United States Court of Appeals for the Eighth Circuit · 2011-10-31
Case and law context
Role: applied; posture: civil; investor/financier sues used-car dealer, its owners and affiliated companies; RICO count dismissed under 12(b)(6)/9(b), leave to amend denied, state claims declined; plaintiffs appeal; affirmed; result: claimant-lost; claim: (c)
Instances and excluded annotation blocks
| Case | Element | Holding and scope | Variant | Exact source quotations |
|---|---|---|---|---|
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | But-for and proximate causation ("by reason of", 18 U.S.C. § 1964(c)) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Interstate or foreign commerce nexus | not_reached Excluded from merits counts applied / merits claim: (c) Pleaded only by reciting the statute; not discussed. | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Conduct or participate in the conduct of enterprise affairs (§ 1962(c) operation or management test) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Enterprise (§ 1961(4)): legal entity or association-in-fact | not Counted merits instance applied / merits basis: pleaded; claim: (c) Listing commonly-owned companies and lenders/backers of one dealership, without facts showing how they relate to each other or share a purpose, pleads no association-in-fact. Court cites Boyle's three features but applies the older circuit "ascertainable structure distinct from the pattern" test. | association-in-fact/conclusory-web-of-related-companies | The complaint broadly and nonspecifically alleges Defendants formed and operated an “association in fact” that fraudulently grew a “web of interrelated” commonly-owned and managed companies that engaged in a host of “fraudulent and illegal” business practices, including mail and wire fraud, and used this association in fact to fraudulently induce Plaintiffs to purchase third-party vehicle loan accounts from On Time Auto and to purchase — then lose — an equity interest in On Time Auto.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [9089:9578] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.The complaint further asserts that Defendants used On Time Auto as a front to maximize and divert the revenues and profits of the illegal enterpriseSource: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [9670:9818] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.In their complaint, Plaintiffs merely suggest that at indefinite times, in nondescript ways, and for unidentified purposes, some, but not all Defendants provided On Time Auto with funds or services.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [19056:19254] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.In deciding whether an alleged RICO enterprise has an ascertainable structure distinct from the pattern of racketeering activity, we must “determine if the enterprise would still exist were the predicate acts removed from the equation.”Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [13086:13322] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.we note that these assertions are more of the same eonclusory allegations that altogether fail to establish how the Defendants are associated with each other or the RICO enterprise.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [15813:15994] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.The district court found Plaintiffs failed to properly plead the RICO elements of an enterprise, a pattern of racketeering activity, and at least two predicate acts committed by each defendant. We agree.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [11595:11798] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Civil RICO injury to business or property (18 U.S.C. § 1964(c)) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Pattern of racketeering activity (§ 1961(5)): at least two predicate acts with relatedness and continuity | not Excluded from merits counts applied / alternative basis: pleaded; claim: (c); theory: two specific predicate acts per defendant; subject: theory=two specific predicate acts per defendant § 1962(c) must be established per defendant: two specific predicate acts each; lumping all defendants together fails. | two-acts-per-defendant/boilerplate-group-pleading | Plaintiffs’ RICO claim identified some, but not all, named defendants.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [11421:11491] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.A RICO claim must be pleaded with particularity under Rule 9(b).Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [8553:8617] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.We also note that Plaintiffs’ RICO claim is fatally flawed because the complaint fails to adequately specify the predicate acts.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [25542:25670] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.While the complaint is awash in phrases such as “ongoing scheme,” “pattern of racketeering,” and “participation in a fraudulent scheme,” without more, such phrases are insufficient to form the basis of a RICO claim.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [19523:19738] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Continuity of predicate acts (closed-ended or open-ended continuity) | not Excluded from merits counts applied / alternative basis: pleaded; claim: (c); theory: closed-ended continuity; subject: theory=closed-ended continuity Eighth Circuit bright-ish line: closed-ended continuity needs about a year; under seven months (single investor, one dealership) fails as a matter of law. | continuity/closed-ended-too-short | In December 2003, Randall Robb (Robb), doing business as Crest, was approached by business acquaintance Larry Myers (Myers) about purchasing third-party auto sales contracts and promissory notes (Loan Accounts) from On Time Auto, Inc. (On Time Auto).Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [629:879] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.In June 2004, Myers unilaterally withdrew from the day-to-day operations of On Time Auto and used the entire amount in the Reserve Account ($40,000) for his own purposes.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [3450:3620] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.We have held that closed-ended continuity “can be shown by related acts continuing over a period of time lasting at least one year____”Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [23781:23916] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.The complaint also fails to satisfy the continuity element alleging a scheme that began in December 2003 and continued until June 2004, a period of less than seven months.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [23609:23780] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.The scheme allegedly lasted less than seven months, which is legally insufficient “to constitute the requisite pattern of racketeering activity.”Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [24081:24226] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Continuity of predicate acts (closed-ended or open-ended continuity) | not Excluded from merits counts applied / alternative basis: pleaded; claim: (c); theory: open-ended continuity; subject: theory=open-ended continuity Unnamed "multiple victims" and labels like "ongoing scheme" do not plead a threat of future repetition. | continuity/open-ended-conclusory-threat | Plaintiffs argue the district court failed to “recognize the true nature of the Defendants’ long term threat not only to Plaintiffs but as to the multiple victims over a significant period of time”Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [18651:18848] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.We reject Plaintiffs’ conclusory assertion that Defendants’ activities constituted an open-ended fraudulent scheme because the “true nature of the Defendants’ long term threat [was] not only [as] to Plaintiffs but as to the multiple victims over a significant period of time.”Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [24804:25080] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Culpable person (§ 1961(3)) distinct from the enterprise under (c) | not_reached Excluded from merits counts applied / merits claim: (c) | Unspecified variant | No source quotation recorded for this block. |
| /f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011 | Mail or wire fraud predicate (18 U.S.C. §§ 1341, 1343) | not Excluded from merits counts applied / alternative basis: pleaded; claim: (c); count: mail and wire fraud predicates; subject: count=mail and wire fraud predicates | rule-9b-particularity/no-who-what-when-where-how | Throughout the complaint, Plaintiffs repeatedly alleged that Defendants executed these fraudulent and illegal activities by using U.S. mails, telephones, and electronic communications with the specific intent to defraud and steal from numerous victims, including PlaintiffsSource: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [10962:11235] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.Rather, Plaintiffs circularly argue Defendants committed mail fraud by sending documents and funds through the U.S. mails in managing On Time Auto’s loan accountsSource: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [22861:23023] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.Considered in its entirety, however, the complaint presumes rather than details any use of the U.S. mails or electronic wire carrier in perpetrating the alleged scheme.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [23266:23434] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.Finally, we note that Plaintiffs’ failure to meet the heightened pleading requirements of Rule 9(b) in alleging mail and wire fraud also provided an independent basis for dismissal.Source: docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [26109:26290] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8. |
Court interpretations recorded from this case
interpretation
A RICO claim must be pleaded with particularity under Rule 9(b).
/f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011
A RICO claim must be pleaded with particularity under Rule 9(b).Source:
docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [8553:8617] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8.Alternative to `debt` ("or collection of unlawful debt"). Under H.J. Inc. v. Northwestern Bell, statutory minimum of two predicates within 10 years is necessary but not sufficient: requires relatedness + continuity (`pattern.relatedness` and `pattern.continuity`).
interpretation
We have held that closed-ended continuity “can be shown by related acts continuing over a period of time lasting at least one year____”
/f3d/660/0346-01 — United States Court of Appeals for the Eighth Circuit · 2011
We have held that closed-ended continuity “can be shown by related acts continuing over a period of time lasting at least one year____”Source:
docroot/ir/caselaw/f3d_660.jsonl#/f3d/660/0346-01; Unicode character offsets [23781:23916] (end exclusive); SHA-256 7242ae3a845a9fa3ef9d25b96ac25219b1844b6afcfbaf06badc6e8e5c6be7c8."Continuity" is both a closed- and open-ended concept: either a closed period of repeated conduct extending over a substantial period of time (typically >1 year, evaluated with multi-factor tests in single-victim/single-scheme fraud cases), or past conduct that by its nature projects into the future with a threat of repetition.