RICO Pleading Challenges - continued . . .
As I have previously noted, properly pleading RICO claims is a challenge. The reality is that if the RICO claims are not comprehensively documented in the complaint, the plaintiff will face a motion to dismiss under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure, or the state rule equivalents, before the defendant answers. A couple of recent cases are on point. Yesterday the Wall Street Journal Law Blog reported that last Friday afternoon, a federal judge in Manhattan dismissed a lawsuit brought by a Brunei prince against two of his advisers, a British husband-and-wife team. The prince claimed the couple conned him and his companies out of millions of dollars, violating federal racketeering laws in the process. Judge Lewis Kaplan dismissed the claims for lack of subject-matter jurisdiction; after he issued the ruling, the plaintiffs turned around and filed the claim in New York state court. Here’s the amended complaint that was filed in federal court. The complaint is interesting because of the detailed pleading of complex facts. The WJS law bloggers, however, noted:
The reason we write about this case has nothing to do with civil procedure or financial fraud. Rather, we’re pleased to report that we have a new member of the Law Blog All-Name Team. The Brunei prince’s name: Duli Yang Teramat Mulia Paduka Seri Pengiran Digadong Sahibul Mal Pengiran Muda Haji Jefri Bolkiah. It’s the longest-named litigant we’ve ever seen and, who knows, it might just be the longest name ever to grace the caption of a U.S. lawsuit.
In TransFirst Holdings, Inc. v. Phillips, 2007 WL 1468553 (N.D. Tex.) (May 18, 2007), the court dealt with a motion to dismiss under Rules 12(b)(6) and 9(b). This decision lays out the factors most courts typically consider in evaluating pleading of RICO claims.
The federal court in the Eastern District of California issued a decision last week in McColm v. Restoration Group, Inc., 2007 WL 1470106 (E.D.Cal.) (May 18, 2007) addressing a plaintiff’s attempt to turn an ordinary dispute into a federal RICO case. In this regard the court noted –
Indeed, after careful review of the complaint, the court concludes that plaintiff has attempted, unsuccessfully, to conflate simple state law contract and fraud claims involving California residents into a federal RICO action. More specifically, plaintiff has failed to allege criminal “predicate acts” and “continuity” required to establish a “pattern of racketeering activity.”
A review of the Prince Jefri complaint and the two cases noted above should be instructive.
