Puri et al v. Khalsa et al

Filing 296

OPINION AND ORDER: I GRANT in part and DENY in part the Motion to Dismiss or in the Alternative Motion to Strike 245 filed by Defendants Kartar, Sopurkh, UI, Karm, Peraim, SSSC, and Karam; GRANT the Motion to Dismiss 247 filed by Defendants Hor owitz and Lane Powell; GRANT the Motion to Dismiss 249 filed by Defendant Ram; GRANT the Motion to Dismiss 250 filed by Defendants Schwabe and Lambert; and GRANT the Motion to Dismiss 257 filed by Defendants Gurudhan, EWTC, Hari, and Ajeet.... (see attached order for full details) Signed on 10/5/2017 by Judge Michael W. Mosman. (kms)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

BIBIJI INDERJIT KAUR PURI;
RANBIR SINGH BHAI; KAMALJIT
KAUR KOHLI; KULBIR SINGH PURI,
No. 3:10-cv-01532-MO
Plaintiffs,
OPINION AND ORDER
v.

SOPURIIB KAUR KHALSA;
PERAIM KAUR KHALSA; SIRI
RAM KAUR KHALSA; KARTAR
SINGH KHALSA; KARAM SINGH
KHALSA; SIRI KARM KAUR
KHALSA; ROY LAMBERT;
SCHWABE, WILLIAMSON &
WYATT, an Oregon Professional
Corporation; LEWIS M. HOROWITZ;
LANE POWELL PC, an Oregon
Professional Corporation; UNTO
INFINITY, LLC, an Oregon Limited
Liability Company; SIRI SINGH
SAHIB CORPORATION, an Oregon
non-profit corporation; GURUDHAN
SINGH KHALSA; GURU HARi SINGH
KHALSA; AJEET SINGH KHALSA;
EWTC MANAGEMENT, LLC; DOES, 1-5,
Defendants.
MOSMAN,J.,
This matter comes before me on Defendants' five Motions to Dismiss the Second
Amended Complaint ("SAC"). [245, 247, 249, 250, 257]. For the reasons below, I GRANT in

1 - OPINION AND ORDER

part and DENY in patt the Motion to Dismiss or in the Alternative Motion to Strike [245] filed
by Defendants Kmtar Singh Khalsa, Sopurkb Kaur Khalsa, Unto Infinity, LLC ("UI"), Siri Karm
Kaur Khalsa, Peraim Kaur Khalsa, Siri Singh Sahib Corporation ("SSSC"), and Karam Singh
Khalsa; GRANT the Motion to Dismiss [247] filed by Defendants Lewis Horowitz and Lane
Powell; GRANT the Motion to Dismiss [249] filed by Defendant Siri Ram Kaur Khalsa;
GRANT the Motion to Dismiss [250] filed by Defendants Schwabe, Williamson & Wyatt
("Schwabe") and Roy Lambert; and GRANT the Motion to Dismiss [257] filed by Defendants
Gurudhan Singh Khalsa, EWTC Management, LLC ("EWTC"), Guru Hari Singh Khalsa, and
Ajeet Singh Khalsa.

BACKGROUND
After this Comt granted Defendants' Motions to Dismiss the First Amended Complaint
("FAC") 1 [215, 220], the Ninth Circuit affirmed in part, vacated in part, and remanded. In a
published opinion, the Ninth Circuit concluded that dismissal pursuant to the ministerial
exception was not warranted and that this Court could address Plaintiffs' claims without
violating the First Amendment. Puri v. Khalsa, 844 F.3d 1152 (9th Cir. 2017). In an
accompanying unpublished memorandum disposition, the Ninth Circuit: (1) affomed the
dismissal with prejudice of all derivative claims; (2) ordered this Court to dismiss without
prejudice Plaintiffs' fraud claim against all Defendants other than Sopurkb, Kartar, Lambert, and
Schwabe for failure to plead fraud with particularity; (3) affirmed the dismissal with prejudice of
Plaintiffs' claim for negligent misrepresentation as to Lane Powell and Horowitz and ordered
this Court to dismiss without prejudice as to the other Defendants for failure to plead fraud with
particularity; (4) ordered this Court to dismiss without prejudice Plaintiffs' claim for tottious
1

Plaintiffs' FAC brought claims for: (1) declaratory relief; (2) breach of fiduciary duty; (3) fraud; (4) negligent
misrepresentation; (5) tortious interference with prospective economic advantage; (6) conversion; (7) unjust
enrichment; (8) RICO; (9) legal malpractice; and (10) aiding and abetting. FAC [102].

2 - OPINION AND ORDER

interference with prospective economic advantage for failure to plead fraud with particularity, as
to all defendants other than Sopurkh2 , Lambert, and Schwabe; (5) ordered this Comt to dismiss
without prejudice Plaintiffs' RICO/ORI CO claim for failure to plead fraud with particularity, as
to all defendants other than Sopurkh, Lambert, and Schwabe. 3 Puri v. Khalsa, 674 F. App'x 679
(9th Cir. 2017).
In the Second Amended Complaint ("SAC"), Plaintiffs bring five claims: (1) Claim One
for declaratory relief(Claim One in the FAC); (2) Claim Two for fraud (Claim Three in the
FAC); (3) Claim Three for negligent misrepresentation (Claim Four in the FAC); (4) Claim Four
for tortious interference with prospective economic advantage (Claim Five in the FAC); and (5)
Claim Five for RICO/ORICO (Claim Eight in the FAC). SAC [234]. 4 In the SAC, Plaintiffs
added four Defendants: Gurudhan, Hari, Ajeet, and ETWC Management, LLC. SAC [234].
Defendants Kmtar, Sopurkh, UI, Katm, Peraim, SSSC, and Karam filed a Motion to
Dismiss [245], arguing the Court should dismiss Claim One for declaratory relief, or in the
alternative, strike the derivative requests for relief; dismiss Claim Two for fraud as to each of these
Defendants other than Sopurkh and Kaitar; dismiss Claim Three for negligent misrepresentation as to
each of these Defendants; dismiss Claim Four for tortious interference with prospective economic
advantage as to each of these Defendants other than Sopurkh; and dismiss Claim Five for
RICO/ORICO as to each of these Defendants. [245]. The Motion to Dismiss filed by Lambert and
Schwabe [250] argues the derivative claims and the ORICO/RICO claims should be dismissed as

2

This opinion, like the briefing, will refer to cetiain individuals in this case by their first names to distinguish from
others who have the same last name.
3

The Ninth Circuit also addressed the dismissal of Plaintiffs' claims for unjust emichment, legal malpractice, and
aiding and abetting, but Plaintiffs do not bring these claims in the SAC.
4

This Comi struck as untimely Plaintiffs "Revised/Corrected" Second Amended Complaint and addresses only the
SAC in this opinion. [281].

3 - OPINION AND ORDER

to both of these Defendants and that the claims against Schwabe for declaratory relief and
negligent misrepresentation as to Plaintiffs Ranbir, Kamaljit, and Kulbi should also be dismissed.
[250]. The Motions to Dismiss filed by Defendants Horowitz and Lane Powell [247], Ram [249],
and by Gurudhan, Hari, Ajeet, and ETWC Management, LLC [257] each argue the Court should
dismiss all claims against these defendants. [247, 249, 257].

LEGAL STANDARD
When reviewing a motion to dismiss, the court must "accept all factual allegations in the
complaint as true and construe the pleadings in the light most favorable to the nonmoving party."
Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). A comt need not accept legal conclusions as

true because "[t]hreadbare recitals of the elements of a cause of action, suppmted by mere conclusory
statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to
dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), "a complaint must
contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its
face."' Id (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers
only "labels and conclusions" or "'naked assertion[s]' devoid of 'further factual enhancement'" will
not suffice. Id (quoting Twombly, 550 U.S. at 555, 557). While a plaintiff does not need to make
detailed factual allegations at the pleading stage, the allegations must be sufficiently specific to give
the defendant "fair notice" of the claim and the grounds on which it rests. See Erickson v. Pardus,
551 U.S. 89, 93 (2007) (per curiam) (citing Twombly, 550 U.S. at 555).
Rule 15 provides that a court should freely give leave to amend a complaint "when justice so
requires." Fed. R. Civ. P. 15(a)(2). As such, when a court dismisses a complaint for failure to state a
claim, "leave to amend should be granted 'unless the court determines that the allegation of other
facts consistent with the challenged pleading could not possibly cure the deficiency."' DeSoto v.
Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-

4 - OPINION AND ORDER

Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). If amendment would be futile, the cou1t

need not grant leave to amend. Id. "Leave to amend may also be denied for repeated failure to cure
deficiencies by previous amendment." Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th
Cir. 2008).

DISCUSSION
I.

Conceded Claims
Plaintiffs concede in their briefing on the Motions to Dismiss that the following claims in

their SAC should be dismissed: (1) Claim One for declaratory relief as to all Defendants except
UI and SSSC; (2) Claim Two for fraud as to UI and SSSC; (3) all Plaintiffs' Claim Three for
negligent misrepresentation as to Sopurkh, Peraim, Siri Ram, Kann, Kartar, Karam, Gurudhan,
Hari, Ajeet, EWTC, UI, and SSSC, and Ranbir's, Kamaljit's, and Kulbir's Claim Three against
Lambert and Schwabe; (4) Claim Four for tortious interference with prospective economic
advantage against Karam, Gurudhan, Hari, Ajeet, EWTC, UI, and SSSC; and (5) Claim Five for
ORICO against all Defendants and for RICO against UI and SSSC. [258] at 9-11, [259] at 9,
[260] at 13, [262] at 9, [272] at 2-3. Accordingly, I GRANT Defendants' Motions as to these
claims.
After Plaintiffs' conceded claims are dismissed, the claims still before this Court in these
Motions to Dismiss are:
•
•
•
•

Claim One for declaratory relief: claimed by all Plaintiffs against UI and SSSC.
Claim Two for fraud: claimed by all Plaintiffs against all Defendants other than UI and
SSSC.
Claim Three for negligent misrepresentation: claimed by Bibiji against Defendants Lambe1t
and Schwabe.
Claim Four for to1tious interference with prospective economic advantage: claimed by all
Plaintiffs against Defendants Sopurkh, Peraim, Ram, Karm, Karter, Lambert, Schwabe,
Horowitz, and Lane Powell.

5 - OPINION AND ORDER

•

Claim Five for RICO: federal RICO claims by all Plaintiffs against all Defendants other than
UI and SSSC.

I address the arguments raised by the patties as to each of these claims in turn.

II.

Claim One: Declaratory Relief
The Declaratory Judgments Act ("DJA") states: "In a case of actual controversy within

its jurisdiction ... any court of the United States ... may declm·e the rights and other legal
relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). Plaintiffs seek
declaratory relief against UI and SSSC in the fonn of a judgment declaring:
•
•

•
•
•

•

39.1 That BIBIJI has been a Manager ofUI from and after July 26, 2004.
39.2 That every act by the Board of Managers ofUI after July 26, 2004, and all actions taken
by Defendants as Managers ofUI from and after July 26, 2004, are void for lack of proper
notice.
39.3 That all amendments to the Organization Agreement from and after July 26, 2004 are
void for lack of proper notice.
3 9.4 That the Settlement Agreement is invalid.
39.5 That Defendants SOPURKH, RAM, PERAIM, KARTAR and KARM KAUR
KHALSA have breached their fiduciary duties and are not fit to serve as Managers/Members
of UL
39.6 That Plaintiff is the sole remaining legitimate Manager ofUI.

SAC [234]

ifif 39.1-39.6. Plaintiffs also "request that the Comt issue a judgment declaring that

Plaintiffs are managers/directors/trustees ofSSSC." SAC [234]

if 40.

UI and SSSC argue that these requests for relief are derivative and therefore baned by the
Ninth Circuit's ruling affirming this Comt' s dismissal with prejudice of Plaintiffs' derivative
claims. [245] at 15-16. Plaintiffs argue they are not seeking derivative relief and instead "[t]he
allegations defendants complain about are necessmy background to Plaintiffs' claims and related
to the conspiratorial nature of the Defendants['] acts." Response [260] at 9.
UI and SSSC are conect that Paragraphs 39.2 to 39.6 ask for derivative relief. Under
Oregon law, which applies in this case because UI and SSSC are Oregon LLCs, if "a shareholder
6 - OPINION AND ORDER

has a 'special' injury, then the shareholder has standing to assert a direct claim. A special injury
is established where there is a wrong suffered by the shareholder not suffered by all shareholders
generally or where the wrong involves a contractual right of the shareholders, such as the right to
vote." Loewen v. Galligan, 882 P.2d 104, 111 (Or. Ct. App. 1994). Here, Plaintiffs have not
alleged they suffered special injury by actions of the board (including the settlement agreement),
by any alleged breaches of fiduciary duties, or by the presence of other board members. But
paragraphs 3 9 .1 and 40, which ask for declaratory relief as to Plaintiffs' membership on the
SSSC board and Bibiji's membership on the UI board, are injuries special to Plaintiffs. I
therefore GRANT in part and DENY in part UI defendants' Motion to Dismiss as to Claim One,
and DISMISS all claims except Bibiji's request for declaratory relief as to UI board membership
and all Plaintiffs' requests for declaratory relief as to SSSC board membership.

III.

Claim Two: Fraud
There are nine elements to a fraud claim under Oregon law: (1) a representation; (2) that

is false; (3) and that is material; (4) the speaker must know that the statement is false or be
ignorant of its truth; (5) the speaker must have intended for the statement to be acted upon in a
manner reasonably contemplated; (6) the listener must have been ignorant of the statement's
falsity; (7) the listener must have relied on the statement; (8) the listener must have a right to rely
on the statement; and (9) the listener's damages must have been proximately caused by his
reliance on the statement. W. Sur. Co. v. Bank ofS. Or., 257 F.3d 933, 936 (9th Cir. 2001); Or.

Public Emps. 'Ref. Fund v. Simat, Helliesen & Eichner, 83 P.3d 350, 359 (Or. Ct. App. 2004).
Plaintiffs bring their fraud claim against all defendants except UI and SSSC. Defendants
Peraim, Ram, Kaim, Karam, Gurudhan, Hari, Ajeet, EWTC, Horowitz, and Powell argue this
claim should be dismissed for failure to meet Rule 9(b)' s heightened pleading standard and

7 - OPINION AND ORDER

because Plaintiffs fail to allege harm sufficient for Article III standing as to Defendants Horowitz
and Powell.
A.

Failure to Meet Rule 9(b) 's Heightened Pleading Standard
1.

Legal Standards

Where a complaint includes allegations of fraud, a party "must state with particularity the
circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). The Ninth Circuit interprets
Rule 9(b) as requiring "an account of the 'time, place, and specific content of the false
representations as well as the identities of the parties to the misrepresentations."' Swartz v.

KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, Inc., 356 F.3d
1058, 1066 (9th Cir. 2004) (citation omitted)). "Rule 9(b) does not allow a complaint to merely
lump multiple defendants together." Id. Instead, Rule 9(b) "requires plaintiffs to differentiate
their allegations when suing more than one defendant ... and info1m each defendant separately
of the allegations surrounding his alleged participation in the fraud." Id. (citations and
quotations omitted). Therefore, Plaintiffs here "must, at a minimum, identify the role of each
defendant in the alleged fraudulent scheme." Id. at 765. The Ninth Circuit further requires that
"in 'all averments offraud . .. , the circumstances constituting fraud ... shall be stated with
particularity."' Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1104 (9th Cir. 2003) (internal
citations omitted). As a result, if fraud is not a necessary element of a claim but Plaintiffs allege a
"unified course of fraudulent conduct and rely entirely on that course of conduct as the basis of a
claim," Plaintiffs' claim is said to be "'grounded in fraud' or to 'sound in fraud,' and the
pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)." Id at
1103-04.
In Wool v. Tandem Computers Inc., the Ninth Circuit first recognized an exception to
Rule 9(b)'s general rnle in instances of fraud where the facts in suppmt are within the
8 - OPINION AND ORDER

defendants' possession, holding that Rule 9(b) "may be relaxed as to matters peculiarly within
the opposing patty's knowledge," despite the general rule that "[a]llegations of fraud based on
infmmation and belief usually do not satisfy the degree ofpmticularity required." 818 F.2d 1433,
1439 (9th Cir. 1987), overruled on other grounds as stated in Flood v. Miller, 35 Fed. App'x.
701, 703 n.3 (9th Cir. 2002). The Wool comt noted that the exception exists for cases such as
corporate fraud where plaintiffs cannot be expected to have personal knowledge of the facts
constituting the wrongdoing. Id. However, a plaintiff relying on this exception must still satisfy
the pmticularity requirement by accompanying the allegations of fraud based on information and
belief with "a statement of the facts upon which the belief is founded." Id.
2.

Plaintiffs' Fraud Claim

The Ninth Circuit affirmed the dismissal of this claim without prejudice under Rule 9(b)
as to all defendants except Lambe1t, Schwabe, Sopurkh and Kartar. Puri v. Khalsa, 674 F.
App'x 679, 688-89 (9th Cir. 2017). The Ninth Circuit concluded that specific paragraphs in
Plaintiffs' FAC met Rule 9(b)'s standard and that others did not. Id In the SAC [234], Plaintiffs
reiterate the FAC's section on fraud verbatim, with nine additional paragraphs (45.8, 47.4, 47.5,
47.6, 48.4, 48.6, 48.7, 49.1, 49.2). Three of these paragraphs (45.8, 49.1, 49.2) add language
referring to allegations in paragraphs 23 through 31, which cover 21 pages. SAC [234]. Even
assuming this language cures the Ninth Circuit's conclusion that the FAC's "vague references"
to prior allegations "are insufficient in a case such as this, involving a lengthy and difficult to
decipher pleading," Puri, 674 F. App'x at 688, paragraphs 23 through 31 principally contain
specific allegations about the actions of Sopurkh, Kmtar, Lambert, Schwabe, and possibly
Horowitz and Lane Powell. 5 The remainder of the paragraphs contain allegations about Peraim,

5

Regarding Horowitz and Lane Powell, Plaintiffs added language to the SAC specifically accepted
by the Ninth Circuit as meeting Rule 9(b)'s standard under the aiding and abetting claim (no longer in the

9 - OPINION AND ORDER

Ram, Karm, Karam, Gurudhan, Hari, Ajeet, and EWTC that are either conclusory or state their
conclusions upon "information and belief," without a basis for those conclusions (e.g., "Plaintiffs
are informed and believe and therefore allege that in furtherance of their conspiracy SOPURKH,
LAMBERT, PERAIM, RAM, KARTAR and KARM deliberately and willfully withheld notice
of annual meetings," SAC [234] if 26.10).
The new paragraphs specifically added to the fraud section (47.4, 47.5, 47.6, 48.4, 48.6,
48.7), continue to state allegations made on information and belief without stating a possible
basis for the belief or specific allegations about any of Defendants' actions, again with the
possible exception of Horowitz and Lane Powell. For example:
47.5. Plaintiffs are futther informed and believe and based thereon allege that
LAMBERT, SCHWABE, HOROWITZ, GURUDHAN, HARI, AJEET and
LANE agreed and conspired to aid and abet KARTAR and KARAM to abscond
with 90% of the value of KIT BV by transferring KIT BV from KIIT into GTO to
the detriment of UI and the Sikh Dhmma community, and to prevent Plaintiffs
from being placed on the Bom·d of SSSC in order to consummate their illicit
transfer of assets.
SAC [234] if 47.5.
Plaintiffs fail to plead their fraud claim with pmticularity or to meet the Wool exception
by accompanying their allegations of fraud based on information and belief with "a statement of
the facts upon which the belief is founded." Wool, 818 F.2d at 1439. I therefore GRANT
Defendants' Motion to Dismiss as to this claim and DISMISS Claim Two for fraud as to Peraim,
Ram, Karm, Karam, Gurudhan, Hari, Ajeet, and EWTC.
B.

Lack of Standing as to Horowitz and Lane Powell

case) to their fraud claim. SAC [234] if 47.6; see Puri, 674 F. App'x at 691. This language claims fraud
based on an email Horowitz sent representing there was no sale of the assets of Golden Temple. SAC
[234] if 47.6. Horowitz's and Lane Powell's alternative arguments about Plaintiffs' fraud claim are
addressed in a separate section below.

10 - OPINION AND ORDER

The Ninth Circuit concluded a version of the following allegation against Horowitz and
Lane Powell met Rule 9(b)'s standards:
31.18. On November 6, 2008, HOROWITZ sent an e-mail to Kate Freeland,
attorney for beneficiaries under the Will of Yogi Bhajan representing that there
had been no sale of assets of Golden Temple. This communication was in
furtherance of the cover-up of the transfer of assets of Golden Temple from KIIT
to EWTCM for the benefit of the owners of EWTCM and in support of the YB
Assurances promised to the Board members of UI for approving the fotmation of
GTO and transfer of 90% of the value of Golden Temple to EWTCM. A copy of
the e-mail from HOROWITZ is attached hereto as Exhibit 42.
SAC [234]

'if 31.18. Given that the SAC contains at least one allegation against Horowitz and

Lane Powell sufficient to meet Rule 9(b)' s standard, I now address their alternative arguments
for dismissal. Horowitz and Lane Powell argue that Plaintiffs' fraud claim against them should
be dismissed because they were only involved in the 2007 Golden Temple events and Plaintiffs
do not allege individual harm from those events. [247] at 8-14. Horowitz and Lane Powell
contend that Plaintiffs only allege harm from the 2004-2005 failure to place Plaintiffs on bom·ds,
and that the only way Horowitz and Lane Powell could be held liable for the 2004-2005 events
would be via retroactive aiding and abetting liability. [247] at 8-14. Plaintiffs respond that the
2007 events were "a continuation of the 2004 and continuing conspiracy to exclude Plaintiffs
from the UI and SSSC Boards, and Plaintiffs were incurring continuing injury." [262] at 10-18.
Plaintiffs also allege in response a new theory of hmm from trademark licensing never before
raised in this case, and not raised in the SAC. [262] at 10-18.
Article III standing "requires the party who invokes the court's authority to show that he
personally has suffered some actual or threatened injmy as a result of the putatively illegal
conduct of the defendant, and that the injury fairly can be traced to the challenged action and is
likely to be redressed by a favorable decision." Valley Forge Christian Coll. v. Ams. United for
Separation of Church & State, Inc., 454 U.S. 464, 472 (1982) (internal citations and quotation

11 - OPINION AND ORDER

marks omitted). In the SAC, Plaintiffs do not allege any personal injmy resulted from the 20072008 Golden Temple events. See, e.g., SAC [234]

~

30.27 ("Plaintiffs are informed and believe

and based thereon allege that this was in furtherance of the conspiracy to benefit the conspiracy
participants to the detriment of the Sikh Dharma community.").
And even under Plaintiffs' theory of continuing harm resulting from the 2004 events,
Horowitz and Lane Powell would have to be held retroactively liable for the 2004 events. Under
Oregon law, a defendant may be liable for another's t01t to a third party under the following
circumstances:
For harm resulting to a third person from the tmtious conduct of another, one is
subject to liability ifhe (a) does a tortious act in conceit with the other or pursuant
to a common design with him, or (b) knows that the other's conduct constitutes a
breach of duty and gives substantial assistance or encouragement to the other so
to conduct himself, or (c) gives substantial assistance to the other in
accomplishing a tortious result and his own conduct, separately considered,
constitutes a breach of duty to the third person.
Granewich v. Harding, 985 P.2d 788, 792 (Or. 1999) (quoting and adopting Section 876 of the
Restatement (Second) of Torts (1979)). Horowitz's conduct in sending the 2008 email to
Freeland does not fit under this framework. Plaintiffs do not allege the 2004 events in keeping
Plaintiffs off the boards and the 2007-2008 Golden Temple events were "pursuant to a common
design," that Horowitz and Lane Powell knew of the prior events, gave substantial assistance to
other defendants, or were involved at all mttil 2007-2008, or that Horowitz breached a duty to
Plaintiffs in sending the 2008 email. See SAC [234]

~~

30.1-30.27. I therefore GRANT

Horowitz's and Lane Powell's Motion to Dismiss as to the fraud claim.

IV.

Claim Three: Negligent Misrepresentation
Plaintiffs concede that their negligent misrepresentation claim should be dismissed as to

all Plaintiffs and Defendants, except for Bibiji's claim against Lambert and Schwabe, who do not

12- OPINION AND ORDER

argue this claim should be dismissed. I therefore make no additional rnlings on this claim, other
than to GRANT dismissal of the conceded claims.

V.

Claim Four: Tortious Interference with Prospective Economic Advantage
A prima facie case for intentional interference in Oregon requires: (1) the existence of a

prospective professional or business relationship; (2) intentional interference with that
relationship or advantage; (3) by a third party; (4) accomplished through improper means or for
an improper purpose; (5) a causal effect between the interference and the harm to the relationship
or prospective advantage; and (6) damages. Allen v. Hall, 974 P.2d 199, 202 (Or. 1999).
Plaintiffs bring their tortious interference claim against Sopurkh, Peraim, Ram, Karm,
Kartar, Lambert, Schwabe, Horowitz, and Lane Powell. Defendants Peraim, Ram, Karm, Kartm·,
Horowitz, and Lane Powell argue this claim should be dismissed for failure to meet Rule 9(b)' s
heightened pleading standard and because Plaintiffs fail to allege hmm sufficient for Article III
standing as to Defendants Horowitz and Powell.
A.

Failure to Meet Rule 9(b) 's Heightened Pleading Standard

The Ninth Circuit concluded the FAC contained sufficient allegations against Sopurkh,
Lmnbert, and Schwabe for the purposes of Rule 9(b). Puri, 674 F. App'x at 689. But the Ninth
Circuit concluded that the FAC failed to meet Rule 9(b)'s heightened pleading standard for fraud
with respect to the remaining Defendants. Id Defendants Peraim, Ram, Karm, Kmiar, Horowitz,
and Lane Powell argue that the SAC continues to suffer from the same infirmities pointed out by
the Ninth Circuit, [245] at 21, and Plaintiffs argue the SAC meets Rule 9(b)'s standards, [260] at

21.
The SAC repeats the FAC's allegations and adds four new paragraphs (62.8, 62.9, 62.10,
62.11 ). These paragraphs read:

13 - OPINION AND ORDER

62.8. Furthermore, Plaintiffs are informed and believe that GURUDHAN, HARI,
AJEET, KARAM and HOROWITZ agreed and conspired to assist, aid and abet
LAMBERT, KARTAR, SOPURI<H, RAM, KARM and PERAIM to exclude
Plaintiffs from the Board of SSSC in order to consummate their fraudulent
transfer of 90% of the value of KIT BV by transferring KIT BV from KIIT into
GTO.
62.9. In reliance on the false representations of Defendants and their failure to
disclose their plans to defraud, Plaintiffs were induced to and did refrain from any
management input, decisions or other management activities at SSSC.
62.10. Had Plaintiffs !mown the actual facts, and not been excluded by
Defendants, they would have undertaken management duties at SSSC and would
have participated in annual and special meetings of SSSC and voted on matters
before the Board of Trustees. Had Plaintiffs been on the board of SSSC they
would have prevented the fraudulent transfer of property to KARTAR, KARAM,
GURUDHAN, HARI, AJEET and EWTCM.
62.11. Furthermore, LAMBERT and SOPURICH were aware Plaintiffs were to be
placed on the board of SSSC and LAMBERT and SOPURKH conspired and
acted in concert with SCWABE, KARTAR, KARAM, GURUDHAN, HARI,
AJEET, HOROWITZ, LANE, RAM, KARM and PERAIM, who ratified and
adopted the prior efforts of LAMBERT, KARTAR and SOPURI<H to prevent
Plaintiffs from being placed on the board of SSSC and/or acquiring lmowledge of
the plan to transfer assets to KARTAR, KARAM, GURUDHAN, HARI, AJEET
without just compensation or disclosure to the Sikh Dharma Community.
SAC [234]

ifif 62.8-62.11. These paragraphs still fail to state the basis for the "information and

belief." Additionally, paragraphs 62.8-62.11 generally relate to the 2007-2008 Golden Templerelated actions of Gurudhan, Hari, Ajeet, Karam, Horowitz, and Lane Powell, and the Plaintiffs
have withdrawn this claim against all of these Defendants other than Horowitz and Lane Powell.
[257], [260] at 13. Because the new paragraphs are conclusory and do not meet Rule 9(b)'s
standards, I GRANT Defendants' Motions to Dismiss on this claim as to Peraim, Ram, Katm,
and Kartar.
B.

Lack of Standing as to Horowitz and Lane Powell

14 - OPINION AND ORDER

For the same reasons outlined in Section III.B. regarding lack of standing, I also GRANT
Horowitz's and Lane Powell's Motion to Dismiss Plaintiffs' tortious interference claim against
them.

VI.

Claim Five: ORICO/RICO
Plaintiffs bring their federal RICO claims against all defendants except UI and SSSC. 6

Defendants Peraim, Ram, Kann, Kartar, Karam, Gurudhan, Hari, Ajeet, EWTC, Horowitz, and
Lane Powell argue this claim should be dismissed for failure to meet Rule 9(b)'s heightened
pleading standard. Defendants Sopurkh, Lambert, and Schwabe argue this claim should be
dismissed against them for failure to state a claim under RICO.
A.

Failure to Meet Rule 9(b) 's Heightened Pleading Standard

The Ninth Circuit dismissed without prejudice the RICO claims against all defendants
except Sopurkh, Lambert, and Schwabe. Defendants Peraim, Ram, Karm, Kartar, Karam,
Gurudhan, Hari, Ajeet, EWTC, Horowitz, and Lane Powell argue that the SAC continues to
suffer from the same infirmities pointed out by the Ninth Circuit. [245] at 25-26, [247] at 17,
[249] at 7, [257] at 13-15. Plaintiffs argue the SAC meets Rule 9(b)'s standards. See, e.g., [260]
at 25.
Other than adding Gurudhan, Hari, and Ajeet's names to numerous allegations, the SAC
only adds one paragraph not already in the FAC:
80.14. GURUDHAN, HARI AND AJEET were active members of the Sikh community
and did not speak out to correct the false statements by LAMBERT, PERAIM, KARM,
SOPURKH and their co-conspirators.
SAC [234]

if 80.14. Because this paragraph is conclusory and the SAC's RICO section is

otherwise substantially similar to the FAC's section found infirm by the Ninth Circuit, I GRANT

6

Plaintiffs concede they no longer bring claims under Oregon's RICO statute.

15- OPINION AND ORDER

Defendants' Motions to Dismiss on this claim as to Peraim, Ram, Kann, Kartar, Karam,
Gurudhan, Hari, Ajeet, EWTC, Horowitz, and Lane Powell.
B.

Failure to State a RICO Claim

The Ninth Circuit concluded that the FAC met Rule 9(b)'s pleading requirements as to
Sopurkh, Lambert, and Schwabe. Puri, 674 F. App'x at 690. Lambert and Schwabe 7 argue in
their Motion to Dismiss [250] that Plaintiffs' RlCO claim should be dismissed because the SAC
does not sufficiently allege a pattern of racketeering, among other argmnents. [250] at 10-19.
Plaintiffs respond that the SAC shows a pattern of continuous criminal behavior through the
conspiracy to take control ofUI and SSSC, sell the assets of GTO Inc., cover up the asset
transfer, and sell off the cereal division ofGTO. [258] at 13-14.
RlCO requires two or more predicate acts such as wire fraud, and in addition, "to prove a

pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering
predicates are related, and that they amount to or pose a threat of continued criminal activity."
HJ. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989). "[C]riminal conduct forms a pattern if it

embraces criminal acts that have the same or similar purposes, results, participants, victims, or
methods of commission, or otherwise are interrelated by distinguishing characteristics and are
not isolated events." Id. at 240 (quoting 18 U.S.C. § 3575(e)),
I concluded that the RlCO claims in Plaintiffs' original Complaint failed because the
Complaint did not sufficiently allege a pattern of racketeering, Transcript of Proceedings [93] at
32:4-33:11, and the SAC fails to remedy this issue. Plaintiffs allege that two series of events
constitute a pattern of racketeering: they point to one voicemail and three emails sent in 20042005 about excluding Plaintiffs from the UI and SSSC boards, and to six emails sent in 20077

Sopurkh does not specifically argue this point in his Motion to Dismiss but does join the arguments of all other
defendants in their Motions to Dismiss, including this argument. (245] at 2.

16- OPINION AND ORDER

2008 about the transfer of the Golden Temple/GTO assets. SAC [234]

iii! 80.4-80.12.

In my

view, these two sets of events are too isolated and set apait in time to constitute racketeering:
they do not have the same purposes or results (consolidating control over the UI and SSSC
boards versus personal profit from selling assets) or victims (Plaintiffs do not allege they were
harmed by the 2007-2008 events).
Additionally, Plaintiffs fail to allege continuity, another RICO requirement, because the
SAC does not allege these predicate acts threatened any future criminal conduct. See HJ Inc.,
492 U.S. at 242 ("A paity alleging a RICO violation may demonstrate continuity over a closed
period by proving a series ofrelated predicates extending over a substantial period of time.
Predicate acts extending over a few weeks or months and threatening no future criminal conduct
do not satisfy this requirement."). I therefore GRANT Defendants' Motion to Dismiss on the
RICO claims as to Lambert, Schwabe, and Sopurkh.
CONCLUSION
I GRANT in pait and DENY in part the Motion to Dismiss or in the Alternative Motion
to Strike [245] filed by Defendants Kaiiar, Sopurkh, UI, Karm, Peraim, SSSC, and Karatn;
GRANT the Motion to Dismiss [247] filed by Defendants Horowitz and Lane Powell; GRANT
the Motion to Dismiss [249] filed by Defendant Ram; GRANT the Motion to Dismiss [250] filed
by Defendants Schwabe and Latnbe1t; and GRANT the Motion to Dismiss [257] filed by
Defendants Gurudhan, EWTC, Hari, and Ajeet.
Because the SAC evinces a "repeated failure to cure deficiencies by previous amendment,"
Abagninin, 545 F.3d at 742, I DISMISS WITH PREJUDICE the following claims:
•

Claim One (declaratory relief): dismissed against all Defendants except UI and SSSC, as
conceded by Plaintiffs; derivative claims against UI and SSSC dismissed (all claims for
relief other than relief of having Bibij i placed on UI board and all Plaintiffs placed on
SSSC board).

17 - OPINION AND ORDER

•

•
•

•

Claim Two (fraud): dismissed against UI and SSSC as conceded by Plaintiffs; dismissed
for failure to meet Rule 9(b) 's heightened pleading standard for fraud against Peraim, Siri
Ram, Karm, Karam, Gurudhan, Guri Hari, Ajeet, and EWTC; dismissed for lack of
standing against Horowitz and Lane Powell.
Claim Three (negligent misrepresentation): dismissed against all defendants except
Bibiji's claim against Lambert and Schwabe, as conceded by Plaintiffs.
Claim Four (to1tious interference): dismissed against Karam, Gurudhan, Guri Hari, Ajeet,
EWTC, UI, and SSSC, as conceded by Plaintiffs; dismissed for failure to meet Rule
9(b)' s heightened pleading standard for fraud against Peraim, Siri Ram, Karm, and
Kartar; dismissed for lack of standing against Horowitz and Lane Powell.
Claim Five (RICO): ORI CO claims dismissed, as conceded by Plaintiffs; RICO claims
dismissed against UI and SSSC, as conceded by Plaintiffs; RICO claims dismissed for
failure to meet Rule 9(b)' s heightened pleading standard for fraud against Peraim, Siri
Ram, Karm, Karam, Kartar, Gurudhan, Hari, Ajeet, EWTC, Horowitz, and Lane Powell;
RICO claims dismissed for failure to state a claim against Sopurkh, Lambert, and
Schwabe.

The following defendants are dismissed from this case: Karm, Peraim, Karam, Ram, Horowitz,
Lane Powell, Gurudhan, Hari, Ajeet, and EWTC.
The claims remaining in the case are:
•
•
•
•

Claim One (declaratory relief): direct claims against UI and SSSC by all Plaintiffs (relief
of having Bibiji placed on UI board and all Plaintiffs placed on SSSC board).
Claim Two (fraud): claim by all Plaintiffs against Sopurkh, Kartar, Lambe1t, and
Schwabe.
Claim Three (negligent misrepresentation): claim by Bibiji against Lambert and
Schwabe.
Claim Four (tortious interference): claim by all Plaintiffs against Sopurkh, Lambe1t, and
Schwabe.

IT IS SO ORDERED.
DATED this£ day of October, 2017.

18- OPINION AND ORDER