Allstate Insurance Company et al v. Plambeck et al

Filing 690

Memorandum Opinion and Order: Plaintiffs' 667 Motion for Entry of Judgment is GRANTED, Plaintiffs' 673 Motion for Attorneys' Fees and Costs is GRANTED in part, Defendants' 675 Motion for Judgment as a Matter of Law is DENIED, and Defendants' 676 Motion for New Trial is DENIED. (Ordered by Judge Barbara M.G. Lynn on 3/31/2014) (jrr)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

ALLSTATE INSURANCE COMPANY, et al., §
§
Plaintiffs,
§
§
v.
§
§
MICHAEL KENT PLAMBECK, D.C., et al., §
§
Defendants.
§

CASE NO. 3:08-CV-388-M

MEMORANDUM OPINION AND ORDER
Before the Court are Plaintiffs’ Motion for Entry of Judgment [Dkt. No. 667]; Plaintiffs’
Motion for Attorneys’ Fees and Costs [Dkt. No. 673]; Chiropractic Defendants’1 Post-Trial
Motion for Judgment as a Matter of Law [Dkt. No. 675]; and Chiropractic Defendants’ Motion
for New Trial [Dkt. No. 676]. Plaintiffs’ Motion for Entry of Judgment is GRANTED as
specified herein, Plaintiffs’ Motion for Attorneys’ Fees and Costs is GRANTED in part,
Defendants’ Motion for Judgment as a Matter of Law is DENIED except as specified herein, and
Defendants’ Motion for New Trial is DENIED.2
I.

BACKGROUND
Plaintiff Allstate Insurance Company and three of its affiliates (“Plaintiffs”) filed this

action on March 6, 2008, asserting common law fraud, conspiracy to defraud, unjust enrichment,

The “Chiropractic Defendants” are those parties as to whom the Court ultimately submitted jury
questions from the group of defendants that filed the Chiropractic Defendants’ First Amended Answer,
[Dkt. No. 143], and are hereinafter referred to as “Defendants.”
1

Consistent with this Order, the Court also DENIES as moot Defendants’ previously filed Motion for
Judgment [Dkt. No. 639] and Motion for Judgment Renewed [Dkt. No. 649].
2

Page 1 of 17

and violations of the federal and Ohio RICO statutes. Plaintiffs argued at trial that Defendants
provided unnecessary and unreasonable chiropractic care to 555 patients involved in motor
vehicle accidents, where those patients or the other driver was insured by Plaintiffs and, thus, the
chiropractic billings were submitted to Plaintiffs for payment. Plaintiffs claimed that, in the
billings, Defendants made fraudulent misrepresentations to them concerning the reasonableness
and necessity of care to these patients.
This case was tried to a jury over a period of six weeks. On April 4, 2013, the jury found
that all of the Defendants violated Sections 1962(c) and 1962(d) of the federal RICO statute, and
that certain Defendants violated the Ohio RICO statute.3 The jury further found certain
Defendants liable on Plaintiffs’ fraud and unjust enrichment claims, but awarded Plaintiffs no
damages on these claims.4 Although these parties now move for judgment, none has yet
requested preparation of the entire trial record, so the Court does not have the benefit of the trial
record in resolving the instant Motions.
II.

RENEWED RULE 50(B) MOTION5
Defendants argue that judgment should be entered in their favor because there is no

legally sufficient evidentiary basis to support the jury’s findings with respect to Plaintiffs’

3

The jury found that the following Defendants did not violate the Ohio RICO statute: Kim Von Readen,
Charles Mora, Irma Escandon, Brownsville Chiropractic Clinic, Inc., El Paso Chiropractic Clinic, LLC,
WTC Chiropractic Clinic, LLC, Harlingen Chiropractic Clinic, Inc., Wolfin Chiropractic Clinic, LLC,
11th Street Chiropractic Clinic, LLC, Mainland Chiropractic Clinic, LLC, Bergstrom Chiropractic Clinic,
Inc., Laredo Chiropractic Clinic, LLC, SA Chiropractic Clinic, LLC, N. Carrier Chiropractic Clinic, Inc.,
Buckner 30 Chiropractic Clinic, Inc., Hampton Chiropractic Clinic, Inc., Haltom City Chiropractic Clinic,
Mobile Spine & Rehab Center on the Loop, Inc., and Five Points Chiropractic, Inc.
Plaintiffs acknowledged at the hearing held on the parties’ post-trial motions that they are not moving
for judgment on their fraud or unjust enrichment claims.
4

5

Federal Rule of Civil Procedure 50(b) provides that a party may renew a motion for judgment made as a
matter of law under Rule 50(a) within 28 days after post-trial entry of judgment. Fed. R. Civ. P. 50(b).
The Court has not yet entered judgment on the jury’s verdict, but ordered the parties to file their post-trial
motions on or before May 3, 2013. [Dkt. No. 668]. Defendants’ Motion is, therefore, ripe for resolution.

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federal and Ohio RICO claims. “A [motion for judgment as a matter of law] challenges the legal
sufficiency of the evidence to support the verdict.” Hodges v. Mack Trucks, Inc., 474 F.3d 188,
195 (5th Cir. 2006).
Judgment as a matter of law is appropriate with respect to an issue if there is no
legally sufficient evidentiary basis for a reasonable jury to find for a party on
that issue. This occurs when the facts and inferences point so strongly and
overwhelmingly in the movant’s favor that reasonable jurors could not reach a
contrary verdict. In considering a Rule 50 motion, the court must review all of
the evidence in the record, drawing all reasonable inferences in favor of the
nonmoving party; the court may not make credibility determinations or weigh
the evidence, as those are jury functions. In reviewing the record as a whole, the
court must disregard all evidence favorable to the moving party that the jury is
not required to believe. That is, the court should give credence to the evidence
favoring the nonmovant as well as that evidence supporting the moving party
that is uncontradicted and unimpeached, at least to the extent that that evidence
comes from disinterested witnesses.
Brennan’s Inc. v. Dickie Brennan & Co., 376 F.3d 356, 362 (5th Cir. 2004) (citations, brackets,
and internal quotation marks omitted). “A jury verdict must stand unless there is a lack of
substantial evidence, in the light most favorable to the successful party, to support the verdict.”
Am. Home Assurance Co. v. United Space Alliance, LLC, 378 F.3d 482, 487 (5th Cir. 2004).
Thus, in reviewing the jury’s verdict, the question the Court must ask is “whether the jury
finding could, with reason, be made upon the evidence before it.” Id. at 490 (internal citation
and quotation marks omitted).
For the following reasons, and except as specified below, the Court concludes that
Defendants are not entitled to judgment in their favor.
A. Federal Racketeer Influenced and Corrupt Organizations Act (“federal RICO”)
Section 1962(c) of RICO makes it “unlawful for any person employed by or associated
with any enterprise . . . to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. § 1962(c).

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“Racketeering activity” is any of the predicate acts defined in Section 1961(1), which includes,
among others, mail fraud and wire fraud. 18 U.S.C. § 1961(1). Section 1962(d) imposes
liability on persons who conspire to violate Section 1962(c). 18 U.S.C. § 1962(d). Any person
injured in his business or property by reason of a violation of section 1962 can bring a civil
action. 18 U.S.C. § 1964(c).
Claims under all subsections of Section 1962 require three elements: “(1) a person who
engages in (2) a pattern of racketeering activity, (3) connected to the acquisition, establishment,
conduct, or control of an enterprise.” Abraham v. Singh, 480 F.3d 351, 355 (5th Cir. 2007)
(internal quotation marks and citation omitted). The person engaging in the racketeering activity
must be distinct from the enterprise, and the enterprise must be distinct from the series of
predicate acts that constitute the racketeering activity. St. Paul Mercury Ins. Co. v. Williamson,
224 F.3d 425, 439 (5th Cir. 2000).
B. Ohio Corrupt Practices Act (“Ohio RICO”)
The Ohio Corrupt Practices Act “is adopted directly from the [federal] RICO Act,” and
“[a]s a result, Ohio courts look to federal case law applying the RICO Act when analyzing
claims brought under the [Corrupt Practices Act].” See Cochran v. VendMasters, Inc., No. 4CV-24, 2006 WL 2709777, at *5 (S.D. Ohio Sept. 20, 2006) (analyzing plaintiff’s federal and
Ohio state RICO claims together); State v. Allen, No. 11AP–1130, 2013 WL 596377, at *1 n.1
(Ohio Ct. App. Feb. 14, 2013) (“The Ohio Corrupt Practices Act was modeled on the federal
Racketeer Influenced and Corrupt Organizations Act . . . [and] has been denominated ‘Ohio’s
RICO statute.’”) (internal citation omitted). Thus, to establish Defendants’ liability under the
Ohio RICO statute, Plaintiffs were required at trial to produce sufficient evidence establishing at

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least the predicate elements required by federal RICO.6 See supra at 4.
C. Plaintiffs demonstrated the existence of an enterprise
The jury found that Plaintiffs proved an association-in-fact enterprise consisting of
Michael Kent Plambeck,7 Douglas Friedman,8 Randall Toca,9 Chiropractic Services Group, Inc.
(“CSG”),10 Media Placement Services, Inc. (“MPS”),11 Professional Management Group, LLC
(“PMG”), and Law Office Network, LLC (“LON”).12 Defendants argue that the evidence does
not support this finding. The Court disagrees.
To demonstrate the existence of an association-in-fact enterprise among these
Defendants, Plaintiffs were required to provide evidence of an (1) ongoing organization that

The Ohio RICO statute penalizes a person’s participation in the affairs of an enterprise through a pattern
of “corrupt activity,” rather than “racketeering activity,” as stated in federal RICO. Compare R.C.
§ 2923.32 with 18 U.S.C. § 1962. Under Ohio RICO, “corrupt activity” includes the RICO predicate
racketeering offenses (i.e., federal mail and wire fraud and the federal statute prohibiting the transport of
stolen money), as well as other specified violations of Ohio law. That Ohio RICO uses the term “corrupt
activity,” rather than “racketeering activity” does not mean that it substantively departs from RICO. See
Jury Charge at 10 [Dkt. No. 658] (“To establish that Defendants have violated section 1962(c), Plaintiffs
must prove each of the following four elements for each Defendant by a preponderance of the evidence:
(1) That an ‘enterprise’ existed; (2) That the Defendant was employed by or associated with the alleged
enterprise; (3) That the Defendant knowingly and willfully conducted or participated, directly or
indirectly, in the conduct of the affairs of the alleged enterprise; and (4) That the Defendant did so
knowingly and willfully through a pattern of racketeering activity.”); id. at 23 (“In order for Plaintiffs to
recover under the Ohio Corrupt Practices Act, you must find by a preponderance of the evidence the four
elements of section 1962(c) of RICO that I have described for you beginning at page 10 of the Charge.”).
6

7

At all relevant times, Plambeck was the sole owner of CSG, MPS, and a majority of the clinic entities.

8

At all relevant times, Friedman was the marketing director of CSG and manager of MPS.

9

At all relevant times, Randall Toca was the owner of PMG and LON.

10

Among other things, CSG provided training to the chiropractors who worked at the clinic entities and
forwarded clinic records and billing reports to law offices, which then sent to Plaintiffs demand packages
on behalf of clinic patients.
11

MPS was a telemarketing firm that solicited patients for chiropractic treatment at the clinic entities.

12

PMG and LON managed law offices that were alleged to have submitted demand packages to Plaintiffs
on behalf of the chiropractic patients.

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(2) exists separate and apart from the pattern of racketeering; and (3) functions as a continuing
unit as shown by a hierarchical or consensual decision making structure. See Montesano v.
Seafirst Commercial Corp., 818 F.2d 423, 426-27 (5th Cir. 1987). The enterprise must have a
shared purpose, and each member of the enterprise must share this purpose. Morse v.
Commonwealth Land Title Ins. Co., No. 12-CV-375, 2013 WL 5372395, at *10 (E.D. Tex. Sept.
24, 2013).
Notwithstanding Defendants’ arguments to the contrary, Plaintiffs presented legally
sufficient evidence at trial that the members of the enterprise shared a common purpose—i.e., the
solicitation, treatment, and legal representation of patients through which the enterprise profited
by presentation of claims. This evidence adequately demonstrated that the members were not at
cross-purposes or acting independently but were, instead, an interdependent and coordinated
association that existed to perpetuate the enterprise and its profitability. A shared “desire to
make money” is sufficient to satisfy RICO’s common purpose requirement. United States v.
Elliot, 571 F.2d 880, 898 (5th Cir. 1978).13 Plaintiffs also presented sufficient evidence that the
enterprise had an existence separate and apart from the alleged racketeering activity—e.g., that
the enterprise solicited and provided treatment and representation to patients who actually
required such treatment. Thus, the enterprise alleged in this case is different from that discussed

The Court charged that the alleged enterprise “may have been organized for a legitimate and lawful
purpose, or it may have been organized for an unlawful purpose.” Jury Charge at 12. This instruction
was adopted from Defendants’ proposed jury instructions. See Defs.’ Proposed Jury Instructions at 11
[Dkt. No. 588]. Defendants’ argument that the alleged purpose of the enterprise was to unlawfully enrich
the enterprise members through the fraudulent presentation of claims appears to conflate the “common
purpose” element of the enterprise determination with the question of whether a “person” has conducted
or participated in the affairs of an enterprise through a pattern of racketeering (or corrupt) activity. See
also Pls.’ RICO Case Statement at 61-62 [Dkt. No. 114] (“The purpose of the association in fact
enterprise was to provide services (management, lobbying, marketing, etc.) to clinics and to law offices
representing clinic patients. There is nothing inherently illegal in these activities (singularly or
collectively), and the enterprise still serves that function, and not all patients treated at the clinics are part
of the fraud scheme.”).
13

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by the Fifth Circuit in Clark v. Douglas, in that Plaintiffs here did not argue at trial that “[t]he
‘enterprise’ came into being only for the purpose of engaging in fraudulent activity.”
No. 06-40364, 2008 WL 58774, at *4-5 (5th Cir. 2008).
Plaintiffs, likewise, presented sufficient evidence that the enterprise functioned as a
continuing unit, with a hierarchical or consensual decision-making structure. Decisions in an
association-in-fact enterprise “may be made on an ad hoc basis and by any number of methods.”
Boyle v. United States, 556 U.S. 938, 948 (2009). Plaintiffs demonstrated that the enterprise
functioned as a continuing unit—without meaningful interruption—at all relevant times, and that
it did so through a discernible decision-making structure. Indeed, Plaintiffs introduced testimony
and other documentary evidence showing, among other things, that: (1) the enterprise members
were tied together geographically; (2) money was transferred between Plambeck/CSG and
Randall Toca/PMG/LON; (3) PMG/LON managed law offices and CSG related clinics made
coordinated office openings subsequent to meetings among the enterprise members regarding the
same; (4) CSG employees had access to PMG/LON client files; (5) Plambeck and Randall Toca
determined how to split settlement payments; (6) Plambeck was involved in the settlement of
claims; (7) Friedman conferred with and advised Plambeck on new clinic openings; (8) Friedman
developed telemarketing scripts used by MPS telemarketers to “convert” individuals into clinic
patients by discussing the possibility of hidden injuries; (9) Friedman was the marketing director
for CSG and manager of MPS; and (10) employment and termination decisions were coordinated
among the various members of the enterprise.
The Court, therefore, cannot conclude that the jury’s finding of an enterprise as alleged
by Plaintiffs lacked substantial supporting evidence.

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D. Plaintiffs demonstrated RICO causation
The Court charged the jurors that to find Defendants liable on Plaintiffs’ RICO claims,
they were required to determine that Plaintiffs’ injuries were caused “by reason of” Defendants’
RICO violations. Jury Charge at 20-21. The Court further charged that “[i]n order to recover
damages, Plaintiffs must demonstrate what portion, if any, of the amounts paid for each of the
555 patients was the direct result of Defendants having bills generated for particular services that
were not reasonable or necessary, by reason of violations of federal or Ohio RICO laws.” Id. at
29.
The Court does not accept Plaintiffs’ arguments that Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639 (2008), “establish[es] the bright-line rule that plaintiffs asserting RICO claims
. . . need not assert or establish their reliance on the fraud.” See Bridgewater v. Double
Diamond-Delaware, No. 9-CV-1758, 2011 WL 1671021, at *11 (N.D. Tex. Apr. 29, 2011)
(Boyle, J.). In Bridgewater, Judge Boyle held that Bridge essentially stands for the proposition
“that in most cases, plaintiffs will either have to show third-party reliance or first-party reliance.”
Id. This Court agrees. Plaintiffs cannot demonstrate causation for a RICO violation without
demonstrating some type of reliance. Id. This issue, however, is academic under the instant
facts, because Plaintiffs have demonstrated reliance sufficient to establish causation.
Responding to the Fifth Circuit’s decision in Allstate Ins. Co. v. Receivable Fin. Co.,
LLC, 501 F.3d 398, 411 (5th Cir. 2007),14 Plaintiffs presented the testimony of claims adjusters
and/or evaluation consultants who personally worked on 39 of the 555 claims submitted to the
jury. These individuals testified as to their reliance on the chiropractors’ medical billings
submitted in connection with the underlying insurance claims, in deciding what settlement

14

Plaintiffs’ counsel in this case also represented Plaintiffs in the Receivable Finance case.

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amounts to pay. The Court rejects Defendants’ argument that this Court should dismiss the
testimony of some of these adjusters because they only recommended settlement amounts,
though they did not ultimately make the decision as to how much to pay. Those adjusters
testified that the ultimate settlement decision was based on their recommendations. See id. at
412 (holding that Plaintiffs could have demonstrated reliance by, for instance, presenting the
testimony of adjusters who worked on the claims).
Plaintiffs also presented at trial reliance testimony from corporate representatives who,
although they did not personally work on the underlying claims, spoke to the claims handling
practice of Plaintiffs’ adjusters, and did so in a manner that was more specific than was the
testimony in Receivable Finance. This Court does not read Receivable Finance to hold that the
testimony of Plaintiffs’ corporate representatives, who did not directly work on claims, is never
to be considered in a reliance analysis, but that it was insufficient where, as there, it was “sparse
and unspecific,” id. at 408, and Plaintiffs did not present testimony of adjusters who worked on
the underlying claims. Here, Plaintiffs presented a combination of reliance testimony from
adjusters who personally worked on a significant number of the claims submitted to the jury as
well as corporate representatives who were familiar with Plaintiffs’ claims handling procedures
and who provided reliance testimony of a more specific nature than occurred in Receivable
Finance.
The Court further finds that the Plaintiffs’ reliance evidence as to the 39 claims could
properly be extrapolated to demonstrate reliance as to the broader universe of claims, particularly
when it was supported by the testimony of Plaintiffs’ corporate representatives. See id. at 411
(noting that Plaintiffs “could have, but did not, introduce the testimony of adjusters (or other
similar agent or employee) who in fact worked on some significant number of the 1,800-plus

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claim files at issue, to say that they relied on the medical claims submitted in deciding to settle a
claim”).15
E. Defendants’ remaining arguments do not demonstrate that they are entitled to
judgment on Plaintiffs’ federal and Ohio RICO claims, except with respect to
Defendants Escandon and Von Readen
Defendants further argue that: (1) Plaintiffs did not proffer competent evidence of
damages; (2) certain of Plaintiffs’ federal RICO claims are barred by the statute of limitations;
and (3) alternatively, certain individual Defendants are entitled to judgment in their favor.
Except as is specified below, the Court finds that these arguments provide no more of a basis for
granting Defendants judgment than do their other arguments. First, Defendants have not
convinced the Court that the jury’s damages award lacks competent supporting evidence.
Second, although Defendants now challenge the timeliness of Plaintiffs’ RICO causes of action
to the extent that they are based on claims paid or settled before March 6, 2004, Defendants
explicitly stated to the Court that they did not want the Court to submit limitations questions to
the jury. Had Defendants not waived this issue, the Court would have submitted limitations
questions to the jury. The Court does not believe the issue of when Defendants knew, or should
have known, of the injuries caused by Defendants’ conduct is a legal matter, and the Defendants
waived their right to have the jury decide this question. Finally, as to all Defendants except
Escandon and Von Readen, the Court concludes, in light of the evidence presented at trial, that
the jury’s verdict establishing their RICO liability is factually based and legally proper.
The Court reaches a contrary result with respect to Escandon and Von Readen, because it
concludes that the jury’s verdict as to their liability was not legally sufficient. The Court charged

15

Defendants argue that Ms. Campbell testified that she could not speak to what other adjusters relied on
in handling claims. The Court disagrees with this characterization of her testimony. It is the Court’s
recollection that Ms. Campbell testified that she could generally speak to how other adjusters settle
claims, although she could not discern the specific thoughts of these other adjusters in evaluating claims.

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the jury that to find a Defendant liable under the substantive federal RICO provision, they were
required to find that the “Defendant knowingly and willfully conducted or participated directly
or indirectly in the conduct of the affairs of the enterprise through a pattern of racketeering [or
corrupt] activity.” Jury Charge at 31-32 (emphasis added). The Supreme Court has held that in
order to satisfy the “conduct or participate” element, a defendant must “participate in the
operation or management of the enterprise itself.” Reves v. Ernst & Young, 507 U.S. 170, 17779, 185 (1993). Although “the word ‘participate’ makes clear that RICO liability is not limited
to those with primary responsibility for the enterprise’s affairs, just as the phrase ‘directly or
indirectly’ makes clear that RICO liability is not limited to those with a formal position in the
enterprise . . . some part in directing the enterprise’s affairs is required.” Id. at 179.
Plaintiffs did not present at trial legally sufficient evidence establishing that Escandon or
Von Readen had a part in directing or otherwise influencing the affairs of the enterprise alleged
by Plaintiffs. Plaintiffs did not show that either of these Defendants were in any position to
“direct” the affairs of the enterprise, or that they otherwise held any “position” in the enterprise
by which they knowingly participated in actions that facilitated the accomplishment of any
racketeering acts. See U.S. v. Posada-Rios, 158 F.3d 832, 856 (5th Cir. 1998). The Court,
therefore, enters judgment in favor of Escandon and Von Readen on Plaintiffs’ Section 1962(c)
claims.
The Court similarly concludes that Escandon and Von Readen are entitled to judgment in
their favor on Plaintiffs’ federal RICO conspiracy claims. Defendants argue both in their preverdict and Rule 50(b) Motion that Escandon and Von Readen did not “engage[] in any
conspiracy with other defendants.” See Defs.’ Rule 50(a) Mot. at 31-32; Defs.’ Post-Trial Mot.
for J. at 31-32. The Court does not read Defendants’ pre-verdict argument as having been made

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only with respect to Plaintiffs’ fraud and unjust enrichment claims, such that Defendants could
be said to have waived the right to make this post-verdict argument as to RICO. See Pls.’ Resp.
at 3 (specifically identifying Rule 50(b) arguments that Plaintiffs argued Defendants have
waived). In order to demonstrate RICO conspiracy as to Escandon and Von Readen, Plaintiffs
were required to show “(1) that two or more people agreed to commit a substantive RICO
offense and (2) that [Escandon and Von Readen] knew of and agreed to the overall objective of
the RICO offense.” Chaney v. Dreyfus Serv. Corp., 595 F.3d 219, 239 (5th Cir. 2010) (internal
citation and quotation marks omitted). They did not do so. Plaintiffs’ Section 1962(d) claims
against Escandon and Von Readen fail because Plaintiffs did not offer legally sufficient evidence
at trial that either of these Defendants had knowledge of any conspiracy and/or agreed to the aim
of the RICO offense.
In sum, the Court concludes that Defendants Escandon and Von Readen are entitled to
judgment in their favor on Plaintiffs’ federal RICO causes of action,16 whereas the remaining
Defendants are not.
F. Defendants are entitled to judgment that Plaintiffs take nothing on their fraud and
unjust enrichment claims
Defendants argue that, because the jury answered “zero” for all damages questions
relating to Plaintiffs’ fraud and unjust enrichment claims, judgment should be rendered that
Plaintiffs take nothing from Defendants on these claims. The Court GRANTS Defendants’
Motion only to the limited extent that the Court will enter judgment that Plaintiffs take nothing
from Defendants on these claims.

16

In compliance with Federal Rule of Civil Procedure 50(c), should this Circuit reverse or vacate the
Court’s judgment in favor of these Defendants, the Court would grant a new trial for these two
Defendants only, as it finds that the jury verdict against them is against the great weight of the evidence.

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III.

DEFENDANTS’ MOTION FOR NEW TRIAL
Defendants alternatively move for a new trial in the event that the Court does not enter

judgment in their favor. “New trials should not be granted on evidentiary grounds unless, at a
minimum, the verdict is against the great weight of the evidence.” Dawson v. Wal-Mart Stores,
978 F.2d 205, 208 (5th Cir. 1992). Defendants’ arguments raised in support of this Motion are
largely the same as those that the Court has now rejected in deciding Defendants’ Rule 50(b)
Motion.
To the extent that Defendants raise arguments in their Motion for New Trial not
considered by the Court on their Rule 50(b) Motion, the Court finds such arguments unavailing.
Not only does the Court disagree with Defendants’ contention that the verdict was against the
great weight of the evidence—except as to Defendants Escandon and Von Readen—but it also
disagrees with Defendants’ argument that the jury’s verdict was inconsistent and not
reconcilable, given that the jury awarded Plaintiffs no damages for fraud and unjust enrichment,
but did award Plaintiffs damages on their RICO claims. See, e.g., Holt Oil & Gas Corp. v.
Harvey, 801 F.2d 773, 781 (5th Cir. 1986) (“[J]ury responses . . . are inconsistent only if
irreconcilable. We have no difficulty reconciling the jury’s verdict in the instant case. The jury
might well have concluded that Holt would unjustifiably receive a double recovery if damages
were awarded under both theories of recovery.”).
The Court similarly finds unpersuasive Defendants’ argument that a new trial is
necessary because Plaintiffs presented to the jury evidence on 126 claims that were ultimately
not submitted. Although the jurors heard evidence as to such claims, the Court specifically
charged the jurors that it was “improper for [them] to consider any testimony or exhibits about
these 126 claims” and that they “must be scrupulous to not consider such evidence for any

Page 13 of 17

purpose.” Jury Charge at 9. Defendants conclusorily argue that evidence as to these claims
“undoubtedly poisoned the jury’s attitude with respect to Defendants generally and the remaining
555 claims specifically,” Defs.’ Mot. at 7, but provide no evidence in support thereof. The Court
has confidence that the jurors followed this Court’s instructions and, without more, will not
conclude that the jurors in this case impermissibly ignored the Court’s directive as to the 126
claims.
IV.

PLAINTIFFS’ MOTION FOR JUDGMENT
Plaintiffs move for entry of judgment based on the jury’s verdict, pursuant to Federal

Rule of Civil Procedure 58. Plaintiffs’ Motion is GRANTED except to the extent that Plaintiffs:
(1) seek to hold the defaulting defendants jointly and severally liable for damages exceeding the
trebled amounts of actual damages that the jury found against these defendants;17 and (2) seek
prejudgment interest on their RICO claims, an award of which is a matter solely within this
Court’s discretion.18 See, e.g., Vanderbilt Mortg. & Fin., Inc. v. Flores, No. C-09-312, 2011 WL
767163, at *3 n.3, 4 (S.D. Tex. Feb. 25, 2011); La. Power & Light Co. v. United Gas Pipe Line
Co., 642 F. Supp. 781, 811 (E.D. La. 1986) (refusing prejudgment interest on RICO claim
because “multiple damages more than reimburse a plaintiff for any loss he suffers from an
unavailability of the funds he seeks to recover.”).

17

Plaintiffs could have, but did not, request that the Court submit the same damages questions as to both
the defaulting and non-defaulting defendants. Consequently, the Court will not decide as a matter of law
that the defaulting defendants are jointly and severally liable on the full amount of damages awarded
against the non-defaulting defendants. Plaintiffs requested separate damage findings against the
defaulting defendants, and the judgment entered by this Court will reflect this distinction. The Court will,
however, hold the defaulting defendants jointly and severally liable for the attorneys’ fees awarded.
“[A]side from the question of whether this Court should award prejudgment interest, the Chiropractic
Defendants concur with the formulation of the judgment proposed by Plaintiffs.” Defs.’ Resp. at 4.
18

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V.

PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES AND COSTS19
Plaintiffs seek in their Motion for Attorneys’ Fees and Costs, pursuant to Federal Rule of

Civil Procedure 54(d), 18 U.S.C. § 1964(c), and Ohio Revised Code § 2923.34, a judgment for
$1,903,006.75 in attorneys’ fees and $119,162.37 in costs incurred in the prosecution of this
action, and $19,531.57 in costs incurred in the successful defense of Defendants’ counterclaims.
Determining the proper amount of a fee award and taxable costs is a matter within this
Court’s discretion. Kinnison v. City of San Antonio, No. 8-CV-421, 2011 WL 1399094, at *2
(W.D. Tex. April 12, 2011); Chambers v. Joseph T. Ryerson & Son, Inc., No. 5-CV-1533, 2007
WL 4302738, at *1 (N.D. Tex. Dec. 10, 2007) (Fitzwater, C.J.). Where a party is deemed
“prevailing,” although he succeeds on only certain of his claims for relief, two questions must be
asked. See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). “First, did the plaintiff fail to
prevail on claims that were unrelated to the claims on which he succeeded? Second, did the
plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis
for making a fee award?” Id.
The Supreme Court counseled:
Where a plaintiff has obtained excellent results, his attorney should recover a
fully compensatory fee. . . . If on the other hand, a plaintiff has achieved only
partial or limited success, the product of hours reasonably expended on the
litigation as a whole times a reasonable hourly rate may be an excessive amount.
Defendants argue that Plaintiffs’ Motion is “premature,” stating that “[a]lthough the Court issued an
order setting a deadline for ‘post-trial’ motions (e.g., motions for judgment) to be filed by May 3, 2013
. . . this does not appear to encompass post-judgment motions, such as a motion for attorneys’ fees or a
bill of costs.” Defs.’ Resp. at 2. Defendants further argue that “[b]ecause no judgment has yet been
entered, it is impossible to determine whether the Plaintiffs are entitled to recover the costs they seek at
this time . . . .” and, thus, “reserve the right to file an additional response to Plaintiffs’ Motion after the
Court enters judgment.” Id. at 3. Defendants addressed in their Response Plaintiffs’ entitlement to
attorneys’ fees but did not address the merits of Plaintiffs’ request for an award of costs. It is premature
to rule on the amount of costs that Plaintiffs are entitled to at this time, and the Court will do so only if the
parties dispute the amounts identified in Plaintiffs’ bill of costs, once filed. See infra at 17. The Court
will, however, rule now on Plaintiffs’ entitlement to attorneys’ fees, and in what amount.
19

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This will be true even where the plaintiff’s claims were interrelated, nonfrivolous,
and raised in good faith. . . . [T]he most critical factor is the degree of success
obtained.
Id. at 435-36.
Defendants do not contest that Plaintiffs’ counsels’ hourly rates are reasonable, and
Defendants do not appear to urge generally that the work performed by counsel was
unnecessary,20 or that the time spent on that work was unreasonable. Rather, Defendants argue
that Plaintiffs’ fees are excessive because they have failed to segregate their successful claims
from their unsuccessful claims; that is, Defendants contend that any fees awarded to Plaintiffs
must be reduced commensurate with the degree of success that Plaintiffs secured on the
underlying claims on which they originally brought suit.
Plaintiffs’ argument that they have achieved total success, because they prevailed on their
RICO causes of action makes little sense where, as here: (1) Plaintiffs’ causes of action were
based on 721 underlying insurance claims; and (2) Plaintiffs asserted additional causes of action
but did not recover on them. Taking Plaintiffs’ argument to its logical end would require a full
award of fees even were Plaintiffs to prevail on only a single claim of hundreds originally
brought. The Court, therefore, exercises its discretion to reduce the fees sought by Plaintiffs
commensurate with the level of success achieved by them in this case. Plaintiffs originally
brought suit based on 721 underlying claims. See Pls.’ Reply at 9 (“Allstate pursued causes of
action under the federal and Ohio RICO statutes and sought damages based on payment of 721
underlying insurance claims.”). Of the claims initially brought, only 555 were actually submitted
to the jury. Of those submitted to the jury, damages were awarded on only 391 claims. Plaintiffs
succeeded on roughly 54% of the underlying insurance claims initially sued upon.
The Court finds without merit Defendants’ argument that Plaintiffs’ fees must be reduced to the extent
that Plaintiffs spent time in pursuing their argument that reliance is not an element of a RICO claim.
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The Court, therefore, finds that Plaintiffs should recover 54% of the total attorneys’ fees
they seek. Plaintiffs are, therefore, entitled to recover $1,027,623.65 in attorneys’ fees.
Plaintiffs shall further be entitled to taxable court costs. After Plaintiffs file a bill of costs,
Defendants may dispute the amount of same, and they will then be subject to judicial review.
VI.

CONCLUSION
For the aforementioned reasons, the Court finds that judgment should be entered in

Plaintiffs’ favor. A separate judgment will be entered.
SO ORDERED.
March 31, 2014.
_________________________________
BARBARA M. G. LYNN
UNITED STATES DISTRICT JUDGE
NORTHERN DISTRICT OF TEXAS

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