Opinion ID: 2742919
Heading Depth: 3
Heading Rank: 2

Heading: Association-in-Fact Enterprise

Text: Plaintiffs also claim that an “association in fact” existed among the RICO defendants and that this association constituted a RICO enterprise. An association-in-fact enterprise “‘is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.’” Boyle, 556 U.S. at 945 (quoting United States v. Turkette, 452 U.S. 576, 583 (1981)). This type of RICO enterprise “must have at least three structural features: [1] a purpose, [2] relationships among those associated with the enterprise, and [3] longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Id. at 946. The enterprise must also exist “separate and apart from the pattern of activity in which it engages.” Turkette, 452 U.S. at 583. “‘[F]or an association of individuals to constitute an enterprise,’” we have required that the members of the association “‘share a common purpose to engage in a particular fraudulent course of conduct and work together to achieve such purposes.’” Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013) (quoting First Capital, 385 F.3d at 174). Here, plaintiffs’ allegations of the RICO defendants’ common purpose fall short of supporting a plausible inference that an association-in-fact enterprise existed. Although the complaints allege that the goal of the purported association-in-fact enterprise was “to purchase the favor and influence of political leaders and government officials,” Joint App’x at 37 (Compl. ¶ 26), this allegation is little more than a “‘naked assertion’ devoid of ‘further factual enhancement,’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (alteration omitted). Notably absent from the complaints’ narrative are any allegations that CNB benefited in any way from the alleged enterprise. Similarly, the complaints lack any “specific factual allegation[s] about the intent” of any RICO defendant other than Spiegelman or Williams. Cruz, 720 F.3d at 121. The complaints further fail to suggest why CNB or Spiegelman would share the goal of deriving political support for NBUF with Williams. Plaintiffs’ failure to allege a plausible common purpose among the RICO defendants is fatal to their assertion that these defendants formed an association-in-fact RICO enterprise. In their reply brief, plaintiffs suggest that their complaints establish a two-person association-in-fact enterprise comprising Spiegelman and Williams alone. We need give this 7 belated argument only brief consideration. First, plaintiffs had never before alleged the existence of this alternative enterprise, whether in their complaints or in their moving brief on appeal. “[W]e generally do not consider arguments that are raised for the first time in a reply brief,” Clubside, Inc. v. Valentin, 468 F.3d 144, 159 n.5 (2d Cir. 2006), “because if an appellant raises a new argument in a reply brief an appellee may not have an adequate opportunity to respond to it,” Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 418 (2d Cir. 2001). See also United States v. Yousef, 327 F.3d 56, 115 (2d Cir. 2003). But even evaluating the substance of plaintiffs’ argument and construing the pleadings liberally with regard to the enterprise element, plaintiffs’ claim that Spiegelman and Williams alone constitute a RICO enterprise does not pass muster. Plaintiffs’ complaint gives no basis for inferring that these two defendants in isolation formed “an ongoing organization, formal or informal,” let alone a coherent “entity separate and apart” from the alleged fraudulent scheme. Turkette, 452 U.S. at 583. Moreover, the complaints fail to provide a plausible basis for inferring that Spiegelman and Williams acted “on behalf of the enterprise as opposed to on behalf of [themselves] in their individual capacities, to advance their individual self-interests.” United Food & Comm. Workers Unions & Emp’rs Midwest Health Benefits Fund v. Walgreen Co., 719 F.3d 849, 854 (7th Cir. 2013) (emphasis in original). The complaints may adequately plead that Spiegelman and Williams worked together in some respects to steal plaintiffs’ funds, but the complaints create no plausible inference that they did so to advance the political agenda of their purported “enterprise” or for any shared purpose. As the Seventh Circuit has observed, “RICO is not violated every time two or more individuals commit one of the predicate crimes listed in the statute.” Id. at 851. Accordingly, plaintiffs have failed sufficiently to plead the existence of an association-in-fact enterprise. Because plaintiffs have not adequately pleaded a plausible nexus between the alleged thefts and NBUF, or the existence of an association-in-fact enterprise, plaintiffs have failed to state a claim for relief under § 1962(c) of the RICO statute. We therefore do not address whether plaintiffs have adequately pleaded the requisite predicate acts, an additional element necessary to a § 1962(c) claim. The failure to state a claim for a substantive RICO violation, 8 moreover, is fatal to plaintiffs’ RICO conspiracy claim under § 1962(d). See First Capital, 385 F.3d at 182.