The opinion of the court was delivered by: Judge Caputo
Presently before the Court is Defendants' motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alternative, for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Docs. 8, 9). Pursuant to this Court's Order of December 3, 2007, the Court will rule on this motion as a motion to dismiss. As Plaintiff has failed to allege the continuity and relatedness requirements to show a pattern of racketeering, Counts I and III will be dismissed. Because Plaintiff failed to allege the substantive RICO claim of 18 U.S.C. § 1962(c), the claims for conspiracy to violate that section in Counts II and IV will also be dismissed. Count VI will also be dismissed, as ERISA preempts Plaintiff's ability to bring an intentional infliction of emotional distress claim. The motion to dismiss on Counts V and VII will be denied, as Plaintiff has properly alleged a claim for defamation and for intrusion upon seclusion.
The Court has jurisdiction pursuant to 28 U.S.C. § 1331 ("federal question") under the federal RICO statute, 18 U.S.C. § 1962, as well as pursuant to 28 U.S.C. § 1332 ("diversity").
The facts as alleged in Plaintiff's Complaint are as follows.
Plaintiff Cheryl Pappa is an adult residing in Lackawanna County, Pennsylvania. (Compl. ¶ 1, Doc. 2 Ex. A.) Defendant Unum Life Insurance Company of America ("Unum Life") is a corporation authorized to conduct insurance business in the Commonwealth of Pennsylvania. (Id. ¶ 2.) Defendant UnumProvident Corporation ("UnumProvident") is a corporation authorized to conduct insurance business in Pennsylvania, and is the parent company of Defendant Unum Life, its wholly owned subsidiary. (Id. ¶ 3.) Defendant International Claim Specialists, Inc. ("ICS") is a corporation authorized to conduct business in Pennsylvania. (Id. ¶4.) Defendant Examination Management Services, Inc. ("Examination Management") is a corporation authorized to conduct business in Pennsylvania, and is the parent company of Defendant ICS, its wholly owned subsidiary. (Id. ¶ 5.) Defendant alleges diversity in its removal action, as Plaintiff is a citizen and resident of Pennsylvania. (Removal Petition, ¶ 6, Doc. 1.) Defendant Unum Life is incorporated in Maine, with principal place of business in Maine. (Id. ¶ 7.) Defendant UnumProvident is incorporated in Delaware with a principal place of business in Tennessee. (Id. ¶ 8.) Defendant Examination Management is a Nevada corporation with a principal place fo business in Texas. (Id. ¶ 10.) Defendant ICS is not a legal entity, as it is an unincorporated division of Examination Management. (Id. ¶ 9.) Plaintiff's complaint does not allege a specified amount of damages, although the removal petition states that Plaintiff's damages are in excess of $75,000. (Id. ¶ 11.)
In May 2005, Plaintiff Pappa was receiving disability benefits from Defendants Unum Life and UnumProvident pursuant to a long-term disability policy. (Compl. ¶ 6.) Plaintiff was receiving these benefits due to a spinal injury which prevented her from working as a Senior Corporate Account Executive at Vanguard Cellular One. (Id.) These injuries made it impossible for the Plaintiff to sit or drive for long periods of time, or to set up displays as required by her employment. (Id.) During the spring of 2005, Defendants Unum Life and UnumProvident placed an interstate telephone call and/or sent an interstate telefax to Examination Management and ICS requesting that they conduct video surveillance of the Plaintiff. (Id. ¶ 8.) Defendants Unum Life and UnumProvident requested this video surveillance intending to terminate the Plaintiff's disability benefits, regardless of what the video surveillance disclosed or failed to disclose. (Id. ¶ 9.) The Defendants conspired with each other to obtain video surveillance to terminate the Plaintiff's disability benefits. (Id. ¶ 10.)
On May 3, 4, and 5, 2005, as part of the conspiracy between Unum Life, UnumProvident, Examination Management, and ICS, video surveillance was conducted at and of the Plaintiff's place of residence in Lackawanna County, Pennsylvania. (Id. ¶ 11.) In accordance with the conspiracy, Defendants Examination Management and ICS trespassed onto Plaintiff's private property and conducted video surveillance of the Plaintiff's bedroom and bathroom windows without the Plaintiff's knowledge, consent, or approval. (Id. ¶ 12.) When the Defendants Examination Management and ICS failed to videotape the Plaintiff, they began following and videotaping Plaintiff's daughter, Erika Pappa, intending to claim that Erika Pappa was the Plaintiff. (Id. ¶ 13.) Defendants Examination Management and ICS observed Erika Pappa enter a vehicle at Plaintiff's home, drive on the interstate highways, stop along the way, exit and enter the vehicle, and ultimately end her trip in Hoboken, New Jersey. (Id.) This surveillance was done with the intent to falsely claim the automobile trip was taken by the Plaintiff. (Id.) During the course of the trip from Pennsylvania to New Jersey, Defendants Examination Management and ICS exchanged multiple interstate telephone calls with Defendants Unum Life and UnumProvident during which the conspiracy was furthered. (Id. ¶ 14.)
Erika Pappa was thirty-one (31) years old, five (5) feet seven (7) inches tall, weighed one-hundred and fifteen (115) pounds, and had red hair. (Id. ¶ 15.) In contrast, Plaintiff was fifty-two (52) years old, five (5) feet four (4) inches tall, weighed one-hundred and thirty-five (135) pounds and had brown hair. (Id.) After the interstate phone calls between the Defendants, Defendants Examination Management and ICS either failed to videotape the face and identity of Erika Pappa despite multiple opportunities to do so, or otherwise videotaped her knowing the video footage establishing her identity would later be erased. (Id. ¶ 16.)
After obtaining the videotaped footage of Erika Pappa, Defendants created a digital video disc (DVD) from the videotaped footage. (Id. ¶ 17.) However, the Defendants then eliminated from the DVD all original video footage establishing Erika Pappa in the video. (Id.) The Defendants then claimed that the DVD depicted the Plaintiff driving to New Jersey, an activity that Plaintiff would not be able to perform due to her spinal injuries. (Id.) After the video footage of Erika Pappa was obtained and altered by the Defendants, Defendants Examination Management and ICS created a false and fraudulent report alleging that Plaintiff made the trip to New Jersey. (Id. ¶ 18.) This report states that the person followed from Pennsylvania to New Jersey was the Plaintiff, when Defendants knew it was not. (Id. ¶ 19.) The original videotape and/or the altered DVD were sent via interstate United States mail by the Defendants to Benjamin Nakkache, M.D., who was retained by Defendants Unum Life and UnumProvident to perform an allegedly independent medical evaluation. (Id. ¶ 20.) Dr. Nakkache was retained by Unum Life and UnumProvident by interstate telephone and/or interstate telefax. (Id.) Defendants falsely represented to Dr. Nakkache that the DVD depicted the Plaintiff driving from Pennsylvania to New Jersey in order to manipulate the opinion of Dr. Nakkache. (Id. ¶¶ 21, 22.) Dr. Nakkache viewed and relied upon the false DVD and false representations made by the Defendants. (Id. ¶ 23.) Based upon the false representations and false DVD, Dr. Nakkache erroneously concluded that the Plaintiff could return to work. (Id. ¶ 24.)
The same false DVD was also sent by interstate United States mail by the Defendants to Pameal Costello, M.D., Plaintiff's treating physician, with the false representation that the video depicted the Plaintiff driving to New Jersey. (Id. ¶ 25.) Defendants Unum Life and UnumProvident also forwarded to Dr. Costello a copy of Dr. Nakkache's medical report. (Id.)
These activities by Defendants Unum Life and UnumProvident were in violation of the Regulatory Settlement Agreement ("RSA") entered into by Defendant Unum Life and other insurance regulators. (Id. ¶ 26.) In the 2004 RSA, Unum Life agreed to change its claims procedures to fairly interpret and apply information from a claimant's attending physician and independent medical examiners without any attempt to influence the medical professionals. (Id. ¶ 27.) In the RSA, Unum Life further agreed to provide all available evidence in the claim file to the medical professionals. (Id. ¶ 28.)The Defendant Unum Life entered into this RSA after it and its wholly owned subsidiaries engaged in a pattern of deceptive, fraudulent, and illegal claim practices. (Id.) As part of this pattern, Defendants Unum Life and UnumProvident and/or other wholly owned subsidiaries of the Defendant conducted surreptitious video surveillance of the child of another disabled claimant. (Id.) This video footage showed the child performing physical activities that the claimant could not perform. (Id.) Defendants Unum Life and UnumProvident falsely claimed the child was the claimant and terminated the claimant's benefits. (Id.)
Defendants Unum Life and UnumProvident, by knowingly providing the false DVD and misrepresentations to Drs. Nakkache and Costello, continued their pattern of deceptive and fraudulent claim practices, and attempted to influence the opinions of the medical professionals in violation fo the RSA and the rights of the Plaintiff. (Id. ¶ 29.) Defendants withheld the most important portions of the video footage from Drs. Nakkache and Costello - the portions which established that Plaintiff's daughter Erika Pappa was the driver of the vehicle. (Id. ¶ 30.)
After providing the false DVD to Dr. Nakkache and receiving an erroneous medical report from him, Defendants Unum Life and UnumProvident terminated Plaintiff's disability benefits and forcing the Plaintiff to retain an attorney and expend thousands of dollars to have her benefits reinstated. (Id. ¶ 31.) After Defendants terminated her benefits, Plaintiff was required to liquidate her retirement funds to pay for necessary living expenses. (Id. ¶ 32.)
During the course of the proceedings to have her disability benefits reinstated, the Plaintiff obtained a court order requiring Defendants Unum Life and UnumProvident to produce the true, complete and unaltered original video surveillance taken by the Defendants in May 2005. (Id. ¶ 34.) Two videotapes were produced. (Id. ¶ 35.) Both tapes were viewed by counsel for Plaintiff and Defendants at the office of Defendants' counsel prior to the Plaintiff receiving possession of the tapes. (Id. ¶ 36.) At the viewing of Tape No. 1, it was determined that the footage contained twenty-two (22) minutes and thirty (30) seconds of footage. (Id. ¶ 40.) However, the case containing Tape No. 1 sent to the Plaintiff states that the tape contains eleven (11) minutes and twenty (20) seconds of footage. (Id. ¶ 39.)
The Plaintiff filed her original Complaint in the Court of Common Pleas of Lackawanna County. (Doc. 2 Ex. A.) Plaintiff's Complaint includes seven (7) counts, including violations of 18 U.S.C. § 1962(c) and (d), defamation, intentional infliction of emotional distress, and invasion of privacy via intrusion upon seclusion. Defendants removed the case to the Middle District of Pennsylvania on April 16, 2007 (Doc. 1-1.) Defendants filed the present motions to dismiss, or in the alternative, for summary judgment on May 8, 2007. (Docs. 8, 9.) On December 3, 2007, the Court ordered that it will rule on this motion as a motion to dismiss. (Doc. 29.)
The motions are fully briefed and ripe for disposition.
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all of the facts alleged in the complaint, Plaintiff has not plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. ----, 127 S.Ct. 1955, 1960, 167 L.Ed.2d 929 (2007) (abrogating "no set of facts" language found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). As a result of the Twombly holding, Plaintiffs must now nudge their claims "across the line from conceivable to plausible" to avoid dismissal thereof. Id. The Supreme Court noted just two weeks later in Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (per curiam), that Twombly is not inconsistent with the language of Federal Rule of Civil Procedure 8(a)(2), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Specific facts are not necessary; the statement need only " 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.' " Id. (citing Twombly, 127 S.Ct. at 1959 (quoting Conley, 355 U.S. at 47)).
There has been some recent guidance from the Courts of Appeals about the apparently conflicting signals of Twombly and Erickson. The Second Circuit Court of Appeals reasoned that "the [Supreme] Court is not requiring [in Twombly] a universal standard of heightened fact pleading, but is instead requiring a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible. Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) (emphasis in original). Similarly, the Seventh Circuit Court of Appeals stated that "[t]aking Erickson and Twombly together, we understand the Court to be saying only that at some point the factual detail in a complaint may be so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is entitled under Rule 8." Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007).
Until further guidance, this Court will follow the guidance of the Second and Seventh Circuit Courts of Appeals, and apply a flexible "plausibility" standard, on a case-by-case basis, in those contexts in which it is deemed appropriate that the pleader be obliged to amplify a claim with sufficient factual allegations.
In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 510 U.S. 1042 (1994). The Court may also consider "undisputedly authentic" documents where the plaintiff's claims are based on the documents and the defendant has attached a copy of the document to the motion to dismiss. Id. The Court need not assume that the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. West Penn Power Co., 147 F.3d 256, 263 (3d Cir. 1998), nor credit a complaint's "bald assertions" or "legal conclusions." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
When considering a Rule 12(b)(6) motion, the Court's role is limited to determining whether the plaintiff is entitled to offer evidence in support of the claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether the plaintiff will ultimately prevail. See id. In order to survive a motion to dismiss, the plaintiff must set forth information from which each element of a claim may be inferred. See Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). The defendant bears the burden of establishing that the plaintiff's complaint fails to state a claim upon which relief can be granted. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
I. Counts I and III - Violation of 18 U.S.C. § 1962(c)
Defendants argue that the Plaintiff lacks standing to bring a RICO claim pursuant to 18 U.S.C. § 1962(c) based upon Plaintiff's lack of reliance based upon the ICS surveillance and the lack of the proper mens rea by Defendants. To have standing, Plaintiff must further plead injury to her business or property, and that the Defendants proximately caused such injury.
Defendants' first argument states that Plaintiff Pappa lacks standing to bring a civil RICO claim because she has not been "injured in his business or property by reason of a violation of section 1962." 18 U.S.C. § 1964(c) (emphasis added).Defendants argue that Plaintiff has failed to allege reliance to establish injury "by reason of" a predicate act of mail or wire fraud. Defendants further argue that to have standing, the Plaintiff must allege that she relied on and was deceived by the alleged misconduct.Noting that Plaintiff relies on mail and wire fraud as her predicate acts, Defendant states that there must be reliance to create such a predicate act. In opposition, Plaintiff argues that there is no requirement that the Plaintiff demonstrate reliance.
The mail fraud statute provides in relevant part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . . for the purposes of executing such scheme or artifice or attempting to do so, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service . . . shall be fined under this title or imprisoned not more than 20 years, or both.
See 18 U.S.C. § 1341.Similarly, the wire fraud statute of 18 U.S.C. § 1343 holds, in relevant part, that:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.
The Third Circuit Court of Appeals has held that "A scheme or artifice to defraud need not be fraudulent on its face, but must involve some sort of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension." Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1415 (3d Cir.1991). "The scheme need not involve affirmative misrepresentation, but the statutory term 'defraud' usually signifies the deprivation of something of value by trick, deceit, chicane or overreaching." Id. (internal quotations and citations omitted).
The Supreme Court has recently granted certiorari to Bridge v. Phoenix Bond & Indem. Co., 128 S.Ct. 829 (Jan. 4, 2008), specifically limited to the question of "Whether reliance is a required element of a RICO claim predicated on mail fraud and, if it is, whether that reliance must be by the plaintiff." Id.Although certiorari has been granted to clarify this issue, at this time, the Court finds that reliance is necessary, although it is not necessary on part of the plaintiff.
"[M]ost courts now agree that reliance must be shown when mail fraud is a predicate act in a civil RICO case." Allen Neurosurgical Assoc., Inc. v. Lehigh Valley Health Network, No. Civ. A. 99-4653, 2001 WL 41143, at *4 (E.D. Pa. Jan. 18, 2001) (citing cases from the Fifth, Fourth, Eighth, Sixth, Eleventh, and Second Circuit Courts of Appeals). The reliance requirement is derived from RICO's proximate cause requirement in 18 U.S.C. § 1964(c), which limits recovery "[a]ny person injured in his business or property by reason of a violation."See Allen, 2001 WL 41143 at *4.
In this case, Plaintiff states that she herself need not have relied on the misrepresentations. Rather, she claims that reliance exists on the part of third parties. Plaintiff states that she was the target of Defendants' scheme to defraud her from her benefits, and that the reliance occurred on the part of the physicians who ...