NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DUAL DIAGNOSIS TREATMENT CENTER, INC., a California corporation; et al.,
Plaintiffs

- Appellants,

v. CENTENE CORPORATION, a Delaware corporation; et al.,

Defendants

- Appellees,
and LIANN GOHARI; et al.,

Defendants.
and LAST CHANCE FUNDING INC.; FLORENTINE HOLDING COMPANY V, LLC, Claimants, No. 21

- 55962
D.C. No. 2:20

- cv - 04112

- SB

- PVC

MEMORANDUM *

Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3. 

# FILED

AUG 15 2022
MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2 Argued and Submitted August 2, 2022 Pasadena, California
Before: C ALLAHAN and H. THOMAS, Circuit Judges, and HUMETEWA, * * District Judge. Plaintiffs appeal the dismissal of their Third Amended Complaint (TAC) with prejudice. We have jurisdiction under 28 U.S.C. § 12 91

. W e affirm in part,

reverse in part , and remand for further proceedings.
Plaintiffs are mental health and substance abuse tr eatment providers that allege that Defendants, insurance companies and their leadership, conspired to
harm Plaintiffs’ businesses. The TAC asserted c laim s under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleging , in part, that
Defendan ts conspired to initiate criminal proceedings against Plaintiffs by provid ing law enforcement and other insurance companies with false accusations of illegal activity . This information, Plaintiffs claim, served as the basis for search
warrants that were ex ecuted simultaneously at several of Plaintiffs’ facilities. As a result of Defendants’ actions, Plaintiffs claim economic damage , such as being
forced to close their bank account s and ultimately being forced to close their businesses entirely.

** The Honorable Diane J. Humetewa, United States District Judge for the District of Arizona, sitting by designation.3

We review the dismissal de novo , accepting the complaint’s allegations as true and drawing inferences in the pleading party’s favor. Eclectic Prop s. E., LLC v. Marcus & Millichap Co. , 751 F. 3d 990, 995 (9th Cir. 2014). To survive a motion to dismiss, the c omplaint must show the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). Allegations of fraud must be made with particularity. Fed. R. Civ. P. 9(b). A claim need not seem probable, but it must be plausible. Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009).
A RICO claim requires showing “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘ predicate acts ’ ) (5) causing injury to plaintiff’s ‘ business or property. ’ ” Living Designs, Inc. v. E.I. Dupont de Nemours & Co. , 431 F.3d 353, 361 (9th Cir. 2005) ( quoting Grimmett
v. Brown , 75 F.3d 506, 510 (9th Cir. 1996) ). A RICO conspiracy claim requires an additional showing that the defendants entered into an agreement to violate RICO.
United States v. Fernandez , 388 F.3d 1199, 1230 (9th Cir. 2004). The district court
dismissed the TAC after concluding that it failed to adequately allege (1) Defendants’ ac tions caused Plaintiffs’ injury, (2) viable predicate acts, and (3)
how some Defendants specifically engaged in a pattern of racketeering activity. 1

1 We reject Plaintiffs’ argument that the district court failed to address these first two issues in its or der dismissing the TAC. The district court clearly cited to the analysis made in its prior order, which elaborated on these issues.4

1. We conclude that the TAC provides a plausible theory of causation.
For a RICO claim, the defendant’s actio ns must be the “but for” cause and the proximate cause leading “directly to the plaintiff’s injuries.” Anza v. Ideal Steel Supply Corp. , 547 U.S. 451, 457

– 61 (2006). We consider three non

- exhaustive factors when evaluating RICO causation: (1) whether there are more direct victims of the wrongful conduct, (2) whether it will be difficult to ascertain damages attributable to the defendant, and (3) whether complex rules will be needed to avoid multiple recoveries. Mendoza v. Zirkle Fruit Co. , 301 F.3d 1163, 11 69 (9th Cir. 2002). Nothing in the TAC suggests a more direct victim than Plaintiffs; Plaintiffs have plausibly alleged the fact of damage ; and there is no indication that complex rules will be required. In dismissing the TAC, t he district court relied upon Galen v. County of Los Angeles , 477 F.3d 652 (9th Cir. 2007) , to support its conclusion that law enforcement’s application for a search warrant and a magistrate judge’s finding of probable cause are intervening act s that break the causal chain

. But G alen does not
foreclose the TAC’s allegations of RICO causation as a matter of law. In Galen , in ruling on a motion for summary judgment , the court contemplated the possibility
that a valid chain of causation could exist upon a showing of f acts that a judi cial official was prevented from exercising independent judgment. 477 F.3d at 663

– 64

. H ere, a t the motion to dismiss phase, Plaintiffs’ plausible allegations that5

Defendants provided false information that successful ly dece ived law enforcement and the magi strate judge are sufficient to plead RICO causation.
2. We conclude that Defendants’ alleged misrepresentations to law
enforcement and others constitute plausible predicate acts. 2 Defendants argue that findings by a state court in a separate case show that Plaintiffs’ claims of misrepresentations are implausible. 3 Specifically, t hey argue the district court properly took judicial notice , under Federal Rule of Evidence 201, of a state court order finding that Plaintiffs had violated California law . But “ taking judicial notice of findings of fact from another case exceeds the limits of Rule 201.” Wyatt v.
Terhune , 315 F.3d 1108, 1114 (9th Cir. 2003), overruled on other grounds by
Albino v. Baca , 747 F.3d 1162 (9th Cir. 2014) (en banc) . Although Defe ndants

may litigate the effect of the state court’s order at a later phase , we conclude , at the pleading stage, that the TAC adequately alleges plausible predicate acts. Defendants also argue that communications with law enforcement cannot serve as predica te acts under the Noe r r
- Pennington doctrine and that California

2 We agree with the district court that the TAC does not adequately allege predicate acts with respect to alleged misrepresentations Defendants made directly to Plaintiffs.

3 The Court notes Plaintiffs’ objection to Defendants’ filing (Doc. 49 ) under Federal Ru le of Appellate Procedure 28(j) as an improper citation to authorities and irrelevant to this matter. (Doc. 5 0). The objection is well taken. Though we permit Defendants ’ filing , we do not consider it for purposes of our decision

.6

law required Defendants to report the suspected fraud. Because the district court did not address these issues, we decline to do so in the first instance. See Singleton v. Wulff , 428 U.S. 106, 120 (1976)

. For the same reason, we decline to reach Defendants’ argument that the RICO claim is barr ed by the statute of limitations.
3. Finally, w e affirm the district court’s conclusion that the TAC fails to make specific allegations showing that Defendants Centene Corp., Managed Health Network, Inc., and Michael Neidroff engaged in a patter n of racketeering activity. We agree with the d istrict c ourt’s analysis noting the pleading’s defect with respect to these Defendants

. The TAC seldom mentions th e m , and it fails to

state their involvement with Rule 9(b) specificity

. We therefore affirm the district
court’s dismissal of the RICO claims as to Defendants Centene Corp., Managed Health Network, Inc., and Michael Neidroff

. Contrary to the district cou rt , however, we conclude that the TAC adequately pleads a RICO claim as to
Defendants Health N et Life Insurance Company and Optum Services, Inc. In sum, we reverse the district court’s dismissal of the RICO claims against
all defendants except Centene Corp ., Managed Health Network, Inc., and Michael
Neidroff

. Because the district court, having dismissed the federal claims, declined to exercise supplemental jurisdiction over the state law claims, we also vacate that ruling and remand for reconsideration in accordance with this Order

. Each party shall bear its own costs.7

AFFIRMED in part, REVERSED in part , and REMANDED

.