Commercial Litigation and Arbitration

8(a), 9(b) and RICO

From Pineda v. Saxon Mortg. Servs., 2008 U.S. Dist. LEXIS 102439 (C.D. Cal. Dec. 10, 2008) (Selna, J.):

First, Pineda does not state a claim under Rule 8(a), which is subject to the pleading requirements set forth in Twombly. "The elements of a civil RICO claim are as follows: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as 'predicate acts') (5) causing injury to plaintiff's business or property." Living Designs, Inc. v. E.I. Dupont de Nemours & Co. , 431 F.3d 353, 361 (9th Cir. 2005) (internal quotations and citation omitted). Pineda does not even recite these elements. Nor does he allege specific facts as to these elements. Nor does he even allege a violation of a particular provision of RICO. See 18 U.S.C. § 1962(a)-(d). *** It is not enough for Pineda to rely on mere labels and conclusions. *** Pineda cannot simply allege general acts of wrongdoing without expressly identifying which acts constitute "predicate acts" for his RICO claim. See, e.g., Graf v. Peoples, No. CV 07-4731-VAP(E), 2008 WL 41 89657, at *6 (C.D. Cal. Sept. 4, 2008) (dismissing complaint for failure to sufficiently allege RICO claim); see also Wagh v. Metris Direct, Inc. , 348 F.3d 1102, 1108 (9th Cir. 2003) (noting that, because of RICO's quasi-criminal nature, "[c]ourts should therefore strive to flush out frivolous RICO allegations at an early stage of the litigation") (internal quotations and citation omitted).

Second, Pineda does not state a claim under Rule 9(b), which imposes a heightened pleading standard for fraud-based allegations. Pineda merely alleges that Saxon "participated in a scheme of racketeering" and "utilized the United States mail," suggesting that he may be basing his RICO predicate acts on alleged mail fraud. ... RICO claims based on mail fraud, however, must be pled with particularity. *** In Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 541 (9th Cir. 1989), the Ninth Circuit upheld the dismissal of investors' RICO claim because it failed to plead fraud with sufficient specificity by not attributing specific conduct to individual defendants and not specifying time, place, or alleged wrongful conduct, other than in general terms. Without any factual specificity, Pineda alleges conspiracy, misrepresentation, "deceptive practices," and "racketeering." *** But none of these allegations come anywhere near satisfying the heightened pleading requirement under Rule 9(b). See Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993) (holding that the rule requires "facts as [to] the times, dates, places, benefits received, and other details of the alleged fraudulent activity").

And from Izenberg v. ETS Servs., 2008 U.S. Dist. LEXIS 102428 (C.D. Cal. Dec. 8, 2008) (Morrow, J.):

Plaintiffs' RICO claim incorporates the preceding allegations in the complaint. The only additional allegation supporting the claim is a conclusory statement that "[i]n doing the aforesaid acts, Defendants and each of them were participating in and have participated in a scheme of racketeering as that term is defined in RICO." This does not suffice to plead a pattern of racketeering activity. Plaintiffs do not adequately identify the predicate acts that form the basis of the alleged "scheme of racketeering." See Graf v. Peoples, No. CV 07-4731-VAP (E), 2008 WL 4189657, *6 (C.D. Cal. Sept. 4, 2008) ("Plaintiff's RICO claims incorporate the Complaint's initial lengthy description of many different asserted acts of wrongdoing by various Defendants. Plaintiff does not expressly identify any RICO predicate acts, but simply incorporates his previous allegations. Such 'shotgun' pleading is insufficient to plead a RICO claim," citing Savage v. Council on American-Islamic Relations, Inc. , No. C 07-6076 SI, 2008 WL 2951281, *14 (N.D. Cal. July 25, 2008) (finding that a RICO claim was insufficient where plaintiff set forth a "redundant narrative of allegations and conclusions of law, but [made] no attempt to allege what facts are material to his claims under the RICO statute, or what facts are used to support what claims under particular subsections of RICO") and Federal Reserve Bank of San Francisco v. HK Systems, No. C-95-1190 MHP, 1997 WL 227955, *3 (N.D. Cal. Apr. 24, 1997) (finding that a complaint was insufficient for failure to "identify exactly which acts are 'predicate acts' for RICO liability")).

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