Evan et al v. JPMorgan Chase Credit Cards

Filing 77

OPINION AND ORDER granting 35 Motion to Dismiss the RICO and FDCPA claims against Defendant Chase. Signed by Judge Rudy Lozano on 7/21/11. (mc)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
CHRISTINE EVAN, et al.,
Plaintiffs,
vs.
JP MORGAN CHASE CREDIT
CARDS1, et al.,
Defendants,

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No. 2:10-CV-246

OPINION AND ORDER
This matter is before the Court on Defendant Chase Bank USA,
N.A.’s Motion to Dismiss Plaintiffs’ Claims for Violation of the
Racketeer Influenced and Corrupt Organization Act and the Fair Debt
Collection Practices Act, filed on February 24, 2011. For the
reasons set forth below, Chase’s motion to dismiss is GRANTED and
the CLERK is ORDERED to DISMISS the RICO and FDCPA claims against
Defendant Chase.

BACKGROUND
Plaintiffs, Christine and George Evan (“Plaintiffs”), filed
their amended complaint, pro se, on February 14, 2011, alleging
violations of the Fair Debt Collection Practices Act (“FDCPA”) and
the Racketeering Influenced and Corrupt Organization Act (“RICO”)
against Defendants Chase Bank USA, N.A., incorrectly named JP
1

Defendant’s correct name is Chase Bank USA, N.A.

Morgan Chase Credit Cards (“Chase”) and Weltman, Weinberg & Reis
Co., L.P.A. (“Weltman”).

Plaintiffs hold several credit card

charge accounts with Chase.

The Plaintiffs further allege that

Chase engaged in a pattern of fraudulent behavior with respect to
those credit card accounts.
On February 24, 2011 Chase filed the instant motion for
dismissal pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. In its motion to dismiss, Chase argues that Plaintiffs
have not sufficiently plead the elements necessary in regard to the
RICO claim, and that as primary creditor they are not a “debt
collector” and cannot be held liable under the FDCPA.

DISCUSSION
At

the

outset,

it

should

be

noted

that

Plaintiffs

are

appearing pro se in this matter. Although, “pro se litigants are
masters of their own complaints,” and “[d]istrict judges have no
obligation to act as counsel or paralegal to pro se litigants,”
Myles v. United States, 416 F.3d 551, 552 (7th Cir. 2005), a
document filed pro se is to be liberally construed, and a pro se
complaint,

however

inartfully

pleaded,

must

be

held

to

less

stringent standards than formal pleadings drafted by lawyers.
Erickson v. Pardus, 551 U.S. 89, 94 (2007).
Federal Rule of Civil Procedure 12(b)(6) allows a complaint to
be dismissed if it fails to “state a claim upon which relief can be

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granted.” Federal Rule of Civil Procedure 8(a), which requires a
“short and plain statement” to show that a pleader is entitled to
relief

governs

the

instant

motion.

To

avoid

dismissal,

the

complaint must describe the claim in sufficient detail to give the
defendant “fair notice of what the ... claim is and the grounds
upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555, (2007). A complaint need not plead law or be tied to one legal
theory. LaPorte County Republican Cent. Comm. v. Bd. of Comm'rs of
the County of LaPorte, 43 F.3d 1126, 1129 (7th Cir. 1994).
In

Ashcroft

v.

Iqbal,

the

Supreme

Court

clarified

its

interpretation of the Rule 8(a)(2) pleading standard. 129 S. Ct.
1937 (2009). Rule 8(a)(2) does not require the pleading of detailed
allegations, however, it does demand something “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at
1949. In order to survive a Rule 12(b)(6) motion, the complaint
“must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face’.” Id.
(quoting Twombly, 550 U.S. at 570). A claim is facially plausible
when the alleged facts “allow the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Id. Determining the plausibility of a claim is “a context-specific
task

that

requires

[the

Court]

to

draw

on

[it’s]

judicial

experience and common sense.” Id. at 1950. “[N]aked assertions
devoid of further factual enhancement” will not do. Id. at 1949
3

(internal quotation marks omitted).
Additionally, allegations of fraud in a civil RICO claim are
subject to the heightened pleading standard set forth in Federal
Rule of Civil Procedure 9(b), which requires a plaintiff to plead
all allegations of fraud with particularity. Slaney v. Int’l
Amateur Athletic Fed’n, 244 F.3d 580, 597 (7th Cir. 2001). Rule
9(b) provides that when a party alleges fraud, they must state with
particularity the circumstances constituting fraud. FED. R. CIV. P.
9(b).

Facts

such

as

the

identity

of

the

person

making

the

fraudulent misrepresentations, the time, place and content of the
misrepresentation, and the method by which it was communicated to
the plaintiff be alleged in detail are required by Rule 9(b). Windy
City Metal Fabricators & Supply, Inc. v. CIT Technology Financing
Services, Inc., 536 F.3d 663, 668 (7th Cir. 2008); Hefferman v.
Bass, 476 F.3d 596, 601 (7th Cir. 2006).

Fair Debt Collection Practices Act
Defendant’s motion seeks dismissal of the FDCPA claim on the
grounds that, as a primary creditor, its actions fall outside the
purview of the act. In response, Plaintiffs acknowledge the lack of
a cognizable claim for an FDCPA violation by Chase. Plaintiff’s
Response Brief, ¶ 8.

Therefore, Chase’s motion to dismiss the

FDCPA claim is GRANTED.

4

Racketeering Influenced and Corrupt Organization Act Claim
The RICO statute makes it unlawful "to conduct an enterprise’s
affairs through a pattern of racketeering activity."

The Supreme

Court has taught that such a claim requires a showing of four
elements: (1) conduct (2) of an enterprise (3) through a pattern
(4) of racketeering activity.

Sedima, S.P.R.L. v. Imrex Company,

Inc., 473 U.S. 479, 496 (1985).

In addition, a plaintiff must

allege and prove the existence of two distinct entities: (1) a
person; and (2) and enterprise.

Cedric Kushner Promotions Ltd. v.

King, 533 U.S. 158, 161 (2001).
Our Circuit has taught that:
Congress enacted RICO in an attempt to
eradicate
organized,
long-term
criminal
activity.
To that end, Congress chose to
supplement
criminal
enforcement
of
its
provisions with a civil cause of action for
persons whose business or property has been
injured by such criminal activity.
To
encourage
private
enforcement,
Congress
provided civil RICO plaintiffs with the
opportunity to recover treble damages, costs,
and attorney’s fees if they can successfully
establish the elements of a RICO violation by
a preponderance of the evidence.
Midwest Grinding Co., Inc. v. Spitz, 976 F.2d 1016, 1019 (7th Cir.
1992)(citations omitted).

Chase asserts that Plaintiffs have

failed to allege an ongoing enterprise and sufficient predicate
acts to uphold a RICO complaint.

As Plaintiffs are proceeding pro

se, some latitude should be given to their “inartfully pleaded”
complaint, especially given the complexity of the RICO statute. Cf.

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Erickson, 551 U.S. at 94. However, while a liberal construction of
RICO is necessary so that Congressional intent is not frustrated by
an overly narrow reading, it is not “an invitation to apply RICO to
new purposes that Congress never intended.” Reves v. Ernst & Young,
507 U.S. 170, 183 (1993).

Racketeering Activity
“Racketeering activity” is defined as a number of distinct,
indictable offenses in Title 18 U.S.C. section 1961. Those include,
but are not limited to violent crimes like murder, arson, and
robbery

and

economic

crimes

such

as

bribery,

extortion,

embezzlement, mail or wire fraud, trafficking, and counterfeiting.
18 U.S.C. § 1961(1).
Plaintiffs
routinely

allege

failed

to

in

their

correct

amended

errors

in

complaint
the

that

balances

Chase

of

the

Plaintiffs’ credit card accounts and engaged in other fraudulent
activities. (Am. Cmplt, ¶¶ 3-7).

Plaintiffs have not alleged any

racketeering activity, as that term is used in the RICO statute.
To prove Chase’s “pattern of racketeering,” Plaintiffs further
allege

that

requisite

these

“routine”

predicate

acts

actions
committed

by
in

Chase

constitute

furtherance

of

the
an

“enterprise” as defined in the statute. Section 1961 requires a
pattern

of

racketeering

activity

consisting

of,

at

the

very

minimum, two predicate acts of racketeering committed within a 10

6

year time period. 18 U.S.C. § 1961(5); Goren, 156 F.3d at 728.
Those “predicate acts” must all be violations of a specified list
of criminal laws as noted in section 1961 supra. Again, Plaintiffs
have not alleged any of the enumerated indictable offenses in their
amended complaint, much less a pattern. RICO was never intended to
allow plaintiffs to turn garden-variety state law fraud claims into
federal RICO actions. Jennings, 495 F.3d at 472.
In

their

amended

complaint,

Plaintiffs

allege

seven

occurrences involving six of their credit accounts with Chase, all
occurring between August 2009 and June 2010. (Am. Cmplt, ¶ 7).
Those allegations, however, allege fraud against one victim, for
one single injury and cannot constitute a pattern of activity for
RICO purposes. Sutherland v. O’Malley, 882 F.2d 1196, 1204-05 (7th
Cir. 1989); see also Brandt v. Schal Associates, Inc., 854 F.2d
948, 952 (7th Cir. 1988) (plaintiff’s “allegations posit only
multiple acts in furtherance of a single episode of fraud ...
against a single victim .... [S]uch a scheme cannot constitute a
RICO pattern”); Medical Emergency Service Associates, S.C. v.
Foulke, 844 F.2d 391, 397 (7th Cir. 1988) (“[w]hile [plaintiff] can
point to a number of predicate acts ... in furtherance of the
alleged scheme to defraud ... the fact remains that each of these
acts relate to but a single episode of alleged wrongdoing”); and
Lipin Enterpises, Inc. v. Lee, 803 F.2d 322, 323-24 (7th Cir. 1986)
(upholding dismissal of a complaint alleging racketeering acts all

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designed

to

defraud

one

victim

on

one

occasion.)

Fraud

allegations, of course, require a set of more detailed, specific
factual support. Fed R. Civ. P. 9(b).
Additionally, in Jennings, 495 F.3d at 473-74, the Seventh
Circuit noted that, “the duration of the alleged racketeering
activity is perhaps the most important element of RICO continuity”
(internal quotation marks and citations omitted). The Court found
that a time span of 10 months was not long enough to justify a
continuous pattern of racketeering activity. Id. Here, as in
Jennings, we have an allegation of a ten month racketeering
enterprise.
Taking into account the fact that these pro se plaintiffs
deserve some amount of deference and latitude in their undertaking
of this most complicated lawsuit, the Federal Rules of Civil
Procedure nevertheless demand more in a pleading. The allegations
of fraud in a complex racketeering enterprise lack the amount of
specificity required by Rules 8(a)(2) and 9(b) as well as the
Supreme Court’s decision in Iqbal, 129 S. Ct. 1937. The Plaintiffs’
complaint

includes

no

specific

names,

no

specific

dates

of

instances of fraudulent behavior and despite considerable effort,
Plaintiffs have not provided the Court with the type of facts that
would make the RICO claim plausible.

8

Enterprise
For the purposes of the RICO statute, “enterprise” is defined
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.” 18 U.S.C. § 1961(4). A RICO
enterprise is a group of persons associated together for a common
purpose of engaging in a course of conduct, and is shown through
evidence of ongoing organization and by evidence that the various
associates

function

as

a

continuing

unit.

Stachon

v.

United

Consumers Club, Inc., 229 F.3d 673, 675 (7th Cir. 2000). A RICO
enterprise is “more than a group of people who get together to
commit

a

‘pattern

of

racketeering

activity.’”

Richmond

v.

Nationwide Cassel L.P., 52 F.3d 640, 645 (7th Cir. 1995). To prove
a RICO enterprise, there must be evidence of an “organization with
a structure and goals separate from the predicate acts themselves.”
Stachon, 229 F.3d at 675; United States v. Masters, 924 F.2d 1362,
1367 (7th Cir. 1991).
The “enterprise,” in the Plaintiffs’ minds is self-evident, in
that

both

Defendants

are

“organized”

corporations

with

some

business relationship. Id. Conducting an enterprise that affects
interstate commerce is not in itself a violation of section 1962.
Sedima, 473 U.S. at 496. The fact that Chase and Weltman engaged in
at

least

one

business

transaction

“enterprise” for RICO purposes.

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does

not

make

them

an

The Seventh Circuit’s extensive history of interpreting the
RICO statute provides the Court with a multitude of examples of
failed attempts at alleging a RICO enterprise. In Richmond, supra,
the Court upheld the dismissal of a RICO complaint for plaintiff’s
open-ended description of a RICO enterprise without any structure
or common course of conduct. 52 F.3d at 645. Four years later, in
Bachman v. Bear, Stearns & Co., Inc., 178 F.3d 930, 932 (7th Cir.
1999), the Court affirmed another dismissal at the “enterprise”
stage. “There, a group of unrelated individuals and corporations
supposedly got together to defraud the plaintiff, and the court
found that the plaintiff's substantive fraud allegations merely
established

a

conspiracy,

not

a

RICO

“organization”

(or

enterprise).” Stachon, 229 F.3d at 675-76 (citing Bachman, 178 F.3d
at 932). Here, as in Bachman, we have two business entities
allegedly conspiring to defraud the Plaintiffs. However, it cannot
stand that “every conspiracy to commit fraud that requires more
than one person to commit is a RICO organization and consequently
every fraud that requires more than one person to commit is a RICO
violation.” Id. at 676 (quoting Bachman, 178 F.3d at 932).
The

Plaintiffs

here

have

not

adequately

alleged

a

RICO

enterprise. While it is true that both Defendants are “organized”
and “structured” as corporations, together they do not constitute
an “enterprise” for the purposes of RICO. The plaintiffs have made
no allegations of organization between the two, with no set of

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specific goals to be reached outside of the alleged frauds (or
predicates)

committed

against

allegations

surrounding

the

Defendants

Plaintiffs.
Chase

and

Therefore,
Weltman

do

the
not

constitute an “enterprise” as defined in 18 U.S.C. § 1961(4).

CONCLUSION
For the reasons set forth above, Chase’s motion to dismiss is
GRANTED and the CLERK is ORDERED to DISMISS the RICO and FDCPA
claims against Defendant Chase.

DATED:

July 21, 2011

/s/RUDY LOZANO, Judge
United States District Court

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