In Brown v. Cassens Transport Co., No. 10-2334, the plaintiffs claimed their employer and its claims adjuster conspired to deny workers compensation benefits in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The district court held that Michigan’s Worker’s Disability Compensation Act (“WDCA”) provided the exclusive remedy and therefore foreclosed federal RICO claims. It further held that the employees’ monetary losses were not injuries to business or property and the damages were too speculative to support standing.
The Sixth Circuit reversed in a 2-1 decision, finding that the Supremacy Clause prevented Michigan from declaring that a state remedy was exclusive of federal remedies. The WDCA and RICO claims were separate claims because the predicate offense for the RICO action was mail fraud, not the denial of worker’s compensation. On the standing question, the Panel held that the district court’s focus on cases rejecting pecuniary losses “flowing from” personal injuries skipped over “the first and most fundamental question at issue – has any legal entitlement been harmed.” It distinguished cases from other circuits as not involving an injury to an intervening legal entitlement. The devaluation of an expectancy of or claim for worker’s compensation was an injury to property: “Focusing on whether pecuniary losses ‘flowed’ in some way from a personal injury does not make sense in cases involving the devaluation of an actual legal entitlement as a result of the independent RICO fraud.”
Having determined that the loss of a statutory entitlement is an injury to property, Judge Moore’s opinion also held that the plaintiffs accrued a property interest in their worker’s compensation benefits at the time their employer became aware of the injury. The Court interpreted the WDCA’s mandatory language – employees injured in the course of employment “shall be paid compensation” – to mean that the Michigan courts would recognize a property interest in an injured employee’s expectancy of worker’s compensation.
In dissent, Judge Gibbons disagreed that the plaintiffs had alleged a property interest. She found the precedent from sister circuits were “useful examples” of when damages compensate for personal injury and when damages compensate for injury to property. Following those precedents, Judge Gibbons would have held that the workers’ pecuniary losses flowed from their personal physical injuries and were therefore insufficient to confer standing under RICO.
