                     RECOMMENDED FOR FULL-TEXT PUBLICATION
                          Pursuant to Sixth Circuit Rule 206
                                File Name: 12a0339p.06

              UNITED STATES COURT OF APPEALS
                             FOR THE SIXTH CIRCUIT
                               _________________


                                                   X
                                                    -
 STEPHEN OUWINGA; LEANN OUWINGA;
                                                    -
 DAVID OUWINGA; CHRISTINE OUWINGA;
 STONEY CREEK FISHERIES AND EQUIPMENT               -
                                                    -
                                                        No. 10-2531
 INC., on behalf of themselves and all others
                                                    ,
                                                     >
                           Plaintiffs-Appellants, -
 similarly situated,

                                                    -
                                                    -
                                                    -
             v.
                                                    -
                                                    -
                                                    -
 BENISTAR 419 PLAN SERVICES, INC.;

                                     Defendants, -
 BENISTAR LTD.,
                                                    -
                                                    -
                                                    -
                                                    -
 JOHN HANCOCK VARIABLE LIFE INSURANCE
                                                    -
 COMPANY; JOHN HANCOCK LIFE INSURANCE
                                                    -
 COMPANY; EDWARDS ANGELL PALMER &
 DODGE, LLP; JOHN H. REID, III; KRIS                -
                                                    -
                                                    -
 LESLEY; ROBERT FOGG; PASCIAK JOHN
                                                    -
 HANCOCK AGENCY LLC, fka West Michigan
                                                    -
 Pasciak General Agency,
                          Defendants-Appellees. -
                                                    -
                                                   N
                      Appeal from the United States District Court
                 for the Western District of Michigan at Grand Rapids.
                     No. 1:09-cv-60—Janet T. Neff, District Judge.
                               Argued: April 11, 2012
                      Decided and Filed: September 19, 2012
      Before: SUHRHEINRICH, STRANCH, and DONALD, Circuit Judges.

                                _________________

                                    COUNSEL
ARGUED: W. Ralph Canada, Jr., CANADA RIDLEY, LLP, Grapevine, Texas, for
Appellants. Eric S. Mattson, SIDLEY AUSTIN LLP, Chicago, Illinois, John R.
Oostema, SMITH HAUGHEY RICE & ROEGGE, Grand Rapids, Michigan, David M.
Saperstein, MADDIN, HAUSER, WARTELL, ROTH & HELLER, P.C., Southfield,


                                          1
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                          Page 2


Michigan, for Appellees. ON BRIEF: W. Ralph Canada, Jr., K. Adam Rothey,
CANADA RIDLEY, LLP, Grapevine, Texas, Frederick D. Dilley, RHOADES McKEE,
PC, Grand Rapids, Michigan, David R. Deary, Jeven R. Sloan, LOEWINSOHN
FLEGLE DEARY, LLP, Dallas, Texas, Joe R. Whatley, Jr., WHATLEY DRAKE &
KALLAS, LLC, New York, New York, for Appellants. Eric S. Mattson, Joel S.
Feldman, Jason M. Adler, SIDLEY AUSTIN LLP, Chicago, Illinois, Melissa C. Brown,
DYKEMA GOSSETT PLLC, Grand Rapids, Michigan, John R. Oostema, Calvin J.
Sterk, SMITH HAUGHEY RICE & ROEGGE, Grand Rapids, Michigan, Kathleen H.
Klaus, MADDIN, HAUSER, WARTELL, ROTH & HELLER, P.C., Southfield,
Michigan, for Appellees.
                                 _________________

                                        OPINION
                                 _________________

       JANE B. STRANCH, Circuit Judge. Plaintiff-Appellants Stephen, Leann, David,
and Christine Ouwinga and their company, Stoney Creek Fisheries and Equipment, Inc.,
(the “Ouwingas”) appeal the dismissal of their Complaint against various Defendant-
Appellees related to a purported tax-deductible welfare benefit plan—the Benistar 419
Plan (“Benistar Plan” or “Plan”)—marketed and sold by the Appellees to the Ouwingas.
The Internal Revenue Service determined that the Plan was an abusive tax shelter, and
the Ouwingas were ultimately assessed back taxes, interest, and penalties. They filed
this class action on behalf of themselves and all others similarly situated, alleging
violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) as well
as several state law claims. For the following reasons, we REVERSE the district court’s
dismissal of the Amended Complaint and remand for further proceedings.

                                  I. BACKGROUND

A.     Factual Background

       Because this appeal arises from a decision at the motion to dismiss stage, we
draw the facts from the allegations of the Amended Complaint. Plaintiffs Stephen,
Leann, David, and Christine Ouwinga own Plaintiff Stoney Creek Fisheries and
Equipment, Inc., a company based in Newaygo County, Michigan. In September 2001,
the Ouwingas were approached by Defendant Kris Lesley (a former high school
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                           Page 3


classmate of David Ouwinga) about financial products offered by Defendant John
Hancock. The Ouwingas attended a meeting with Lesley and his supervisor, Defendant
Robert Fogg, at which both highlighted the “incredible tax liabilities” of the Ouwingas
and offered to research potential tax-liability-reduction options.

       The Ouwingas met again with Lesley and Fogg who presented the Benistar
419 Plan and explained the purported tax benefits of the Plan, asserting that Plan
contributions were tax-deductible and that the Ouwingas could take money out of the
Plan at any time tax-free. On October 18, the Ouwingas, their accountant, and their
attorney met with Lesley and Fogg, who gave a detailed presentation regarding the
structure and purported tax benefits of the Plan. A tax attorney for the John Hancock
entities participated telephonically, providing legal assurances to the Ouwingas and
affirming the representations about the Plan’s tax benefits.

       Lesley and Fogg then forwarded several documents to the Ouwingas including
John Hancock’s legal authority regarding welfare benefit trusts. They presented the
Benistar 419 Plan and Trust in the form of two large loose-leaf binders produced by the
Benistar Admin Services, Inc. (“the Benistar Books”).          These Books contained
information about the Plan in general; touted its purported advantages, tax and
otherwise; and provided a legal opinion from Defendants Edwards Angell Palmer &
Dodge LLP (“Edwards Angell”) and John Reid. The Ouwingas allege that the John
Hancock entities adopted and advanced the representations made in these Books.
Defendant John Hancock Life Insurance Company inserted certain disclaimers into these
Books, asserting the Insurance Company made no representations about the tax benefits
of the Benistar Plan. The Benistar Books also contained copies of Internal Revenue
Code (“IRC”) sections 419 and 419a and copies of certain federal court rulings. The
Ouwingas allege the Defendants used the Benistar Books to highlight only positive
authority and ignored certain IRS Notices and Rulings that “would have given the
Plaintiffs an (accurate) indication that Plan Payments were not deductible.”

       Based on the representations of Lesley and Fogg and the legal opinion of
Edwards Angell, the Ouwingas agreed to participate in the Benistar Plan in late 2001 and
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                              Page 4


each Plaintiff made substantial contributions. These contributions were used by the Plan
to pay premiums to the John Hancock entities to purchase large insurance policies on the
lives of the Ouwingas.

       On September 25, 2002, Lesley sent the Ouwingas a series of bulletins that he
claimed were “very encouraging for the continued existence of these plans,” showed that
“Benistar remains to be the leading authority on these plans,” and “also [gave] John
Hancock very high praise.” Several written statements and representations in these
bulletins assured that new tax shelter reporting rules would not affect participants in the
Benistar Plan and expressly represented that the Plan was not considered a tax shelter
under IRS guidelines.

       In 2003, Lesley and Fogg told the Ouwingas that the IRS had changed the rules;
that the Ouwingas would need to contribute additional money so the Plan could purchase
new life insurance policies to keep the Plan compliant; and that each year they would
need to form a new plan. Lesley and Fogg assured the Ouwingas that, while this might
signal that the “loophole” in the Code might be closing soon, there was no reason to be
concerned about the tax benefits that had already been claimed in prior years or the
benefits that were going to be claimed in 2003. Reid of Edwards Angell also issued
letters dated October 24, 2003; November 4, 2003; and December 19, 2003 assuring that
under the “new IRS rules” the Benistar plan was still not a tax shelter and was viable
against any challenge by the IRS. In response to an inquiry by an advisor of the
Ouwingas, Lesley and Fogg sent a letter dated November 20, 2003 further representing
that the Plan was in compliance with the latest IRS rules.

       In 2006, the Ouwingas decided to terminate and/or transfer policies out of the
Benistar Plans. The John Hancock entities again advised the Ouwingas that there would
be no taxable consequences of this transaction and that the Benistar Plan continued to
meet the IRS requirements for tax deductible treatment. They also assured the Ouwingas
that there “had [been] no audits or problems with clients who did buy outs.” At that
time, the Ouwingas were asked to and did sign a “Plan Termination and Policy Release
Form” for each transaction, which contained a purported liability release of Benistar 419
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                           Page 5


Plan & Trust, Benistar Admin. Services, Inc., and Benistar 419 Plan Services from “any
and all claims.”

       By letter dated January 23, 2007, the IRS notified the Ouwingas that their tax
returns for the years 2003 and 2004 were going to be examined. In early 2008, the IRS
notified the Ouwingas that it was disallowing deductions related to the Benistar Plan.
The IRS ultimately assessed back taxes, interest, and penalties as a result of the tax
benefits the Ouwingas claimed from the Benistar Plan, which the IRS deemed to be an
“abusive tax shelter.”

B.     Procedural Background

       On January 22, 2009, the Ouwingas filed a class action Complaint against
Benistar 419 Plan Services, Inc. and Benistar Ltd. (the “Benistar Defendants”); John
Hancock Variable Insurance Company and John Hancock Insurance Company (the
“Hancock Defendants”); Edwards Angell Palmer & Dodge LLP and John Reid (the
“Lawyer Defendants”); and Kris Lesley, Robert Fogg, and Pasciak John Hancock
Agency LLC f/k/a West Michigan Pasciak General Agency (the “Agent Defendants”).
Shortly thereafter, the Ouwingas voluntarily dismissed the Benistar Defendants and
amended their Complaint. The Amended Complaint alleges that the Defendants
conspired to defraud employers such as the Ouwingas into adopting welfare benefits
plans supposedly in compliance with IRC § 419A(f)(6), which allows significant tax
benefits. Specifically, the Ouwingas assert violations of RICO, 18 U.S.C. §§ 1962(c),
(d), and negligent misrepresentation against all Defendants; and additional claims of
fraudulent misrepresentation/omission, unjust enrichment, breach of fiduciary duty,
breach of contract, and violations of state consumer protection laws against the Hancock
Defendants.

       The Defendants filed motions to dismiss the Amended Complaint under Federal
Rule of Civil Procedure 12(b)(6). The Defendants asserted the Ouwingas’ RICO claims
were barred by the Private Securities Litigation Reform Act (“PSLRA”) and that the
allegations of “enterprise,” “conduct,” “racketeering,” and “conspiracy” in the Amended
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                               Page 6


Complaint were each defective. The Defendants primarily relied on the disclaimers
present in the Benistar Books to defeat the remaining state law claims.

        On October 29, 2010, the district court entered an order granting each motion to
dismiss and dismissing the Ouwingas’ Amended Complaint in its entirety. Although the
district court did not find the Ouwingas’ RICO claims barred by the PSLRA, the court
found the Ouwingas failed to sufficiently plead the “conduct” and “enterprise” elements
for a valid RICO claim. The court dismissed all state law claims because the Ouwingas
signed “explicit disclaimers and disclosures that appear in multiple documents.” On
appeal, the Ouwingas challenge the district court’s dismissal of all their claims.

                                    II. DISCUSSION

A.      Standard of Review

        We review the district court’s order granting a Rule 12(b)(6) motion to dismiss
de novo. Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565, 572 (6th Cir. 2008).
In assessing a complaint for failure to state a claim, we must construe the complaint in
the light most favorable to the plaintiff, accept all well-pled factual allegations as true,
and determine whether the complaint “contain[s] sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citation and internal quotation marks omitted).

B.      The PSLRA

        In the Private Securities Litigation Reform Act, Pub. L. No. 104-67, 109 Stat.
737 (1995), Congress amended RICO to exclude “any conduct that would have been
actionable as fraud in the purchase or sale of securities to establish a violation of section
1962.” 18 U.S.C. § 1964(c). The purpose behind this amendment was to avoid
duplicative recovery for fraud actionable under the securities laws: “Because the
securities laws generally provide adequate remedies for those injured by securities fraud,
it is both necessary [sic] and unfair to expose defendants in securities cases to the threat
of treble damages and other extraordinary remedies provided by RICO.” 141 Cong. Rec.
H13, 691-08, at H13, 704 (daily ed. Nov. 28, 1995) (statement of SEC Chairman Arthur
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                                 Page 7


Levitt). The amendment not only eliminates securities fraud as a predicate act in civil
RICO claims, but also prevents plaintiffs from relying on other predicate acts if they are
based on conduct that would have been actionable as securities fraud. See Bald Eagle
Area Sch. Dist. v. Keystone Fin., Inc., 189 F.3d 321, 330 (3d Cir. 1991). The Ouwingas’
RICO claims are based on the purchases of variable life insurance policies which,
because they are “variable,” qualify as securities. The district court held that the PSLRA
does not bar the claims of the Ouwingas because the “securities transactions”—the sale
of the policies—were not integral to or “in connection with” the fraudulent scheme as
a whole.

       The Defendants assert that even though the Ouwingas did not allege securities
fraud, their complaint could present a claim for violation of securities laws and is thus
barred by the PSLRA. The Defendants, however, fail to provide any specific reference
to a securities action available based on the Amended Complaint’s allegations. Instead,
the Defendants support their argument that fraud in the sale of the Benistar Plan was “in
connection with” the purchase of securities by citing cases primarily involving fraud that
directly coincided with the securities transaction. See, e.g., SEC v. Zandford, 535 U.S.
813, 820 (2002) (“[R]espondent’s fraud coincided with the sales themselves.”); Swartz
v. KPMG LLP, 476 F.3d 756, 761 (9th Cir. 2007) (finding that “[t]he entire purpose” of
the scheme was to allow the transfer of stock so that the plaintiff’s basis in those assets
would be artificially inflated).

       The Ouwingas respond that they do not allege fraud relating to the purchase of
the variable life insurance policies by the Plan. They note that their fraud claim relates
only to the tax consequences of the Benistar Plan, and it is merely incidental that the
policies happened to be securities. The Southern District of New York articulated the
distinction well:

       Plaintiffs do not allege a securities fraud, but rather a tax fraud. There
       was nothing per se fraudulent from a securities standpoint about the
       financial mechanism and schemes used to generate the tax losses. While
       the alleged fraud could not have occurred without the sale of securities
       at the inflated basis (which created the artificial loss to offset Plaintiffs’
       major capital gains), it is inaccurate to suggest that the actual purchase
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                               Page 8


       and sale of securities were fraudulent. In actuality, the securities
       performed exactly as planned and marketed; it was the overall scheme
       that allegedly defrauded the Plaintiffs and Class Members. . . . This Court
       as well finds that the alleged fraud here involved a tax scheme, with the
       securities transactions only incidental to any underlying fraud.
       Accordingly this Court will not apply the PSLRA bar to Plaintiffs’ RICO
       claims.

Kottler v. Deutsche Bank AG, 607 F. Supp. 2d 447, 458 n.9 (S.D.N.Y. 2009). The Ninth
Circuit relied on similar reasoning when it found a tax-shelter RICO claim was not
barred by the PSLRA, holding that it was “not sufficient merely to allege a defendant has
committed a proscribed act in a transaction of which the pledge of a security is a part.”
Rezner v. Bayerische Hypo-Und Vereinsband AG, 630 F.3d 866, 871-72 (9th Cir. 2010)
(citation and alteration omitted).

       The analysis in the cases cited by the Ouwingas, including Kottler and Rezner,
applied to the factual allegations in this case support the finding that the securities
transactions here were not integral to or “in connection with” the fraudulent scheme as
a whole. The district court correctly found that the PSLRA did not bar the Ouwingas’
RICO claims because the fraud and the securities transactions were essentially
independent events.

C.     RICO Violation under § 1962(c)

       The Ouwingas challenge the dismissal of their substantive RICO claim under
18 U.S.C. § 1962(c), which provides:

       It shall be unlawful for any person employed by or associated with any
       enterprise engaged in, or the activities of which affect, interstate or
       foreign commerce, to conduct or participate, directly or indirectly, in the
       conduct of such enterprise’s affairs through a pattern of racketeering
       activity or collection of unlawful debt.

To state a RICO claim, a plaintiff must plead the following elements: “(1) conduct (2) of
an enterprise (3) through a pattern (4) of racketeering activity.” Moon v. Harrison
Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006) (quoting Sedima, S.P.R.L. v. Imrex Co.,
Inc., 473 U.S. 479, 496 (1985)). The Ouwingas challenge the district court’s finding that
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                               Page 9


they did not sufficiently plead the first two elements. The district court made no finding
as to whether the Ouwingas properly pled a “pattern of racketeering activity.” We
address each element.

        1.      “Conduct”

        A plaintiff must set forth allegations to establish that the defendant conducted or
participated, “directly or indirectly, in the conduct of [the RICO] enterprise’s affairs.”
18 U.S.C. § 1962(c). In Reves v. Ernst & Young, the Supreme Court held that
participation in the conduct of an enterprise’s affairs requires proof that the defendant
participated in the “operation or management” of the enterprise. 507 U.S. 170, 183
(1993). RICO liability is not limited to those with primary responsibility for the
enterprise’s affairs; only “some part” in directing the enterprise’s affairs is required. Id.
at 179. However, defendants must have “conducted or participated in the conduct of the
‘enterprise’s affairs,’ not just their own affairs.” Id. at 185 (emphasis in original).
Concluding that the Agents sold “pre-packaged” Plans and the Lawyers merely rendered
traditional legal services, the district court held the Ouwingas failed to allege that the
Defendants participated in any affairs beyond the operation of their own businesses.

        We disagree. The Amended Complaint alleges participation by the Defendants
in the enterprise sufficiently to satisfy the “operation or management” test. We have
held:

        Although Reves does not explain what it means to have some part in
        directing the enterprise’s affairs, subsequent decisions from our sister
        circuits have persuasively explained that it can be accomplished either by
        making decisions on behalf of the enterprise or by knowingly carrying
        them out.

United States v. Fowler, 535 F.3d 408, 418 (6th Cir. 2008) (emphasis added). Even if
the Benistar Plan was designed by the Benistar entities, the Agent and Lawyer
Defendants carried out the directions of the Benistar entities by marketing the Plan
directly to investors and providing allegedly incomplete and misleading legal opinions.
Importantly, the Ouwingas allege the Defendants carried out these directions, all the
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                            Page 10


while knowing that contributions to the Plan were not likely to be allowed as deductions
by the IRS. The district court held these allegations to be merely conclusory. The
Amended Complaint reveals otherwise—it lists the specific IRS rulings and notices that
should have put the Defendants on notice of the likelihood that the Benistar Plan was not
compliant with IRC § 419A(f)(6), but which were allegedly ignored in favor of older
rulings and notices that were more favorable. Assuming the truth of these allegations,
as a court must for a 12(b)(6) motion, it is plausible that the Defendants were aware of
the falsity of the tax benefits that they represented as flowing from the Benistar Plans
and that they promoted to the Ouwingas.

        The Defendants rely on Stone v. Kirk, 8 F.3d 1079 (6th Cir. 1993), to argue that
the marketing of a fraudulent plan is not sufficient participation to satisfy the “operation
or management” test. In Stone, the defendant was a sales representative for Sagittarius
Recording Company, which used fraudulent appraisals and other misrepresentations to
lure investors into a master-recording leasing program. Id. at 1082. In fact, Sagittarius
was so convincing about the tax benefits of the leasing program that the agent defendant
invested some of his own money in the program. Id. With little explanation, Stone held
that the agent defendant did not participate in the operation or management of the RICO
entity, which was defined to be Sagittarius and its associates. Id. at 1092.

        The Agent Defendants here argue that they, like the defendant in Stone, were
merely sales agents and did not participate in the operation or management of the alleged
RICO enterprise. However, the Amended Complaint alleges: that the Agent Defendants
were more than a mere conduit of information supplied by Benistar; that all the
Defendants were aware of the IRS notices, which put the Plan’s legality into question;
and that, notwithstanding, the Agent Defendants continued to represent the tax benefits
of the Benistar Plan over several years. Fowler makes clear that knowingly carrying out
the orders of the enterprise satisfies the “operation or management” test. 535 F.3d at
418.

        Though the Lawyer Defendants provided opinion letters to a client, Benistar,
relating the tax consequences of the Benistar Plan, the Ouwingas allege that they knew
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                            Page 11


the purpose of the Benistar Plan was to falsely represent tax benefits, knew of IRS
warnings that these type of plans would not qualify for deductions, and created their
opinions letters for the purpose of falsely promoting the plan as a tax-saving device to
potential investors. In Davis v. Mutual Life Insurance Co. of New York, we relied on the
knowledge and continued endorsement of a fraudulent scheme by an insurance company,
MONY, to find the “conduct” element satisfied:

       [E]ven after MONY had received numerous warnings concerning [the
       agent’s] fraudulent sales tactics, MONY continued to allow, if not
       actively encourage, [the agent] and his associates to carry on with their
       scheme. In light of this state of affairs, and of the central role that
       MONY’s life insurance policies played in [the] scheme, we have little
       difficulty in ruling that MONY exercised sufficient control over the
       affairs of the RICO enterprise to withstand scrutiny under Reves.

6 F.3d 367, 380 (6th Cir. 1993). Because the Ouwingas alleged the continued promotion
of the Benistar Plan by all the Defendants in the face of this information, the Amended
Complaint plausibly alleges that the Defendants participated in the enterprise’s affairs
and not merely their own.

       We recognize that although this analysis applies to all Defendants, the various
Defendants acted in different capacities and those differences may ultimately impact the
determination of whether a particular Defendant only participated in his own affairs. But
that is a matter to be fleshed out in discovery and to be resolved through motion practice
or by the jury. At this stage in the litigation, the Ouwingas have alleged sufficient facts
to satisfy Reves’s “operation or management” test, as interpreted in this circuit by
Fowler, and the district court erred in finding otherwise.

       2.      “Enterprise”

       RICO defines an “enterprise” as “any individual, corporation, association, or
other legal entity and any union or group of individuals associated in fact although not
a legal entity.” 18 U.S.C. § 1961(4). The Ouwingas allege that the Defendants created
an association-in-fact enterprise. In order to establish the existence of an “enterprise”
under § 1962(c), a plaintiff is required to prove: (1) an ongoing organization with some
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                            Page 12


sort of framework or superstructure for making and carrying out decisions; (2) that the
members of the enterprise functioned as a continuing unit with established duties; and
(3) that the enterprise was separate and distinct from the pattern of racketeering activity
in which it engaged. United States v. Chance, 306 F.3d 356, 372 (6th Cir. 2002) (citing
Frank v. D’Ambrosi, 4 F.3d 1378, 1386 (6th Cir. 1993)). The district court found that
the Ouwingas failed to satisfy the third element because they did not make allegations
sufficient to show that the enterprise existed for a purpose separate and distinct from the
pattern of racketeering.

       The Supreme Court recently clarified what is required to show an association-in-
fact enterprise in Boyle v. United States, 556 U.S. 938 (2009). The Court stated that “an
association-in-fact enterprise must have at least three structural features: a purpose,
relationships among those associated with the enterprise, and longevity sufficient to
permit these associates to pursue the enterprise’s purpose.” Id. at 946. An association-
in-fact enterprise “require[s] a certain amount of organizational structure which
eliminates simple conspiracies from the Act’s reach.” VanDenBroeck v. CommonPoint
Mortg. Co., 210 F.3d 696, 699 (6th Cir. 2000), abrogated on other grounds by Bridge
v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008). The Supreme Court clarified that
this organizational structure need not be hierarchical, can make decisions on an ad hoc
basis, and does not require the members to have fixed roles. Boyle, 556 U.S. at 948. Put
another way, a plaintiff must show “simply a continuing unit that functions with a
common purpose.” Id.; see also id. at 949 (emphasizing “the breadth of the ‘enterprise’
concept”).

       Though the district court recognized both the importance of the wide reach of
RICO to stymie corruption and the refusal of Boyle to narrowly interpret the statute, it
determined that the Ouwingas did not allege a structure distinct from the pattern of
racketeering. It warned that if allegations of mirror-image, ill-motivated activity of
normal business conduct are sufficient to establish an enterprise, all business conduct
gone awry would constitute a per se RICO enterprise. This concern is not well founded
and ignores the statutory requirement of liberal construction to effectuate RICO’s
No. 10-2531            Ouwinga, et al. v. Benistar, et al.                                         Page 13


remedial purposes. Moreover, our decision in Hofstetter v. Fletcher, 905 F.2d 897 (6th
Cir. 1988), directly addresses the issue:

         “RICO applies both to legitimate enterprises conducted through
         racketeering operations as well as illegitimate enterprises.” United States
         v. Qaoud, 777 F.2d 1105, 1115 (6th Cir. 1985) (citing United States v.
         Turkette, 452 U.S. 576 (1981)). In Qaoud, we held that although
         “enterprise” and “pattern of racketeering activity” are separate elements,
         they may be proved by the same evidence.

905 F.2d at 903 (finding an association-in-fact enterprise consisting of a group of
insurance agents who joined together to sell insurance policies by emphasizing false tax
advantages). This understanding is consistent with Boyle, where the Supreme Court
recognized that although the existence of an enterprise is a separate element that must
be proved, the evidence used to prove the pattern of racketeering activity and the
evidence establishing an enterprise “may in particular cases coalesce.” 556 U.S. at 947
(quoting Turkette, 452 U.S. at 583). In Boyle, the Court upheld an instruction that
allowed a jury to find an association-in-fact enterprise “form[ed] solely for the purpose
of carrying out a pattern of racketeering acts” and instructed that “[c]ommon sense
suggests that the existence of an association-in-fact is oftentimes more readily proven
by what it does, rather than by abstract analysis of its structure.” Id. at 942 n.1. “[A]
pattern of racketeering activity may be sufficient in a particular case to permit a jury to
infer the existence of an association-in-fact [enterprise].” Id. at 951.

         The Amended Complaint alleges an organizational structure that satisfies the
standard in Boyle. It delineates the specific roles and relationships of the Defendants,
alleges the enterprise functioned at least five years, and alleges it functioned for the
common purpose of promoting a fraudulent welfare benefit plan to generate
commissions and related fees. That pattern of activity is sufficient to permit a jury to
infer the existence of an enterprise. See Hofstetter, 905 F.2d at 903.1

         1
          As an alternative argument, the Hancock Defendants argue that only “individuals” and not
corporations or entities can form an association-in-fact enterprise. They rely on the language of § 1961(4),
which they argue describes either “any individual, corporation, association, or other legal entity,” on the
one hand, or “any union or group of individuals associated in fact although not a legal entity,” on the other
hand. Such a limited reading of § 1961(4), however, is directly contrary to clear Sixth Circuit precedent.
Dana Corp. v. Blue Cross & Blue Shield Mut. of N. Ohio, 900 F.2d 882, 887 (6th Cir. 1990) (recognizing
No. 10-2531          Ouwinga, et al. v. Benistar, et al.                                 Page 14


        3.       “Pattern of Racketeering”

        To establish a substantive RICO violation, a plaintiff must show “a pattern of
racketeering activity.” 18 U.S.C. § 1962(c). A pattern of racketeering activity requires,
at a minimum, two acts of racketeering activity within ten years of each other. 18 U.S.C.
§ 1961(5) (emphasis in original).         The Supreme Court has held, however, that the
minimum two acts are not necessarily sufficient and that a plaintiff must show “that the
racketeering predicates are related, and that they amount to or pose a threat of continued
criminal activity.” H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 237-39 (1989) (emphasis
in original). This requirement is known as the “relationship plus continuity” test. See
Brown v. Cassens Transp. Co., 546 F.3d 347, 355 (6th Cir. 2008).

        The relationship prong is satisfied by showing the predicate acts have “similar
purposes, results, participants, victims, or methods of commission, or otherwise are
interrelated by distinguishing characteristics and are not isolated events.” H.J. Inc.,
492 U.S. at 240. A particular defendant’s predicate acts are not required to be
interrelated with each other; instead, the predicate acts must be connected to the affairs
and operations of the criminal enterprise. Fowler, 535 F.3d at 421. The Ouwingas
allege as predicate acts mail and wire fraud based on the various communications from
the Defendants, which fraudulently misrepresented the tax consequences of the Benistar
Plan. All predicate acts allegedly had the same purpose of misrepresenting the Plan’s
tax consequences, were directed toward the Ouwingas, and were presented to the
Ouwingas through the same participants, the Agent Defendants, purportedly as
continued assurances about the Plan’s benefits. The relationship prong is satisfied here.

        The continuity prong of the test is satisfied by demonstrating either “a ‘close-
ended’ pattern (a series of related predicate acts extending over a substantial period of
time) or an ‘open-ended’ pattern (a set of predicate acts that poses a threat of continuing
criminal conduct extending beyond the period in which the predicate acts were
performed).” Heinrich v. Waiting Angels Adoption Servs., 668 F.3d 393, 409-10 (6th


that a group of corporations can form an enterprise). As the Defendants correctly recognize, their
argument is foreclosed by Dana Corp.
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                            Page 15


Cir. 2012) (citing H.J. Inc., 492 U.S. at 241-42). In other words, the continuity prong
“is sufficiently established where the predicates can be attributed to a defendant
operating as part of a long-term association that exists for criminal purposes.” H.J. Inc.,
492 U.S. at 242-43. This prong is clearly met for the Agent and Hancock Defendants
who communicated consistently with the Ouwingas for at least five years.

        The analysis is closer for the Lawyer Defendants. The Lawyer Defendants issued
four opinion letters, the first dated in 1998 and the other three sent over the span of two
months in 2003. The similarity in the representations of tax consequences in all letters
can plausibly indicate that the Lawyer Defendants participated in the fraudulent
enterprise over that entire period. The allegations against the Lawyer Defendants in the
Amended Complaint are sufficient to withstand a motion to dismiss.

D.      RICO Conspiracy under § 1962(d)

        The district court dismissed the Ouwingas’ RICO conspiracy claim under
§ 1962(d) “for the same reason” it dismissed their § 1962(c) claim and because it found
the allegations regarding a conspiracy to be merely conclusory. Although the Amended
Complaint’s allegations in the conspiracy section appear to be conclusory, the Amended
Complaint expressly incorporates all prior allegations therein. It is a plausible inference
from the incorporated factual allegations that the Defendants agreed and conspired to
commit the predicate acts in furtherance of the fraudulent scheme. Therefore, the
Amended Complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Because the
allegations are not merely conclusory, and because the Ouwingas have pled a claim
under § 1962(c), the district court erred in dismissing the Ouwingas’ RICO conspiracy
claim under § 1962(d).

E.      State Law Claims

        The Ouwingas allege six claims under state law: one claim of negligent
misrepresentation against all Defendants and five claims against the Hancock
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                            Page 16


Defendants, including fraudulent misrepresentation/omission, unjust enrichment, breach
of fiduciary duty, breach of contract, and violation of state consumer protection laws.
The district court found all state claims against the Hancock Defendants were foreclosed
by “the explicit disclaimers and disclosures that appear in multiple documents signed by
plaintiffs.” The court dismissed the negligent misrepresentation claim against all
Defendants because it determined the Ouwingas could not prove justifiable reliance in
the face of those same disclaimers. The district court further noted that the Lawyer
Defendants could not be liable for fraudulent misrepresentation because they issued
opinions only, which are not actionable as misrepresentations.

       The Ouwingas argue the district court’s reliance on the disclaimers was
inappropriate because they were presented and considered out of the context of the
volume of documents in which they were contained. It is undisputed that “[d]ocuments
that a defendant attaches to a motion to dismiss are considered part of the pleadings if
they are referred to in the plaintiff’s complaint and are central to her claim.” Weiner v.
Klais & Co., 108 F.3d 86, 89 (6th Cir. 1997). The Defendants attached to their motions
to dismiss copies of the disclaimer forms provided to the Ouwingas, most of which had
been included in the Benistar Books. The Ouwingas expressly challenge the scope,
validity, and enforceability of the disclaimers based on the context in which the
disclaimers were presented to them. The Ouwingas argue that the disclaimers were
interspersed in the Benistar Books amidst a mountain of documents containing repeated
representations about the tax benefits of the Benistar Plan, the very representations that
the disclaimers submit were not being made or relied upon.

       “While documents integral to the complaint may be relied upon, even if they are
not attached or incorporated by reference, it must also be clear that there exist no
material disputed issues of fact regarding the relevance of the document.” Mediacom
Se. LLC v. BellSouth Telecomms., Inc., 672 F.3d 396, 400 (6th Cir. 2012) (citations,
internal quotation marks, and alterations omitted). This principle is equally applicable
where issues of fact regarding the validity and enforceability of the disclaimers exist.
See Knowlton v. Shaw, 708 F. Supp. 2d 69, 75 (D. Me. 2010) (“[I]f the parties do not
No. 10-2531         Ouwinga, et al. v. Benistar, et al.                             Page 17


dispute a central document, a court may consider it in ruling on a motion to dismiss; yet,
if there is a genuine dispute, the legal sufficiency of the cause of action is better tested
in a motion for summary judgment.”). Thus, the district court erred in relying on a
document whose validity was in question.

        The district court also found that the fraudulent misrepresentation claim against
the Lawyer Defendants should be dismissed because the opinion letters stated they were
not to be relied on by anyone else besides Benistar and because opinions could not form
the basis for misrepresentations. As with the disclaimers in the Benistar Books, the
Ouwingas challenge the validity of disclaimers in the letters, and also emphasize that the
1998 opinion letter—the only letter the Ouwingas possessed when deciding whether to
participate in the Benistar Plan—did not contain any reliance disclaimer.

        The district court noted that mere opinions are generally not actionable as
misrepresentations, but did not explain why the opinion letters should fit into this general
rule at the motion to dismiss stage, where all inferences are to be drawn in the
Ouwingas’ favor. The district court relied on City National Bank of Detroit v. Rodgers
& Morgenstein, 399 N.W.2d 505 (Mich. Ct. App. 1986), for this proposition, but that
court distinguished its facts “from the situation in which an ordinary person deals in
reliance upon an attorney’s opinion on a point of law.” Id. at 508. The Ouwingas allege
the purpose of the opinion letters was to add a legal stamp of approval to the fraudulent
tax plan and to give potential clients the peace of mind to participate in the Plan. Thus,
they allege the Lawyer Defendants were giving legal tax advice not only to Benistar, its
direct client, but also to the intended recipients, taxpayers evaluating the Plan. The
Supreme Court has recognized that “[w]hen an accountant or attorney advises a taxpayer
on a matter of tax law, such as whether a liability exists, it is reasonable for the taxpayer
to rely on that advice.” United States v. Boyle, 469 U.S. 241, 250 (1985). Therefore, it
is plausible that the Ouwingas could show reliance on the opinion letters.

        The district court erred in considering the disclaimers at the 12(b)(6) stage when
their validity was directly in question based on the full context of their presentation to
No. 10-2531        Ouwinga, et al. v. Benistar, et al.                           Page 18


the Ouwingas. Because this formed the basis for the district court’s analysis of the state
law claims, we must reverse dismissal of those claims.

                                 III. CONCLUSION

       For the foregoing reasons, the judgment of the district court judgment dismissing
the Ouwingas’ Amended Complaint is reversed and the matter is remand for further
proceedings consistent with this opinion.
