PAGE 1 – OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

TIMOTHY ROTE,

Plaintiff,

v.

SILICON VALLEY BANK, INC.;

CHESTER TE; LIVEVOX, INC.; ERIC 

GROTHE; CARLOS A. SAMOUR; 

BIEGING, SHAPIRO & BARBER, LLP; 

DUNCAN BARBER; JULIE TRENT; 

ADAM MICHELIN; THE RECEIVERS, 

INC.; and JOHN DOES 1-10.

Defendants.

Case No. 3:16-cv-00471-SI

OPINION AND ORDER

Timothy Rote, 24790 SW Big Fir Road, West Linn, OR 97068. Pro se Plaintiff.

B. John Casey, K&L GATES, LLP, One S.W. Columbia Street, Suite 1900, Portland, OR 97258; 

Peter Bales and Peter G. Bertrand, BUCHALTER NEMER, 55 Second Street, Suite 1700, San 

Francisco, CA 94105-3493. Of Attorneys for Defendants Silicon Valley Bank, Inc. and Chester 

Te.

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PAGE 2 – OPINION AND ORDER

Casey M. Nokes, CABLE HUSTON LLP, 1001 SW 5th Avenue, Suite 2000, Portland, OR 97204-

1136; Nathaniel P.T. Read, COHEN & GRESSER LLP, 800 Third Avenue, New York, NY 10022.

Of Attorneys for Defendant LiveVox, Inc.

Allison R. Ailer and Friedrick C. Haines, COLORADO ATTORNEY GENERAL’S OFFICE, 1300 

Broadway, Denver, CO 80203. Of Attorneys for Defendant Carlos A. Samour.

Christopher E. Hawk and Tanya C. O’Neil, GORDON & REES LLP, 121 SW Morrison Street, 

Suite 1575, Portland, OR 97204. Of Attorneys for Defendants Bieging, Shapiro & Barber, LLP,

Duncan Barber, and Julie Trent.

Michael H. Simon, District Judge.

Plaintiff Timothy Rote (“Rote” or “Plaintiff”) brings this civil action against Silicon 

Valley Bank, Inc. (“SVB”), Chester Te, LiveVox, Inc. (“LiveVox”), Judge Carlos A. Samour,

Bieging, Shapiro & Barber, LLP,1 Duncan Barber, Julie Trent, Eric Grothe, Adam Michelin, The 

Receivers, Inc., and John Does 1-10,2(collectively “Defendants”).3Plaintiff alleges that 

Defendants violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 

et seq. (“RICO”). According to Rote, Defendants were part of a criminal enterprise engaged in a 

pattern of racketeering activity involving numerous RICO predicate acts, including extortion, 

bribery, fraud, tampering with witnesses, destruction of property, and obstruction of justice. 

Plaintiff asserts that Defendants intended to destroy Plaintiff’s business interests, create 

unwarranted litigation against Plaintiff, and prevent Plaintiff from publishing materials 

concerning Defendants’ behavior.

 

1 Bieging, Shapiro & Barber LLP was misidentified in the amended complaint as 

“Beiging, Shapiro & Barber LLP.”

2

It does not appear that Grothe, Michelin, The Receivers, Inc., or John Does 1-10 have 

been served in this action. They have not yet appeared, and Plaintiff has not filed any proof of 

service on these parties. Consequently, Grothe, Michelin, The Receivers, Inc., and John Does 1-

10 are not included in the Court’s references to “Defendants.”

3 Golden Gate Capital, named as a defendant in the amended complaint, has since been 

dismissed by Plaintiff. ECF 30.

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PAGE 3 – OPINION AND ORDER

Before the Court are three motions to dismiss: (1) a motion to dismiss filed by Defendant 

Judge Samour (ECF 24); (2) a motion to dismiss or, in the alternative, a motion for a more 

definite statement filed by SVB and SVB’s in-house counsel, Chester Te (collectively “SVB 

Defendants”) (ECF 28);4and (3) a motion to dismiss filed by Defendant LiveVox (ECF 35). The 

SVB Defendants also ask the Court to take judicial notice of a blog post written by Rote, an 

annual report from Rote’s company filed with the Oregon Secretary of State, and three 

documents from the Colorado state courts. ECF 29. Additionally, Rote attached numerous 

documents to his declarations filed in response to the motions to dismiss. The Court construes 

the attachment of these documents as a motion for the Court to take judicial notice of them. For 

the reasons below, the SVB Defendants’ motion for judicial notice is granted in part and denied 

in part, Rote’s motions for judicial notice are granted in part and denied in part, and Defendants’ 

motions to dismiss are granted. Plaintiff’s claims against all defendants, including those that 

have not yet been served or appeared, are dismissed.

STANDARDS

A. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss for failure to state a claim may be granted only when there is no 

cognizable legal theory to support the claim or when the complaint lacks sufficient factual 

allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., 

Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual 

allegations, the court must accept as true all well-pleaded material facts alleged in the complaint 

and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-

 

4 Defendants Bieging, Shapiro & Barber, Barber, and Trent (collectively “Barber 

Defendants”) have joined and incorporated by reference SVB and Chester Te’s motion, briefing, and 

arguments. ECF 48. Accordingly, those arguments are attributed to the Barber Defendants as 

well.

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Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629 

F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint 

“may not simply recite the elements of a cause of action, but must contain sufficient allegations 

of underlying facts to give fair notice and to enable the opposing party to defend itself 

effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from 

the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office 

Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the 

plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 

U.S. 662, 678-79 (2009).

A complaint must contain sufficient factual allegations to “plausibly suggest an 

entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the 

expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial 

plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

B. Pro Se Plaintiff

A court must liberally construe the filings of a pro se plaintiff and afford the plaintiff the 

benefit of any reasonable doubt. Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010). “A pro se

litigant must be given leave to amend his or her complaint unless it is ‘absolutely clear that the 

deficiencies of the complaint could not be cured by amendment.’” Karim-Panahi v. Los Angeles 

Police Dep’t, 839 F.2d 621, 623 (9th Cir. 1988) (quoting Noll v. Carlson, 809 F.2d 1446, 1448 

(9th Cir. 1987), superseded on other grounds by statute as stated in Lopez v. Smith, 203 F.3d 

1122 (9th Cir. 2000)). Under Federal Rule of Civil Procedure 8(a)(2), however, every complaint 

must contain “a short and plain statement of the claim showing that the pleader is entitled to 

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PAGE 5 – OPINION AND ORDER

relief.” This standard “does not require ‘detailed factual allegations,’” but does demand “more 

than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S.at 555). “A pleading that offers ‘labels and conclusions’ or ‘a 

formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting Twombly, 550 

U.S. at 555).

BACKGROUND

For purposes of Defendants’ motions to dismiss, the Court accepts as true the facts 

alleged in Plaintiff’s Amended Complaint. ECF 9. The Court also considers additional facts set 

forth in the documents of which the Court has taken judicial notice, for purposes of general 

background. 

Rote is a resident of Oregon. He owns Northwest Direct Teleservices (“NDT”), a 

corporation that operated telephone call centers in Oregon and Iowa. NDT originally had a 

contract with DataTel under which DataTel provided servers and software for NDT’s call

centers. TouchStar Software Corporation (“TouchStar”) acquired DataTel, and NDT entered into 

a contract with TouchStar in May 2008. Under this Software Corporation Hardware Sales 

Agreement and End User License Agreement (“the Agreement”), TouchStar promised to deliver 

two servers to NDT that would provide blended inbound and outbound calling services with 192 

agent seats (also called licenses) for a total of 576 telephone lines. NDT agreed to pay TouchStar 

$87,500 for the equipment, software, and services to be provided under the Agreement, and also 

promised to return certain DataTel equipment. Under the Payment Terms, NDT was required to 

pay $40,000 upon initial execution of the Agreement, and the remaining amount of $47,500 in 

three equal, consecutive monthly payments following installation acceptance. NDT paid the 

initial $40,000, but did not pay the remaining amount.

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In March 2009, Rote discovered that foreclosure of TouchStar’s assets by SVB was 

imminent. Rote alleges that at that time, TouchStar had violated the Agreement between 

TouchStar and NDT, and was attempting to terminate NDT’s software licenses. SVB, 

meanwhile, was TouchStar’s senior secured creditor. When TouchStar defaulted in June 2009, 

Colorado state court Judge Samour appointed Grothe as the receiver to manage TouchStar’s 

assets. Grothe hired Michelin to provide management services at TouchStar during the 

receivership process. 

Rote alleges that Michelin used the temporary software licenses to extort money from 

NDT. Rote further alleges that Michelin entered into an agreement with NDT not to terminate 

the software licenses, but then breached that agreement when Michelin discovered that Rote was 

speaking with a potential buyer of TouchStar.

In April 2009, NDT filed a lawsuit against TouchStar in the United States District Court 

for the District of Oregon, seeking a temporary restraining order preventing TouchStar from 

shutting down NDT’s software. In early June 2009, the judge in the Oregon federal lawsuit

granted TouchStar’s motion to transfer venue to the District of Colorado, based on a forum 

selection clause in the Agreement. Before the District of Colorado court could hear NDT’s

emergency motion, however, SVB authorized TouchStar to shut down NDT’s software on 

August 6, 2009, allegedly in an effort to eliminate the lawsuit filed by NDT. This shutdown 

allegedly could only have been performed through unauthorized access to NDT’s server. On 

August 24, 2009, the Colorado federal court granted NDT’s motion for a preliminary injunction, 

ordered TouchStar to reinstall NDT’s computer software, ordered TouchStar to provide 

consistent and reliable access to 144 agent licenses, and enjoined TouchStar from including or 

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PAGE 7 – OPINION AND ORDER

enforcing any expiration dates on the software licenses and from further interrupting NDT’s 

service.

Rote alleges that NDT was one of TouchStar’s unsecured creditors and that SVB 

structured the sale of TouchStar’s assets to avoid having to pay any unsecured creditors. NDT 

received nothing from the sale of TouchStar’s assets. Rote further alleges that over the next five 

years, SVB and its “enterprise affiliates” systematically sought to destroy NDT through a series 

of bribes and intimidation, including influencing state court judges.

SVB filed a complaint against NDT in Colorado state court in August 2009, seeking to 

collect the outstanding TouchStar account receivable. After NDT received the federal court order

requiring TouchStar to reinstall NDT’s software, SVB obtained in state court from Judge Samour 

an order staying NDT from enforcing the federal court’s order. By the time that stay was lifted, 

SVB had sold TouchStar’s assets. The company that purchased TouchStar’s assets reinstalled the 

software at NDT in November 2009, for outbound calling. Inbound calling was moved to another 

platform.

NDT ultimately consented to jurisdiction in the Colorado state court receivership action 

before Defendant Judge Samour. On January 12, 2010, Judge Samour denied NDT’s motion to 

dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue to the Colorado 

federal Court. After ruling on some additional motions relating to NDT’s and TouchStar’s claims 

against one another, on March 23, 2013, Defendant Judge Samour notified the parties that he had

transferred the receivership case to Colorado state court Judge Elizabeth Weishaupl. Judge 

Weishaupl presided over the remainder of the receivership case. 

Judge Weishaupl presided over a four-day bench trial in March 2014. In July 2014,

Judge Weishaupl entered her findings of fact and conclusions of law. The court found in SVB’s 

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PAGE 8 – OPINION AND ORDER

favor, holding that NDT breached the Agreement and that SVB was entitled to a money 

judgment against NDT. The court also found that the shutdown of the TouchStar software was 

authorized by the Agreement, and that the receiver effectuated the shutdown rather than SVB. 

Thus, SVB was not liable for breach of the Agreement.

Plaintiff alleges numerous acts of misconduct by Defendants throughout the state court 

litigation. These alleged acts include extortion, bribery, fraud, tampering with witnesses, 

corruption, destruction of property, and obstruction of justice.

DISCUSSION

Plaintiff alleges three RICO claims under Section 1962. Defendants move to dismiss all 

claims, arguing under Federal Rule of Civil Procedure 12(b)(6) that Plaintiff has failed to state a 

claim upon which relief can be granted. The SVB Defendants also request judicial notice of 

several documents filed in support of their motion to dismiss. The Court also has construed 

Plaintiff’s filings in response to the motions to dismiss to be a request for judicial notice. 

A. Requests for Judicial Notice

1. SVB Defendants

The SVB Defendants move for judicial notice of five documents: (1) a May 5, 2016 blog 

post from Timothy Rote’s blog “Sitting Duck Portland” entitled “Chapter 60—What we want 

from Judges”; (2) the “Findings of Fact/Conclusions of Law” filed on July 30, 2014 in District 

Court, County of Arapahoe, State of Colorado in the action entitled Robert G. Garber v. 

Defendant TouchStar Software Corp., et al., Case No. 2009CV1189; (3) the order for Silicon 

Valley Bank’s Motion for Award of Attorneys’ Fees and Costs filed on May 28, 2015 in District 

Court, County of Arapahoe, State of Colorado in the action entitled Robert G. Garber v.

Defendant TouchStar Software Corp., et al., Case No. 2009CV1189; (4) the mandate ordering 

that an appeal be dismissed, filed on April 3, 2015 in Colorado Court of Appeals, Court of 

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PAGE 9 – OPINION AND ORDER

Appeals Case No. 2014CA1805; and (5) the 2014 Annual Report for Northwest Direct 

Teleservices, Inc. filed with the Oregon Secretary of State on February 21, 2014.

A court “may take judicial notice of court filings and other matters of public record.” 

Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). Taking notice 

of matters of public record does not convert a motion to dismiss into a motion for summary 

judgment so long as the facts are noticed in accordance with the Federal Rules of Evidence. See 

Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007). Under the Federal 

Rules of Evidence, a “court may judicially notice a fact that is not subject to reasonable dispute 

because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be 

accurately and readily determined from sources whose accuracy cannot reasonably be 

questioned.” Fed. R. Evid. 201(b). Documents of which courts have taken judicial notice include 

filings by government agencies. See, e.g., N.W. Envtl. Advocates v. EPA, 537 F.3d 1006, 1026-27 

(9th Cir. 2008) (taking judicial notice of the EPA’s request for public comment).

A court also may take judicial notice of the contents of a document submitted to a 

government agency without ruling on the truth of the contents. See Telesaurus VPC, LLC v. 

Power, 2009 WL 273295, at *1 n.1 (D. Ariz. Feb. 5, 2009), aff’d in part, rev’d in part on other 

grounds, 623 F.3d 998 (9th Cir. 2010) (taking judicial notice of, among other things, an 

application for an FCC license); Patel v. Parnes, 253 F.R.D. 531, 546 (C.D. Cal. 2008) (“It is 

appropriate for the court to take judicial notice of the content of the SEC Forms 4 and the fact 

that they were filed with the agency.”). It is improper, however, for a court to take judicial notice 

of the veracity and validity of a public document’s contents when the parties dispute the meaning 

and truth of the contents. See, e.g., Lee v. City of L.A., 250 F.3d 668, 690 (9th Cir. 2001) 

(reversing a district court’s grant of a motion to dismiss where the court not only took judicial 

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notice of undisputed matters of public record but also took judicial notice of “disputed facts 

stated in public records” and relied on the validity of those facts in deciding the motion to 

dismiss); Patel, 253 F.R.D. at 546 (noting after finding it appropriate to take judicial notice of 

the content of forms filed with the SEC that “[t]he truth of the content, and the inferences 

properly drawn from them, however, is not a proper subject of judicial notice under Rule 201”); 

United States v. S. Cal. Edison Co., 300 F. Supp. 2d 964, 975 (E.D. Cal. 2004) (“While the court 

may take judicial notice of the general meaning of words, phrases, and legal expressions, 

documents are judicially noticeable only for the purpose of determining what statements are 

contained therein, not to prove the truth of the contents or any party’s assertion of what the 

contents mean.”).

The first document for which the SVB Defendants seek judicial notice, Exhibit 1 to their 

motion (ECF 29-1), is a blog post from the website Sitting Duck Portland. The blog post is 

entitled “Chapter 60—What We Want From Judges.” A blog post is neither a “court filing” nor a 

matter “of public record.” Reyn’s Pasta, 442 F.3d at 746 n.6. Additionally, a blog’s accuracy is 

subject to reasonable questioning, as blogs are not generally considered reputable sources. The 

Court therefore does not take judicial notice of Exhibit 1.

The second, third, and fourth documents included in the SVB Defendants’ request are 

judicial orders from the Colorado state case and therefore are appropriate for judicial notice. See 

Reyn’s Pasta, 442 F.3d at 746 n.6. Accordingly, the Court takes judicial notice of Exhibits 2, 3, 

and 4. ECF 29-2, 29-3, and 29-4. The fifth document is NDT’s 2014 Annual Report filed with 

the Oregon Secretary of State, a government agency, and the report is available on the Oregon 

Secretary of State’s website. Because the report is a public record, the Court takes judicial notice 

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of the existence of Exhibit 5, but will not take judicial notice of the truth of its contents to the 

extent that they are disputed by Plaintiff. ECF 29-5.

2. Plaintiff

Plaintiff also filed declarations, attaching numerous documents. ECF 40, 44, 45, 47. 

Plaintiff attached: (1) deposition transcripts from depositions taken in the Colorado state court 

proceedings, which were apparently filed as exhibits in the Colorado court proceedings; 

(2) transcripts of certain testimony from the Colorado state bench trial; (3) judicial orders filed in 

the Colorado state court proceedings; (4) other documents filed in the Colorado state court 

proceedings; and (5) judicial orders filed in the Colorado federal court proceedings. The Court 

takes judicial notice of the documents submitted by Plaintiff. For the deposition and trial 

transcripts, the Court does not deem the content of those documents to be true and does not rely 

on the facts contained within those documents.

B. Standing

Defendants argue that Plaintiff lacks standing to bring a civil RICO claim because his 

only alleged injury is the loss of value he experienced as a shareholder in NDT and its affiliated 

companies.5 Plaintiff alleges that the losses sustained by NDT, although already adjudicated and 

closed, were sustained because of a pattern and practice racketeering activity. Plaintiff further 

alleges that such racketeering activity destroyed NDT and its affiliated group of companies and 

that the loss in shareholder value of those companies is the loss asserted by Rote.

 

5 Defendants make a number of other potentially meritorious arguments in their 

respective motions, including Defendant Judge Samour’s argument that he is entitled to judicial 

immunity and Defendant LiveVox’s argument that it did not participate in the alleged RICO 

enterprise. The Court does not reach these arguments, however, because the Court concludes that 

Plaintiff lacks standing. 

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1. Standard

Section 1964 of RICO provides that “[a]ny person injured in his business or property by 

reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United 

States district court.” 18 U.S.C. § 1964(c). In order to have standing to sue under this provision, 

“a civil RICO plaintiff must show: (1) that his alleged harm qualifies as injury to his business or 

property; and (2) that his harm was ‘by reason of’ the RICO violation, which requires the 

plaintiff to establish proximate causation.” Canyon Cty. v. Syngenta Seeds, Inc., 519 F.3d 969, 

972 (9th Cir. 2008) (quoting Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258, 268 (1992)). The 

Supreme Court in Holmes rejected an exclusive “but for” causation standard for civil RICO 

claims, noting that causation must be both “but for” and proximate in order to assert a civil RICO 

claim. Holmes, 503 U.S. at 268.

In Anza v. Ideal Steel Supply Corp., the Supreme Court emphasized the “attenuated 

connection” between the plaintiff’s injury and the defendant’s injurious conduct in its 

determination that the plaintiff had not established standing. 547 U.S. 451, 459 (2006). The 

Supreme Court further noted that there is a “requirement of a direct causal connection” and that 

the “immediate victims” are those who “can be expected to vindicate the laws by pursuing their 

own claims.” Id. at 460. Essentially, “the Supreme Court clarified that the Holmes proximate 

cause requirement not only bars RICO suits by derivative victims, or those whose injuries are 

‘purely contingent on the harm suffered by’ direct victims, but generally precludes recovery by 

those whose injuries are only tenuously related to the RICO violation at issue.” Canyon Cty., 519 

F.3d at 981 (quoting Anza, 547 U.S. at 457). “Where the violation is not itself the immediate 

cause of the plaintiff’s injury, proximate cause may be lacking.” Id.

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2. Analysis

Rote concedes that the “losses sustained by Rote’s company NDT have been adjudicated 

and are now closed.” ECF 9 ¶ 108. NDT is therefore not a named plaintiff in this suit, nor can 

Rote bring a suit on NDT’s behalf. As his injury, Rote alleges that the “racketeering activity 

destroyed Rote’s affiliated group of corporations and it is the loss of that shareholder value [that] 

Rote is asserting as damages.” Id. Allegations of shareholder loss, however, do not convey 

individual standing under RICO, absent a special relationship between the parties.6See Sparling 

v. Hoffman Constr. Co., 864 F.2d 635, 640-41 (9th Cir. 1988) (analyzing whether shareholders 

or guarantors have standing to assert individual RICO claims and holding that they do not). 

As the Ninth Circuit explained in Sparling:

The Sparlings argue that their harm is not derivative, but direct. 

This argument has no merit. The Sparlings must show either an 

injury distinct from that to other shareholders or a special duty 

between Hoffman and the Sparlings if they are to have standing to 

assert RICO claims based on injury to the corporation. The wrong 

alleged is a fraud on the corporation. Because [the Sparlings] are 

the sole shareholders they cannot show an injury distinct from that 

to other shareholders. Nor was there a special relationship between 

the Sparlings and Hoffman which would create the kind of duty 

required. Thus, the court was correct in ruling that [the Sparlings] 

had no standing as shareholders to assert a RICO claim.

Any harm to the Sparlings due to their status as guarantors of the 

bonds given by the corporation is also derivative of the harm to the 

corporation. Thus, this status does not give the Sparlings standing.

Id. (citations omitted); see also Ahn v. Hanil Dev., Inc., 471 F. App’x 615, 617 (9th Cir. 2012) 

(“In the context of a § 1962(c) claim brought by an individual shareholder, the shareholder must 

allege harm unique to the individual, not harm to the corporation (i.e., a RICO plaintiff may not 

 

6

There are no allegations demonstrating a special relationship sufficient to give rise to 

individual RICO standing between Plaintiff and Defendants, nor are the types of relationships 

between Plaintiff and each of the Defendants the types of relationships that would be considered 

sufficient to create the kind of duty required for individual standing under RICO.

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PAGE 14 – OPINION AND ORDER

acquire standing by alleging only derivative harm). Ahn lacks standing to assert a claim under 

§ 1962(c) because his alleged injury is not unique to him. . . . Specifically, Ahn alleged that the 

predicate acts underlying his derivative § 1962(c) claims ‘defraud[ed] HDI of money’ and 

‘render[ed] . . . Ahn’s investment in HDI worthless,’ thereby ‘tak[ing] from him his share of

legitimate income earned by HDI.’ These are allegations of derivative, not individual, harm.” 

(first alteration added, remaining alterations in original) (citations omitted)); Desoto v. 

Condon, 371 F. App’x 822, 824 (9th Cir. 2010) (“Shareholders and limited partners typically 

lack standing to assert RICO claims where the harm is derivative of their corporation or 

partnership’s harm. Such plaintiffs can establish standing only by showing an injury ‘distinct 

from that to other shareholders’ or a special duty between the shareholder and the defendant. The 

gravaman of Desoto’s complaint is injury to the Trago entities, so Desoto’s injuries are 

derivative.” (citations omitted)). 

Here, as in the cases discussed above, the gravaman of Rote’s complaint is injury to 

NDT, which resulted in a loss of value to NDT and its affiliated corporations, thereby resulting 

in a loss of shareholder value to Rote. This is not a unique and direct harm to Rote, but only a 

derivative injury. Accordingly, Rote does not have standing to bring claims under RICO. See 

also Warren v. Mfrs. Nat’l Bank of Detroit, 759 F.2d 542, 544 (6th Cir. 1985) (finding that the 

plaintiff did not have standing under RICO where the plaintiff alleged injury as “the sole 

shareholder” of the company allegedly destroyed by the bank’s alleged racketeering conduct who 

had “lost his total investment when his stock became worthless,” and noting that “[i]n his 

capacity as a shareholder of Paragon, any injury he incurred was actually one sustained by the 

corporation. . . . diminution in value of the corporate assets is insufficient direct harm to give the 

shareholder standing to sue in his own right” (quotation marks and citation omitted)). 

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Further, in order to sue on behalf of NDT’s affiliated corporations, Rote would need to 

bring a derivative action under Federal Rule of Civil Procedure 23.1. Rote has failed to do so. 

Even if Rote were to file such an action, however, based on the facts alleged in the Complaint, 

Rote would be unable to establish proximate causation. According to the facts asserted in Rote’s 

complaint, NDT was the direct victim of the alleged RICO enterprise. Any injuries to NDT’s

affiliated corporations, similar to the alleged injuries to Rote, were “purely contingent on the 

harm suffered by” NDT, which the Supreme Court has held to be an insufficient basis for 

standing. Anza, 547 U.S. at 457. In addition, the loss in value suffered by NDT’s affiliated 

companies “could have resulted from factors other than [Defendants’] alleged [RICO violations]. 

Businesses lose and gain customers for many reasons, and it would require a complex 

assessment to establish what portion” of the loss in value, if any, was caused by Defendants’ 

alleged actions that allegedly harmed NDT. Id. at 459. 

NDT was the direct victim of the alleged racketeering activity. Accordingly, because 

Rote was, at most, derivatively harmed by Defendants’ alleged RICO enterprise and was only 

“tenuously” connected to the alleged RICO enterprise, Rote does not have standing to assert his 

claims under RICO. Id. at 457-59; Canyon Cty., 519 F.3d at 981; Sparling, 864 F.2d at 640-41.

The Court dismisses Plaintiff’s claims with prejudice. The facts alleged in the Complaint 

and the documents of which the Court has taken judicial notice demonstrate that the alleged 

RICO enterprise was directed at, and allegedly directly harmed, NDT. Accordingly, the Court 

finds that allowing an amendment would be futile. Although some of the named defendants have 

not yet been served or appeared, the Court dismisses this case in its entirety because all of the 

allegations against all of the defendants rely on the same theory of a RICO enterprise, which 

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allegedly directly harmed NDT and then, at most, only derivatively harmed Rote and NDT’s 

affiliated companies.

CONCLUSION

Defendant Judge Samour’s motion to dismiss (ECF 24) is GRANTED. The SVB 

Defendants’ request for judicial notice (ECF 29) is GRANTED in part and DENIED in part. The 

SVB Defendants’ motion to dismiss (ECF 28) is GRANTED. Defendant LiveVox’s motion to 

dismiss (ECF 35) is GRANTED. This case is dismissed with prejudice.

IT IS SO ORDERED.

DATED this 1st day of September, 2016.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge

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