Jay Brown v. Ajax Paving Industries, Inc., et al
OPINION and JUDGMENT filed: The judgment of the district court is AFFIRMED. Decision for publication. Jeffrey S. Sutton (AUTHORING) and Deborah L. Cook, Circuit Judges; Algenon L. Marbley, U.S. District Judge for the Southern District of Ohio, sitting by designation.
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0102p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
AJAX PAVING INDUSTRIES, INC.; AMERICAN
CONTRACTORS INSURANCE GROUP, INC.; WARD
NORTH AMERICA, LP; VERICLAIM, INC.; NOVAPRO
RISK SOLUTIONS, LP; NOVAPRO US RISK, LLC;
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit
No. 2:10-cv-10137—Gerald E. Rosen, Chief District Judge.
Decided and Filed: May 19, 2014
BEFORE: SUTTON and COOK, Circuit Judges; MARBLEY, District Judge.*
ON BRIEF: Marshall Lasser, MARSHALL LASSER, P.C., Southfield, Michigan, for
Appellant. James J. Urban, Paul M. Mersino, BUTZEL LONG, Lansing, Michigan for Appellee
Ajax Paving. Joseph A. Fink, Jeffery V. Stuckey, D. Lee Khachaturian, DICKINSON WRIGHT
PLLC, Lansing, Michigan, for Appellees American Contractors, Ward North, VeriClaim and
NovaPro. Daniel B. Tukel, BUTZEL LONG, Detroit, Michigan, Michael F. Smith, THE
SMITH APPELLATE LAW FIRM, Washington, D.C., for Appellee Drouillard.
The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting
Brown v. Ajax Paving Indus., et al.
SUTTON, Circuit Judge. This case began as a dispute over who should pay for Jay
Brown’s shoulder injury. Brown claimed that he suffered the injury while paving a road for his
employer Ajax Paving, and that the company as a result owed him workers’ compensation. At
the workers’ compensation hearing, however, Ajax introduced medical testimony suggesting that
the injury occurred outside of work. While the case remained pending before the Michigan
administrative agency, Brown and Ajax settled.
Unlike most settlements, this one did not end the controversy. Brown thought that Ajax
had introduced false medical testimony in order to deny or at least diminish his benefits and that
it had done the same thing to other employees. As a result, he sued Ajax and its alleged
accomplices—insurers, claims administrators and the doctor—under the Racketeer Influenced
and Corrupt Organizations Act. The district court dismissed the complaint.
In order to sue under the Act, Brown must show that illegal racketeering activities have
“injured [him] in his business or property.” 18 U.S.C. § 1964(c); see also id. § 1962. Brown
attempts to meet this requirement by arguing that his employer’s use of false testimony prompted
him to accept a small settlement, and so cost him some of the workers’ compensation benefits he
otherwise deserved. Not long ago this theory of injury might have worked. This circuit used to
treat “expected [workers’ compensation] benefits” as “property” under the Act.
Cassens Transp. Co., 675 F.3d 946, 951 (6th Cir. 2012).
But last year, while the appeal in this case lay pending, the court reversed course while
sitting en banc. In Jackson v. Sedgwick Claims Management Services, a carbon copy of this
case, we turned back a lawsuit challenging a scheme to introduce false testimony at workers’
compensation hearings. 731 F.3d 556, 558 (6th Cir. 2013) (en banc). We held that “loss or
diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme
does not constitute an injury to ‘business or property’ under RICO.” Id. at 566. We gave two
key reasons for our holding. One was that workers’ compensation compensates for personal
Brown v. Ajax Paving Indus., et al.
injury. The Act, which puts its spotlight on “business or property,” does not cover losses that
flow from personal injuries. Id. at 565–66. The other was that a contrary rule would allow the
Act to police fraud in the workers’ compensation system, planting the national banner on land
traditionally patrolled by the States. The Act does not speak with enough clarity, we reasoned, to
authorize such an intrusion. Id. at 566–69.
Unfortunately for Brown, Jackson resolves this appeal. Brown’s alleged injury consists
of getting less workers’ compensation than he deserved. Because “loss or diminution” of
expected workers’ compensation “does not constitute an injury to ‘business or property,’” id. at
566, Brown’s claims must fail.
In response to all of this, Brown makes a partial but not a complete retreat. He submits
that Jackson applies only to disputes between employer and employee, leaving in place his
claims against the insurers, the claims administrators and the doctor.
Yet this argument
overlooks what happened in Jackson itself. The defendants in that case included not only an
employer, but also a claims administrator and a doctor (in fact the same doctor sued in this case).
The court rejected the claims against all of the defendants. See id. at 558–59. To limit Jackson
to lawsuits against employers is to rewrite history.
This argument not only slights Jackson’s outcome, but it also disrespects its reasoning.
Jackson explained that expected workers’ compensation benefits stand outside the Act’s
perimeter because they flow from personal injuries. It added that extending the Act to expected
workers’ compensation benefits would clash with the States’ customary control of their workers’
compensation systems. Each argument applies with equal force whether an employee sues his
employer or somebody else. Changing the defendant neither weakens the link between the
benefits and personal injury nor dims the respect owed to the States’ authority over workers’
Last but not least, Brown’s attempted distinction between employers and others collides
with the statute Congress enacted. The Act’s applicability turns on the nature of the injury—that
the plaintiff was “injured in his business or property.” 18 U.S.C. § 1964(c). It does not turn on
the nature of the defendant. We do not see how the same harm, loss of expected workers’
Brown v. Ajax Paving Indus., et al.
compensation benefits, could count as an injury to business or property against some defendants
but not against other defendants.
Brown complains that our decision “immunize[s] any insurer, claim adjuster or medical
examiner who fraudulently denied or conspired to deny” workers their benefits. Reply Br. at 5.
That is an overstatement. States can and do impose liability upon people—employers as well as
others—who defraud the workers’ compensation system.
Brown’s own brief tells us that
Michigan’s courts would entertain claims that “an insurer, claim adjuster or medical examiner
tortiously interfered with an employee’s receipt of . . . benefits.” Id. at 3. And the commission
that heads the Michigan workers’ compensation system punishes abuses of the workers’
See Mich. Comp. Laws Ann. § 418.861b.
Our decision does not
“immunize” anyone from these exercises of state power. Our decision means only that federal
judges may not use the Act to seize this power for themselves. That of course was the whole
point of Jackson.
The defendants’ alleged actions in short did not injure Brown “in his business or
property.” 18 U.S.C. § 1964(c). Because this flaw undoes all of Brown’s claims, we need not
decide whether Brown’s settlement with Ajax covers this case. Nor need we consider whether
Brown has satisfied other requirements imposed by the Act.
For these reasons, we affirm.
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