Commercial Litigation and Arbitration

Claims Or Defenses Not Defended In Opposition To Dispositive Motion Are Abandoned — No Abuse Of Discretion To Deny Leave To Amend Where Request Is Conclusory And Requested Only In Brief

Farag v. XYZ Two Way Radio Serv., Inc., 2023 U.S. App. LEXIS 7950 (2d Cir. April 4, 2023) (Unpublished):



Ahmed Farag appeals from the district court's dismissal of his complaint against XYZ Two Way Radio Service, Inc. ("XYZ") - a cooperative association of ground-transportation drivers - and several of its directors and shareholders (collectively, "Defendants"), alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), and various state-law claims.1 Primarily, the complaint asserts that Defendants engaged in "an ongoing fraudulent scheme" by "wrongfully terminat[ing]" its employment contracts with certain XYZ drivers, which in turn forced the dismissed drivers to sell their shares in the cooperative "at a diluted price." J. App'x at 96, 99, 103. The district court dismissed Farag's [*2]  RICO claim for failure to state a claim and his state-law claims for abandonment - both with prejudice. On appeal, Farag contends that (1) he adequately pleaded his RICO claim, (2) he did not abandon the state-law claims, and (3) in any event, his RICO and state-law claims should not have been dismissed with prejudice. We assume the parties' familiarity with the underlying facts, procedural history, and issues on appeal.

HN1[] "We review de novo a district court's dismissal of a complaint pursuant to Rule 12(b)(6), . . . accepting all factual allegations in the complaint as true[] and drawing all reasonable inferences in the plaintiff's favor." Dolan v. Connolly, 794 F.3d 290, 293 (2d Cir. 2015). "We review for abuse of discretion a district court's decision whether dismissal of a complaint should be with prejudice." Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 125 (2d Cir. 2013).

The district court properly dismissed Farag's RICO claim. HN2[] To state a civil RICO violation, a plaintiff must plausibly allege that he was injured by "a pattern of racketeering activity" consisting of "at least two predicate [racketeering] acts." First Cap. Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 178 (2d Cir. 2004) (alteration and internal quotation marks omitted) (citing 18 U.S.C. § 1961(5)). In his complaint, Farag asserts that Defendants' predicate racketeering acts consisted of "mail fraud in violation of 18 U.S.C. § 1341" and money laundering [*3]  "in violation of 18 U.S.C. § 1957." J. App'x at 110. HN3[] With respect to mail fraud, we have long held that allegations of fraud "must be made with the particularity required by Federal Rule of Civil Procedure 9(b)." McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir. 1992). This heightened pleading standard requires a plaintiff to "state the contents of the communications, who was involved, where and when they took place, and explain why they were fraudulent." Mills v. Polar Molecular Corp., 12 F.3d 1170, 1176 (2d Cir. 1993). Farag has not done so here. The complaint states in a conclusory fashion that Defendants committed mail fraud by filing "erroneous or false 10-5 violation[] [notices] against" Farag and other dismissed drivers. J. App'x at 98-99. Completely absent from the complaint, however, are allegations as to what "the contents" of the notices were, "where and when" the notices were filed, and "why" the notices "were fraudulent." Mills, 12 F.3d at 1176 (emphasis added). Although Farag alleges elsewhere in the complaint that he was "wrongfully terminated" along with other XYZ drivers and was subsequently compelled by Defendants to sell his XYZ shares at a "diluted and depressed value," J. App'x at 99, 102, nowhere in the complaint does he explain how he was deceived or defrauded by Defendants' alleged conduct. Because the complaint has failed to "identify [any] fraudulent [*4]  communications" or "provide [any] detailed description of any underlying scheme," we agree with the district court that Farag has not plausibly stated any instance of mail fraud underlying his RICO claim. Sp. App'x at 13.

Farag's allegation of money laundering fares no better. The complaint asserts that Defendants violated the federal money-laundering statute by conducting "monetary transactions in fraud to criminally deprive" the dismissed drivers of their equity interests in XYZ. J. App'x at 110. But other than this "legal conclusion[] masquerading" as a factual allegation, the complaint is "devoid of any specific facts or circumstances supporting [Farag's] assertion" of money laundering. De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996) (citations omitted). In light of the complaint's barebones and conclusory allegations of mail fraud and money laundering, we affirm the district court's dismissal of Farag's RICO claim.

The district court also properly dismissed Farag's state-law claims. HN4[] In a "counseled" case, "a court may, when appropriate, infer from a party's partial opposition that relevant claims or defenses that are not defended have been abandoned." Jackson v. Fed. Express, 766 F.3d 189, 198 (2d Cir. 2014). In keeping with this principle, we have routinely affirmed the district court's dismissal of [*5]  a plaintiff's claims when the plaintiff "did not discuss them in his opposition to [the defendant]'s motion to dismiss." Gross v. Rell, 585 F.3d 72, 94 (2d Cir. 2009); see also, e.g., Elliot-Leach v. N.Y.C. Dep't of Educ., 710 F. App'x 449, 450 n.1 (2d Cir. 2017). Here, Farag's opposition to Defendants' motion to dismiss only addressed the standing and scope-of-authority issues as to some of his state-law claims. In response to Defendants' argument that the complaint failed to plausibly state the elements of each of the state-law claims, Farag offered merely the conclusory assertion that the complaint had "stated a claim for each and every cause of action." J. App'x at 485. Further, Farag "explicitly abandoned" his state-law claims, Conboy v. AT & T Corp., 241 F.3d 242, 250 (2d Cir. 2001), stating that he was "not seeking damages for any claims beyond the RICO cause of action," J. App'x at 485 (emphasis added).2 Given this concession and Farag's failure to meaningfully discuss his state-law claims in his opposition to Defendants' motion, we cannot say that the district court erred in dismissing Farag's state-law claims for abandonment.

Finally, the district court did not abuse its discretion by dismissing the RICO and state-law claims with prejudice. HN5[] Although courts are generally "free[]" to "give leave" to amend pleadings "when justice so requires," Fed. R. Civ. P. 15(a)(2), we have [*6]  found no abuse of discretion where - as here - a district court denied a request for leave to amend made conclusorily in an opposition brief "without specifying what additional factual allegations it would include if leave were granted." WC Cap. Mgmt., LLC v. UBS Sec., LLC, 711 F.3d 322, 334 (2d Cir. 2013). In this case, Farag never made a formal motion to amend, and when the district court offered Farag the opportunity to amend his complaint during the pre-motion conference and at oral argument for the motion to dismiss, Farag repeatedly declined, see, e.g., J. App'x at 31-32, 38-41, 596-97. Farag offers no explanation as to how "an amended complaint would cure the deficiencies" identified by the district court, WC Cap. Mgmt., 711 F.3d at 334, nor did he ever "advise[] the [d]istrict [c]ourt of any proposed revisions" to the operative complaint, Cruz, 720 F.3d at 126. Under these circumstances, we conclude that the district court did not abuse its discretion by dismissing Farag's RICO and state-law claims with prejudice.

We have considered Farag's remaining arguments and find them to be without merit. Accordingly, we AFFIRM the judgment of the district court.



Although the action in the district court included other plaintiffs, Farag is the only plaintiff appealing from the district court's judgment dismissing the complaint.

Farag further explained that "the state[-]law claims were filed in conjunction with the [RICO] claim[] for the purpose of establishing a pattern of wrongful conduct," suggesting his apparent belief that the state-law claims might serve as valid racketeering predicates. J. App'x at 486. Farag was mistaken, since none of the state-law claims alleged in the complaint are listed as a predicate "racketeering activity" under RICO. 18 U.S.C. § 1961(1).

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