The Cordish Companies, Inc. et al v. Dickens Law, LLC et al
Filing
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MEMORANDUM AND ORDER granting 15 Motion to Dismiss. Plaintiffs' RICO claims are dismissed with prejudice and plaintiffs' defamation claim is dismissed without prejudice. Signed by District Judge John W. Lungstrum on 08/27/2014. (ses)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF KANSAS
The Cordish Companies, Inc.;
Lounge KC, LLC d/b/a Mosaic Lounge;
and Kansas City Live Block 126
Entertainment, LLC,
Plaintiffs,
v.
Case No. 14-CV-2211
Dickens Law LLC; Linda Dickens;
and Austin Johnston,
Defendants.
MEMORANDUM & ORDER
Plaintiffs filed this lawsuit against defendants alleging violations of the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68, and a state law claim for
defamation based on defendants’ alleged misconduct in connection with defendants’ legal
representation of clients in two underlying lawsuits filed against plaintiffs. This matter is
presently before the court on defendants’ motion to dismiss plaintiffs’ complaint (doc. 15). As
will be explained, the motion is granted.
Background
The following well-pleaded allegations, taken from plaintiffs’ complaint, are accepted as
true for purposes of defendants’ motion. Plaintiff Lounge KC, LLC d/b/a Mosaic Lounge
operates the Mosaic Lounge in the “KC Live!” section of the Kansas City Power & Light
District located in Kansas City, Missouri.1 In December 2013, defendants (a law firm and two
attorneys employed by the law firm) sent a letter to counsel for the Mosaic Lounge alleging that
defendants’ client, Glen Cusimano, had been wrongfully terminated from his employment at the
Mosaic Lounge on the basis of his race. According to plaintiffs, defendants’ letter contained
numerous false statements about plaintiffs, including allegations that the Mosaic Lounge
directed Mr. Cusimano to employ a Caucasian male (referred to as “a rabbit”) for the sole
purpose of initiating altercations with African-American patrons in the Lounge such that
security personnel in the Lounge would have a basis for removing those patrons from the
Lounge; that African-American patrons would then be ejected from the Lounge and from the
Power & Light District for a period of one year; that Mr. Cusimano in fact hired Caucasian
males for this purpose; and that Mr. Cusimano, an African-American, was ultimately terminated
from his employment after he himself was “set up” for a fight by a “rabbit” employed by Mosaic
Lounge.
According to plaintiffs, defendants attached to their letter an affidavit from an
individual who falsely alleged that he had been employed by the Mosaic Lounge for the purpose
of starting altercations with African-Americans so that those patrons would be removed from the
club.
According to plaintiffs’ complaint, defendants’ letter threatened to make their allegations
known to the public for the purpose of damaging plaintiffs’ business unless defendants agreed to
a resolution of Mr. Cusimano’s claims. At the end of December 2013, defendants met with
1
According to the complaint, plaintiff Kansas City Live Block 126 Entertainment, LLC owns
the land and is the landlord for the KC Live section of the Power & Light District. The
complaint does not allege the relationship between The Cordish Companies, Inc. and the other
plaintiffs.
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counsel for plaintiffs to discuss the allegations made in the letter and, according to the
complaint, counsel for plaintiff explained how and why the allegations made in the letter were
demonstrably false. Plaintiffs allege that defendants nonetheless continued to manufacture false
allegations about plaintiffs and to threaten a publicity campaign designed to damage plaintiffs’
reputation in the community and to inflict economic injury on plaintiffs. Plaintiffs allege that, at
the close of the December 2013 meeting, and in subsequent telephone conversations in January
and February 2014, defendants continued to threaten to publicly disclose their false allegations
unless plaintiffs agreed to pay settlement money to Mr. Cusimano and defendants.
According to the complaint, plaintiffs refused to pay any money to settle Mr. Cusimano’s
claims and, as a result, defendants formed a scheme to defraud the public about plaintiffs’
business reputation. Plaintiffs allege that defendants, in March 2014, made numerous false
statements to various television and radio news reporters, including statements concerning the
District’s purported desire to minimize the number of African-American patrons visiting the
District.
These news reporters, as intended by defendants, subsequently published, via
television and radio communications, news reports containing the false statements made by
defendants. Plaintiffs allege that these false reports have resulted in harm to plaintiffs’ business
reputations. Plaintiffs further allege that defendants, on two occasions in March 2014, contacted
a former employee of another club in the District in an effort to buttress Mr. Cusimano’s claims
and that defendants harassed that individual and threatened him with litigation when he denied
observing race-based behavior in the District.
On February 28, 2014, defendants filed a complaint for damages on behalf of Mr.
Cusimano against various entities, including plaintiffs in this lawsuit, in the Circuit Court of
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Jackson County, Missouri. This lawsuit contained many of the same allegations made in the
December 2013 letter sent by defendants to plaintiffs’ counsel. Two weeks later, on March 10,
2014, defendants filed a class-action lawsuit in the United States District Court for the Western
District of Missouri alleging class-wide racial discrimination against African-American patrons
in the Power & Light District. Plaintiffs The Cordish Companies, Inc. and Mosaic Lounge are
named defendants in the class action lawsuit. In May 2014, plaintiffs filed this lawsuit against
defendants.2
RICO Claims
In Count I of their complaint, plaintiffs assert a claim against defendants under § 1962(c)
as well as a RICO conspiracy claim under § 1962(d).
Specifically, plaintiffs allege that
defendants wrongfully attempted to obtain settlement money from plaintiffs through the threat
of economic harm; that defendants made false statements to the public as part of a scheme to
defraud the public about plaintiffs’ business reputation; that defendants wrongfully attempted to
influence the testimony of a potential witness; and that these acts constitute a “pattern of
racketeering activity” in violation of RICO.
Defendants move to dismiss plaintiffs’ § 1962(c) claim for failure to state a claim. See
Fed. R. Civ. P. 12(b)(6). A complaint challenged by a Rule 12(b)(6) motion to dismiss must
contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on
its face.” Burnett v. Mortgage Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir.
2
The facts concerning the underlying lawsuits filed by defendants are not included in the
complaint, but plaintiffs do not object to the court taking judicial notice of those filings for
purposes of defendants’ motion.
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2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007))). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Free Speech v. Federal Election Comm'n., 720 F.3d 788, 792 (10th Cir.
2013) (quoting Iqbal, 556 U.S. at 678). Factual allegations must be “enough to raise the right to
relief above the speculative level.” Twombly, 550 U.S. at 555.
18 U.S.C. § 1962(c) makes it illegal “for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a
pattern of racketeering activity.” To survive a Rule 12(b)(6) motion, a civil RICO claim must
allege the defendants (1) participated in the conduct (2) of an enterprise (3) through a pattern (4)
of racketeering activity. Tal v. Hogan, 453 F.3d 1244, 1268 (10th Cir. 2006) (citations omitted).
In their motion to dismiss, defendants contend that plaintiffs’ complaint fails to satisfy the
requirement of a “pattern” of racketeering activity.
A “pattern” of racketeering is defined as “at least two acts of racketeering activity . . .
which occurred within ten years” of each other. 18 U.S.C. § 1961(5). “However, because RICO
is not aimed at the isolated offender, proof of two or more predicate acts [is] not sufficient to
prove a pattern unless there is a relationship between the predicate acts and a threat of
continuing activity.” Hogan, 453 F.3d at 1267-68 (citations omitted). Continuity of threat
requires proof of “a series of related predicates extending over a substantial period of time,” or a
“showing that the predicates themselves involve a distinct threat of long-term racketeering
activity . . . or that the predicates are a regular way of conducting the defendant’s ongoing
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legitimate business or the RICO enterprise.” Id. at 1268; Resolution Trust Corp. v. Stone, 998
F.2d 1534, 1545 (10th Cir. 1993) (plaintiffs satisfy continuity prong of pattern element by
establishing “closed-ended” continuity or “open–ended” continuity). To determine continuity,
the court examines both the duration of the related predicate acts and the extensiveness of the
RICO enterprise’s scheme. Hogan, 453 F.3d at 1268.
In their response to the motion to dismiss, plaintiffs clarify that they have alleged only
open-ended continuity with respect to their RICO claims.3 Plaintiffs allege in their complaint in
conclusory fashion that defendants have engaged in activity that “threatens to extend into the
future.” As further fleshed out in their submissions, plaintiffs contend that defendants’ conduct
necessarily will extend into the future because defendants have not yet achieved their goal of
either forcing defendants to pay settlement money or obtaining a judgment against defendants.
Plaintiffs, then, urge that defendants’ conduct will cease only when the underlying litigation
ends, either through settlement or a judgment.
Plaintiffs have not alleged the type of long-term criminal activity against which the RICO
statute is aimed. See Erikson, 151 Fed. Appx. at 678. Rather, plaintiffs have described a single
scheme on the part of defendants to obtain settlement money or a judgment directed at a finite
group of entities, with no potential to extend to other persons or entities. See Bixler v. Foster,
596 F.3d 751, 761 (10th Cir. 2010) (dismissal of RICO complaint appropriate under Rule
3
Because the predicate acts alleged by plaintiffs—from the December 2013 demand letter
through the filing of the class action lawsuit—span roughly six months, plaintiffs would not be
able to establish closed-ended continuity. See H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S.
229, 242 (1989) (predicate acts extending over a few months are insufficient to establish closedended continuity); Erikson v. Farmers Group, Inc., 151 Fed. Appx. 672, 678 (10th Cir. 2005)
(predicate acts that occurred exclusively during discovery—a period not exceeding a few
months—insufficient to demonstrate closed-ended continuity).
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12(b)(6) for failure to satisfy continuity requirement where complaint alleged only that
defendants engaged in a single scheme to accomplish discrete goal of transferring uranium
mining interests to another corporation); Erikson, 151 Fed. Appx. at 678
(no threat of
continuing criminal conduct where plaintiff alleged that defendants engaged in single scheme to
obtain information about a finite group of individuals); Boone v. Carlsbad Bancorporation, Inc.,
972 F.2d 1545, 1556 (10th Cir. 1992) (no threat of continuing illegal activity where plaintiff
alleged a series of predicate acts constituting a single scheme to accomplish a discrete goal
directed at a finite group of individuals with no potential to extend to other persons or entities);
SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1516 (10th Cir. 1990) (no threat of continuing
illegal activity where plaintiff alleged “single scam affecting a single mark”).
Apart from the complaint’s failure to allege the requisite continuity, dismissal of
plaintiffs’ § 1962(c) claim is appropriate because plaintiffs have alleged conduct that constitutes
“legitimate acts” on the part of attorneys “acting on behalf of a client in the course of pending
litigation.” See Morin v. Trupin, 711 F. Supp. 97, 105-06 (S.D.N.Y. 1989) (letter sent by
attorney-defendant demanding payment on notes which defendant allegedly knew to be
unenforceable failed to constitute predicate act under RICO). As the court explained in Morin:
Congress could not have intended that the mail fraud statute sweep up
correspondence between attorneys, dealing at arm’s length on behalf of their
parties, concerning an issue in pending litigation. . . . Subjecting the letters in
issue to the mail fraud statute would chill an attorney’s efforts and duty to
represent his or her client in the course of pending litigation.
Id. at 105 (quoting Spiegel v. Continental Ill. Nat’l Bank, 609 F. Supp. 1083, 1089 (N.D. Ill.
1985); Paul S. Mullin & Assoc., Inc. v. Bassett, 632 F. Supp. 532, 540 (D. Del. 1986) (“The
Court finds absurd plaintiffs’ apparent suggestion that a lawyer’s act in posting a letter which
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states a client’s legal position in a dispute can constitute mail fraud. If such were the situation,
every dispute in which the parties’ counsel exchanged letters could give rise to RICO
litigation.”). Even if, as plaintiffs allege, defendants’ statements amounted to extortion, those
statements cannot form the basis of a RICO claim. See I.S. Joseph Co. v. J. Lauritzen A/S, 751
F.2d 265 (8th Cir. 1984) (rejecting RICO claim where defendant threatened lawsuit if plaintiff
did not pay debts). While plaintiffs have alleged that defendants, in their representation of
clients, were overly zealous and even malicious, any remedy lies in a state law tort action rather
than a federal RICO claim. Handeen v. Lemaire, 112 F.3d 1339, 1349 (8th Cir. 1997) (noting
that it would be “extremely difficult to fathom any scenario in which an attorney might expose
himself to RICO liability by offering conventional advice to a client or performing ordinary
legal tasks (that is, by acting like an attorney).”); Melton v. Blankenship, 2009 WL 87472, at *3
(6th Cir. Jan. 13, 2009) (efforts and filings made by lawyers on behalf of clients, even if overly
zealous and malicious, cannot be considered RICO predicate acts); Meier v. Musburger, 588 F.
Supp. 2d 883, 902 (N.D. Ill. 2008) (predicate act requirement is not satisfied by merely allegeing
unethical conduct by a lawyer).
In sum, plaintiffs’ complaint fails to satisfy RICO’s continuity requirement and dismissal
of plaintiffs’ § 1962(c) claim is appropriate. Moreover, because dismissal of plaintiffs’ §
1962(c) claim is appropriate, dismissal of plaintiffs’ RICO conspiracy claim is required. Tal v.
Hogan, 453 F.3d 1244, 1270 (10th Cir. 2006) (“By its terms, § 1962(d) requires that a plaintiff
must first allege an independent violation of subsections (a), (b), or (c), in order to plead a
conspiracy claim under subsection (d).”)
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Defamation Claim
In Count II of their complaint, plaintiffs allege a defamation claim against defendant
Linda Dickens based on allegedly false statements made by Ms. Dickens to news reporters in
March 2014. Because the court has dismissed plaintiffs’ federal-law claims, the court exercises
its discretion under 28 U.S.C. § 1367(c) and declines to exercise supplemental jurisdiction over
plaintiff’s defamation claim, particularly as a scheduling order has yet to be entered in this case
and discovery has not yet commenced. See Tonkovich v. Kansas Bd. of Regents, 254 F.3d 941,
945 (10th Cir. 2001) (given lack of pretrial proceedings, including total absence of discovery,
considerations of judicial economy, convenience and fairness did not favor retaining
jurisdiction). This claim, then, is dismissed without prejudice.
IT IS THEREFORE ORDERED BY THE COURT THAT defendants’ motion to
dismiss (doc. 15) is granted.
Plaintiffs’ RICO claims are dismissed with prejudice and
plaintiffs’ defamation claim is dismissed without prejudice.
IT IS SO ORDERED.
Dated this 27th day of August, 2014, at Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
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