Source: cases/18usc1962/f-supp-2d-926-1143-negrete-v-allianz-life.case
Case source: https://www.neochart.com/catalog/cases/f-supp-2d/volume_926/1143_01/index.html
Quite simply, there is nothing inconsistent between a finding that Allianz has exerted some control over the FMOs at issue on the one hand, with a finding that the level of control that Allianz has exerted does not render the alleged enterprise indistinguishable from Allianz itself on the other.
This formal separation is alone sufficient to support a finding of distinctiveness.
For all of the foregoing reasons, the Court finds that disputed issues of fact preclude a grant of summary judgment in Allianz’s favor on the issue of distinctiveness.
On October 13, 2011, 2011 WL 4852314, the Court denied the motion, finding that disputed issues of material fact precluded summary judgment on the required elements of (1) a RICO enterprise; (2) an injury “by reason of’ the conduct constituting the alleged RICO violation; and (3) a RICO conspiracy.
And the “by reason of’ language of section 1964 requires a plaintiff to prove “but for” causation, proximate causation, and a concrete financial loss to a protectable business or property interest.
A RICO defendant’s conduct cannot be so neatly divided into “enterprise activities” and “non-enterprise activities,” with only the former supporting liability under RICO.
Because all of Allianz’s actions appear to have been in furtherance of the alleged enterprise’s unlawful scheme — and not a frolic and detour by Allianz alone — a reasonable jury could find that all of the class members were directly injured by the enterprise’s affairs.
Allianz cannot unilaterally redefine the alleged enterprise’s affairs based upon an exceedingly narrow conception of Allianz’s “operation or management” of the 19 FMO members of the enterprise, while ignoring plaintiffs’ evidence that Allianz undertook all of these actions in furtherance of the enterprise’s affairs — and not simply its own.
courts have repeatedly found that maintenance of a separate lawsuit, which was initiated prior to the plaintiff receiving notice of the proposed settlement, does not serve as an opt-out from the class settlement.
Accordingly, the Court finds that judgment shall be entered on the claims of all class members barred by the lorio agreement and judgment, including Ow’s claims with respect to his purchase of the MasterDex 10 annuity.
Generally, the parol evidence rule does not act to bar extrinsic evidence related to a fraud claim rather than a breach of contract claim.
Because plaintiffs bring RICO claims grounded in fraud — not claims for breach of contract — evidence related to their claims is plainly not barred by the parol evidence rule.
casedsl 1
case /f-supp-2d/926/1143-01
name Negrete v. Allianz Life Insurance Co. of North America
cite 926 F. Supp. 2d 1143 (2013)
court United States District Court for the Central District of California
date 2013-02-25
url catalog/cases/f-supp-2d/volume_926/1143_01/index.html
source ir/caselaw/f_supp_2d_926.jsonl sha1=4778183b44a4f21b2bc9653d353ec0cc3f089fb0 chars=50901
law 18usc1962 (c),(d)
role applied
posture civil; certified nationwide class of senior annuity purchasers v. insurer; defendant's third motion for summary judgment on the RICO claims (person/enterprise distinctness, causation, release, parol evidence); denied except as to claims released by a prior class settlement
result mixed
element person : satisfied [triable]
party Allianz (person) vs. "Senior Annuity Enterprise" (Allianz + 13 Allianz-owned marketing organizations + 6 independent ones)
variant distinct-from-enterprise/corporation-vs-network-of-owned-and-independent-distributors
fact @11962..12183 [supports] | According to plaintiffs, the Senior Annuity Enterprise consists of Allianz, the 13 FMOs in which Allianz holds ownership interests, and the 6 FMOs who have served as board members of the Market Advisory Committee (“MAC”).
fact @13436..13704 [supports] | The degree of control Allianz exercises over the FMOs it does not own is defined by contract, PSGI ¶ 61, and Allianz and these FMOs do not share executives, employees, or co-mingle operating funds, and the FMOs handle payment of their operating expenses and employees.
fact @14139..14377 [supports] | In addition, these FMOs sell various securities products offered by other insurance companies, including non-annuity products, and some of the FMOs also provide unrelated services like tax consulting, stock advice, and brokerage services.
fact @19420..19697 [supports] | Unlike situations where a single corporate defendant is alleged to have “conspirefd] with himself,” River City, 960 F.2d at 1461, Allianz is alleged to have conspired with 19 formally-separate corporate entities (the enterprise) in furtherance of its alleged scheme to defraud.
fact @25423..25512 [supports] | And whether Allianz-owned or not, none of the FMOs are pled as RICO persons in this case.
rule @11379..11479 [quoted] | Stated otherwise, the enterprise must be either “formally or practically separable from the person.”
rule @22033..22329 | Quite simply, there is nothing inconsistent between a finding that Allianz has exerted some control over the FMOs at issue on the one hand, with a finding that the level of control that Allianz has exerted does not render the alleged enterprise indistinguishable from Allianz itself on the other.
held @19753..19836 | This formal separation is alone sufficient to support a finding of distinctiveness.
held @29070..29237 | For all of the foregoing reasons, the Court finds that disputed issues of fact preclude a grant of summary judgment in Allianz’s favor on the issue of distinctiveness.
gloss Defendant corporation is the only RICO person and is itself a member of the association-in-fact. Distinctness survives because the other members are separately incorporated and six are unowned affiliates that sell rivals' products; "agent" labels in contracts and substantial control do not collapse them into the defendant. Rejects the single-corporate-family line (Riverwoods/Fitzgerald/Fogie) on these facts, and holds that even a "something more" test would be triable.
element enterprise : satisfied [triable]
variant association-in-fact/manufacturer-and-distribution-network
fact @12184..12364 [supports] | In the late 1990s, Allianz — and LifeUSA Holding Inc., which merged with Allianz in 1999— began acquiring ownership interests in certain FMOs under the banner of “Project Procure.”
fact @12927..13095 [supports] | Moreover, this Court has previously found that the MAC Board members have demonstrated a “high degree of coordinated conduct with respect to targeted sales to seniors.”
fact @20390..20675 [supports] | While the evidence supports plaintiffs’ contention that all of the FMOs work with Allianz with a view towards selling as many annuity products as possible in the senior market, this common purpose and other evidence of coordination does not make the FMOs and Allianz indistinguishable.
rule @9353..9568 [quoted] | Under Boyle, an association-in-fact enterprise must have “a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.”
held @2641..2940 | On October 13, 2011, 2011 WL 4852314, the Court denied the motion, finding that disputed issues of material fact precluded summary judgment on the required elements of (1) a RICO enterprise; (2) an injury “by reason of’ the conduct constituting the alleged RICO violation; and (3) a RICO conspiracy.
gloss Existence of the enterprise (purpose/relationships) was held triable in the PRIOR order (MSJ Order No. 2), only recited here; this opinion adds the distinctness analysis under `person`.
element causation : satisfied [triable]
party class members who bought annuities through marketing organizations that are not members of the alleged enterprise
variant proximate-cause/purchasers-via-intermediaries-outside-the-enterprise
fact @33147..33343 [supports] | Because class members that purchased their annuity from non-enterprise FMOs still had to sign the “Allianzmandated” SOU, they suffered an injury by reason of Allianz’s operation of the enterprise.
fact @35075..35429 [supports] | Thus, Allianz’s development of the annuity products, design and dissemination of the marketing materials and SOUs, creation and utilization of the MAC Board to further its marketing efforts, and leadership of the enterprise are all “enterprise activities” that were undertaken in furtherance of an alleged scheme to defraud financial products purchasers.
rule @29748..29945 | And the “by reason of’ language of section 1964 requires a plaintiff to prove “but for” causation, proximate causation, and a concrete financial loss to a protectable business or property interest.
rule @34638..34808 | A RICO defendant’s conduct cannot be so neatly divided into “enterprise activities” and “non-enterprise activities,” with only the former supporting liability under RICO.
held @36928..37198 | Because all of Allianz’s actions appear to have been in furtherance of the alleged enterprise’s unlawful scheme — and not a frolic and detour by Allianz alone — a reasonable jury could find that all of the class members were directly injured by the enterprise’s affairs.
gloss Injury need not pass through an enterprise member: the defendant's own standardized sales documents, done in furtherance of the enterprise's affairs, reach buyers who dealt with non-member sellers. First fact line is the court's summary of plaintiffs' argument, which it then accepts.
element conduct : satisfied [triable]
variant operation-or-management/leader-directing-distribution-network
fact @35719..36007 [supports] | This also includes the allegedly excessive commissions and lucrative incentive programs that Allianz created for all FMOs and their agents, see PSGI ¶¶ 133, 135, which purportedly furthered the enterprise’s “common purpose” of increasing the sales of Allianz products in the senior market
held @36585..36927 | Allianz cannot unilaterally redefine the alleged enterprise’s affairs based upon an exceedingly narrow conception of Allianz’s “operation or management” of the 19 FMO members of the enterprise, while ignoring plaintiffs’ evidence that Allianz undertook all of these actions in furtherance of the enterprise’s affairs — and not simply its own.
gloss Decided only as part of the causation argument: "the enterprise's affairs" include what the leader does alone in furtherance of the common purpose, not only its dealings with fellow members. Tension with distinctness (Reves: the enterprise's affairs, not the defendant's own) is noted by the court and resolved for plaintiffs.
defense x-release-prior-class-settlement : satisfied [law]
scope procedural
party named plaintiff Ow and all class members within the Iorio class settlement
count Ow's MasterDex 10 purchase and the other transactions released in Iorio
variant release/class-member-did-not-opt-out-separate-suit-predates-settlement
fact @38680..38773 [supports] | Notably, plaintiffs do not dispute that Ow did not explicitly opt-out of the lorio settlement
fact @39972..40184 [supports] | Here, plaintiff Ow indisputably filed this lawsuit long before the proposed settlement was reached in lorio; as such, his maintenance of this suit was insufficient to opt-out of the lorio settlement and judgment.
rule @39641..39853 | courts have repeatedly found that maintenance of a separate lawsuit, which was initiated prior to the plaintiff receiving notice of the proposed settlement, does not serve as an opt-out from the class settlement.
held @40960..41178 | Accordingly, the Court finds that judgment shall be entered on the claims of all class members barred by the lorio agreement and judgment, including Ow’s claims with respect to his purchase of the MasterDex 10 annuity.
defense x-parol-evidence-rule : not-satisfied [law]
variant state-evidence-rule/does-not-bar-fraud-based-rico-claim
rule @41428..41566 | Generally, the parol evidence rule does not act to bar extrinsic evidence related to a fraud claim rather than a breach of contract claim.
held @42849..43024 | Because plaintiffs bring RICO claims grounded in fraud — not claims for breach of contract — evidence related to their claims is plainly not barred by the parol evidence rule.
gloss Rests on a month-old change in California law (Riverisland overruling Pendergrass); court does not decide whether a state parol evidence rule could ever limit a federal RICO claim.
element racketeering.mail-fraud : not-reached
gloss Mail/wire fraud via misleading brochures and "Statements of Understanding" is the predicate; its elements are stated but not in issue on this motion.
element pattern : not-reached
element conspiracy : not-reached
gloss Held triable in the prior order; not revisited.
element injury : not-reached
misfit The decisive question is again a RELATION, distinct(person, enterprise) (now a constraint on the .law side), where the person is a MEMBER of the association-in-fact; recorded under `person` as in Cedric Kushner. The court weighs control against independence, but the v0 fact lines were chosen from the independence side, so polarity shows only [supports]; the opposing facts (ownership of 13 members, "agent" labels, substantial contractual control) live in the gloss and the quote set is frozen.
misfit `satisfied [triable]` on a DEFENDANT's summary-judgment motion means only "not negated as a matter of law"; yet for distinctness the court also says formal separation "alone" suffices (closer to [law]). One block cannot carry two bases (law for the legal-separation ruling, triable for the functional-separation alternative).
misfit Holdings on enterprise/conspiracy/injury live in an earlier order in the same case (MSJ Order No. 2, 2011 WL 4852314) that this opinion only recites; no construct for "decided in a prior order of the same case". The `enterprise` block is left on merits scope (it is this court's ruling in this case; `lower-court` would be wrong) but its held line is that recital.
misfit Many `fact` lines are party contentions or statement-of-facts citations ("According to plaintiffs...", "Allianz argues...") rather than findings; at summary judgment the court narrates both sides' versions and the notation has no slot for whose version a fact is.
misfit Class action: causation is decided for a SUBSET of class members (buyers via non-enterprise sellers); `party` holds it, but class-wide proof of reliance/causation (signatures on standard forms) is a proof-method concept with no home.
misfit `conduct` is not separately decided; it surfaces inside the causation holding (scope of "enterprise's affairs"). Recorded as its own block because the court states a usable rule, but it is really causation x conduct.
misfit `result mixed` hides that every merits element went for plaintiffs and the only loss is a release defense as to part of the class; result has no per-defense/per-subclass granularity.
misfit Defenses here are not RICO-specific (class-settlement release, state parol evidence rule) -- x- ids that belong to general civil procedure/evidence rather than to this law's model.