action under federal and state antitrust law.

The Court then looks to whether the plaintiffs sufficiently state claims for breach of a voluntarily undertaken duty and for conspiracy. After reviewing these questions, the Court finds plaintiffs do state a cause of action for civil conspiracy upon which relief can be granted. However, the Court finds plaintiffs do not state causes of action for breach of a voluntarily undertaken duties. Accordingly, the Court grants defendants motions to dismiss Counts VI and VII of the Amended Complaint.

I. Introduction

Plaintiffs are certain trusts organized to provide health-related benefits to workers and their families.³ The plaintiffs are non-profit, union-sponsored tax-exempt trusts organized under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq. The trusts provide medical or hospital care benefits to participants and their beneficiaries as an employee retirement income security program. Trustees govern the trusts. Of the trustees, employers contributing to the trusts typically choose half of the trustees and union member beneficiaries of the trusts choose half of the trustees.

On May 20, 1997, Plaintiffs Funds brought this action against tobacco-related entities.⁴ Plaintiffs allege that, since about 1953, the defendants have shifted the large health care costs of smoking onto plaintiffs, proposed class members, and other health care payers. Plaintiffs say defendants expected, foresaw, and planned this shift of expenses. The plaintiffs say that as the direct result of the defendants' wrongdoing, plaintiffs and all similar trust funds had to make substantial expenditures to pay for treatment of smoking-related illnesses and addiction.

Because of this alleged shift of expenses onto the funds, and other medical expense payers, plaintiffs say the defendants have depleted their Trusts of monies otherwise available. Because of this purportedly unlawful conduct, Plaintiffs Funds say they bore the cost of damages caused by the defendants. Plaintiffs allege standing to sue defendants for damage to the business or property of the trust funds. Plaintiffs say they bring this action in fulfillment of their fiduciary duty to replenish the trust funds and to maximize health care benefits for all trust beneficiaries. Plaintiff Funds seek damages and injunctive relief.

In Counts I, II, and III, plaintiffs make claim under the federal RICO provisions of the Organized Crime Control Act of 1979. 18 U.S.C. § 1961, et seq. In Counts XIV, XV, and XVI, plaintiffs make claim under the Ohio equivalent of RICO, the Ohio Pattern of Corrupt Activity Act, Ohio Rev.Code §§ 2923.31, et seq. In Counts IV and X of the Amended Complaint, the plaintiffs make two antitrust claims. In Counts VI and VII, plaintiffs make claim for intentional and negligent breach of a special duty. Finally, plaintiffs make claim for civil conspiracy in Count XI of their Amended Complaint.⁵

Defendants now seek dismissal of all plaintiffs' claims. In seeking dismissal, defendants say certain reasons stop all claims made by plaintiffs. Separately, defendants say certain defenses stop individual claims. In ruling upon defendants' motion to dismiss, the Court first examines defendants' more generalized defenses. Chief among these defenses is the argument that plaintiffs' claims are too remote to allow recovery. After reviewing defendants' more generalized arguments, the Court moves to defendants' more specific arguments for dismissal.

II. Standard of review

A court properly grants a motion to dismiss under Fed.R.Civ.P. 12(b)(6) only if it appears beyond doubt that the plaintiff can prove no set of facts that would entitle her to relief. See McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980). We accept as true and construe all factual allegations in the complaint in the light most favorable to the plaintiff. U.S. ex rel. McKenzie v. Bellsouth Telecommunications, Inc., 123 F.3d 935 (6th Cir.1997), cert. denied, ___...