Highlights from the September 2016 Issue of the RICO and Securities Law Reporter

To order, fax your request on your letterhead to 202-328-2430 or scan your request and email to orders@lawreporters.com

The most noteworthy decisions this month are the following:

  • In Chambers v. North American Co. for Life and Health Insurance, No. 4:11-cv-00579-JAJ-CFB (S.D. Iowa June 13, 2016), plaintiffs who allegedly were defrauded by misleading statements concerning the annuities they purchased from the defendant insurer were unable to show that class-wide inquiries would predominate as required by Rule 23(b)(3). Denying the plaintiffs’ motion for class certification, Chief District Judge Jarvey determined that assessing the uniformity of the representations would require individualized inquiry sufficient to preclude class certification. The court pointed out that there was variation in the promotional materials provided by the defendant to the agents, variations in the oral presentation made by the agents to the class members, and even variation in the disclosure statements signed by the two named plaintiffs.
  • In B Choice Limited v. Epicentre Development Assocs., LLC, No. H-14-2096 (S.D. Tex. May 12, 2016), a plaintiff allegedly defrauded into providing funds for the acquisition of 104 acres for an ambitious project, only to learn later that the defendants over the years had misrepresented the status of the project and had purchased only 11 acres that later was sold, adequately alleged RICO claims. Recommending the denial of motions to dismiss with respect to the RICO claims, Magistrate Judge Johnson determined that the plaintiff had adequately alleged predicate acts of mail and wire fraud, money laundering, and Travel Act violations occurring over a period of years, and thus had alleged a pattern of racketeering activity. The recommendation and report was adopted by District Judge Miller on July 14, 2016.
  • In Mann v. Bales, No. 4:15-cv-01440 (M.D. Pa. July 12, 2016), in a RICO case involving a family dispute over an insurance agency, the plaintiff who filed the suit in Pennsylvania was unable to establish a prima facie case of personal jurisdiction over the defendants, all of whom resided in Illinois. Magistrate Judge Schwab recommended that the motions to dismiss could be granted on the basis of lack of personal jurisdiction, but that the case should be transferred in the interests of justice to the Northern District of Illinois.
  • In Menzies v. Seyfarth Shaw LLP, No. 15 C 3403 (N.D.Ill. July 15, 2016), a plaintiff who allegedly was defrauded into using a tax avoidance scheme in an ultimately unsuccessful attempt to avoid capital gains taxes—leaving him with a tax bill for over $10 million—failed to adequately allege a pattern of racketeering. Dismissing the RICO claims with leave to replead, District Judge Blakey held that, though the plaintiff had alleged complex transactions involving multiple acts of mail and wire fraud over a substantial period, he had alleged only a single scheme with a single victim. Any amended complaint would be assessed with a view to whether the plaintiff alleged the existence of other victims or the manner in which he or others suffered distinct injuries resulting from the alleged scheme.