Opinion ID: 2982589
Heading Depth: 3
Heading Rank: 1

Heading: The Standard of Review and Applicable Law

Text: We review the district court’s dismissal of Kalitta’s RICO claims under Rule 12(b)(6) de novo. Ouwinga v. Benistar 419 Plan Servs., Inc., 694 F.3d 783, 790 (6th Cir. 2012). “In assessing a complaint for failure to state a claim, we must construe the complaint in the light most favorable to the plaintiff, accept all well-pled factual allegations as true, and determine whether the complaint -8- ‘contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The RICO statute states that “any person employed by or associated with any enterprise engaged in . . . interstate or foreign commerce” may be subject to criminal and civil liability if he or she “conduct[s] or participate[s], directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). The statute’s civil remedies provision allows private plaintiffs “injured in [their] business or property by reason of a violation” of the statute to sue in federal court and “recover threefold the damages [they] sustain[]” as well as the “cost of the suit, including a reasonable attorney’s fee . . . .” 18 U.S.C. § 1964(c). “[T]o state a [civil] RICO claim, [a plaintiff] must plead the following elements: ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.’” Moon, 465 F.3d at 723 (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)). The parties dispute whether Kalitta’s amended complaint sufficiently alleged a “pattern” of racketeering activity, which “requires at least two acts of racketeering activity,” the last of which must, excluding any period in prison, be within ten years of the first. 18 U.S.C. § 1961(5) (quotations omitted). In H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989), the Supreme Court held that although “two acts are necessary, they may not be sufficient.” Id. at 237 (quotations omitted); see also Brown v. Cassens Transp. Co., 546 F.3d 347, 354 (6th Cir. 2008). “Beyond setting forth the minimum number of predicate acts required to establish a pattern,” the statute “‘assumes that there is something to a RICO pattern beyond simply the number of predicate acts involved.’” Brown, 546 F.3d at 354 (quoting H.J. Inc., 492 U.S. at 238). “Within the numerous -9- sorts of relationships that can constitute a pattern, two elements must be shown: ‘that the racketeering predicates are [1] related, and that [2] they amount to or pose a threat of continued criminal activity.’” Id. (quoting and emphasizing H.J. Inc., 492 U.S. at 239). The parties do not dispute that the predicate acts Kalitta alleges are sufficiently related. The issue is continuity. “‘Continuity’ is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition.” H.J. Inc., 492 U.S. at 241. “Continuity may be established at the pleading stage by alleging facts of either closed- or open-ended racketeering activity.” Moon, 465 F.3d at 724. “A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement” because “Congress was concerned in RICO with long-term criminal conduct.” H.J. Inc., 492 U.S. at 242; see also Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir. 1994) (predicate acts over 17-month period did not satisfy closed-period analysis); Vild v. Visconsi, 956 F.2d 560, 569 (6th Cir. 1992) (six- to seven-month period not sufficient). When circumstances interrupt the predicate activity or a plaintiff brings a RICO action “before continuity can be established in this way,” “liability depends on whether the threat of continuity is demonstrated”—that is, whether continuity is “open-ended.” H.J. Inc., 492 U.S. at 242. “Determining whether open-ended continuity has been established requires a court to probe ‘the specific facts of each case.’” Brown, 546 F.3d at 354 (quoting H.J. Inc., 492 U.S. at 242). Open-ended continuity may be present “if the related predicates themselves involve a distinct threat of long-term racketeering activity, either implicit or explicit.” H.J. Inc., 492 U.S. at 242. -10- “Even when ‘the number of related predicates involved may be small and they may occur close together in time,’ if ‘the racketeering acts themselves include a specific threat of repetition extending indefinitely into the future,’ this ‘suppl[ies] the requisite threat of continuity.’” Brown, 546 F.3d at 354 (quoting H.J. Inc., 492 U.S. at 242). “In other cases, the threat of continuity may be established by showing that the predicate acts or offenses are part of an ongoing entity’s regular way of doing business.” H.J. Inc., 492 U.S. at 242. “Thus, the threat of continuity is sufficiently established where the predicates can be attributed to a defendant operating as part of a long-term association that exists for criminal purposes.” Id. at 242-43. One consideration is whether a complaint alleges “an inherently terminable scheme—a pattern of racketeering activity with a built-in ending point.” Heinrich, 668 F.3d at 410. The plaintiffs’ allegations must “support a systematic threat of ongoing fraud.” Moon, 465 F.3d at 728. At the same time, “‘the threat of continuity need not be established solely by reference to the predicate acts alone’”; “‘facts external to the predicate acts may, and indeed should, be considered.’” Brown, 546 F.3d at 355 (quoting United States v. Busacca, 936 F.2d 232, 238 (6th Cir. 1991)).