Commercial Litigation and Arbitration

RICO, Twombly and Fact Pleading

From Clark v Porcelli, 2009 U.S. Dist. LEXIS 5677 (M.D. Fla. Jan. 27, 2009):

The Federal Rules of Civil Procedure generally do not require a plaintiff to set out in detail the facts upon which he bases his claim. Instead, all that is ordinarily required is that the claimant set forth a "short and plain statement of his claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, U.S. , 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L. Ed. 2d 929 (2007…. Thus, a plaintiff is obliged to provide the "grounds" of his "entitlement to relief," rather than mere labels, conclusions, or formulaic recitations of the elements of a cause of action. Twombly, 127 S.Ct. at 1964-65. "Factual allegations must be enough to raise [the claimant's] right to relief above the speculative level on the assumption that all of the complaint's allegations are true." Id. at 1965 (citations omitted).


[Fact Pleading as to Operation and Management.] [I]n order to survive a 12(b)(6) motion, a plaintiff must offer specific factual assertions as to how the defendants participated in the operation or management of the RICO enterprise. In re Managed Car Litigation, 298 F.Supp. 2d 1259, 1276-77 (S.D. Fla. 2003).

While this Circuit has never required anything other than a "loose or informal" association of distinct entities, the facts alleged here are insufficient….. Plaintiffs … do not provide specific facts in support of these claims or of any assertion that Defendant Little had "some part in directing the affairs of the enterprise." See Reves, 507 U.S. at 179. The … allegations are entirely the conclusory recitation of the prima facie case that are insufficient to establish a RICO claim.

Plaintiffs do somewhat specify their allegations in claiming that Defendant Little, despite being aware of federal injunctions against the conspiracy activities, assisted in the formation of criminal enterprises, aided usurious lenders in enforcing illegal contracts by filing lawsuits for specific performance in state court, and received payment for his services from the profit made by the illegal loans….

These facts, while sufficient to paint a clearer picture of predatory behavior, do not provide the detail with regard to the specific criminal transactions, the events comprising those transactions, or the methods of "assistance" or "aid" in illegal ventures to the degree necessary so as to put Defendant Little on notice of the activity being charged.

Hence, Plaintiffs' rather vague and somewhat conclusory allegations fail to state a RICO claim upon which relief may be granted. See Twombly, supra.


[Fact Pleading as to Injury.] To assert a civil RICO cause of action, Plaintiffs must also prove (1) requisite injury to "business or property," and (2) that such injury was "by reason of" the substantive RICO violation. 18 U.S.C. § 1964(c). Plaintiffs allege that they and others have suffered extreme economic damage, and are entitled to recover the same." ***

Plaintiffs never allege specific transactions, the details of those specific transactions, or the nature by which the specific transactions transpired resulting in injury. Thus, Plaintiffs have failed to sufficiently plead this element of their claim as well.


[Fact Pleading as to Conspiracy.] …Plaintiffs' conclusory allegation that Defendants "conspired among themselves and with others to commit illegal acts and to use illegal methods" … is insufficient to state a claim for civil conspiracy under the rule 9(b) standard.


[Good Quote.] Plaintiffs' Complaint was drafted "shotgun" style with antecedent allegations incorporated by reference into each claim for relief and a lack of connectivity of facts to the causes of action.

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