This summary also appears under Litigation
Issues: Claims brought under the Racketeer Influenced & Corrupt Organizations Act (RICO)(18 USC § 1962); Dismissal pursuant to Fed.R.Civ.P. 12(c); Rawe v. Liberty Mut. Fire Ins. Co.; Vickers v. Fairfield Med. Ctr.; Motion to dismiss under Fed.R.Civ.P. 12(b)(6); Ashcroft v. Iqbal; Bell Atl. Corp. v. Twombly; The "rigorous pleading standards" of Fed.R.Civ.P. 9(b) as to fraud claims; United States ex rel. Bledsoe v. Community Health Sys., Inc.; Challenge to the dismissal of the plaintiffs' RICO claim under § 1962(c); Sedima, S.P.R.L. v. Imrex Co.; § 1961(1)(B); Plaintiffs' "predicate acts of racketeering activity"; Mail and wire fraud (18 USC §§ 1341 and 1343); Extortion in violation of the Hobbs Act (18 USC § 1951); Transmitting or transferring in interstate commerce goods, wares, merchandise, or money knowing the same to have been stolen, converted, or taken by fraud (18 USC § 2314); Traveling in interstate or foreign commerce with the intent to distribute the proceeds of extortion (18 USC § 1952); Whether the district court included all the alleged predicate acts in its analysis of the plaintiffs' RICO claim; Mail fraud; United States v. Jamieson; Wire fraud; United States v. Daniel; "Scienter"; United States v. DeSantis; Frank v. Dana Corp.; Bridge v. Phoenix Bond & Indem. Co.; Holmes v. Security Investor Prot. Corp.; North Am. Catholic Educ. Programming Found., Inc. v. Cardinale (1st Cir.); Greenstone v. Cambex Corp. (1st Cir.); Matters outside the pleadings; Jones v. City of Cincinnati; Patterson v. Novartis Pharm. Corp. (Unpub. 6th Cir.); Extortion allegations; 18 USC § 1951(a); United States v. Kelly; United States v. Williams; § 1951(b)(2); United States v. Collins; Mathon v. Feldstein (ED NY); "A pattern of racketeering activity"; § 1961(5); H. J. Inc. v. Nw. Bell Tel. Co.; The "relationship plus continuity" test; Brown v. Cassens Transp. Co.; Vemco, Inc. v. Camardella; Whether the allegations in the third amended complaint met the requirement of continuity; United States v. Busacca; Dismissal of RICO conspiracy claim under § 1962(d); United States v. Sinito
Court: U.S. Court of Appeals Sixth Circuit
Case Name: Heinrich v. Waiting Angels Adoption Servs., Inc.
e-Journal Number: 50840
Judge(s): Gibbons, Sutton, and Adams
The court held that the district court erred by dismissing with prejudice, pursuant to Rules 12(b)(6) and 9(b), all claims in the plaintiffs' third amended complaint brought under RICO. The court concluded that plaintiffs adequately pleaded four predicate acts of rackeetering activity and that those four acts were sufficient to establish a pattern of racketeering activity. The plaintiffs are seven couples who enlisted the assistance of defendant-Waiting Angels Adoption Services in an attempt to adopt children from Guatemala. Believing that they were defrauded in the course of their adoption efforts, they filed this action against Waiting Angels Adoption Services and its two principals, the individual defendants. The case was stayed due to pending state criminal proceedings against the individual defendants. After the state criminal proceedings were resolved, the district court granted the plaintiffs' motion to lift the stay and granted them permission to file a second amended complaint. In response, the defendants filed a motion for judgment on the pleadings, which the district court granted. Some claims were dismissed with prejudice, but the plaintiffs were granted leave to amend and replead certain claims. They filed their third amended complaint, which contained the allegations that were particularly relevant to the appeal. Plaintiffs alleged that the defendants advertised Waiting Angels's services on the Internet and that the defendants' website displayed children that were advertised as available for adoption. The plaintiffs also alleged that Waiting Angels was advertised as a non-profit organization, when, in reality, it was a for-profit organization. Plaintiffs appealed, inter alia, the dismissal of their RICO claim under § 1962(c). They challenged the district court's findings that only four predicate acts of racketeering activity were adequately alleged in the third amended complaint and that these four predicate acts were insufficient to establish a pattern of racketeering activity. The district court found (and the court agreed) that plaintiffs sufficiently alleged four predicate acts of mail or wire fraud - plaintiffs-Cassassas' claim of fraudulent representations made about the availability of a pair of twins, and the plaintiffs-Flennikens', Saenzs', and Wrights' claims of fraudulent inducement of the payment of foster care expenses. The issue then became whether those four acts, if proven, would be sufficient to establish a pattern of racketeering activity. The court held that the relationship part of the "relationship plus continuity" test was satisfied. The predicate acts were committed by the same participants, the individual defendants, "for similar purposes with similar victims using similar methods of commission." The individual defendants used e-mail correspondence, telephone conversations, and a website connected to their adoption agency "to defraud hopeful adoptive parents out of adoption-related fees." The court also held that plaintiffs established "open-ended continuity." When the defendants "committed the four predicate acts alleged here, there was no indication that their pattern of behavior would not continue indefinitely into the future." The court determined that the third amended complaint stated a claim upon which relief can be granted under § 1962(c), and that dismissal of this claim pursuant to Rule 12(b)(6) was improper. Further, dismissal of plaintiffs' claim under § 1962(d) was also improper. Reversed and remanded.
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