Csx Transp. v. Gilkison

CSX TRANSPORTATION, INCORPORATED, Plaintiff-Appellant,

v. ROBERT v. GILKISON; PEIRCE, RAIMOND & COULTER, PC, a/k/a Robert Peirce & Associates, P.C., a Pennsylvania Professional Corporation; JOHN DOES; ROBERT N. PEIRCE, JR.; LOUIS A. RAIMOND;MARK T. COULTER; RAY A. HARRON, Dr., Defendants-Appellees, and RICHARD CASSOFF, M.D., Party-in-Interest, LUMBERMENS MUTUAL CASUALTY COMPANY, Intervenor.AMERICAN SOCIETY OF RADIOLOGIC TECHNOLOGISTS; AMERICAN TORT REFORM ASSOCIATION;ASSOCIATION OF AMERICAN RAILROADS; DANIEL E. BANKS; COALITION FOR LITIGATION JUSTICE, INCORPORATED;ALFRED FRANZBLAU; LAWRENCE MARTIN; NATIONAL ASSOCIATION OF MANUFACTURERS;PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA; VIRGINIA SOCIETY OF RADIOLOGIC TECHNOLOGISTS;WASHINGTON LEGAL FOUNDATION; WEST VIRGINIA CHAMBER OF COMMERCE, Amici Supporting Appellant.

No. 09-2135

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: October 26, 2010

Decided: December 30, 2010

UNPUBLISHED

Appeal from the United States District Court for the Northern District of West Virginia, at Wheeling. Frederick P. Stamp, Jr., Senior District Judge. (5:05-cv-00202-FPS-JES)

Before DUNCAN, AGEE, and DAVIS, Circuit Judges.

Affirmed in part, vacated in part, and remanded by unpublished per curiam opinion. Judge Davis wrote a separate concurring opinion.

ARGUED: Dan Himmelfarb, MAYER BROWN, LLP, Washington, D.C., for Appellant.

Walter P. DeForest, III, DEFOREST KOSCELNIK YOKITIS KAPLAN & BERARDINELLI, Pittsburgh, Pennsylvania, for Appellees.

ON BRIEF: Evan M. Tager, Michael B. Kimberly, MAYER BROWN, LLP, Washington, D.C.; E. Duncan Getchell, Jr., Samuel L. Tarry, Jr., Mitchell K. Morris, MCGUIREWOODS LLP, Richmond, Virginia; Marc E. Williams, Robert L. Massie, NELSON MULLINS RILEY & SCARBOROUGH LLP, Huntington, West Virginia, for Appellant.

Robert A. Lockhart, SCHUDA & ASSOCIATES, PLLC, Charleston, West Virginia, David J. Berardinelli, Matthew S. McHale, DEFOREST KOSCELNIK YOKITIS KAPLAN & BERARDINELLI, Pittsburgh, Pennsylvania, for Appellees Peirce, Raimond & Coulter, PC, Robert N. Peirce, Jr., Louis A. Raimond, and Mark T. Coulter; Lawrence S. Goldman, Elizabeth M. Johnson, LAW OFFICES OF LAWRENCE S. GOLDMAN, New York, New York, Jerald E. Jones, WEST & JONES, Clarksburg, West Virginia, Ron Barroso, Corpus Christi, Texas, for Appellee. Ray A. Harron; John E. Gompers, GOMPERS, MCCARTHY & MCCLURE, Wheeling, West Virginia, Stanley W. Greenfield, GREENFIELD & KRAUT, Pittsburgh, Pennsylvania, for Appellee. Robert V. Gilkison. David P. Goch, Heidi K. Abegg, WEBSTER CHAMBERLAIN & BEAN, Washington, D.C., for American Society of Radiologic Technologists and Virginia Society of Radiologic Technologists; Ashley C. Parrish, Candice Chiu, KING & SPALDING LLP, Washington, D.C., for American Society of Radiologic Technologists, Amici Supporting Appellant.

Mark A. Behrens, Cary Silverman, SHOOK, HARDY & BACON, LLP, Washington, D.C.; H. Sherman Joyce, AMERICAN TORT REFORM ASSOCIATION, Washington, D.C.; Ann W. Spragens, Sean McMurrough, PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA, Des Plaines, Illinois; Quentin Riegel, NATIONAL ASSOCIATION OF MANUFACTURERS, Washington, D.C.; Daniel Saphire, ASSOCIATION OF AMERICAN RAILROADS, Washington, D.C., for American Tort Reform Association, Association of American Railroads, Coalition for Litigation Justice, Incorporated, National Association of Manufacturers, and Property Casualty Insurers Association of America, Amici Supporting Appellant. David Craig Landin, Cheryl G. Ragsdale, HUNTON & WILLIAMS LLP, Richmond, Virginia, for Daniel E. Banks, Alfred Franzblau, and Lawrence Martin, Amici Supporting Appellant. Daniel J. Popeo, Richard A. Samp, WASHINGTON LEGAL FOUNDATION, Washington, D.C., for Washington Legal Foundation, Amicus Supporting Appellant. Scott L. Winkelman, Michael L. Martinez, Robert L. Willmore, Jennifer G. Knight, CROWELL & MORING LLP, Washington, D.C., for West Virginia Chamber of Commerce, Amicus Supporting Appellant.

Unpublished opinions are not binding precedent in this circuit.

PER CURIAM:

CSX Transportation, Incorporated ("CSX") filed a complaint against Robert V. Gilkison ("Gilkison"), Peirce, Raimond & Coulter, P.C. ("Peirce firm"), Robert N. Peirce, Jr. ("Peirce"), Louis A. Raimond ("Raimond"), Mark T. Coulter ("Coulter"), and Ray Harron, M.D. ("Harron"), alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., common law fraud, and civil conspiracy, all "aris[ing] from the successful efforts of the defendants to deliberately fabricate and prosecute objectively unreasonable, false and fraudulent asbestosis claims against CSX." (J.A. 143).¹

The district court granted defendants' motion to dismiss as to the RICO counts and as to all but two fraud counts. On appeal, CSX contends that the district court erred by dismissing those RICO and fraud claims, abused it discretion by denying CSX leave to amend its complaint, erred by granting the defendants' motion for summary judgment on one remaining fraud count, and abused its discretion by excluding certain evidence during trial on another fraud count. For the following reasons, we affirm in part and vacate in part the district court's judgment and remand the case for further proceedings.

I.

In its first amended complaint (hereinafter "complaint"), ²CSX alleges that the defendants—a law firm, certain attorneys, an investigator, and a medical expert, all employed by the law firm—"embarked upon a calculated and deliberate strategy to participate in and to conduct the affairs of the Peirce firm through a pattern and practice of unlawful conduct, including bribery, fraud, conspiracy, and racketeering," (J.A. 145), by "orchestrat[ing] a scheme to inundate CSX[] and other entities with thousands of asbestosis cases without regard to their merit." (J.A. 142).

In order to perpetrate this alleged scheme, CSX contends "the lawyer defendants gained access to potential clients through unlawful means, [and] retained clients and procured medical diagnoses for them through intentionally unreliable mass screenings." (J.A. 145-46). CSX charges that the screenings were unreliable, in part, because "[t]he lawyer defendants... deliberately hired unreliable doctors such as... Harron to 'read' the x-rays for signs of asbestosis." (J.A. 148). In the complaint, CSX averred that, Harron "agreed to read unusually high numbers of x-rays with reckless or deliberate disregard fortheir true content with the full knowledge that the lawyer defendants intended to file personal injury claims based on his diagnoses." (J.A. 163). Ultimately, CSX alleges that defendants used this scheme to "fabricate[] and prosecute[] asbestosis claims with no basis in fact." (J.A. 146).

The complaint specifies nine personal injury suits the Peirce firm filed against CSX on behalf of former CSX employees, which CSX alleges to have been "a deliberate effort by the lawyer defendants to defraud CSX[]." (J.A. 160). Count 1 of the complaint charged the lawyer defendants with violating RICO as to each of the nine suits while Count 2 charged a RICO conspiracy as to those suits. Count 3 charged the lawyer defendants, individually, with common law fraud as to each of the nine suits. Count 4 charged the lawyer defendants and Harron with common law civil conspiracy as to each of the nine suits, and Counts 5 and 6 charged Gilkison and the Peirce firm with conspiracy and fraud as to the so-called "May/Jayne Incident," infra.

The defendants moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Counts 1 through 4 and Count 6 of the complaint. The district court granted the motion in part and denied the motion in part. As to the RICO counts, the district court found that because "eight of the nine lawsuits that comprise the basis of th[e] claims were filed more thanfour years before CSX filed its amended complaint in this case," (J.A. 696), and "CSX was on inquiry notice of the injuries alleged in Counts 1 and 2 when the nine allegedly fraudulent claims against it were filed and/or settled," (J.A. 698), eight of the claims were time-barred. As to the ninth suit, (the "Baylor suit" on behalf of Earl Baylor), the district court reasoned that since the other eight RICO claims were timebarred, and because proving "[a] 'pattern of racketeering activity' requires a showing of at least two acts of racketeering activity[,].... CSX has failed to show the requisite pattern to sustain its RICO claims." (J.A. 699-700).

As to the common law fraud and conspiracy counts, the district court held that "[t]he foregoing [RICO] statute of limitations analysis similarly applies to [those] [c]ounts." (J.A. 700). As a result, the district court concluded that, "[b]ecause eight of the nine lawsuits... were filed more than two years before the amended complaint was filed in this case, reliance on those suits is time-barred" under West Virginia law. (J.A. 700). The Baylor suit was not time-barred but decided on summary judgment as discussed below.

The district court denied the motion to dismiss Count 6, and the fraud and conspiracy claims arising from the May/Jayne Incident proceeded to trial.

After the district court's ruling on the Rule 12(b)(6) motion, CSX moved for leave to amend its complaint and proffered a proposed second amended complaint, which "added [eleven] more recent fraudulently filed claims as well as detailed allegations concerning the difficulty of discovering the fraud." (Appellant's Br. 13). The district court denied the motion.

CSX noted a timely appeal as to all its claims, and this Court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1291.

II.

A.

CSX first contends that the district court erred by granting the defendants' motion to dismiss the RICO and common law fraud counts. CSX argues that this Court should adopt the so-called "separate accrual rule" for RICO statute of limitations purposes, under which "a cause of action accrues when new predicate acts occur...