RICO and Class Action Lawsuits Are Difficult To Win—The Florida Restoration Contractor RICO Lawsuit Is Dismissed

The recent Champlain Towers class action lawsuit is a case that our law firm participated in that resulted in over a billion dollars being approved by the judge as part of the class settlement. The class action cases against banks overcharging for forced place insurance premiums, which we participated in, resulted in billions awarded and was a big win. But civil racketeering lawsuits (RICO lawsuits) that are successful are rare, and class action lawsuits are tough. That is the warning to those who flaunt these cases in discussions following the ruling dismissing a RICO case we blogged about in RICO Lawsuit Against United Property & Casualty Amended With More Allegations.

The Order¹ dismissed the case relying upon the McCarren-Ferguson federal exemption and failure to plead sufficient facts to justify the lawsuit. I would suggest to those that are really nerdy about insurance law read my post, Are Property Insurers Subject to Antitrust Lawsuits Through Pricing Guidelines and Boycotting Contractors That Properly and Legally Repair Property. I disagree that with the recent court finding that the McCarren-Ferguson exemption should extend to an insurer’s criminal activity regarding claims handling. That was never part of the purpose of the exemption. However, it has been my experience that RICO civil lawsuits often fail because it is nearly impossible to plead sufficient facts at the outset of litigation that the insurer is in a criminal enterprise as required by the case law construing this statute. The one significant departure about RICO insurance cases being unsuccessful is found in a post, State Farm Buys It Way Out of a Billion Dollar Judgement for $250 Million.

Is the current case over? No. The court ruled the same allegations can be made in state court with state court remedies sought rather than Federal RICO remedies. So, this story is not over.

We will keep readers up to date as to future developments.

Thought For The Day

You’ll never convince me there is a hopeless situation or there is any finality in any success or any failure.
—Carlos Ghosn
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¹ SFR Services v. United Prop. & Cas. Ins. Co., No. 8:22-cv-00109 (M.D. Fla. Oct. 12, 2022).