District Court Rules that Based Upon Liberal Construction of Civil RICO Plaintiffs’ Claims Under Section 1962(c)- Substantive RICO- are Sufficient, But Finds Claims Under Section 1962(a) Inadequately Alleged

In re National Prescription Opiate Litigation-   West Boca Medical Center v. Amerisource Bergen Drug Corporation, et al,  ___F.Supp.3d ___, 2020 WL 1669655 (N.D. Ohio, Apr. 3, 2020)

In this multi-district court litigation, the Court considered the claims of Plaintiff West Boca Medical Center and based upon previous rulings reaffirmed that the Plaintiff adequately alleged a violation of section 1962(c) of RICO.  West Boca alleged that all Defendants (Distributors, Manufacturers, and Pharmacies) conducted and participated—through various acts of mail and wire fraud – in an enterprise and created the opioid epidemic and injured West Boca, in violation of 18 U.S.C. § 1962(c).  West Boca further alleges each Defendant derived income and invested the proceeds in an enterprise that injured West Boca, in violation of § 1962(a), and that each Defendant conspired with one another to do so in violation of § 1962(d).

Standing/Proximate Cause

With regard to the section 1962c claim, the Court also explained in depth how the Plaintiff’s RICO’s civil-suit provision adequately satisfied standing and proximate cause, and thus there was sufficient jurisdiction to bring the suit.  See pages *7-*13.

Other Legal Requirements For a Section 1962c Claim Adequately Alleged

The District Court stated that there was nothing in the parties’ briefs to cause the Court to revisit any of its prior analysis of the applicable RICO standards. Given the RICO statute should be liberally construed and should apply broadly in civil cases the court reaffirmed its holdings that plaintiff adequately alleged (1) the existence of an enterprise, (2) predicate acts, (3) conspiratorial agreement, and met (4) Fed. R. Civ. P. 9(b)’s particularity requirement (citing Boyle v. United States, 556 U.S. 938, 944 (2009)); Doc. #: 1203 at 6 (citing Sedima, SPRL v. Imrex Co., Inc., 473 U.S. 479, 498 (1985)). *14.

Section 1962(a)

The court, however, did not agree with West Boca’s claim that Defendant Pharmacies violated section 1962(a) finding as West Boca did not allege an injury specifically caused by any of the Defendants’ investment of income obtained through racketeering activity, a requirement under section 1962(a).   The court explained that a majority of the Circuits, including the Sixth, have concluded that, “in order to state a claim under § 1962(a), a plaintiff must plead a specific injury to the plaintiff caused by the investment of income into the racketeering enterprise, distinct from any injuries caused by the predicate acts of racketeering,”  and the court explained that Section 1962(c) is the proper avenue to redress injuries caused by the racketeering acts themselves.

The court concluded that West Boca alleged that the Defendants merely reinvested their allegedly ill-gotten racketeering income in themselves as enterprises and used that reinvestment to further propagate their alleged pattern of racketeering activity (false marketing and failure to prevent diversion). Under controlling Sixth Circuit precedent, these allegations were insufficient to confer standing on West Boca to assert a § 1962(a) claim, and West Boca’s Second Claim for Relief was dismissed.

Ed Note:   This case is useful in (1) its broad construction of civil RICO substantive provision section 1962(c), which is the “proper avenue to redress injuries” caused by racketeering activity; (2) its expansive view of standing and proximate cause and its detailed analysis; and (3) the strict construction of section 1962(a), in conformance with the majority of the circuits.

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