Salik Rao v. BP Products North America, Inc

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-2065
S ALIK R AO,
Plaintiff-Appellant,
v.
BP P RODUCTS N ORTH A MERICA, INC., et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 04 C 6040—Joan B. Gottschall, Judge.
A RGUED A PRIL 18, 2008—D ECIDED D ECEMBER 9, 2009
Before B AUER, F LAUM, and W ILLIAMS, Circuit Judges.
W ILLIAMS, Circuit Judge. After BP Products North
America, Inc. (“BP”) determined that Salik Rao had
secretly paid a BP manager to influence the award of
operating agreements in Rao’s favor, BP told Rao it was
terminating its franchise relationship with him at his
two BP gas stations. Rao maintains that BP failed to
give him timely notice of early termination as required
by the Petroleum Marketing Practices Act. We conclude
that BP acquired knowledge of Rao’s failure to comply
2 No. 07-2065
with a franchise provision when Rao stopped cooperating
with BP’s investigation, so the notice was timely. Rao
had maintained all along that he had been the victim
of extortion, and BP reasonably decided to continue
investigating instead of immediately terminating the
franchise. Summary judgment was also proper on Rao’s
breach of contract claim because the franchise agree-
ment allowed for early termination upon the com-
mission of any fraudulent act. We further affirm the
dismissal of Rao’s claims under the Racketeer Influenced
and Corrupt Organizations Act (“RICO”) and for common-
law fraud because the allegations in the complaint did
not sufficiently state a claim on either count. As a
result, we affirm the judgment of the district court.
I. BACKGROUND
In accordance with a local rule, the district court justifi-
ably deemed the factual assertions in BP’s Rule 56.1(a)
Statement in support of its motion for summary judg-
ment admitted because Rao did not respond to the state-
ment. See N.D. Ill. R. 56.1(b)(3)(C) (“All material facts
set forth in the statement required of the moving party
will be deemed to be admitted unless controverted by
the statement of the opposing party.”); Cracco v. Vitran,
Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009); Raymond v.
Ameritech Corp., 442 F.3d 600, 608 (7th Cir. 2006). We
recount the narrative that follows with that in mind.
Salik Rao began operating as a BP dealer in 1992. The
twelve or so BP gas stations he has operated include the
two relevant in this case: a station in Morton Grove, Illinois
No. 07-2065 3
and another in Franklin Park, Illinois. Rao began operating
the Morton Grove station in 1997 and the Franklin Park
station in 1999. Stephen Yarr was a BP regional sales
manager until he was fired in November 2003. As the
regional sales manager, Yarr had significant control over
the award of franchises and dealerships in Chicago’s
northern and western suburbs.
From 1993 to 2003, Rao paid Yarr approximately
$100,000 in cash and gifts, including a computer, big-
screen television, and other electronics—all in an attempt
to influence decisions regarding BP franchises. During
that time, Yarr allowed Rao to purchase interests in two
downtown Chicago stations at a good price, and Rao
secretly gave Yarr an interest in the stations. One was
sold about eighteen months after Rao purchased it for
a profit of over $1 million.
In 1997, Rao purchased a BP station in Wilmette, Illinois.
Although BP did not know it at the time, Rao and Paige
Thomason, a BP area representative, each put up half
the purchase price for the station. As a BP employee,
however, Thomason was prohibited from owning an
interest in any BP station. To get around this ban, Rao
agreed to form a corporation for the acquisition that
fronted Brad Schumacher, Thomason’s husband, as its
corporate officer. After Thomason stopped working for
BP, Rao agreed to sell his interest in the Wilmette station
to her. Concerned that BP might exercise its right of first
refusal, Thomason and Rao submitted a false letter of
intent to BP that represented the station’s purchase price
and value at $700,000 when it was actually worth only
4 No. 07-2065
$500,000. BP did not exercise its right of first refusal,
and Thomason bought Rao’s interest in the station
for $250,000.
Rao also introduced his cousin, Ateeq Khan, to Yarr
while Yarr was the BP regional sales manager. Rao ar-
ranged for Khan to meet Yarr in connection with a
BP station in Lockport, Illinois. Khan admitted that he
negotiated a payment of $10,000 to Yarr related to the
sale of the Lockport station before the FBI became
involved in an investigation into money and gifts given
to Yarr.
Although Rao knew the money and gifts he was pro-
viding to Yarr were improper, he did not say anything
to anyone at BP until the summer of 2003. That summer,
Rao told Yarr’s boss that he was having problems with
Yarr. BP then had Rao meet with its regional security
advisor, Ronald Benhart. During a meeting in August
2003, Rao told Benhart that he and other dealers had
provided gifts and benefits to Yarr over a long period of
time, and that he had been extorted by Yarr. In response
to the allegation of extortion, Benhart began an internal
investigation that had Yarr as its principal focus. Benhart
asked Rao to provide any documentation or evidence
he had to substantiate his allegations. Benhart also con-
tacted the FBI in August 2003 and asked for its coopera-
tion in the investigation. On November 7, 2003, with
Rao’s cooperation, the FBI conducted a sting in which
Rao paid Yarr $10,000. That month, Benhart conducted
multiple interviews with Yarr, and Yarr admitted that
he had received money and gifts for facilitating transac-
tions with dealers. BP fired Yarr on November 17, 2003.
No. 07-2065 5
The termination of Yarr’s employment did not end BP’s
investigation. Benhart continued to investigate after
November 2003, and he did so because Rao was still
maintaining that Yarr had coerced him into providing
benefits. On November 4, 2003, Rao gave Benhart a
seventeen-page statement listing and explaining the gifts
he gave to Yarr. The statement repeated his assertion
that he had been the victim of Yarr’s extortion. There-
fore, Benhart continued to seek any evidence of extortion.
To that end, he also continued to contact Rao in an
attempt to set up meetings. Rao stated that he would
meet with Benhart, although he did not do so after the
fall of 2003. Benhart last spoke with Rao in May or June
of 2004, and Rao’s attorney told Benhart in June that
Rao would no longer cooperate with BP’s investigation.
After Benhart was told that Rao would not cooperate
any further, Benhart informed BP management that no
further information would be forthcoming from Rao. BP
management then made the decision to end its relation-
ship with Rao. On July 14, 2004, BP notified Rao via
letter that effective October 15, 2004, it was ending its
franchise relationship with him because it concluded
that he had engaged in bribery and fraud. It sent
similar letters to other dealers who had been involved in
comparable activities with Yarr. At the time, Rao was
operating two BP stations under franchise agreements,
one in Morton Grove with an agreement that expired in
2005, and another in Franklin Park that expired in 2006.
BP subsequently extended the effective date of its termina-
tions until December 13, 2004, then to February 18, 2005,
and then to May 2, 2005, to allow Rao more time to sell
6 No. 07-2065
his interests in the Morton Grove and Franklin Park
stations.
Rao filed suit in federal court against BP, Yarr,
Thomason, and Schumacher alleging Petroleum
Marketing Practices Act (“PMPA”), RICO, fraud, breach of
contract, and extortion claims. After Rao filed a motion for
a preliminary injunction to enjoin BP from terminating his
franchises, a magistrate judge conducted a four-day
evidentiary hearing. The magistrate judge recommended
denying Rao’s motion because “Rao was actively engaged
in bribery and fraud” and “BP acted in good faith and was
justified in terminating Rao as a BP dealer.” The district
court agreed and denied the preliminary injunction
motion. It later granted the defendants’ motion to
dismiss Rao’s RICO, fraud, and breach of contract claims
and granted the defendants’ motion for summary judg-
ment on the remaining claims. Rao appeals.
II. ANALYSIS
A. Notice Timely Under Petroleum Marketing Practices
Act
Rao maintains that the notice BP gave that it was
ending its relationship with him was not timely under
the PMPA. We review the district court’s grant of sum-
mary judgment on this issue de novo. See Breneisen v.
Motorola, Inc., 512 F.3d 972, 977 (7th Cir. 2008). Summary
judgment is proper where there is no genuine issue of
material fact and the moving party is entitled to judg-
ment as a matter of law. Fed. R. Civ. P. 56(c); Hobbs v. City
of Chi., 573 F.3d 454, 460 (7th Cir. 2009).
No. 07-2065 7
The PMPA prohibits a franchisor from terminating a
motor fuel franchise prior to the completion of its term
unless the franchisor does so: (1) on the basis of a
ground provided in the statute, and (2) with the notice
the statute requires. 15 U.S.C. § 2802(a); Jet, Inc. v. Shell Oil
Co., 381 F.3d 627, 629 (7th Cir. 2004). In doing so, the
statute protects gas station franchisees from the
arbitrary termination or nonrenewal of their franchises
by large corporations, as well as from the threat of termina-
tion or nonrenewal. See Marcoux v. Shell Oil Prods. Co.
LLC, 524 F.3d 33, 39 (1st Cir. 2008) (citing S. Rep. No. 95-
731, at 17-19 (1978)); DuFresne’s Auto Service, Inc. v. Shell
Oil Co., 992 F.2d 920, 925 (9th Cir. 1993). The PMPA
provides a civil cause of action for motor fuel franchisees
terminated or not renewed in violation of its provisions.
15 U.S.C. § 2805; Rawoof v. Texor Petroleum Co., 521 F.3d
750, 755 (7th Cir. 2008).
Although the PMPA generally prohibits the early
termination of a franchise, there are exceptions. Two of
the exceptions are particularly relevant here. The
PMPA allows early termination when there has been a
“failure by the franchisee to comply with any provision
of the franchise, which provision is both reasonable and
of material significance to the franchise relationship . . . .”
15 U.S.C. § 2802(a)(2)(A). Another ground for early termi-
nation is “[t]he occurrence of an event which is relevant
to the franchise relationship and as a result of which
termination of the franchise . . . is reasonable . . . .” 15
U.S.C. § 2802(a)(2)(C). The PMPA specifically lists “fraud
or criminal misconduct by the franchisee relevant to the
operation of the marketing premises” as an event falling
within the latter provision. 15 U.S.C. § 2802(b)(2)(C).
8 No. 07-2065
On appeal, Rao does not contest that BP had the
requisite cause to end its relationship with him. Engaging
in fraud against BP related to franchise award and pur-
chase was relevant to the franchise relationship, and
termination on that account was reasonable. See
Humboldt Oil Co. v. Exxon Co., U.S.A., 695 F.2d 386, 389 (9th
Cir. 1982) (“Good faith belief of the franchisor that the
franchisee is untrustworthy or engages in fraudulent
practices undermines the entire franchise relationship.”).
Rao paid Yarr six figures worth of cash and gifts to influ-
ence the award of gas stations to him, including the
Morton Grove and Franklin Park stations at issue in this
case. He made payments to Yarr that allowed him to get
a good price for two downtown service stations, and he
secretly made Yarr a partner in those stations. Rao also
secretly made Thomason a partner in another station
while she was a BP employee prohibited from having an
interest in a BP station and used her husband as a straw
owner. Rao then sold his interest in it to her after she
stopped working for the company. Rao and Thomason
even submitted a false letter of intent that inflated the
purchase price in a successful attempt to deter BP from
exercising its right of first refusal. BP certainly had
grounds under the statute to end its relationship with Rao.
Rather than arguing that BP’s basis for termination
was insufficient, Rao’s argument on appeal is that the
notice he received was untimely under the PMPA. Pursu-
ant to the PMPA provisions applicable here, a franchisor
must give notice of early termination within 120 days
of when it “first acquired actual or constructive knowl-
edge” of the failure to comply with a material franchise
No. 07-2065 9
provision. 15 U.S.C. § 2802(b)(2)(A)(i), (b)(2)(C)(i). This
time limitation aims to prevent franchisors from basing
termination upon “old and long forgotten events” while
still giving the franchisor adequate time to evaluate the
events or to work with the franchisee to correct the sit-
uation. Brach v. Amoco Oil Co., 677 F.2d 1213, 1217 n.2
(7th Cir. 1982).
BP informed Rao on July 14, 2004 that it would be
ending its relationship with him. Rao argues that BP first
acquired knowledge of his failure to comply with a fran-
chise provision in November 2003, well over 120 days
before BP’s notification. He therefore maintains that
BP’s notice was untimely. BP, on the other hand, contends
that it acted reasonably when it continued to investigate
while Rao was cooperating and maintaining he was a
victim of extortion, and that it gave timely notice after
Rao stopped cooperating with the investigation and
BP concluded he was not in fact an extortion victim.
We find the Second Circuit’s discussion in Nassau
Boulevard Shell Service Station, Inc. v. Shell Oil Co., 875 F.2d
359 (2d Cir. 1989), instructive. There, a Shell franchisee
argued that the PMPA’s 120-day clock should have
started ticking when another Shell station operator in-
formed Shell that the franchisee had used a credit card not
belonging to him at another Shell station. A few months
later, Shell learned that the franchisee had been arrested
on suspicion of alleged credit card improprieties. Shell
conducted further investigation after learning of the
arrest. It decided not to terminate the franchise upon a
mere arrest since the franchisee had not been convicted of
10 No. 07-2065
any crime, and Shell conducted a series of conversations
with the franchisee’s counsel. Two months after the
arrest, in a meeting with Shell, the franchisee admitted he
was embarrassed by the credit card incident and that
he was undergoing therapy. Within 120 days of that
meeting, Shell gave notice of its intent to terminate the
franchise. Id. at 361.
Although the franchisee argued that Shell “first
acquired actual or constructive knowledge” of his failure
to abide by the terms of his franchise agreement when
Shell first learned of the allegations regarding misuse of
a credit card, the Second Circuit held that Shell did not
acquire the knowledge contemplated by section 2802 of
the PMPA until its meeting with the franchisee. Id. at 362.
It reasoned that starting the 120-day clock as soon as a
franchisor hears an allegation of impropriety was incon-
sistent with Congress’s intent when it passed the PMPA:
In passing the PMPA, Congress intended to pro-
mote, if not mandate, this type of careful approach
to termination by franchisors. The practice of such
discretion, restraint, and prudence goes a long way
toward prevention of arbitrary terminations . . .
based on idle rumor and baseless allegations.
Id. The Sixth Circuit has also agreed with the Second
Circuit’s reasoning, stating that “the PMPA was not
intended to induce [the franchisor] to terminate [the]
franchise summarily upon the first suspicion of wrongdo-
ing.” Geib v. Amoco Oil Co., 29 F.3d 1050, 1056 (6th Cir.
1994); see also Desfosses v. Wallace Energy, Inc., 836 F.2d 22,
29 (1st Cir. 1987).
No. 07-2065 11
We agree that the PMPA does not necessarily require a
franchisor to give notice of termination upon the first
hint that something might be amiss. That is especially true
here. In November 2003, when Rao argues BP “first
acquired actual or constructive knowledge” of his noncom-
pliance, Rao was still maintaining that Yarr had extorted
him. That month Rao gave Benhart a seventeen-page
statement listing the gifts he gave to Yarr, and Rao’s
statement very clearly expressed the view that he had
been the victim of Yarr’s extortion. During multiple
interviews with Yarr, however, Yarr told BP that he
received money and gifts that dealers voluntarily gave
him in exchange for his assistance in facilitating transac-
tions.
Benhart therefore had two conflicting stories before
him in November 2003. Rao said Yarr had been extorting
him, while Yarr said Rao paid the money willingly in
exchange for favorable treatment. Benhart made the
reasonable decision to continue his investigation. He
continued to contact Rao to set up meetings, and Rao
said he would meet with Benhart. Rao had maintained
all along that he was the victim of extortion—in August
2003 when he met with Benhart and said he had been
extorted, in November 2003 when he argues the clock
should have started to run, and even during the prelimi-
nary injunction hearing before the district court in this
case. Rao never admitted he had engaged in wrongdoing.
In these circumstances, BP acted reasonably when it
continued to investigate before it made the termination
decision.
12 No. 07-2065
Under Rao’s rule, although the PMPA’s notice require-
ment is in place largely to protect franchisees, a franchisor
would need to terminate the franchise upon the mere
suspicion that its franchisee was not acting honorably.
But “[a]n interpretation of section 2802 which fosters
termination based on rumor or suspicion surely does not
afford the protection from arbitrary and discriminatory
terminations that Congress intended.” Nassau Blvd., 875
F.2d at 362. Of course, there could come a time when a
franchisor’s purported investigation lasts an unrea-
sonable amount of time. There is no indication here,
however, that BP dragged its feet or acted unreasonably
during its investigation, especially since Rao had not
admitted that he had engaged in bribery. Rao told Benhart
in June 2004 that he would no longer cooperate with BP’s
investigation. BP m anagem ent con cluded soon
afterwards that Rao had engaged in bribery and fraud, and
it notified him on July 14, 2004, less than 120 days later, of
its intent to terminate the franchise relationship. We
conclude that BP acquired the knowledge contemplated
by sections 2802(b)(2)(A) and (b)(2)(C) when Rao said he
would not cooperate with BP’s investigation any longer
and that the notice BP gave was therefore timely.
In light of our decision, we need not address whether the
PMPA applies to the Morton Grove station. Rao maintains
that it does, while BP argues that the type of agreement
in place at that station falls outside the scope of the
PMPA and therefore outside its notice requirements.
Even if the PMPA applied to the Morton Grove station as
Rao argues, summary judgment on the PMPA claim
was proper because the notice was timely.
No. 07-2065 13
B. Summary Judgment Proper on Breach of Contract
Claims
Rao also maintains that his breach of contract claims
should proceed past summary judgment. He contends that
the district court erred when it concluded that the PMPA
preempted his breach of contract claim regarding the
Franklin Park station. Even if Rao were correct in that
regard, however, he has not demonstrated that summary
judgment in BP’s favor in his breach of contract claim
was incorrect.
Rao maintains that BP breached the contract it
had with him regarding the Franklin Park station by
terminating its relationship with him without good
cause and for arbitrary, discriminatory, and retaliatory
reasons; for violations that did not relate to the station;
and by refusing to approve a buyer for the Franklin Park
station. The Franklin Park franchise agreement contains
a specific provision, though, allowing BP to terminate its
relationship with Rao upon the “[c]ommission . . . of any
deceptive, fraudulent, illegal, immoral, or other
improper act relevant to the operation of the business on
the Facility which is detrimental to [BP Products] . . . .” As
we discussed, the undisputed facts reflect that Rao en-
gaged in fraudulent activities relevant to the operation
of the station, namely paying off Yarr in exchange for
favorable treatment. Therefore, summary judgment
was proper on Rao’s breach of contract claim.
14 No. 07-2065
C. Dismissal of RICO Claims Proper
Rao also appeals the dismissal of the RICO claims he
asserted in his complaint against BP (referred to as Amoco
in the complaint), Yarr, Thomason, and Schumacher. The
district court granted the defendants’ motion to dismiss
the RICO claims for failure to state a claim upon which
relief could be granted. Our review of the grant of a
motion to dismiss is de novo, and our inquiry asks
whether the plaintiff has provided allegations that “raise
a right to relief above the speculative level” and “state a
claim to relief that is plausible on its face.” Bell Atlantic
Corp. v. Twombly, 550 U.S. 554, 550, 570 (2007); see also
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-53 (2009).
Rao’s complaint purported to allege several RICO counts.
He listed a claim for violation of 18 U.S.C. § 1962(a), which
prohibits the use or investment of income in an
enterprise that was derived from a pattern of racketeering
activity. A section 1962(a) claim requires a showing that
a defendant: (1) received income from a pattern of racke-
teering activity; (2) used or invested that income in the
operation of an enterprise; and (3) caused the injury
complained of by the use or investment of racketeering
income in an enterprise. Vicom, Inc., v. Harbridge Merch.
Servs., Inc., 20 F.3d 771, 778 n.6 (7th Cir. 1994). Rao’s
complaint merely restates the elements of section 1962(a)
in boilerplate fashion and contains no suggestion that
money was used or invested in the operation of an enter-
prise or that he suffered an injury caused by the use or
investment of racketeering income. Accordingly, the
district court properly dismissed this claim. See Twombly,
No. 07-2065 15
550 U.S. at 555 (complaint must allege more than “a
formulaic recitation of the elements of a cause of action” to
survive a motion to dismiss).
Rao’s complaint also invoked 18 U.S.C. § 1962(c), which
makes it
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.
A claim under section 1962(c) therefore requires a
plaintiff to demonstrate (1) conduct (2) of an enterprise
(3) through a pattern (4) of racketeering activity. Vicom,
Inc., 20 F.3d at 778.
The defendants maintain that the complaint fails to
state a claim for several reasons, including that it fails to
allege an enterprise. The RICO statute defines an “enter-
prise” to include “any individual, partnership, 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). At issue here is the
“association-in-fact” type of enterprise. After oral argu-
ment in this case, the Supreme Court accepted certiorari
on the question of whether, in order to establish an
association-in-fact enterprise, there must be some
showing of an ascertainable structure beyond that
inherent in the pattern of racketeering activity in which it
16 No. 07-2065
engages. Boyle v. United States, 129 S. Ct. 29 (2008) (granting
writ of certiorari). The Supreme Court held in Boyle that an
association-in-fact enterprise under RICO must have a
“structure,” although the jury need not receive
an instruction in these terms. Boyle v. United States, 129
S. Ct. 2237, 2241 (2009). The Court wrote 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 2244. However, it clarified that RICO
enterprises are not limited to “business-like entities” and
that they need not have a hierarchical structure or a “chain
of command.” Id. at 2246; cf. Limestone Dev. Corp. v. Vill. of
Lemont, Ill., 520 F.3d 797, 804 (7th Cir. 2008).
A section 1962(c) claim also requires that there be a
“pattern” of racketeering activity, which is an element
distinct from the enterprise requirement. Boyle, 129 S. Ct.
at 2245. The compensable harm in a cause of action
under section 1962(c) “necessarily is the harm caused by
predicate acts sufficiently related to constitute a pattern, for
the essence of the violation is the commission of those
acts in connection with the conduct of an enterprise.” Anza
v. Ideal Steel Supply Corp., 547 U.S. 451, 457 (2006) (quoting
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985))
(emphasis added).
With these principles in mind, we turn to the
complaint in this case. When the district court granted
the motion to dismiss the RICO counts, it noted that
many of the elements of the RICO claims were set forth
No. 07-2065 17
in boilerplate fashion. It also wrote that the amended
complaint alleged violations of three different RICO
subsections in the same count and did not provide any
time frame for the events in question in that count. The
district court further noted in its opinion that Rao had
indicated a desire to include additional acts and to
clarify certain allegations and so for that reason it
would not detail all of the RICO counts’ pleading deficien-
cies. Although the defendants did not file their motion
for summary judgment until six months later, Rao
did not further amend his complaint, and Rao’s counsel
on appeal acknowledges that the RICO counts “could
have been pleaded more artfully.”
Rao does not contest the district court’s determination
that the statute of limitations bars consideration of acts
before September 16, 2000. The allegations in his com-
plaint that he maintains are sufficient to state a claim for
violation of section 1962(c) are: (1) Yarr, Thomason, and
Schumacher forced Rao to sell his share of a station to
Thomason at a false price, under the threat that he
would lose his other franchises if he did not, Am. Compl.
¶ 20(e); (2) after Rao spoke with the FBI, unnamed “[BP]
employees” told Rao his franchises would be terminated
if he sought help, Am. Compl. ¶ 20(g); and (3) BP allowed
Yarr to force Rao into purchasing two parcels of its land
so that BP would not have to purchase the gas stations
he maintained at fair market value, under the threat of
increased costs and the loss of his business if he
refused, Am. Compl. ¶ 20(j).
It is difficult to see an enterprise with a structure that
engaged in a pattern of racketeering activity from these
18 No. 07-2065
allegations. Even though the Supreme Court has now
made clear that the “structure” requirement can be satis-
fied in ways other than by demonstrating a business-like
entity and that enterprise participants can come and go,
an association-in-fact enterprise still requires a showing
of a “group of persons associated together for a common
purpose of engaging in a course of conduct.” Boyle, 129
S. Ct. at 2243 (citing United States v. Turkette, 452 U.S. 576,
583 (1981)). The allegations to which Rao points, however,
contain different actors for each event—Yarr, Thomason,
and Schumacher in one instance; different unnamed BP
employees in another; and then the company (and possibly
Yarr) in the third. These allegations do not indicate
how the different actors are associated and do not
suggest a group of persons acting together for a common
purpose or course of conduct. See Stachon v. United Consum-
ers Club, Inc., 229 F.3d 673, 676 (7th Cir. 2000) (upholding
dismissal of RICO claim that failed to show the acts
complained of were “the work of an organization, how-
ever loose-knit”). The allegations to which Rao points
also fail to set forth a pattern of related acts in connection
with an enterprise’s conduct. For example, in the first
allegation at issue, individuals stood to benefit if Rao
sold his share of a gas station, while the third alleges
that a large corporation did not want to buy property at
fair market value. Rao had plenty of time to amend his
complaint and did not do so, and we decline to overturn
the district court’s dismissal of this count for failure
to state a claim.
Finally, Rao’s claim also invoked 18 U.S.C. § 1962(d),
which prohibits a conspiracy to violate any other RICO
No. 07-2065 19
provision. In a manner similar to his section 1962(a) claim,
Rao’s complaint only recited generically that the defen-
dants had “conspired to violate 18 USCA 1962(a), 18
USCA 1962(b) and/or 18 USCA 1962(c).” He does not
develop an argument that the dismissal of the claim
containing only boilerplate allegations was improper, cf.
Twombly, 550 U.S. at 555, and we affirm the dismissal
of that claim as well.
D. Dismissal of Fraud Claim Proper
Finally, we address the dismissal of Rao’s state-law fraud
claim. Federal Rule of Civil Procedure 9(b) requires that
fraud claims be pled with particularity. See DiLeo v.
Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). This means
the “who, what, when, where, and how” of the alleged
fraud. Id. Rao makes a brief argument on appeal that the
following allegations in his complaint sufficiently pled a
fraud claim: (1) Yarr told Rao that he must sell the
Wilmette gas station to Thomason, must pay Yarr $10,000,
and would lose his leases in other stations if he refused,
and (2) Yarr told Rao that if he refused to exercise his
right of first refusal to purchase certain land, Yarr
would make sure all of his leases at other locations were
terminated and put him out of business. The defendants
argue that the allegations do not specify the “when” and
“where” of the alleged fraud.
Even if that information can be gathered by cobbling
together allegations in other parts of the complaint,
upholding the dismissal is proper for another reason. A
typical element of fraud under Illinois law is that the
20 No. 07-2065
defendant made a false statement of material fact,
Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004), and
Rao’s complaint does not allege a false statement of a
material fact. Illinois does recognize a promissory fraud
claim, but it requires that “when the promise was
made, the promisor had no intent to fulfill it; if the
promisor simply later changed his mind, an action for
fraud will not lie.” Ass’n Ben. Servs. Co. v. Caremark RX, Inc.,
493 F.3d 841, 853 (7th Cir. 2007); see also Byung Moo Soh
v. Target Mktg. Sys., 817 N.E.2d 1105 (Ill. App. Ct. 2004)
(“ ‘Promissory fraud’ is a form of fraud based upon a
false representation of intent concerning future conduct,
e.g., a promise to perform a contract where there is
actually no intent to perform the contract.”). That is, a
fraud claim requires that “at the time the allegedly
fraudulent statement was made, it was an intentional misrep-
resentation.” Caremark RX, 493 F.3d at 853. No such
allegation exists here either, nor does Rao argue to the
contrary. He also does not contend there was a scheme
to defraud him. The motion to dismiss Rao’s fraud claim
was properly dismissed as well.
III. CONCLUSION
The judgment of the district court is A FFIRMED.
12-9-09