The plaintiffs' injuries are purely economic. They are
distinguishable from any personal injuries caused by the
Nevertheless, defendants argue that the plaintiffs' RICO
claims should be barred because they are in some sense
"derivative" of the personal injuries sustained by third
parties. Courts in this circuit have favored pecuniary claims
related to personal injuries. See Jerry Kubecka, Inc. v.
Avellino, 898 F. Supp. 963, 968 (E.D.N.Y. 1995) ("If [murder
victims] had been merely disabled by the attempt on their lives
but survived, presumably they would have had a RICO claim for
lost earnings from their business activities because they had
been injured in their `business or property.'"); von Bulow v.
von Bulow, 634 F. Supp. 1284, 1309 (S.D.N.Y. 1986) ("The cost to
[murder target] of her committee and her inability to enjoy her
personal and real property may well be compensable monetary
injuries under RICO."). Other circuits have not allowed a party
who has suffered a personal injury to bring a RICO claim for
the pecuniary losses associated with the personal injuries. See
Doe v. Roe, 958 F.2d 763, 770 (7th Cir. 1992) (no RICO claim
for client coerced by lawyer into sexual relations; "sexual
labor" not property for RICO purposes and related pecuniary
expenditures "reflect personal injuries which are not
compensable under RICO"); Grogan v. Platt, 835 F.2d 844, 848
(11th Cir. 1988) (no RICO claim for pecuniary losses of injured
FBI agents and estates of murdered agents; losses "most
properly understood as part of a personal injury claim"); Drake
v. B.F. Goodrich Co., 782 F.2d 638, 643-44 (6th Cir. 1986)
(wrongful death claimants not allowed to amend complaint to
state RICO action).
Even if this court were to adopt the reasoning employed in
other circuits, as defendants urge, it nevertheless remains
true that the Blues have stated a RICO injury to their
"business or property." In all the cases where pecuniary
damages were not allowed, the gravamen of the plaintiffs'
claims was for personal injuries. The plaintiffs' economic
losses were interfused with and merely supplemental to their
personal injuries. Conceptually, as well as practically, the
two types of claims were joined together as a single cause of
action. See Grogan, 835 F.2d at 846 ("[T]he pecuniary and
non-pecuniary aspects of personal injury claims are not so
separated as the appellants would have us accept; rather, loss
of earnings, loss of consortium, loss of guidance, mental
anguish, and pain and suffering are often to be found,
intertwined, in the same claim for relief.").
In the instant suit, by contrast, the plaintiffs have
suffered entirely economic injuries. Any personal injuries to
smokers and to persons exposed to cigarette smoke caused by the
defendants' alleged racketeering are separate and distinct from
the plaintiffs' economic injuries suffered by their businesses.
See, e.g., Steele v. Hospital Corp. of America, 36 F.3d 69, 70
(9th Cir. 1994) (rejecting RICO claim of patients for
overbilling of hospital because, "if the patients have paid
none of the allegedly excessive charges out of their own
pockets because those charges were covered by insurance, then
they have suffered no financial loss"). The Blues have a right
to bring their own legal claim for their own injuries.
The law of equity has long recognized that plaintiffs such as
the Blues have a right to recoup the economic losses they
themselves incur as a result of tortious injury to their
insureds. In almost all jurisdictions, plaintiffs such as the
Blues, as the real parties in interest, may bring legal actions
to enforce this right under their own names. See, e.g., United
States v. Aetna Casualty & Surety Co., 338 U.S. 366, 379, 70
S.Ct. 207, 94 L.Ed. 171 (1949) ("[B]oth the insured and insurer
. . . have substantive rights against the tortfeasor which
qualify them as real parties in interest."); Virginia Elec. &
Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 84 (4th
Cir. 1973) ("Either party may bring the suit — the
insurer-subrogee to the extent it has reimbursed the subrogor,
or the subrogor for either the entire loss or only its
unreimbursed loss."); 6A Charles A. Wright, Arthur R. Miller
and Mary Kay Kane, Federal Practice and Procedure § 1546, at
360 (2d ed. 1990) ("Either the insured or the insurer may
sue."). The general rule in federal courts is that the insured
is not an indispensable party under Rule 19 and need not be
joined in the insurer's action against the tortfeasor if the
joinder would deprive the court of subject matter jurisdiction.
See, e.g., Aetna, 338 U.S. at 382 n. 19, 70 S.Ct. 207 (insureds
and insurers "clearly not `indispensable' parties"); Krueger v.
Cartwright, 996 F.2d 928, 934 (7th Cir. 1993) ("We agree with
the majority of courts that have addressed the issue and
applied this principle [that neither is indispensable] as a
general rule in cases of partial subrogation.").
In most jurisdictions the insureds themselves have no
equitable claim to compensatory damages predicated upon
payments made directly by the Blues. In some jurisdictions,
such as New York, smokers are even statutorily barred from
recovering for those medical expenses paid by Blue Cross. N.Y.
C.P.L.R. § 4545(c) (McKinney 1992).
While the states have taken a wide variety of approaches to
the law of subrogation, a current view is that the insurer's
claims for economic damages are separate and distinct from
those of the insureds. See, e.g., Arkwright-Boston
Manufacturers Mutual Ins. Co. v. City of New York,
762 F.2d 205, 209 (2d Cir. 1985) ("These two claims [of subrogor and
subrogee] are separate and distinct, and do not constitute
unlawful splitting under New York law."); Fidelity & Deposit
Co. of Maryland v. Gaspard, 1997 WL 335598, at *2 (E.D.La.
1997) ("Since the two claims [of subrogee and subrogor] against
[defendant] are distinct, a judgement rendered in the absence
of [subrogor] would have no prejudicial affect on him.");
Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577, 582, 626
N.Y.S.2d 994, 650 N.E.2d 841 (1995) ("The claims of the insurer
for amounts paid by it and the insured's claim for uninsured
losses are divisible and independent, and `[p]ermitting the
insurer to sue . . . as equitable subrogee does not affect the
insured's right to sue for the amount of the loss remaining
unreimbursed.'" (quoting Federal Ins. Co. v. Arthur Andersen &
Co., 75 N.Y.2d 366, 374, 553 N.Y.S.2d 291, 552 N.E.2d 870
(1990))). The Blues' economic losses are "derived" in some
sense from the injuries of others but the Blues' economic
injuries are nonetheless separate and distinct from the
injuries sustained by others and the Blues' legal claims are
properly understood as separate and independent from the claims
An analysis of the purpose of the RICO statute confirms the
conclusion that the statute may be applied to remedy the
plaintiffs' economic injuries in the instant suit. When
Congress drafted the "business and property" provision in the
statute, it may be assumed to have known that sufficient
remedial measures already existed for those suffering personal
injuries at the hands of racketeers. See, e.g., Genty v.
Resolution Trust Corp., 937 F.2d 899, 918 (3d Cir. 1991)
("Congress' apparent unwillingness to allow recovery for
personal injuries under RICO appears to be consistent with
enacting RICO and its specific intention to thwart the
organized criminal invasion and acquisition of legitimate
business enterprises and property. Ample law already existed to
provide recovery for wrongfully inflicted personal injuries.").
The deleterious influence of racketeers upon legitimate
businesses presented a well known, pressing and unresolved
problem for society. RICO was specifically designed to address
and curtail these adverse economic consequences. The
legislative findings which preface the statute include the
Congress finds that (1) organized crime in the
United States is a highly sophisticated,
diversified, and widespread activity that annually
drains billions of dollars from America's economy
by unlawful conduct and the illegal use of . . .
fraud. . . .
Pub.L. No. 91-452, § 1, 84 Stat. 922, 922 (1970).