Opinion ID: 2516402
Heading Depth: 3
Heading Rank: 3

Heading: RICO claims

Text: We reach a similar conclusion with respect to plaintiffs' RICO claims. The pattern of racketeering activity necessary to establish a RICO enterprise always falls outside the scope of the compensation bargain. Thus, plaintiffs' RICO claims are exempt from the exclusivity bar. In their complaint, plaintiffs allege that defendants violated and conspired to violate 18 United States Code section 1962(c). A violation of 18 United States Code section 1962(c) requires (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. ( Sedima, S.P.R.L. v. Imrex Co., Inc. (1985) 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346, fn. omitted.) To establish a pattern of racketeering activity, plaintiffs must allege at least two predicate acts that `are interrelated by distinguishing characteristics' ( H.J. Inc. v. Northwestern Bell Telephone Company (1989) 492 U.S. 229, 240, 109 S.Ct. 2893, 106 L.Ed.2d 195 ( H.J.Inc. )) and amount to or pose a threat of continued criminal activity. ( Id at p. 239, 109 S.Ct. 2893.) [T]he threat of continuity is sufficiently established where the predicates can be attributed to a defendant operating as part of a long-term association that exists for criminal purposes or where it is shown that the predicates are a regular way of conducting defendant's ongoing legitimate business . . . or of conducting or participating in an ongoing and legitimate RICO `enterprise.' ( Id. at pp. 242-243,109 S.Ct. 2893, fn. omitted.) Here, plaintiffs' RICO claims allege that defendants conducted or conspired to conduct various enterprises through numerous acts of mail and wire fraud. Because these predicate acts of mail and wire fraud allegedly form a pattern of racketeering activity, they, by definition, cannot be closely connected to a normal insurer activity. The compensation bargain anticipates that an insurer may commit various misdeeds during the claims process, including some criminal acts. (See Fermino, supra, 7 Cal.4th at p. 723, fn. 7, 30 Cal.Rptr.2d 18, 872 P.2d 559; Vuillemainroy v. American Rock & Asphalt, Inc. (1999) 70 Cal.App.4th 1280, 1286-1287, 83 Cal.Rptr.2d 269 [involuntary manslaughter does not support an exception to exclusivity]; Up-Right, supra, 5 Cal.App.4th at pp. 582-584, 7 Cal.Rptr.2d 34.) It does not contemplate that an insurer will engage in systematic and longterm criminal activities bound by common `purposes, results, participants, victims, or methods of commission. . . .' ( H.J. Inc., supra, 492 U.S. 229, 240, 109 S.Ct. 2893, 106 L.Ed.2d 195, quoting 18 U.S.C. former § 3575(e).) Indeed, such organized and systemic criminal misconduct is always illegal, regardless of the employer's state of mind. (See 18 U.S.C. § 1962.) Accordingly, RICO claims are never subject to the exclusive remedy provisions, and we refuse to bar them here. (See Fermino, supra, 7 Cal.4th at p. 723, fn. 7, 30 Cal.Rptr.2d 18, 872 P.2d 559.)