VINCENT L. BRICCETTI, District Judge.
Plaintiff Dynarex Corp. brings this action against (i) Richard Farrah; (ii) Dolores Mazza; (iii) Provimed, Inc., Yitzchak a/k/a Isaac Wosner, and Rebeccah Wosner (the "Wosner Defendants"); (iv) Amesco Hospital Supply Co., Bayamon Hospital, Hector Ojeda, and Ivan Ojeda (the "Ojeda Defendants"); (v) Sidra Medical Supply Inc. ("Sidra") and Muhammad Momen (the "Sidra Defendants"); and (vi) John Does #1 through #10.
Plaintiff, claiming defendants perpetrated mail and wire fraud, invokes the Racketeer Influenced Corrupt Organizations Act ("RICO"), for alleged violations of 18 U.S.C. § 1962(c) and (d). Plaintiff also brings state law claims against all defendants for fraud, unjust enrichment, misappropriation of trade secrets, conversion, fraudulent misrepresentation, civil conspiracy, and punitive damages.
Now pending are Mazza's, the Wosner Defendants', and the Sidra Defendants' motions to dismiss the amended complaint. (Docs. ##49, 60, 63).
For the following reasons, the motions are GRANTED.
For the purpose of ruling on the motions to dismiss, the Court accepts as true all well-pleaded factual allegations in the amended complaint and draws all reasonable inferences in plaintiff's favor, as summarized below.
Dynarex manufactures and distributes medical and janitorial supplies. Farrah worked for Dynarex as a vice president of sales from 1994 to 2001, when he was terminated for theft. In 2004, Dynarex re-hired Farrah to the same position.
Starting in approximately June 2014, Farrah, together with his assistant Mazza, allegedly masterminded three schemes to defraud Dynarex.
First, Farrah and Mazza arranged for the sale of Dynarex products to defendants Provimed and Provimed CEO Yitzchak a/k/a Isaac Wosner at below-standard prices; the four defendants then split the savings, which were at least $713,352.00. Allegedly, the Wosner Defendants provided Farrah and Mazza with kickbacks in the form of "cash, negotiable instruments, luxury goods, payments of personal credit card bills and other means." (Doc. #43 ("Am. Compl.") at 14 ¶ 61).
Dynarex's management caught on and began requiring Farrah to obtain purchase orders from Provimed, which Dynarex could then review to ensure appropriate pricing. Dynarex subsequently implemented stricter policies, requiring specific approval from its CEO for all Provimed sales. Farrah, Mazza, Provimed, and Mr. Wosner responded by creating fraudulent initial sales orders at authorized pricing and sending the fraudulent sales orders to Dynarex's CEO for approval; they would then retroactively lower the prices and add un-ordered items to the sales orders to hide the price reductions.
Second, Farrah allegedly conspired with the Sidra Defendants to steal nearly $70,000 of products from Dynarex's Rockland County warehouse, in return for which Farrah received kickbacks. Sidra was authorized to pick up pre-paid items from the warehouse. Farrah and the Sidra Defendants would add unauthorized items to the pickups and schedule Sidra's trucks to arrive when supervisors "would be less cognizant of the pick-up procedures." (Am. Compl. at 14 ¶ 65).
Third, Farrah allegedly conspired with the Ojeda Defendants "[o]n at least twenty-seven (27) occasions . . . to manipulate invoices and reduce them from standard pricing." (Am. Compl. at 14 ¶ 67). Farrah and the Ojeda Defendants then split the resulting $291,993 in savings.
Farrah was arrested in January 2018 and charged with second-degree larceny.
In deciding a Rule 12(b)(6) motion for failure to state a claim, the Court evaluates the sufficiency of the operative complaint under the "two-pronged approach" articulated by the U.S. Supreme Court in
To survive a Rule 12(b)(6) motion, the complaint's allegations must meet a standard of "plausibility."
Plaintiff fails sufficiently to allege a RICO enterprise.
RICO Section 1962(c) provides:
18 U.S.C. § 1962(c). Thus, to state a substantive RICO claim under Section 1962(c), a plaintiff must plead "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity."
"The RICO statute defines `enterprise' as `any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.'"
"[A]n association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose."
"Proof that several individuals, independently and without coordination, engaged in a pattern of crimes listed as RICO predicates, is not enough to show that the individuals were members of an enterprise."
Here, plaintiff alleges a classic rimless hub-and-spoke conspiracy. Plaintiff alleges facts suggesting the Wosner Defendants, Sidra Defendants, and Ojeda Defendants each joined with Farrah (and in the case of the Wosner Defendants, also with Mazza) to perpetrate a separate scheme to defraud Dynarex. The amended complaint does not merely suggest so—it outright says so. (Am. Compl. at 9 ¶ 40 ("The pattern of racketeering activity committed by the Defendants . . . involved separate — albeit related — schemes with various participants.")).
Moreover, plaintiff's allegations of relationships among the Wosner Defendants, Sidra Defendants, and Ojeda Defendants are entirely conclusory. (
Finally, there are no allegations the Wosner Defendants, Sidra Defendants, and Ojeda Defendants were symbiotic: the amended complaint does not allege they depended on one another, acted for one other's benefit, or relied on one another. And the amended complaint suggests each scheme could have been accomplished without the assistance of the other members of the alleged enterprise.
Accordingly, plaintiff's Section 1962(c) RICO claim is dismissed.
Because plaintiff fails to state a substantive RICO claim, plaintiff's RICO conspiracy claim necessarily fails.
Having dismissed all claims over which it has original jurisdiction, the Court declines to exercise supplemental jurisdiction over any state law claims asserted in the amended complaint.
Plaintiff's state law claims are dismissed without prejudice.
The Court granted plaintiff leave to amend after the Wosner Defendants, moving to dismiss, raised substantially the same arguments at issue in the instant motions. (Doc. #38). Plaintiff then filed the amended complaint, which failed to address the deficiencies raised in the Wosner Defendants' initial motion. A plaintiff's "failure to fix deficiencies in the previous pleading, after being provided notice of them, is alone sufficient ground to deny leave to amend."
Further, plaintiff has not requested leave to amend. "[N]o court can be said to have erred in failing to grant a request that was not made."
Accordingly, the Court declines to grant plaintiff leave to file a second amended complaint.
The motions to dismiss are GRANTED.
The Clerk is instructed to terminate the motions (Doc. ##49, 60, 63) and close this case.
SO ORDERED.