Moon v. Harrison Piping Supply

• Decision Date: 12 May 2005
• Docket Number: No. 04-CV-71882.,04-CV-71882.
• Citation: 375 F.Supp.2d 577
• Parties: Timothy MOON, Plaintiff, v. HARRISON PIPING SUPPLY, a MI corporation; Michigan Tooling Association Workers Compensation Fund, a MI corporation; Michigan Tooling Association Service Company, a MI corporation; and Dr. Asit Ray, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

Page 577

375 F.Supp.2d 577

Timothy MOON, Plaintiff, v. HARRISON PIPING SUPPLY, a MI corporation; Michigan Tooling Association Workers Compensation Fund, a MI corporation; Michigan Tooling Association Service Company, a MI corporation; and Dr. Asit Ray, Defendants.

No. 04-CV-71882.

United States District Court, E.D. Michigan, Southern Division.

May 12, 2005.

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Marshall D. Lasser, Southfield, MI, for Plaintiff.

Ronald G. Acho, Thomas J. Laginess, Cummings, McClorey, Livonia, MI, Cecil F. Boyle, Jr., Chicago, IL, David M. Thomas, Rutledge, Manion, Detroit, MI, Carolyn A. Almassian, Elaine A. Parson, Raymond & Prokop, Southfield, MI, for Defendants.

OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS PLAINTIFF'S COMPLAINT UNDER RULE 12(b)(6)

BORMAN, District Judge.

Now before the Court are Defendants' motions to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, to stay proceedings. The Court heard oral argument on February 7, 2005. Having considered the entire record, and for the reasons that follow, the Court:

1) DISMISSES Plaintiff's claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq., because they fail to state claims for which relief may be granted, and because Michigan's Workers' Disability Compensation Act, M.C.L.A 418.131, et seq., reverse-preempts those claims under the McCarran-Ferguson Act, 15 U.S.C. § 1012(b); and

2) DISMISSES Plaintiff's state-law claims of intentional infliction of emotional distress against Defendants for failure to state claims for which relief may be granted.

I. FACTS

At all times relevant to the instant action, Timothy Moon ("Plaintiff") was an employee of Harrison Piping Supply ("Harrison"). (1^st Am. Compl. at ¶ 4.) The Michigan Tooling Association Workers Compensation Fund ("the Fund") and the Michigan Tooling Association Service Company ("the Service") insured Harrison for workers-compensation claims and adjusted such claims for Harrison, respectively. (Id.) Dr. Asit Ray ("Ray") examined Plaintiff, on behalf of the other Defendants, concerning his entitlement to workers compensation benefits. (Id. at ¶ 9(f))

On June 7, 2004, Plaintiff filed a First Amended Complaint against Harrison, the Fund, the Service, and Ray (collectively "Defendants"), alleging that each Defendant engaged in a fraudulent enterprise to deny Plaintiff of his workers' compensation benefits in violation of the Racketeer Influenced and Corrupt Organizations Act ("the RICO Act"), 18 U.S.C. § 1961, et seq., and alleging that the corporate Defendants intentionally inflicted emotional distress upon Plaintiff in violation of Michigan law. (Id. at ¶¶ 7-19.)

On July 20, 2004, Harrison filed the instant motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) or to stay proceedings. The stay relates to the fact that Plaintiff has an on-going workers' compensation claim proceeding. The Service, the Fund, and Ray concur in this motion to the extent that Harrison's arguments would equally apply to Plaintiff's claims against them. (Ray Mot. at 2.) On August 13, 2004, Ray filed the instant motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) or to stay proceedings. Much of that motion merely repeats the arguments that Harrison raises in its motion to dismiss. On September 1, 2004, the Fund filed the instant motion to dismiss Plaintiff's First Amended Complaint. Both the Service, as an agent of the Fund, and Harrison concur in this motion to the extent that the Fund's arguments equally apply to Plaintiff's claims against them. On November 16, 2004, the Service filed the instant motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6). Harrison concurs in this motion to the extent that the challenges that it raises equally apply to Plaintiff's claims against Harrison.

II. ANALYSIS

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise as a defense to a claim for relief in a pleading the opposing party's failure to state a claim upon which relief can be granted. Rule 12(b)(6) is designed to test whether, as a matter of law, a plaintiff is entitled to legal relief. Nishiyama v. Dickson County, 814 F.2d 277, 279 (6th Cir.1987). Before dismissing a complaint for failure to state a claim upon which relief can be granted, a court must conclude "beyond [a] doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Carver v. Bunch, 946 F.2d 451, 452 (6th Cir.1991).

To survive a motion to dismiss under Rule 12(b)(6), a "complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988). When considering a motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff and accept well-pleaded facts as true. Columbia Natural Resources Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995). Thus, a court may not grant a Rule 12(b)(6) motion based upon its disbelief of a complaint's factual allegations. Id. A court, however, need not accept as true conclusions of law or unwarranted factual inferences. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987).

Federal Rule of Civil Procedure 9(b) provides that, "[i]n all averments of fraud ..., the circumstances constituting fraud ... shall be stated with particularity." Compare Begala v. PNC Bank, Ohio, Nat. Ass'n, 214 F.3d 776, 781 (6th Cir.2000) (holding that RICO pleadings are to be liberally construed).

Rule 12(b) provides:

If, on a motion asserting the defense ... [of] failure to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

A. RICO Claims

The Court will proceed to discuss the following issues related to Plaintiff's RICO claims:

1) whether the primary-jurisdiction doctrine mandates a stay of Plaintiff's RICO claims;

2) whether the Burford doctrine mandates a stay of Plaintiff's RICO claims;

3) whether the complaint pleads a predicate act of witness tampering;

4) whether the complaint pleads predicate acts of mail/wire fraud with the necessary particularity;

5) whether the complaint pleads the requisite pattern of racketeering activity as to each Defendant;

6) whether the complaint pleads detrimental reliance to establish the necessary causation;

7) whether the complaint pleads the requisite pattern of racketeering activity;

8) whether the complaint pleads the necessary impact on interstate or foreign commerce;

9) whether the complaint pleads a distinct criminal enterprise;

10) whether the McCarran-Ferguson Act reverse-preempts Plaintiff's RICO claims; and

11) whether the Labor Management Relations Act preempts Plaintiff's RICO claims.

1. The Primary-Jurisdiction Doctrine

In their motions to dismiss, Defendants contend that the primary-jurisdiction doctrine applies to Plaintiff's RICO claims. Plaintiff has filed a claim for workers' compensation benefits before the Workers' Disability Compensation Bureau ("the WDCB"), and is awaiting a final determination on that claim.¹

The doctrine of primary jurisdiction's aim is to "promot[e] proper relationships between the courts and administrative agencies charged with particular regulatory duties." United States v. Western Pac. R.R. Co., 352 U.S. 59, 63, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). Specifying when the doctrine of primary jurisdiction is applicable, the Supreme Court has held:

.... `Primary jurisdiction' applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of a claim requires a resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case[,] a judicial process is suspended pending referral of such issues to the administrative body for its views.

Id. at 63-64, 77 S.Ct. 161. Thus, the primary-jurisdiction doctrine applies where: 1) the Court has original jurisdiction over the claim before it; 2) the adjudication of that claim requires the resolution of certain underlying issues; and 3) a regulatory scheme commits the resolution of those issues to an administrative agency's special competence. In deciding whether the primary-jurisdiction doctrine applies in any given case, the court must determine whether the application of that doctrine in the particular case would serve the following twin rationales underlying that doctrine: 1) uniformity in questions of an administrative nature; and 2) the expert and specialized knowledge of the relevant agency to the issue in question. Id. at 64, 77 S.Ct. 161.

The threshold requirements for the applicability of the primary-jurisdiction doctrine are met here. First, despite Defendants' arguments to the contrary, the Court clearly has jurisdiction over Plaintiff's RICO claims.² Second, the adjudication of Plaintiff's RICO claims — i.e. that Defendants engaged in a RICO enterprise fraudulently to deny Plaintiff workers' compensation benefits — hinge, in part, upon whether Plaintiff is entitled to those benefits in the first instance. Lastly, a regulatory scheme of the Michigan legislature commits the resolution of one's entitlement to workers' compensation benefits in the first instance to the special competence of the WDCB. Specifically, Michigan's Workers' Disability Compensation Act ("the WDCA"), M.C.L. 418.841(1), provides:

Any dispute or controversy...