Opinion ID: 811166
Heading Depth: 4
Heading Rank: 2

Heading: The Plaintiffs’ Injuries are Ripe

Text: We held in Brown II that injured Michigan employees “acquire a property interest in worker’s compensation when employers learn of their employees’ physical injuries.” Brown II, 675 F.3d at 963. The fraudulent denial of these benefits causes injury to this property interest, and the value of the lost property interest is readily ascertainable—it is the value of the worker’s compensation that the plaintiff was entitled to receive under the WDCA’s scheme for calculating benefits. See Fleischhauer v. Feltner, 879 F.2d 1290, 1299 (6th Cir. 1989) (RICO damages must be “established by competent proof, not based upon mere speculation and surmise”), cert. denied, 493 U.S. 1074 (1990); see also Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 265-68 (1992) (requiring RICO violation proximately cause plaintiff’s injuries). Because the injury occurs at the time of the fraudulent denial of benefits, the plaintiffs’ claims in this case were ripe at the time they filed their lawsuit. The district court therefore erred in determining that the plaintiffs’ injury is “conjectural and hypothetical” until they have proven their entitlement in state proceedings. Jackson, 2010 WL 931864, at  & n.33,  & n.34. That is not to say that the state proceedings will be irrelevant; however, they will affect the amount of damages the plaintiffs are entitled to receive rather than the existence of the damages in the first place. By the time we issued our opinion in Brown II, all of the plaintiffs there had settled their worker’s compensation claims with their employer. In such cases, we stated that the primary damages would be the difference between the amount the plaintiffs received in settlement and the amount they would have received but for the fraud. 675 F.3d at 967. This calculus remains applicable in this case because Jackson has also settled his claims. Scharnitzke, on the other hand, has already received a ruling that he is entitled to some benefits, a ruling which is being appealed. The outcome of that appeal may certainly be relevant on the amount of damages that Scharnitzke may receive in this case, but the possibility of future mitigation of damages No. 10-1453 Jackson et al. v. Segwick et al. Page 10 does not make the injury itself less ripe at the time it occurred (or the total value of the damages less ascertainable).7 We acknowledge that one of our sister circuits currently disagrees with this approach. The Second Circuit has adopted a rule that RICO claims are not ripe “until the amount of damages becomes clear and definite.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 768 (2d Cir. 1994), cert. denied, 513 U.S. 1079 (1995). But to the extent that this rule has been followed by other circuits, the focus has been on the speculative nature of the damages themselves and not their amount. See Evans v. City of Chicago, 434 F.3d 916, 932 (7th Cir. 2006) (adopting standard but focusing on indirect nature of injuries rather than their amount); Maio v. Aetna, Inc., 221 F.3d 472, 495 (3d Cir. 2000) (holding no RICO cause of action because factual predicate necessary for damages to be incurred at all too speculative); DeMauro v. DeMauro, 115 F.3d 94, 97-98 (1st Cir. 1997) (adopting “clear and definite” standard but focusing on existence of damages in the first place). Other circuits have simply declined to adopt this rule as overly rigid. Potomac Elec. Power Co. v. Elec. Motor & Supply, Inc., 262 F.3d 260, 265 (4th Cir. 2001) (“The best reading of § 1964(c)’s injury to business or property requirement is that it refers to the fact of injury and not the amount.”), cert. denied, 535 U.S. 927 (2002); Grimmett v. Brown, 75 F.3d 506, 516-17 (9th Cir. 1996) (holding “error to equate” a situation where “the injury is speculative because it is not known whether it will occur at all” to a situation where “the injury has occurred and is known, but it is speculative whether the damages might be reduced or even eliminated by alternative recovery efforts”), cert. dismissed, 519 U.S. 233 (1997); see also Liquidation Comm’n of Banco Intercontinental, S.A. v. Renta, 530 F.3d 1339, 1350-51 (11th Cir. 2008) (noting that even Second Circuit rule does not make a RICO injury unripe based solely on the “mere possibility” of recovery in a state proceeding); PAUL A. BATISTA, CIVIL RICO PRACTICE MANUAL 7 It is unclear from where the concurrence derives its statement that we would use as evidence of entitlement to damages the fact that an employee had settled his or her claim with the employer. In fact, Brown II restricts plaintiffs from recovering damages under a civil RICO claim that they had already received as part of the settlement agreement. 675 F.3d at 967. No. 10-1453 Jackson et al. v. Segwick et al. Page 11 § 4.22[D] (3d ed. 2008) (“[Gelt is] a case to which the Second Circuit rigidly adheres and which most other circuits tend to ignore or downplay.”). As the Ninth Circuit noted, the Second Circuit’s “clear and definite” amount rule was taken from an earlier Second Circuit case that held that a plaintiff’s claims were not ripe if the plaintiff might recover damages from a pending bankruptcy proceeding. Grimmett, 75 F.3d at 516 (citing Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1105 (2d Cir. 1988)). Like the Ninth Circuit, we also have similar precedent directly contradicting that rule. In Isaak v. Trumbull Savings & Loan Co., 169 F.3d 390 (6th Cir. 1999), we held that the plaintiffs’ RICO claim accrued for statute of limitations purposes at the time the scheme was completed, because that was when the injuries became “ascertainable and definable.” Id. at 396-97. Citing Grimmett, we held that “[t]he possibility that Plaintiffs might have been able to recover some of the damages during the course of the bankruptcy proceedings does not negate the existence of injury at the time of the bankruptcy filing.” Id. at 397. We are not at liberty to depart from this precedent here today. The plaintiffs’ injuries were definite and ascertainable at the time of the allegedly fraudulent denial of their benefits. Any speculative future recovery in state proceedings may affect the amount of damages the plaintiffs can receive, but has no bearing on the accrual of a cause of action under RICO. The plaintiffs’ claims are ripe.