Antitrust Law Daily Wrap Up, TOP STORY—NDWV: RICO Claims Proceed Against Law Firm, Attorneys, Medical Expert for Allegedly Fraudulent Asbestosis Litigation, (Jan 15, 2013)

By Tobias J. Gillett, J.D., LLM.

CSX Transportation, Inc. can continue to pursue RICO claims against a law firm, attorneys, an investigator, and a doctor it alleges engaged in a conspiracy to bring meritless asbestosis litigation against it, the federal district court in Wheeling, West Virginia has ruled (CSX Transportation, Inc. v. Gilkison, January 14, 2013, Stamp, F.).

The court held that (1) enough factual disputes remained regarding when and how much CSX knew about the defendants’ scheme to preclude summary judgment on statute of limitations grounds, (2) CSX did not have to prove reasonable reliance, and (3) factual disputes remained concerning whether the Noerr-Pennington doctrine, which provides First Amendment immunity to parties engaged in “petitioning activity,” applied in this case.

According to CSX’s complaint, the attorneys had obtained access to asbestosis litigation clients through illegal means, and had procured intentionally unreliable medical diagnoses for those clients through a medical expert. The medical expert allegedly “agreed to read unusually high numbers of x-rays with reckless or deliberate disregard for their true content with the full knowledge that the lawyer defendants intended to file personal injury claims based on his diagnoses.” The attorneys then allegedly filed thousands of spurious asbestosis cases based on those diagnoses against CSX and other entities.

CSX’s complaint charged that the defendants had violated the Racketeer Influenced and Corrupt Organizations Act (RICO Act) through their attempts to defraud CSX, among other claims. The attorneys filed a motion for summary judgment.

Statute of Limitations

The attorneys argued that the RICO Act’s four-year statute of limitations for private civil claims had expired prior to CSX bringing the lawsuit, since CSX had knowledge of its alleged injury more than four years prior to filing its complaint on July 5, 2007. The attorneys contended that CSX had access to the clients’ medical documents, could judge the quality of the documents, was suspicious of the medical expert’s practices, knew of the law firm’s screening process, did not trust the attorneys, and knew of the firm’s alleged improper coaching of its clients. CSX argued that each of these facts was either disputed or immaterial. The court agreed with CSX that the factual contentions had to be resolved by the jury and not on summary judgment.

Reasonable Reliance

The attorneys also contended that CSX could not demonstrate the reasonable reliance necessary to state its fraud-based RICO claims. As the court observed, however, the Supreme Court had eliminated the requirement that a plaintiff must show reasonable reliance to establish a RICO violation based on mail fraud in its 2008 decision in Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639.

The attorneys attempted to evade Bridge by asserting that “whether couched in terms of reliance or as part of RICO’s causation requirement whereby an injury must be ‘by reason of’ the RICO conduct,” an injury cannot be caused by a scheme if the party is aware of the scheme. The court concluded that CSX did not have to demonstrate any reliance, and even if it did, factual disputes remained regarding what knowledge CSX possessed concerning the alleged improper conduct.

Noerr-Pennington Doctrine

The attorneys also argued that the Noerr-Pennington doctrine barred CSX’s claims. The court explained that the Noerr-Pennington doctrine “grants First Amendment immunity to those who engage in petitioning activity,” including parties pursuing litigation. However, the court noted that the doctrine did “not protect those who file ‘sham’ lawsuits,” defined as lawsuits that are “(1) objectively baseless and (2) subjectively intended to abuse process.” The court concluded “that evidence does exist that creates a factual dispute as to whether the claims filed on behalf of the claimants by the [law firm] were objectively baseless and subjectively intended to abuse the litigation process.”

The court thus refused to grant summary judgment to the defendants on the RICO claims. The court also declined to grant summary judgment on all other counts in CSX’s complaint, including claims for common law fraud and civil conspiracy.

The case is Civil Action No. 5:05CV202 (STAMP).

Attorneys: Dan Himmelfarb (Mayer Brown, LLP) for CSX Transportation, Inc. John E. Gompers (Gompers, McCarthy & McClure) for Robert V. Gilkison. David J. Berardinelli (DeForest, Koscelnik, Yokitis, Kaplan & Berardinelli) for Peirce, Raimond & Coulter, PC. Jerald E. Jones (West & Jones) for Dr. Ray A. Harron.

Companies: CSX Transportation, Inc.; Peirce, Raimond & Coulter, PC.

MainStory: TopStory RICO WestVirginiaNews