•     In Zellner v. Monroe County Municipal Waste Management Authority, No. 3:07-CV-1976 (M.D.Pa. Jul. 28, 2008), plaintiffs allegedly defrauded by the sellers and a critical customer in the purchase of a vehicle repair business were unable to identify a distinct enterprise. Dismissing the RICO claims, District Judge Caputo of the United States District Court for the Middle District of Pennsylvania held that the plaintiffs’ identification of the critical customer as the enterprise failed the distinctness requirement because the customer also was named as a defendant.

•     In Vulcan Golf, LLC v. Google Inc., No. 07 C 3371 (N.D. Ill. Jul. 31, 2008), plaintiffs who claimed that the defendants had set up websites with domain names deceptively similar to those used by the plaintiffs, and then capitalized on the resulting advertising revenue, were unable to identify a proper RICO enterprise. Dismissing the RICO claims with prejudice, District Judge Manning of the United States District Court for the Northern District of Illinois held that the plaintiffs had made no allegations that indicated that the members of the enterprise (which included publishers and advertisers that could run into the millions) engaged in consensual decision-making or were joined in purpose to further the goals of the enterprise. Indeed, there was nothing to suggest that the various members had any specific knowledge of the others’ existence.

•     In Three Rivers Provider Network, Inc. v. Meritain Health, Inc., No. 07CV1900 WQH (BLM) (S.D.Cal. Jul. 23, 2008), a plaintiff claiming that the defendants had schemed to deprive it of fees for use of its exclusive network of health care providers adequately alleged an association-in-fact enterprise. Denying motions to dismiss the plaintiff’s Section 1962(c) claim, District Judge Hayes of the United States District Court for the Southern District of California held that the complaint sufficiently alleged that the defendants associated together for the common purpose of defrauding the plaintiff, that there was an ongoing organization created to commit the alleged predicates, and that the members functioned as a continuing unit.

•     In Pravak v. The Meyer Eye Group, PLC, No. 07-2433-JPM-dkv (W.D.Tenn. Jul. 25, 2008), a doctor claiming he was improperly ousted from a medical practice was able to identify the practice as the enterprise with respect to the individual defendants. Denying the individual defendants’ motions to dismiss the RICO claims, District Judge McCalla of the United States District Court for the Western District of Tennessee held that the alleged enterprise was distinct from the individual defendants. Granting the motion to dismiss of practice itself, the court ruled that the practice could not be both the “person” and the “enterprise” in any RICO claim alleged against the practice.

•     In Walter v. Drayson, No. 07-16284 (9th Cir. Aug. 18, 2008), a trust beneficiary allegedly defrauded of his fair share of the trust assets could not hold the trustees’ counsel liable because he could not show that counsel had operated or managed the alleged RICO enterprise. Upholding the dismissal of the RICO claims, the Ninth Circuit held that, while the allegations established that counsel was part of the enterprise, they failed to show that counsel had “some part in directing its affairs,” as the Supreme Court stated in Reves. It was possible to be part of the enterprise without having a role in its management and operation, the Ninth Circuit explained. “Simply performing services for the enterprise does not rise to the level of direction ….”

•     In Mazur v. eBay Inc., No. C 07-03967 MHP (N.D.Cal. Jul. 25, 2008), a plaintiff who participated in live floor auctions through an online auction website adequately alleged a pattern of racketeering activity based on the website’s single, ongoing post that the live auctions were “safe,” “carefully screened,” had “floor bidders,” and involved “international auction houses.” Denying a motion to dismiss the plaintiff’s Section 1962(c) claim, District Judge Patel of the United States District Court for the Northern District of California held that, at this stage of the case, the allegations were sufficient to establish that the predicates were related and amounted to or posed a threat of continued criminal activity.

•     In Loften v. Diolosa, No. 3:CV-05-1193 (M.D.Pa. Jul. 31, 2008), a homebuyer complaining of predatory mortgage lending practices in which the property’s price was greatly inflated was able to adequately plead an association-in-fact enterprise. Denying motions to dismiss the plaintiff’s Section 1962(c) claim, District Judge Vanaskie of the United States District Court for the Middle District of Pennsylvania held that it was not necessary to demonstrate the Turkette factors at the pleading stage. The plaintiff had pled a plausible association-in-fact enterprise of individuals and corporations under the leadership of two of its individual members, and Twombly required nothing more.

 •    In CSX Transportation, Inc. v. Meserole Street Recycling, Inc., No. 5:06-CV-138 (W.D.Mich. Aug. 12, 2008), recycling companies claiming that the defendants had fraudulently induced them to ship cargo and then failed to deliver were unable to raise their RICO allegations beyond the speculative level to meet the Twombly standard. Dismissing the RICO claims, district Judge Jonker of the United States District Court for the Western District of Michigan held that the plaintiffs had failed to “nudge” their claim of RICO continuity “across the line from conceivable to plausible,” as required by the Supreme Court’s decision in Twombly. The plaintiffs had attempted to transform a routine commercial dispute into something significantly more burdensome for the defendants simply by invoking the RICO statutory language. The complaint failed, however, to go beyond the labels to include sufficient factual allegations to raise a right to relief above the speculative level, the court concluded.

•     In RegScan, Inc. v. Brewer, No. 07-2082 (3d Cir. Aug. 14, 2008) (unpub.), a plaintiff that had previously sued the defendants’ corporate employer in state court was barred from bringing RICO claims against individual defendants, alleging that they had stolen electronic databases, thereby giving their corporate employer a competitive advantage. Upholding summary judgment for the defendants, the Third Circuit in a nonprecedential decision held that the RICO claims were barred by res judicata. Although the plaintiff contended that the state court’s denial of its motion to amend to add the RICO claims was not a judgment on the merits, the state court, which issued sanctions against the plaintiff for bringing the motion, essentially determined that the proposed amendment would be futile, a decision which in most jurisdictions was a judgment on the merits, the Third Circuit determined.

•     In Lipari v. General Electric Company, No. 07-0849-CV-W-FJG (W.D.Mo. Jul. 30, 2008), a plaintiff alleging that the defendants’ racketeering activities prevented the entry of his business into the hospital supply industry lacked RICO standing. Dismissing the RICO claims, Chief District Judge Gaitan of the United States District Court for the Western District of Missouri held that the plaintiff’s claimed injuries were indefinite and unprovable. Although he claimed damages of $450 million, he made no attempt to quantify or measure the damages in any way, and offered no evidence or support for his claim. Moreover, there were numerous other factors, such a poor marketing, lack of vendor contracts, or lack of industry experience, that could have contributed to the business’s failure to get started, the court observed.

 

 

 

 

 

 

 

 

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