Douglas v. Hirshon ( 2023 )

United States Court of Appeals
For the First Circuit
No. 22-1483
JOEL DOUGLAS; STEVEN FOWLER; JAMES LEWIS,
Plaintiffs, Appellants,
v.
DAVID HIRSHON; LOSU LLC,
Defendants, Appellees,
BIRCH POINT STORAGE LLC; SCOTT LALUMIERE; MICHAEL LYDEN; SHAWN
LYDEN; RUSSELL OAKES; WAYNE LEWIS; ANDRE BELLUCCI; DAVID JONES;
ROBERT BURGESS; ANDROSCOGGIN SAVINGS BANK; BANGOR SAVINGS BANK;
CAMDEN NATIONAL BANK; DAVID CLARKE; MILK STREET CAPITAL LLC;
MECAP, LLC, d/b/a Milk Street Capital LLC; COASTAL REALTY
CAPITAL, LLC, d/b/a Maine Capital Group, LLC; MAINE CAPITAL
GROUP, LLC; LH HOUSING, LLC; TTJR, LLC; F.O. BAILEY REAL ESTATE;
BLR CAPITAL, LLC; ERIC HOLSAPPLE; MACHIAS SAVINGS BANK; JOHN DOE
NUMBER I; JOHN DOE NUMBER II; JOHN DOE NUMBER III; JOHN DOE
NUMBER IV,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Jon D. Levy, U.S. District Judge]
Before
Gelpí, Lynch, and Thompson,
Circuit Judges.
Robert C. Andrews for appellants.
Marshall J. Tinkle, with whom Thompson, MacColl & Bass, LLC,
P.A. was on brief, for appellees.
March 21, 2023
LYNCH, Circuit Judge. Joel Douglas, Steven Fowler, and
James Lewis sued twenty-six defendants, alleging several
interrelated schemes to defraud the plaintiffs of real estate in
Maine. Among other claims, the complaint asserts that, in
connection with these schemes, a subset of the defendants
participated in a conspiracy in violation of the Racketeer
Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C.
§§ 1961-1968, and that this conspiracy injured the plaintiffs.
The district court dismissed the RICO conspiracy claim
against two of the defendants, David Hirshon and LOSU, LLC
("LOSU"), and denied a motion from the plaintiffs seeking limited
discovery from Hirshon. See Douglas v. Lalumiere, No. 20-cv-
00227, 2021 WL 4470399, at *4-5 (D. Me. Sept. 29, 2021). The
plaintiffs appeal, contending that the district court erred in
(1) concluding that the complaint fails to state a RICO claim
against Hirshon and LOSU, (2) declining to consider certain
materials outside the complaint in ruling on the motion to dismiss,
and (3) denying the plaintiffs discovery. We find no error and
affirm the district court's well-reasoned decision.
I.
Because this appeal follows a dismissal for failure to
state a claim, "we accept as true all well-pleaded facts alleged
in the complaint and draw all reasonable inferences therefrom in
the pleader's favor." Roe v. Lynch, 997 F.3d 80, 82 (1st Cir.
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2021) (quoting Lee v. Conagra Brands, Inc., 958 F.3d 70, 74 (1st
Cir. 2020)).
The plaintiffs filed the original complaint in this
action, which included thirteen counts against twenty-four
defendants, on June 24, 2020, in the U.S. District Court for the
District of Maine. Neither Hirshon nor LOSU was named in this
complaint. The plaintiffs filed the operative amended complaint
("the complaint") on September 15, 2020. In addition to adding
new allegations, claims, and exhibits, this amended pleading
introduced Hirshon and LOSU as defendants on two counts: Count IV
(a RICO conspiracy claim) and Count XVII (a state law unjust
enrichment claim).1 The RICO claim alleges that Hirshon, LOSU,
and other defendants conspired to violate 18 U.S.C. § 1962(a) by
investing funds obtained through alleged fraud schemes into
efforts to defraud additional victims. The unjust enrichment claim
asserts that Hirshon, LOSU, and other defendants unjustly
benefited by defrauding Douglas and Fowler.
The complaint alleges three interrelated fraudulent
schemes to deprive the plaintiffs and others of real estate in
1 The complaint does not actually list LOSU among the
defendants for Count IV, but the allegations included in support
of the claim do refer to LOSU. The district court construed the
complaint as seeking to bring a claim against LOSU, see Douglas,
2021 WL 4470399, at *3 n.3, and, in the interest of completeness,
we do so as well.
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Maine.2 At least the first two of these schemes were allegedly
spearheaded by defendant Scott Lalumiere.
As the district court summarized, in the first alleged
scheme,
Lalumiere, funded by various banks and private
lenders, fraudulently induced several
vulnerable individuals, including
[p]laintiffs [Douglas and Fowler], who lacked
access to conventional credit, to enter into
unfavorable lease/buy-back agreements. Under
the terms of the agreements, the title of the
victim's property would be transferred to a
corporate entity controlled by Lalumiere with
the victim, as the lessee, retaining a
purchase option. The Lalumiere-controlled
entity would subsequently mortgage the
property to banks and private lenders, and,
when the entity defaulted on its loan, the
mortgagees foreclosed on the property,
frustrating the victim's option to purchase.
Douglas, 2021 WL 4470399, at *1. Properties allegedly targeted in
this scheme include 75 Queen Street, Gorham, and 661 Allen Avenue,
Portland, at the time owned by plaintiffs Douglas and Fowler,
respectively, as well as 36 Settler Road, South Portland, then
owned by a nonplaintiff, Christina Davis. The complaint asserts
that the participants in this scheme repeatedly used the mail or
wires to facilitate the fraud.
In the second alleged scheme, Fowler agreed with
Lalumiere that Fowler would perform renovations at several
2 In characterizing the complaint's allegations, we do not
express any view as to whether the complaint states a claim against
any defendant other than Hirshon or LOSU.
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properties at a discounted rate and in exchange be given the option
to purchase the properties after completing the work and the
authority to rent out the properties in the meantime. Lalumiere
then defaulted on the properties' mortgages, preventing Fowler
from exercising his purchase option.
In the third alleged scheme, multiple defendants agreed
to pay off a defaulted mortgage on a property owned by Lewis and
to lend him funds for improvements in exchange for his transferring
the title to the property to a corporation and making certain
payments. Following the title transfer, those defendants refused
to make the promised loans and foreclosed on the property.
The complaint's description of these schemes says very
little about Hirshon or LOSU. Indeed, in their principal brief,
the plaintiffs describe as "accurate[]" the district court's
statement that "[t]he [c]omplaint contains scant details regarding
Hirshon's and LOSU's participation in Lalumiere's schemes." Id.
at *2. The complaint alleges that Hirshon "is a person residing
in Freeport[,] Maine," and LOSU "is a Maine corporation doing
business in the State of Maine," but does not otherwise provide
any background information on Hirshon or LOSU. For instance, the
complaint does not even identify Hirshon's occupation or LOSU's
line of business. With respect to the RICO count, the complaint
alleges that Hirshon and LOSU "knew about the fraud committed by
the [RICO e]nterprise because of their participation in the
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transactions for 661 Allen Avenue and 75 Queen Street," and that
they, alongside other defendants, "realized the proceeds" of the
schemes. In addition, the complaint includes as an attachment an
affidavit dated January 27, 2020, sworn out by Davis (the
nonplaintiff victim of the alleged fraud involving 36 Settler Road)
and recorded with the county registry of deeds, regarding the
transactions involving 36 Settler Road. In the affidavit, Davis
states "[o]n information and belief" that, after Davis entered a
lease/buy-back agreement with a Lalumiere-controlled corporation
in 2012, the corporation granted a mortgage on the property to
LOSU in March 2019, and that "LOSU . . . had actual notice" of
Davis's lease/buy-back agreement when it accepted the mortgage.
Outside of these statements, the complaint does not describe the
nature, timing, or extent of Hirshon's or LOSU's alleged
participation in the schemes.3
Various subgroups of defendants filed separate motions
to dismiss for failure to state a claim under Federal Rule of Civil
Procedure ("Rule") 12(b)(6). Hirshon and LOSU jointly filed such
a motion on November 23, 2020, arguing, inter alia, that the
3 A paragraph supporting the unjust enrichment claim
alleges: "LOSU[,] . . . Hirshon, . . . and [other defendants]
extraction [sic] of equity from the homes at 661 Allen Avenue and
57 [sic] Queen Street when . . . Douglas and . . . Fowler paid the
underlying obligations on the property unjustly enriched the
organization . . . ." On appeal, the plaintiffs do not cite this
allegation or argue that it clarifies Hirshon's or LOSU's alleged
participation in the schemes for purposes of the RICO claim.
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complaint fails to plausibly allege that they knowingly joined any
RICO conspiracy or that they received any benefit from the
plaintiffs, as necessary to state an unjust enrichment claim.
The plaintiffs filed a memorandum in opposition to the
motion to dismiss that relied heavily on a set of attached
documents not referenced in or attached to the complaint. They
never moved to amend the complaint to incorporate these documents.
On the same day, the plaintiffs also filed a motion seeking limited
discovery from Hirshon before the court ruled on the motion to
dismiss, asserting that such discovery would allow them to cure
any deficiencies in their pleading. Hirshon opposed this motion.4
The district court granted the motion to dismiss and
denied the motion for limited discovery in a written opinion issued
September 29, 2021. See Douglas, 2021 WL 4470399, at *4-5. It
reasoned that the complaint fails to plausibly allege either that
Hirshon or LOSU knowingly joined a RICO conspiracy or that the
plaintiffs conferred any benefit on Hirshon or LOSU, as necessary
to state a claim for unjust enrichment under Maine law. See id.
at *3-4, *4 n.5. The court also concluded that the complaint's
4 A magistrate judge denied the discovery motion without
prejudice and recommended that the district court consider it
alongside the motion to dismiss. After further briefing on the
issue from both sides, the district court construed the magistrate
judge's order denying the motion as "a deferral of action on the
motion," and addressed the merits of the discovery and dismissal
motions together. Douglas, 2021 WL 4470399, at *1 n.2.
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allegations fall too far short of the plausibility and
particularity requirements of Rules 8 and 9(b) to justify any
discovery under this court's precedents. See id. at *5.
Hirshon and LOSU then moved for final judgment on the
plaintiffs' claims against them under Rule 54(b). The district
court granted the motion,5 see Douglas v. Lalumiere, No. 20-cv-
00227, 2022 WL 2047698, at *3 (D. Me. June 7, 2022), and this
timely appeal followed.
II.
The plaintiffs argue that the district court erred in
(1) holding that the complaint fails to plausibly allege that
Hirshon or LOSU knowingly joined a RICO conspiracy, (2) declining
to consider documents outside the complaint in ruling on the motion
to dismiss the RICO claim, and (3) denying the motion for limited
discovery with respect to the RICO allegations.6 We address, and
reject, each argument in turn.
5 The plaintiffs opposed the motion for final judgment,
but on appeal they do not mount any challenge to the district
court's decision to grant the motion independent of their
challenges to its decision to deny discovery and dismiss their
claims.
6 The plaintiffs do not address their unjust enrichment
claim on appeal, thereby waiving any argument with respect to that
count. See, e.g., United States v. Zannino, 895 F.2d 1, 17 (1st
Cir. 1990).
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A.
We review a district court's grant of a motion to dismiss
for failure to state a claim de novo. E.g., Legal Sea Foods, LLC
v. Strathmore Ins. Co., 36 F.4th 29, 34 (1st Cir. 2022). The
complaint "must contain 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 Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial
plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Id. Although "[w]e 'accept
as true the complaint's well-pleaded factual allegations' and
'draw all reasonable inferences in favor of the non-moving party,'"
Cheng v. Neumann, 51 F.4th 438, 443 (1st Cir. 2022) (quoting McKee
v. Cosby, 874 F.3d 54, 59 (1st Cir. 2017)), we do not credit
"'conclusory legal allegations' [or] factual allegations that are
'too meager, vague, or conclusory to remove the possibility of
relief from the realm of mere conjecture,'" Legal Sea Foods, 36
F.4th at 33 (citation omitted) (first quoting Cardigan Mountain
Sch. v. N.H. Ins. Co., 787 F.3d 82, 84 (1st Cir. 2015); and then
quoting SEC v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (en
banc)).7
7 The district court reasoned that, because the
plaintiffs' RICO claims are based on alleged predicate acts of
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The criminal RICO statute, 18 U.S.C. § 1962, "prohibits
certain conduct involving a 'pattern of racketeering activity.'"
Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 453 (2006) (quoting
18 U.S.C. § 1962). Racketeering activity is defined "to include
a host of so-called predicate acts," including acts that would be
indictable as mail or wire fraud. Bridge v. Phoenix Bond & Indem.
Co., 553 U.S. 639, 647 (2008); see 18 U.S.C. § 1961(1) (defining
"racketeering activity"); id. §§ 1341, 1343 (defining mail and
wire fraud). Subsection (a) of § 1962 provides:
It shall be unlawful for any person who has
received any income derived, directly or
indirectly, from a pattern of racketeering
activity . . . to use or invest, directly or
indirectly, any part of such income, or the
proceeds of such income, in acquisition of any
interest in, or the establishment or operation
of, any enterprise which is engaged in, or the
activities of which affect, interstate or
foreign commerce.
18 U.S.C. § 1962(a). Subsection (d) makes it "unlawful for any
person to conspire to violate any of the provisions of subsection
(a)." Id. § 1962(d). In order "[t]o prove a RICO
conspiracy . . . , the [plaintiff] must show that 'the defendant
mail and wire fraud, their complaint "must [also] satisfy the
[heightened] particularity requirements of Rule 9(b)." Douglas,
2021 WL 4470399, at *3 (quoting Ahmed v. Rosenblatt, 118 F.3d 886,
889 (1st Cir. 1997)). Under that standard, the complaint "must
state the time, place and content of the alleged mail and wire
communications perpetrating that fraud." Ahmed, 118 F.3d at 889.
Because the complaint fails to meet even the ordinary plausibility
standard, we need not separately address issues related to Rule 9.
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knowingly joined the conspiracy, agreeing with one or more
coconspirators to further [the] endeavor, which, if completed,
would satisfy all the elements of a substantive [RICO]
offense.'" United States v. Velazquez-Fontanez, 6 F.4th 205, 212
(1st Cir. 2021) (third and fourth alterations in original)
(internal quotation marks omitted) (quoting United States v.
Rodríguez-Torres, 939 F.3d 16, 23 (1st Cir. 2019)). The RICO
statute's civil component, 18 U.S.C. § 1964, provides a cause of
action to "[a]ny person injured in his business or property by
reason of a violation of [the criminal RICO provisions]." 18
U.S.C. § 1964(c).
Count IV of the complaint asserts that Hirshon and LOSU,
together with numerous other defendants, participated in a RICO
conspiracy to violate § 1962(a) by investing funds obtained through
the alleged fraud schemes into efforts to defraud additional
victims. To state a claim on this count with respect to Hirshon
and LOSU, the complaint must plausibly allege, among other things,
that they knowingly joined the purported RICO conspiracy. See
Velazquez-Fontanez, 6 F.4th at 212. We agree with the district
court that the complaint fails to do so.
As the district court observed, the complaint "contains
scant details regarding Hirshon's and LOSU's participation" in the
alleged conspiracy. Douglas, 2021 WL 4470399, at *2. On appeal,
the plaintiffs direct our attention essentially to three
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statements in the complaint or its exhibits. First, in a paragraph
describing the alleged "role[s]" of various defendants in the
purported conspiracy, the complaint states that "LOSU LLC, David
Hirshon, [and other defendants] realized the proceeds [of the real
estate transactions]." Second, the complaint states that Hirshon
and LOSU "knew about the fraud committed by the [RICO e]nterprise
because of their participation in the transactions for 661 Allen
Avenue and 75 Queen Street." Third, the Davis affidavit attached
to the complaint states "[o]n information and belief" that a
corporation controlled by Lalumiere granted a mortgage on the
property at 36 Settler Road to LOSU in March 2019 and that
"LOSU . . . had actual notice" of Davis's lease/buy-back agreement
with that corporation at that time.
The conclusory assertion that Hirshon and LOSU "knew
about the fraud . . . because of their participation in the
transactions for 661 Allen Avenue and 75 Queen Street" is "too
meager, vague, or conclusory to remove the possibility of relief
from the realm of mere conjecture." Legal Sea Foods, 36 F.4th at
33 (quoting Tambone, 597 F.3d at 442). The complaint alleges a
complex series of transactions, many of which -- such as a
titleholder's taking out a mortgage on a property -- are
unremarkable. No inference can reasonably be drawn from the mere
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fact of these transactions that those involved knowingly
participated in fraud.8
Stripping out this conclusory statement, the remaining
allegations against Hirshon and LOSU assert that they in some
unspecified way participated in transactions involving 661 Allen
Avenue and 75 Queen Street; that they in some unspecified way
benefitted financially from Lalumiere's transactions; and that
LOSU acquired a mortgage on a different property, 36 Settler Road,
from a corporation controlled by Lalumiere while having notice
that the corporation had entered into a lease/buy-back agreement
with Davis. These sparse allegations fall well short of "plausibly
narrat[ing] a claim for relief." Schatz v. Republican State
Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012). We cannot "draw
[a] reasonable inference that the defendant[s are] liable for the
misconduct alleged." Iqbal, 556 U.S. at 678. None of the
allegations is remotely inconsistent with the conclusion that
Hirshon and LOSU are ordinary lenders or providers of services
8 The plaintiffs contend that it was sufficient for them
simply to allege knowledge on the part of Hirshon and LOSU without
supporting facts because Rule 9 allows plaintiffs to plead
"knowledge . . . generally." But the Supreme Court has made clear
that "'generally' is a relative term," and that, "[i]n the context
of Rule 9, it is to be compared to the particularity requirement
applicable to fraud or mistake." Iqbal, 556 U.S. at 686 (quoting
Fed. R. Civ. P. 9(b)). It "excuses a party from pleading
[knowledge] under an elevated pleading standard," but it does not
allow a party to rest on conclusory allegations that do not satisfy
the basic plausibility standard. Id.; see id. at 686-87; Schatz v.
Republican State Leadership Comm., 669 F.3d 50, 58 (1st Cir. 2012).
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related to real estate transactions that operate in the area of
Maine where the alleged fraud took place. "The plausibility
standard is not akin to a 'probability requirement,' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully." Id. (quoting Twombly, 550 U.S. at 556). The
plaintiffs have not met this standard.
Because the plaintiffs' allegations do not support a
reasonable inference that Hirshon or LOSU knowingly joined the
alleged RICO conspiracy, the district court properly concluded
that the complaint fails to state a claim against these defendants.
B.
The plaintiffs argue that, even if the complaint itself
fails to state a claim, the district court erred by refusing, when
ruling on Hirshon and LOSU's motion to dismiss, to consider
additional documents attached to the plaintiffs' memorandum
opposing the motion. They contend that these attachments -- which
were not attached to or referenced in the complaint, and which
include, for example, mortgage documents related to the properties
involved in the alleged fraud schemes, ostensibly retrieved from
county registries of deeds -- fill any gaps in the complaint's
allegations. The district court refused to consider these
documents because they were not included in the plaintiffs'
complaint. Douglas, 2021 WL 4470399, at *4.
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In ruling on a motion to dismiss for failure to state a
claim, "a court ordinarily may only consider facts alleged in the
complaint and exhibits attached thereto, or else convert the motion
into one for summary judgment."9 Freeman v. Town of Hudson, 714
F.3d 29, 35-36 (1st Cir. 2013) (citation omitted). "Under certain
'narrow exceptions'" -- including for "documents the authenticity
of which are not disputed by the parties" and "official public
records" -- "some extrinsic documents may be considered without
converting a motion to dismiss into a motion for summary judgment."
Id. at 36 (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.
1993)). The plaintiffs argue that the attachments to their
memorandum opposing the motion to dismiss fall into these "narrow
exceptions."
This court has not decided the standard of review
applicable to a district court's refusal to consider documents
external to a complaint in ruling on a Rule 12(b)(6) motion, see
id. at 36 n.5 (declining to decide whether review is de novo or
for abuse of discretion); Lab. Rels. Div. of Constr. Indus. of
Mass., Inc. v. Healey, 844 F.3d 318, 331 (1st Cir. 2016) (same),
but the plaintiffs concede that an abuse of discretion standard
applies, so we proceed on that assumption, cf. Davis v. HSBC Bank
9 The plaintiffs do not argue that the district court
should have converted the motion into one for summary judgment in
order to consider the attachments.
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Nev., N.A., 691 F.3d 1152, 1160 (9th Cir. 2012) (holding that a
"district court's decision to incorporate by reference documents
into [a] complaint shall be reviewed for an abuse of discretion").
We note also that the plaintiffs do not develop any argument or
cite any authority holding that considering external documents is
mandatory -- rather than within the district court's
discretion -- if those documents fall into one of the "narrow
exceptions" the plaintiffs invoke. Cf., e.g., Healey, 844 F.3d at
331 (explaining that a court "may" consider external documents
within the exceptions); Freeman, 714 F.3d at 36 (same); cf. also
Davis, 691 F.3d at 1159 ("Our relevant case law has recognized
consistently that [a] district court may, but is not required to
incorporate documents by reference.").
We see no abuse of discretion in the district court's
refusal to consider the attachments. The plaintiffs did not
articulate to the district court any reason why it could or should
consider the attachments in ruling on the motion to dismiss. Cf.
Diulus v. Am. Express Travel Related Servs. Co., 823 F. App'x 843,
847 (11th Cir. 2020) (unpublished decision) (finding no abuse of
discretion where district court did not take judicial notice of
materials sua sponte); River Farm Realty Tr. v. Farm Fam. Cas.
Ins. Co., 943 F.3d 27, 41 n.21 (1st Cir. 2019) (treating argument
not made to district court as waived). The plaintiffs do not
dispute Hirshon and LOSU's observation that, in litigating the
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motion before the district court, they did not cite the exceptions
on which they now rely. Their opposition memorandum simply noted
that various exhibits were attached, and cited those attachments
without any discussion of why doing so would be permissible.10
Precedent emphasizes that the exceptions the plaintiffs seek to
invoke are "narrow," and the district court did not abuse its
discretion by declining to maneuver the attachments into those
exceptions without assistance from the plaintiffs. Freeman, 714
F.3d at 36 (quoting Watterson, 987 F.2d at 3); see id. at 37(treating as waived any argument that a document fit into the
"narrow exceptions" because the party advancing the document
failed to make such an argument).
Further, the plaintiffs have offered no persuasive
reason why the attachments could not have been submitted with the
complaint or included in a proposed amended complaint. See
Bates v. Green Farms Condo. Ass'n, 958 F.3d 470, 483 (6th Cir.
2020) ("If plaintiffs believe that they need to supplement their
complaint with additional facts to withstand . . . a motion to
10 The district court heard oral argument on the motion to
dismiss; the record does not contain any transcript of this
argument, but the plaintiffs do not claim to have raised the
exceptions they now invoke during that proceeding. The plaintiffs
did assert in a footnote in their memorandum opposing Hirshon and
LOSU's motion for final judgment that the district court could
have considered one of the attachments as a public record. But
this memorandum was filed after the district court ruled on the
motion to dismiss, and the plaintiffs did not move the district
court to reconsider the dismissal.
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dismiss[], they have a readily available tool: a motion to amend
the complaint under Rule 15."); Zomolosky v. Kullman, 640 F. App'x
212, 218 n.2 (3d Cir. 2016) (unpublished decision) (finding no
abuse of discretion where district court declined to take judicial
notice of SEC filings that plaintiff had been "free to include" in
complaint). The plaintiffs respond that "[t]he [complaint] was
lengthy and already had numerous attachments without trying to
anticipate how it might be defended." But while a complaint need
not anticipate every possible defense a defendant might raise,
see, e.g., Jones v. Bock, 549 U.S. 199, 211-12 (2007), it "must
contain sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face'" as to each
defendant, Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at
570). The district court merely held the plaintiffs to that
burden, and we follow its lead. See Trans-Spec Truck Serv., Inc.
v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (explaining
that, in reviewing a dismissal under Rule 12(b)(6), this court
"review[s] only those documents actually considered by the
district court . . . unless we are persuaded that [the district
court] erred in declining to consider the proffered documents").
C.
In the end, this appeal turns on whether the district
court abused its discretion by denying "limited discovery" against
Hirshon before dismissing the plaintiffs' claims. This court has
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identified two circumstances in which a district court considering
a motion to dismiss under Rule 12(b)(6) might appropriately permit
limited discovery. This case does not fall into either category.
First, a line of cases beginning with New England Data
Services, Inc. v. Becher, 829 F.2d 286 (1st Cir. 1987), recognizes
that, where a complaint "specifically set[s] out a general scheme
to defraud" but (1) the complaint falls short of pleading a claim
with the heightened particularity required by Rule 9(b) and (2)
the missing information is "peculiarly within [the] defendants'
knowledge," a district court may have discretion to allow the
plaintiffs limited discovery to uncover the missing details. Id.
at 292; see id. at 290-92. In Becher, for example, the complaint,
which alleged a RICO claim based on predicate acts of mail and
wire fraud, was deficient only because it did not set forth in
detail the "time, place[,] and content" of the underlying mailings
or wirings. Id. at 291; see id. at 290-92; see also N. Bridge
Assocs., Inc. v. Boldt, 274 F.3d 38, 43-44 (1st Cir. 2001)
(discussing Becher). This court has never applied Becher in a
case, like this one, where the complaint fell short not only of
Rule 9(b)'s heightened particularity requirements but also of the
ordinary plausibility standard. See Home Orthopedics Corp. v.
Rodríguez, 781 F.3d 521, 532 (1st Cir. 2015) (rejecting application
of Becher where complaint did not meet plausibility standard);
Boldt, 274 F.3d at 43-44 (similar). Because "it is not simply the
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details [the plaintiffs] lack, but the substance of a RICO claim,"
Boldt, 274 F.3d at 44, Becher discovery is unwarranted.
Second, this court held in Menard v. CSX Transportation,
Inc., 698 F.3d 40 (1st Cir. 2012), that limited discovery may be
appropriate where "a plausible claim may be indicated [by the
plaintiff's allegations,] . . . 'information needed [to flesh out
the allegations before trial] may be in the control of [the]
defendants,'" and "modest discovery may provide the missing link."
Id. at 45 (third alteration in original) (quoting Pruell v. Caritas
Christi, 678 F.3d 10, 15 (1st Cir. 2012)). The plaintiff in Menard
alleged that he had been injured twice while trespassing in a
railyard operated by the defendant -- first by having his foot
crushed by a moving segment of track, then by being hit by a
train -- and that the defendant's employees had failed to prevent
the second injury despite being aware of the first. See id. at
41-42, 44. This court explained that, although the plaintiff had
not provided detailed allegations about the defendant's employees'
activities, "one might not expect precise recollection from a man
badly injured by a switched track and shortly thereafter hit and
dragged under [a] train." Id. at 45. Critically, the plaintiff
had made general allegations about those employees on "information
and belief" and described his own actions, and the defendant was
better positioned to supply the missing information than was the
plaintiff. Id. at 41-42, 44-45.
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Later cases have read Menard as indicating that "'some
latitude may be appropriate' in applying the plausibility
standard" and authorizing discovery where "a material part of the
information needed is likely to be within the defendant's control,"
and that "the plausibility inquiry properly takes into account
whether discovery can reasonably be expected to fill any holes in
the pleader's case." García-Catalán v. United States, 734 F.3d
100, 104 (1st Cir. 2013) (quoting Menard, 698 F.3d at 45); accord
Saldivar v. Racine, 818 F.3d 14, 23 (1st Cir. 2016).
The complaint in this case falls well short of justifying
discovery under Menard. As explained above, the complaint does
not come close to plausibly alleging that Hirshon or LOSU knowingly
joined a RICO conspiracy. It supplies virtually no information
about the nature, timing, or extent of their alleged participation
in the conspiracy. Nor does the complaint give shape to its claims
through allegations made on information and belief, as in Menard.
See 698 F.3d at 44-45; see also Saldivar, 818 F.3d at 23(discussing Menard). Given the near-total lack of information, we
cannot say that "a plausible claim may be indicated" by the
complaint or that there is information likely to be under the
defendants' control that would "provide the missing link." Menard,
698 F.3d at 45. As the district court correctly concluded, there
is simply too wide a "gap between the allegations in the complaint
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and a plausible claim" for discovery to be appropriate. Saldivar,
818 F.3d at 23.
We reject the plaintiffs' contention that, in
considering the motion for limited discovery, the district court
should have looked beyond the complaint and considered the
attachments to the memorandum opposing the motion to dismiss.
Cases following both Becher and Menard have focused specifically
on the allegations contained in the complaint (or a proposed
amended complaint). See, e.g., Boldt, 274 F.3d at 44 (examining
"allegations" in "complaint" in holding Becher discovery
unwarranted); Becher, 829 F.2d at 292 (focusing on "the strength
of [the] plaintiff's allegations" in the complaint); Parker v.
Landry, 935 F.3d 9, 18-19 (1st Cir. 2019) (citing Menard, 698 F.3d
at 45) (assessing whether allegations in proposed amended
complaint were sufficiently plausible to permit discovery);
García-Catalán, 734 F.3d at 104-05 (examining "what the
[plaintiff] . . . set forth in her complaint" when applying
Menard). This focus makes good sense, as both Becher and Menard
concerned the plaintiff's compliance with pleading requirements.
See Becher, 829 F.2d at 292 (examining compliance with Rule 9(b));
Menard, 698 F.3d at 45 (examining compliance with plausibility
standard). Nor does this approach impose an unreasonable burden
on the plaintiffs, who were free to seek to amend their complaint
to include the attachments but failed to do so. Cf. Bates, 958
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F.3d at 483 (explaining that a plaintiff can "readily" supplement
a complaint through a motion to amend). The district court
properly considered the material before it with respect to the
motion to dismiss when ruling on the plaintiffs' discovery motion.
We also reject the plaintiffs' argument that a plaintiff
confronted with a Rule 12(b)(6) motion is entitled to discovery
unless the record shows that "there is no means of pleading the
claim well." On the contrary, this court has emphasized that the
burden is on the plaintiff to "allege[] 'enough fact[s] to raise
a reasonable expectation that discovery will reveal evidence' of
[an] actionable [claim]." Parker, 935 F.3d at 18 (second
alteration in original) (quoting Twombly, 550 U.S. at 556); see
also Boldt, 274 F.3d at 44 (explaining that Becher discovery is
appropriate only where the complaint's allegations "render[] it
likely" that discovery would uncover necessary details). This
burden reflects the fact that "[o]ne of the main goals of the
plausibility standard is the avoidance of unnecessary discovery."
Ríos-Campbell v. U.S. Dep't of Com., 927 F.3d 21, 26 (1st Cir.
2019) (quoting Grajales v. P.R. Ports Auth., 682 F.3d 40, 46 (1st
Cir. 2012)); see Schatz, 669 F.3d at 56. The plaintiffs' approach
would undermine that goal by requiring discovery in a broad set of
cases where the pleadings offer no reason to think discovery is
worthwhile.
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The district court properly denied the plaintiffs'
motion for limited discovery.
III.
For the foregoing reasons, we affirm.
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