Class Action Nuclear Device Puts Big Business on Guard: Don Frederico Quoted in Bloomberg BNA Class Action Litigation Report

Recently, the U.S. Chamber of Commerce, the nation’s leading business group, warned the Fifth Circuit that civil federal racketeering class actions are the “litigation equivalent of a thermonuclear device.” The group made this analogy based on the civil RICO statute that “authorizes recovery of treble damages and attorneys’ fees, plus class status can multiply a company’s potential liability by hundreds or even thousands.”

On September 30, 2016, the Fifth Circuit upheld certification of RICO class claims that an alleged pyramid scheme caused plaintiffs to lose money. The circuit court, which disagreed with a three-judge panel, held that “fraud-based claims under RICO don’t require proof that each plaintiff relied on the defendant’s alleged misrepresentations to establish that the injuries were proximately caused by the fraud.” (Torres v. S.G.E. Mgmt. LLC, 2016 BL 326050, 5th Cir. en banc, No. 14-20128, 9/30/16) (17 CLASS 1029, 10/14/16). (Torres v. S.G.E. Mgmt. LLC, 2016 BL 326050, 5th Cir. en banc, No. 14-20128, 9/30/16) (17 CLASS 1029, 10/14/16).

In the BNA article, Pierce Atwood litigation partner Donald R. Frederico stated that he doesn’t think the decision will lead to more RICO claims because it's limited to the facts of this case. “Had the case not involved an alleged pyramid scheme, it very well might have come out differently.”

Please click here to read the complete article about RICO and class actions, and all of Don Frederico’s insights.