Tuesday, September 24, 2013

Sixth Circuit Divides on Clear-Statement Application to Civil RICO

The en banc Sixth Circuit divided sharply today over whether Michigan workers could sue their employer, claims manager, and employer's doctor under federal civil RICO for engaging in a fraudulent scheme involving the mail to deny the workers state workers' compensation benefits.

The case, Jackson v. Sedgwick Claims Management Services, Inc., arose when employees of Coca-Cola applied for, and were denied, workers' compensation benefits under Michigan law.  The employees sued  Coca-Cola, Coke's claims management service, and a cooperating doctor under federal civil RICO for colluding to deny them their benefits.  The defendants moved to dismiss, arguing that the claim wasn't cognizable.

The en banc Sixth Circuit agreed.  The court held that the plaintiffs failed to allege that they were "injured in [their] business or property" as required by RICO for civil damages.

But then the court went on to say that this conclusion "is confirmed by" the clear-statement principle in Gregory v. Ashcroft.  The majority said that under the clear-statement principle Congress must make clear when it intends federal law to displace state law in an area traditionally regulated by the states.  Here, the majority held that RICO doesn't have a sufficiently clear statement of intent to displace state workers' compensation law, and so the clear-statement principle confirms the court's conclusion that the plaintiffs can't use federal civil RICO to attack the state workers' compensation scheme.

Judge Moore dissented, joined by four other judges.  Judge Moore argued that "the majority makes the erroneous assumption that the clear-statement rule would even apply in this context."  She argued that the majority's approach is inconsistent with the Supreme Court's clear instruction to read RICO broadly.

http://lawprofessors.typepad.com/conlaw/2013/09/sixth-circuit-divides-on-clear-statement-application-to-civil-rico.html

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