Summary
Ceramic tile dealers brought a civil RICO action against a manufacturer, alleging mail and wire fraud based on concealed plans to close the business. The Ninth Circuit affirmed summary judgment and denial of leave to amend, holding that the dealers failed to present a genuine issue regarding intent to defraud, but reversed Rule 11 sanctions against their attorney.
Holdings
- Summary judgment was appropriate because the dealers failed to show a genuine issue of fact concerning Franciscan's intent to defraud, even though the district court relied on an incorrect conclusion regarding the RICO pattern requirement.
- Multiple alleged acts of mail and wire fraud involving multiple victims and continuing over five months can constitute a RICO pattern even when the acts relate to a single alleged criminal episode.
- Absent an independent duty, such as a fiduciary or explicit statutory duty, failure to disclose a contingent business plan cannot constitute a fraudulent scheme.
- The district court acted within its discretion in denying leave to amend because the proposed amendment was futile.
- Rule 11 sanctions were improper because the complaint was not so baseless or implausible that the attorney's decision to sign and prosecute it violated the rule.
Questions Presented
- Whether the dealers presented a genuine issue of material fact concerning the fraudulent intent necessary to support their RICO mail- and wire-fraud allegations.
- Whether multiple alleged acts of mail and wire fraud involving multiple victims and occurring over several months constituted a RICO pattern of racketeering activity despite relating to one prospective business closure.
- Whether the district court abused its discretion by denying leave to file a second amended complaint on the ground that the proposed amendment would be futile.
- Whether the district court properly imposed Rule 11 sanctions on the dealers' attorney for signing and continuing to prosecute the complaint.
Disposition
other
Cases Cited (22)
- Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 764-65 (9th Cir. 1986)(followed)
- Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2552-53 (1986)(followed)
- Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2511 (1986)(followed)
- Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356 (1986)(followed)
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n.14 (1985)(limited)
- Schreiber Distributing Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1399-1400 (9th Cir. 1986)(distinguished)
- United States v. Bohonus, 628 F.2d 1167, 1171 & n.7 (9th Cir. 1980), cert. denied, 447 U.S. 928 (1980)(followed)
- United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir. 1984), rev'd on other grounds, 473 U.S. 207 (1985)(followed)
- Chism v. National Heritage Life Insurance Co., 637 F.2d 1328, 1331 (9th Cir. 1981)(followed)
- Foman v. Davis, 371 U.S. 178, 182 (1962)(followed)
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Court Document
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