Opinion
No. 6:19-cv-02486-TMC-JDA
10-11-2019
Anthony Oliver, Plaintiff, v. JND Holdings, LLC, Jennifer Keough, Does 1-10, Defendants.
REPORT AND RECOMMENDATION
Anthony Oliver ("Plaintiff"), proceeding pro se and in forma pauperis, files this civil action against the above-captioned Defendants. [Doc. 1.] Pursuant to the provisions of 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2), D.S.C., the undersigned Magistrate Judge is authorized to review the Complaint for relief and submit findings and recommendations to the District Court. Having reviewed the Complaint in accordance with applicable law, the undersigned concludes that this action should be summarily dismissed without issuance and service of process.
The undersigned notes that Plaintiff has been deemed a "vexatious litigant" in several courts. See, e.g., Oliver v. Cty. of Effingham, No. 4:18-cv-120, 2019 WL 356803, at *3 (S.D. Ga. Jan. 29, 2019) (imposing conditions on further litigation by Plaintiff and noting that "[h]is broader litigation record only reinforces the conclusion that Oliver is, to say the least, irresponsible"), Report and Recommendation adopted by 2019 WL 1244715 (S.D. Ga. Mar. 18, 2019); Oliver v. City of Pooler, No. 4:18-cv-100, 2019 WL 1005198, at *1 (S.D. Ga. Feb. 28, 2019) ("In this Court's view, Plaintiff is plainly a vexatious litigant"); Oliver v. Lyft, Inc., No. C 19-01488 WHA, 2019 WL 2342263, at *1 (N.D. Cal. June 3, 2019) (noting the Southern District of Georgia had imposed pre-filing conditions on Plaintiff, including a post-contempt bond, and the Central District of California had declared Plaintiff a vexatious litigant). Notably, in September 2018, the United States District Court for the Central District of California declared Oliver a vexatious litigant, noting that "[i]n addition to his numerous actions in state court, [Oliver] has filed at least thirty lawsuits in federal court," that it "searched in vain for a case in federal court resulting in a verdict on the merits in [Oliver's] favor," but found, instead, warnings to restrain his conduct "on multiple occasions by multiple judges in multiple districts," and requiring Plaintiff to "obtain leave of court before filing any additional lawsuits." Oliver v. Luner, No. 2:18-cv-2562 (C.D. Cal. Sept. 26, 2018), Doc. 99 at 4, 7-9. The undersigned is not aware of any other actions filed by Plaintiff in this Court and could find no pre-filing conditions imposed against him in this District.
BACKGROUND
Plaintiff is currently a detainee at the Chatham County Jail in Savannah, Georgia. However, the claims in this action are unrelated to Plaintiff's criminal charges or current incarceration. Plaintiff commenced this action by filing a hand-written, seventeen-page Complaint. [Doc. 1.] Thereafter, in response to this Court's Order dated September 16, 2019 [Doc. 9], Plaintiff filed a Complaint on the standard court form [Doc. 1-1]. The Court considers both of these documents together as the Complaint in this action.
The Court takes judicial notice that Plaintiff was charged at case number SPCR19-02076-J4 with aggravated stalking, criminal attempt to commit a felony, and making a false statement. Plaintiff was convicted by a jury of these charges on September 26, 2019, and was sentenced to a term of 20 years' imprisonment on October 9, 2019. See https://cmsportal.chathamcounty.org/portal (search by Plaintiff's first and last name) (last visited Oct. 10, 2019).
Plaintiff makes the following allegations. Plaintiff is a citizen of the State of Georgia. [Doc. 1-3 at 3, 4 n.2]. Plaintiff also claims that he is currently a law student. [Doc. 1 at 1.] JND Holdings, LLC ("JND"), is a company located in Seattle, Washington, is incorporated under the laws of the State of Washington, and has its principal place of business in the State of Washington. [Doc. 1-3 at 2, 4.] Defendant Jennifer Keough ("Keough") is the Chief Executive Officer of JND and is a citizen of the State of Washington. [Id. at 3.] JND and Keough (collectively, "Defendants") operate a class action administration company that administers class action cases in state and federal courts. [Doc. 1 at 3.]
Plaintiff also claims that he is "both a resident of the State of South Carolina and Georgia." [Doc. 1 at 4 n.2.]
According to Plaintiff, "[i]n an effort to promote their class action administration services," Defendants have engaged in an "invasive and unlawful form of marketing," wherein they seek to be appointed class action administrators, purportedly to send out class action notices to potential class members. [Id. at 2.] However, Defendants do not send out such notices, but instead they "pocket millions of dollars each month and year." [Id.] Defendants contact class plaintiffs and class members, promising to pay referral fees, but then refuse to pay such referral fees. [Id.]
Keough contacted Plaintiff and informed him that he was a potential class member in a case filed in federal court. [Id.] Keough agreed to pay Plaintiff $30,000 for each referral, putting the agreement in writing. [Id.] However, Defendants refused to pay Plaintiff for his referrals, "causing Plaintiff damages, including, but not limited to Plaintiff having his vehicle repossessed." [Id.]
More specifically, Plaintiff alleges that, in December 2018, Defendants sent Plaintiff "a notice that [he] was appointed by a Federal Judge to serve as a class Plaintiff representative in the class action case" and provided him with a claim form. [Id. at 4.] Defendants also informed Plaintiff that he was a plaintiff in three other potential class actions. [Id.] Keough informed Plaintiff that she would pay him "the amount of $30,000 [ ] for each case, and would pay Plaintiff's law school fees and tu[i]tion for one [ ] year." [Id.] Plaintiff and Defendants agreed in writing that Plaintiff would receive a $30,000 referral fee for each case. [Id.] Plaintiff met with Keough in Greenville, South Carolina, in February 2019, "to seal the deal." [Id. at 5.] At that meeting, Keough admitted to Plaintiff that her company is appointed in class action cases to locate potential class members and that she uses the confidential personal information to contact class members to solicit them for her services, promising to pay a referral fee to potential class members who would be involved in other cases. [Id.] Keough also informed Plaintiff that, even though she is required to send letters, postcards, and flyers to potential class members, she does not do so and, instead, pockets the funds and costs for doing so and uses those funds to pay referral fees to people like Plaintiff. [Id.] According to Plaintiff, Keough admitted that, if she were audited, she would not be able to account for "'millions upon millions of dollars'" that she has pocketed over the past five years. [Id.]
Then, in March 2019, Keough met with Plaintiff in Savannah, Georgia, reaching an agreement wherein Defendants would hire Plaintiff as an employee to serve as an "'account executive'" so that Plaintiff could solicit business on behalf of Defendants. [Id. at 6.] The parties then executed a written employment agreement by email and began searching for an office for Plaintiff. [Id.] Several weeks later, Keough contacted Plaintiff regarding whether she was approved to serve as the class administrator for Plaintiff's class action cases. [Id.] Plaintiff informed Keough that she was not approved to serve as the class administrator and that Plaintiff's class counsel had decided to use a different company to serve as the class administrator. [Id.] Thereafter, Keough informed Plaintiff that "he no longer 'works' for JND and is considered 'shut down' and has 'no future' with JND." [Id.] Defendants refused to pay Plaintiff the $30,000 in referral fees for the three class action cases, totaling $90,000. [Id.] Defendants also refused to pay Plaintiff for his work in advertising, hourly wages, and expenses for travel. [Id.]
Plaintiff contends that he "uncovered evidence that [Defendants] never sent out class notices to potential class members" in Howard v. Southwest Gas Corporation, No. 18-cv-01035-JAD-VCF (D. Nev. June 10, 2019). [Id.] Instead, Defendants "pocketed the class member payments and pocketed funds used for mailing postcards and letters." [Id.]
In light of these allegations, Plaintiff contends that Defendants have committed mail fraud in violation of 18 U.S.C. § 1341, and have committed wire fraud in violation of 18 U.S.C. § 1343. [Id. at 7.] Plaintiff asserts that Defendants should be fined and imprisoned. [Id.] Plaintiff asserts that Defendants have generated their wealth by using wrongfully obtained funds and have deceived the United States District Courts, class action plaintiffs, and law firms nationwide. [Id. at 8.] Plaintiff asserts that Defendants have made false statements to courts, law firms, and class members, in an attempt to deceive them. [Id.]
Defendants promised to pay Plaintiff, as an employee, an average of $7,000 a month in take-home pay, as well as reimbursements for costs and expenses. [Id. at 9.] He contends he is entitled to past, future, and compensatory damages. [Id.] Plaintiff contends that he has suffered the loss of his income, has experienced depression, has been unable to find any immediate employment, has had to borrow money, and has had to seek extensions of time to pay his household bills. [Id.] Plaintiff contends that Defendants' conduct was intentional, reckless, and caused serious injury to Plaintiff, justifying an award of punitive damages under South Carolina state law. [Id.]
Plaintiff asserts four causes of action against Defendants. For his first cause of action, Plaintiff asserts that Defendants breached a contract with him. [Id. at 10.] Specifically, Plaintiff contends that he entered a contract with Defendants in which they agreed to pay Plaintiff $30,000 for each class action referral for a total of $90,000. [Id.] Plaintiff alleges that Defendants breached that contract by failing and refusing to pay Plaintiff the sum of $90,000. [Id.] Defendants also breached the employment contract when they terminated him from employment. [Id.] For his second cause of action, Plaintiff asserts that Defendants violated the Sherman Act, 15 U.S.C. § 1. [Id. at 11.] Specifically, Plaintiff contends that "Defendants conspired and agreed to restrain trade and commerce by cheating law firms, corporations, state, county and federal courts" by engaging in a scheme to pocket funds from class action administration fees to pay referral fees. [Id.] For his third cause of action, Plaintiff asserts that Defendants violated the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1964. [Id. at 12.] For a fourth cause of action, Plaintiff seeks declaratory and injunctive relief under 28 U.S.C. §§ 2201 and 2202 related to his claims. [Id. at 14.] For his relief, Plaintiff requests compensatory damages in the amount of $2 million, punitive damages, special damages, costs of suit, statutory damages, and an order granting the requested declaratory and injunctive relief. [Id. at 16.]
STANDARD OF REVIEW
Under established local procedure in this judicial district, a careful review has been made of the pro se Complaint. Plaintiff filed this action pursuant to 28 U.S.C. § 1915, the in forma pauperis statute. This statute authorizes the District Court to dismiss a case if it is satisfied that the action "fails to state a claim on which relief may be granted," is "frivolous or malicious," or "seeks monetary relief against a defendant who is immune from such relief." 28 U.S.C. § 1915(e)(2)(B).
Further, even if the Complaint were not subject to the prescreening provisions of 28 U.S.C. § 1915, this Court would possess the inherent authority to review the pro se Complaint to ensure that subject matter jurisdiction exists and that this case is not frivolous. See Mallard v. U.S. Dist. Court, 490 U.S. 296, 307-08 (1989) ("Section 1915(d) . . . authorizes courts to dismiss a 'frivolous or malicious' action, but there is little doubt they would have power to do so even in the absence of this statutory provision."); Ross v. Baron, 493 F. App'x 405, 406 (4th Cir. 2012) ("[F]rivolous complaints are subject to dismissal pursuant to the inherent authority of the court, even when the filing fee has been paid . . . [and] because a court lacks subject matter jurisdiction over an obviously frivolous complaint, dismissal prior to service of process is permitted.") (citations omitted); see also Fitzgerald v. First E. Seventh St. Tenants Corp., 221 F.3d 362, 364 (2d Cir. 2000) ("[D]istrict courts may dismiss a frivolous complaint sua sponte even when the plaintiff has paid the required filing fee[.]"); Ricketts v. Midwest Nat'l Bank, 874 F.2d 1177, 1181 (7th Cir. 1989) ("[A] district court's obligation to review its own jurisdiction is a matter that must be raised sua sponte, and it exists independent of the 'defenses' a party might either make or waive under the Federal Rules."); Franklin v. State of Or., State Welfare Div., 662 F.2d 1337, 1342 (9th Cir. 1981) (providing a judge may dismiss an action sua sponte for lack of subject matter jurisdiction without issuing a summons or following other procedural requirements).
As a pro se litigant, Plaintiff's pleadings are accorded liberal construction and held to a less stringent standard than formal pleadings drafted by attorneys. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam). However, even under this less stringent standard, the pro se Complaint is subject to summary dismissal. The mandated liberal construction afforded to pro se pleadings means that if the Court can reasonably read the pleadings to state a valid claim on which Plaintiff could prevail, it should do so, but the Court may not rewrite a petition to include claims that were never presented, Barnett v. Hargett, 174 F.3d 1128, 1133 (10th Cir. 1999), or construct Plaintiff's legal arguments for him, Small v. Endicott, 998 F.2d 411, 417-18 (7th Cir. 1993), or "conjure up questions never squarely presented" to the court, Beaudett v. City of Hampton, 775 F.2d 1274, 1278 (4th Cir. 1985). The requirement of liberal construction does not mean that the Court can ignore a clear failure in the pleading to allege facts which set forth a claim cognizable in a federal district court. See Weller v. Dep't of Soc. Servs., 901 F.2d 387, 390 (4th Cir. 1990).
The Court must accept all well-pled allegations and review a complaint in a light most favorable to plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Although the Court must liberally construe the pro se Complaint and Plaintiff is not required to plead facts sufficient to prove his case as an evidentiary matter in his pleadings, the Complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (explaining that a plaintiff may proceed into the litigation process only when his complaint is justified by both law and fact). "A claim has 'facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Owens v. Baltimore City State's Attorneys Office, 767 F.3d 379, 388 (4th Cir. 2014).
DISCUSSION
The Complaint is subject to summary dismissal as it is frivolous and fails to allege facts to support a claim for relief that is plausible. As noted, 28 U.S.C. § 1915 permits an indigent litigant to proceed in forma pauperis, which allows the litigant to commence a federal court action without prepaying the administrative costs of proceeding with the lawsuit. See Staley v. Witherspoon, No. 9:07-cv-195-PMD-GCK, 2007 WL 1988272, at *1 (D.S.C. July 3, 2007). However, the statute provides limitations to such actions by permitting the Court to dismiss the case upon a finding that the action "fails to state a claim on which relief may be granted" or is "frivolous or malicious." Id. (quoting 28 U.S.C. § 1915(e)(2)(B)); see also Denton v. Hernandez, 504 U.S. 25, 32-33 (1992) (explaining a complaint is deemed frivolous when it is "clearly baseless" and includes allegations that are "fanciful," "fantastic," or "delusional") (citing Neitzke v. Williams, 490 U.S. 319, 325, 327-28 (1989)).
A district court's review of a case for factual frivolousness under § 1915 is guided by the Supreme Court's decision in Denton. See Thomas v. Barri, No. 8:10-cv-0431-MBS-BHH, 2010 WL 1993881, at *2-3 (D.S.C. Mar. 3, 2010), Report and Recommendation adopted by 2010 WL 1993860 (D.S.C. May 18, 2010). When a plaintiff proceeds in forma pauperis, § 1915 "gives courts the authority to 'pierce the veil of the complaint's factual allegations[,]' mean[ing] that a court is not bound, as it usually is when making a determination based solely on the pleadings, to accept without question the truth of the plaintiff's allegations." Denton, 504 U.S. at 32. The "initial assessment of the in forma pauperis plaintiff's factual allegations must be weighted in favor of the plaintiff," id., and "[a]n in forma pauperis complaint may not be dismissed . . . simply because the court finds the plaintiff's allegations unlikely." Id. at 33. However, the district court is entrusted with the discretion to dismiss the case for factual frivolousness "when the facts alleged rise to the level of the irrational or the wholly incredible." Id. "[A] court may dismiss a claim as factually frivolous only if the facts alleged are 'clearly baseless', a category encompassing allegations that are 'fanciful,' 'fantastic,' and 'delusional.'" Id. at 32-33 (citations omitted) (quoting Neitzke, 490 U.S. at 325, 328).
Here, each of Plaintiff's claims for relief should be dismissed as they are frivolous and/or fail to state a claim for relief. The Court evaluates each cause of action below.
Breach of Contract Claim
"To state a claim for breach of contract in South Carolina, Plaintiff must show: 1) a contract, 2) breach of the contract, and 3) damages stemming from the breach." Justin Winter & Assocs., LLC v. McIver, No. 8:17-cv-01620-MGL, 2017 WL 6367429, at *3 (D.S.C. Dec. 12, 2017) (citing S. Glass & Plastics Co., Inc. v. Kemper, 732 S.E. 2d 205, 209 (S.C. Ct. App. 2012)).
Here, Plaintiff appears to allege that he entered into two contracts with Defendants—a contract for referral fees and an employment contract. The Court addresses each contract in turn.
First, Plaintiff alleges that he entered into a written contract with Defendants, in which Defendants agreed to pay Plaintiff a referral fee of $30,000 for each class action case he referred to Defendants. [Doc. 1 at 10.] Plaintiff alleges that Defendants promised to pay him a total of $90,000 in referral fees for three class action cases. [Id.] Plaintiff alleges that Defendants breached the contract by refusing to pay him the $90,000 in referral fees. [Id.]
Even assuming that the parties executed the contract that Plaintiff describes, his claim for relief fails because such a contract would be unenforceable as it would violate public policy. Rule 5.4(a) of the South Carolina Rules of Professional Conduct provides that "[a] lawyer or law firm shall not share legal fees with a nonlawyer," subject to certain exceptions. Rule 5.4(a), SCRPC. In this case, Keough, as a lawyer, is not permitted to share legal fees with Plaintiff because he is not an attorney. Thus, because "'referral agreements between an attorney and a non-attorney are contrary to public policy,'" the contract alleged by Plaintiff is unenforceable. Wishnefsky v. Carroll, 44 F. App'x 581, 582 (3d Cir. 2002) (explaining that an agreement between an attorney and non-attorney for referral fees would violate the rules of professional conduct and that the plaintiff was not able to enforce any such fee agreement); Superior Vending, Inc. v. Dick's Bar of Hudson, Inc., No. 09-cv-567-SLC, 2010 WL 4386663, at *9 (W.D. Wis. Oct. 29, 2010) (citing Abbott v. Marker, 722 N.W.2d 162, 166 (Wis. Ct. App. 2006)); Homolka v. Clark, No. H-09-cv-151, 2010 WL 11468921, at *7 (S.D. Tex. May 11, 2010) (explaining that a fee-sharing agreement between attorney and non-attorney is unenforceable because it would violate the rules of professional conduct), aff'd, 416 F. App'x 408 (5th Cir. 2011).
"Under South Carolina law, a party may not enforce an illegal contract." OrthAlliance, Inc. v. McConnell, No. 8:08-cv-2591-RBH, 2010 WL 1344988, at *6 (D.S.C. Mar. 30, 2010) (citing Beach Co. v. Twillman, Ltd., 566 S.E.2d 863, 867 (S.C. Ct. App. 2002)). As the South Carolina Supreme Court has noted, "no court will lend its aid to enforce a claim based upon an illegal or immoral contract." Packard & Field v. Byrd, 51 S.E. 678, 679 (S.C. 1905); see also Dunlop v. Baker, 239 F. 193, 207 (4th Cir. 1916) ("'The law refuses to enforce illegal contracts as a rule, not out of regard for the party objecting, nor for any wish to protect his interests, but from reasons of public policy. Whenever, therefore, the illegality of the contract appears, whether alleged in the pleadings or made known for the first time in the evidence, it is fatal to the case.'") (quoting Camp v. Bruce, 31 S.E. 901, 901 (Va. 1898)). The contract alleged by Plaintiff is unenforceable because it is illegal and violates the South Carolina Rules of Professional Conduct. Thus Plaintiff's breach of contract claim fails.
Plaintiff's breach of contract claim related to the employment contract also fails. Plaintiff alleges that, in March 2019, the parties reached an agreement that Defendants would hire Plaintiff as an employee and that Plaintiff would "serve as an 'account executive' that would require Plaintiff to solicit business on behalf of JND." [Doc. 1 at 5.] Plaintiff claims that the parties executed a written employment agreement by email and Keough began searching for an office for Plaintiff. [Id. at 6.] However, several weeks later, Keough informed Plaintiff that he no longer worked for JND. Plaintiff contends that he is entitled to wages for work performed as an employee of Defendants. [Id.] Plaintiff's cursory allegations fail to state a claim because he has not alleged facts to state a claim for relief.
Further, even if Plaintiff had alleged facts to support a claim that Defendants violated the employment contract, the Court would lack jurisdiction over this claim. Plaintiff's claim for breach of contract under the employment agreement alone is insufficient to invoke this Court's jurisdiction as it does not satisfy the requirements for diversity jurisdiction or federal question jurisdiction. Because Plaintiff's federal claims warrant dismissal under 28 U.S.C. § 1915(e)(2)(B)(ii), the Court may appropriately decline to exercise supplemental jurisdiction over Plaintiff's state-law claims. See Shanaghan v. Cahill, 58 F.3d 106, 110 (4th Cir. 1995) (explaining that, pursuant to § 1367(c)(3), "a [federal] court has discretion to dismiss or keep a case when it 'has dismissed all claims over which it has original jurisdiction,'" and that "[t]here are no situations wherein a federal court must retain jurisdiction over a state law claim, which would not by itself support jurisdiction"). Generally, "where federal claims in a lawsuit originally filed in United States District Court are dismissed, leaving only state law causes of action, dismissal of the remaining state law claims without prejudice is appropriate." Bruce v. Wilmington Sav. Fund Soc'y, FSB, Tr. of Stanwich Mortg. Loan Tr. C, No. 2:18-cv-2555-BHH-BM, 2019 WL 1293718, at *5 (D.S.C. Jan. 15, 2019), Report and Recommendation adopted by 2019 WL 2281364 (D.S.C. May 29, 2019). "This will allow Plaintiff to pursue and obtain a ruling as to the viability of his state law claims in a more appropriate forum." Id.; see also United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) ("Certainly, if the federal claims are dismissed before trial, . . . the state claims should be dismissed as well."); Carnegie-Mellon v. Cohill, 484 U.S. 343, 350, n.7 (1988) ("[I]n the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine . . . will point toward declining to exercise jurisdiction over the remaining state law claims.").
Sherman Act Claim
For his second cause of action, Plaintiff contends that Defendants have violated federal antitrust laws by entering into a conspiracy to restrain trade in violation of the Sherman Act. [Doc. 1 at 11.] According to Plaintiff, "Defendants conspired and agreed to restrain trade and commerce by cheating law firms, corporations, state, county, and federal courts by stating and advertising that Defendants would notify proposed and potential class members and plaintiffs of pending class action lawsuits by mail, email and text messages, but refused to do so." [Id.] Plaintiff contends that, instead of paying the referral fees as promised, Defendants pocketed the funds. [Id.] Plaintiff contends that Defendants "engaged in numerous anticompetitive activities" in furtherance of its conspiracy to restrain trade, targeting "the citizens of the United States of America, the United States of America itself, the United States District Courts, and thousands of State and Superior Courts nationwide, as well as proposed class members and Plaintiffs." [Id. at 11-12.] As a result of this conspiracy, Defendants have "reap[ed] millions of dollars in profits." [Id. at 12.] Further, Plaintiff alleges that Defendants' conduct has injured his business and property. [Id.]
Plaintiff's allegations fail to state a claim for relief under the Sherman Act. Plaintiff appears to allege a violation under Section 1 of the Sherman Act, which "states that contracts and conspiracies that restrain interstate commerce are illegal." Jadali v. Alamance Reg'l Med. Ctr., 225 F.R.D. 181, 184 (M.D.N.C. 2004), Report and Recommendation adopted by 399 F. Supp. 2d 675 (M.D.N.C. 2005), aff'd sub nom. Jadali v. Almance Reg'l Med. Ctr., Inc., 167 F. App'x 961 (4th Cir. 2006). To establish a violation of Section 1 of the Sherman Act, a plaintiff must allege that (1) two persons or entities acted in concert under a contract, combination, or conspiracy; (2) that imposed an unreasonable restraint of trade. Dickson v. Microsoft Corp., 309 F.3d 193, 202 (4th Cir. 2002) (citing Oksanen v. Page Mem'l Hosp., 945 F.2d 696, 702 (4th Cir.1991)); Jadali, 225 F.R.D. at 184 (explaining that, to survive dismissal, "a complaint listing claims under Section 1 of the Sherman Act must allege both of these elements"). Courts have required "some reasonable particularity in pleading violations of the federal antitrust laws." Reynolds Metals Co. v. Columbia Gas Sys., Inc., 669 F. Supp. 744, 750 (E.D. Va. 1987). A plaintiff claiming a conspiracy must give "some details of the time, place, and alleged effect of the conspiracy; '(i)t is not enough to merely state that a conspiracy has taken place.'" Nat'l Constructors Ass'n v. Nat'l Elec. Contractors Ass'n, 498 F. Supp. 510, 528 (D. Md. 1980) (citation omitted).
Here, Plaintiff's vague and conclusory allegations fail to state a claim for relief as they are not plausible on their face. While Plaintiff alleges that Defendants engaged in a conspiracy, he does not allege any information regarding the participants of the conspiracy or how and when the conspiracy formed. "Section one applies only to concerted action, which 'requires evidence of a relationship between at least two legally distinct persons or entities.'" Palmer v. Equifax, No. 2:18-cv-2405-DCN-BM, 2019 WL 1293717, at *2 (D.S.C. Jan. 31, 2019) (quoting Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 284 (4th Cir. 2012)), Report and Recommendation adopted by 2019 WL 1296351 (D.S.C. Feb. 22, 2019). Here, Plaintiff has failed to identify any legally distinct person or entity, apart from Defendants themselves, with whom Defendants allegedly acted in concert to restrain trade. Indeed, Plaintiff's allegation that Defendants have acted to defraud courts, law firms, and litigants undercuts his allegation that they acted in concert with anyone involved in a class action lawsuit, including courts, law firms, and litigants. Plaintiff has failed to allege any facts showing that Defendants participated in a conspiracy.
Further, the Court must evaluate "the reasonableness of a restraint [ ] based on its impact on competition as a whole within the relevant market," which requires a showing of "anticompetitive effect" resulting from the agreement in restraint of trade. Dickson, 309 F.3d at 206 (internal quotation marks omitted). Plaintiff has not alleged any facts to support his assertion that Defendants engaged in anticompetitive conduct that caused harm to the competitive market as a whole. See Patel v. Scotland Mem'l Hosp., 91 F.3d 132, 1996 WL 383920, at *4 (4th Cir. 1996) (per curiam) (unpublished table decision) (explaining that "[p]ersonal economic injury alone" is insufficient to support a Section 1 claim of the Sherman Act because "[t]here must be some cognizable effect on the competitive market"). The Court notes that Plaintiff has alleged that, despite Defendants' efforts to be appointed claims administrator in a class action in which Plaintiff was a named plaintiff, class counsel chose another claims administrator for that action. [Doc. 1 at 6.] That allegation cuts against Plaintiff's claim that Defendants' conduct had an anticompetetive effect on the market, and he provides no allegations showing any cognizable effect of Defendants' conduct on the competitive market, beyond his assertion that they did not pay him referral fees. Accordingly, Plaintiff's Sherman Act claim should be dismissed.
RICO Act Claim
Likewise, Plaintiff's RICO claim should be dismissed because the Complaint fails to set forth the required elements of a RICO cause of action generally or with the required specificity to plead a fraud claim under Rule 9(b). Plaintiff contends that "Defendants have engaged in a pattern of racketeering activity connected to the acquisition, establishment, conduct or control of their respective enterprises." [Doc. 1 at 12.] Plaintiff contends that, in furtherance of their pattern of racketeering activity, Defendants have engaged in wire fraud, "which amounts to or poses a threat to continued criminal activity." [Id.] Plaintiff describes the wire fraud as Defendants' "scheme or artifice to defraud or to obtain money or property by means of false pretenses, representations, or promises; their use of interstate wires for the purpose of executing the scheme; and a specific intent to defraud either by devising, participating in or abetting the scheme." [Id. at 13.] Plaintiff quotes portions of the mail fraud statute, 18 U.S.C. § 1341, and the wire fraud statute, 18 U.S.C. § 1343, and baldly asserts "Defendants . . . are clearly in violation of such statute[s] and should be fined an imprisoned." [Id. at 7.] Finally, Plaintiff asserts that Defendants' actions "constitute a conspiracy under RICO because [Defendants] conspired to commit these RICO offenses and acted in furtherance thereof." [Id. at 13.]
RICO "does not cover all instances of wrongdoing. Rather, it is a unique cause of action that is concerned with eradicating organized, long-term, habitual criminal activity." US Airline Pilots Ass'n v. Awappa, LLC, 615 F.3d 312, 317 (4th Cir. 2010) (internal quotation marks omitted) (quoting Gamboa v. Velez, 457 F.3d 703, 705 (7th Cir. 2006)). Thus, although courts read the terms of the statute "liberally" to "effectuate its remedial purposes," they must also "exercise caution" to ensure that "RICO's extraordinary remedy does not threaten the ordinary run of commercial transactions; that treble damage suits are not brought against isolated offenders for their harassment and settlement value; and that the multiple state and federal laws bearing on transactions . . . are not eclipsed or preempted." Id. (internal quotation marks omitted) (alteration in original). "The RICO statute creates civil liability for those who engage in a 'pattern of racketeering activity.'" GE Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 548 (4th Cir. 2001) (citing 18 U.S.C. §§ 1962, 1964). To recover civil RICO damages, a plaintiff must allege that he was injured by reason of the racketeering activity. Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 233 (4th Cir. 2004).
Plaintiff asserts a cause of action under 18 U.S.C. § 1962(c), which makes it unlawful
for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.Thus, to state a civil RICO claim, a plaintiff must allege "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985) (footnote omitted); Gibson v. Confie Ins. Grp. Holdings, Inc., No. 2:16-cv-02872-DCN, 2017 WL 2936219, at *8 (D.S.C. July 10, 2017). The plaintiff must also plead proximate cause, such that he was injured in his business or property "by reason of" the RICO violation. Hemi Grp., LLC v. City of New York, N.Y., 559 U.S. 1, 6 (2010) (internal quotation marks omitted). To allege a RICO pattern, "two or more predicate acts of racketeering must have been committed [by a defendant] within a ten year period." ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 181 (4th Cir. 2002) (citing 18 U.S.C. § 1961(5)). "Racketeering activity" includes federal mail and wire fraud. Id. (citing 18 U.S.C. § 1961(1)); see also Am. Chiropractic Ass'n, 367 F.3d at 233. Fraud claims must be pled with particularity. See, e.g., Menasco, Inc. v. Wasserman, 886 F.2d 681, 684 (4th Cir. 1989). A plaintiff asserting a RICO claim predicated on mail or wire fraud must show both (1) a scheme disclosing an intent to defraud and (2) the mails or interstate wires were used in furtherance of the scheme. Chisholm v. TranSouth Fin. Corp., 95 F.3d 331, 336 (4th Cir. 1996); Morley v. Cohen, 888 F.2d 1006, 1009-11 (4th Cir. 1989) (explaining defendants may violate RICO if they commit two or more acts of mail or wire fraud and the acts are sufficiently related and sufficiently continuous).
"[T]o establish liability under § 1962(c) one must allege and prove the existence of two distinct entities: (1) a 'person'; and (2) an 'enterprise' that is not simply the same 'person' referred to by a different name." Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001). Thus, a plaintiff must allege that a "person" violated § 1962(c), who is liable for damages and who is separate and distinct from the "enterprise" through which the RICO violation occurred. Busby v. Crown Supply, Inc., 896 F.2d 833, 840-41 (4th Cir. 1990). A "person" can be an individual or corporate entity. 18 U.S.C. § 1961(3). "Enterprise," as defined in 18 U.S.C. § 1961(4), "includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." A RICO enterprise is characterized by "continuity, unity, shared purpose and identifiable structure." United States v. Fiel, 35 F.3d 997, 1003 (4th Cir. 1994) (internal quotation marks omitted). To show an "enterprise" a plaintiff must plead facts establishing three elements: (1) an ongoing organization; (2) associates functioning as a continuing unit; and (3) that the enterprise is an entity "separate and apart from the pattern of activity in which it engages." Proctor v. Metro. Money Store Corp., 645 F. Supp. 2d 464, 477-78 (D. Md. 2009).
Here, Plaintiff has failed to allege facts showing an enterprise distinct from the persons alleged to have violated 18 U.S.C. § 1962(c). The Supreme Court has explained that a RICO enterprise is "a group of persons associated together for a common purpose of engaging in a course of conduct," the existence of which is proven "by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583 (1981). In perhaps its least developed form, an enterprise may be found where there is simply a "discrete economic association existing separately from the racketeering activity." United States v. Anderson, 626 F.2d 1358, 1372 (8th Cir. 1980); see Turkette, 452 U.S. at 583; United States v. Tillett, 763 F.2d 628, 632 (4th Cir. 1985) ("enterprise" requires evidence "to show that the organization had an existence beyond that which was necessary to commit the predicate crimes" (citations omitted)). Upon review, the Court finds the Complaint in the instant matter devoid of any such allegations. Plaintiff's allegations do not support an inference that an enterprise existed as a continuous structure separate from the commission of alleged predicate acts. Indeed, the Complaint fails to allege that a RICO enterprise existed for any purpose other than to perpetrate the alleged fraud upon Plaintiff. See Mylan Labs., Inc. v. Akzo, N.V., 770 F. Supp. 1053, 1080 (D. Md. 1991) (dismissing RICO claim where Plaintiff "alleged no ascertainable structure distinct from the pattern of racketeering acts"); United States v. Whitehead, 618 F.2d 523, 525 n.1 (4th Cir. 1980) (noting that Congress's primary concern in enacting RICO was to prevent "infiltration of legitimate businesses by organized crime"). Because the failure to plead the existence of an enterprise is fatal to a RICO claim, the Court is constrained to find that Plaintiff has failed to allege such a claim.
Likewise, Plaintiff has failed to allege facts showing that a pattern of racketeering activity has occurred with sufficient specificity to survive dismissal. Plaintiff asserts that Defendants have engaged in mail and wire fraud in violation of 18 U.S.C. §§ 1341, 1343. However, Plaintiff makes only conclusory statements that Defendants' conduct constitutes illegal predicate acts, and he fails to allege any facts that create the "reasonable inference that [D]efendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Plaintiff makes no allegations concerning the contents of the allegedly fraudulent wires and mailings, nor has he provided any facts indicating that the statements contained in the wires or mailings were untrue. Further, Plaintiff fails to allege facts showing that he was injured in his business or property by the fraudulent representations alleged to have been made by Defendants. Instead, Plaintiff's alleged injury arises from Defendants' failure to pay him the promised referral fees arising from his purported contract with them, which has nothing to do with the alleged fraudulent mailings.
Finally, to the extent that Plaintiff intends to assert a claim for conspiracy to violate RICO, he has failed to state a claim for relief. [See Doc. 1 at 13 ("The actions of the Defendants constitute a conspiracy under RICO.").] To allege a conspiracy to violate RICO, a plaintiff must allege (1) the existence of a conspiracy to participate in an enterprise; (2) that the enterprise affects interstate commerce through a pattern of racketeering activity; (3) that the defendant joined the conspiracy with knowledge of the purpose of the conspiracy; and (4) that, during the time the defendant was a member of the conspiracy, defendant knew someone would commit at least two racketeering acts in furtherance of the enterprise. See 18 U.S.C. § 1962(d); Salinas v. United States, 522 U.S. 52, 63-65 (1997). "If conspirators have a plan which calls for some conspirators to perpetrate the crime and others to provide support, the supporters are as guilty as the perpetrators." Salinas, 522 U.S. at 64. Nevertheless, because the undersigned has found that the pleadings do not state a substantive RICO claim as Plaintiff failed to allege the existence of an enterprise, Plaintiff's RICO conspiracy claim fails as well. GE Inv. Private Placement Partners II, 247 F.3d at 551 n.2 (citing Elfron v. Embassy Suites (P. R.), Inc., 223 F.3d 12, 21 (1st Cir. 2000), cert. denied, 532 U.S. 905 (2001)). As such, the undersigned recommends dismissal of Plaintiff's conspiracy to violate RICO claim.
Declaratory Relief
In his Fourth Cause of Action, Plaintiff seeks declaratory and injunctive relief under 28 U.S.C. §§ 2201 and 2202. Specifically, Plaintiff seeks a "judicial determination that [Defendants] engaged in a pattern and practice to defraud courts across the country and further engaged in violations of RICO and Federal Antitrust laws." [Doc. 1 at 14.] Plaintiff asks that the Court (1) "order the Clerk of the Court to notice all Federal Courts in the United States concerning the pendency of this action;" (2) "order all Courts in the United States to cease and desist in appointing JND Legal as the class action administrator;" (3) "order defendants to provide a past and current list of class actions that the defendants are seeking to become class administrator to the Court;" (4) "order the South Carolina and Washington State's Secretary of States to suspend all corporation business licenses issued to any of the defendants;" (5) "request the United States Attorneys' Office for the District of South Carolina, as well as the Federal Bureau of Investigations open or investigate the Defendants for their criminal misconduct;" and (6) "direct Defendant to cease and desist in bidding, applying, or [being] appointed, or allowing defendants to be appointed as a class action administrator in any and all courts across the United States." [Id. at 14-15.]
The Declaratory Judgment Act provides that a court of the United States, "[i]n a case of actual controversy within its jurisdiction . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Declaratory Judgment Act is an "enabling Act, which confers discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (internal quotation marks omitted).
Here, Plaintiff's request for declaratory and injunctive relief fails because there is no case or controversy as the Court recommends dismissal of each of his other causes of action. The Court's authority to afford declaratory relief arises only "[i]n a case of actual controversy within its jurisdiction, . . . upon the filing of an appropriate pleading." 28 U.S.C. § 2201(a). Moreover, "[d]eclaratory judgments are not meant simply to proclaim that one party is liable to another." Johnson v. McCuskey, 72 F. App'x 475, 478 (7th Cir. 2003) (citing Loveladies Harbor, Inc. v. United States, 27 F.3d 1545, 1553-54 (Fed. Cir. 1994)). Rather, declaratory judgments "define the legal rights and obligations of the parties in the anticipation of some future conduct." Johnson, 72 F. App'x at 477. Thus,
under the facts alleged [in a complaint], there must be a substantial continuing controversy between parties having adverse legal interests. The plaintiff must allege facts from which the continuation of the dispute may be reasonably inferred. Additionally, the continuing controversy may not be conjectural, hypothetical, or contingent; it must be real and immediate, and create a definite, rather than speculative threat of future injury. The remote possibility that a future injury may happen is not sufficient to satisfy the "actual controversy" requirement for declaratory judgments.Emory v. Peeler, 756 F.2d 1547, 1552 (11th Cir. 1985) (citations omitted). "Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).
Here, Plaintiff's requests for injunctive and declaratory relief arise from his contention that Defendants' actions constitute violations of RICO and federal antitrust laws. [Doc. 1 at 14.] "Although Plaintiff may believe that he will suffer future injury, the factual matter provided reflects nothing more than a speculative threat of future injury, which falls short of actual controversy requirement for declaratory judgments.'" Rankin v. Sykes, No. 1:18-cv-353, 2019 WL 203184, at *8 (M.D.N.C. Jan. 15, 2019) (internal quotation marks and citations omitted). This is so because the Court finds Plaintiff has failed to state a claim under either RICO or the Sherman Act.
Further, Plaintiff's request for injunctive relief "suffers from gross overbreadth," a "defect [that] alone warrants dismissal of that aspect of Plaintiff's claim against [Defendants]." Id. (citing PMB Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 128 (4th Cir. 2011) ("[The Fourth Circuit] will vacate an injunction if it . . . does not carefully address only the circumstances of the case."); Hayes v. N. State Law Enf't Officers Ass'n, 10 F.3d 207, 217 (4th Cir. 1993) ("Although injunctive relief should be designed to grant the full relief needed to remedy the injury to the prevailing party, it should not go beyond the extent of the established violation.")). Here, Plaintiff asks that the Court order other courts to "cease and desist in appointing [Defendants] as the class action administrator" and order the Secretaries of State for the States of South Carolina and Washington to "suspend all corporation business licenses issued to [Defendants]," among other things. [Doc. 1 at 15.] Plaintiff's requests are clearly overbroad.
Additionally, "[w]hen a plaintiff seeks injunctive relief, the 'injury in fact' element of standing requires more than simply an allegation of [a] defendant's prior wrongful conduct." Harty v. Luihn Four, Inc., 747 F. Supp. 2d 547, 551-52 (E.D.N.C. 2010) (citing City of Los Angeles v. Lyons, 461 U.S. 95, 103 (1983)). A plaintiff must demonstrate "a real or immediate threat that the plaintiff will be wronged again—a likelihood of substantial and immediate irreparable injury." Lyons, 461 U.S. at 111 (internal quotation marks omitted). Indeed,
bare allegations of what is likely to occur are of no value since the court must decide whether the harm will in fact occur. The movant must provide proof that the harm has occurred in the past and is likely to occur again, or proof indicating that the harm is certain to occur in the near future.Bloodgood v. Garraghty, 783 F.2d 470, 476 (4th Cir. 1986) (internal quotation marks omitted). Here, Plaintiff makes only "'bare allegations of what is likely to occur,'" id., and fails to show "'a likelihood of substantial and immediate irreparable injury,'" Lyons, 461 U.S. at 111. Put simply, Plaintiff seeks to enjoin Defendants from conduct that has nothing to do with him. Accordingly, Plaintiff has failed to allege facts showing that he is entitled to any declaratory or injunctive relief under the Declaratory Judgment Act.
RECOMMENDATION
Accordingly, it is recommended that the District Court dismiss this action pursuant to § 1915(e)(2)(B) without issuance and service of process.
The undersigned finds that, in light of all of the foregoing, Plaintiff cannot cure the deficiencies in his Complaint and that allowing Plaintiff to amend his pleadings would be futile. See Goode v. Central Va. Legal Aid Soc'y, Inc., 807 F.3d 619, 624 (4th Cir. 2015). Therefore, the undersigned recommends that the District Court decline to give Plaintiff an opportunity to amend. See Workman v. Kernell, No. 6:18-cv-00355-RBH-KFM, 2018 WL 4826535, at *2 n.7 (D.S.C. Oct. 2, 2018).
IT IS SO RECOMMENDED.
s/ Jacquelyn D. Austin
United States Magistrate Judge October 11, 2019
Greenville, South Carolina
Plaintiff's attention is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
300 East Washington Street, Room 239
Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).