Opinion
No. 01-6040-CIV-GOLD/SIMONTON
November 18, 2002
ORDER ON DEFENDANTS' MOTION TO DISMISS
THIS CAUSE is before the Court upon Defendants' Motion to Dismiss (DE #13), filed on March 15, 2001. Plaintiff filed a Response (DE #27) on April 30, 2001, and Defendants filed a Reply (DE #36) on May 18, 2001. The parties have also submitted numerous Notices of Filing Supplemental Authority in connection with this matter, which the Court has fully considered. Oral argument on Defendants' Motion to Dismiss took place before the Court on Thursday, November 14, 2002.
In Plaintiffs Amended Class Action Complaint, Plaintiff purports to bring a class action for (1) violation of the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961-1964 (RICO); (ii) breach of contract; (iii) unjust enrichment; and (iv) injunctive relief. According to the Amended Complaint, "each claim is based upon the Defendants' perpetration of a uniform and widespread scheme designed to collect insurance premium payments for periods of time during which the Defendants were not providing insurance coverage." (Amended Complaint ¶ 1). Namely, Plaintiff alleges that Defendants represented that they would provide a year of life insurance in exchange for an annual premium, but in fact provided less than a year's worth of coverage. The Court has jurisdiction over the case pursuant to 18 U.S.C. § 1964 (c) (RICO), 28 U.S.C. § 1331 (federal question), and supplemental jurisdiction over Plaintiffs state law claims pursuant to 28 U.S.C. § 1367.
In their Motion to Dismiss, Defendants argue that (i) Plaintiffs RICO claim fails as a matter of law because Plaintiff has not sufficiently alleged facts to show that Defendants committed the required predicate acts to support the claim or that Defendants' actions proximately caused injury to Plaintiff; (ii) Plaintiff has failed to sufficiently allege the elements for breach of contract; (iii) Plaintiff has failed to sufficiently allege the elements for unjust enrichment; (iv) Plaintiff has failed to sufficiently allege the requirements for injunctive relief under Florida law; and (v) the Court should dismiss Defendants GeneraLife and General Life Insurance Company of America due to lack of standing. With respect to Plaintiffs RICO claim, Defendants also argue that Plaintiffs claim is precluded by the McCarran-Ferguson Act, and that Plaintiff has failed to allege detrimental reliance as required of them by recent Eleventh Circuit case law.
After considering the parties briefs, supplemental briefs and authority submitted by the parties, and the parties' oral arguments, the Court concludes that Defendants' Motion to Dismiss is GRANTED. Count I of the Amended Complaint is dismissed, with prejudice, due to preemption. Even if Count I of the Amended Complaint were not dismissed, with prejudice, due to preemption, the Court concludes that Count I should be dismissed, without prejudice, for failure to plead reliance. The remaining state law claims, Counts II, III, and IV, are dismissed, without prejudice, as the Court declines to exercise supplemental jurisdiction over them.
I. Factual Background
Plaintiff seeks to bring a class action pursuant to Fed.R.Civ.P.23(a) and 23(b)(3) "on behalf of a class consisting of all persons who purchased life insurance from General Life since January 1, 1996 through the date of judgment entered in this case, and who paid a premium for a period of time during which General Life did not provide insurance coverage because the policy's issue date was calculated by General Life to be a date prior to the date the policy actually became effective." (Compl. ¶ 9). The application for life insurance coverage provided by Defendant General Life stated that "[i]f a premium payment is not given at the same time as this application, then insurance will take effect when all of the following are satisfied: (1) a policy is approved by the company for issues as applied for; (2) the full first premium is paid; and (3) the health and insurability of any person proposed for insurance have not changed since the date of this application." (Compl. ¶ 18).
According to Plaintiff, each policy delivered by General Life provided a date of issue that was "the effective date of coverage under the policy, and was the date used to determine subsequent policy anniversaries and premium due dates." (Compl. ¶ 21). The first premium was also due on the date of issue. (Compl. ¶ 21). Plaintiff thus concludes that "the General Life contract purports to provide a year of insurance in exchange for its annual premium, such year of coverage beginning to run on the issue date of each year in which the policy is in effect." (Compl. ¶ 21). However, Plaintiff contends that "on each of the policies of the class members, General Life uniformly set as the issue date a date that preceded the insured's payment of his or her first premium." (Compl. ¶ 22). As a result, Plaintiff concludes that "General Life collected annual premiums from each class member, a portion of which was for a period of time during which General Life provided no coverage to the insured." (Compl. ¶ 22).
II. Standard of Review for a Motion to Dismiss under Rule 12(b)(6)
To warrant dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, it must be "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Blackston v. Alabama, 30 F.3d 117, 120 (11th Cir. 1994) (quoting Hishon V. King Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232 (1984)). Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir. 1994). The threshold of sufficiency that a complaint must meet to survive a motion to dismiss is exceedingly low.See Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir. 1985) (citation omitted); Jackam v. Hospital Corp. of America Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir. 1983). "[U]nless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint should not be dismissed on grounds that it fails to state a claim upon which relief can be granted. M/V Sea Lion V v. Reyes, 23 F.3d 345, 347 (11th Cir. 1994) (citation omitted). Nevertheless, to survive a motion to dismiss, a plaintiff must do more than merely "label" his claims. Blumel v. Mylander, 919 F. Supp. 423, 425 (M.D. Fla. 1996). Moreover, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
III. Analysis
In reviewing recent case law, the Court concludes that two main issues are dispositive in regards to Plaintiffs federal RICO claim (Count I): (i) whether Plaintiffs RICO claim is preempted by the McCarran-Ferguson Act; and (ii) whether the Plaintiff has properly plead reliance upon alleged misrepresentations by the Defendants.
(A) McCarran-Ferguson Act Preemption
Defendants assert that Plaintiffs RICO claim is preempted by the McCarran-Ferguson Act, which provides that no federal law "shall be construed to invalidate, impair, or supersede any law enacted by a State for the purpose of regulating the business of insurance." 15 U.S.C. § 1012 (b). Thus, the McCarran-Ferguson Act bars federal claims only when a state enacts a law "for the purpose of regulating the business of insurance" and the defendant insurance company is engaged in the "business of insurance." See Securities Exchange Comm'n v. National Secs., Inc., 393 U.S. 453, 459-460, 89 S.Ct. 564, 569 (1969).
Defendants argue that by challenging General Life's premium due date/inception of coverage practices by means of RICO, Plaintiffs claim would impair state oversight of General Life's insurance policy language and practices pursuant to Florida's Unfair Insurance Trade Practices Act ("FUITPA"), Fla. Stat. § 626.951, et seq., because FUITPA comprehensively regulates allegedly deceptive insurance practices. The Eleventh Circuit has stated that the McCarran-Ferguson Act bars the application of federal law where three requirements are met: "(1) the federal statute at issue does not `specifically relate to the business of insurance'; (2) the state statute at issue was `enacted . . . for the purpose of regulating the business of insurance'; and (3) application of the federal statute would invalidate, impair, or supersede' the state statute." Moore v. Liberty Nat'l Life Ins. Co., 267 F.3d 1209, 1220 (11th Cir. 2001) (quoting Humana, Inc. v. Forsyth, 525 U.S. 299, 307, 119 S.Ct. 710 (1999)); see also Patton v. Triad Guaranty Ins. Corp., 277 F.3d 1294, 1298 (11th Cir. 2002) (noting that the McCarran-Ferguson Act "does not seek to insulate state insurance regulation from the reach of all federal law," court concludes that because the federal Real Estate Settlement Procedures Act (RESPA) specifically related to the business of insurance, application of RESPA to conduct also regulated by state insurance law was not barred by McCarran-Ferguson) (emphasis original) (citations omitted).
First, it is clear that the federal Racketeer Influenced and Corrupt Organizations Act does not specifically relate to the business of insurance. See Humana, 525 U.S. at 307 (RICO is not a law that "specifically relates to the business of insurance."). As such, RICO is distinguished from RESPA, which the Eleventh Circuit in Patton determined was specifically related to the business of insurance and could thus not be precluded by the McCarran-Ferguson Act.
Second, the Florida Unfair insurance Trade Practices Act ("FUITPA") was enacted for the purpose of regulating the business of insurance' as enumerated by the United States Supreme Court, and thus meets the second requirement for McCarran-Ferguson preemption. In United States Dept. of Treasury v. Fabe, 508 U.S. 491, 504-05, 113 S.Ct. 2202 (1993), the Supreme Court stated that "[t]he broad category of laws enacted for the purpose of regulating the business of insurance' consists of laws that possess the end, intention, or aim" of adjusting, managing, or controlling the business of insurance. This category necessarily encompasses more than just the "business of insurance." Id. As such, the Supreme Court rejected the use of the narrower phrase "business of insurance" in favor of the broader phrase "a law enacted for the purpose of regulating the business of insurance" in determining whether a state statute met the requirements for McCarran-Ferguson preemption. FUITPA comes within this broad category of laws, which was enacted with the explicit purpose of "regulat[ing] trade practices relating to the business of insurance." Fla. Stat. § 626.951.
This broader language differs from the analysis used by some courts in cases concerning preemption under ERISA in which courts have addressed whether a state law governs the more narrowly defined phrase "business of insurance." In cases addressing whether FUITPA does not regulate the business of insurance and is thus preempted by ERISA, the Eleventh Circuit has found that FUITPA "does not regulate insurance and therefore is not saved from ERISA preemption." Chilton v. Prudential Ins. Co. of America, 124 F. Supp.2d 673, 679 (M.D. Fla. 2000) (citing Anschultz v. Connecticut Gen. Life Ins. Co., 850 F.2d 1467 (11th Cir. 1988)); see also Walker v. Southern Co. Servs., Inc., 279 F.3d 1289, 1291 (11th Cir. 2002). Because the Supreme Court has rejected the use of the narrower "business of insurance" phrase for cases, such as this one, concerning the first clause of the McCarran-Ferguson Act, "whether a state law regulates the business of insurance' as used in the ERISA complete preemption analysis" does not entail the same analysis as required here. Final Order of Dismissal, Weinstein v. Zurich Kemper, Case No. 01-6140-CIV-DIMITROULEAS (S.D. Fla. March 15, 2002) (DE #70). "Accordingly, this Court will not follow the ERISA cases concerning whether claims" under FUITPA face preemption. Id.
Finally, because RICO does not specifically relate to the business of insurance and because the FUITPA was enacted with the purpose of regulating the business of insurance, the Court must determine whether applying RICO to Plaintiffs claim in this case would conflict with FUITPA and "invalidate, impair, or supersede the relevant state law." Humana, 525 U.S. at 307.
In allowing civil lawsuits, FUITPA contains procedural and substantive restrictions that conflict with RICO's remedy provisions. First, Fla. Stat. § 624.155 contains pre-suit notice provisions that require a plaintiff to provide the defendant and the Florida Department of Insurance sixty days notice before being able to bring suit. If the defendant insurance company corrects the violation within sixty days, no action would lie pursuant to Fla. Stat. § 624.155(2)(d). Second, class actions are not permitted under § 624.155(5). These limitations are the declared state policy in Florida on suing insurance companies for unfair or deceptive trade practices, of the type alleged in this case, pursuant to Fla. Stat, § 626.9541(1)(o). In Humana, the Supreme Court concluded that RICO's application to plaintiffs' claims established that those claims were not precluded by McCarran-Ferguson in favor of Nevada insurance laws because in that case federal law does not directly conflict with state regulation . . . application of federal law would not frustrate any declared state policy or interfere with a State's administrative regime. Humana, 525 U.S. at 310 (citations omitted). Nevada's insurance laws, however, did not contain the same restrictions as Florida law. See Nevada Unfair Insurance Practices Act, Nev.Rev.Stat. §§ 686A.010 et seq., 686A.310(2). Here, the application of RICO, which does not contain Florida's procedural limitations and does not preclude the initiation of class actions, directly conflicts with state regulation, frustrates Florida's declared state policy, and interferes with Florida's administrative regime in dealing with these types of claims. See In re Managed Care Litig., 185 F. Supp.2d 1310, 1321-22 (S.D. Fla. 2002) (holding that McCarran-Ferguson precluded RICO claims of those plaintiffs residing in states that did not recognize private rights of action for insurance fraud because permitting those claims to proceed would "frustrate a declared state policy and possibly interfere with a State's administrative regime").
In Weinstein v. Zurich Kemper Life, a recent case with a strikingly similar fact pattern, plaintiffs alleged violation of RICO where defendants allegedly engaged in a pattern and scheme of collecting life insurance premium payments for periods of time during which the Defendants were not providing insurance. There, the court also applied the reasoning of Humana to conclude that the limitations in Florida's insurance laws enumerated above conflicted with RICO's remedy provisions, and that plaintiffs' RICO claims were thus precluded by the McCarran-Ferguson Act. See Final Order of Dismissal, Weinstein v. Zurich Kemper Life, Case No. 01-6140-CIV-DIMITROULEAS (S.D. Fla. March 15, 2002) (DE #70).
In another recent case involving a substantially similar fact pattern,Burstein v. First Penn-Pacific Life Ins. Co., the court granted defendants judgment on the pleadings due to plaintiffs' failure to allege reliance in its RICO claim. See Order Granting Judgment on the Pleadings, Burstein v. First Penn-Pacific Life Ins. Co., 01-985-CIV-GRAHAM (S.D. Fla. Sept, 18, 2002) (DE #86). Earlier, the Court had dismissed Plaintiffs RICO claim as barred under the McCarran-Ferguson Act, and then subsequently reversed itself on reconsideration concluding that subsection 7 of Ha. Stat. § 624.155 allowed for other remedies. The court concluded that FUITPA thus could not preempt RICO, which provides for such other remedies.
Subsection 7 of Fla. Stat. § 624.155 states that "[t]he civil remedy specified in this section does not preempt any other remedy or cause of action provided for pursuant to any other statute or pursuant to the common law of this state." The Weinstein court expressly disagreed with the Burstein court's conclusion that this section allows for expansive remedies in federal statutes such as RICO. In so doing, theWeinstein court determined that the words "of this state" modify both "common law" and "statute." As such, the court concluded that the Florida legislature was allowing other remedies under Florida law, and not federal statutory law. The Weinstein court reasoned that if "of this state" only modified "common law," the Florida legislature would allow remedies under federal statutes but not federal common law. Since there are few, if any, claims that could arise under federal common law, theWeinstein court concluded that there "would be no reason for the Florida legislature to be concerned about allowing such claims." See Weinstein, Final Order of Dismissal at 6.
The Eleventh Circuit has "repeatedly stated" that "[w]e begin our construction of(a statutory provision] where courts should always begin the process of legislative interpretation, and where they often should end it as well, which is with the words of the statutory provision."CBS, Inc. v. Primetime 24 Joint Venture, 245 F.3d 1217, 1222 (11th Cir. 2001) (citing Harris v. Garner, 216 F.3d 970, 972 (11th Cir. 2000)). In addition, the Eleventh Circuit has "also said just as frequently that [w]hen the import of words Congress has used is clear . . . we need not resort to legislative history, and we certainly should not do so to undermine the plain meaning of the statutory language.' Id. (citingHarris, 216 F.3d at 976). Moreover, even where the statutory language is not entirely transparent . . . the Court has tools at its disposal for elucidating the meaning of a statute without reverting to legislative history. These tools are the canons of construction." CBS, 245 F.3d at 1225. If the statutory language and canons of construction are not dispositive in ascertaining the meaning of the statute, the Eleventh Circuit has cited "language from several of our cases which indicates that we may look beyond the plain language of a statute at extrinsic materials [like legislative history] if: (1) the statute's language is ambiguous; (2) applying it according to its plain meaning would lead to an absurd result; or (3) there is clear evidence of contrary legislative intent." Id. at 1226 (citations omitted).
Here, interpretation of the relevant statutory language depends on the meaning of "or" as it is used in the phrase "pursuant to any other statute or pursuant to the common law of this state." The parties differ over whether "of this state" modifies both "statute" and "common law." The Florida Supreme Court has stated that "[i]n ascertaining the meaning and effect to be given the word `or' when construing a statute, the intent of the Legislature is the determining factor." McConnell Wetenhall Citrus Props. v. Special Disability Trust Fund, 304 So.2d 112, 115 (Fla. 1974). While "in its elementary sense the word `or' is a disjunctive participle that marks an alternative generally corresponding to `either' as `either this or that,' there are of course, familiar instances in which the conjunctive `or' is held equivalent to the copulative conjunction and, and such meaning is often given the meaning `or' in order to effectuate the intention of the parties to a written instrument or the legislative intent in enacting a statute." Winemiller v. Feddish, 568 So.2d 483, 484-85 (Fla. 4th DCA 1990) (citations omitted). TheWinemiller court recognized "this rule of construction that the words `or' and `and' may be interchanged when it is required to effectuate the obvious intention of the Legislature to accomplish the purpose of the statute." Id. at 485 (citations omitted); see also Florida Birth-Related Neurological Injury Compensation Assn., Inc. v. Florida Division of Administrative Hearings, 686 So.2d 1349, 1355 (Fla. 1997) (distinguishing that case from cases where "courts may construe the word `and' as the word `or' in statutes where legislative intent mandates it").
The Court concludes that the statutory language relevant to this question is not plain on its face, and is indeed ambiguous. As noted, the district courts in Weinstein and Burstein disagreed as to whether the words "of this state" modify both "common law" and "statute" in subsection 7 of Fla. Stat. § 624.155. A review of Florida case law for statutory interpretations by Florida courts of any similar phrases in legislation and canons of construction under Florida law are not dispositive of this question. In fact, Florida case law as discussed above requires that the Court look to legislative intent in determining the meaning of "or" in the relevant statute. The ambiguity in the statute results from differences in the common usage of phrases using the conjunction "or." More specifical1y, the ambiguity in the statute results "from the common usage of that language, not from the parties' dueling characterizations of what Congress [the legislature] `really meant.'"CBS, 245 F.3d at 1225. Therefore, the Court concludes that the language of the relevant statute meets the Eleventh Circuit's requirement that ambiguity in statutory language be shown before a court delves into legislative history. Id. at 1224 (citations omitted) (emphasis original). "When faced with various suggested interpretations of a statute, it is appropriate for a court to look to legislative history as a guide to its meaning." Continental Can Co., Inc. v. Mellon, 825 F.2d 308, 310 (11th Cir. 1987) (citations omitted). Here, where the meaning of "or" in the statute is in dispute, an analysis of legislative intent is "the determining factor." McConnell, 304 So.2d at 115.
Upon review of the statute and an analysis of the legislative history, the Court agrees with the Weinstein court's conclusion that Fla. Stat. § 624.155(7) only allows for other remedies under state law, and not federal statutory law. In addition to agreeing with the Weinstein court's conclusion that the plain language of the statute, namely the phrase "of this state," modifies both "statute" and common law in addressing "other remedies" allowed by the statute, the Court concludes that the legislative history behind Fla. Stat. § 624.155(7) confirms its conclusion that Plaintiffs RICO claim is precluded by the McCarran-Robinson Act.
As Defendants note, Fla. Stat. § 624.155(7) was codified into law in 1990, and the language of subsection 7 originated in Senate Bill 1158. In determining the legislative intent of the Florida statutes, Senate Staff and Economic Impact Statements provide a "touchstone of the collective legislative will." Strivers v. Ford Motor Credit Co., 777 So.2d 1023, 1025 (Fla. 4th DCA 2001) (citing White v. State, 714 So.2d 440, 443 n. 5 (Fla. 1998)). The Senate Staff and Economic impact Statement for Senate Bill 1158 states as follows:
Senate Bill 1158 sought to add the following language under Fla. Stat. § 624.155(7): "[I]t is the intent of the Legislature that the civil remedies specified in this section do not preempt any other remedy or cause of action provided for pursuant to any other statute or pursuant to the common law of this state and are supplemental to such remedies or causes of action without limiting or otherwise affecting them. . . ."
I. Summary
A. Present Situation
Persons damaged as a result of specified provisions of the insurance code may bring suit under the provisions of Section 624.155, F.S. In addition to the six listed violations of the code, s. 624.155 provides for recovery in the event the insurer has not attempted to settle claims in good faith. Common law remedies also exist for suing insurers.
Differences may exist between common law bad faith actions and bad faith suits under the statute. For example, damages are not defined in this act and courts could possibly award different types of damages under the act to those that have been held unrecoverable under common law caselaw.
In addition, different procedural requirements may exist for common law and statutory bad faith suits.
The interrelationship between common law and statutory bad faith action as well as the issue of whether or not a statutory remedy preempts common law actions is not settled by case law.
III. COMMENTS
Lower court holdings have stated that the existence of a statutory bad faith action preempts common law remedies.
Upon review of the legislative history, the Court agrees with Defendants that the preemption language of subsection 7 was designed to allow plaintiffs to assert Florida common law bad faith actions against insurers in addition to the remedies available under Fla. Stat. § 624.155. There is nothing in the legislative history contradicting the plain language of the statute that would support an alternative interpretation that subsection 7 permits all federal actions thus eviscerating the preemptive force conferred on the states by the McCarran-Ferguson Act. Moreover, the Court agrees with the Weinstein court's reasoning that if the `of this state' language in Fla. Stat. § 624.155(7) modified only common law," then the Florida legislature would be allowing other remedies under federal statutes but for some reason would only be concerned about not allowing other remedies under federal common law. Since there are few claims, if any, that derive from federal common law, a more reasonable interpretation of Fla. Stat. § 624.155(7) would read the subsection to be non-exclusive as to other claims, whether by statute or common law, that derive from state law.
Finally, in Fla. Stat. § 626.951, the Florida Legislature stated in its "Declaration of Purpose" that "the purpose of this part is to regulate trade practices relating to the business of insurance in the Act of Congress of March 9, 1945 (Pub.L. No. 15, 79th Congress)." Id. The "Act of Congress of March 9, 1945" is the McCarran-Ferguson Act, 15 U.S.C. § 1101 et seq. The phrase "this part" means Part X of Chapter 626 of the Florida insurance laws that includes portions of the statutory provisions at issue here. Therefore, the "declaration of purpose" relating to these relevant state statutes expressly provides the state statutes with the preemptive force conferred on them by the McCarran-Ferguson Act. For all these reasons, the Court concludes that Plaintiffs RICO claim (Count I in its Amended Complaint) is preempted under the McCarran-Ferguson Act.
(B) Reliance Required for RICO Claim
Even if Plaintiffs RICO claim were not precluded by the McCarran-Ferguson Act, Plaintiffs claim would still be dismissed, without prejudice, because Plaintiff has failed to adequately allege detrimental reliance. In a recent decision, the Eleventh Court concluded that "when a plaintiff brings a civil RICO case predicated upon mail or wire fraud, he must prove that he was a target of the scheme to defraud and that he relied to his detriment on misrepresentations made in furtherance of that scheme." Sikes v. Teleline, Inc., 281 F.3d 1350, 1360 (11th Cir. 2002) (quoting Pelletier v. Zweifel, 921 F.2d 1465, 1499-1500 (11th Cir. 1991)), cert. denied, 123 S.Ct. 117 (2002). Moreover, the Eleventh Circuit held that reliance cannot be presumed in a fraud case that is not based upon a fraud-upon-the-market claim unique to the public securities market. Id. at 1361-62.
Plaintiffs RICO claim is based on "at least 2 acts of racketeering activity, namely, violation of federal mail fraud or wire fraud laws." (Compl. ¶ 32). Pursuant to Sikes, a plaintiff who asserts a RICO claim predicated on mail or wire fraud must allege and prove: "1) that the defendant intentionally participated, 2) in a scheme to defraud, 3) the plaintiff of money or property, 4) by means of material misrepresentation, 5) using the mails or wires, 6) that the plaintiff relied on a misrepresentation made in furtherance of the fraudulent scheme, 7) that the misrepresentation would have been relied upon by a reasonable person, 8) that the plaintiff suffered injury as a result of such reliance, and 9) that the plaintiff incurred a specifiable amount of damages." Id. at 1360-61. The Eleventh Circuit has clearly stated that it takes a "restrictive view" of proximate cause and reliance requirements in RICO claims. Special Purpose Accounts Receivable Coop. Corp. v. Prime One Capital Co., L.L.C., 202 F. Supp.2d 1339, 1349 (S.D. Fla. 2002) (citing Byrne v. Nezhat, 261 F.3d 1075, 1110 (11th Cir. 2001)) (In light of the principle clearly announced and reiterated throughout Byrne, the court finds that the defendants correctly have stated the rule regarding reliance in the Eleventh Circuit, which, by the court's own admission, has taken a "restrictive view' of the proximate cause and reliance requirement."); see also Banco Latino Int'l v. Gomez Lopez, 95 F. Supp.2d 1327, 1334 (S.D. Fla. 2000) (stating that, in a civil RICO case, plaintiff alleging fraud as a predicate act must show he relied to his detriment on misrepresentations made in furtherance of the scheme).
A review of the Amended Complaint reveals no allegations of individual reliance on a misrepresentation in furtherance of the alleged fraudulent scheme. At oral argument, Plaintiff argued that because Plaintiffs alleged in paragraph 42 of the Amended Complaint that they had been injured by Defendants' predicate acts, they have met the requirements for pleading reliance at the pleadings stage. (Transcript, 3:21:08). The Eleventh Circuit, however, has explicitly stated that presumption of reliance is "error." Sikes, 281 F.3d at 1361 (citing Andrews v. Am. Tel. Tel. Co., 95 F.3d 1014 (11th Cir. 1996), court states that "our rejection of the district court's use of a presumption regarding reliance and damages was our only comment pertaining to the mail and wire fraud allegations"). Because Plaintiff will have to prove reliance on an individual basis, the Court concludes that Plaintiffs Amended Complaint should be dismissed, without prejudice, to allow Plaintiff to amend its pleading if it believes in good faith that it can meet the Eleventh Circuit's requirements for reliance in civil RICO cases predicated on mail or wire fraud. Therefore, even if Plaintiffs RICO claim (Count I) was not precluded by McCarran-Ferguson, the Court concludes that Plaintiffs RICO claim should be dismissed, without prejudice, for failure to plead reliance. See Final Order of Dismissal, Weinstein v. Zurich Kemper, Case No. 01-61-40-CIV-DIMITROULEAS (S.D. Fla. March 15, 2002) (DE #70) (dismissing Plaintiffs' RICO claim for, inter alia, failure to plead reliance); Order Granting Judgment on the Pleadings, Burstein v. First Penn-Pacific Life Ins., Co., 01-985-CIV-GRAHAM (S.D. Fla. Sept, 18, 2002) (DE #86) (granting judgment on the pleadings to defendants on plaintiffs RICO claim due to plaintiffs failure to plead reliance).
(C) Plaintiff's Remaining State Law Claims
As discussed earlier, the Court has jurisdiction over this case pursuant to 18 U.S.C. § 1964 (RICO), 28 U.S.C. § 1331 (federal question), and supplemental jurisdiction over Plaintiffs state law claims pursuant to 28 U.S.C. § 1367. (Compl. ¶ 4). Plaintiff does not allege diversity jurisdiction. Having dismissed Plaintiffs Count I for RICO violations, Plaintiffs remaining claims, Count II for breach of contract, Count III for unjust enrichment, and Count IV for injunctive relief, all arise under state law.
As such, the Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367, which states that district courts "shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367 (a). The district courts may decline to exercise supplemental jurisdiction over a claim, however, if the district court has dismissed claims over which the district court has original jurisdiction. See 28 U.S.C. § 1367 (c)(3).
In this case, because diversity jurisdiction has not been alleged and because the Court has dismissed Plaintiff s Count I under RICO, the Court declines to exercise jurisdiction over Counts II, III, and IV of Plaintiffs Amended Complaint. See L.S.T, Inc. v. Crow, 49 F.3d 679, 685 (11th Cir. 1995) ("[T]he only causes of action remaining in this case are those involving state law. Because diversity of citizenship does not exist and all the federal claims to which these state charges were jurisdictionally attached have been eliminated, the district court should consider on remand whether the continued exercise of its supplemental jurisdiction over counts four through thirteen of the complaint is appropriate.") As such, the Court dismisses, without prejudice, Plaintiffs Counts II, III, and IV as the federal claims presented here are dismissed. Accordingly, it is hereby:
ORDERED AND ADJUDGED:
1. Defendants' Motion to Dismiss (DE #13) is GRANTED. Count I of the Amended Complaint is DISMISSED, WITH PREJUDICE, due to preemption.
2. Even if Count I were not dismissed due to preemption, the Court concludes that Count I of the Amended Complaint should be DISMISSED, WITHOUT PREJUDICE, for failure to plead reliance.
3. Counts II, III, and IV are DISMISSED, WITHOUT PREJUDICE, as the Court declines to exercise supplemental jurisdiction.
4. All other motions in this case are DENIED AS MOOT.
5. This case is CLOSED.