Elizabeth Blevins v. Seydi Vakkas Aksut , 849 F.3d 1016 ( 2017 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 16-11585
D.C. Docket No. 2:15-cv-00120-CG-B
ELIZABETH BLEVINS, individually and
on behalf of others similarly situated,
Plaintiffs-Appellants,
versus
SEYDI V. AKSUT, M.D.,
SELMA HEART INSTITUTE, PC,
VAUGHAN REGION MEDICAL CENTER, LLC,
LIFEPOINT HOSPITALS, INC.,
LIFEPOINT RC, INC.,
LIFEPOINT CSGP, LLC,
BAPTIST MEDICAL CENTER SOUTH,
JACKSON HOSPITAL & CLINIC, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Alabama
(March 1, 2017)
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Before WILSON and JULIE CARNES, Circuit Judges, and HALL,∗ District
Judge.
HALL, District Judge:
This case arises out of Defendant Doctor Seydi V. Aksut’s alleged
performance of unnecessary heart procedures. Two issues are on appeal. First, we
must decide whether the Class Action Fairness Act’s (“CAFA”) local-controversy
provision, 28 U.S.C. § 1332(d)(4), precluded the district court from exercising
federal-question jurisdiction. And if not, we must decide whether Plaintiffs allege
that they were injured in their “business or property,” 18 U.S.C. § 1964(c), under
the Racketeer Influenced and Corrupt Organizations Act (“RICO”).
Below, the district court sided with Defendants on both issues. We affirm in
part and vacate in part. We affirm the denial of Plaintiffs’ motion to remand
because CAFA’s local-controversy provision does not prohibit district courts from
exercising federal-question jurisdiction under 28 U.S.C. § 1331. But we vacate the
district court’s grant of Defendants’ motion to dismiss because Plaintiffs allege
economic injuries that are recoverable under RICO.
I. Background
According to Plaintiffs, after an examination, Doctor Aksut would falsely
tell a patient that the patient needed heart surgery. Doctor Askut would then
∗
Honorable J. Randal Hall, United States District Judge for the Southern District of
Georgia, sitting by designation.
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perform the procedure at a facility operated by Defendants Selma Heart Institute,
P.C., LifePoint Hospitals, Inc., LifePoint RC, Inc., LifePoint CSGP, Inc., Baptist
Medical Center South, or Jackson Hospital & Clinic, Inc. Defendants would then
bill the patient for the procedure. According to the complaint, each Plaintiff
underwent some type of unnecessary procedure at one of these locations.
After learning about this practice, Plaintiffs filed suit in February 2015 in the
Circuit Court of Dallas County, Alabama. Plaintiffs’ complaint asserts, among
other things, civil RICO claims and alleges that Defendants operated a racketeering
enterprise through which they performed and billed for the unnecessary heart
procedures.
Defendants timely removed the case to the Southern District of Alabama
based on federal-question jurisdiction. Defendants then moved to dismiss the
complaint and argued that Plaintiffs allege only personal injuries, which are not
recoverable under RICO, and that they failed to plead sufficient facts to support
their claims. Around the same time, Plaintiffs moved to remand and argued that
CAFA’s local-controversy provision prohibited the district court from exercising
jurisdiction.
The magistrate judge assigned to the case reported and recommended that
the district court deny Plaintiffs’ motion to remand because CAFA was
inapplicable and grant Defendants’ motion to dismiss because Plaintiffs had failed
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to plead RICO-recoverable injuries. After entertaining objections to the report and
recommendation, the district court adopted it as its opinion and dismissed the
case.1 Plaintiffs now appeal.
II. Standards of Review
We review the denial of Plaintiffs’ motion to remand de novo. See
Henderson v. Wash. Nat’l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006). We also
review the grant of Defendants’ motion to dismiss de novo, “and we must accept
all factual allegations in the complaint as true and construe them in the light most
favorable to [Plaintiffs].” Id. (quotation omitted).
III. Discussion
On appeal, Plaintiffs argue that the district court erred by not remanding the
case because CAFA’s local-controversy provision precluded it from exercising
jurisdiction. And even if it appropriately exercised jurisdiction, Plaintiffs contend
that the district court should have denied Defendants’ motion to dismiss because
Plaintiffs’ complaint alleges pecuniary injuries that are recoverable under RICO. 2
1
The district court dismissed the entire case because it declined to exercise supplemental
jurisdiction over Plaintiffs’ state-law claims.
2
Also, Defendants argue on appeal that: (1) we lack appellate jurisdiction over the
district court’s order denying Plaintiffs’ motion to remand because Plaintiffs did not petition for
permission to appeal that ruling; (2) we lack appellate jurisdiction over the grant of Defendants’
motion to dismiss because Plaintiffs did not sufficiently designate that ruling in their notice of
appeal; and (3) even if we have appellate jurisdiction, Plaintiffs are entitled to only plain-error
review. Because we are satisfied that we have appellate jurisdiction and that Plaintiffs are
entitled to de novo review, we reject these arguments.
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A. Plaintiffs’ Motion to Remand
It is undisputed that Plaintiffs’ complaint alleges that Defendants violated
federal RICO statutes—that is, it pleads a federal question—and that Defendants
removed based on federal-question jurisdiction under 28 U.S.C. § 1331. Still,
Plaintiffs contend that CAFA’s local-controversy provision precludes federal
jurisdiction. First, Plaintiffs argue that CAFA’s local-controversy provision
requires district courts to abstain from exercising jurisdiction over all local class
actions. Alternatively, they argue that CAFA assigns jurisdiction over local class
actions exclusively to the state courts. We reject both arguments.
“Congress enacted CAFA to address inequitable state court treatment of
class actions and to put an end to certain abusive practices by plaintiffs’ class
counsel.” Lowery v. Ala. Power Co., 483 F.3d 1184, 1193 (11th Cir. 2007).
Indeed, Congress was concerned that 28 U.S.C. § 1332 had worked to “kee[p]
cases of national importance in state courts rather than federal courts.” Miss. ex
rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 739 (2014) (alteration in original)
(quotation omitted). “CAFA seeks to address these inequities and abusive
practices by, among other things, broadening federal diversity jurisdiction over
class actions with interstate implications.” Lowery, 483 F.3d at 1193.
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1. CAFA’s local-controversy provision does not require district courts to
abstain from exercising jurisdiction over federal-question class actions.
With the enactment of CAFA, Congress amended 28 U.S.C. § 1332 to
include § 1332(d). Notably, § 1332(d)(2) grants district courts jurisdiction over
class actions “in which the matter in controversy exceeds the sum or value of
$5,000,000” and there is diversity between any class member and any defendant.
But under CAFA’s local-controversy provision, § 1332(d)(4), district courts must
refrain from exercising jurisdiction over certain class actions that otherwise meet
§ 1332(d)(2)’s requirements. Specifically, § 1332(d)(4) instructs district courts to
“decline to exercise jurisdiction under” § 1332(d)(2) over class actions that involve
local parties and controversies. And, as Plaintiffs point out, courts have held that
§ 1332(d)(4) is similar to abstention and does not eliminate federal jurisdiction.
See Morrison v. YTB Int’l, Inc., 649 F.3d 533, 536 (7th Cir. 2011)
(“[Section] 1332(d)(4) does not itself diminish federal jurisdiction. It directs
district judges to ‘decline to exercise’ jurisdiction otherwise present and thus is
akin to abstention.”); Graphic Commc’ns Local 1B v. CVS Caremark Corp., 636
F.3d 971, 973 (8th Cir. 2011) (“The local controversy provision . . . inherently
recognizes the district court has subject matter jurisdiction . . . . Thus, the local
controversy provision operates as an abstention doctrine, which does not divest the
district court of subject matter jurisdiction.”).
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Plaintiffs contend that § 1332(d)(4) requires district courts to refrain from
hearing any local class action. That is, according to Plaintiffs, district courts must
decline to exercise jurisdiction over any class action that meets the requirements of
§ 1332(d)(4), even those based on federal-question jurisdiction, such as this one.
The problem with Plaintiffs’ argument is simple: § 1332(d)(4) does not affect a
district court’s ability to exercise jurisdiction under § 1331.
As noted, § 1332(d)(2) grants district courts jurisdiction over minimally
diverse class actions in which more than $5,000,000 is in dispute. And
§ 1332(d)(4) proscribes the exercise of that jurisdiction over local cases. Put
differently, § 1332(d)(2) grants district courts jurisdictional power they did not
previously have, and § 1332(d)(4) removes their ability to exercise that specific
grant of jurisdiction in certain cases. Indeed, § 1332(d)(4)’s language makes clear
that it has no bearing on jurisdiction asserted under § 1331: it provides that district
courts “shall decline to exercise jurisdiction under paragraph (2)” of § 1332(d)
(emphasis added). It does not preclude the exercise of any other jurisdictional
power. Thus, when the requirements of federal-question jurisdiction are met,
district courts may exercise jurisdiction over class actions, even if they involve
only local parties.
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2. CAFA’s local-controversy provision does not grant state courts
exclusive jurisdiction over local federal-question class actions.
Plaintiffs also contend that § 1332(d)(4) grants state courts exclusive
jurisdiction over local class actions, including those based on federal-question
jurisdiction. When a federal statute creates a private right of action, the federal
courts presumptively have jurisdiction under § 1331. Mims v. Arrow Fin. Servs.,
LLC, 565 U.S. 368, 378–79, 132 S. Ct. 740, 748–49 (2012). And “[t]hat principle
endures unless Congress divests federal courts of their § 1331 adjudicatory
authority.” Id. at 379, 132 S. Ct. at 749.
Nothing in the language of § 1332(d)(4) indicates that Congress intended to
divest district courts of jurisdiction under § 1331. Rather, as explained above,
§ 1332(d)(4) prevents district courts from exercising the jurisdiction that they
otherwise possess under that statute. See Morrison, 649 F.3d at 536; CVS
Caremark Corp., 636 F.3d at 973. It does not restrict their ability to exercise other
forms of jurisdiction. Thus, we are unpersuaded that § 1332(d)(4) divests district
courts of their authority under § 1331.
In sum, CAFA’s local-controversy provision does not require district courts
to abstain from exercising federal-question jurisdiction over local class actions, and
nothing in that provision indicates that Congress intended to divest district courts
of federal-question jurisdiction. Accordingly, we affirm the district court’s denial
of Plaintiffs’ motion to remand.
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B. Defendants’ Motion to Dismiss
Plaintiffs assert, among other things, civil RICO claims under 18 U.S.C.
§ 1964(c) and allege that Defendants operated a racketeering enterprise in violation
of 18 U.S.C. § 1962(a), (c), & (d). Specifically, Plaintiffs allege that “Defendants
operated a medical services enterprise that falsely represented to patients that
certain interventional cardiology procedures were medically necessary.” Plaintiffs
also contend that Defendants committed mail and wire fraud through this
enterprise by billing Plaintiffs for the unnecessary procedures.
Under 18 U.S.C. § 1964(c), “[a]ny person injured in his business or property
by reason of a violation of [18 U.S.C. § 1962]” may pursue a civil action in federal
court based on that violation. But the language “injured in his business or
property” limits an aggrieved party’s ability to recover because it “excludes
personal injuries, including the pecuniary losses therefrom.” Grogan v. Platt, 835
F.2d 844, 847 (11th Cir. 1988). Thus, “both personal injuries and pecuniary losses
flowing from those personal injuries fail to confer relief under § 1964(c).” Jackson
v. Sedgwick Claims Mgmt. Servs., Inc., 731 F.3d 556, 565 (6th Cir. 2013).
Here, the magistrate judge concluded that Plaintiffs failed to allege injuries
to their business or property because their alleged harm—their medical expenses—
flowed from their personal injuries—the unnecessary procedures. But Plaintiffs
allege in their complaint that “Plaintiffs and class members and/or their
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indemnitors paid or are obligated to pay monies to the defendants” for the
unnecessary medical procedures.
In the context of unnecessary medical treatment, payment for the treatment
may constitute an injury to property. See Ironworkers Local Union 68 v.
AstraZeneca Pharm., LP, 634 F.3d 1352, 1363 (11th Cir. 2011). In Ironworkers,
the plaintiffs asserted civil RICO claims against AstraZeneca. They claimed that
AstraZeneca fraudulently induced physicians to prescribe one of its drugs instead
of cheaper alternatives. Similar to Plaintiffs here, the plaintiffs in Ironworkers
sought to recover damages based on the amounts they paid for the unnecessary
prescriptions. Although this Court affirmed the dismissal of the case, we noted
that a plaintiff who “allege[s] that her purchase payments were the product of a
physician’s medically unnecessary or inappropriate prescriptions” has likely
pleaded an injury under RICO.3 Id.Our reasoning in Ironworkers applies here. Plaintiffs seek to recover
damages under § 1964(c) for the amounts they paid for the unnecessary heart
procedures. These injuries do not flow from any personal injuries. Rather, as in
Ironworkers, the payments themselves are economic injuries because they were for
3
The plaintiffs in Ironworkers included a putative class of insurers and an individual.
We affirmed the dismissal of the insurers’ claims because we found that they had assumed the
risk of paying for medically unnecessary prescriptions, and we affirmed the dismissal of the
individual’s claims because she failed to plausibly allege that she purchased medically
unnecessary prescriptions.
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medically unnecessary procedures. That Plaintiffs also seek redress for personal
injuries under other legal theories does not change the outcome. Accordingly,
because Plaintiffs have alleged injuries to “business or property,” we vacate the
district court’s grant of Defendants’ motion to dismiss.4
IV. Conclusion
We AFFIRM the district court’s denial of Plaintiffs’ motion to remand,
VACATE the district court’s grant of Defendants’ motion to dismiss, and
REMAND for further proceedings.
4
We note that Defendants alternatively argue that we should affirm the district court’s
order for a separate reason: that the complaint fails to meet Federal Rule of Civil Procedure 9’s
heightened pleading standard. We decline to reach that issue. The district court, however, is free
to address that argument on remand.
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