JAMES A. TEILBORG, District Judge.
Pending before the Court is Defendants Anil Vazirani, Vazirani & Associates Financial, LLC, and Secured Financial Solutions, LLC's Motion for Judgment on the Pleadings on Plaintiffs' RICO Cause of Action (Doc. 74). The Court now rules on the Motion.
Plaintiffs Aviva USA Corporation and Aviva Brands Limited (collectively "Aviva") filed an amended complaint (Doc. 42) against Defendants Anil Vazirani, Vazirani & Associates Financial LLC, Secured Financial Solutions, LLC (collectively the "Vazirani Defendants"), James Regan, and Regan and Associates, LLC (collectively the "Regan Defendants"). Aviva is one of the largest insurance companies in the world and serves customers in the life insurance and annuity sector. Though the Vazirani Defendants at one time had a commercial relationship with Aviva, that relationship has been terminated. The Vazirani Defendants currently offer products and services that purportedly compete with products and services offered by Aviva. Further, the Vazirani Defendants, with the assistance of the Regan Defendants, are allegedly involved in "a campaign against Aviva of cyber-terrorism, racketeering, and extortion." (Doc. 42 at ¶ 9).
Specifically, Plaintiffs allege that, in July 2010, Defendant Vazirani's lawyer emailed Aviva claiming that Defendants would hire a public relations firm to launch an internet smear campaign if Aviva did not pay Defendant Vazirani off. (Id. at ¶ 20). Plaintiffs allege that when Aviva did not pay, Defendants hired Eric Starkman and his public relations firm, Starkman & Associates, Inc., to develop a commercial website that infringed Aviva's trademark and trade dress rights and disparaged Aviva. (Id. at ¶ 21). Plaintiffs allege that Defendants then made the website available to the public at various domain names, including insideaviva.com, aviva-exposed.com, avivauncovered.com (collectively the "Tranche 1 Domain Names"), and aviva-uncovered.com (the "Tranche 2 Domain Name"). (Id. at ¶¶ 31-34). Plaintiffs further allege that Defendants registered these domain names fraudulently by providing false information and false names. (Id. at ¶¶ 39-55).
The Defendants then allegedly continued their campaign against Aviva by sending out "blast emails" to Aviva's agents, potential agents, and consumers. (Id. at 11, ¶ 56). The emails both disparaged Aviva and directed the recipients to Defendants' websites. (Id.). Furthermore, the Defendants continued to modify the website after this lawsuit was filed and increased the number of domain names associated with the website from four to fourteen. (Id. at ¶¶ 58-59). These additional websites included aviva-lawsuit.com (the "Tranche 3 Domain Name") and avivacomplaints.com, avivaplcsucks.com, avivasucksusa.com, anilvaziranivsaviva.com, anilvsaviva.com, avivavsanilvazirani.com, avivavsanil.com, aviva-problems.com, and aviva-litigation.com (collectively the "Tranche 4 Domain Names"). (Id. at 60-61).
In Count Five of the amended complaint, Plaintiffs allege that Defendants, through these activities, have engaged in federal racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). (Id. at ¶¶ 134-42). Defendants have moved for judgment on the pleadings on Plaintiffs' RICO claim.
A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) "is properly granted when there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). When considering a Rule 12(c) motion, a court "must accept all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party." Id. Further, because the standard for dismissal is "functionally identical" to the standard under Rule 12(b)(6), United States ex rel. Caffasso v. Gen. Dynamics C4 Systs., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011), a court must "inquire whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." Id. at 1054 (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-80, 129 S.Ct. 1937, 1949-50 (2009)). In other words, dismissal pursuant to Rule 12(c) is inappropriate in circumstances in which, if the facts were as pleaded, they would entitle the plaintiff to a remedy. Merchants Home Delivery Serv., Inc. v. Hall & Co., 50 F.3d 1486, 1488 (9th Cir.1995).
The Federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq., provides a private cause of action for "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter." 18 U.S.C. § 1964(c). Section 1962(c) of RICO makes it "unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." Thus, to state a claim under section 1962(c), "a plaintiff must allege (1) conduct, (2) of an enterprise, (3) through a pattern, and (4) of racketeering activity." Jarvis v. Regan, 833 F.2d 149, 151-52 (9th Cir. 1987) (internal citations omitted).
Section 1961 of RICO defines "racketeering activity" by reference to a list of specific crimes and statutes. 18 U.S.C. § 1961(1). That section further states that a "`pattern of racketeering activity' requires at least two acts of racketeering activity" within a 10-year period. 18 U.S.C. § 1961(5). The acts must be related and also must amount to or pose a threat of continued criminal activity. H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989). Furthermore, with regard to continued criminal activity, "`[c]ontinuity' is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition." Id. at 241. Thus, because "Congress was concerned in RICO with long-term criminal conduct," "[p]redicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement." Id. at 242.
Moreover, the Ninth Circuit has held that allegations of one scheme, perpetrated against a single victim, are typically insufficient to establish a pattern for civil RICO purposes. See Sever v. Alaska Pulp Co., 978 F.2d 1529, 1535 (9th Cir. 1992) (affirming dismissal of RICO claims where "although [plaintiff] alleges a number of `acts,' [defendant's] collective conduct is in a sense a single episode having the singular purpose of impoverishing [plaintiff], rather than a series of separate, related acts," and pointing to the importance of the fact that "there was but a single victim involved"); Jarvis v. Regan, 833 F.2d 149, 153-54 (9th Cir. 1987) (affirming dismissal of a RICO claim where the alleged pattern consisted of three acts of mail and wire fraud committed by legal aid organizations in obtaining a single federal grant); Schreiber Distrib. Co. v. Serv Well Furniture Co., 806 F.2d 1393, 1399 (9th Cir. 1986) (affirming dismissal of RICO claims where alleged pattern consisted of fraudulently obtaining a single shipment of goods). Additionally, "[a]ctivity that lasts only a few months is not sufficiently continuous." Howard v. Am. Online Inc., 208 F.3d 741, 750 (9th Cir. 2000). And though there is no bright-line rule, see Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1528 (9th Cir. 1995), the Ninth Circuit has previously noted an absence of cases finding continuity where all of the alleged predicate acts occurred within a year. See Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 366-67 (9th Cir. 1992) (collecting cases).
Here, the alleged pattern of racketeering activity in Plaintiffs' amended complaint includes eight "counts" of extortion, two "counts" of wire fraud, and two "counts" of forgery.
Despite Plaintiffs attempts to carefully distinguish each of these "counts," the Court views them merely as part of a single alleged extortion scheme, or in Plaintiffs' words, a single extortionate "Internet smear campaign" against Aviva. That is, after the initial alleged extortionate demand, the remaining "counts" are simply evidence of Defendants' efforts to "follow through with their extortionate demand." (Doc. 42, at ¶ 21). Furthermore, while this single alleged predicate act of extortion is not sufficient to establish a pattern of racketeering activity under RICO, see 18 U.S.C. § 1961(5), Plaintiffs have also failed to allege such a pattern when the additional alleged predicate acts of wire fraud and forgery are considered. Particularly, Plaintiffs have failed to allege acts that meet RICO's continuity requirement for establishing a pattern of racketeering activity. See H.J. Inc., 492 U.S. at 239.
The Hobbs Act defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under the color of official right." 18 U.S.C. § 1951(b)(2).
Here, Plaintiffs allege in "Extortion Count 1" that Defendants sent a single email demand for a "pay off" and threatened a single, economically harmful "Internet smear campaign" to induce Plaintiffs to consent to "pay off" Defendants. Construing these allegations in a light most favorable to Plaintiffs, Plaintiffs have properly alleged attempted extortion under the Hobbs Act. However, they have alleged only a single instance of attempted extortion. The additional "counts" of extortion in the amended complaint, including developing, publishing, and modifying the website, registering and changing the domain names, and sending emails directing third parties to the website, are insufficient to constitute additional violations of the Hobbs Act because the alleged acts in those counts merely reflect Defendants following through on the initial extortionate demand. As Plaintiffs stated in their response, "the Vazirani Defendants have registered a series of fourteen domain names and websites . . . to make good on their threat to launch a smear campaign against Aviva to extort Aviva into paying them off, restoring Vazirani's business relationship with Aviva, and to unfairly compete with Aviva." (Doc. 84, at 1) (emphasis added); see also McLaughlin v. Anderson, 962 F.2d 187, 194 (2d Cir. 1992) (finding several acts following alleged extortion demand did not meet the Hobbs Act definition of extortion because they were, at best, examples of the defendant "making good" on his initial threat). There is no indication of any additional extortionate demands or threats associated with those additional "counts" that might give rise to an additional Hobbs Act violation. Plaintiffs have therefore alleged only a single predicate act of extortion.
Even assuming here that the alleged acts of wire fraud and forgery constitute distinct predicate acts for purposes of RICO,
With regard to a threat of future criminal conduct, the acts alleged in the amended complaint are clearly all "designed to bring about a single event"-the "paying off" of Defendants.
Further, as the amended complaint itself demonstrates, Defendants' alleged acts of wire fraud and forgery, which related to the Tranche 1 and Tranche 2 Domain Names, were not allegedly repeated with the Tranche 3 and Tranche 4 Domain Names, further indicating that these acts have not "become a regular way of conducting business" for the Defendants.
In sum, the Court, accepting the allegations in Plaintiffs' amended complaint as true and construing them in a light most favorable to Plaintiffs, finds that Plaintiffs have not sufficiently alleged a pattern of racketeering activity even if the Court considers the alleged acts of wire fraud and forgery to be valid predicate acts. Defendants therefore are entitled to judgment on the pleadings with respect to Plaintiffs' RICO claim.
Plaintiffs alternatively request leave to amend if the Court grants Defendants' Motion, while Defendants argue amendment would be futile. The Court should freely give leave to amend "when justice so requires." Fed. R. Civ. P. 15(a). "Five factors are frequently used to assess the propriety of a motion for leave to amend: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) whether plaintiff has previously amended his complaint. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). "[A] proposed amendment is futile only if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense." see Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). Furthermore, "[t]he district court's discretion to deny leave to amend is particularly broad where plaintiff has previously amended the complaint." Id. (internal quotation omitted).
As discussed above, the Court has already determined that Plaintiffs' amended complaint does not sufficiently state a RICO claim because it does not properly allege a pattern of racketeering activity under RICO. Thus, any amendments by Plaintiffs, in order to not be futile, would need to overcome this finding. However, none of Plaintiffs' proposed amendments can do so.
Plaintiff's proposed amendments would include the following alleged facts: (1) "Vazirani's and Regan's perjurious testimony and destruction of evidence," which is alleged to be obstruction of justice under 18 U.S.C. § 1503; (2) Defendants' "extortionate efforts to stifle Aviva's business activities," which is alleged to be a violation of 18 U.S.C. § 1951; (3) "Starkman's [interstate travels] to further [Defendants'] scheme," which is alleged to "constitute interstate travel in aid of racketeering;" (4) "Starkman's use of the U.S. mail to transport the electronic copy of the draft website to Vazirani through Regan," which is alleged to constitute "interstate transportation in aid of racketeering;" and (5) Defendants' "wrongful use of Will Moneymaker's identity to register the extortionate websites," which is alleged to violate A.R.S. §§ 13-2004 and 13-2008. (Doc. 84, at 16-17).
The second proposed amendment, that Defendants violated section 1951 through "extortionate efforts to stifle Aviva's business activities," clearly adds nothing to the allegations already contained in the amended complaint. Of the remaining proposed amendments, only the first alleges a violation that is clearly included as a predicate act under RICO. See 18 U.S.C. § 1961(1)(B) (listing "section 1503 (relating to obstruction of justice)"). Nevertheless, even assuming that the remaining proposed amendments constitute valid predicate acts for purposes of RICO, they still are not sufficient to constitute a pattern of racketeering activity when added to the allegations in the amended complaint. Rather, they are all simply part of the same single extortion scheme discussed above. That is, even with the additional alleged conduct, the Defendants' "collective conduct" remains "in a sense a single episode having [a] singular purpose." Sever, 978 F.2d at 1535. Plaintiffs' strained efforts to break this single episode of alleged extortion into as many different criminal acts as possible is unavailing. Thus, none of these proposed amendments supplies the closed- or open-ended continuity that was lacking in Plaintiffs' amended complaint. The proposed amendments are therefore futile, and Plaintiffs' request for leave to amend their complaint is denied.
Accordingly,