Antitrust Law Daily Wrap Up, RICO—9th Cir.: Lack of pattern of racketeering activity dooms insurance agent’s claims, (Dec 7, 2015)

By Greg Hammond, J.D.

An insurance company could not overturn orders entered by the federal district court in Phoenix that found the company failed to demonstrate a pattern of extortion in support of federal and state racketeering claims. In affirming the lower court’s decisions, the U.S. Court of Appeals in San Francisco determined that the insurance company’s allegations merely demonstrated a series of steps that were part of a single plan to expose the company’s supposed unlawful business practices, rather than a pattern of racketeering activity (Aviva USA Corp. v. Vazirani, December 4, 2015, per curiam).

Aviva USA Corp. is a life and annuity insurance company that claimed an independent insurance agent developed a website in order to criticize Aviva and its business practices and to publicize his lawsuits against Aviva. The agent also purportedly sent out a series of “blast emails” to hundreds of thousands of life insurance and annuity sales agents and stockbrokers, providing a link to the website; and registered 14 domain names in connection with the website, each of which referenced “Aviva” and was routed to the website. Some of the domain names were supposedly registered with false names and contact information.

The district court granted judgment on the pleadings in favor of the agent on the Racketeer Influenced and Corrupt Organization Act (RICO) claim; granted summary judgment in favor of the agent on the Arizona anti-racketeering claim; and granted the agent attorney fees under Arizona’s anti-racketeering statute. Aviva appealed.

Racketeering claims. The court agreed with the lower court that Aviva failed to support its federal and Arizona racketeering claims. Aviva alleged that the appellant engaged in a pattern of extortion when he sent emails to Aviva threatening a negative public relations claim, hired a public relations firm, registered domain names using Aviva’s mark to publish negative information about the company, distributed negative information using mass email, and destroyed evidence during litigation. These actions, however, did not constitute a pattern of racketeering activity, the appellate court determined. Rather, the court concluded that the allegations demonstrated the appellant engaged in a series of steps that were part of a single plan to expose what he believed to be unlawful business practices by Aviva.

In addition, the lower court did not abuse its discretion in awarding the appellant attorney fees under Arizona’s anti-racketeering statute, the appellate court determined. Aviva had claimed that the appellant’s earlier spoliation of evidence constituted special circumstances that would render an award of attorney fees to appellants “unjust.” The appellate court noted, however, that the appellant was already sanctioned for the earlier spoliation of evidence and it was not unreasonable for the lower court to conclude that the previous sanctions were sufficient.

The appellate court also affirmed the lower court’s entry of summary judgment in favor of the agent on Aviva’s trademark, unfair competition, and anticybersquatting claims.

The cases are Nos.13-16858 and 13-16869.

Attorneys: Andrew Foster Halaby (Snell & Wilmer) for Aviva USA Corp. and Aviva Brands Ltd. Andrew L. Pringle (Dickinson Wright PLLC) for Anil Vazirani.

Companies: Aviva USA Corp.; Aviva Brands Ltd.; Vazirani & Associates Financial, LLC; Secured Financial Solutions, LLC; James Regan & Associates LLC

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