Stanissis v. Dyncorp Int'l LLC, Civil Action No. 3:14-CV-2736-D

• Decision Date: 29 December 2015
• Docket Number: Civil Action No. 3:14-CV-2736-D
• Parties: ZANI STANISSIS, INDIVIDUALLY and AS REPRESENTATIVE OF THE ESTATE OF HER HUSBAND, CAVIN STANISSIS, et al., Plaintiffs, v. DYNCORP INTERNATIONAL LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

ZANI STANISSIS, INDIVIDUALLY and AS REPRESENTATIVE OF THE

ESTATE OF HER HUSBAND, CAVIN STANISSIS, et al., Plaintiffs, v. DYNCORP INTERNATIONAL LLC, et al., Defendants.

Civil Action No. 3:14-CV-2736-D

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

December 29, 2015

(Consolidated with Civil Action No. 3:15- CV-2026-D)

MEMORANDUM OPINION AND ORDER

In Stanissis v. Dyncorp International LLC, 2015 WL 1931417, at *1 (N.D. Tex. Apr. 29, 2015) (Fitzwater, J.) ("Stanissis I"), the court granted in part and denied in part the motions to dismiss under Fed. R. Civ. P. 12(b)(6) and 9(b) of defendants DynCorp International LLC ("DynCorp") and Midlands Claim Administrators, Inc. ("Midlands"), held that the amended complaint stated a claim for promissory estoppel, dismissed plaintiffs' remaining claims,¹ and granted plaintiffs leave to replead. Plaintiffs have amended their complaint, and defendants move anew to dismiss under Rules 12(b)(6) and 9(b). For thereasons that follow, the court grants Midlands' motion to dismiss and grants in part and denies in part DynCorp's motion to dismiss.

I

Because the relevant background facts are set out in Stanissis I, see id. at *1-2, the court will limit its discussion to what is necessary to understand today's decision. Plaintiffs² allege that DynCorp recruited them to work on DynCorp's projects in Iraq and Afghanistan. Although recruited by DynCorp, each plaintiff signed a contract of employment with DynCorp FZ International ("DynCorp FZ"), an employee leasing company, who leased the employee back to DynCorp. Plaintiffs allege that, in recruiting them, and separate from their employment contracts with DynCorp FZ, DynCorp offered them accident and disability insurance coverage through DynCorp's Additional Benefits Plan (the "Plan"), which is explicitly set forth in Attachment A to their employment contracts with DynCorp FZ. Plaintiffs allege that this offer was a significant inducement to their decisions to go to work for DynCorp overseas. In exchange for Plan coverage, plaintiffs waived their rights to sue DynCorp for third-party tort liability based on injuries they sustained within the scope of their employment. Plaintiffs allege that DynCorp self-funded the Plan, and that, at all relevant times, DynCorp maintained the legal duty to administer benefits and pay claims asprovided in the Plan.

Plaintiffs assert that, while working for DynCorp, they sustained serious injuries that met the requirements of a disability under the Plan, and they filed claims for disability insurance benefits with DynCorp. They allege that, instead of paying the promised disability benefits, DynCorp attempted to steer them away from receiving benefits by misrepresenting the nature of the coverage under the Plan; DynCorp misdirected the proper claims handling and coverage for their disability claims by misrepresenting that CIGNA Worldwide Insurance Company ("CIGNA") was the provider of their disability coverage, even though CIGNA only provided health and medical insurance, resulting in the denial of their claims; and as to claims that CIGNA did not deny, DynCorp forwarded the claims to insurers, insurance brokers, claims handlers, or underwriters who denied the claims under a Lloyd's insurance policy, even though DynCorp knew that Lloyd's was not the proper insurer for plaintiffs' claims and that the Lloyd's policy was significantly narrower than the Plan's disability coverage.

In their second amended complaint, all plaintiffs allege claims against DynCorp for violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), Tex. Bus. & Com. Code Ann. §§ 17.41-17.63 (West 2011), and common law claims for breach of contract, breach of the duty of good faith and fair dealing, punitive damages, fraud, fraudulent inducement, promissory estoppel, and negligentmisrepresentation.³ Plaintiff George Kieser ("G. Kieser") asserts a claim against Midlands for negligent misrepresentation. Defendants move to dismiss under Rules 12(b)(6) and 9(b).⁴ Plaintiffs oppose the motions.

II

"In deciding a Rule 12(b)(6) motion to dismiss, the court evaluates the sufficiency of plaintiffs' [second] amended complaint by 'accepting all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff[s].'" Bramlett v. Med. Protective Co. of Fort Wayne, Ind., 855 F.Supp.2d 615, 618 (N.D. Tex. 2012) (Fitzwater, C.J.) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)) (alteration and some internal quotation marks omitted). To survive defendants' motions to dismiss under Rule 12(b)(6), plaintiffs must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S.662, 678 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556); see also Twombly, 550 U.S. at 555 ("Factual allegations must be enough to raise a right to relief above the speculative level[.]"). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'shown'—'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)) (alteration omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678 (citation omitted).

III

The court turns initially⁵ to DynCorp's motion to dismiss plaintiffs' civil RICO claim.⁶

A

RICO makes it unlawful "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[.]" 18 U.S.C. § 1962(c). "'Reduced to theirsimplest terms, the essential elements of a RICO claim are: (1) a person who engages in (2) a pattern of racketeering activity (3) connected to the acquisition, establishment, conduct, or control of an enterprise.'" Orthoflex, Inc. v. ThermoTek, Inc., 2012 WL 2864510, at *2 (N.D. Tex. July 12, 2012) (Fitzwater, C.J.) (quoting Larrew v. Barnes, 2002 WL 32130462, at *1 n.1 (N.D. Tex. Aug. 27, 2002) (Kaplan, J.), rec. adopted, 2002 WL 32130462 (N.D. Tex. Sept. 17, 2002) (Fitzwater, J.)). DynCorp contends that the second amended complaint fails to adequately plead the required elements of a civil RICO claim, entitling DynCorp to a dismissal under Rule 12(b)(6).

B

The court will assume, without deciding, that plaintiffs have adequately pleaded all other essential elements of a civil RICO claim and will focus on whether they have plausibly pleaded the third element: the existence of an enterprise.

"RICO defines an enterprise as 'any individual, partnership, corporation, association or other legal entity, and any union or group of individuals associated in fact although not a legal entity.'" Allstate Ins. Co. v. Plambeck, 802 F.3d 665, 673 (5th Cir. 2015) (quoting 18 U.S.C. § 1961(4)). An "association-in-fact enterprise is 'a group of persons associated together for a common purpose of engaging in a course of conduct,'" and "'is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.'" Boyle v. United States, 556 U.S. 938, 945-46 (2009) (quoting United States v. Turkette, 452 U.S. 576, 583 (1981)). An enterprise must have a "structure," that is "a purpose, relationships among those associated with theenterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose." Id. "An association-in-fact enterprise '(1) must have an existence separate and apart from the pattern of racketeering, (2) must be an ongoing organization and (3) its members must function as a continuing unit as shown by a hierarchical or consensual decision making structure.'" Allstate Ins., 802 F.3d at 673 (quoting Calcasieu Marine Nat'l Bank v. Grant, 943 F.2d 1453, 1461 (5th Cir. 1991)). "[T]he existence of an enterprise is an element distinct from the pattern of racketeering activity and 'proof of one does not necessarily establish the other.'" Boyle, 556 U.S. at 947 (quoting Turkette, 452 U.S. at 583). "For example, suppose that several individuals, independently and without coordination, engaged in a pattern of crimes listed as RICO predicates—for example, bribery or extortion. Proof of these patterns would not be enough to show that the individuals were members of an enterprise." Id. at 947 n.4.

Plaintiffs attempt to allege the existence of an association-in-fact enterprise consisting of DynCorp, DynCorp FZ, insurance-related entities (Midlands, Lloyd's, C.J. Coleman ("Coleman"), and CIGNA), and recruiting entities (MSC Global Recruitment, and World Wide Recruiting Company), or, alternatively, an enterprise consisting of DynCorp and any one of the other entities. Plaintiffs also assert that DynCorp and DynCorp FZ formed a RICO enterprise "[b]ecause they worked together regularly in adjusting and handling claims for personal accident insurance and DynCorp FZ functioned as a leasing employer for DynCorp." 2d Am. Compl. ¶ 197(a). And plaintiffs aver that "[e]ach enterprise was an organization which existed not only for the purpose of defrauding Plaintiffs of their disabilitybenefits, the enterprises engaged in other activities, such as the administration of disability claims and the examination of individuals claiming other benefits, and recruiting workers...