NOT FOR PUBLICATION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 APPEALS
2 

Argued and Submitted August 2, 2022

Pasadena, California

Before: CALLAHAN 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. § 1291. We affirm in part, 

reverse in part, and remand for further proceedings.

Plaintiffs are mental health and substance abuse treatment providers that

allege that Defendants, insurance companies and their leadership, conspired to 

harm Plaintiffs’ businesses. The TAC asserted claims under the Racketeer 

Influenced and Corrupt Organizations Act (RICO), alleging, in part, that 

Defendants conspired to initiate criminal proceedings against Plaintiffs by 

providing 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 executed simultaneously at several of Plaintiffs’ facilities. As a 

result of Defendants’ actions, Plaintiffs claim economic damage, such as being 

forced to close their bank accounts 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 Props. E., LLC 

v. Marcus & Millichap Co., 751 F.3d 990, 995 (9th Cir. 2014). To survive a 

motion to dismiss, the complaint 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’ actions 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 order 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 actions 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, 1169 (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, the 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 acts that break the causal chain. But Galen 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 facts that a judicial 

official was prevented from exercising independent judgment. 477 F.3d at 663–64.

Here, at the motion to dismiss phase, Plaintiffs’ plausible allegations that 
5 

Defendants provided false information that successfully deceived law enforcement

and the magistrate 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, they 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 Defendants 

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 predicate acts under the Noerr-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 Rule of Appellate Procedure 28(j) as an improper citation to authorities 

and irrelevant to this matter. (Doc. 50). 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 barred by the statute of limitations.

3. Finally, we 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 pattern of racketeering 

activity. We agree with the district court’s analysis noting the pleading’s defect 

with respect to these Defendants. The TAC seldom mentions them, 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 court, 

however, we conclude that the TAC adequately pleads a RICO claim as to 

Defendants Health Net 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.
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AFFIRMED in part, REVERSED in part, and REMANDED.