Kevin Doan v. Nirmal Singh

FILED
NOT FOR PUBLICATION JUN 12 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN DOAN, et al., No. 13-16980
Plaintiffs - Appellants, D.C. No. 1:13-cv-00531-LJO-SMS
v.
MEMORANDUM*
NIRMAL SINGH, et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Eastern District of California
Lawrence J. O’Neill, District Judge, Presiding
Submitted May 15, 2015**
San Francisco, California
Before: PAEZ and CLIFTON, Circuit Judges, and DUFFY, District Judge.***
Plaintiffs Kevin and Pauline Doan filed a complaint in the Eastern District of
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Kevin Thomas Duffy, District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
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California alleging a RICO claim and various state law claims.1 Plaintiffs’ claims
related to failed gas station development investments in companies controlled by or
associated with the individual Defendants. Plaintiffs appeal the district court’s
order dismissing their complaint for failure to state a claim pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure and an order denying Plaintiffs
further leave to amend their first amended complaint. We have jurisdiction
pursuant to 28 U.S.C. § 1291 and we affirm the judgment of the district court.
“We review de novo a dismissal for failure to state a claim under Rule
12(b)(6).” Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007) (en banc).
We accept as true all factual allegations in the complaint and draw all reasonable
inferences in favor of the nonmoving party. Retail Prop. Trust v. United Bhd. of
Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). A complaint
need not state “detailed factual allegations,” but it must contain sufficient factual
matter to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555, 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.” Ashcroft v.
1
Plaintiffs have waived review of the district court’s decision not to
exercise supplemental jurisdiction over the complaint’s state law claims by failing
to argue the issue in their briefing. See Fed. R. App. P. 28(a)(8); Christian Legal
Soc’y Chapter of Univ. of Cal. v. Wu, 626 F.3d 483, 487 (9th Cir. 2010).
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Iqbal, 556 U.S. 662, 678 (2009).
To state a claim under the civil RICO statute, 18 U.S.C. § 1962(c), “a
plaintiff must allege ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.’” Odom, 486 F.3d at 547 (quoting Sedima, S.P.R.L. v. Imrex
Co., 473 U.S. 479, 496 (1985)). “In addition, the conduct must be (5) the
proximate cause of harm to the victim.” Eclectic Props. E., LLC v. Marcus &
Millichap Co., 751 F.3d 990, 997 (9th Cir. 2014) (citing Sedima, S.P.R.L., 473
U.S. at 496–97). A “‘pattern of racketeering activity’ requires at least two acts of
racketeering activity . . . .” 18 U.S.C. § 1961(5). “‘[R]acketeering activity’ is any
act indictable under several provisions of Title 18 of the United States Code . . . .”
Sanford v. MemberWorks, Inc., 625 F.3d 550, 557 (9th Cir. 2010) (internal citation
omitted).
Here, Plaintiffs claimed mail, wire, and bank fraud as RICO predicates.2 See
Sanford, 625 F.3d at 557; see also 18 U.S.C. § 1961(1). RICO fraud allegations
are subject to the heightened pleading standard of Rule 9(b) of the Federal Rules of
Civil Procedure. Odom, 486 F.3d at 553.
A RICO claim also requires a plaintiff to plead the existence of an
2
Plaintiffs’ other allegations, as they are described in the complaint, are not
RICO predicates. See 18 U.S.C. § 1961(1) (setting forth the complete list of
“racketeering activities”).
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“enterprise” within the meaning of 18 U.S.C. § 1961(4). An enterprise may be a
legal entity, or it may be an association-in-fact. 18 U.S.C. § 1961(4). “[A]n
associated-in-fact enterprise under RICO does not require any particular
organizational structure, separate or otherwise.” Odom, 486 F.3d at 551. To allege
an association-in-fact, the complaint must describe “‘a group of persons associated
together for a common purpose of engaging in a course of conduct[]’ . . . [and]
must provide both ‘evidence of an ongoing organization, formal or informal,’ and
‘evidence that the various associates function as a continuing unit.’” Id. at 552(quoting United States v. Turkette, 452 U.S. 576, 583 (1981)). Importantly, “[t]he
‘enterprise’ is not the ‘pattern of racketeering activity’; it is an entity separate and
apart from the pattern of activity in which it engages.” Turkette, 452 U.S. at 583.
The complaint does not allege a legal entity and fails to sufficiently allege an
association-in-fact. Plaintiffs have not sufficiently pleaded the existence of an
enterprise because the complaint does not allege how Defendants associated
together for a common purpose. Apart from acts attributed to Defendant Nirmal
Singh, the Defendant Chandis, and Defendant Paul Raj Chadha, the other
defendants are variously alleged to have “conspired,” “assisted,” “colluded,” or
“help[ed].” Still, it is not clear what exactly each individual did, when they did it,
or how they functioned together as a continuing unit. These bare assertions of a
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pattern of racketeering activity do not establish an enterprise and they do not,
therefore, satisfy Plaintiffs’ burden. See Iqbal, 556 U.S. at 681. As such, we
affirm the judgment of the district court dismissing Plaintiff’s RICO claim.3
In cases “where the plaintiff has previously been granted leave to amend and
has subsequently failed to add the requisite particularity to its claims, the district
court’s discretion to deny leave to amend is particularly broad.” Zucco Partners,
LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (internal quotation
marks omitted). Here, the district court warned Plaintiffs that given the initial
complaint’s failure to satisfy rudimentary pleading standards, they would get only
one opportunity to amend the complaint. The district court dismissed the original
RICO claim for failure to plead facts sufficient to support the existence of an
enterprise and noted that Plaintiffs had failed to allege the existence of an ongoing
organization or that the various Defendants functioned as a continuing unit.
Plaintiffs’ amended RICO claim suffered from the same deficiencies. The district
court did not abuse its discretion in denying Plaintiffs further leave to amend.
The judgment of the district court is AFFIRMED.4
3
Moreover, Plaintiffs’ complaint fails to meet the Rule 9(b) standard for
mail or wire fraud. See Sanford, 625 F.3d at 558.
4
Plaintiffs’ outstanding motions for judicial notice (Dkt. Nos. 19 and 33)
are denied as moot.
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