Danny Lynn Electrical & Plumbing LLC et al v. Veolia ES Solid Waste Southeast, Inc. et al

Filing 310

OPINION AND ORDER that defendants' 177 Motion to Dismiss is: (1) Granted as to the plaintiffs' RICO claims, as further set out in the order. (2) Denied as to the plaintiffs' breach-of-contract claim, as further set out in the order. (3) Granted in part and denied in part as to the plaintiffs' unjust-enrichment claim, as further set out in the order. The plaintiffs' request to amend their complaint again is denied. Signed by Honorable Judge Myron H. Thompson on 7/19/2011. (dmn)

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

DANNY LYNN ELECTRICAL &
PLUMBING, LLC,
et al.,
Plaintiffs,
v.
VEOLIA ES SOLID WASTE
SOUTHEAST, INC., et al.,
Defendants.

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CIVIL ACTION NO.
2:09cv192-MHT
(WO)

OPINION AND ORDER
Relying on Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007) and Ashcroft v. Iqbal, 556 U.S. ___, 129 S.Ct.
1937 (2009), it is ORDERED that the defendants’ motion to
dismiss (Doc. No. 177) is:
(1) Granted as to the plaintiffs’ RICO claims, as
explained below.
(2) Denied as to the plaintiffs’ breach-of-contract
claim, as explained below.
(3) Granted in part and denied in part as to the
plaintiffs’ unjust-enrichment claim, as explained below.

***
The plaintiffs’ RICO claims, alleged pursuant to 18
U.S.C.A. § 1962 et seq.: After the court previously
dismissed

the

plaintiffs’

first

RICO

claims,

the

plaintiffs filed a third amended complaint, reasserting
claims under RICO.

They have alleged three separate

enterprises each of which is “legally separate, although,
to the extent necessary, they are each pled in the
alternative.”

3d Am. Comp. ¶ 123 (Doc. No. 163).

court

however,

finds,

that

none

of

these

The

alleged

enterprises constitutes a valid RICO enterprise and, as
such,

the

plaintiffs’

RICO

claims

are

due

to

be

dismissed.
The first enterprise alleged by the plaintiffs is:
“[A]n association in fact consisting of:
Defendant
Richard
Burke,
Defendant
Jeffrey Adix, Defendant Paul Jenks,
Defendant Matthew Gunnelson, Defendant
James Long, an outside third-party
‘consultant(s)’
(whose
role
and
existence is known, but whose name has
not been discovered yet), along with
Defendant Veolia ES Solid Waste, Inc.
(‘VES’), Defendant Veolia Environmental
Services North America Corp. (‘VESNA’),
2

Defendant
Veolia
ES
Solid
Waste
Southeast Inc., Veolia ES Solid Waste of
New Jersey, Inc., Veolia ES Solid Waste
of Pennsylvania, Inc., Superior Waste
Services of New York City, Inc., and/or
Veolia ES Solid Waste Midwest, LLC.
Each of these individuals and entities
are ‘persons’ within the meaning of 18
U.S.C.
§
1961(4)
and
18
U.S.C.
§ 1962(c).”
3d Am. Comp. ¶ 124.

VESNA is the parent company of VES;

and Veolia Southeast, Veolia of New Jersey, Veolia of
Pennsylvania, Superior Waste Services of New York City,
and Veolia Midwest are all wholly-owned subsidiaries of
VES.

Of the five individuals named, all are or were

officers of VES or VESNA.
The

defendants

argue

that

this

is

an

invalid

enterprise because “the individuals and entities that
comprise the enterprise[] are the exact same individuals
and entities named as RICO persons.”
No. 177).

Mot. at 20 (Doc.

Thus, the RICO “persons” and enterprise are

not distinct, as required in this circuit.

See United

States v. Goldin Industries, Inc., 219 F.3d 1268, 1271
(11th Cir. 2000) (en banc) (holding that for purposes of
3

18 U.S.C. § 1962(c), there must be a RICO person distinct
from the RICO enterprise alleged).
The plaintiffs claim that the Supreme Court’s ruling
in Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158
(2001), forecloses the defendants’ argument. In Kushner,
the Court held that the defendant individual, who was the
president and sole share-holder of a corporation, was a
“person”

sufficiently

distinct

from

the

alleged

enterprise, the corporation itself.

The Court found that

“The

natural

corporate

owner/employee,

a

person,

is

distinct from the corporation itself, a legally different
entity with different rights and responsibilities due to
its different legal status.”

Id. at 163.

Therefore,

“[a] corporate employee who conducts the corporation’s
affairs

through

activity,’

§

an

unlawful

1962(c),

uses

RICO
that

‘pattern
corporation

...
as

‘vehicle’ whether he is, or is not, its sole owner.”
at 164-65.

of
a
Id.

On the basis of the Court’s reasoning, the

plaintiffs argue that corporate employees are distinct

4

from

the

corporations

for

which

they

work

for

the

purposes of RICO, such that they have stated a valid RICO
claim.
However, the Supreme Court distinguished the facts in
Kushner from a case in which “a corporation was the
‘person’

and

the

corporation,

together

with

all

its

employees and agents, were the ‘enterprise.’” Id. at 164
(discussing Riverwoods Chappaqua Corp. v. Marine Midland
Bank, N. A., 30 F.3d 339, 344 (2d Cir. 1994)).

The Court

noted that “It is less natural to speak of a corporation
as ‘employed by’ or ‘associated with’ this latter oddly
constructed entity.” Id. Furthermore, Kushner’s holding
was limited to situations where “a corporate employee
unlawfully conducts the affairs of the corporation of
which he is the sole owner--whether he conducts those
affairs

within

the

corporate authority.”
Here,

the

scope,

or

beyond

the

scope,

of

Id. at 166.

plaintiffs

have

alleged

an

enterprise

comprised of parent companies and their subsidiaries,

5

along with officers and agents of those corporations.

As

the Court said in Kushner, it is awkward to conceive of
a corporation as “employed by” or “associated with” an
entity composed of itself and its related corporations
See 18 U.S.C. § 1962(c) (forbidding the

and employees.
conduct

of

an

racketeering

enterprise

activity

by

through

“any

person

associated with” the enterprise).

a

pattern

employed

by

of
or

In addition to the

Second Circuit, cited in Kushner, many other courts of
appeal have refused to find a valid RICO claim where the
alleged enterprise consists only of a corporation and its
employees.

See, e.g., Khurana v. Innovative Health Care

Sys., 130 F.3d 143, 155 (5th Cir. 1997), vacated on other
grounds, Teel v. Khurana, 525 U.S. 979 (1998) (“The
distinctiveness

requirement

may

not

be

avoided

by

alleging a RICO enterprise that consists merely of a
corporation defendant associated with its own employees
or

agents

carrying

defendants.”)

on

(internal

the

regular

quotation

6

affairs

marks

and

of

the

citation

omitted) (quoted in ISystems v. Spark Networks, Ltd.,
2011 WL 2342523, *4 (5th Cir. 2011)); Bessette v. Avco
Financial Services, Inc., 230 F.3d 439, 449 (1st Cir.
2000) (“employees acting solely in the interest of their
employer,

carrying

on

corporate

enterprise,

the
are

regular
not

affairs

distinct

of

from

the
that

enterprise.”); Bachman v. Bear, Stearns & Co., Inc., 178
F.3d 930, 932 (7th Cir. 1999) (“A firm and its employees,
or a parent and its subsidiaries, are not an enterprise
separate from the firm itself.”); Riverwoods Chappaqua
Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d
Cir. 1994) (distinguished and left intact by Kushner, 533
U.S.

at

164)

(“Nevertheless,

by

alleging

a

RICO

enterprise that consists merely of a corporate defendant
associated with its own employees or agents carrying on
the regular affairs of the defendant, the distinctness
requirement may not be circumvented.”); Davis v. Mutual
Life Ins. Co. of New York, 6 F.3d 367, 377 (6th Cir.
1993)

(“Under

the

‘non-identity’

7

or

‘distinctness’

requirement,

a

corporation

may

not

be

liable

under

section 1962(c) for participating in the affairs of an
enterprise that consists only of its own subdivisions,
agents, or members.

An organization cannot join with its

own members to undertake regular corporate activity and
thereby become an enterprise distinct from itself.”).
As the cited cases recognize, a corporation and its
associated subsidiaries, employees and agents do not form
an enterprise that satisfies the distinctness requirement
under RICO.

Moreover, the plaintiffs have alleged no

acts on the part of any of the defendants that fall
outside the normal business of the Veolia corporations.
The plaintiffs claim their injuries are the result of
alleged fraud committed through misrepresentations in
invoices and letters sent to the defendants’ customers,
and published on the defendants’ websites, made in an
attempt

to

corporations

increase
by

the

charging

profits

unwarranted

of

the

fees.

Veolia
Sending

invoices is the normal business of a waste-collection

8

corporation, as is maximizing profits.

Indeed, had the

corporate officers not tried to increase profits, they
would have been remiss in their duties.

The plaintiffs

do not allege that the defendants conspired to take over
a legitimate business in order to commit illegal acts
(the prototypical RICO scenario), nor do they allege that
the

Veolia

corporations

and

their

employees

were

associating as an enterprise to do anything other than
what the corporations normally do, that is, mail invoices
to collect for services rendered and maximize profits.
See Atkinson v. Anadarko Bank and Trust Co., 808 F.2d
438, 441 (5th Cir. 1987) (holding that a bank, its
holding company, and three employees did not form an
association-in-fact

enterprise,

and

that

the

alleged

predicate act-“mailing of false statements requesting
payment of interest in excess of the agreed amount”-was
a normal activity of the bank).
As the Supreme Court has stated, “liability depends
on showing that the defendants conducted or participated

9

in the conduct of the ‘enterprise’s affairs,’ not just
their own affairs.”

Reves v. Ernst & Young, 507 U.S.

170, 185 (1993) (emphasis original).

Here, there is no

allegation that the members of the first enterprise were
doing
rather

anything
than

but

the

conducting

specific

their

affairs

of

normal
the

affairs,

enterprise.

Therefore, the plaintiffs have failed to state a claim
through their first alleged

RICO enterprise.

The court similarly finds that the second enterprise
put forth by the plaintiffs, as well as the alternative
second, or third, enterprise, do not constitute valid
RICO enterprises.

As described by the plaintiffs,

“The second enterprise is an association
in fact consisting of at least five
individuals: Richard Burke, Jeffrey
Adix, Matthew Gunnelson, James Long, and
Paul Jenks, along with an outside thirdparty ‘consultant(s),’ whose role and
existence is known, but whose names have
not
been
discovered
yet.
These
individuals are ‘persons’ within the
meaning of 18 U.S.C. § 1961(4) and 18
U.S.C. § 1962(c). These individuals used
their positions at various Veolia
entities
to
create,
misrepresent,
implement, charge, and collect the
10

improper fees and further desiminate
[sic] half truths to customers as set
out herein. By doing so, they profited
directly apart from the profit their
employers received. In the alternative,
this enterprise is a legal entity known
as Veolia Environmental Services North
America Corp. (‘VESNA’) or Veolia ES
Solid Waste, Inc. (‘VES’), with the same
individuals constituting the ‘persons’
(Richard Burke, Jeffrey Adix, Matthew
Gunnelson, James Long, Paul Jenks, and
an outside third-party ‘consultant(s)’)
as that term is used in 18 U.S.C.
§ 1961(4) and 18 U.S.C. § 1962(c).”
3d Am. Comp. ¶ 144.
enterprise
persons,

cannot

and

supporting

cite

that

The defendants argue that a RICO

consist
a

solely

series

proposition.

of

of

the

district
However,

named
court

the

RICO
cases

Eleventh

Circuit in Goldin cautioned that “The prohibition against
the unity of person and enterprise applies only when the
singular person or entity is defined as both the person
and the only entity comprising the enterprise.”
at 1275.

219 F.3d

That is not the case with the described second

enterprise.

However, it is difficult to conceive of

these five individuals as a distinct entity, because they

11

are associated only by virtue of their positions at the
Veolia corporations.

What appears to bring them together

is not their common purpose to commit fraud, but their
common employment by VESNA and its subsidiaries.
Furthermore, the named enterprise should provide a
vehicle

for

the

commission

of

RICO

predicate

acts.

Goldin, 219 F.3d at 1275 (stating that “the definitive
factor in determining the existence of a RICO enterprise
is

the

existence

of

an

association

of

individual

entities, however loose or informal, that furnishes a
vehicle for the commission of two or more predicate
crimes”).

It is unclear how an enterprise consisting of

the five named individuals formed a vehicle for the
alleged

racketeering

acts,

collecting fraudulent fees.

that

is,

charging

and

While the named individuals

may have helped to come up with the idea of charging
customers extra fees and figured out how to do so, they
did not complete the acts themselves.

Instead, it is the

Veolia companies-and ultimately the local divisions that

12

actually have contracts with customers-that committed the
alleged

racketeering

acts.

None

of

the

individual

defendants personally charged or collected a fraudulent
fee,

either

alone

or

in

concert

with

the

other

individuals, so their association does not provide any
sort of vehicle for the fraud alleged.

At most, they may

have conspired to commit fraud, but RICO requires more
than allegations of a conspiracy.

See Boyle v. United

States, 129 S.Ct. 2237, 2246 (2009) (noting that “Section
1962(c)

demands

much

more

[than

does

proof

of

a

conspiracy]: the creation of an ‘enterprise’-a group with
a common purpose and course of conduct-and the actual
commission

of

a

pattern

of

predicate

offenses.”);

Fitzgerald v. Chrysler Corp., 116 F.3d 225, 228 (7th Cir.
1997) (“RICO, however, is not a conspiracy statute. Its
draconian penalties are not triggered just by proving
conspiracy.

‘Enterprise’ connotes more.”).

As for the alleged third enterprise, the defendants
state that the plaintiffs “failed to provide any details

13

regarding the enterprise, its purpose, structure, or
duration.”

Mot. at 16 (Doc. No. 178).

The plaintiffs

counter that the defendants have mischaracterized their
complaint

and

that,

“The

allegations

regarding

this

enterprise are clearly set forth in the ensuing fifteen
paragraphs.”
The

Resp. at 19 (Doc. No. 196).

court

agrees

with

the

defendants

that

the

plaintiffs have failed to plead adequately the third
enterprise.

The paragraphs following the description of

the second and third enterprises give no indication of
how the third enterprise functioned differently from that
of the second enterprise, comprised of the five named
individuals.

Furthermore, later paragraphs repeatedly

refer to the named individuals as the members of the
enterprise, yet for the third enterprise, they are only
the RICO “persons.”

See, e.g., Comp. ¶ 153 (“the members

of the enterprise met regularly”); ¶ 154 (“the members of
the enterprise have communicated regularly”); ¶ 158 (“the
association of [the individuals] together furnished a

14

vehicle for the commission of multiple predicate acts”).
To satisfy Federal Rule of Civil Procedure 8(a), the
plaintiffs’ claim must be “plausible on its face,” Iqbal,
129 S.Ct. 1937, 1949 (2009), and Rule 9(b) requires that
fraud be pled with particularity.

Fed. R. Civ. P. 9(b);

see also American Dental Ass'n v. Cigna Corp., 605 F.3d
1283, 1291 (11th Cir. 2010).

The facts constituting

fraud must be alleged “with respect to each defendant's
participation in the fraud.”
enterprise

is

not

fully

set

Id.

Since here the third

out,

how

VES

or

VESNA

constitutes the enterprise itself in order to provide a
vehicle

for

the

fraud

(as

opposed

to

the

first

enterprise, where the corporations work in concert) is
not apparent.
In addition, by alleging that the third enterprise
could be either VESNA or VES, the plaintiffs have failed
to clearly describe said enterprise.

This appears to be

an instance of artful pleading, wherein the plaintiffs
have alleged that the enterprise is either VES or VESNA

15

in

an

effort

previous

to

holding

subsidiaries

may

However,

is

it

avoid

a

recurrence

that

a

parent

not

form

a

unclear

how

of

the

corporation

valid
only

RICO

one

court’s
and

its

enterprise.

of

the

Veolia

corporations could constitute the entire RICO enterprise,
when the gravamen of the plaintiffs’ claim is that all of
the

Veolia

companies,

with

their

together to perpetrate this scheme.

employees,

acted

Therefore, the third

enterprise also fails.
The plaintiffs’ breach-of-contract claim: Defendants
have

again

attempted

to

provide

evidence

that

the

contract clauses at issue are not identical, as claimed
by plaintiffs, this time citing an Eleventh Circuit case
for the premise that “where the plaintiff refers to
certain documents in the complaint and those documents
are central to the plaintiff's claim, then the Court may
consider the documents part of the pleadings for purposes
of Rule 12(b)(6) dismissal, and the defendant's attaching
such documents to the motion to dismiss will not require

16

conversion
judgment.”

of

the

motion

into

a

motion

for

summary

Brooks v. Blue Cross and Blue Shield of

Florida, Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).
However, the documents submitted by the defendants are
not yet “central to the plaintiff[s’] claim,” because the
plaintiffs have reproduced the alleged contract language
in their complaint, rather than simply refer to the
contracts at issue.

Therefore, the court repeats that

“[t]he scope of ... review must be limited to the four
corners of the complaint” when ruling on a motion to
dismiss.

St. George v. Pinellas County, 285 F.3d 1334,

1337 (11th Cir. 2002).

The court must “accept[] the

facts alleged in the complaint as true and draw[] all
reasonable inferences in the plaintiff’s favor.”

Id.

Based on plaintiffs’ allegations in the complaint, a
valid breach-of-contract claim has been pled.
The plaintiffs’ unjust-enrichment claim: The court
will allow the plaintiffs to plead unjust enrichment and
breach of contract as alternative theories of recovery.

17

See

Fed.

R.

Civ.

P.

8(e);

Wagner

v.

First

Horizon

Pharmaceutical Corp., 464 F.3d 1273, 1277-78 (11th Cir.
2006) (“Federal Rule of Civil Procedure 8(e) allows a
plaintiff to plead in the alternative ... separate counts
of the complaint must be read separately.”)
The

court

agrees,

however,

that

the

plaintiffs’

unjust-enrichment claim should be dismissed as to the
individual defendants because the plaintiffs did not
confer

a

direct

benefit

on

those

individuals.

In

Alabama, “the essence of ... unjust enrichment ... is
that a plaintiff can prove facts showing that defendant
holds money which, in equity and good conscience, belongs
to plaintiff or holds money which was improperly paid to
defendant because of mistake or fraud.”

Hancock-Hazlett

General Const. Co., Inc. v. Trane Co., 499 So.2d 1385,
1387 (Ala. 1986) (emphasis original).

Under Florida law,

“the essential elements of a claim for unjust enrichment
are: (1) a benefit conferred upon a defendant by the
plaintiff,

(2)

the

defendant’s

18

appreciation

of

the

benefit, and (3) the defendant’s acceptance and retention
of the benefit under circumstances that would make it
inequitable for him to retain it without paying the value
thereof.”
1274

Vega v. T–Mobile USA, Inc., 564 F.3d 1256,

(11th

omitted).
Veolia

Cir.

2009)

(quotation

marks

and

citation

Here, the plaintiffs allege that the fees

Southeast

charged

for

waste

removal

were

intentionally inflated, such that the Veolia companies’
profits increased. The named individuals’ yearly bonuses
were

tied

to

profits,

increased, as well.

and

thus

their

compensation

However, there was no money paid by

the plaintiffs to the named individuals.

Similarly,

there

individual

was

no

benefit

conferred

upon

the

defendants by the plaintiffs.
Ultimately, any benefit the individual defendants
received came from their corporate employers, who paid
their bonuses.
between

the

No direct line has been established

money

paid

by

the

plaintiffs

and

the

compensation received by the individuals, such that it

19

could be determined what portion of their compensation
resulted from the allegedly fraudulent fees.

Since the

individual defendants enjoyed no direct benefit, the
unjust

enrichment

claim

against

them

is

due

to

be

leave

to

dismissed.
Finally,

the

plaintiffs

have

requested

amend, should their claims be dismissed.

While it is

true that a court should give leave to amend “when
justice so requires,” Fed. R. Civ. P. 159a)(2), a court
may also deny such a motion as futile.

Coventry First,

LLC v. McCarty, 605 F.3d 865, 870 (11th Cir. 2010).
Here, the plaintiffs have already had three bites at the
apple.

Their case was removed to this court on March 6,

2009.

They first amended their complaint and added the

RICO claims on November 17, 2009.
leave

for

the

plaintiffs

to

The court then granted

file

a

second

complaint, which they did on September 15, 2010.
the

plaintiffs’

RICO

claims

in

the

second

amended
After
amended

complaint were dismissed, the court again granted leave

20

for them to file the third amended complaint currently
under consideration, filed December 22, 2010.

Thus, the

plaintiffs have attempted to plead a valid RICO claim in
three of their complaints, and have yet to succeed.
Their theory of the case has not changed with each
pleading, but only the individuals and entities who form
the alleged RICO enterprises.

The court does not see

how, based on the allegations, the plaintiffs can state
a RICO claim that will withstand scrutiny.

It would thus

be futile to grant the plaintiffs leave to amend their
complaint a fourth time.

Moreover, regardless as to

issue of futility, the plaintiffs have been given many
times to amend their complaint, and there comes a time
when enough is enough.

The plaintiffs’ request to amend

their complaint again is denied.
DONE, this the 19th day of July, 2011.

/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE