WWW.THESIS.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Online materials, documents
 
<< HOME
CONTACTS



Pages:   || 2 | 3 |

«MEMORANDUM OPINION AND ORDER THOMAS D. SCHROEDER, District Judge This is an action by AARP against providers of certain financial services and their ...»

-- [ Page 1 ] --

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

AARP, )

)

Plaintiff, )

v. )

)

AMERICAN FAMILY PREPAID LEGAL )

CORPORATION, INC., d/b/a AMERICAN ) FAMILY LEGAL PLAN, HERITAGE MARKETING ) Case No.: 1:07cv202 AND INSURANCE SERVICES, INC., STANLEY ) NORMAN, JEFFREY NORMAN, MIKE )

FEDYNSIZYN, ROBERT MALARCHICK, )

AMERICA’S RECOMMENDED MAILERS, INC., ) TINA HENNESSY, and TOM HENNESSY, ) ) Defendants. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge This is an action by AARP against providers of certain financial services and their marketing firms and principals for allegedly engaging in a scheme to unlawfully pass off their services as AARP-endorsed. The Amended Complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act (federal “RICO”), 18 U.S.C. § 1962 (2000), and its North Carolina analog, N.C. Gen. Stat. § 75D-1-14 (2007) (state “RICO”), the Lanham Act, 15 U.S.C. §§ 1114, 1125, the North Carolina unfair and deceptive trade practice statute, N.C. Gen Stat. § 75-1.1, and North Carolina common law involving trademark infringement, unfair competition, false designation of origin, passing off and dilution. (Doc. 3.) Before the court are motions to dismiss the federal RICO claims by all Defendants (Docs. 19, 20 & 27), and to dismiss the state RICO claims by certain Defendants (Doc. 27), for failure to state a claim, pursuant to Rule 12(b)(6), Fed. R. Civ. P.

Certain Defendants have also moved to dismiss the Amended Complaint for lack of personal jurisdiction, pursuant to Rule 12(b)(2), Fed. R. Civ. P., and, in the alternative, to dismiss any claims arising out of conduct other than activity directed toward North Carolina. (Docs. 19, 20 & 27.) For the reasons set forth below, the court grants the motions to dismiss the federal RICO claims, which will be dismissed without prejudice, and it denies the motions as to the North Carolina RICO claims. The court denies the jurisdictional motions and concludes that specific jurisdiction exists over the individual Defendants

–  –  –

mailings directed outside of North Carolina, those claims are dismissed.

I. BACKGROUND The key facts are set forth below, while additional facts

–  –  –

analysis to follow. On motion to dismiss, all facts are viewed in the light most favorable to AARP as the non-moving party.

Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007).

–  –  –

“Financial Services Defendants,” marketed their services through

                                                            

Stanley Norman, at all times relevant, was president of American Family and president (or chief executive officer of Heritage, he could not remember which); his son, Jeffrey Norman, was secretary and chief executive officer of American Family. (Doc. 41, Ex. B at 9, 11 & 56.) Defendants Mike Fedynsizyn and Robert Malarchick were allegedly North Carolina-based sales associates who contracted with American Family and Heritage to personally call on potential customers in North Carolina. The case against Malarchick is stayed pursuant to 11 U.S.C.

§ 362, pending the resolution of his bankruptcy proceedings.

(Doc. 70.)

–  –  –

Financial Services Defendants. (Doc. 3 103, 108, 114 & 120.)

An illustrative lead card states as follows:

                                                            

Tina Hennessy founded ARM and is its sole officer, shareholder and director; her husband, Tom Hennessy, has been its general manager since 2000. (Doc. 42, Ex. A at 11-12, 16-17.)

–  –  –

testimony that the Hennessys modified any of the text referring to AARP. However, at least one other version of the lead card containing reference to the AARP study was a “stock” mailer ARM

–  –  –

Tom Hennessy testified that the “stock” lead cards predated his employment with ARM in 2000. (Id., Ex. A. at 127-128.) The Financial Services Defendants contracted with ARM to mail the lead cards and to process responses from potential

–  –  –

(Id. 27.) Respondents seeking more information were contacted by sales representatives (including Defendants Fedynsizyn and Malarchick) employed by the Financial Services Defendants, and a home-visit was set up during which high-pressure sales tactics were allegedly used to “browbeat seniors into buying financial services.” (Id. 40-90.) AARP alleges that the lead cards misled seniors into believing that the mailings and subsequent

–  –  –

“conducted or participated in the conduct of the affairs of an enterprise engaged in interstate commerce through a pattern of

                                                            





Remand was not sought although it appears to have been available because the original complaint was removable under 28 U.S.C. § 1332.

See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 198-99 (4th Cir. 2008).

      At one point the Amended Complaint alleges that the Financial Services Defendants and the Mail House Defendants constitute an enterprise that has “conspired to engage” in the predicate acts.

(Doc. 3 39.) A conspiracy would be subject to a claim under 18 U.S.C. § 1962(d).   

–  –  –

31 at 4.) 6 A motion under Rule 12(b)(6) should be granted only where, assuming the truth of all allegations in the Amended Complaint, a plaintiff fails to allege sufficient facts entitling it to

–  –  –

Crown Supply, Inc., 896 F.2d 833, 841 (4th Cir. 1990) (en banc) (affirming the necessity of distinction between the “person” and the “enterprise” in actions alleging a violation of § 1962(c)).

–  –  –

casts the same group of actors as being both “persons” and the “enterprise.” Defendants argue that by doing so AARP’s Amended Complaint lacks the requisite distinctness between the “person” undertaking the racketeering conduct and the “enterprise” with which such person is associated.

–  –  –

“enterprise” and a “person” cannot be one and the same because under the statute a “person” cannot be “employed” by itself.

For that reason New Beckley Mining, upon which Defendants rely,

–  –  –

Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir.

1994) (dismissing claim where employer and employees were both defendants and alleged enterprise); Eason v. Merrigan, No. DKC

–  –  –

have been sustained under section 1962(c) where there is only partial overlap between the person and the enterprise, Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir. 1989), and where the defendant may be a RICO person yet one of a number of members of the alleged enterprise, Cullen v. Margiotta, 811 F.2d 698 (2d

–  –  –

federal RICO claim on this basis is denied.

                                                            

It is difficult to conclude that the court’s statement in Entre Computer Ctrs., Inc. v. FMG of Kansas City, Inc., 819 F.2d 1279 (4th

Cir. 1987), requires a different result. There the court stated:

“[A]ssuming a corporation can be part of an ‘association in fact,’ the central question is whether it can combine with other entities to form an enterprise, when it is already the ‘person’ whose behavior the Act is designed to punish. Computer Sciences answers that question in the negative.” Id. at 1287. While the facts of the case are not set out in detail in the opinion, it appears that the court’s statement was in regard to the fact that the alleged enterprise was the corporate defendant and its franchises, thus demonstrating application of the rule set out above that corporations and their closely aligned entities cannot constitute both the RICO enterprise and the person.

–  –  –

18 U.S.C. § 1961(4). The latter is known as an “association-infact” RICO enterprise. The Supreme Court has described it as “a group of persons associated together for a common purpose of

–  –  –

AARP argues that the enterprise shared a common purpose to make money by defrauding seniors into believing that certain living trusts, annuities, financial and insurance products sold

–  –  –

Defendants argued at the hearing on these motions, though not in their briefing, that making money alone cannot suffice as a common purpose.

An association-in-fact enterprise requires demonstration of

–  –  –

States v. Batts, 171 F. App’x 977, 981 (4th Cir. 2006) (finding that a common purpose of dealing cocaine existed where gang members looked out for police, protected each other, referred drug buyers to other gang members for purchases, took turns

–  –  –

crimes to preserve their turf); United States v. Najjar, 300 F.3d 466, 485 (4th Cir. 2002) (finding common purpose between defendant-employee and the corporation based on evidence that defendant-employee acted on behalf of and with intent to benefit the corporation). A goal of making money establishes a common purpose where the enterprise members sought to profit from the alleged illegal activity. Tillett, 763 F.2d at 630-31 (finding

–  –  –

smoker traffic in retailers’ stores,” sufficiently alleged an association-in-fact); see also Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1284 (11th Cir. 2006) (holding complaint alleging members of an enterprise stood to gain substantial financial benefits from the employment and harboring of illegal workers

–  –  –

while for obvious reasons making money is frequently the common purpose in RICO enterprises, RICO does not require that either the enterprise or the predicate acts be motivated by an economic purpose. Fiel, 35 F.3d at 1003.

–  –  –

                                                            

AARP alleges that ARM and the Hennessys provide infringing lead cards not just to the Financial Services Defendants but to other insurance agencies and financial service companies throughout the United States. (Doc. 3 19-20.)

–  –  –

Services Defendants’ products to allegedly unsuspecting buyers, and there is no allegation or evidence that ARM or the Hennessys either were involved in, or benefitted from, any of those sales.

–  –  –

collected names of responders, and ARM’s payment is not alleged to have been contingent upon any sale by the Financial Services Defendants.

This case is very similar to In re Pharmaceutical Industry

–  –  –

existed, however, the court noted that “[w]hile some of these factors may support an inference that some publishers may have been aware of concerns by governmental entities about inflated AWP’s, they are insufficient to draw a reasonable inference that each of the publishers knew of the fraudulent nature of the

–  –  –

In Turkette, the Court stated that an enterprise is “proved by evidence of an ongoing organization, formal or informal,” while the “pattern of racketeering” is “proved by evidence of

–  –  –

                                                            

AARP points to the statements in Turkette that an enterprise may also be proved by demonstrating it operated as a “continuing unit.” (Doc. 31 at 9.) The Fourth Circuit appears to analyze the continuity element as proof of a common purpose, United States v. Tillett, 763 F.2d 628, 631-32 (4th Cir. 1985), which the court has already addressed.

–  –  –

882 F.2d 1249, 1251 (7th Cir. 1989).

                                                            

Whether an association-in-fact enterprise requires proof of an ascertainable structure beyond that inherent in the commission of predicate crimes is presently before the Court and awaiting decision.

Boyle v. United States, No. 07-1309, 129 S. Ct. 29 (U.S. argued Jan.

14, 2009); see Brief for the Petitioner, Boyle v. United States, 129 S. Ct. 29 (2008) (No. 07-1309).

–  –  –

precedent in the Fourth Circuit as to the extent to which a RICO complaint must allege the requisites of an “enterprise” as set forth in Turkette. Tillett was decided on a full record after conviction and therefore does not speak directly to the issue.

763 F.2d at 630-61. The circuits are split in their approach.

See, e.g., City of New York v. Smokes-Spirts.com, Inc., 541 F.3d 425, 451 (2d Cir. 2008) (affirming dismissal of civil RICO claim

–  –  –

sufficient under Turkette a complaint alleging enterprise had common purpose, ongoing organization, and continuing unit); AsaBrandt, Inc. v. ADM Investors Servs., Inc., 344 F.3d 738, 752

–  –  –

structure but affirming grant of summary judgment for lack of proof); Pavlov v. Bank of New York Co., 25 F. App’x 70, 71 (2d Cir. 2002) (holding complaint sufficiently alleged enterprise

–  –  –



Pages:   || 2 | 3 |


Similar works:

«MAKING OPEN SCIENCE A REALITY MAKING OPEN SCIENCE A REALITY The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed...»

«NEW YORK STATE BLACK BEAR RESPONSE MANUAL New York State Department of Environmental Conservation July 26, 2011 NEW YORK STATE=S BLACK BEAR RESPONSE MANUAL Third Edition Updated by the Black Bear Management Team: Matt Merchant, Region 3 Larry Bifaro, Region 4 Ed Reed, Region 5 Steve Heerkens, Region 6 Ashley Meyers, Region 7 Art Kirsch, Region 8 Tim Spierto, Region 9 Chuck Dente, Central Office Jeremy Hurst, Central Office Lt. Lawrence DiDonato, Division of Law Enforcement Original Standard...»

«St. Paul's Conception of Law NATURAL LAW AND THE LAW OF THE STATE M. F. WILES, M.A. BY THE REV. I Nattempt ofpartmade tostudy published inand throughwhatissue, the the first of this the September was answer the question In sense is there a law God revealed through Moses Christ, which is binding upon Christians to-day? But the law of Moses and the law of Christ are not the only possible kinds of law. We need to ask whether there is not also a genuine knowledge of God's law and a valid operation...»

«USER GUIDE LCS SERIES Hardware Reference Matrix3 Audio Show Control System Edition: 2007-09-18 for CueStation 4.6.0 Meyer Sound Laboratories Inc 2832 San Pablo Avenue Berkeley, CA 94702 www.meyersound.com © 2007 T: +1 510 486.1166 Meyer Sound Laboratories Inc. F: +1 510 486.8356 © 2007 Meyer Sound. All rights reserved. Hardware Reference The contents of this manual are furnished for informational purposes only, are subject to change without notice, and should not be construed as a commitment...»

«Anti-human trafficking manual for criminal justice practitioners Module 7 UNITED NATIONS OFFICE ON DRUGS AND CRIME Vienna Anti-human trafficking manual for criminal justice practitioners Module 7: Crime scene and physical evidence examinations in trafficking in persons investigations UNITED NATIONS New York, 2009 The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United...»

«CORPORATE GOVERNANCE The Representative Director Problem Directors representing controlling shareholders, venture capitalists and preferred shareholders are elected to protect the interests of their sponsors. Nevertheless, accepted doctrine says that they owe undivided loyalty to the corporation and all shareholders. Business needs in both closely held and publicly traded corporations require a more realistic and nuanced legal approach to the position of a representative director. By Cyril...»

«FIRE FIGHTER CanCER PREsumPTIVE/WoRkERs’ ComPEnsaTIon InFoRmaTIon PRoVIDED BY aTToRnEY mIkE DRYDEn Attorney Mike Dryden was guest speaker at the recent Pennsylvania Legislative Federation Meeting and presented his experiences and explained the processes of accessing benefits under the recently passed Pennsylvania Fire Fighter Cancer Presumption Act. This is an edited version of a court steno transcript of this presentation. You may contact Attorney Dryden for further information on Cancer...»

«STUDY GUIDE S TU D Y G U ID E W H E AT O N, I L L I N O I S Study Guide for The Whole Story of the Bible in 16 Verses Copyright © 2015 by Christopher R. Bruno Published by Crossway 1300 Crescent Street Wheaton, Illinois 60187 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopy, recording, or otherwise, without the prior permission of the publisher, except as provided for by...»

«VSI Alliance™ Virtual Component Identification Soft IP Tagging Standard Version 2.0 (IPP 4 2.0) Intellectual Property Protection Development Working Group Released September, 2006 Dedication to Public Domain VSI Alliance hereby dedicates all copyright that VSI Alliance holds in this (the Work) to the public domain, free of charge, and for the general benefit of the public at large. VSI Alliance intends this dedication to be an overt act of relinquishment in perpetuity of all present and...»

«Review of the Draft Multicultural Strategic Outreach Plan March 2013 Review of the Draft Multicultural Strategic Outreach Plan iii table of contents EXECUTIVE SUMMARY 3 SCOPE OF REVIEW 8 Project Team 8 Key Work Elements 9 Chronology 11 GOVERNMENT CONTEXT 11 Partisan versus Government Activities 11 Legal and Constitutional Conventions 11 POLICY AND LEGISLATIVE CONTEXT 13 Public Service Employees 13 Freedom of Information and Protection of Privacy Act 15 Information Management/Information...»

«State of New Jersey 2014 Hazard Mitigation Plan Section 5. Risk Assessment 5.14 Civil Unrest 2014 Plan Update Changes  The hazard profile has been significantly enhanced to include a detailed hazard description, location, extent, previous occurrences, probability of future occurrence, severity, warning time and secondary impacts of the civil unrest hazard.  Potential change in climate and its impacts on the civil unrest hazard are discussed.  A vulnerability assessment has been...»

«The Legal Process and the Promise of Justice: A Conference to Honor the Work of Malcolm M. Feeley October 22 and 23, 2015 ABSTRACTS SESSION I: The Process Is the Punishment ROSANN GREENSPAN, UNIVERSITY OF CALIFORNIA, BERKELEY (CHAIR) 9:30 – 11:30 MARTIN SHAPIRO, UNIVERSITY OF CALIFORNIA, BERKELEY (DISCUSSANT) HADAR AVIRAM, UNIVERSITY OF CALIFORNIA, HASTINGS COLLEGE OF LAW Adversarial Bias and the Criminal Process: Infusing the Organizational Perspective on Criminal Courts with Insights from...»





 
<<  HOME   |    CONTACTS
2017 www.thesis.dislib.info - Online materials, documents

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.