Moon v. Harrison Piping Sup

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 06a0365p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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X
Plaintiff-Appellant, -
TIMOTHY MOON,
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No. 05-1808
v.
,
>
HARRISON PIPING SUPPLY; MICHIGAN TOOLING -
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ASSOCIATION WORKERS COMPENSATION FUND;
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ASIT K. RAY; MICHIGAN TOOLING ASSOCIATION
Defendants-Appellees. -
SERVICE COMPANY,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 04-71882—Paul D. Borman, District Judge.
Argued: June 8, 2006
Decided and Filed: September 28, 2006
Before: MOORE, COLE, and CLAY, Circuit Judges.
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COUNSEL
ARGUED: Marshall D. Lasser, LAW OFFICE OF MARSHALL LASSER, Southfield, Michigan,
for Appellant. Thomas J. Laginess, CUMMINGS, McCLOREY, DAVIS & ACHO, P.L.C., Livonia,
Michigan, Hal O. Carroll, VANDEVEER GARZIA, P.C., Troy, Michigan, Dale A. Robinson,
RUTLEDGE MANION RABAUT TERRY & THOMAS P.C., Detroit, Michigan, for Appellees.
ON BRIEF: Marshall D. Lasser, LAW OFFICE OF MARSHALL LASSER, Southfield, Michigan,
for Appellant. Thomas J. Laginess, Ronald Acho, CUMMINGS, McCLOREY, DAVIS & ACHO,
P.L.C., Livonia, Michigan, Hal O. Carroll, VANDEVEER GARZIA, P.C., Troy, Michigan, Dale
A. Robinson, RUTLEDGE MANION RABAUT TERRY & THOMAS P.C., Detroit, Michigan, C.F.
Boyle, Jr., LAW OFFICE OF C.F. BOYLE, JR., Chicago, Illinois, for Appellees.
COLE, J., delivered the opinion of the court, in which CLAY, J., joined. MOORE, J. (pp.
9-10), delivered a separate concurring opinion.
1
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 2
_________________
OPINION
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R. GUY COLE, JR., Circuit Judge. Timothy Moon filed suit under the Racketeer Influenced
and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, as well as state tort law, alleging that
his employer colluded with an insurance provider, an insurance adjuster, and a physician, to deny
him workers’ compensation benefits. The district court dismissed Moon’s suit for failure to state
a claim under Federal Rule of Civil Procedure 12(b)(6), or, in the alternative, because the suit was
“reverse-preempted” under the McCarran-Ferguson Act, 15 U.S.C. § 1012(b). Because Moon failed
sufficiently to allege a pattern of racketeering activity for purposes of RICO, we AFFIRM the
district court’s judgment with respect to Moon’s RICO claim. However, because deciding Moon’s
state-law claim was unnecessary, we REVERSE the district court’s exercise of pendent jurisdiction,
and REMAND with instructions to dismiss those claims without prejudice.
I. BACKGROUND
According to his First Amended Complaint (the “Complaint”), Timothy Moon was an
employee of Harrison Piping Supply (“Harrison”), who was injured at work on October 23, 2000.
Although he initially received workers’ compensation benefits, Moon alleges that Harrison colluded
with the Michigan Tooling Association Workers’ Compensation Fund (the “Fund”), the Michigan
Tooling Association Service Company (the “Service Company”), and Dr. Asit Ray to terminate
those benefits. Moon named as defendants: (1) Harrison, his employer; (2) the Fund, which is
Harrison’s insurer; (3) the Service Company, which was the Fund’s adjuster; and (4) Ray, an
independent physician.
Moon alleges that the Defendants collectively formed an “enterprise” for purposes of RICO
and engaged in a pattern of racketeering in the form of mail fraud and witness-tampering.
Specifically, Moon claims that the Fund sent him a Notice of Dispute (the “Notice”) via United
States mail on July 24, 2003, which stated that Moon was capable of fully resuming his job
responsibilities even though Defendants knew that examining doctors had determined that Moon
was still disabled. The Notice terminated Moon’s benefits.
After receiving the Notice, Moon brought a workers’ compensation claim before the
Michigan Workers’ Disability Compensation Bureau (the “Bureau”). According to Moon, the
Defendants reinstated his benefits on the eve of his hearing before the Bureau. On the same day,
March 25, 2004, the Fund and the Service Company sent notice to Moon that he was to be examined
by Dr. Ray. According to Moon, the other Defendants gave Dr. Ray express or tacit instructions to
issue a “cut-off” report, i.e., a medical report that could form the basis for terminating Moon’s
benefits. Dr. Ray, who Moon claims has a reputation for rendering medical opinions supporting
rejection of claimants’ benefits, examined Moon on April 8, 2004, and issued an allegedly fraudulent
report opining that Moon was no longer disabled. The report was mailed to various persons and
entities, including the Bureau. Finally, on April 16, 2004, the Fund mailed a second Notice of
Dispute (the “Second Notice”), which, according to Moon, falsely claimed that he was no longer
disabled.1
Moon filed a RICO claim in district court, as well as a claim for intentional infliction of
emotional distress (“IIED”) under Michigan common law. The Defendants filed a motion to dismiss
1
In support of his witness-tampering claim, Moon states only that “Defendants’ actions violated 18 U.S.C.
§ 1512.” He adds that “[t]his allegation is based in part on information and belief, and are [sic] likely to have evidentiary
support after reasonable opportunity for investigation and discovery.”
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 3
for, inter alia, failure to state a claim upon which relief could be granted under Rule 12(b)(6). The
district court granted the Defendants’ motion in an Amended Opinion and Order, dismissing with
prejudice Moon’s RICO and IIED claims. This timely appeal followed.
II. STANDARD OF REVIEW
In assessing a motion to dismiss for failure to state a claim under Rule 12(b)(6), we “treat[]
all well-pleaded allegations in the complaint as true.” Kostrzewa v. City of Troy, 247 F.3d 633, 638
(6th Cir. 2001). “Dismissal is proper only ‘if it appears beyond doubt that the plaintiff can prove
no set of facts in support of [his] claims that would entitle [him] to relief.’” Id. (quoting
Performance Contracting, Inc. v. Seaboard Sur. Co., 163 F.3d 366, 369 (6th Cir. 1998)). Moreover,
we construe the complaint in the light most favorable to the non-moving party. Columbia Natural
Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995). A complaint will survive a motion to
dismiss if it “contain[s] either direct or inferential allegations with respect to all material elements
necessary to sustain a recovery under some viable legal theory.” Performance Contracting, Inc.,
163 F.3d at 369; see also Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (Rule 12(b)(6)
dismissal improper unless “it is clear that no relief could be granted under any set of facts that could
be proved consistent with the allegations”). We review a district court’s Rule 12(b)(6) dismissal de
novo. Gao v. Jenifer, 185 F.3d 548, 552 (6th Cir. 1999).
III. DISCUSSION
A. Moon’s RICO Claims
Moon asserts a claim under RICO, a federal statute that affords a civil remedy to an
individual who is injured by virtue of certain types of unlawful activity. RICO provides in relevant
part:
It shall be unlawful for any person employed by or associated with any enterprise
engaged in, or the activities of which affect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of such enterprise’s
affairs through a pattern of racketeering activity or collection of unlawful debt.
18 U.S.C. § 1962(c). Thus, to state a RICO claim, Moon must plead the following elements:
“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima, S.P.R.L.
v. Imrex Co., Inc., 473 U.S. 479, 496 (1985). Because we conclude that the Complaint lacks facts
establishing a “pattern of racketeering activity,” and thus fails to state a RICO claim, we do not
address any of the other RICO elements.
1. Moon Has Failed To Allege Adequately A “Pattern Of Racketeering Activity”
(a) Predicate Acts
To establish a RICO violation under §1962(c), a plaintiff must allege that the RICO
enterprise engaged in a “pattern of racketeering activity” consisting of at least two predicate acts of
racketeering activity occurring within a ten-year period. 18 U.S.C. § 1961(5). The alleged predicate
acts may consist of offenses “which are indictable” under any of a number of federal statutes,
including the mail (18 U.S.C. § 1341) and wire fraud statutes (18 U.S.C. § 1343). 18 U.S.C.
§ 1961(1).
Here, the district court concluded that Moon pleaded five predicate acts of racketeering
activity with the requisite particularity. See Bender v. Southland Corp., 749 F.2d 1205, 1216
(consistent with Rule 9(b), RICO plaintiffs must allege “the time, place and contents of the
misrepresentations”). These alleged acts include: (1) the Fund’s July 24, 2003 mailing to Moon of
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 4
the Notice terminating his benefits on the fraudulent grounds that Moon was capable of resuming
his job responsibilities; (2) the Fund’s March 25, 2004 mailing of a Notice of Examination to be
performed by Dr. Ray, which examination was part of Defendants’ scheme to fraudulently deprive
Moon of his benefits; (3) Dr. Ray’s mailing, between April 8, 2004 and April 26, 2004, of his
medical report, which fraudulently opined that Moon was no longer disabled; (4) Defendants’
agent’s (attorney Felker) April 26, 2004 mailing of Dr. Ray’s fraudulent medical report to Moon’s
counsel; and (5) the Fund’s April 16, 2004 mailing to Moon of the Second Notice terminating
Moon’s benefits, which again fraudulently stated that Moon was not disabled.
The district court correctly concluded that Moon adequately pleaded a minimum of two
predicate acts.2 Although necessary to sustain a RICO claim, the pleading of two predicate acts may
not be sufficient because § 1961(5) “assumes that there is something to a RICO pattern beyond the
number of predicate acts involved.” H.J., Inc. v. Northwestern Bell Tele. Co., 492 U.S. 229, 238
(1989). In H.J., the Supreme Court held that “the term pattern itself requires the showing of a
relationship between the predicates and of the threat of continuing activity. It is this factor of
continuity plus relationship which combines to produce a pattern.” Id. at 239 (internal citations
omitted). “Continuity and relationship constitute two analytically distinct prongs of the pattern
requirement.” Vild v. Visconsi, 956 F.2d 560, 566 (6th Cir. 1992), cert. denied, 506 U.S. 832 (1992).
(b) Relatedness
Moon has satisfied the “relatedness” requirement because he has alleged predicate acts that
have “the same or similar purposes, results, participants, victims, or methods of commission, or
otherwise are interrelated by distinguishing characteristics and are not isolated events.” H.J., Inc.,
492 U.S. at 240. The predicate acts pleaded in the Complaint had the same purpose of depriving
Moon of his benefits, the same result in that Moon periodically lost his benefits, the same
participants in Harrison and the Fund, the same victim in Moon, and the same method of
commission in mail fraud.
(c) Continuity
In addition to “relatedness,” the predicate acts pleaded must have sufficient “continuity.”
“‘Continuity’ is both a closed- and open-ended concept, referring either to a closed period of
repeated conduct, or to past conduct that by its nature projects into the future with a threat of
repetition.” Id. at 241. Whether a pattern of racketeering activity satisfies the continuity
requirement depends on the particular facts of each case. Id. at 242. Continuity may be established
at the pleading stage by alleging facts of either closed- or open-ended racketeering activity.
A closed period of continuity may be demonstrated “by proving a series of related predicates
extending over a substantial period of time.” Id. at 242. Here, the predicate acts set forth in the
Complaint cover a nine-month period (from July 2003 to April 2004). Although there are no rigid
rules regarding what amounts to “a substantial period of time,” racketeering activity lasting only “a
few weeks or months and threatening no future criminal conduct” is insufficient. Id. at 242; see also
Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994), cert. denied, 513 U.S. 1017 (1994)
(predicate acts over 17 months did not satisfy the closed period analysis); Vild, 956 F.2d at 569(predicate acts over six or seven months not sufficient under closed-period analysis).
2
We do not reach the issue, decided by the district court, of whether a RICO plaintiff must plead at least two
predicate acts against each defendant alleged to have participated in a racketeering enterprise. Since the parties do not
challenge this portion of the district court’s order, and since we hold that Moon’s RICO pleading fails on other grounds,
we decline to express an opinion on this subject.
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 5
Moon argues that the district court erred by failing to consider the allegations in his Second
Amended Complaint when it concluded that he failed to allege a closed period of racketeering
activity. The Second Amended Complaint is virtually identical to the Complaint (i.e., the First
Amended Complaint) except that the former pleads that Moon’s benefits were first unlawfully
terminated in September 2001 and that this constituted the first predicate act in the Defendants’
racketeering scheme. Had the district court taken into account the additional facts pleaded in his
Second Amended Complaint, contends Moon, the pattern of racketeering would have extended for
two-and-a-half years, rather than nine months, and therefore would have satisfied the closed period
requirement.
Moon is mistaken. The Second Amended Complaint was not properly before the district
court, nor is it before this Court. The magistrate judge granted Moon’s motion to file a Second
Amended Complaint subject to the district judge denying the motions to dismiss, which the district
judge did not do. Moon did not appeal the order of the magistrate judge to the district judge. Even
though Moon’s notice of appeal to this Court includes the magistrate judge’s order, this Court lacks
jurisdiction to review that order where the magistrate judge did not have plenary jurisdiction over
Moon’s case (the district judge merely referred to the magistrate judge Moon’s motion for leave to3
file his Second Amended Complaint) and Moon failed to seek review before the district judge first.
See McQueen v. Beecher Cmty. Schs., 433 F.3d 460, 471 (6th Cir. 2006) (declining to entertain
appeal of magistrate judge’s order denying a motion for a default judgment where the magistrate did
not exercise plenary jurisdiction and the appellant did not appeal to the district judge).
In any event, even if the racketeering activity lasted for two-and-a-half years, as Moon
insists, facts establishing a closed period of continuity are still lacking. Moon has pleaded that the
Defendants embarked upon a coordinated scheme to wrongfully terminate his workers’
compensation benefits. All of the predicate acts—the mailing of the Notice and Second Notice
cutting off his benefits and the mailing of Dr. Ray’s fraudulent medical report—were keyed to
Defendants’ single objective of depriving Moon of his benefits. No other schemes, purposes, or
injuries are alleged, and there are no facts suggesting that the scheme would continue beyond the
Defendants accomplishing their goal of terminating Moon’s benefits. In circumstances such as
these, the purported racketeering activity does not bear the markings of the “long-term criminal
conduct” about which “Congress was concerned” when it enacted RICO. H.J., Inc., 492 U.S. at 242.
This Court’s prior decisions compel the conclusion that Moon has not pleaded a closed-
ended period of continuity. For instance, in Vemco, the parties entered into a contract under which
the defendant agreed to build a “paint finishing system” in the new facility of the plaintiff car-parts
manufacturer. Id. at 131. Displeased with the defendant’s repeated demands for payment beyond
that specified in the contract and defendant’s performance under the contract, the plaintiff brought
suit alleging predicate acts of fraud and extortion under RICO. Id. at 131-32. This Court held that
a single scheme emanating from a dispute over an ordinary construction contract did not possess the
requisite RICO continuity:
Vemco has alleged a single fraudulent scheme by Flakt to misrepresent a guaranteed
price in a building contract, and later to extort a higher price from Vemco. The total
scheme, from the time of contract negotiations until the last threat alleged, lasted
only seventeen months. The goal of the ‘single criminal episode,’ as the district
court accurately characterized it, was to get Vemco to pay the cost of one paint
3
28 U.S.C. § 636(c)(1) provides that “[u]pon the consent of the parties, a . . . magistrate judge . . . may conduct
any or all proceedings in a jury or nonjury civil matter and order the entry of judgment in the case, when specially
designated to exercise such jurisdiction by the district court . . . .” Orders from magistrate judges who exercise plenary
jurisdiction over a case are directly appealable to this Court. See In re Bell & Beckwith, 838 F.2d 844, 848 n.5 (6th Cir.
1988).
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 6
system. [¶] There are no facts pleaded suggesting anything but that once Flakt
received the money it was requesting in the billing statements, its scheme would be
over, and it would end its association with Vemco.
Vemco, 23 F.3d at 134-35.
Similarly, in Thompson v. Paasche, 950 F.2d 306 (6th Cir. 1991), the plaintiff landowners
asserted RICO claims against the defendant seller on the grounds that the seller fraudulently
represented that the purpose of his reservation of oil and gas rights as part of the terms of the sales
was to ensure that the land remained unspoiled. Id. at 309. In fact, claimed the plaintiffs, the seller
had arranged to lease the oil and gas rights to a third party who would undertake drilling. Id. at 309-
10. This Court reversed the RICO verdict for the plaintiffs, concluding that the alleged RICO
scheme ended once the defendant had sold all of his lots to the plaintiffs, and therefore it was
“insufficiently protracted to qualify as a RICO violation.” Id. at 311; see also Efron v. Embassy
Suites (Puerto Rico), Inc., 223 F.3d 12, 19 (1st Cir. 2000), cert. denied, 532 U.S. 905 (2001) (where
the plaintiff alleged a pattern of racketeering acts focused on coercing him into relinquishing his
ownership interest in a real estate development project, the court characterized the alleged
racketeering activities as “finite in nature” and occurring over a “relatively modest period of time,”
thus foreclosing a finding of closed-period continuity); Edmondson & Gallagher v. Alban Towers
Tenants Assoc., 48 F.3d 1260, 1265 (D.C. Cir. 1995) (“We think that the combination of these
factors (single scheme, single injury, and few victims) makes it virtually impossible for plaintiffs
to state a RICO claim.”).
As in the foregoing cases, Moon’s allegations center around a single RICO scheme with a
single object stemming from a dispute about whether Moon is impaired by a workplace disability
entitling him to benefits. Even assuming a period of two-and-a-half years of racketeering activity,
these allegations do not give rise to closed-ended continuity.
Moon’s allegations also do not give rise to a finding of open-ended continuity. This inquiry
turns on whether the plaintiff has pleaded facts suggesting the threat of continued racketeering
activities projecting into the future. In H.J., the Supreme Court held that open-ended continuity
could be pleaded through facts showing “a distinct threat of long-term racketeering activity,” or by
showing “that the predicate acts or offenses are part of an ongoing entity’s regular way of doing
business.” H.J., Inc., 492 U.S. at 242.
Here, Moon argues that open-ended continuity exists because there is nothing to stop the
Defendants from persisting in their cycle of fraudulently terminating his benefits, restoring them,
and then fraudulently terminating them again. The district court was not persuaded, finding that
there is no risk of ongoing racketeering activity where Moon petitioned the Bureau for a resolution
of his dispute with Defendants. We agree. A final decision of the Bureau (once all appellate options
have been exhausted) is binding on the parties and, if favorable to Moon, would prevent the
Defendants from withdrawing benefits in the absence of further action by the Bureau. See Mich.
Comp. Laws Serv. §§ 418.847 & 418.851 (2006). In other words, the Defendants could no longer
suspend Moon’s benefits through issuing Notices of Dispute, but would instead have to file a
petition with the Bureau to stop their payments to Moon and prove that he is no longer entitled to
them. Mich. Admin. Code R. 408.40 (2006).
We do not hold that a RICO action for fraudulent termination of workers’ compensation
benefits could never occur alongside a state administrative proceeding before the Bureau, but merely
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 7
that under the fact-specific continuity inquiry, Moon has not alleged facts sufficient to establish a
pattern of racketeering activity.4
Finally, Moon has not pleaded any allegations to the effect that the fraudulent termination
of workers’ compensation benefits is Defendants’ “regular way of doing business.” H.J., Inc., 492
U.S. at 242; see also Vild, 956 F.2d at 569 (plaintiff who asserted RICO violations stemming from
fraudulent representations and extortion in connection with a marketing agreement did not allege
facts demonstrating that the “conduct directed toward him is a normal way of doing business for
defendants”). True, Moon pleads that “Dr. Ray was known to defendants, through their attorney
Thaddeus Felker, as a doctor who could be relied upon to write ‘cut off’ reports in workers
compensation cases; defendants and/or their attorney had relied upon him in the past to issue ‘cut
off’ reports.” Moon also pleads that “[o]n information and belief, one or more members of the
enterprise engaged in similar acts to defraud other persons of their workers’ compensation benefits.”
These allegations do not reasonably support the notion that the alleged fraud of which Moon
complains is Defendants’ regular way of doing business. “Regular” means “usual; normal;
customary.” Random House Unabridged Dictionary 1624 (2d ed. 1993). Moon’s allegations
regarding open-ended continuity amount to the following: (1) Moon—the only plaintiff in this
case—was denied workers’ compensation benefits as a result of Defendants’ scheme to use Dr. Ray
to fraudulently deny benefits; (2) Defendants had used Dr. Ray for this purpose in the past; and (3) at
some point, Defendants treated some other people similarly to Moon. Moon does not allege the sort
of longstanding relationship that would give rise to a threat of continued racketeering activity.
Drawing all reasonable inferences in Moon’s favor may lead us to conclude that several instances
of similar conduct have occurred, but they do not support a systematic threat of ongoing fraud. In
short, the leap from Moon’s allegations to the conclusion that Defendants customarily bilked
employees out of workers’ compensation benefits is too great, even drawing all reasonable
inferences in favor of Moon.
For the reasons described above, we AFFIRM the district court’s judgment dismissing
Moon’s RICO claims under Rule 12(b)(6).
B. Moon’s IIED Claim
Having dismissed Moon’s RICO claim, the district court proceeded to analyze whether Moon
stated a claim for intentional infliction of emotional distress under Michigan common law. We
review a district court’s decision to exercise pendent jurisdiction for abuse of discretion, Landefeld
v. Marion Gen. Hosp., Inc., 994 F.2d 1178, 1182 (6th Cir. 1983), meaning that this Court will not
reverse unless the district court “relies on clearly erroneous findings of fact, improperly applies the
law, or uses an erroneous legal standard.” United States v. Chambers, 441 F.3d 438, 446 (6th Cir.
2006) (internal citation omitted).
As the district court recognized, a federal court that has dismissed a plaintiff’s federal-law
claims should not ordinarily reach the plaintiff’s state-law claims. See 28 U.S.C. § 1367(c)(3);
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966) (“Certainly, if the federal claims
are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims
should be dismissed as well.”); Hankins v. The Gap, Inc., 84 F.3d 797, 803 (6th Cir. 1996); Gaff v.
Fed. Deposit Ins. Corp., 814 F.2d 311, 319 (6th Cir. 1987); Landefeld, 994 F.2d at 1182. Residual
jurisdiction should be exercised only in cases where the “interests of judicial economy and the
avoidance of multiplicity of litigation” outweigh our concern over “needlessly deciding state law
4
Although it is not germane to our disposition of Moon’s appeal, the magistrate judge that presided over Moon’s
Bureau petition issued an opinion granting Moon a closed award of benefits entitling him to compensation only for the
period of Oct. 24, 2000 through April 7, 2004. On April 24, 2006, during the pendency of this appeal, Michigan’s
Workers’ Compensation Appellate Commission affirmed the magistrate judge’s decision.
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 8
issues.” Landefeld, 994 F.2d at 1182 (quoting Aschinger v. Columbus Showcase Co., 934 F.2d 1402,
1412 (6th Cir. 1991)).
Contrary to the analysis of the district court, this is not such a case. Moon’s IIED claim has
no bearing on his RICO claim. Moreover, although we decline to address whether Moon’s RICO
claim is precluded by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b), we disagree with the
district court that resolution of Moon’s IIED claim is necessary to resolve that issue. Meanwhile,
Moon’s IIED claim implicates complex aspects of Michigan law. Michigan courts of appeal have
handled such claims differently over the years, compare Broadus v. Ferndale Fastener Div., 269
N.W.2d 689, 693 (Mich. Ct. App. 1978), with Lisecki v. Taco Bell Rests., Inc., 389 N.W.2d 173, 176
(Mich. Ct. App. 1986), and the Michigan Supreme Court has never formally recognized IIED as a
cause of action. See Roberts v. Auto Owners, Inc., 374 N.W.2d 905, 913 (Mich. 1985) (Williams,
C.J., concurring). Moon’s is clearly the ordinary case, where the exercise of pendent jurisdiction
is improper.
IV. CONCLUSION
For the reasons described above, we AFFIRM the district court’s dismissal of Moon’s RICO
claim for failure to state a claim upon which relief can be granted under Rule 12(b)(6). We
REVERSE the district court’s dismissal of Moon’s claim for intentional infliction of emotional
distress, and REMAND with instructions to dismiss that claim without prejudice.
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 9
_____________________
CONCURRENCE
_____________________
KAREN NELSON MOORE, Circuit Judge, concurring. The Supreme Court has indicated
two ways a RICO plaintiff may prove (or, as is the case here, allege) a “pattern of racketeering
activity” by showing open-ended continuity. First, “[a] RICO pattern may surely be established if
the related predicates themselves involve a distinct threat of long-term racketeering activity, either
implicit or explicit.” H.J., Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 242 (1989). Alternatively, “the
threat of continuity may be established by showing that the predicate acts or offenses are part of an
ongoing entity’s regular way of doing business.” Id. I wholly agree with the majority’s analysis of
the “regular way of doing business” method of alleging open-ended continuity. Further, I agree with
the majority that Moon fails to allege a “distinct threat of long-term racketeering activity.”
However, I offer different reasons for this conclusion.
As an initial matter, in determining whether Moon has alleged a threat of long-term
racketeering activity, I do not believe we should consider events that transpired after the alleged
racketeering acts ended. In United States v. Busacca, 936 F.2d 232 (6th Cir. 1991), we noted that
“the threat of continuity must be viewed at the time the racketeering activity occurred.” Id. at 238.
See also Blue Cross & Blue Shield of Mich. v. Kamin, 876 F.2d 543, 545 (6th Cir. 1989) (concluding
that racketeering activity was open-ended because “if he had not been caught, there is no reason to
believe [the defendant] would not still be submitting false claims”). Thus, the question we must
answer is whether Moon has pleaded sufficient facts to conclude that, on the date of the last alleged
racketeering act, there was a distinct threat of long-term racketeering activity.
Moon’s First Amended Complaint alleges the following:
• Moon’s benefits were terminated on July 24, 2003, J.A. at 10 (First Am. Compl.
¶ 9c);
• On March 25, 2004, his benefits were reinstated, J.A. at 11 (First Am. Compl.
¶ 9e);
• That same day, the Fund and the Service Company sent him a notice of
examination, requiring him to be examined by Dr. Ray, J.A. at 11 ((First Am.
Compl. ¶ 9f);
• The defendants previously had relied on Dr. Ray to write cut-off reports, id.;1
• On April 8, 2004, Dr. Ray examined Moon and wrote (and subsequently mailed)
a fraudulent report concluding that Moon was not disabled, id.;
• On April 16, 2004, an employee of the Fund mailed Moon a notice of dispute
claiming that he had no work-related disability, J.A. at 12 (First Am. Compl.
¶ 10).
Although nothing in these allegations indicates that, as of April 2004, the alleged
racketeering activity would immediately cease, nothing indicates the type of “distinct threat of long-
term racketeering activity” the Supreme Court referred to in H.J. In explaining what might
constitute such a distinct threat, the Supreme Court offered the example of a thug’s extorting money
1
Moon offers no direct allegation, however, that these prior reports were necessarily fraudulent.
No. 05-1808 Moon v. Harrison Piping Supply et al. Page 10
from storekeepers and “telling his victims he would be reappearing each month to collect” additional
payments. H.J., 492 U.S. at 242. This example led us to state that a plaintiff seeking to prove open-
ended continuity in this manner must show acts that “by their nature ‘involve a distinct threat of
long-term racketeering activity.’” Vild v. Visconsi, 956 F.2d 560, 569 (6th Cir. 1992) (emphasis
added). See also id. (“Similarly, the plaintiff cannot fulfill the open-ended formulations of the
continuity test because he has not alleged facts which, by their nature, demonstrate only a threat of
indefinite improper activity . . . .”). Because the nature of the acts Moon alleges does not indicate
a distinct threat of long-term racketeering activity, his First Amended Complaint does not
sufficiently allege a RICO “pattern.”
For these reasons, I respectfully concur.