Lichter v. Massachusetts Mutual Life Insurance Company

Background

Menachem Lichter filed a proposed class action against Massachusetts Mutual Life Insurance Co., doing business as MassMutual; MassMutual Brooklyn; Aaron Klein, Jacob Kahan, Shloime Hoffman, and Shimon Greenwald; and unidentified agents. Lichter alleged that he entered a career contract with MassMutual and MassMutual Brooklyn in 2013 and worked as an insurance agent through December 31, 2021.

The complaint alleged two schemes. First, the defendants allegedly presented some of Lichter’s earned commissions as sales by lower-performing agents. Lichter alleged that he was coerced into giving Greenwald a $12,000 commission in 2018. Second, Lichter alleged that Klein pressured him to donate $125,000 to Congregation Broshiv in 2013 by threatening to withhold an outstanding commission of about $15,000. The complaint asserted claims including breach of contract, violations of New York Labor Law, unjust enrichment, conversion, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), RICO conspiracy, and aiding and abetting.

Defendants’ Motion

The defendants jointly moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. For this motion, the court treated the complaint’s non-conclusory factual allegations as true and considered whether they made the claims plausible rather than merely speculative.

Federal RICO Claims

The court held that the RICO claims based on the 2013 kickback scheme were time-barred. Civil RICO claims generally must be brought within four years of the plaintiff’s discovery of the injury. The court found that Lichter’s alleged injury was apparent when he was required to make the donation before receiving his commission. The court rejected Lichter’s argument that the defendants’ alleged misrepresentations had concealed the injury.

The court did not find the 2018 commission-sharing claim time-barred on the face of the complaint because the complaint did not specify when the 2018 injury occurred. The court nevertheless dismissed that claim on the merits of the pleading. To state a RICO claim, Lichter had to allege, among other things, a pattern of racketeering activity. He alleged that the defendants used mail and electronic communications, including marketing and sales materials, to carry out the scheme.

The court found that the complaint did not allege facts showing that these communications involved fraudulent intent or were connected to the commission-sharing scheme. The materials described in the complaint appeared to be routine promotional communications, and the complaint did not identify information in them that furthered or related to the alleged scheme. Because Lichter failed to plead the required pattern of racketeering activity, the court dismissed the substantive RICO claim.

The court also dismissed the RICO conspiracy claim because Lichter relied on the same factual basis for both claims, and the complaint did not adequately state a substantive RICO violation.

State Claims and Leave to Amend

After dismissing the federal claims, the court declined to exercise supplemental jurisdiction, meaning authority to decide related state-law claims in the same case, over Lichter’s remaining state claims. The court remanded those claims to New York County Supreme Court.

Lichter had not asked for permission to amend the complaint if it was dismissed. The court therefore denied leave to amend. The defendants’ motion to dismiss was granted in its entirety, Lichter’s federal claims were dismissed, the remaining state claims were remanded, and the federal case was closed. Chief United States District Judge Laura Taylor Swain signed the order.