Brown v. AJAX PAVING INDUSTRIES, INC.
2011 U.S. Dist. LEXIS 19481
| E.D. Mich. | 2011Background
- Plaintiff Jay Brown was employed by Ajax Paving Industries, Inc. from May 2004 to September 2009 and sought workers' compensation after a July 2005 shoulder injury.
- Ajax denied the WDCA benefits despite an IME by Dr. Drouillard indicating work-related injury; the WDCA proceedings proceeded to a magistrate who awarded benefits in October 2006, despite Drouillard's testimony later contradicting the earlier report.
- During settlement discussions, Brown executed a September 1, 2009 Release to redeem liability for WDCA claims, agreeing to quit Ajax employment, waive seniority, relinquish re-employment claims, and not seek re-employment.
- The Release also provided a broad discharge of Ajax and its agents of any liabilities arising out of the employment relationship; Brown later filed a lawsuit alleging a RICO scheme to deny WDCA benefits by Ajax and related entities.
- The action named Ajax, the Insurance Defendants (ACIG, Ward North America, VeriClaim, NovaPro), and Dr. Drouillard, and the court previously ruled Ajax’s claims barred by the Release; the current motion addresses whether the Release bars further RICO claims against the Insurance Defendants and Drouillard.
- The court granted the Defendants’ motions to dismiss, finding the Release bars the RICO claims against the Insurance Defendants as Ajax’s agents and finding the pleadings fail to show a RICO injury to business or property or a viable pattern of racketeering.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Release bar the RICO claims against the Insurance Defendants as Ajax's agents? | Brown contends the Insurance Defendants are not covered by the Release as agents distinct from Ajax. | Insurance Defendants qualify as Ajax's agents under Michigan law, so the Release bars their RICO claims. | Yes; the Insurance Defendants are agents, and the Release bars their RICO claims. |
| Do Brown's damages qualify as injuries to business or property under RICO? | Damages reflect lost WDCA benefits and related expenses, allegedly arising from a scheme to deny benefits. | Damages are pecuniary losses tied to a personal injury and not injuries to business or property. | No; damages are not injuries to business or property under RICO. |
| Has Brown alleged a viable pattern of racketeering (continuity) to support a RICO claim? | Alleges a continuing scheme affecting multiple claimants over several years. | Allegations lack the necessary continuity (closed or open-ended) and multiple victims to constitute a pattern. | No; the complaint fails to plead a viable pattern of racketeering. |
Key Cases Cited
- Brown v. Cassens Transport Co., 743 F. Supp. 2d 651 (E.D. Mich. 2010) (WDCA damages not recoverable under RICO; claims similar to Brown.)
- Moon v. Harrison Piping Supply, 465 F.3d 719 (6th Cir. 2006) (No closed- or open-ended continuity; single scheme; not a pattern.)
- Magnum v. Archdiocese of Philadelphia, 253 F. App'x 224 (3d Cir. 2007) (Lost opportunity to sue cannot be redressable under RICO when not injury to business/property.)
- Malley-Duff & Associates, Inc. v. Crown Life Insurance Co., 792 F.2d 341 (3d Cir. 1986) (Lost or impaired business action may be RICO injury when arising out of a business termination.)
- Deck v. Engineered Laminates, 349 F.3d 1253 (10th Cir. 2003) (Fraud injury to business or property requires business-like harm.)
- McLaughlin v. American Tobacco Co., 522 F.3d 215 (2d Cir. 2008) (Actual injury required for RICO standing; not mere intangible loss.)
- Maio v. Aetna, Inc., 221 F.3d 472 (3d Cir. 2000) (Injury to expectancy or intangible property insufficient for RICO standing.)
- Stefanac v. Cranbrook Educational Community, 458 N.W.2d 56 (Mich. 1990) (Settlement agreements are binding until rescinded for cause.)