RICO / Mail Fraud — Bridge Does Not Dispense with Reliance Requirement Where Reliance Affirmatively Pled
After the district judge denied class certification in Dungan v. Academy at Ivy Ridge, 2008 U.S. Dist. LEXIS 56757 (N.D.N.Y. July 21, 2008), the plaintiffs sought reconsideration on the ground that the Supreme Court’s June 9, 2008 decision in Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct. 2131 (2008), constituted a material change in controlling law because it clarified that reliance is not an essential element of a RICO claim based on mail fraud and much of the Court's reason for denying the motion for certification was because of the predominance of the reliance issue. Rationale rejected:
What is clear from Bridge is that "a plaintiff asserting a RICO claim predicated on mail fraud need not show, either as an element of its claim or as a prerequisite to establishing proximate causation, that it relied on the defendant's alleged misrepresentations." Id. at 2145. While this Court acknowledges the rule enunciated in Bridge, the problem for Plaintiffs is that they do allege that they relied on Defendant's claimed misrepresentations and that it was this first-person reliance that caused them to sustain damages. Thus, this case is unlike Bridge where third-party representations caused damage to the plaintiff. This is a classic first-party reliance case. Plaintiffs have not adequately explained how or why removing reliance as an element of the RICO claim becomes irrelevant to the class certification determination (or to its RICO claims). While first-person reliance may not be an essential element of the RICO claims, it remains a central focus of the allegations and claims in this case (including the common-law and RICO claims). Accordingly, reliance continues to be a predominant issue in this case and the holding in Bridge does not constitute a change in controlling law that warrants reconsideration of the motion for class certification or would otherwise warrant certification of the issues requested by Plaintiffs.
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