David et al v. Signal InternationaL LLC et al

Filing 2115

ORDER denying 1873 Motion for Partial Summary Judgment Regarding Second Claim for Relief Under RICO and Fifteenth Claim for Relief Under 42 U.S.C. Section 1985, as stated herein. Signed by Judge Susie Morgan on 1/9/2015. (tsf)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

KURIAN DAVID, et al.
Plaintiffs

CIVIL ACTION

VERSUS

No. 08-1220

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION “E”

EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,
Plaintiff

CIVIL ACTION

VERSUS

No. 12-557

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION "E"

LAKSHMANAN PONNAYAN ACHARI, et al.,
Plaintiffs

CIVIL ACTION

VERSUS

No. 13-6218
(c/w 13-6219, 13-6220,
13-6221, 14-732, 141818)

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION "E"

Applies To:
David v. Signal
(No. 08-1220)

1

ORDER
Before the Court is Signal's Motion for Partial Summary Judgment Regarding
Plaintiffs' Second and Fifteenth Claim for Relief.1 Plaintiffs subsequently dismissed
their Fifteenth Claim and portions of their Second claim.2 In light of this dismissal, only
three elements of Signal's Motion remain in dispute: (1) whether the RICO persons
identified in the Sixth Amended Complaint are sufficiently distinct from the alleged
RICO enterprises; (2) whether the RICO claims are impermissibly extraterritorial; and
(3) whether there is sufficient evidence that Signal conspired to violate the RICO statute.
The Court addresses each argument in turn.
I. Distinction Between RICO Persons and RICO Enterprises
18 U.S.C. § 1962(c) prohibits "any person employed by or associated with any
enterprise" from "participat[ing] . . . in the conduct of such enterprise's affairs through a
pattern of racketeering activity . . . ." Under this subsection, the Fifth Circuit requires
the RICO "person" be distinct from the RICO "enterprise."3 The RICO person(s) is the
named defendant(s), while the RICO enterprise can be either a legal entity or an
association-in-fact.4
The seminal Fifth Circuit case regarding the RICO person-RICO entity distinction
is St. Paul Mercury Insurance Co. v. Williamson. The plaintiff in St Paul filed a civil
RICO suit against three individuals who allegedly comprised an association-in-fact
enterprise.5 Summarizing its prior case law, the Fifth Circuit distinguished between
corporate entities and individuals: where a single entity is named as both a RICO

R. Doc. 1873.
See R. Doc. 1914.
3 In re Burzynski, 989 F.2d 733, 743 (5th Cir. 1993).
4 St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 (5th Cir. 2000).
5 See id. at 445.
1

2

2

defendant and a RICO enterprise, the person-entity distinction is violated.6 There is no
violation, however, "when individuals have been named as defendants and as members
of an association-in-fact RICO enterprise."7 Applying this rule to the case before it, the
court vacated the district's court dismissal of the plaintiff's Section 1962(c) claim.8
In the case at bar, the Sixth Amended Complaint names each Defendant as a
RICO person and alleges three separate association-in-fact enterprises:

"RICO

Enterprise I" is comprised of "[a]ll Defendants and the United States Consular officers
in India;" "RICO Enterprise II" is comprised of the "Recruiter Defendants, Legal
Facilitator Defendants, and Defendant Signal;" and "RICO Enterprise III" is comprised
of the "Recruiter Defendants, Defendant Signal, Legal Facilitator Defendants, Swetman
Security, and M & M Bank."

This case is distinguishable from St. Paul, because

individuals and corporate entities are named as RICO persons and as part of an
association-in-fact enterprise. Moreover, unlike St. Paul, there is no perfect identity
between the RICO persons and any of the alleged RICO enterprises. Accordingly, St.
Paul does not require dismissal of the RICO claims.9 Signal has not cited any Fifth
Circuit decisions with even a remotely similarly fact pattern, nor can this Court find any.

See id. at 446—47; see also In re Mastercard Int'l Inc., Internet Gambling Litig., 132 F. Supp. 2d 468,
491 (E.D. La. 2001) ("[T]he strict reading of the enterprise/person distinctness requirement originally
contemplated cases where a single corporate entity was the defendant, and that same single corporate
entity was alleged to be the enterprise.").
7 See id. at 447 (emphasis added).
8 See id.
9 The St. Paul court noted in dicta that "[c]ourts have roundly criticized" charging "a corporation as being
part of an association-in-fact enterprise and also as a RICO defendant." 224 F.3d at 447 n.16. The court
explained the rationale behind this criticism by quoting the following excerpt from Brittingham v. Mobil
Corp., 943 F.2d 297, 301 (3d Cir. 1991): "a § 1962(c) enterprise must be more than an association of
individuals or entities conducting the normal affairs of a defendant corporation." 225 F.3d at 447 n.16
(quoting Brittingham, 943 F.2d at 301). This rationale clearly does not apply to the case at bar for two
reasons. First, Brittingham presupposes the RICO defendants are all corporations. There are several
non-corporate RICO defendants in this case. Second, the Sixth Amended Complaint ascribes a specific
"common purpose" for each enterprise sufficiently distinct from the "normal affairs" of any of the
corporate defendants.
6

3

II. Extraterritoriality
The Fifth Circuit has not yet addressed whether RICO applies extraterritorially
but two other circuits have.

The Ninth Circuit focuses on whether the pattern of

racketeering activity has a sufficient nexus to the United States.10 Under this approach,
even a pattern of racketeering "conceived and planned overseas" has the requisite nexus
if it was ultimately "executed and perpetuated in the United States."11 Unlike the Ninth
Circuit, the Second Circuit focuses on the relevant predicate statutes underlying the
alleged RICO violation.12

If the predicate statute evinces an "unmistakable

congressional intent to apply extraterritorially, RICO will apply to extraterritorial
conduct, too, but only to the extent that the predicate would."13 If the predicate statute
does not manifest such intent, then the court examines whether "plaintiffs have alleged
conduct in the United States that satisfies every essential element of the [predicate
statute]."14 Such allegations are cognizable under RICO "even if some further conduct
contributing to the violation occurred outside the United States."15
Under either the Second Circuit approach or the Ninth Circuit approach, the
Court finds that application of RICO in this case is not extraterritorial. The Sixth
Amended Complaint alleges a pattern of racketeering activity sufficiently domestic in
nature.

Furthermore, the allegations and evidence supporting a violation of the

predicate statutes demonstrate that Plaintiffs bring domestic—rather than foreign—
RICO claims.

See United States v. Chao Fan Xu, 706 F.3d 965, 979 (9th Cir. 2013).
See id.
12 See European Cmty. v. RJR Nabisco, 767 F.3d 129, 136 (2d Cir. 2014).
13 Id.
14 Id. at 142.
15 Id.
10
11

4

III. RICO Conspiracy
"To demonstrate a civil RICO conspiracy, a claimant must show that: (1) two or
more persons agreed to commit a substantive RICO offense, and (2) the defendant knew
of and agreed to the overall objective of the RICO offense."16 These elements may be
established by circumstantial evidence.17

In other words, "[t]he agreement, a

defendant's guilty knowledge and a defendant's participation in the conspiracy all may
be inferred from the development and collocation of circumstances."18 Having reviewed
the summary judgment record in the light most favorable to Plaintiffs, there are genuine
issues of material fact with respect to both elements of the conspiracy claim. Summary
judgment is not appropriate.
CONCLUSION
For the reasons previously stated;
IT IS ORDERED that the Motion is DENIED.
New Orleans, Louisiana, this 9th day of January, 2015.
_______ _____ ______ _________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

Davis-Lynch, Inc. v. Moreno, 667 F.3d 539, 551 (5th Cir. 2012).
United States v. Delgado, 401 F. 3d 290, 296 (5th Cir. 2005).
18 United States v. Posadas-Rios, 158 F.3d 832, 857 (5th Cir. 1998).
16
17

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