Case: 14-10574 Document: 00513196769 Page: 1 Date Filed: 09/17/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-10574 FILED
September 17, 2015
Lyle W. Cayce
Clerk
ALLSTATE INSURANCE COMPANY;
ALLSTATE INDEMNITY COMPANY;
ALLSTATE PROPERTY & CASUALTY INSURANCE COMPANY;
ALLSTATE COUNTY MUTUAL INSURANCE COMPANY,
Plaintiffs–Appellees
Cross–Appellants,
versus
MICHAEL KENT PLAMBECK, DC; MICHAEL CAPOBIANCO, DC;
PAUL GRINDSTAFF, DC; DOUGLAS FRIEDMAN;
JENNIFER GIESSNER,
Formerly Known as Jennifer Makarwich, Formerly Known as Jennifer Bland;
ET AL.,
Defendants–Appellants
Cross–Appellees.
Appeals from the United States District Court
for the Northern District of Texas
Before JONES, SMITH, and COSTA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Allstate Insurance Company (“Allstate”) sued a consortium of telemar-
keting companies, chiropractic clinics, and affiliated law offices spanning
several states, contending that they had violated the Racketeer Influenced and
Corrupt Organizations Act (“RICO”). A jury returned a verdict in Allstate’s
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favor, leading to a sizable award and attorney’s fees. The defendants contend
that the evidence was insufficient under RICO, that some claims were barred
by the statute of limitations, and that the district court erred in admitting
Allstate’s expert witnesses. Allstate challenges the district court’s decision not
to award prejudgment interest and to reduce the fee award. We affirm.
I.
The scheme to defraud insurance companies such as Allstate aimed to
identify persons who had been in vehicle accidents but were not at fault. The
defendants would convince them to receive unnecessary chiropractic services,
then would file third-party claims against the at-fault party’s insurer.
First, the participants had to identify potential claimants. Michael
Plambeck owned Media Placement Services (“MPS”), a telemarketing firm,
which Douglas Friedman managed. Defendant Jennifer Giessner was Plam-
beck’s Controller. MPS employees purchased police accident reports and
scoured them for not-at-fault victims who met certain criteria, usually low-
income individuals without health insurance.
Once a potential patient was identified, an MPS employee would call to
warn that the person may have suffered trauma whose ill effects might not be
apparent for weeks. The telemarketer would offer the victim a free spinal
exam to determine whether he was injured. The caller would assure the pro-
spective patient that the appointment would be at no cost to him or his insurer,
but the charges would be billed to the at-fault party. The caller would schedule
an appointment at a clinic that was part of Chiropractic Strategies Group
(“CSG”), which Plambeck owned; defendants Michael Capobianco and Paul
Grindstaff were Clinic Partners. At a clinic, the patient would sign several
forms, including an Assignment of Benefits that allowed the clinic to collect
directly from the insurer.
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A Plambeck-trained chiropractor would administer the free examina-
tion, at the end of which the chiropractor often ordered x-rays. The x-rays often
were marked up with lines and circles purporting to show that the patient
needed treatment, although the markings had little or no diagnostic value.
Many of the x-rays were of poor quality, with some rendered unreadable by
underexposure or overexposure and others made difficult to parse by the pres-
ence of buttons, clips, zippers, and belt buckles. Even though the chiropractor
deemed x-rays necessary, the useless ones were not retaken, but the insurer
was still billed for them.
The chiropractors almost always prescribed the same treatment: hot and
cold packs, electrical stimulation, massages, and other passive modalities.
Patients received the treatment for the same length of time—daily for two
weeks, then three times a week. After sixteen or twenty visits, the chiropractor
often deemed the patient cured without a reexamination or follow-up testing.
When a patient came to a clinic, he was usually referred, at Plambeck’s
direction, to a law firm with substantial ties to Plambeck. Many of those firms
were funded and run by two companies, Professional Management Group LLC
(“PMG”) and Law Office Network LLC (“LON”), which were owned by Randall
Toca and funded by Plambeck. PMG was in the same Plambeck-owned build-
ing with MPS and CSG, and Plambeck exercised significant oversight over
PMG employees. The patient would meet with a lawyer, but nonlawyer
employees drafted demand letters on firm letterhead, mailed them to insurers,
and negotiated settlements.
Settlement checks were sent to local offices, then forwarded to headquar-
ters. The case managers prepared deposits to the representative firms’ trust
accounts, from which Toca disbursed the funds to various entities. Often the
accident victim received less than one-third of the funds.
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II.
After beginning a two-year investigation in 2005, Allstate sued Plam-
beck and more than sixty other individuals and entities, alleging violations of
federal and state RICO statutes, fraud, conspiracy to commit fraud, and unjust
enrichment. Allstate sought to recover the amount it customarily allowed for
services Plambeck’s clinics had provided to 721 patients. During trial, Allstate
dropped a number of cases, and the district court dismissed others, ultimately
reducing the contested insurance claims to 555.
After a five-week trial and four days of deliberations, the jury found that
the defendants had violated the federal RICO statute and Ohio’s RICO statute,
had committed fraud, and were unjustly enriched in 391 of the 555 cases.
Almost all of the 391 cases involved missing or deficient x-rays.
Although the jury found liability on multiple theories, it awarded dam-
ages only for the federal and Ohio RICO violations and not for fraud or unjust
enrichment. Actual damages assessed on the appealing defendants were
$945,593, and the court assessed treble damages of $2,836,779. 1 The court
denied Allstate’s request for prejudgment interest on the actual-damages
amount and denied defendants’ motion for a new trial.
Allstate moved for attorney’s fees of $1,903,006.75. The court held that
the hourly rate and total hours were appropriate, but it reduced the award
because Allstate had prevailed on only 391 of the original 721 disputed claims.
Because Allstate proved only about 54% of its underlying claims, the court
awarded only 54% of the requested fees, or $1,027,623.65.
1 The jury also awarded damages for the Ohio RICO claims, which the court trebled,
but the court ordered that the defendants would not recover doubly on the federal and Ohio
RICO claims.
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III.
Both sides appeal. The defendants challenge the sufficiency of the evi-
dence supporting the existence of a RICO enterprise, causation, and damages;
additionally, they assert that some claims are barred by limitations and that
the court erred in admitting certain of Allstate’s experts. Both the Ohio RICO
claims and the attorney’s-fee award are contested, but those challenges rise
and fall on the success of the federal RICO claims.
Allstate’s cross-appeal asserts that the district court abused its discre-
tion in not awarding prejudgment interest and in reducing the total attorney’s-
fee request. Allstate presses a contingent cross-appeal: If we grant relief to
the defendants, Allstate disputes the district court’s dismissing its misrepre-
sentation claims and excluding certain evidence and questions from the jury
charge and verdict form.
IV.
We review de novo a denial of a motion for judgment as a matter of law.
Allstate Ins. Co. v. Receivable Fin. Co., 501 F.3d 398, 405 (5th Cir. 2007). We
reverse a denial only if there is “no legally sufficient evidentiary basis for a
reasonable jury to find for a party.” Id. “[W]e view all evidence and draw all
reasonable inferences in the light most favorable to the verdict” and reverse
only when the evidence and inferences “point so strongly in favor of the movant
that a rational jury could not reach a contrary verdict.” Id.
RICO makes it unlawful for “any person employed by or associated with
any enterprise . . . to conduct or participate, directly or indirectly, in the con-
duct of such enterprise’s affairs through a pattern of racketeering
activity.” 18 U.S.C. § 1962(c). The defendants’ first challenge is to the
existence of an enterprise. RICO defines an enterprise as “any individual,
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partnership, corporation, association or other legal entity, and any union or
group of individuals associated in fact although not a legal entity.” Id.
§ 1961(4). At trial, Allstate contended that the various defendants fell into the
last category—that they were an enterprise “associated in fact.”
An association-in-fact enterprise “(1) must have an existence separate
and apart from the pattern of racketeering, (2) must be an ongoing organi-
zation and (3) its members must function as a continuing unit as shown by a
hierarchical or consensual decision making structure.” Calcasieu Marine Nat’l
Bank v. Grant, 943 F.2d 1453, 1461 (5th Cir. 1991). RICO does not require
than an enterprise be a separate business-like entity. Boyle v. United States,
556 U.S. 938, 945 (2009). Instead, an association-in-fact enterprise includes “a
group of persons associated together for a common purpose of engaging in a
course of conduct,” and that enterprise can be proved with “evidence of an
ongoing organization, formal or informal, and by evidence that the various
associates function as a continuing unit.” Id. at 944–45. A pattern of racke-
teering activity does not, by itself, necessarily show that an enterprise exists.
See United States v. Turkette, 452 U.S. 576, 583 (1981). But the evidence estab-
lishing the enterprise and the pattern of racketeering may “coalesce.” Boyle,
556 U.S. at 947.
The linchpin of enterprise status is the continuity or ongoing nature of
the association. Calcesieu Marine Nat’l Bank, 943 F.2d at 1462. “The enter-
prise must have continuity of its structure and personnel, which links the
defendants, and a common or shared purpose.” Id. The Supreme Court has
similarly identified those three structural features as indispensable to an
association-in-fact enterprise: “a purpose, relationships among those
associated with the enterprise, and longevity sufficient to permit these
associates to pursue the enterprise’s purpose.” Boyle, 556 U.S. at 946.
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The defendants contend that the shared-purpose requirement was not
satisfied because the only shared purpose was to carry out the pattern of racke-
teering; no associated-in-fact enterprise exists if the shared purpose was
merely to conduct the racketeering, they assert. They failed to raise that chal-
lenge, however, until their Federal Rule of Civil Procedure 50(b) motion after
the verdict. Consequently, our review on that point is for plain error. Flowers
v. S. Reg’l Physician Servs. Inc., 247 F.3d 229, 238 (5th Cir. 2001). “If any
evidence exists that supports the verdict, it will be upheld.” Id.
The defendants point to no binding authority that an enterprise must
have a purpose besides committing racketeering activity. Instead, they assert
that there must be a different purpose because a RICO enterprise cannot be
the pattern of racketeering itself. But in Turkette, 452 U.S. at 583, the Court
rejected a similar challenge that would have excluded from “enterprise” those
entities pursuing solely unlawful ends. Id.
Even with “wholly illegitimate enterprises such as an illegal gambling
business or a loan-sharking operation” the government must still satisfy differ-
ent legal standards to show the existence of the enterprise and the pattern of
racketeering. Id. at 583–85. Although the evidence proving the two will some-
times coalesce, the government still has to satisfy the organizational metric of
the enterprise (including continuity and common purpose) and the statutorily
enumerated predicate offenses. Id. at 583. There is thus no impermissible
collapsing of the distinction between the enterprise and the pattern of racke-
teering. The Sixth Circuit examined Boyle and held that an association can
satisfy the enterprise requirement under RICO even if its sole purpose is to
carry out a pattern of racketeering. Ouwinga v. Benistar 419 Plan Servs., Inc.,
694 F.3d 783, 794–95 (6th Cir. 2012). If the district court committed an error,
it certainly was not plain.
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In another challenge to the common-purpose requirement, the defen-
dants contend the evidence was insufficient to show that Toca and Friedman
shared the fraudulent purpose of the enterprise. The defendants assert that,
because those two were involved with only some of the claimants, Allstate
failed to show that they shared that purpose.
Establishing that Toca and Friedman had limited involvement does not
seriously cast doubt on the conclusion that they shared in the enterprise’s pur-
pose. The jury was presented with sufficient evidence to conclude that they
were actively involved and shared the goal of making money through the
scheme. PMG, MPS, and CSG shared a building and regularly saw staff switch
between entities. Plambeck loaned money to Toca for the law offices, directed
PMG’s employees regarding settlements, and divided the proceeds. The jury
had plenty of evidence to find that Toca was a willing participant in the
scheme. The same is true for Friedman, who ran the solicitation side of the
enterprise, following Plambeck’s directions and signing up patients.
By highlighting Toca’s and Friedman’s limited roles, the defendants may
be contesting that they “conduct[ed] or participate[d], directly or indirectly, in
the conduct of [the] enterprise’s affairs.” 18 U.S.C. § 1962(c). Even if Toca and
Friedman were not the main leaders, however, they qualify because they “par-
ticipate[d] in the operation or management of [the] enterprise.” Reves v. Ernst
& Young, 507 U.S. 170, 84 (1993). “An enterprise is ‘operated’ not just by upper
management but also by lower rung participants in the enterprise who are
under the direction of upper management.” Id. It is evident that Toca and
Friedman participated in managing the enterprise with their supervisory roles
in their respective parts of the scheme, even if Plambeck was in charge.
Finally, focusing on the question whether the defendants engaged in a
pattern of racketeering, they assert that they lacked the requisite intent to
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defraud. Because the jury found liability only on those insurance claims
involving bad x-rays, the defendants state that Allstate needed to show some
nexus between the x-rays and Plambeck, Toca, and Friedman. If the defen-
dants did not take, review, or know about the bad x-rays, how could they have
the requisite intent?
That contention has two flaws. First, although there is no evidence that
Friedman, Toca, and Plambeck took any of the deficient or missing x-rays, cir-
cumstantial evidence links them to the x-rays. And irrespective of how closely
tied the three were to the direct handling of the x-rays, they were involved, in
any event, with the supervision of the clinic and used its inadequate work to
support the false claims for medical services. For example, Plambeck person-
ally trained new chiropractors at CSG’s Louisiana headquarters, teaching doc-
tors to use x-rays as a sales tool. Toca was present at some of the training
sessions. After the initial two-week session, Plambeck sent chiropractors for
additional training at the Dove Pointe clinic, which took a large portion of the
bad x-rays. Furthermore, Friedman wrote the telemarketing scripts used to
lure patients to the clinics and instructed telemarketers to target vulnerable
individuals. He was also head of marketing for CSG, which owned the clinics
that took the bad x-rays.
Second, the defendants misunderstand the nature of the predicate acts.
Allstate’s theory at trial was that Friedman, Toca, and Plambeck had engaged
in a pattern of mail and wire fraud. Both of those crimes, which constitute
predicate acts under 18 U.S.C. § 1961(1), are broad. “The mail fraud statute
applies to anyone who knowingly causes to be delivered by mail anything for
the purpose of executing any scheme or artifice to defraud.” United States v.
Whitfield, 590 F.3d 325, 355 (5th Cir. 2009) (internal citations and quotation
marks omitted). Similarly, wire fraud involves the use of, or causing the use
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of, wire communications in furtherance of a scheme to defraud. United States
v. Stalnaker, 571 F.3d 428, 436 (5th Cir. 2009). “Once membership in a scheme
to defraud is established, a knowing participant is liable for any wire
communication which subsequently takes place or which previously took place
in connection with the scheme.” Id.
It follows that Allstate needed to prove only that Friedman, Toca, and
Plambeck had engaged in a scheme to defraud for which the use of the mail or
wires was reasonably foreseeable. See Whitfield, 590 F.3d at 354–55. And, as
we have explained at length, Allstate did that. Plambeck’s entities, which
Friedman and Toca ran, operated as a cohesive unit. The enterprise targeted
poor and uneducated individuals, convinced them that they needed chiroprac-
tic and legal services, and solicited payment for those services from insurers
like Allstate. Based on the evidence that conversations with prospective
patients were highly scripted and allowed for almost no deviation, the jury
could reasonably infer that the scheme was fraudulent and that using the mail
or wire services was inevitable. As a result, it makes no difference that Fried-
man, Toca, and Plambeck did not take the x-rays.
V.
Regarding causation, RICO provides civil remedies to “[a]ny person
injured in his business or property by reason of a violation of section 1962.”
18 U.S.C. § 1964(c). An injured party must show that the violation was the
but-for and proximate cause of the injury. Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639, 654 (2008). In cases predicated on mail or wire fraud, reli-
ance is not necessary. Id.
The defendants contend that this case is a repeat of Receivable Finance,
in which we overturned a verdict on a fraud claim because Allstate had not
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produced evidence showing that it had relied on the defendant’s misrepresen-
tations. That case, however, was predicated on common-law fraud, which has
a reliance requirement, and not on RICO or mail fraud. Receivable Fin.,
501 F.3d at 406. As recognized in Bridge, 553 U.S. at 653, mail fraud and its
place in RICO framework are different from a case alleging common-law fraud,
and one of the differences is the lack of a reliance requirement. In St. Germain
v. Howard, 556 F.3d 261, 263 (5th Cir. 2009), we addressed Bridge and
expressly overruled the requirement that a RICO plaintiff show reliance.
Furthermore, the jury instructions stated the causation requirement in
terms of proximate cause, not reliance, stating that proximate cause was pres-
ent if “the injury or damage was either a direct result or a reasonably probable
consequence of the act.” If the defendants wanted the jury to delve into issues
of reliance, they should have challenged the instructions on that point.
The proper inquiry, then, is what constitutes proximate cause under
RICO. The defendants contend that reliance is the only causal mechanism
potentially at issue and thus should still be the proper metric. But we reject
that invitation to disregard Bridge and St. Germain.
The other courts of appeals to address RICO proximate cause have simi-
lar proximate-cause definitions. The First Circuit identified directness as the
prime directive of proximate cause and laid out three functional factors to help
analyze whether an injury was sufficiently direct: whether there are concerns
about proof resulting from the level of attenuation; avoiding multiple recover-
ies and the difficult apportionment calculations courts would have to make;
and whether the societal interest in policing the injurious behavior justifies
finding proximate causation. In re Neurotonin Mktg. & Sales Practices Litig.,
712 F.3d 21, 35–40 (1st Cir. 2013). The Sixth Circuit looks to whether “the
defendants’ fraudulent acts were a substantial and foreseeable cause of the
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injuries alleged.” Brown v. Cassens Transp. Co., 546 F.3d 347, 357 (6th Cir.
2008). And the Seventh Circuit similarly states that RICO proximate cause is
designed for those situations “when too many unexpected things had to happen
between the defendant’s wrongdoing and the plaintiff’s injury, in order for the
injury to occur.” BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750, 754 (7th
Cir. 2011).
Regardless of how proximate cause is sliced, Allstate proved it. There is
no plausible argument that the insurers were unforeseeable victims or other-
wise wronged by the caprice of chance. The objective of the enterprise was to
collect from the insurance companies; the entire structure of the system, from
the screening for not-at-fault victims to the factory-efficient issuance of
demand letters, shows that Allstate’s paying up was not just incidental but
was the object of the collaboration. Allstate presented sufficient evidence to
satisfy the unchallenged jury instruction regarding proximate cause. 2
VI.
The defendants challenge the quantum of damages, claiming that All-
state failed to introduce evidence showing the payments made were solely for
unnecessary chiropractic services. They posit that some of Allstate’s payments
could have been to cover expenses that were not the result of the defendants’
fraud; some of the patients may have suffered injuries and been prescribed an
appropriate treatment.
In Receivable Finance, 3 we faulted Allstate for failing to conduct a file-
by-file determination of the damages amount and to present evidence showing
2 It appears undisputed that the “but-for” causation requirement is satisfied as well.
3 We assume arguendo that the same damages rule applies in this case as applied in
Receivable Finance, which dealt with disgorgement as a remedy for state fraud claims that
required proof of reliance.
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that all of the treatment was unnecessary or inappropriate. On the latter
point, Allstate had produced evidence that some of the medical treatment for
which it had paid was unnecessary, but without establishing that the payment
covered no necessary and appropriate treatment, Allstate’s damages were too
speculative. Receivable Fin., 501 F.3d at 414.
There is no such deficiency here. The court instructed the jury, in award-
ing damages, to distinguish between the portions of the bills generated for
unreasonable or unnecessary services and those not generated for those ser-
vices. Allstate had experts examine all of the files, not just a representative
sample, and one of those witnesses testified that Allstate had internally item-
ized the elements of each settlement. The jury found liability on the claims for
which there were deficient x-rays, and it was presented with testimony that a
chiropractor could not both label an x-ray necessary and prescribe reasonable
and necessary treatment in the absence of that x-ray.
The defendants had the chance to convince the jury that the insurance
claims included necessary and appropriate coverage, but they did not succeed.
Given our highly deferential standard of review and the evidence presented to
show the inappropriateness and unreasonableness of the entire course of
treatments prescribed by the chiropractors, this case does not suffer from the
same flaws as did Receivable Finance.
VII.
The defendants contend that the statute of limitations bars certain of
Allstate’s claims and that the court erred in admitting Allstate’s experts.
Neither argument avails the defendants.
The defendants urge that the four-year statute of limitations bars All-
state’s recovery on insurance settlements paid before March 6, 2004, because
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Allstate knew or should have known about those frauds. The defendants
stated during trial, however, that they did not want limitations questions sub-
mitted to the jury. That decision waived the right to have the jury make a
finding as to the defense. See McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298,
306 (5th Cir. 1993).
The defendants challenge the admission of several expert witnesses,
chiropractic experts who testified that chiropractic care was unnecessary for
the patients. The defendants state that the lack of “concrete, specific reference
to any authoritative sources” means the testimony should have been excluded.
The district court, however, has broad discretion in its gatekeeping function
under Federal Rule of Evidence 702, and an expert witness’s testimony (and
its reliability) may be based on his personal and professional experience and
his own observation. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 151–53
(1999). The defendants’ conclusional statements regarding the impropriety of
the testimony do not establish that the district court abused its wide latitude
in allowing the expert witnesses to testify based on professional experience.
VIII.
Allstate seeks an adjustment of the attorney’s-fee award. The district
court held that, because Allstate had shown liability on only 391 of the 721
underlying insurance claims it had originally contested, fees should be
proportionate.
Allstate posits three errors. First, the court treated Allstate as having
brought 721 discrete legal claims. Second, it used the proportionate approach
to segregate between successful and unsuccessful claims, even though no such
segregation was necessary. And third, it baselessly concluded that each of
those claims should be treated as requiring equal resources.
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Those challenges misconstrue what occurred. The court did not reduce
the award as a means of segregating claims or attempting to determine the
resources actually used in pursuit of each basis of the final judgment. Indeed,
the court noted it was uncontested that Allstate’s lawyers’ hourly rates were
reasonable, their work was necessary, and the time they spent was reasonable.
Instead, the court stated that it was “exercis[ing] its discretion to reduce the
fees sought by Plaintiffs commensurate with the level of success achieved by
them in this case.”
After calculating a reasonable rate and the proper number of hours, the
court may adjust the award based on numerous factors, “including the impor-
tant factor of the results obtained.” Hensley v. Eckerhart, 461 U.S. 424, 434
(1983) (internal quotation marks omitted). If a plaintiff has achieved “only
partial or limited success,” the court may reduce the award because the fees
would not reflect the scope of the relief, “even where the plaintiff’s claims were
interrelated, nonfrivolous, and raised in good faith.” Id. at 435–36. The court
stated that it was reducing the attorney’s-fee award to account for Allstate’s
level of success, so we will examine its actions under that framework.
We are presented with two interrelated issues: Did the district court err
in determining that the degree of Allstate’s success justified reducing the
award? And did the court abuse its discretion in its method of calculating the
new award?
The first question is easier. We agree with the district court that Allstate
realized only limited success. Although a plaintiff must obtain merely some
relief to be the prevailing party, the crucial factor in determining success is the
relief obtained. For example, if a plaintiff recovers only nominal damages, the
proper fee usually is none at all, even though the plaintiff has won his case.
Farrar v. Hobby, 506 U.S. 103, 115 (1992). Similarly, a plaintiff’s victory in a
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RICO claim is a necessary condition to the award of fees, but the appropriate
amount is determined in part by the plaintiff’s success in obtaining the relief
it pursued. Allstate prevailed on its RICO claim and the damages award was
sizable, but it failed to convince the jury on many of the underlying insurance
claims, and the amount of recovery was tied to the success on those claims. We
therefore agree with the district court that Allstate’s fees appropriately could
be reduced.
The second question is more difficult. How do we measure Allstate’s
degree of success? The court may not use “a mathematical approach comparing
the total number of issues in the case with those actually prevailed upon.”
Hensley, 461 U.S. at 435 n.11. An award should not be reduced merely because
the plaintiff prevailed on only one of several alternative grounds for the same
relief. Id. at 435.
Allstate contends that the district court used a proscribed mathematical
approach when it reduced the fee award to reflect the ratio of insurance claims
on which Allstate prevailed. But the Supreme Court did not categorically bar
the use of math. The court’s mathematical approach was different in kind from
the prohibited penalizing of alternative arguments or substitute remedies.
Allstate has not identified why the proportionate approach was a poor measure
of the degree of success, nor has it proposed an alternative means of calibrating
the fee award to reflect its limited success. “There is no precise rule or formula
for making these determinations,” and “[t]he court necessarily has discretion
in making this equitable judgment.” Id. at 436–37. The use of the proportion
between the number of disputed claims and the success on those claims was
not an abuse of that discretion.
IX.
The district court declined to award prejudgment interest, stating that
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the decision was within its discretion. It offered no other justification, but it
did cite two district-court decisions that had denied prejudgment interest in
RICO cases. The reasoning in both was that RICO’s treble damages suffici-
ently offset the cost of being temporarily deprived of the recovered funds, mak-
ing prejudgment interest unnecessary to mitigate the cost of that deprivation.
See La. Power & Light Co. v. United Gas Pipe Line Co., 642 F. Supp. 781, 811
(E.D. La. 1986); Vanderbilt Mortg. & Fin., Inc. v. Flores, 2011 WL 767163, at *3
n.3 (S.D. Tex. Feb 25, 2011). It is safe to say that the district court denied
prejudgment interest for the same reason.
We have “a strong presumption in favor of awarding pre-judgment
interest.” United States v. Ocean Bulk Ships, Inc., 248 F.3d 331, 344 (5th Cir.
2001). “Courts should award prejudgment interest whenever a certain sum is
involved.” Thomas v. Tex. Dep’t of Crim. Justice, 297 F.3d 361, 372 (5th Cir.
2002). But even where prejudgment interest is indisputably available, “the
decision to award such interest rests within the sound discretion of the district
court,” and we “will not overturn the district court’s determination in the
absence of an abuse of discretion.” Sellers v. Delgado Cmty. Coll., 839 F.2d
1132, 1140 (5th Cir. 1988).
The court did not abuse its discretion in denying prejudgment interest.
It could reasonably have concluded that Allstate’s recovery of treble damages
sufficiently offset the loss it suffered from being deprived of the use of its money
caused by the fraud. Treble damages under RICO are partly punitive, allowing
recovery to “exceed actual provable damages.” Gil Ramirez Grp., L.L.C. v.
Hous. Indep. Sch. Dist., 786 F.3d 400, 412–13 (5th Cir. 2015). Allstate has
already been made more than whole on the damages it could prove, and it has
not shown that the prejudgment interest would exceed that extra recovery. We
agree with the Second Circuit that a district court does not necessarily abuse
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Case: 14-10574 Document: 00513196769 Page: 18 Date Filed: 09/17/2015
No. 14-10574
its discretion in relying on the extracompensatory nature of RICO treble dam-
ages in denying prejudgment interest. See Abou-Khadra v. Mahshie, 4 F.3d
1071, 1083–84 (2d Cir. 1993).
AFFIRMED. 4
4 Because any remaining issues are not necessary to our disposition, we decline to
address them.
18