Southern Snow Mfg. Co. v. Snowizard Holdings, Inc., 2014 U.S. App. LEXIS 12242 (Fed. Cir. June 30, 2014):
A snowball is a confection of ice shavings, flavored with various syrups and typically served in a cone-shaped paper cup. This appeal arises from the conclusion of four consolidated lawsuits in the United States District Court for the Eastern District of Louisiana, involving members of every segment of the snowball industry from manufacturers of the icemakers and syrups to distributors to local snowball vendors. The claims in this suit are numerous and diverse, spanning patents, trademarks, antitrust, and the Racketeering Influenced and Corrupt Organizations [*2] Act ("RICO"). We have jurisdiction under 28 U.S.C. § 1295(a)(1). For the reasons provided below, we affirm-in-part, reverse-in-part, vacate-in-part, dismiss-in-part, and remand.
The District Court identified five categories of civil RICO claims brought by Appellants:
1) fraudulent assertion of patent rights;
2) fraudulent assertion of trademark rights with respect to 20 trade-marks;
3) fraudulent assertion of ETL certification for icemakers;
4) extortion by sending 4 cease and desist letters to Southern Snow, Para-sol, and the Yellow Pages over 9 years, and by suing Raggs for trademark infringement, unfair competition, trademark dilution, and defamation; and
5) infringement of trademarks.
S. Snow Mfg. Co. v. SnoWizard Holdings, Inc., 912 F. Supp. 2d 404, 412-13 (E.D. La. 2012) ("RICO Op. I").
On motion under Rule 12(b)(6), the District Court dismissed all these claims for failure to establish predicate acts of mail fraud, wire fraud, or extortion. Id. at 424. Relying on Fifth Circuit precedent, St. Germain v. Howard, 556 F.3d 261 (5th Cir. 2009), the District Court stated that Appellants "must plead a set of facts sufficient to plausibly establish the predicate criminal acts of mail or wire fraud," RICO Op. I, at 420.
Appellants challenge the dismissal of the first four categories of RICO claims. They take the position that the claims do [*34] not require predicate acts that were criminal. They assert that allegations of a "pattern of racketeering activity," not criminal activities, is sufficient to sustain their RICO claims. Appellant Br. 45. To the extent the District Court relied on the precedents of the Fifth Circuit, Appellants request this Court to "distinguish, disregard, or overrule" them. Id. at 43.
SnoWizard contends that a criminal predicate act is necessary to sustain a RICO claim. That Appellants failed to allege any criminal predicate act is, in its view, fatal to their RICO claims.
We affirm the dismissal of Appellants' RICO claims. As the Supreme Court stated:
RICO's legislative history reveals Congress' intent that to prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity.
H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989) (second emphasis added). To survive Rule 12(b)(6) dismissal, Appellants must therefore allege some sort of racketeering activity that "amount to or pose a threat of continued criminal activity." Appellants do not argue that any of the alleged predicate [*35] acts are actually criminal, and the District Court did not err in dismissing the RICO claims.
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