United States District Court for the Central District of California · 2013-02-25
Case and law context
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; claim: (c),(d)
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | But-for and proximate causation ("by reason of", 18 U.S.C. § 1964(c)) | satisfied Counted merits instance applied / merits basis: triable; claim: (c),(d); party: class members who bought annuities through marketing organizations that are not members of the alleged enterprise; subject: party=class members who bought annuities through marketing organizations that are not members of the alleged enterprise 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. | proximate-cause/purchasers-via-intermediaries-outside-the-enterprise | 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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [33147:33343] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [35075:35429] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [29748:29945] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [34638:34808] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [36928:37198] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | satisfied Counted merits instance applied / merits basis: triable; claim: (c),(d) 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. | operation-or-management/leader-directing-distribution-network | 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 marketSource: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [35719:36007] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [36585:36927] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) | not_reached Excluded from merits counts applied / merits claim: (c),(d) Held triable in the prior order; not revisited. | Unspecified variant | No source quotation recorded for this block. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Enterprise (§ 1961(4)): legal entity or association-in-fact | satisfied Counted merits instance applied / merits basis: triable; claim: (c),(d) 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`. | association-in-fact/manufacturer-and-distribution-network | 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.”Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [12184:12364] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.”Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [12927:13095] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [20390:20675] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.”Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [9353:9568] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [2641:2940] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Civil RICO injury to business or property (18 U.S.C. § 1964(c)) | not_reached Excluded from merits counts applied / merits claim: (c),(d) | Unspecified variant | No source quotation recorded for this block. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity | not_reached Excluded from merits counts applied / merits claim: (c),(d) | Unspecified variant | No source quotation recorded for this block. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Culpable person (§ 1961(3)) distinct from the enterprise under (c) | satisfied Counted merits instance applied / merits basis: triable; claim: (c),(d); party: Allianz (person) vs. "Senior Annuity Enterprise" (Allianz + 13 Allianz-owned marketing organizations + 6 independent ones); subject: party=Allianz (person) vs. "Senior Annuity Enterprise" (Allianz + 13 Allianz-owned marketing organizations + 6 independent ones) 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. | distinct-from-enterprise/corporation-vs-network-of-owned-and-independent-distributors | 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”).Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [11962:12183] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [13436:13704] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [14139:14377] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [19420:19697] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.And whether Allianz-owned or not, none of the FMOs are pled as RICO persons in this case.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [25423:25512] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Stated otherwise, the enterprise must be either “formally or practically separable from the person.”Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [11379:11479] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [22033:22329] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.This formal separation is alone sufficient to support a finding of distinctiveness.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [19753:19836] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [29070:29237] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Mail or wire fraud predicate (18 U.S.C. §§ 1341, 1343) | not_reached Excluded from merits counts applied / merits claim: (c),(d) Mail/wire fraud via misleading brochures and "Statements of Understanding" is the predicate; its elements are stated but not in issue on this motion. | Unspecified variant | No source quotation recorded for this block. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Parol evidence rule raised to bar extrinsic evidence of fraudulent misrepresentations | not Counted merits instance applied / merits basis: law; claim: (c),(d) 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. | state-evidence-rule/does-not-bar-fraud-based-rico-claim | Generally, the parol evidence rule does not act to bar extrinsic evidence related to a fraud claim rather than a breach of contract claim.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [41428:41566] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [42849:43024] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
| /f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013 | Claim preclusion / release by prior class-action settlement | satisfied Excluded from merits counts applied / procedural basis: law; claim: (c),(d); 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; subject: 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 | release/class-member-did-not-opt-out-separate-suit-predates-settlement | Notably, plaintiffs do not dispute that Ow did not explicitly opt-out of the lorio settlementSource: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [38680:38773] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [39972:40184] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [39641:39853] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.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.Source: docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [40960:41178] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee. |
Court interpretations recorded from this case
interpretation
Stated otherwise, the enterprise must be either “formally or practically separable from the person.”
/f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013
Stated otherwise, the enterprise must be either “formally or practically separable from the person.”Source:
docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [11379:11479] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Under § 1962(c), a corporate defendant cannot be both the "person" and the "enterprise" (nor can it evade distinctness merely by defining the enterprise as the corporation plus its own employees/agents acting in the course of business).
interpretation
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.
/f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013
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.Source:
docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [29748:29945] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Under Holmes v. SIPC (503 U.S. 258 (1992)), Anza, and Hemi Group, proximate cause requires "some direct relation between the injury asserted and the injurious conduct alleged".
interpretation
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.
/f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013
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.Source:
docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [29748:29945] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Civil RICO claims are governed by a 4-year statute of limitations borrowed from the Clayton Act (Agency Holding Corp. v. Malley-Duff, 483 U.S. 143 (1987)), accruing under the injury-discovery rule (Rotella v. Wood, 528 U.S. 549 (2000)).
interpretation
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.
/f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013
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.Source:
docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [39641:39853] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.General affirmative defense litigated in civil RICO class actions.
interpretation
Generally, the parol evidence rule does not act to bar extrinsic evidence related to a fraud claim rather than a breach of contract claim.
/f-supp-2d/926/1143-01 — United States District Court for the Central District of California · 2013
Generally, the parol evidence rule does not act to bar extrinsic evidence related to a fraud claim rather than a breach of contract claim.Source:
docroot/ir/caselaw/f_supp_2d_926.jsonl#/f-supp-2d/926/1143-01; Unicode character offsets [41428:41566] (end exclusive); SHA-256 21289dc912cdd3fe1c08a082d0c16baed1b869223da6aebc79966cadcfbee6ee.Rejected as a bar to mail/wire fraud RICO predicates sounding in tort rather than contract enforcement.