In re National Prescription Opiate Litigation, __ F.3d ___, 2020 WL 5701916 (6th Cir., Sept. 24, 2000)
In this multi-district litigation (“MDL”) relating to the opioid crisis, the Court addressed the district court’s order certifying a “negotiation class” under Federal Rule of Civil Procedure 23. The district court had certified a class of all cities and counties throughout the United States for purposes of negotiating a settlement between class members and opioid manufacturers, distributors, and pharmacies. Appellants, objecting opioid distributors and retail pharmacies (“Defendants”), as well as six objecting Ohio cities, appeal the district court’s order certifying this negotiation class. Appellees, putative representatives of the negotiation class (“Plaintiffs”), requested the court to approve this novel form of class action, but the Court declined to do so for various reasons discussed in the opinion. Accordingly, the court reversed the district court’s order.
Further argument in support of certifying the “negotiation class” was the dissenting Judge’s opinion who that RICO’s causation element did not necessitate individualized proof and thus the predominance criterion of Rule 23 was satisfied. In other contexts, whether harm was caused by individuals’ reliance on alleged fraud may be an individual question that would predominate over common questions. But, the Judge said “Not so for RICO.”
The Judge stated that Defendants’ argument is at odds with both the Supreme Court’s and Sixth Circuit precedent. In Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008), the Supreme Court held that those who bring mail fraud claims under RICO do not have to demonstrate that they relied on the fraud to establish that their injuries were caused by the fraud. See id. at 649, 128 S.Ct. 2131 (“[N]o showing of reliance is required to establish that a person has violated § 1962(c) by conducting the affairs of an enterprise through a pattern of racketeering activity consisting of acts of mail fraud.”). Because “[f]or RICO purposes, reliance and proximate cause remain distinct,” Plaintiffs “need only show use of the mail in furtherance of a scheme to defraud and an injury proximately caused by that scheme.” Wallace v. Midwest Fin. & Mortg. Servs., Inc. 714 F.3d 414, 420 (6th Cir. 2013). RICO’s softened causation element “largely dooms the Defendants’ attempt to identify individual issues of causation sufficient to preclude a finding of predominance.” Torres v. S.G.E. Mgmt., L.L.C., 838 F.3d 629, 638 (5th Cir. 2016); see, e.g., id. at 638–40 (finding predominance existed when pyramid scheme victims sought to certify RICO claims because victims’ being “necessary to the scheme[,]” “direct victims of the scheme,” and “foreseeable victims of the alleged fraud” satisfied RICO’s causation element).
Note: This affirmation by the dissenting Judge of the broad reach of civil RICO fraud actions, particularly in Class Action cases, is worthy of examination.