Scheppegrell v. Hicks et al
Filing
35
ORDER AND REASONS granting 20 Motion to Dismiss for Failure to State a Claim; granting 21 Motion to Dismiss for Failure to State a Claim. Signed by Judge Ivan L.R. Lemelle on 5/25/2016. (ijg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LOUIS SCHEPPEGRELL II
CIVIL ACTION
VERSUS
NO. 15-5794
BERNIECE R. HICKS, ET AL.
SECTION “B”(2)
ORDER AND REASONS
Before the Court are two separate Rule 12(b)(6) motions to
dismiss filed by Defendants Berniece Hicks (“Hicks”) and Barbara
Young (“Young”). Rec. Docs. 19, 21. Plaintiff Louis Scheppegrell
(hereinafter “Scheppegrell” or “Plaintiff”) filed oppositions in
response to both motions. Rec. Docs. 24, 26. Hicks and Young each
filed a reply memorandum. Rec. Docs. 32, 34. For the reasons
outlined below,
IT IS ORDERED that the motions are GRANTED.
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case arises out of Plaintiff’s former membership in
Christ
Gospel
Churches
International,
Inc.
(“CGCI”
or
“the
church”). Defendant Hicks founded the church over fifty years ago
and continues to serve as a preacher at the age of ninety-seven.
Rec. Docs. 1 at 2; 19-1 at 1-2. According to Hicks, CGCI currently
has twenty-eight (28) affiliated churches in the United States and
a number of others around the globe. Plaintiff was a member of the
church from the summer of 1973 until October 1984. Rec. Doc. 1 at
5.
1
Scheppegrell first joined the Kenner, Louisiana branch of
CGCI in the summer of 1973. Rec. Doc. 1-2 at 6. In July 1978, he
moved to Jeffersonville, Indiana to attend CGCI’s main church and
bible school. Rec. Doc. 1-2 at 6. Scheppegrell claims that Hicks
secured his trust and confidence, and that of other parishioners,
by espousing the “[D]octrine of the Bride.” Rec. Doc. 1-2 at 3-4.
At the heart of Hick’s Doctrine is her claim to being “the Witness”
to the Holy Ghost. Rec. Doc. 1-2 at 5. Hicks allegedly achieved
this status through a number of one-on-one, “in the flesh” meetings
with Jesus Christ. Rec. Doc. 102 at 2-5. Hicks used the insight
she gleaned from these meetings to advise her parishioners on a
number of significant life decisions, including where to go to
college, what employment and business decisions to make, and whom
to marry. Rec. Doc. 1-2 at 5.
The alleged meetings also gave Hicks
great influence over her followers because those who refused to
comply with her advice—“the decision of the ‘Holy Ghost’”— were
threatened with the full gamut of repercussions: loss of standing
within the church, exposure to hellfire and brimstone, and eternal
damnation. Rec. Doc. 1-2 at 5-6. Scheppegrell claims that he
supported
the
church
though
tithing,
donating
approximately
$22,000 over the years of his membership. Rec. Docs. 1-2 at 6; 7
at 10.
In 1975, Hicks held a special meeting with CGCI’s inner
circle, known within the CGCI community as “Purple Pearls,” at
2
which she distributed notes (“the Notes”) from one of her meetings
with Jesus. Rec. Doc. 1-2 at 3. However, in the late 1970s, rumors
began to circulate that Hicks had plagiarized the Notes. Rec. Doc.
1-2 at 3. Scheppegrell, his wife, and a number of others attended
a small group meeting with Hicks in October 1984 in an attempt to
get to the bottom of such rumors. Rec. Doc. 1-2 at 3. In that
meeting,
Scheppegrell
alleges
that
Hicks
openly
admitted
to
copying the substance of the Notes from a book by Carlos Suares
entitled
“The
Song
of
Songs:
The
Canonical
Song
of
Solomon
Deciphered According to the Original Code of Qabala.” Rec. Doc. 12 at 2-3. Scheppegrell immediately left the church after Hicks’s
alleged admission. Rec. Doc. 1-2 at 6.
Around 2003 or 2004, Scheppegrell started a blog entitled
“Romans Letter/Christ Gospel and Sister Hicks Revealed.” Rec. Doc.
1-2 at 2. The purpose of the blog was to expose Hicks’s alleged
plagiarism and to debunk her Doctrine of the Bride. Rec. Doc. 1-2
at
2-4.
Scheppegrell
claims
that
his
blog
is
“crucial
and
intrinsically detrimental to the doctrines espoused by Hicks and
the operation of Christ Gospel Church International, Inc.” Rec.
Doc. 1-2 at 3. Moreover, he contends that CGCI and Hicks were
fearful that the information revealed by his blog “would cause a
reduction in tithing and other revenue through the loss of members
in CGCI churches worldwide.” Rec. Doc. 1-2 at 4.
3
On May 28, 2013, Defendant Young, who is Hicks’s daughter and
CGCI’s attorney, wrote a letter to Scheppegrell explaining that
his postings on his blog “made false statements of fact and cobbled
together many half-truths that defame [Hicks] and present the
church in a false light.” Rec. Doc. 1-2 at 22. The letter also
urged Scheppegrell to “remove all of the negative and misleading
content” from the blog and to contact Young so that they could
“work together to resolve any lingering animosity” towards the
church. Rec. Doc. 1-2 at 23. After exchanging a handful of emails,
Scheppegrell informed Young that he would take down the blog so
long as the “matter” between him and the church was “closed”. Rec.
Doc. 1-2 at 25-28. He also informed her that he was “unable to
pursue any legal issue concerning this letter.” Rec. Doc. 1-2 at
27. In response, Young sent Scheppegrell a letter with a proposed
settlement agreement. Rec. Doc. 1-2 at 25, 30-32. Though he signed
the agreement, Scheppegrell claims that he did so as a result of
Young’s extortion. Rec. Doc. 1 at 3.
He claims that the following covenants within the agreement
constituted “obvious threats of an intent to harm [him] outside of
any legal proceedings whatsoever, including an obvious threat to
damage [his] professional reputation and ability to earn a living:”
(1) the church’s promise not to further disclose his identity as
the author of the blog; (2)the church’s promise not to refer to
him in a derogatory fashion in public; and (3) the church’s promise
4
not to contact his employer. Rec. Doc. 1-2 at 4-5. Moreover, he
claims
that
the
settlement
agreement
divested
him
of
his
intellectual property rights in his blog and his ability to write
a subsequent book exposing how CGCI operates. Rec. Doc. 1-2 at 5.
Scheppegrell then filed suit against Young and Hicks for civil
remedies under the Racketeer Influenced and Corrupt Organizations
Act
(“RICO”),
18
U.S.C.
§
1961
et
seq.
Specifically, he seeks injunctive relief,
Red.
Doc.
1
at
1.
declaratory relief,
damages, and attorney’s fees. Rec. Doc. 1 at 1. Plaintiff claims
that the following actions constitute RICO violations. Concerning
Hicks, Scheppegrell alleges that she “engaged in a pattern of
racketeering activity by fraudulently promulgating worldwide, by
mail and wire, that she had face-to-face, ‘in the flesh’ meetings
with Jesus Christ.” Rec. Doc. 7 at 1. He also contends that Hicks
directed her daughter’s unlawful activity. Rec. Doc. 7 at 2. With
respect to Young, he claims that she “participated in a pattern of
racketeering
by
sending
extortionate
letters
and
‘settlement
agreements’ that secured victims’ silence and protected CGCI’s
illegal revenue stream.” Rec. Doc. 7 at 2. Finally, Plaintiff’s
case statement alleges the following injuries to his business and
property:
(1)
his
“professional
reputation,
business
relationships, and ability to earn a living were threatened by the
Enterprise if he did not comply with the ‘settlement agreement’;”
(2) his exclusive rights under the Copyright Act were constrained;
5
and (3) “fear of economic harm remains a damoclean Sword over [him]
such that he cannot continue to express his views on the Enterprise
through either a blog or by publishing a book that is planned.”
Rec. Doc. 7 at 9. Later in his case statement, Plaintiff also
refers to the $22,000 he donated to CGCI over the course of his
eight-year membership as damages resulting from the Defendants’
RICO violations. Rec. Doc. 7 at 10. Based on these injuries,
Plaintiff urges this Court to grant him relief.
II.
THE PARTIES’ CONTENTIONS
Hicks seeks dismissal of all of Plaintiff’s claims against
her pursuant to Federal Rule of Civil Procedure 12(b)(6). Rec.
Doc. 19. First, she asserts that any claims based upon donations
Scheppegrell made as a member are barred by RICO’s four-year
limitations period. Rec. Doc. 19-1 at 7-12. Second, Hicks argues
that Plaintiff has failed to adequately state a RICO claim because
he has not sufficiently pled predicate acts involving fraud or
conspiracy, and he has not pled any compensable injury. Rec. Doc.
19-1
at
12-20.
Finally,
Hicks
maintains
that
her
statements
regarding Jesus are protected by the First Amendment and cannot
form the basis of a RICO action. Rec. Doc. 19-1 at 20-23. For these
reasons, she asks this Court to grant her motion to dismiss.
Young seeks dismissal of the claims against her on similar
grounds. She argues that Scheppegrell has not adequately stated a
RICO
claim
because:
(1)
he
failed
6
to
show
the
existence
of
predicate acts; (2) he failed to allege a pattern of racketeering;
and (3) he has not sustained any actual damages to his business or
property. Rec. Doc. 21-1 at 11-22. Accordingly, Young urges this
Court to dismiss Scheppegrell’s claims.
Scheppegrell’s oppositions claim that the motions to dismiss
attempt to mislead the Court, and that he has adequately pled all
elements of a RICO claim. Rec. Docs. 24 at 8-9; 26 at 8-10.
Specifically, he argues that Young, at the direction of Hicks,
extorted him by threatening economic harm that led to the signing
of the settlement agreement, which “stripped Scheppegrell of his
intellectual property.” Rec. Doc. 24 at 8-9. See also Rec. Doc. 26
at 8-9. He further claims that the statute of limitations issue
raised by Hicks is irrelevant because he is not trying to recover
for damages suffered decades ago, but rather for the damage to his
intellectual property rights since the settlement agreement was
signed. Rec. Doc. 26 at 8. Both Hicks and Young filed reply
memoranda countering Plaintiff’s arguments. Rec. Docs. 32, 34.
III. LAW AND ANALYSIS
a. Standard of Review
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure,
a party can move to dismiss a complaint for failure to state a
claim upon which relief can be granted. Such motions are viewed
with disfavor and rarely granted. Lowrey v. Tex. A & M Univ. Sys.,
117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser Aluminum & Chem.
7
Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th
Cir. 1982)). When reviewing a motion to dismiss, courts must accept
all well-pleaded facts as true and view them in the light most
favorable to the non-moving party. See Baker v. Putnal, 75 F.3d
190, 196 (5th Cir. 1996). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
marks omitted). A claim is facially plausible “when the plaintiff
pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678.
b. Plaintiff’s RICO Claims
Plaintiff claims violations of 18 U.S.C. §§ 1962(b), 1962(c),
and 1962(d). Under all of these subsections, “RICO claims require
‘1) a person who engages in 2) a pattern of racketeering activity,
3)
connected
to
the
acquisition,
establishment,
conduct,
or
control of an enterprise.’” Word of Faith World Outreach Center
Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir. 1996). See also
Crowe v. Henry, 43 F.3d 198, 205 (5th Cir. 1995). “A pattern of
racketeering activity consists of two or more predicate criminal
acts that are (1) related and (2) amount to or pose a threat of
continued criminal activity.” St. Germain v. Howard, 556 F.3d 261,
263 (5th Cir. 2009). Predicate acts consist of state or federal
8
crimes. Id. Finally, to have standing to bring a RICO claim, a
plaintiff must plead damages to business or property that resulted
from
the
RICO
activity.
In
re
Taxable
Mun.
Bond
Securities
Litigation, 51 F.3d 518, 521 (5th Cir. 1995) (hereinafter “Bond
Securities Litigation”).
Both
Young
and
Hicks
challenge
several
elements
of
Plaintiff’s RICO claims as insufficient to state a claim upon which
relief can be granted. The Court will begin its analysis by
addressing the standing element—whether Plaintiff has adequately
pled damages to business or property.
1. Damages to Business or Property
RICO
protects
against
actual
“concrete
financial
loss”
resulting from the RICO scheme. Bond Securities Litigation, 51
F.3d at 523 (quoting Steele v. Hospital Corp. of Am., 36 F.3d 69,
70 (9th Cir. 1994)). Speculative damages are not compensable under
RICO. Id. (citing Hecht v. Commerce Clearing House, Inc., 897 F.2d
21, 24 (2d Cir. 1990)). Moreover, RICO does not protect against
personal
injuries,
emotional
distress,
or
“mere
injury
to
a
valuable intangible property interest.” Id. (quoting Steele v.
Hospital Corp. of Am., 36 F.3d 69, 70 (9th Cir. 1994)); Pohlot v.
Pohlot, 664 F. Supp. 112, 116 (S.D.N.Y. 1987) (pointing to numerous
cases
that
have
“uniformly
held
that
personal
emotional distress do not come within RICO.”).
9
injuries
and
Plaintiff’s case statement refers to three specific forms of
damages when asked to describe the alleged injury to his business
or property. Two of those alleged injuries are wholly speculative:
(1) the alleged threat to his reputation, business relationships,
and ability to earn a living, and (2) his reasonable fear of
economic harm that “remains a damoclean sword” over his head. Rec.
Doc. 7 at 9. Threatened injuries and fear of future injuries are
speculative and not actual damages because they have not yet
occurred.
It
demonstrate
is
axiomatic
concrete
then
financial
that
loss
for
Scheppegrell
these
cannot
theoretical
injuries, meaning they are insufficient to support his RICO claims.
See
Bond
Securities
Litigation,
51
F.3d
at
523.
In
fact,
Scheppegrell seems to have realized the futility of relying on
such speculative damages. In his opposition to Hicks’s motion, he
claims that he does not seek to recover for those injuries—despite
the seemingly clear language in the case statement, and that he
only referenced them because they precipitated the actual injuries
to his intellectual property rights. Rec. Doc. 26 at 15.
The
third
injury
alleged
in
Plaintiff’s
case
statement
addresses those intellectual property rights. He argues that the
exclusive rights granted to him by the 1976 Copyright Act were
constrained by Defendants’ racketeering activity.1 Rec. Doc. 7 at
Plaintiff claims in separate filings that he was “divested,” “dispossessed,”
and “stripped” of his intellectual property rights as a result of the
settlement agreement. However, the settlement agreement, which Scheppegrell
1
10
9. Specifically, Scheppegrell refers to his rights as an author in
the content of his blog, which he agreed to take down as a part of
the settlement agreement. He argues in opposition to the pending
motions that the agreement kept him from exercising his rights
because he could never reproduce, distribute, or publicly display
the content of his blog. Rec. Doc. 26 at 16. Further, the agreement
prevented him from using “his creative expression [within the
contents of the blog] as a part of his upcoming ‘tell-all’ book.”
Rec. Doc. 26 at 16. Finally, he claims that the agreement deprived
him of his audience that he had cultivated for years through the
blog. Rec. Doc. 26 at 16. While acknowledging that he had not
“monetized his blog,” Plaintiff contends that the intellectual
property still has a definite value, the amount of which will be
determined by a jury. Rec. Docs. 24 at 17; 26 at 16-17.
However,
it is well established
that “mere injury to a
valuable intangible property interest” is an insufficient injury
to support a RICO claim. Bond Securities Litigation, 51 F.3d at
523
(quoting
Steele,
36
F.3d
at
70).
See
also
Chaset
v.
repeatedly references in his complaint and attaches as an exhibit thereto,
unambiguously leaves Plaintiff with all of his intellectual property rights
in the blog. See Rec. Doc. 1-2 at 30-32. Accordingly, the Court will
interpret Plaintiff’s claimed injury to his intellectual property as an
impermissible limitation on his rights rather than a divestment because it is
evident from the attached settlement agreement that he has retained all
rights in the blog. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
308, 322 (2007) (noting that courts may consider “documents incorporated into
the complaint by reference.”). Moreover, the language used to describe the
alleged injuries in the oppositions to the pending motions support this
interpretation. See Rec. Docs. 24, 26.
11
Fleer/Skybox Int’l, LP, 300 F.3d 1083, 1086-87 (9th Cir. 2002)
(“To demonstrate injury for RICO purposes, plaintiffs must show
proof of concrete financial loss, and not mere injury to a valuable
intangible property interest.”); Anderson v. Ayling, 396 F.3d 265,
271 (3d Cir. 2005) (stating the same principle); Gomez v. Wells
Fargo Bank, N.A., 676 F.3d 655, 660 (8th Cir. 2012) (stating the
same).
Here,
Plaintiff
claims
that
his
intellectual
property
interest in the blog has value, and that said value has been harmed
by the limitations contained in the settlement agreement. Under a
clear application of well-established law, Plaintiff’s inability
to reproduce his blog and inability write a tell-all book are
insufficient injuries absent a showing of concrete financial loss.
Scheppegrell does not claim that he has any book deal and concedes
that his blog was not “monetized.” As such, Plaintiff cannot show
a concrete financial loss because he does not allege that he has
already lost income due to the limitations on his rights or that
he had a definite expectation of income from the intellectual
property rights that is now lost. All Scheppegrell has pled is
diminished value of his intellectual property rights and the
possibility that those rights could be used for financial gain in
the future, which are both insufficient to support a RICO claim.
Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607 (5th Cir. 1998)
(“Injury to mere expectancy interest or to an ‘intangible property
interest’ is not sufficient to confer RICO standing.”).
12
The only concrete financial injury alleged by Scheppegrell is
his tithing of $22,000 as a result of Hicks’s allegedly unlawful
activities.2 However, Hicks argues that Plaintiff’s tithing falls
well outside of the RICO statute of limitations, and thus cannot
support the claim. Rec. Doc. 19-1 at 7-12. While the civil RICO
statute does not explicitly provide a statute of limitations, the
Supreme Court of the United States analogized to the Clayton Act
and found a four-year limitations period appropriate for civil
RICO actions. Agency Holding Corp. v. Malley-Duff & Assocs., 483
U.S. 143, 156 (1987). The timing of the discovery of the alleged
injury governs when the limitations period begins to run. Rotella
v. Wood, 528 U.S. 549, 555 (2000).
Here, Scheppegrell became aware of the injury in 1984 at the
latest when he allegedly left the church. All of Scheppegrell’s
donations took place before that time, because he left the church
after finding out about Hicks’s alleged plagiarism. So, even
assuming arguendo that Scheppegrell’s voluntary donation of money
could form the grounds of a RICO injury, that injury is too distant
to support a RICO claim filed roughly thirty years later. See
Agency Holding Corp., 483 U.S. at 156 (giving civil RICO claims a
four-year limitations period); Love v. Nat’l Med. Enters., 230
F.3d 765, 773 (5th Cir. 2000) (noting that even if a RICO plaintiff
While Scheppegrell’s opposition claims that he does not rely on this injury
to support his RICO claims, the Court will address it anyway for the sake of
comprehensiveness.
2
13
can identify a new predicate act within the limitations period,
the new predicate act cannot be used to bootstrap earlier injuries
that took place outside of the limitations period). Consequently,
Scheppegrell has pled no cognizable injury sufficient to support
a RICO claim. Because Plaintiff has not pled an injury adequate
enough to support his claims, he does not have standing and all of
his claims must be dismissed.3 See Ocean Energy II, Inc. v.
Alexander & Alexander, Inc., 868 F.2d 740, 746 (5th Cir. 1989).
IV.
CONCLUSION
For the reasons outlined above, Scheppegrell does not have
standing to bring this suit because he has not sufficiently pled
injury to business or property. Accordingly,
IT IS ORDERED that the Defendants’ motions to dismiss are
GRANTED. The futility of an amended complaint is apparent from the
record and foregoing analysis.
New Orleans, Louisiana, this 25th day of May, 2016.
____________________________
UNITED STATES DISTRICT JUDGE
As the Court finds that Plaintiff lacks standing to bring this suit, it need
not reach the other issues raised in Defendants’ motions to dismiss.
3
14
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