* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### APR 10 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

DIRT HOGS INC., an Oklahoma Corporation, Plaintiff-Appellant,

v. NATURAL GAS PIPELINE COMPANY OF AMERICA; CURTIS ANDERSON; TONY CARR; MIKE TUBBS,

Defendant-Appellee, and ARNOLD JOE ALFORD, doing business as S&J Construction,

Defendant. No. 99-6026 (D.C. No. 98-CV-231-R) (W.D. Okla.)

ORDER AND JUDGMENT *

Before EBEL , LUCERO , and MURPHY , Circuit Judges.1 After examining the briefs and appellate record, th is panel has determined

unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.

-2- Plaintiff Dirt Hogs, Inc. appeals the district court’s dismissal of its claims brought pursuant to the Racketeer Influenced and Co rrupt Organizations Act of 1970 (RICO), 18 U.S.C. §§ 1961-68, together with its state law claims. 1
We affirm. Plaintiff is a construction company that performed reclamation and earth moving work for defendant Natural Gas Pipeline Co. (Natural) in Kansas, Texas, and Oklahoma. Plaintiff contends it was promised s ubstantial reclamation work by Natural, but that the work was withheld after pl aintiff refused to comply with schemes involving mail fraud and extortion. Specif ically, plaintiff’s third amended complaint alleged that defendant Natural, t ogether with its employees and an employee of Dirt Hogs (Mills), committed the following acts: (1) enticed plaintiff into buying additional equipment by promi sing that a large amount of reclamation work was available for plaintiff, witho ut disclosing that plaintiff would still be required to bid for this work; (2) i n the fall of 1996, Natural’s inspector in Kansas, defendant Anderson, together w ith plaintiff’s employee Mills, pressured plaintiff for a horse and barn forAnderson’s daughter, and when plaintiff refused, they required plaintiff to deliver sheets of metal to the-3-

work site which were then converted to Anderson’s o wn use; (3) to reduce reclamation costs, defendant Carr, Natural’s inspec tor in Texas, together with Mills, altered or required plaintiff to alter its i nvoices to undercharge for work and equipment; and (4) starting on April 10, 1997, defendants Carr and Mills began pressuring plaintiff for kickbacks, telling p laintiff that this was a standard practice in Natural’s operation, requesting first abig screen television or $1,500 in cash, then a lawnmower, alcoholic beverages, con struction of a fence for Carr’s dog pen, and a rototiller. In addition, plaintiff alleged that it submitted a superior bid for the Kansas contract but the work was awarde d to its competitor, defendant S&J Construction, because S&J gave bribes to Natura l employees. The district court dismissed the RICO claims in pla intiff’s third amended complaint for failure to state a claim. The court held that plaintiff’s mail fraud claim failed because there was not a sufficient pattern of racketeering, and that its extortion claim failed because the complaint di d not show the existence of a RICO enterprise. The court declined to exercise supplemental jurisdiction over plaintiff’s state law claims and dismissed the acti on. On appeal, plaintiff argues that the district courterred in dismissing the complaint because the mail fraud and extortion pred icate acts should have been considered together to establish a pattern of racke teering, and because plaintiff adequately described the structure of and participa nts in the RICO enterprise.-4-

We review the district court’s dismissal for failure to state a claim de novo. See Brannon v. Boatmen’s First Nat’l Bank , 153 F.3d 1144, 1146 (10th Cir. 1998). The first issue can be resolved quickly. We need n ot examine whether the complaint alleged a continuous pattern of mail frau d when considered together with the extortion claims, because the facts as all eged by plaintiff simply do not constitute mail fraud. Plaintiff’s claim rests on the allegation that it was required to submit false invoices understating the amount of work it performed and the equipment used. Mail fraud is not committed, howev er, simply by sending false statements through the mail. Instead, the mails mu st have been used to further a scheme to defraud or obtain money or property thr ough false pretenses.
See BancOklahoma Mortgage Corp. v. Capital Title Co. , 194 F.3d 1089, 1102 (10th Cir. 1999). This requirement was not satisfied here. The reduc ed billing was not intended to defraud Natural, who allegedly knew that the invoices undercharged for the work performed and the equipment used. Norwere the invoices mailed to deceive plaintiff, who also knew that the informati on contained therein was inaccurate. See id. at 1103 (setting out elements of fraud, including lack of knowledge of truth by recipient of false statement, and right to rely on false statement); United States v. Reddeck , 22 F.3d 1504, 1507 (10th Cir. 1994)-5-

(“A scheme to defraud is conduct that is intended t o or is reasonably calculated to deceive ordinary people.”) (quotations omitted). As for the extortion claim, plaintiff has not shown that the third amended complaint adequately described an “enterprise” with a distinct existence and structure, as required by RICO. Section 1962(c) pr ovides: [i]t shall be unlawful for any person employed by o r associated with any enterprise engaged in, or the activities of whi ch affect, interstate or foreign commerce, to conduct or participate, dir ectly or indirectly, in the conduct of such enterprise’s affairs througha pattern of racketeering activity or collection of unlawful deb t. 18 U.S.C. § 1962(c). An enterprise may be either alegal entity or a “group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). To plead the existence of such an enterprise, the c omplaint must show (1) “an ongoing organization with a decision-making framewo rk or mechanism for controlling the group;” (2) with associates that “f unction as a continuing unit;” and (3) which is “separate and apart from the patte rn of racketeering activity.” United States v. Sanders , 928 F.2d 940, 943-44 (10th Cir. 1991) (applying c riteria identified in United States v. Riccobene , 709 F.2d 214, 223-24 (3d Cir. 1983)). “A RICO enterprise is an ongoing structure of perso ns associated through time, joined in purpose, and organized in a manner amenab le to hierarchical or consensual decision-making.” United States v. Rogers , 89 F.3d 1326, 1337 (7th Cir. 1996) (citation and internal quotations o mitted).-6-

Despite being given numerous opportunities to amend , plaintiff’s eightynine page complaint and RICO statement do not clear ly identify an ongoing enterprise, with an existence and a decision-making structure separate from its corporate participant. In general, plaintiff alleg es that the “enterprise” was an association among Natural, its high-level management, certain corporate employees, S&J Construction, plaintiff’s employees, and other unidentified participants. See Appellant’s App. at 35 (alleging enterprise consis ted of “Natural, Pike, Pikula, Alford d/b/a S&J, Mills, Ca rr, Tubbs, Anderson, and other persons unknown”); at 37 (“The participants in the enterprise are officers, employees, independent contractors and their employ ees (the specific actors vary from time to time) of the corporation Natural Gas P ipelines of America, S&J Construction, and Dirt Hogs Construction, Inc.”); at 39 (“in addition to the named participants of the enterprise . . . there do existother known and unknown participants”); at 46 (“Defendant Natural, through its agents and co-conspirators engaged in a series of distinct and separate crimin al enterprises, associated with, controlled and maintained both directly and indirec tly the criminal conspiracies and engaged in interstate commerce . . . .”); at 64 (“Natural, Pike, Pikula, Tubbs, Carr, and Mills did conspire and associate with one another in an interstate enterprise to violate RICO . . . .”); at 87 (identi fying participants in extortion enterprise as Natural, Pike, Pikula, Anderson, Mill s, Carr, and Alford).-7-

Such inconsistent and conclusory allegations employa “moving target” approach to describing an enterprise, by naming a s tring of participants, known and unknown, and alleging that they acted as an ass ociation in fact. Considering the centrality of the enterprise to a RICO claim, “ a nebulous, open-ended description of the enterprise does not sufficientlyidentify this essential element.” Richmond v. Nationwide Cassel L.P. , 52 F.3d 640, 645 (7th Cir. 1995). Further, the only decision-making structure describ ed by plaintiff is the inherently hierarchical relationship between Natura l, its employees, and agents.
See Appellant’s App. at 85-88; Appellant’s Br. at 20-2 5; and Appellant’s Reply Br. at 10. Similarly, the enterprise’s purpose--ma king it appear that Natural was complying with the reclamation laws, keeping its co sts down, and maintaining its liquidity for a future sale--furthered primarily the corporation’s interests. See id. at 7-8. Because the complaint failed to describe a n enterprise with a separate structure or purpose, the district court was correc t in holding it did not satisfy the RICO pleading requirements. Plaintiff’s complaint suffers from a second defect as well. Because the “enterprise” identified by plaintiff appears to be nothing more than another name for Natural and its agents, conducting the corporat ion’s business, the complaint fails to describe an enterprise distinct from the d efendant corporation. We have held that § 1962(c) requires a showing that a RICO “enterprise” is distinct from2 We question whether a racketeering victim can be pa rt of the enterprise

through which the racketeering is conducted. See National Org. for Women, Inc. v. Scheidler , 510 U.S. 249, 259 (1994) (“[T]he ‘enterprise’ in [§ 1962(c)] connotes generally the vehicle through which the un lawful pattern of racketeering is committed, rather than the victim of that activity.”); Jaguar Cars, Inc. v. Royal Oaks Motor Car Co. , 46 F.3d 258, 267 (3d Cir. 1995) (holding “a victi m corporation . . . could not reasonably be viewed as the enterprise through which employee persons carried out their racketeering act ivity. Rather, in such an instance, the proper enterprise would be the associ ation of employees who are victimizing the corporation, while the victim corpo ration would not be the enterprise, but instead the § 1962(c) claimant.”). -8- the “person” who conducts the enterprise’s affairs through a pattern of racketeering. See Brannon , 153 F.3d at 1146. Although here plaintiff allege d that the enterprise was comprised of parties unrelated to Natural, the complaint ascribed active roles only to Natural and its agent s, with Dirt Hogs and S&J participating simply as victims. 2 Under these circumstances, courts have pierced through the allegations in a complaint to hold thatthe alleged enterprise is not distinct from its defendant participants. See, e.g. , Richmond , 52 F.3d at 647 (affirming dismissal when alleged enterprise consis ted of related legal entities and unnamed car dealers for lack of distinctiveness between defendants and the only active participants in the enterprise); see also Board of County Comm’rs v. Liberty Group , 965 F.2d 879, 885-86 (10th Cir. 1992) (piercing through allegation of association in fact between entities and individ uals to show that all actions were taken by the defendant partnership, “going abo ut its ordinary business”-9-

through its employees and agents, and therefore the enterprise was not distinct from the partnership). As explained by the Second Circuit in Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A. , 30 F.3d 339, 344 (2d Cir. 1994), the distinctiven ess requirement may not be avoided by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendants . . . . [W]he re employees of a corporation associate together to commit a pattern of predicate acts in the course of their employment and on behalf of the corporation, the employees in association with the corporation d o not form an enterprise distinct from the corporation. Because the complaint did not allege an enterprise separate and distinct from Natural, the district court properly dismissed the extortion-based RICO claim. In addition, because plaintiff did not state mail f raud or extortion claims under § 1962(c), the district court correctly dismissed t he § 1962(d) conspiracy claims as well. See Torwest DBC, Inc. v. Dick , 810 F.2d 925, 927 n.2 (10th Cir. 1987) (noting that resolution of substantive § 1962(c) cl aim also disposed of conspiracy claim). The judgment is AFFIRMED. Entered for the Court

Carlos F. Lucero Circuit Judge