Last Friday the Sixth Circuit reversed a federal court in Michigan in holding that a plaintiff’s civil RICO claim accrues at the time an employer fraudulently denies worker’s compensation benefits. Jackson v. Segwick Claims Mgmt. Servs., No. 10-1453 (6th Cir. 2012). Writing for the panel, Judge Karen Moore quickly pointed out, however, that a split in authority exists over this issue:
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, 115 S. Ct. 728, 130 L. Ed. 2d 632 (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, 122 S. Ct. 1297, 152 L. Ed. 2d 209 (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, 117 S. Ct. 759, 136 L. Ed. 2d 674 (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 § 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.
Notwithstanding the disagreement among the circuits, the Jackson panel ultimately concluded,
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.
You can read the full opinion here: Jackson v. Segwick Claims Mgmt. Servs., No. 10-1453 (6th Cir. 2012).