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NATIONAL ASBESTOS WORKERS v. PHILIP MORRIS

August 2, 1999

THE NATIONAL ASBESTOS WORKERS MEDICAL FUND, ET AL., PLAINTIFFS,
v.
PHILIP MORRIS, INC., ET AL., DEFENDANTS. BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC., ET AL., PLAINTIFFS, V. PHILIP MORRIS, INCORPORATED, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Weinstein, Senior District Judge.

PRELIMINARY MEMORANDUM AND ORDER

Defendants' motions to dismiss the complaints in these two cases are denied. A more extensive memorandum will follow this preliminary memorandum and order as soon as work permits. See 74 F. Supp.2d 221 (E.D.N.Y. 1999).

I. FACTS

A. Plaintiffs' Original Claims

These two cases involve claims by medical providers to be compensated for the economic injuries they have allegedly sustained as a result of the treatment of tobacco related illnesses. In both cases the defendants are the major tobacco manufacturers and related entities.

In Blue Cross & Blue Shield of New Jersey, Inc., et al. v. Philip Morris, Inc., et al. ("Blue Cross"), the plaintiffs are medical provider Blue Cross plans ("The Blues") who allege violations of both federal and state law. The federal causes of action are brought under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the antitrust statutes. The pendent state law claims are asserted under various state statutes and under common law theories of fraudulent misrepresentation, fraudulent concealment, breach of special duty, unjust enrichment, and conspiracy.

In National Asbestos Workers Medical Fund, et al. v. Philip Morris, Inc., et al. ("National Asbestos"), the plaintiffs are self-insured ERISA trust funds which provide health care benefits to union workers in the building trades. The plaintiffs state claims under federal RICO and under federal common law on theories of unjust enrichment, restitution, indemnity, and breach of assumed duty.

The plaintiffs' original allegations are set out in greater detail in the court's published memoranda. See Blue Cross, 36 F. Supp.2d 560 (E.D.N.Y. 1999); National Asbestos, 23 F. Supp.2d 321 (E.D.N.Y. 1998).

B. Procedural Background

On October 19, 1998, defendants' 12(b)(6) motion in National Asbestos was denied. See 23 F. Supp.2d 321, 323 (E.D.N.Y. 1998). Given the expansive public policies of RICO, the comprehensive preemption force of ERISA law, and the conflicting decisions regarding the sufficiency of similar claims, a dismissal based on the pleadings was inappropriate.

Ten days after the Blue Cross opinion was issued and approximately six months after the National Asbestos opinion, the court of appeals of the Second Circuit decided an interlocutory appeal in a case involving RICO allegations against the tobacco industry by union trust fund-insurers. See Laborers Local 17 Health & Benefit Fund v. Philip Morris, Inc., 172 F.3d 223 (2d Cir. 1999) ("Laborers Local 17"). The court in Laborers Local 17 found the claims of plaintiff trust funds to be compensated for tobacco related expenditures to be too "indirect." The defendants then renewed their motions to dismiss the complaints in both Blue Cross and National Asbestos on the grounds that both suits are controlled by Laborers Local 17.

C. Amendments To Plaintiffs' Original Complaints

In June 1999 plaintiffs in both Blue Cross and National Asbestos moved to amend their complaints to add new claims and to restate, in the alternative, the original federal and state claims under subrogation; they continue to press all their original claims. They were permitted to amend their complaints pursuant to the liberal standards of Rule 15 of the Federal Rules of Civil Procedure. Decision was reserved on whether the amended complaints stated valid causes of action.

II. ANALYSIS OF CLAIMS

Defendants argue that Laborers Local 17 bars federal claims in both Blue Cross and National Asbestos. Yet, even if the plaintiffs' "direct" RICO theory, discussed in this court's Blue Cross and National Asbestos memoranda denying motions to dismiss, were barred by Laborers Local 17, neither of these actions can be dismissed at the ...


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