RICO — Competitors as Members of an Associated-in-Fact Enterprise

From Negrete v. Allianz Life Ins. Co. of N. Am., 2011 U.S. Dist. LEXIS 118529 (C.D. Cal. Oct. 13, 2011):

Allianz next contends that because each FMO competes "aggressively, and at cross-purposes" with every other FMO, plaintiffs are unable to prove the "common purpose" element required by Boyle. Specifically, Allianz argues that "'[i]f the constituents are competitors, if they are acting independently or at cross purposes — or if the allegation of common purpose is purely conclusory — this prong will not be satisfied.'" Id. at 16 (quoting Gregory P. Joseph, Civil RICO: A Definitive Guide 93-94. (3d ed. 2010) ("Civil RICO")). Moreover, Allianz maintains that "'were the rule otherwise, competitors who independently engaged in similar types of transactions with the same firm could be considered associates in a common enterprise. Such a result would contravene Boyle's definition of 'enterprise.''" Id. at 16-17 (quoting Ins. Brokerage, 618 F.3d at 375.).

Plaintiffs respond that Allianz's argument that competitors cannot share a common purpose as a matter of law was "squarely rejected" by the court in In re Nat. Western Life Ins. Deferred Annuities Litig. ("National Western I"), 635 F. Supp. 2d 1170 (S.D. Cal. 2009). Opp'n at 27. Moreover, plaintiffs contend that Allianz's factual contention that the FMOs acted at cross-purposes is inconsistent with the record in this case, which shows a "high degree of coordinated conduct" with respect to targeted sales to seniors. Id.

The Court finds Allianz's argument unavailing for the reasons articulated in National Western I. In that case, as in the present matter, an annuities issuer moved for summary judgment as to RICO claims on the basis that it did not share a common purpose with the various national marketing organizations ("NMO") and sales agents who ultimately sold the issuer's products. See id. at 1172. The court cited Odom v. Microsoft Corp., 486 F.3d 541, 552 (9th Cir. 2007) for the principle that the "common purposes" element does not require the enterprise participants to share all of their purposes in common. Id. The court then found that plaintiffs had set forth sufficient evidence to prove that the issuer, the NMOs, and the sales agents shared the common purpose to sell the issuer's deferred annuities. Id. 5 As in National Western I, plaintiffs here have cited sufficient evidence to allow a jury to determine that Allianz, the FMOs, and the sales agents share the "common purpose" of increasing sales of Allianz products through senior-focused promotional materials and seminar programs. Opp'n at 29. Most significantly, the FMOs and sales agents sell Allianz's products, and this relationship involves "more than mere sales" as Allianz exerts control over the FMOs through training, marketing materials, commissions, etc. See National Western I, 635 F. Supp. at 1174.

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