Opinion ID: 785133
Heading Depth: 2
Heading Rank: 2

Heading: rico claims against yokohama managers

Text: 12 The district court's dismissal of Miller's remaining § 1962(c) and (d) RICO claims against the Yokohama Managers was also proper. Because he fails to properly allege any predicate acts of mail or wire fraud, Miller's complaint does not state any claim for which relief can be granted under RICO. 13 Liability under § 1962(c) requires (1) the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sun Sav. & Loan Ass'n v. Dierdorff, 825 F.2d 187, 191 (9th Cir.1987) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). `Racketeering activity' is defined in 18 U.S.C. § 1961(1)(B) as including any act `indictable' under certain enumerated federal criminal statutes, including 18 U.S.C. § 1341, which makes mail fraud a criminal offense, and 18 U.S.C. § 1343, which makes wire fraud a crime. Schreiber Distrib. Co. v. ServWell Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir.1986). 14 Because Miller's complaint satisfies the first three RICO elements of the conduct of an enterprise through a pattern, we are left to analyze whether he has stated a claim of racketeering activity through mail fraud. Miller contends that every time the Yokohama Managers sent him or other employees a paycheck or W-2 amounted to a predicate act of mail or wire fraud. 3 He argues, that taken together, the thousands of mailings amounted to a pattern of racketeering activity. 15 To allege a violation of mail fraud under § 1341, it is necessary to show that (1) the defendants formed a scheme or artifice to defraud; (2) the defendants used the United States mails or caused a use of the United States mails in furtherance of the scheme; and (3) the defendants did so with the specific intent to deceive or defraud. Schreiber, 806 F.2d at 1400 (citations omitted). Miller alleges that the Yokohama Managers formed a scheme to defraud him and other Yokohama employees through misrepresenting the law, and furthered that scheme through the mailing of paychecks and W 2s. Miller's complaint falls short because it does not state actionable fraud. 16 The threshold issue we address is Miller's argument that an employer's misrepresentation of the law to an employee constitutes actionable fraud. In Neder v. United States, 527 U.S. 1, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999), the Supreme Court underscored that the term defraud in the mail fraud statute is given its established common law meaning. Id. at 21-25, 119 S.Ct. 1827. As a result, we must look to common law to determine whether Miller has stated a claim of actionable fraud. See United States v. Kenrick, 221 F.3d 19, 28 (1st Cir.2000) (en banc) (referring to common law definitions of fraud and noting that the Neder Court relied on the Restatement for its definition of the materiality element of fraud). Under common law, Miller has failed to state a claim for actionable fraud. 17 It is ... well settled, as a general rule, that fraud cannot be predicated upon misrepresentations of law or misrepresentations as to matters of law. Am.Jur.2d of Fraud and Deceit § 97 (2001). Statements of domestic law are normally regarded as expressions of opinion which are generally not actionable in fraud even if they are false. Id. The Yokohama Managers' statements did not include express or implied misrepresentations of fact. The Restatement explains that where a misrepresentation of law is only one of opinion, rather than one that includes a misrepresentation of fact, the recipient can only justifiably rely on it to the extent that he can justifiably rely on other opinions. Restatement (Second) of Torts § 545 (1977). 18 The general rule is not without exception. The Restatement lays out four special situations that would justify reliance on such a misrepresentation of law. See Id. Where the party making the misrepresentation 1) purports to have special knowledge; 2) stands in a fiduciary or similar relation of trust and confidence to the recipient; 3) has successfully endeavored to secure the confidence of the recipient; 4) or has some other special reason to expect that the recipient will rely on his opinion, misrepresentations of law may result in actionable fraud. Id. None of these circumstances apply to the present case. 19 The Yokohama Managers did not purport to have expert or superior knowledge. Miller cites two cases in support of his effort to come within the superior knowledge exception, but he fails to explain why his circumstance is analogous to either case. The first case, Seeger v. Odell, 18 Cal.2d 409, 115 P.2d 977(1941), involved the superior knowledge of an attorney vis-a-vis elderly laypersons. Id. at 979. The second case, Regus v. Schartkoff, 156 Cal. App.2d 382, 319 P.2d 721 (1957), involved an insurance adjuster's superior knowledge regarding an insurance claim. Id. at 724. Miller does not allege facts to support superior knowledge, nor are we willing to impute hypothetical knowledge on the basis of the facts alleged. 20 Nor does Miller's case involve a fiduciary duty or similar special relationship. No presumption of a confidential relationship arises from the bare fact that parties to a contract are employer and employee; rather, additional ties must be brought out in order to create the presumption of a confidential relationship between the two. Odorizzi v. Bloomfield Sch. Dist., 246 Cal.App.2d 123, 54 Cal. Rptr. 533, 539 (Ct.App.1966); see also Bowman v. City of Indianapolis, 133 F.3d 513, 519(7th Cir.1998) (explaining that a relationship between city and its employees does not constitute a confidential relationship without more). In Slocomb v. City of Los Angeles, 197 Cal.App.2d 794, 17 Cal.Rptr. 529 (Ct.App.1961), the California Court of Appeal affirmed the dismissal of plaintiffs' claim that they were defrauded for nineteen years by their employer's misrepresentations of entitlement to overtime pay. Part of the reason the dismissal was affirmed was that the plaintiffs failed to allege that any confidential relationship existed between the employers and the employees. Id. at 530-31, 532. Here, as in Slocomb, Miller does not plead any facts of additional ties between himself and the Yokohama Managers that would create a presumption of a confidential relationship. 21 The Yokohama Managers did not endeavor[] to secure the confidence of Miller. See Restatement (Second) of Torts § 542. The comment on Restatement (Second) of Torts § 542(c) explains that the rule is usually applicable to situations where the maker gains the other's confidence by stressing their common membership in a religious denomination, fraternal order, or social group or the fact that they were born in the same locality. Id. at cmt. h. The only illustration of endeavoring to secure confidence the comment to the Restatement provides is a situation where after years of giving an elderly widow good investment advice, a friend advises her to buy worthless stock from him. Id. at cmt. h, illus. 2. The facts of the present case are nothing like the illustration in the Restatement. Miller alleges no facts indicating that the Yokohama managers endeavored to secure his confidence. 22 Finally, no other special reason supports an allegation that the Yokohama Managers would have expected Miller to rely on their opinion. There is no claim that Miller has a particular lack of intelligence or is particularly gullible, nor is there any allegation that the Yokohama Managers preyed on any such traits. See id. at cmt. I(explaining that the main application of the other special reason clause is to cases in which the maker of the representation knows of some special characteristic of the recipient, such as lack of intelligence ... which gives the maker special reason to expect the opinion to be relied on). Therefore, the final exception is not applicable to Miller. 23 Absent an exception — which is not present here — under common law, Miller's fraud claim cannot rest on the employee-employer relationship. 24