Aronov et al v. Mersini et al

Filing 29

MEMORANDUM AND ORDER granting 24 Motion to Dismiss. The Complaint, assuming the truth of its allegations, suggests that one or both plaintiffs were seriously damaged by tortious conduct of one or more defendants. That, however, is not sufficient t o state a federal RICO or RICO conspiracy claim. This Court's declination of supplemental jurisdiction assures that any timely and meritorious state law claim may be pursued in state court. Defendants motion to dismiss (Dkt. No. 24) is GRANTED. The Clerk is directed to enter judgment for the defendants and close the case. (Signed by Judge P. Kevin Castel on 4/20/2015) (spo)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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OLEG ARONOV and STAT RX PHARMACY,
INC.,
Plaintiffs,
-against-

14-cv-7998 (PKC)
MEMORANDUM
AND ORDER

ROLAND MERSINI, ROMAN ILYAEV,
JASMINA INCEKARA, and RJ PHARMACY,
INC.,
Defendants.
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CASTEL, U.S.D.J.
The action before the Court alleges defendants’ theft of data concerning plaintiffs’
retail pharmacy customers for the purpose of fraudulently enticing these customers to use a
competing retail pharmacy. Plaintiffs, Stat Rx Pharmacy, Inc. (“Stat Rx”) and Oleg Aronov,
majority shareholder and president of Stat Rx, bring claims under the Racketeer Influenced and
Corrupt Organizations Act (“RICO”) and allege state laws claims of conversion, unjust
enrichment, theft of proprietary information, and fraud. Defendants Roland Mersini and Roman
Ilyaev, former employees of Stat Rx, at all times relevant to the Complaint worked for RJ
Pharmacy, Inc. (“RJ Pharmacy”) with defendant Jasmina Incekara. Defendants move to dismiss
the Complaint, asserting that plaintiffs’ RICO claim is both procedurally and substantively
deficient. Having argued that plaintiffs’ RICO claim—the only alleged federal cause of action—
should be dismissed, defendants submit that the Court should decline to exercise supplemental
jurisdiction over plaintiffs’ New York State law claims. For reasons to be explained, defendants’
motion to dismiss is granted.

BACKGROUND
Plaintiff Stat Rx is a retail pharmacy located in the Bronx. (Compl., ¶ 4.) In
December 2007, plaintiff Aronov hired defendant Mersini to work as a pharmacy technician at
Stat Rx, and hired defendant Ilyaev to assist Mersini. (Id. ¶ ¶ 12-13.) Stat Rx established a
customer/patient database with the names, addresses, contact information, medical conditions,
and prescription history of all customer/patients. (Id. ¶ ¶ 17, 20.) The database was only
accessible by Stat Rx pharmacists, technicians, and managers, including Mersini and Ilyaev. (Id.
¶ 18.) Stat Rx employees agreed that the database was owned by Stat Rx, was to be used only
for Stat Rx purposes, and was non-transferrable. (Id. ¶ 19.)
In April 2010, Ilyaev resigned from Stat Rx and began working for defendant RJ
Pharmacy, also located in the Bronx. (Id. ¶ 22-23.) Plaintiffs allege that “[a]t or about the same
time, the spring and summer of 2010, Ilyaev and Mersini began a campaign of theft of Stat Rx’s
clients.” (Id. ¶ 25.) Ilyaev and Mersini stole Stat Rx’s confidential customer/patient database
and “beginning in the spring of 2010 and continuing each month at least through October 2010,
Mersini and Ilyaev placed dozens of telephone calls from Ilyaev’s land line at his residence in
New Jersey to Stat Rx customers in the Bronx and stated that Stat Rx had changed its name and
location to RJ Pharmacy at 2111 Williamsbridge Road.” (Id. ¶ ¶ 25-26.) Plaintiffs also claim
that defendants misappropriated Stat Rx’s vendor list, altered the contact information in Stat
Rx’s computer database, and stole more than $500,000 worth of medicine. (Id. ¶ ¶ 27-28.)
Defendant Incekara, while working for RJ Pharmacy, was allegedly complicit in the “theft and
misappropriation of Stat Rx clients” and “aided and abetted the theft of Stat Rx’s prescriptionmedicine inventory.” (Id. ¶ 29.)

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On October 7, 2010, plaintiffs discharged Mersini and instructed him to surrender
any contact list he had received during his employment with Stat Rx. (Id. ¶ 31.) Plaintiffs told
Mersini not to contact Stat Rx clients or physicians, with whom it did business, with the intent to
cause damage to Stat Rx. (Id.) “Nevertheless, Mersini and Ilyaev, with the consent and at the
insistence of Incekara, continued the telephone campaign of theft of Stat Rx’s clients and
vendors.” (Id. ¶ 32.)
Plaintiffs’ Complaint asserts a RICO claim, a RICO conspiracy claim, and state
law claims of conversion, unjust enrichment, theft of proprietary information, and fraud. (Id. ¶ ¶
45-76.) Plaintiffs base their RICO claim on allegations of wire fraud, specifically, that Mersini
and Ilyaev called Stat Rx customers and falsely informed them that Stat Rx had moved and
changed its name to RJ Pharmacy. (Id. ¶ ¶ 66, 26, 38, 56-57.) Defendants move to dismiss the
Complaint in its entirety. (Dkt. No. 24.)
DISCUSSION
I.

Legal Standard
To survive a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., “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) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “ ‘Labels and conclusions’ or ‘a formulaic recitation of the elements
of a cause of action will not do,’ ” rather, a plaintiff must plead “factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. (quoting Twombly, 550 U.S. at 555). In considering a Rule 12(b)(6) motion to dismiss, all
non-conclusory factual allegations are accepted as true, see id. at 678–79, and all reasonable

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inferences are drawn in favor of the plaintiff. See In re Elevator Antitrust Litig., 502 F.3d 47, 50
(2d Cir. 2007) (per curiam).
In addition to the pleading requirements of Rule 12(b)(6), a complaint alleging
fraud must satisfy the heightened pleading requirements of Rule 9(b), Fed. R. Civ. P., which
require a party alleging fraud to “state with particularity the circumstances constituting fraud.”
To satisfy this pleading threshold, the complaint must “(1) specify the statements that the
plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the
statements were made, and (4) explain why the statements were fraudulent.” Novak v. Kasaks,
216 F.3d 300, 306 (2d Cir. 2000) (quoting Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128
(2d Cir. 1994)). Further, Rule 9(b) pleadings cannot generally be based upon “information and
belief,” however, this rule is relaxed when the allegations (i) involve “matters peculiarly within
the adverse parties’ knowledge” and (ii) are “accompanied by a statement of the facts upon
which the belief is founded.” Segal v. Gordon, 467 F.2d 602, 608 (2d Cir. 1972). Requiring
particularity serves to give a defendant notice of the plaintiff’s claim and safeguards a
defendant’s reputation from “improvident” charges. See ATSI Commc’ns., Inc. v. Shaar Fund,
Ltd., 493 F.3d 87, 99 (2d Cir. 2007).
The Supreme Court has stated that “RICO is to be read broadly,” because of
“Congress’ self-consciously expansive language and overall approach” and the statute’s “express
admonition that RICO is to be liberally construed to effectuate its remedial purposes.” Sedima,
S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 497–98 (1985) (citations and internal quotation marks
omitted). Notwithstanding this interpretive directive, because the “mere assertion of a RICO
claim has an almost inevitable stigmatizing effect on those named as defendants courts should
strive to flush out frivolous RICO allegations at an early stage of the litigation.” Katzman v.

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Victoria’s Secret Catalogue, 167 F.R.D. 649, 655 (S.D.N.Y. 1996) aff'd sub nom. Katzman v.
Victoria’s Secret Catalogue, Div. of The Ltd., Inc., 113 F.3d 1229 (2d Cir. 1997) (alterations
omitted) (quoting Figueroa Ruiz v. Alegria, 896 F.2d 645, 650 (1st Cir. 1990)).
II.

Section 1962(c) RICO Claim
Plaintiffs allege that defendants conducted or participated, directly or indirectly,

in the conduct of affairs of an enterprise through a pattern of racketeering activity in violation of
18 U.S.C. § 1962(c). (See Compl., ¶ ¶ 61-68.) In order to state a RICO claim under section
1962(c), a plaintiff must adequately “allege the existence of seven constituent elements: (1) that
the defendant (2) through the commission of two or more acts (3) constituting a ‘pattern’ (4) of
‘racketeering activity’ (5) directly or indirectly . . . participates in (6) an ‘enterprise’ (7) the
activities of which affect interstate or foreign commerce.” Moss v. Morgan Stanley Inc., 719
F.2d 5, 17 (2d Cir. 1983). In addition, a civil RICO plaintiff must allege that he or she “was
injured in his business or property by reason of a violation of section 1962.” Id. (emphasis in
original) (citing 18 U.S.C. § 1964(c)).
Defendants challenge plaintiffs’ pleadings on elements three and four, contending
that plaintiffs have failed to allege predicate acts of “racketeering activity,” with the particularity
required by Rule 9(b), Fed. R. Civ. P., and have failed to allege a sufficient “pattern” within the
meaning of RICO.
A. Racketeering Activity Pursuant to Rule 9(b)
Racketeering activity consists of the commission of a predicate act. Sedima, 473
U.S. at 495; 18 U.S.C. § 1961(1). The RICO statute sets forth an exhaustive list of acts that
qualify as “racketeering activity” under the statute, which includes “any act which is indictable
under . . . [18 U.S.C] section 1343 (relating to wire fraud).” 18 U.S.C. § 1961(1)(B). See Beck

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v. Prupis, 529 U.S. 494, 497 n. 2 (2000) (“Section 1961(1) contains an exhaustive list of acts of
‘racketeering,’ commonly referred to as ‘predicate acts.’ ”). To the extent that any predicate acts
sound in fraud, the pleading of those acts must satisfy the particularity requirements of Rule 9(b),
Fed. R. Civ. P. See, e.g., Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 88 (2d Cir.
1999). The Court concludes that plaintiffs’ pleadings, which allege that defendants engaged in
predicate acts of wire fraud, fail to satisfy Rule 9(b) pleading standards.
Plaintiffs plead the following in support of their wire fraud claim:
Though Aronov is unaware of the full scope of the fraudulent misappropriation of
clients, on information and belief, beginning in the spring of 2010 and continuing
each month at least through October 2010, Mersini and Ilyaev placed dozens of
telephone calls from Ilyaev’s land line at his residence in New Jersey to Stat Rx
customers in the Bronx and stated that Stat Rx had changed its name and location
to RJ Pharmacy at 2111 Williamsbridge Road.
(Compl., ¶ 26 (emphasis added.)) Plaintiffs further allege that the “racketeering activity”
consisted “principally of dozens, if not hundreds, of uses of the telephone to perpetrate fraud.”
(Id. ¶ 38.)
Allegations of fraud may be made on information and belief only if the matters
are peculiarly within the adverse parties’ knowledge and the allegations are accompanied by a
statement of facts upon which the belief is based. See Segal, 467 F.2d at 608; DiVittorio v.
Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987). Here, the allegations of
wire fraud are made on information and belief but are not peculiarly within defendants’
knowledge. The identity of the speaker and the location from which the calls were placed may
be only known to defendants; however, the dates on which Ilyaev and Mersini placed the calls
and the content of the alleged misrepresentations are known to the customers who received these
calls. See Schlansky v. United Merchants & Mfrs., Inc., 443 F. Supp. 1054, 1063 (S.D.N.Y.
1977) (where alleged misrepresentations were made to numerous participants in a pension plan,
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such information was not peculiarly within the adverse parties’ knowledge because “[c]ertainly
the [participants] know whether or not omissions and misrepresentations were made to them”).
Additionally, plaintiffs fail to submit a statement of facts upon which their belief is based.
Without such a statement, plaintiffs’ allegations fail to satisfy the Rule 9(b) pleading
requirements. See Segal, 467 F.2d at 608; Morgan v. Prudential Grp., Inc., 81 F.R.D. 418, 424
(S.D.N.Y. 1978) (“[I]nsofar as [allegations] are made on information and belief they must be
supported by a recitation of facts lending credence to the belief . . . [Plaintiff] must show that his
belief is not without foundation, that it is belief rather than irresponsible speculation.”); Cargo
Partner AG v. Albatrans Inc., 207 F. Supp. 2d 86, 116 (S.D.N.Y. 2002) aff’d, 352 F.3d 41 (2d
Cir. 2003) (same).
Plaintiffs’ Complaint fails to satisfy Rule 9(b) in other respects. The Complaint,
which specifies an approximate eight-month period during which the statements were made,
lacks particularity with regard to the timeframe of the alleged misrepresentations. See Skylon
Corp. v. Guilford Mills, Inc., 93-cv-5581 (LAP), 1997 WL 88894, at *2 (S.D.N.Y. Mar. 3, 1997)
(“Although plaintiff outlines a four-month window during which all of the misrepresentations
occurred, this does not satisfy the pleading standard of Rule 9(b).”); Sendar Co. v. Megaware
Inc., 705 F. Supp. 159, 161 (S.D.N.Y. 1989) (dismissing a fraud claim for lack of particularity
where plaintiff “merely alleg[ed] that statements were made some time during a two month
period.”); Alnwick v. European Micro Holdings, Inc., 281 F. Supp. 2d 629, 641 (E.D.N.Y. 2003)
(dismissing a fraud claim where amended complaint alleged that fraudulent statements were
made between May 1997 and August 1997, in part, because a “vague four-month period of time
is insufficient to satisfy the pleading standards of Rule 9(b)”). Further, the Complaint, which
does not name any particular Stat Rx customers, fails to allege which defendants made

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fraudulent communications to which customers. See Spool v. World Child Int’l Adoption
Agency, 520 F.3d 178, 185 (2d Cir. 2008) (“Allegations of predicate . . . wire fraud acts should
state . . . who was involved.” (internal quotation marks and citation omitted)); Mills v. Polar
Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993) (“Rule 9(b) is not satisfied where the
complaint vaguely attributes the alleged fraudulent statements to ‘defendants.’ ”); Doehla v.
Wathne Ltd., Inc., 98-cv-6087 (CSH), 1999 WL 566311, at *17 (S.D.N.Y. Aug. 3, 1999)
(dismissing fraud claims for lack of particularity where the complaint “improperly attributes the
alleged fraudulent statements to [three defendants] . . . without linking each defendant to a
particular statement”).
The Complaint, with respect to the predicate acts of wire fraud, fails to satisfy the
particularity requirements of Rule 9(b), and plaintiffs’ RICO claim is therefore subject to
dismissal. Because dismissal under Rule 9(b) raises the issue of whether to grant plaintiffs leave
to amend, the Court will consider whether, even if the predicate acts of fraud had been pleaded
with particularity, the Complaint adequately alleges a pattern of racketeering activity. The Court
concludes that it does not.
B. Pattern Requirement
Plaintiffs fail to adequately demonstrate that the predicate acts alleged constitute a
“pattern” of racketeering activity, as required by the RICO provisions. See 18 U.S.C. § 1962(c).
Under the statute, a “ ‘pattern of racketeering activity’ requires at least two acts of racketeering
activity . . . the last of which occurred within ten years . . . after the commission of a prior act of
racketeering activity.” 18 U.S.C. § 1961(5). “To establish a pattern, a plaintiff must also make a
showing that the predicate acts of racketeering activity by a defendant are ‘related, and that they
amount to or pose a threat of continued criminal activity.’ ” Cofacredit, S.A. v. Windsor

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Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999) (quoting H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 239 (1989) (emphasis in the original)). Thus, in order to allege a pattern of
racketeering activity, a plaintiff must show both relatedness and continuity. Id. Defendants
contend that plaintiffs fail to plead continuity.
The continuity requirement may “be satisfied either by showing a ‘closed-ended’
pattern—a series of related predicate acts extending over a substantial period of time—or by
demonstrating an ‘open-ended’ pattern of racketeering activity that poses a threat of continuing
criminal conduct beyond the period during which the predicate acts were performed.” Spool,
520 F.3d at 183. Here, plaintiffs have failed to adequately allege either a closed-ended or openended pattern.
i.

Closed-Ended Continuity
To demonstrate “closed-ended continuity, the plaintiff must prove ‘a series of

related predicates extending over a substantial period of time.’ ” Cofacredit, 187 F.3d at 242
(quoting H.J. Inc., 492 U.S. at 242). The Second Circuit has identified several “non-dispositive
factors” considered by courts in determining whether closed-ended continuity exists, “including,
inter alia, the length of time over which the alleged predicate acts took place, the number and
variety of acts, the number of participants, the number of victims, and the presence of separate
schemes.” GICC Capital Corp. v. Tech. Fin. Group. Inc., 67 F.3d 463, 467 (2d Cir. 1995).
Notwithstanding this list of factors, the Second Circuit has repeatedly emphasized that “closedended continuity is primarily a temporal concept,” and since the Supreme Court decided H.J. Inc.
the Circuit has “never held a period of less than two years to constitute a ‘substantial period of
time.’ ” Cofacredit, 187 F.3d at 242; see also DeFalco v. Bernas, 244 F.3d 286, 321 (2d Cir.
2001); Spool, 520 F.3d at 184. The relevant period in evaluating continuity “is the time during

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which RICO predicate activity occurred, not the time during which the underlying scheme
operated or the underlying dispute took place.” Spool, 520 F.3d at 184 (citations omitted).
Here, the at most eight-month timeframe identified by plaintiffs falls far short of
the two-year benchmark that the Second Circuit has consistently cited. Further, nearly all of the
factors identified by the Second Circuit in GICC Capital weigh against a finding of closed-ended
continuity: the predicate acts took place over a short period of time, there is no variety of
predicate acts, there are a small number of participants, and there is only one single scheme.
ii.

Open-Ended Continuity
“To satisfy open-ended continuity, the plaintiff . . . must show that there was a

threat of continuing criminal activity beyond the period during which the predicate acts were
performed.” Cofacredit, 187 F.3d at 242. When an enterprise’s business is “primarily or
inherently unlawful,” such a threat is generally presumed. Spool, 520 F.3d at 185 (citations
omitted); see also United States v. Aulicino, 44 F.3d 1102, 1111 (2d Cir. 1995) (“[W]here the
acts of the defendant or the enterprise were inherently unlawful, such as murder or obstruction of
justice, and were in pursuit of inherently unlawful goals, such as narcotics trafficking or
embezzlement, the courts generally have concluded that the requisite threat of continuity was
adequately established . . . .”). In contrast, when the enterprise primarily conducts a legitimate
business, no such presumption arises. Spool, 520 F.3d at 185. In such a case, “there must be
some evidence from which it may be inferred that the predicate acts were the regular way of
operating that business, or that the nature of the predicate acts themselves implies a threat of
continued criminal activity.” Id. (quoting Cofacredit, 187 F.3d at 243).
The activities of the enterprise alleged in the Complaint are not “inherently
unlawful.” The enterprise consists of a pharmacy that sells prescription medication to its

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customers (Compl., ¶ 30), and its legitimacy as a business is recognized by plaintiffs. (See Pl.
Opp., p. 7 (“RJ Pharmacy can claim some ‘legitimate’ existence” (Dkt. No. 27.)) Thus, in order
to show closed-ended continuity, plaintiffs must provide evidence from which it can be inferred
that the alleged predicate acts of wire fraud either (1) were the regular way of operating the
pharmacy or (2) imply a threat of continued criminal activity. Plaintiffs have failed to do so.
Plaintiffs allege that defendants engaged in criminal acts other than the alleged
predicate act of wire fraud, such as stealing Stat Rx’s pharmaceuticals and vendors and
manipulating its computer contact list, and argue that “the pattern of racketeering at issue is part
of a larger scheme which suggests that stealing from Stat Rx is RJ Pharmacy’s ‘regular way of
operating business.’ ” (Pl. Opp., p. 7 (citations omitted.)) However, when determining whether
the predicate acts were the regular way of operating the enterprise, the Court must take into
account only the predicate racketeering activity that plaintiffs have alleged, which in this case is
wire fraud. See Cofacredit, 187 F.3d at 244. In Cofacredit, the Second Circuit reversed the
district court’s finding that the plaintiff had demonstrated open-ended continuity because the
district court had considered actions that did not constitute predicate racketeering activity, and
absent this improper consideration the evidence was insufficient to support a finding of
continuity. Id. Taking into account only the alleged wire fraud, the calling of Stat Rx’s clients
to inform them that the pharmacy had changed its name and location to RJ Pharmacy, the Court
concludes that plaintiffs have failed to plausibly plead that this is defendants’ regular way of
operating its business. Rather, the Complaint alleges a “discrete and relatively short-lived
scheme to defraud” Rx Stat, which is insufficient to establish open-ended continuity. See id.;
Spool, 520 F.3d at 186.

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Moreover, instead of posing an ongoing threat of criminal activity, the
racketeering activity alleged in this case is “inherently terminable.” The Second Circuit has
repeatedly held that “an ‘inherently terminable’ scheme does not imply a threat of continued
racketeering activity.” Cofacredit, 187 F.3d at 244; see also Spool, 520 F.3d at 186. In Spool,
defendants, an adoption agency, allegedly stole client files from plaintiffs, a group it was
previously affiliated with. 520 F.3d at 181. The Second Circuit held that plaintiffs failed to
established open-ended continuity because the allegedly fraudulent scheme was “inherently
terminable,” in that once defendants concluded the fraudulent processing of stolen client cases it
would have no more of plaintiffs’ files with which to work. Id. at 186; see also GICC Capital, 67
F.3d at 466 (“It defies logic to suggest that a threat of continued looting activity exists when . . .
there is nothing left to loot.”). Here, plaintiffs argue that “the predicate acts—which depended
on the theft of Stat Rx’s client contact list, which RJ Pharmacy associates presumably still have
and can use, ‘implies a threat of continued criminal activity.’ ” (Pl. Opp., p. 7.) However, just
like there were a finite number of client cases to process in Spool, the contact list in this case has
a limited number of customers on it. Any future fraudulent calls made to persuade customers
that RJ Pharmacy is the successor to Stat Rx could not continue indefinitely: once defendants
contact each client on the list they will have no more individuals to call. Further, the fact that
plaintiffs do not allege that any predicate acts have occurred since October 2010, four years
before commencement of this action, suggests that the alleged scheme has come to a close. See
First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 181 (2d Cir. 2004) (concluding
that there was no threat of continued criminal activity where the last alleged predicate act
occurred approximately two years before the filing of the amended complaint because this
suggested that the scheme had “wound to a close.”)

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Accordingly, plaintiffs have failed to demonstrate that the predicate acts alleged
satisfy either closed-ended or open-ended continuity. As a matter of law, the Complaint fails to
demonstrate a “pattern of racketeering activity” and thus fails to state a RICO claim under
section 1962(c).
III.

Section 1962(d) RICO Conspiracy Claim
In order to “establish the existence of a RICO conspiracy, a plaintiff must prove

the existence of an agreement to violate RICO’s substantive provisions.” Cofacredit, 187 F.3d at
244 (internal quotation marks and citations omitted). Where “there is insufficient evidence that
the [defendants] actually committed predicate acts displaying the continuity necessary to support
a substantive RICO violation,” and “no evidence that the [defendants] agreed to perform
additional predicate acts that, if committed, would have displayed continuity sufficient to
establish a pattern of racketeering activity,” a RICO conspiracy claim must fail. Id. at 245.
Here, plaintiffs have failed to state a substantive RICO claim and have made no additional
allegations in pleading a RICO conspiracy claim that would establish a pattern of racketeering
activity. As such, plaintiffs have failed to state a RICO conspiracy claim under 18 U.S.C. §
1962(d).
IV.

State Law Claims
Plaintiffs concede that their state law claims of conversion, unjust enrichment,

and theft of proprietary information should be dismissed based upon the applicable statute of
limitations, but argue that they sufficiently allege a cause of action for fraud. (See Pl. Opp., p. 7
n. 1.) With the dismissal of plaintiffs’ federal claims, this Court must decide whether to exercise
supplemental jurisdiction over the remaining state law fraud claim. 28 U.S.C. § 1367. Although
section 1367(c)(3) is couched in permissive terms, the Second Circuit has made clear that the
Court’s discretion “is not boundless.” Valencia ex rel. Franco v. Lee, 316 F.3d 299, 305 (2d Cir.
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2003). “In deciding whether to exercise jurisdiction over supplemental state-law claims, district
courts should balance the values of judicial economy, convenience, fairness, and comity—the
‘Cohill factors.’ ” Klein & Co. Futures, Inc. v. Bd. of Trade of City of New York, 464 F.3d 255,
262 (2d Cir. 2006) (citing Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 350, (1988)). “[I]n
the usual case in which all federal-law claims are eliminated before trial, the balance of factors to
be considered under the pendent jurisdiction doctrine . . . will point toward declining to exercise
jurisdiction over the remaining state-law claims.” Cohill, 484 U.S. at 350 n. 7. Discovery has
not yet commenced in the present action, there are no economies achieved in continuing the
action in this Court, and there is no federal interest intertwined with the state law claim.
Accordingly, the Court declines to exercise supplemental jurisdiction over plaintiffs’ state law
fraud claim.
CONCLUSION
The Complaint, assuming the truth of its allegations, suggests that one or both
plaintiffs were seriously damaged by tortious conduct of one or more defendants. That,
however, is not sufficient to state a federal RICO or RICO conspiracy claim. This Court’s
declination of supplemental jurisdiction assures that any timely and meritorious state law claim
may be pursued in state court.
Defendants’ motion to dismiss (Dkt. No. 24) is GRANTED. The Clerk is directed
to enter judgment for the defendants and close the case.
SO ORDERED.

Dated: New York, New York
April 20, 2015
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