Court Opinion

ID: 4280130
Source: CourtListenerOpinion
Date Created: 2018-05-31 18:00:20.210292+00
Date Added: 2024-06-11T13:10:36.675684
License: Public Domain

Case: 17-20576      Document: 00514494081         Page: 1    Date Filed: 05/31/2018

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                                                         United States Court of Appeals

                                    No. 17-20576
                                                                                  Fifth Circuit

                                                                                FILED
                                  Summary Calendar                          May 31, 2018
                                                                           Lyle W. Cayce
ERIKA ARROYO,                                                                   Clerk

       Plaintiff-Appellant,

v.

OPRONA, INC., ROSEN SWISS AG, and CHRIS F. YOXALL,

       Defendants-Appellees

                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 4:16-CV-852

                         ON PETITION FOR REHEARING
Before STEWART, Chief Judge, and ELROD and HIGGINSON, Circuit
Judges.
PER CURIAM: *
       The petition for panel rehearing is GRANTED. The panel opinion, Arroyo
v. Oprona, Inc., No. 17-20576 (5th Cir. 2018) is WITHDRAWN, and the
following opinion is SUBSTITUTED:

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
     Case: 17-20576       Document: 00514494081          Page: 2     Date Filed: 05/31/2018

                                       No. 17-20576

       Plaintiff-Appellant Erika Arroyo (“Arroyo”) appeals the district court’s
judgment dismissing her federal                Racketeer Influenced and Corrupt
Organizations Act (“RICO”) claims and remanding her remaining state law
claims to state court. Because Arroyo’s complaint failed to sufficiently allege
facts that support the standing requirement under the RICO statute for her
civil RICO claims against Defendants-Appellees Oprona, Inc. (“Oprona”),
Rosen Swiss AG (“Rosen Swiss”), and Chris F. Yoxall (“Yoxall”), we AFFIRM.
I.     RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
       Oprona employed Arroyo as a finance manager in its Houston, Texas
office from December 2013 to August 2015. 1 Arroyo’s duties as the supervisor
of the financial staff at Oprona primarily related to overseeing Oprona’s
accounting, payroll, and taxes. Yoxall, an Oprona vice president, supervised
Arroyo.
       During her employment, Arroyo became aware that Yoxall was using
company funds for the payment of his personal expenses. Reviewing the
accounting records, Arroyo discovered thousands of dollars had been
transferred to Yoxall’s personal accounts from Oprona’s accounts in a way
indicating that Yoxall was attempting to evade federal income taxes.
Particularly, in April 2015, Yoxall requested that Arroyo prepare and sign a
$96,922 check from Oprona’s business account for his personal income taxes
due to the IRS. Yoxall claimed that Oprona’s parent company based out of
Switzerland, Rosen Swiss, approved the payment that he requested. After
consulting with the chief financial officer of Rosen Swiss, Oliver Kille (“Kille”),
who stated that Yoxall’s requested payment would not be authorized, Arroyo
refused to sign and prepare the $96,922 check for Yoxall.

       1We accept all well-pleaded facts as true and view the facts in the light most favorable
to Arroyo. See Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012) (citing Jebaco Inc. v.
Harrah’s Operating Co., 587 F.3d 314, 318 (5th Cir. 2009)).

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                                No. 17-20576

      Despite Arroyo’s refusal to prepare and sign the check, the check was
still prepared and processed by another staff member for Yoxall. At an annual
financial meeting held at Rosen Swiss’s headquarters in Stans, Switzerland
the same month, Arroyo voiced her concerns to Kille regarding Yoxall’s use of
company funds to pay his personal expenses. To support her allegations, after
returning to Houston, Arroyo sent financial records to Rosen Swiss’s
headquarters that detailed Yoxall’s improper use of Oprona’s funds.
      Thereafter, Arroyo began to gradually lose her duties at Oprona. In May
2015, Arroyo was moved out of her office and had some of her responsibilities
passed over to a newly hired employee. In July 2015, Yoxall removed more of
Arroyo’s duties and supervisory authority. Eventually, Yoxall asked Arroyo to
voluntarily resign from her position. On August 5, 2015, after Arroyo refused
to resign, Oprona terminated Arroyo’s employment.
      In March 2016, Arroyo filed this lawsuit against Oprona, Rosen Swiss,
and Yoxall in Texas state court alleging Texas state law claims and claims for
violations of the federal civil RICO statute. Particularly, Arroyo alleged that
Oprona, Yoxall, and Rosen Swiss engaged in a RICO conspiracy involving the
RICO predicate acts of mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. §
1343, witness tampering, 18 U.S.C. § 1512(b), and retaliation against a
witness, 18 U.S.C. § 1513(e), that directly related to her termination of
employment at Oprona.
      The suit was subsequently removed to federal court based on federal
question jurisdiction. On November 1, 2016, the district court granted Arroyo’s
motion for leave to amend her complaint, where she continued to assert her
federal civil RICO and state law claims. Oprona, Yoxall, and Rosen Swiss filed
motions to dismiss Arroyo’s amended complaint. After adopting the magistrate
judge’s report and recommendation, the district court dismissed Arroyo’s

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                                  No. 17-20576

complaint against Rosen Swiss without prejudice on grounds of insufficient
service of process pursuant to Federal Rule of Civil Procedure 12(b)(5).
Additionally, the district court dismissed the federal civil RICO claims against
Yoxall and Oprona based on Arroyo’s failure to state a plausible claim for relief
pursuant to Federal Rule of Civil Procedure 12(b)(6). Arroyo timely appealed.
II.    DISCUSSION
          a. RICO Claims
       We review a district court’s grant of a Rule 12(b)(6) motion to dismiss de
novo. Bass, 669 F.3d at 506. “Dismissal is appropriate when the plaintiff has
not alleged enough facts to state a claim to relief that is plausible on its face or
has failed to raise [her] right to relief above the speculative level.” Id. “[W]e
may affirm the district court on any grounds raised below and supported by
the record.” Welborn v. Bank of New York Mellon Corp., 557 F. App’x 383, 386
(5th Cir. 2014) (per curiam) (unpublished) (citing Raj v. Louisiana State Univ.,
714 F.3d 322, 330 (5th Cir. 2013)). As a preliminary matter, “[a] plaintiff must
establish standing to bring a civil RICO claim” under the RICO statute.
Jackson v. Nat’l Ass’n for Advancement of Colored People, 546 F. App’x 438,
442 (5th Cir. 2013) (per curiam) (unpublished) (citing Price v. Pinnacle Brands,
Inc., 138 F.3d 602, 606 (5th Cir. 1998)). “‘Any person injured in his business or
property by reason of a violation of section 1962’ may sue pursuant to the civil
cause of action created by RICO.” Id. (quoting 18 U.S.C. § 1964).
       “Whistle blowers do not have standing to sue under RICO for the injury
caused by the loss of their job.” Cullom v. Hibernia Nat’l Bank, 859 F.2d 1211,
1215 (5th Cir. 1988). However, a plaintiff has standing under the RICO statute
if she can show she “has been injured in [her] business or property by the
conduct constituting the violation”—that is, by the commission of the predicate
acts. Id. (quoting Sedima v. Imrex, Co., 473 U.S. 479, 497 (1985)). Here, Arroyo

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                                 No. 17-20576

claims that the commission of two predicate acts resulted in her injuries.
However, Arroyo did not sufficiently plead violations of those two predicate
acts: (1) retaliation against a witness under 18 U.S.C. § 1513(e); and (2)
witness tampering under 18 U.S.C. § 1512(b). We agree with the district court
that Arroyo’s pleadings are conclusory and insufficient to survive a 12(b)(6)
motion to dismiss.
         b. Denial of Leave to Amend
      “The district court is entrusted with the discretion to grant or deny a
motion to amend and may consider a variety of factors including undue delay,
bad faith or dilatory motive on the part of the movant, repeated failures to cure
deficiencies by amendments previously allowed, undue prejudice to the
opposing party . . ., and futility of the amendment.” Marucci Sports, L.L.C. v.
Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014) (quotation
marks omitted). Arroyo failed to explain in either the district court or in this
appeal “what facts [she] would have added or how [she] could have overcome
the deficiencies found” in regards to her lack of standing under the RICO
statute to assert her claims. See Brewster v. Dretke, 587 F.3d 764, 768 (5th Cir.
2009) (internal quotation marks and citation omitted). Arroyo “gives no
indication that [she] did not plead [her] best case in [her] complaint.” Id.
Although Arroyo’s objections to the Report and Recommendation included six
additional proposed amendments, we agree with the district court that these
amendments would have been futile because the additions sought were still
conclusory. Arroyo had already been previously granted leave to amend her
complaint and the amendments would not have cured the deficiencies. Thus,
we conclude that Arroyo’s request for leave to amend her complaint was
properly denied.
      In light of the foregoing, the judgment of the district court is AFFIRMED.

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