Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_01-cv-03884/USCOURTS-cand-4_01-cv-03884-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

STEPHEN TURNER, M.D., SUSANA TURNER,

on behalf of themselves and as

Guardian ad Litem for minor children

DAVID TURNER, DANIEL TURNER, DEBORAH

TURNER, and WESTERN PARAMEDICAL

SERVICES, LLC,

 Plaintiffs,

 v.

DAVID J. COOK, ESQ., COOK, PERKISS &

LEW, a professional law corporation,

AH BENG YEO and E.A. MARTINI, and

DOES 1 THROUGH X AND EACH OF THEM

INCLUSIVE,

 Defendants.

 /

No. C 01-3884 CW

ORDER GRANTING

DEFENDANTS’

MOTION TO DISMISS 

Defendants move to dismiss Plaintiffs’ Second Amended

Complaint. Plaintiffs’ First Amended Complaint alleged violations

of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 

§ 1692; the Racketeer Influenced and Corrupt Organizations Act

(RICO), 18 U.S.C. § 1961; and several State law claims. On March

22, 2002, the Court dismissed that complaint with leave to amend. 

Order Granting Defendants’ Motion to Dismiss (March 22 Order). In

this Complaint, Plaintiffs have amended their RICO claim and

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continue to pursue a State law claim for invasion of privacy. 

Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants

move to dismiss these two remaining claims. Plaintiffs oppose the

motion. The matter was submitted without oral argument. Having

considered all the papers filed by the parties, the Court grants

the motion (Docket # 50).

BACKGROUND

The facts of this case were discussed in the Court’s March 22

Order. They will be recounted here only as necessary to resolve

the issues in dispute. 

On August 21, 1998, Defendants Yeo and Martini obtained a

judgment against Plaintiff Stephen Turner in excess of $1,000,000. 

The judgment resulted from a jury verdict after trial in which

Plaintiff Stephen Turner was found to have committed “various

business interference torts” against Defendants Yeo and Martini. 

Defendants Yeo and Martini hired Defendant Cook and his law firm,

Cook, Perkiss, and Lew, to assist in collection of the judgment. 

Plaintiffs allege that the means used by Defendants in their effort

to collect on the judgment violated RICO and constituted an

invasion of privacy.

In support of their RICO claim, Plaintiffs allege ninety-four

separate incidents of fraud. The alleged fraud consists of stating

that a State court had ordered that any monies owed to Plaintiff

Western Paramedical Services (WPS) should be turned over to

Defendants. Plaintiffs contend that the turnover order, in fact,

only applied to Stephen Turner, that WPS is not owned, operated or

controlled by Plaintiff Stephen Turner, and, therefore, the State

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1

The parties request that the Court take judicial notice of

the interpleader action, WPS’s motion to set aside default, and the

State court’s denial of that motion. The requests for judicial

notice properly encompass adjudicative facts within the meaning of

Federal Rule of Evidence 201. These requests are, therefore,

granted (Docket ## 51, 62, 65, 67).

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court did not order that monies owed to WPS be turned over to

Defendants. Plaintiffs contend that each time Defendants

misrepresented the substance of the turnover order, they committed

an act of mail or wire fraud. Defendants made this allegedly false

representation in numerous letters to numerous insurance companies

that were believed to be debtors of Plaintiff WPS.

Travelers Insurance Company (Travelers) was one of the

insurance companies that received a letter from Defendants. 

Travelers interplead the contested funds in State court. In that

action, WPS did not participate and a default judgment was entered

against it. On July 8, 2002, WPS’s motion to set aside default and

default judgment was denied.1

In addition, Plaintiffs contend that there were multiple

victims of Defendants’ alleged fraudulent acts. The alleged

victims of the RICO violation include Plaintiff WPS; Plaintiffs

Stephen Turner, Susana Turner and their children David, Daniel and

Deborah; the insurance companies who received the allegedly

fraudulent communications; Plaintiff Stephen Turner’s financial

advisor, Robert Matthews; the Contra Costa Superior Court; and

American Paramedical Services (APS). 

LEGAL STANDARD

A motion to dismiss for failure to state a claim will be

denied unless it appears that the plaintiff can prove no set of

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facts which would entitle it to relief. See Conley v. Gibson, 355

U.S. 41, 45-46 (1957); see also Fidelity Fin. Corp. v. Fed. Home

Loan Bank of S.F., 792 F.2d 1432, 1435 (9th Cir. 1986). All

material allegations in the complaint will be taken as true and

construed in the light most favorable to the plaintiff. See NL

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

Although the court is generally confined to consideration of the

allegations in the pleadings, when the complaint is accompanied by

attached documents, such documents are deemed part of the complaint

and may be considered in evaluating the merits of a Rule 12(b)(6)

motion. See Durning v. First Boston Corp., 815 F.2d 1265, 1267

(9th Cir. 1987).

Dismissal of a complaint can be based on either the lack of a

cognizable legal theory or the lack of sufficient facts alleged

under a cognizable legal theory. See Balistreri v. Pacifica Police

Dep’t, 901 F.2d 696, 699 (9th Cir. 1988).

When granting a motion to dismiss, a court is generally

required to grant a plaintiff leave to amend, even if no request to

amend the pleading was made, unless amendment would be futile. 

See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc.,

911 F.2d 242, 246-47 (9th Cir. 1990). In determining whether

amendment would be futile, a court examines whether the complaint

could be amended to cure the defect requiring dismissal “without

contradicting any of the allegations of [the] original complaint.” 

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 

Leave to amend should be liberally granted, but an amended

complaint cannot allege facts inconsistent with the challenged

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pleading. See id. at 296-97. 

A district court has broad discretion to grant or deny leave

to amend, particularly where the court has already given a

plaintiff one or more opportunities to amend his complaint to

allege all claims. Mir v. Fosburg, 646 F.2d 342, 347 (9th Cir.

1980); see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 809-10

(9th Cir. 1988) (“[r]epeated failure to cure deficiencies by

amendments previously allowed is another valid reason for a

district court to deny a party leave to amend”).

DISCUSSION

A. RICO

Civil liability under RICO is premised on violations of one or

more of the provisions of section 1962. The provisions at issue

here are section 1962(c), which prohibits a person from

participating in the conduct of the affairs of an enterprise

through a pattern of racketeering activity, and section 1962(d),

which prohibits a person from conspiring to violate the other

provisions of RICO. The issue raised in this motion is whether the

acts alleged by Plaintiffs constitute a “pattern of racketeering

activity.” 

In H.J. Inc. v. N.W. Bell Tel. Co., the Supreme Court held

that to show a pattern of racketeering activity, a RICO plaintiff

must “show that the racketeering predicates are related and that

they amount to or pose a threat of continued criminal activity.” 

492 U.S. 229, 239 (1989). The “relatedness” requirement is met if

the predicate acts “have the same or similar purposes, results,

participants, victims, or methods of commission.” Id. at 240. 

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Defendants do not dispute that the alleged predicate acts are

related in that they had the same purposes, participants and

victims. 

The “continuity” requirement is met when the “conduct poses a

threat of continued criminal activity such as when the illegal

conduct is ‘a regular way of conducting a defendant’s ongoing

legitimate business.’” Sever v. Alaska Pulp Corp., 978 F.2d 1529,

1535 (9th Cir. 1992) (citing H.J. Inc., 492 U.S. at 243). 

“Isolated or sporadic” acts generally do not satisfy the continuity

requirement, see Schreiber Distrib. Co. v. Serv-Well Furniture Co.,

806 F.2d 1393 (9th Cir. 1986), while “ongoing schemes, numerous

victims and a risk of continuing illegal activity” suggest that the

predicate acts satisfy this requirement. Medallion Television, 833

F.2d at 1365; id. (“we prefer to frame the inquiry as whether the

acts are isolated or sporadic, on the one hand, or whether they

indicate a threat of continuing activity on the other”).

Plaintiffs do not contend that the enterprise, Defendant law

firm Cook, Perkiss, & Lew, is conducted as a criminal enterprise. 

See Plaintiffs’ RICO Statement ¶ 7 (“Plaintiffs believe that the

racketeering activity is separate from the enterprise and that it

has not merged with the enterprise.”); id. ¶ 8 (“The usual activity

of the enterprise is the honest practice of law.”). Rather,

Plaintiffs argue that they have satisfied the continuity

requirement because they have alleged numerous fraudulent acts with

multiple victims. According to Plaintiffs, these multiple acts

directed at multiple victims show a threat of continuing criminal

activity. 

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In support of this contention, Plaintiffs rely on Cal.

Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818

F.2d 1466 (9th Cir. 1987). In Cal. Architectural, the plaintiffs

were businesses and individuals who sold ceramic tile. The

defendant was a manufacturer of ceramic tile. The alleged

predicate acts of fraud were representations by the defendant that

it would stay in business and supply the plaintiffs with tile

through March, 1994. In fact, the defendant had decided to close

its business by the end of October, 1993. 818 F.2d at 1467. The

defendant argued that the predicate acts did not satisfy the

continuity requirement because they all related to a single

criminal episode, the closing of the defendant’s business. Id.

at 1469. The court held that the plaintiffs had sufficiently

alleged a pattern of racketeering activity because they alleged

“multiple fraudulent sales to . . . multiple victims” over a period

of five months. Id. Plaintiffs contend that under Cal.

Architectural, they have adequately plead a RICO violation because

they too have alleged multiple fraudulent acts against numerous

victims. 

Under Cal. Architectural, Plaintiffs need not plead multiple

“criminal episodes” in order to state a RICO claim. However, where

all of the alleged predicate acts are part of a single scheme, the

plaintiffs must allege something that shows a threat of continuing

criminal activity. In Cal. Architectural, the court held that

multiple, separate fraudulent sales to separate plaintiffs over a

five month period was sufficient. In subsequent cases, however,

the Ninth Circuit has made clear that numerous predicate acts do

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not satisfy the continuity requirement if those acts were aimed at

fulfilling a single, identifiable purpose. 

In Medallion Television, for example, the plaintiff alleged

that the defendants’ multiple misrepresentations induced it to

enter into a joint venture that ultimately failed. The plaintiff

alleged that each misrepresentation made over the phone or through

the mails was a predicate act for purposes of RICO. The court held

that the numerous allegedly fraudulent acts did not satisfy the

continuity requirement. 

All of SelecTV’s assertions about the number of licensing

agreements it had obtained were parts of its single

effort to induce Medallion to form the joint venture in

order to obtain the broadcast rights from the promoters. 

In essence, Medallion’s allegations concern a single

fraudulent inducement to enter a contract. Once the

joint venture had acquired the broadcast rights, the

fraud, if indeed it was a fraud, was complete. 

833 F.2d at 1363-64.

Similarly, in Sever, the plaintiff brought suit against his

former employers alleging that they had fired him, blacklisted him,

and induced a subsequent employer to fire him after he wrote

articles criticizing them and testified before Congress to their

economic detriment. 978 F.2d at 1532. The plaintiff's RICO claim

alleged that the defendants engaged in a pattern of racketeering

activity that damaged his ability to obtain employment. The lower

court dismissed the plaintiff's fourth amended complaint for

failure to state a claim under RICO, on grounds, inter alia, that

he had failed to allege a pattern of racketeering. 978 F.2d at

1533. The Ninth Circuit affirmed, holding that the allegations did

not satisfy the continuity requirement. The Ninth Circuit

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specifically noted that there was no suggestion that the defendants

would have harmed any other Congressional witnesses or that the

alleged practices had become a regular way of conducting business. 

Id.

In this case, the sole alleged purpose of Defendants’ conduct

was to redirect to Defendants sums owed to Plaintiff WPS in order

to collect the outstanding judgment owed by Plaintiff Stephen

Turner. There is no allegation of a continuing threat of unlawful

activity once that judgment is collected. See also Religious

Technology Center v. Wollersheim, 971 F.2d 364, 366 (9th Cir. 1992)

(because the goal of allegedly fraudulent activity was prosecution

of State court tort suit, “there was no threat of activity

continuing beyond the conclusion of that suit”). Consequently, the

multiple predicate acts alleged by Plaintiffs do not satisfy RICO’s

continuity requirement.

Plaintiffs’ contention that there were multiple victims of

Defendants’ fraudulent conduct does not alter this conclusion. 

Several cases have noted that the existence of multiple victims is

one indication that the alleged conduct constitutes a threat of

continued criminal activity. See Medallion Television, 833 F.2d at

1363 (finding continuity requirement not satisfied because “this

case involved but a single alleged fraud with a single victim”);

Sever, 978 F.2d at 1536. The existence of multiple victims is

probative of the threat of continued criminal activity because it

is fair to infer that a defendant who has defrauded numerous

individuals is likely to continue its fraudulent activity. In this

case, however, Plaintiffs are not entitled to this inference

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2

In fact, because the Turner Plaintiffs’ alleged injuries are

indirect, they do not have standing to bring a RICO claim. 

The Ninth Circuit has articulated a three-factor test to

determine if an injury is “too remote” to allow recovery under

RICO. Assoc. of Wash. Pub. Hosp. Dists. v. Philip Morris, Inc., 241 F.3d 696, 701 (9th Cir. 2001). First, the Court must determine

“whether there are more direct victims of the alleged wrongful

conduct who can be counted on to vindicate the law.” Id. In this

case, Plaintiff WPS is the direct victim of the allegedly wrongful

conduct in that Defendants attempted to convince WPS’s debtors to

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because the additional victims they identify are closely connected

to one another and all were allegedly injured by the single course

of allegedly fraudulent conduct discussed above.

Plaintiffs Stephen and Susana Turner, for example, are husband

and wife and employees of Plaintiff WPS. Plaintiffs concede that

Stephen Turner played a role in creating the Golden Gate Trust,

which is the nominal owner of WPS. Second Amended Complaint ¶ 48. 

Plaintiffs Stephen and Susana Turner allege that Defendants’

allegedly fraudulent acts injured them because those acts damaged

Plaintiff WPS’s ability to pay their salaries. Similarly,

Plaintiffs David, Daniel and Deborah Turner are Plaintiffs Stephen

and Susana Turner’s children and they are the residuary

beneficiaries of the trust which owns Plaintiff WPS. The children

allege that they were victims of Defendants’ allegedly fraudulent

acts in that any damage suffered by Plaintiff WPS will be

ultimately borne by them. These Plaintiffs do not allege that

Defendants separately committed acts of fraud that injured them. 

Rather, they contend that the same predicate acts that injured

Plaintiff WPS also injured them. These allegations do not support

Plaintiffs’ contention that there is a continuing risk of illegal

activity by Defendants.2 

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pay monies owed to WPS to Defendants. WPS’s role in this

litigation attests to its ability to vindicate its rights. Second,

the Court must assess “whether it will be difficult to ascertain

the amount of the plaintiff’s damages attributable to defendant’s

wrongful conduct.” Id. This factor also favors a finding that the

Turner Defendants lack standing. The value of Plaintiffs David,

Daniel and Deborah Turner’s residual interest in the trust that

owns Plaintiff WPS is uncertain. The decrease in that uncertain

value as a result of Defendants’ allegedly wrongful conduct is, at

the least, difficult to ascertain and, more likely, entirely

speculative. Likewise, it is difficult to ascertain what portion

of Plaintiffs Stephen Turner and Susana Turner’s lost salary is

attributable to the allegedly wrongful conduct of Defendants. The

final factor that the Court must apply is “whether the courts will

have to adopt complicated rules apportioning damages to obviate the

risk of multiple recoveries.” Id. Such would be the case here. 

If, for example, after trial on the merits, it is determined that

Defendants wrongfully diverted a certain sum from Plaintiff WPS, it

is not clear how much of that wrongfully diverted sum would go to

Plaintiffs Stephen Turner and Susana Turner for their lost wages,

how much to Plaintiffs David, Daniel and Deborah Turner for their

residuary interest in the trust that owns Plaintiff WPS and how

much would go to the direct victim of the fraud, Plaintiff WPS.

Consequently, even if Plaintiff WPS had stated a RICO claim

against Defendants, the Turner Plaintiffs would have no standing to

pursue that claim. 

11

Plaintiffs also contend that the insurance companies that

received letters from Defendants were victims of Defendants’

allegedly wrongful conduct. The insurance companies are alleged to

be victims of this fraud because, upon receiving letters from

Defendants, “these companies didn’t know what to do.” Plaintiffs

RICO Statement ¶ 4(e)(5). The Ninth Circuit addressed a similar

argument in Medallion Television. As noted above, that case

involved the plaintiff’s allegation that it was fraudulently

induced into an unsuccessful joint venture. The joint venture

secured rights to telecast a professional boxing match. The

plaintiff argued that the fight promoter and the television

stations that broadcast the fight were also victims. The Court

rejected this contention, holding “the stations were not victims

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3

According to the Second Amended Complaint, Defendants

contacted APS, a company run by Plaintiff Stephen Turner’s sister

and attempted to convince the manager of APS to turn over sums owed

to Plaintiff Stephen Turner. The alleged damage to this victim is

that “it made its dealings with [Plaintiff Stephen] Turner much

more difficult.” Second Amended Complaint ¶ 47. APS, like the

insurance companies that received the allegedly false letters, was

not a victim of wrongful conduct by Defendants. 

12

because they got everything they had bargained for--the telecast of

the fight.” Medallion Television, 833 F.2d at 1364 n.5. The fight

promoter likewise “got what it bargained for: it sold the telecast

rights.” Id. 

Similarly, in this case, the insurance companies owed certain

sums to Plaintiff WPS. They paid those sums. There is no evidence

that they were defrauded of sums they did not owe or failed to

receive the services for which they paid. Therefore, the insurance

companies are not victims of Defendants’ allegedly fraudulent

acts.3

Plaintiffs also allege that Plaintiff Stephen Turner’s

financial advisor Robert Matthews and the Contra Costa County

Superior Court were also victims of Defendants’ illegal acts. 

Apparently, Matthews was briefly named as a defendant in a

wrongful conveyance action brought by Defendants in Contra Costa

Superior Court. Matthews “provided financial advice to [Plaintiff

Stephen] Turner in connection with the creation of the Golden Gate

Trust.” Second Amended Complaint ¶ 48. Plaintiffs state that

Matthews is a victim of Defendants’ unlawful activity because

“Cook’s theory in bringing Mr. Matthews in the case was that

Matthews was supposedly a trustee to the Golden Gate Trust, which

is patently false, and yet another example of Cook trying to use

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wire fraud, mail fraud, and obstruction of justice as a means

toward its goal of securing payment on the judgment debt.” Id.

¶ 48. In order for Matthews to be a victim of Defendants’ unlawful

conduct, he must suffer some detriment. Plaintiffs have failed to

allege that Mr. Matthews was harmed by his brief inclusion as a

defendant in the fraudulent conveyance action. 

The contention that the Contra Costa Superior Court was the

victim of fraud similarly lacks merit. Plaintiffs argue that the

Contra Costa Superior Court was injured when Defendants brought an

unfounded contempt proceeding against Plaintiff Stephen Turner. 

Suffice it to say that courts are frequently called upon to

adjudicate actions that objectively lack merit. The bringing of

such an action does not constitute a predicate act of fraud for

RICO purposes.

Lastly, Plaintiff WPS is an alleged victim of Defendants’

allegedly fraudulent conduct. Plaintiff WPS was allegedly

victimized when parties which owed it money were fraudulently

induced to turn that money over to Defendants. One of those

parties, Travelers, interplead the disputed funds in State court. 

In that action, the Contra Costa County Superior Court granted

default judgment to Defendants Yeo and Martini, thereby holding

that the turnover order entitled Defendants to monies owed to

Plaintiff WPS. Defendants argue that this judgment collaterally

estops Plaintiff WPS from arguing that the letters sent to third

party insurance companies were fraudulent. 

Collateral estoppel applies where 1) the issue decided in the

prior action is identical to the issue presented in the second

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action; 2) there was a final judgment on the merits; and 3) the

party against whom estoppel is asserted was a party to the prior

adjudication. In re Moore, 186 B.R. 962, 968 (Bkrtcy. N.D. Cal.

1995). Plaintiff WPS contends that it was never served in the

interpleader action, did not participate in that action, and,

therefore, is not estopped from arguing here that Defendants’

assertions in letters to third parties were false. However, on

July 8, 2002, Plaintiff WPS moved to set aside the default

judgment. That motion was denied by the Contra Costa Superior

Court. Consequently, the State court has already determined that

the letters mailed to Plaintiff WPS’s debtors accurately informed

them of the content of the turnover order and, pursuant to that

order, properly required them to pay to Defendants sums owed to

Plaintiff WPS. The final judgment of the State court involving the

same parties and issues precludes Plaintiff WPS from contending in

this Court that Defendants’ letters to third party debtors were

fraudulent. 

Plaintiffs’ conclusory allegations that Defendants’ fraudulent

conduct had numerous victims are not accepted as true. McGlinchy,

845 F.2d at 810 (“conclusory allegations without more are

insufficient to defeat a motion to dismiss for failure to state a

claim”). The allegations in the Second Amended Complaint indicate

that Defendants’ alleged acts of fraud had the sole purpose of

collecting on the judgment against Stephen Turner. As was the case

in Medallion Television and Sever, there is nothing in these acts

to suggest Defendants would continue their allegedly criminal

activity after the judgment was collected. Without such

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allegations, Plaintiffs have failed to allege facts that satisfy

the continuity requirement of a RICO claim. 

In addition, the Second Amended Complaint fails to allege

facts that suggest there were multiple victims of the alleged

fraud. The injuries alleged by Plaintiffs Stephen, Susana, David,

Daniel and Deborah Turner are indirect and speculative. Alleged

victims Robert Matthews, APS, and the Contra Costa County Superior

Court suffered no legally cognizable injury. Finally, because a

State court has already determined that the letters sent by

Defendants to Plaintiff WPS’s debtors accurately reflected the

content of the turnover order, Plaintiff WPS is collaterally

estopped from contending in this action that those letters were

fraudulent. 

B. Invasion of Privacy

Plaintiffs also bring a claim for relief pursuant to State

law. Title 28 U.S.C. § 1367(a) gives this Court supplemental

jurisdiction over this claim. Pursuant to 28 U.S.C. § 1367(c),

however, the Court may decline to exercise its jurisdiction if, as

is the case here, “the district court has dismissed all claims over

which it has original jurisdiction.” The ultimate question for the

Court is whether accepting or declining jurisdiction “best

accomodate[s] the values of economy convenience, fairness and

comity.” Executive Software North America, Inc. v. United States

District Court, 24 F.3d 1545, 1556 (9th Cir. 1994) (quoting

Carnegie-Mellon v. Cohill, 484 U.S. 343, 351 (1988)). “In the

usual case in which all federal-law claims are eliminated before

trial, the balance of factors will point toward declining to

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exercise jurisdiction over the remaining state-law claims.” Acri

v. Varian Assoc., Inc., 114 F.3d 999, 1001 (9th Cir. 1997)(en banc)

(quoting Carnegie-Mellon, 484 U.S. at 350 n.7). 

There are no factors that suggest this Court is best suited to

adjudicate the invasion of privacy claim. The State law claim is

based on separate facts and a separate legal theory from the RICO

claim addressed here. In addition, the Contra Costa Superior Court

is dealing with these same parties in ongoing litigation in State

court. The Court, therefore, exercises its discretion to decline

jurisdiction pursuant to 28 U.S.C. § 1367(c). 

CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss

Plaintiffs’ Second Amended Complaint is granted (Docket # 50). 

Plaintiffs’ RICO claim is dismissed on the merits and without leave

to amend. Plaintiffs’ State law claim for invasion of privacy is

dismissed without prejudice to re-filing in State court. Judgment

shall enter accordingly. Defendants shall recover their costs from

Plaintiffs. The clerk shall close the file. 

Dated: 8/28/02 

CLAUDIA WILKEN

United States District Judge

Case 4:01-cv-03884-CW Document 77 Filed 08/28/02 Page 16 of 16