Updated: Mar 3
The title of this article uses a word that is not exactly the epitome of intellectual writing. But the word “bullshit” is really the best word to describe how federal courts apply pleading standards.
Take a RICO pleading in a civil case. Intelligent honest judges have referred to RICO as such:
[E]xperience reveals that many plaintiffs, rather than fostering RICO's mission as private attorneys general aiding public law enforcement, actually appear as private prospectors digging for RICO's elusive gold, and more often than not generating substantial costs rather than net gains to the public.
Rosenson v. Mordowitz,2012 U.S. Dist. LEXIS 120077 *12-13 (S.D.N.Y. 2012) (Citations omitted)
In the recent case of Spoto v. Herkimer County Trust, 2000 U.S. Dist. LEXIS 6057, 2000 WL 533293 *1 (N.D.N.Y. Apr. 27, 2000), Judge Howard G. Munson of my sister Court made the following prescient observation:
"Plaintiffs' instant action is a superlative example of why some legal minds posit that the civil provisions of [RICO] are the most misused statutes in the federal corpus of law."
2000 U.S. Dist. LEXIS 6057, *2-3, 2000 WL 533293 at *1.
Judge Munson knew whereof he spoke. I surmise that every member of the federal bench has before him or her at least one -- and possibly more -- garden variety fraud or breach of contract cases that some Plaintiff has attempted to transform into a vehicle for treble damages by resort to what another respected jurist, Judge Allan Schwartz of this Court has referred to as "the litigation equivalent of a thermonuclear device" -- a civil RICO suit. Schmidt v. Fleet Bank 16 F. Supp. 2d 340, 346 (S.D.N.Y. 1998) (quoting Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir. 1991)). All too frequently, these damning actions are commenced without the Plaintiff's … being aware of the most fundamental principles of the law that governs allegations of racketeering in a civil action. This case is more of the same.
Goldfine v. Sichenzia,118 F. Supp. 2d 392, 394-395 (S.D.N.Y. 2000) (Emphasis added)
These are real Judges.
For many of lawyers reading this piece is a good way to expand your practice into RICO defense. Lord knows there are tons of these cases – one is probably filed by an insurance company every hour of every day in the EDNY – and the RICO defense bar in large part are hard pressed to handle a traffic court matter. So cut and paste and become a RICO Defense expert. Let us begin:
What is the pleading standard that a RICO complaint must meet in order to withstand a motion to dismiss? It is supposed to be very high according to Federal Statute and case law. Here is the law that I have taken from a recently submitted memorandum of law in support of a motion to dismiss:
Under Rule 12(b) (6), the well-pleaded material allegations of the complaint are taken as admitted; but conclusions of law or unwarranted deductions of fact are not admitted. This principle applies with even greater force in a fraud case governed by the more stringent pleading requirements of Fed R. Civ. P. 9(b).
First Nationwide Bank v. Gelt Funding Corp, 27 F.3d 763, *771 (2nd Cir. 1994) (emphasis added) (citations omitted)
Notwithstanding its broad language, the federal RICO statute was created for the sole purpose of fighting organized crime. Congress wanted to provide new weapons for targeting and prosecuting organized criminals that had infiltrated legitimate businesses and organizations. Rusello v. United States, 464 U.S. 16, 26-27 (1983). Meanwhile fraud pleadings, including fraud based RICO are subject to the heightened particularity standards set forth in F.R.C.P. Rule 9(b). Anatian v. Coutts Bank (Switzerland) LTD., 193 F.3d 85 (2d Cir. 1999) "[I]n civil RICO actions, the concerns that dictate that fraud be pleaded with particularity exist with even greater urgency." Wilson v. Toussie, 260 F.Supp.2d 530, 537 (EDNY 2003).
The elements of fraud [Rule 9 same as a mail/wire fraud RICO] are: (1) the existence of a material false representation or the omission of a material fact; (2) made with knowledge of its falsity and an intent to defraud; and (3) leading to reasonable reliance on the part of the plaintiff and actual damages as a result of such reliance.
Kirk v. Liberty Mut. Ins. Co., 1998 U.S. App. LEXIS 25997 *5 (2d Cir. 1998)
To avoid dismissal, a RICO claim that asserts fraud as the injury-producing predicate act must (a) allege a material misrepresentation, (b) allege that this misrepresentation was a but-for cause of the plaintiffs' entering into the transactions at issue, (c) allege that the misrepresentation was the proximate cause of the losses the plaintiffs sustained, and (d) allege the fraud with the required particularity.
Moore v. PaineWebber, Inc.,189 F.3d 165, 169 (2d Cir. 1999) (Emphasis added)
The plaintiffs' theory of RICO liability is based on predicate acts of mail fraud in violation of 18 US. C. § 1341 ... For RICO liability to exist as a result of a violation of these statutes, the defendant must have made misrepresentations that are material to the harm caused to the victim. The causation requirement, which is jurisdictionally mandated, has two different components. There must be 'transaction causation,' meaning that the misrepresentation must have led the plaintiffs to enter into the transactions at issue, and there must be "loss causation," meaning that the misrepresentation must be both an actual and a proximate source of the loss that the plaintiffs suffered.
(Id. at 169-170)
To avoid dismissal the RICO complaint must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent” Anatian v. Coutts Bank (Switzerland) LTD., 193 F.3d 85 (2d Cir. 1999)
And try this one on for size:
Further, in a fraud-based RICO claim, if the sole purpose of the alleged enterprise is to perpetrate the alleged fraud, there can be no enterprise for RICO purposes. See Schmidt, 16 F. Supp. 2d at 350 ("If the purpose of the entity or the association in fact was to defraud the investors, then it has no continuity or distinct structure beyond the alleged conspiracy. In short, the enterprise … [in this case] would not exist were the predicate acts removed from the equation.") (internal citations and quotations omitted).
Goldfine v. Sichenzia, 118 F. Supp. 2d at 401.
That’s a slap in the face of insurance companies who bring RICOs in the EDNY on an almost hourly basis claiming to have been defrauded by a medical provider, an alleged layperson owner, management and anyone else in the building no matter how big the building is. If all these alleged bad guys did was commit the insurance fraud alleged there is no Enterprise and without an Enterprise there cannot be a RICO.
Why is this? Because RICO was designed to go after the Mafia’s infiltration of Unions. A Mafia “family” – Enterprise – would be a cohesive organized unit with hierarchy and members who had different functions. The “family” or “enterprise” would be involved in various criminal endeavors all at once: Union Infiltration; Extortion; Prostitution; Drugs – the good ole days. RICO was meant to target the Mafia – not breach of contract cases; alleged overbilling; or Greenpeace and other activists like it does now.
Here is some more law from the memorandum that I recently submitted in the EDNY. This law sets forth the enterprise element of a RICO pleading. The bold sections are the pleading requirements that could be used as point headings; however you’d like to phrase them:
An enterprise is "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 173 (2d Cir. 2004) (internal quotations omitted); see also 18 U.S.C. § 1961(4).It is identified "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 this case, plaintiff attempts to allege an "association-in-fact" enterprise, which is a "group of persons associated together for a common purpose of engaging in a course of conduct." Boyle v. United States, 129 S.Ct. 2237, 2243 (2009) (quoting Turkette, 452 U.S. at 583).
An association-in-fact enterprise must have an ascertainable structure, which necessitates a showing of three structural components: (1) a purpose; (2) a relationship among those associated with the enterprise; and (3) sufficient longevity to permit these associates to pursue the enterprise's purposes. Boyle, 129 S.Ct. at 2244. There must also be a "nexus...between the enterprise and the racketeering activity that is being conducted." First Capital, 385 F.3d at 173-74.
Simply stating in conclusory fashion that all the defendants are an "enterprise within the meaning" of the RICO statute is insufficient, absent some factual allegations in support. Here there are no allegations which would plausibly suggest some overall "functional unit" as required by Turkette. See 452 U.S. at 583. There are no legally sufficient pleadings with regard to the Smith Defendants “as to the internal workings or organization of the alleged enterprise, explaining neither how it was run nor by whom." Greenberg v. Blake, No. 09 Civ. 4347(BMC), 2010 U.S. Dist. LEXIS 57617, 2010 WL 2400064, at *6 (E.D.N.Y. June 10, 2010) (citing First Capital, 385 F.3d at 174-75). "Plaintiffs' conclusory naming of a string of entities does not adequately allege an enterprise." First Capital, 385 F.3d at 175 (internal citations omitted)
Under 18 U.S.C. § 1962(c), a plaintiff is entitled to relief only after establishing that each individual defendant participated in the operation or management of the alleged RICO enterprise. Reves v. Ernst & Young, 507 U.S.170, 179-80 (1993); DeFalco v. Bernas, 244 F.3d 286, 306 (2d Cir. 2001).
The test is not involvement, but control. Shams v. Fisher, 107 F. Supp. 2d 266, 274-75 (S.D.N.Y. 2000). The "simple taking of tasks that are 'necessary or helpful' to the enterprise, without more, is insufficient to bring a defendant within the scope of § 1962(c)" and "simply because one provides goods or services that ultimately benefit the enterprise does not mean that one becomes liable under RICO as a result." Id. at 276. There is a substantial difference between actual control over an enterprise and association with an enterprise in ways that do not involve control; only the former is sufficient because the test is not involvement but control. It is not the importance of such services that determines § 1962(c) liability, but whether the provision of those services allows the defendant to direct the affairs of the enterprise. The mere fact that a defendant may have aided in the alleged scheme to defraud, even if that aid was intentional, does not give rise to liability under 18 U.S.C.S. § 1962(c). Goldfine v. Sichenzia, 118 F. Supp. 2d 392, 394-395 (S.D.N.Y. 2000)
The payment of or receipt of rent does not create a role in directing a RICO enterprise's affairs just as the [a fact from the specific case involved] "lending money to an enterprise does not establish a role in 'directing the enterprises affairs."' Berry v. Deutsche Bank Trust Co. Ams.,2008 U.S. Dist. LEXIS 76104 *17 (S.D.N.Y. 2008)
"The 'enterprise' is not the 'pattern of racketeering activity'; it is an entity separate and apart from the pattern of activity in which it engages ..." United States v. Turkette,452 U.S. 576, 583 (1981). The enterprise must be distinct from the person(s) accused of conducting the racketeering activity. See, e.g. Rosenson v. Mordowitz,2012 U.S. Dist. LEXIS 120077 (SDNY 2012) See, Goldfine v. Sichenzia, 118 F. Supp. 2d at 400:
"It is firmly established that, to state a claim under RICO, a Plaintiff must allege and prove the existence of an enterprise which is "separate and distinct from the alleged pattern of racketeering activity." Black Radio Network, Inc. v. NYNEX Corp., 44 F. Supp. 2d 565 at 580 (S.D.N.Y. 199
In Schmidt v. Fleet Bank, Judge Schwartz held that in order to determine whether the alleged enterprise is separate from the activity in which it engages the Court should look to whether the alleged enterprise would exist in the absence of that activity:
The enterprise cannot simply be the minimal association which surrounds the [pattern racketeering] acts. In other words, the members of the group as a whole must have a common link other than the racketeering activity. Thus, in assessing whether an alleged enterprise has an ascertainable structure distinct from that inherent in a pattern of racketeering, it is appropriate to consider whether the enterprise would still exist were the predicate acts removed from the equation.
Id. at 400-401. The Court in Black Radio Network, thus held:
Plaintiffs have not alleged an enterprise separate from its pattern of racketeering activity. Even assuming that these proposed defendants were part of a continuing enterprise, it was part of that enterprise only by virtue of the alleged racketeering activity. Plaintiffs simply have not alleged an ascertainable structure distinct from that inherent in [the alleged] pattern of racketeering, and it is apparent that the alleged enterprise, including the proposed defendants, would not still exist were the predicate acts removed from the equation. Accordingly, Plaintiffs fail to state a claim under 18 U.S.C. § 1962(c).
44 F. Supp. 2d at 581 (internal citations and quotations omitted).
Once again "[in] a fraud-based RICO claim, if the sole purpose of the alleged enterprise is to perpetrate the alleged fraud, there can be no enterprise for RICO purposes." Atkins v. Apollo Real Estate Advisors, L.P., 2008 WL 1926684, *15 (E.D.N.Y. 2008).
But don’t worry corporate oligarchs.
When you bring a RICO the pleading standards go right out the window. They are bullshit. But I know from experience that when a corporate oligarch like a big insurance company is sued under RICO or fraud the pleading standards become a hurdle that even Michael Jordan cannot leap.
It is so bad that when one makes a motion for a conference seeking permission to make a motion to dismiss an insurance company RICO Complaint one is met by a threatening opposition to that motion in the form of a letter. The letter is filed on ECF. It has a string citation that is a page or two long of Eastern District cases denying motions to dismiss and threatening sanctions for the making of such motions.
As an aside that is the efficiency of federal court. You must bring a motion to request a hearing to seek permission to make a motion – even if it’s a motion of right like a motion to dismiss. The efficiency is the fact that you can do it in the form of a letter. It’s like the time when I worked for AIG and we had a meeting to decide why we should have the meeting. I proudly spoke up: "The free lunch."
When I made my motion for a conference to seek permission to make a motion to dismiss I was met by such a sanction threatening opposition. Here is how I addressed it in the memorandum of law:
I know all about the tidal wave of Eastern District case law denying motions to dismiss insurance company RICOs and even saying such motions should be met by sanctions. One should not be impressed. Those cases deal with other pleadings – not the pleadings in this case. They have never gone through the scrutiny of an appeal. Furthermore, the deluge of EDNY cases on this subject are not controlling. The pleading standards set forth by the United States Supreme Court and the Second Circuit are controlling.
It is most respectfully submitted that if this Court sustains the Amended Complaint it is incumbent upon the Court to show the Smith Defendants – and every citizen burdened by RICO – which exact pleadings from the Amended Complaint push the asserted claims over the bar set by the pleading standards established by the Supreme Court of the United States.
I even dropped a footnote:
The Eastern District is a RICO friendly haven for insurance companies. The bringing of such suits has become a cottage industry – according to one Magistrate Judge. This complaint demonstrates that these suits are brought in order to avoid the payment of claims by insurance companies including the avoidance of claims arbitration. It is on par with the RICO analysis performed in: Nybo, Nicholas L. (2013) A Three-Ring Circus: The Exploitation of Civil Rico, How Treble Damages Caused It, and Whether Rule 11 Can Remedy The Abuse, Roger Williams University Law Review: Vol. 18: Iss. 1, Article 3.
THE TWOMBLY REVOLUTION OR DEGENERACY?
Up until 2007 the general pleading standard in federal court was much akin to notice pleadings in the State of New York – in fact New York like many other states adopted it. In both places there were exceptions for such things as fraud, RICO and defamation. But most of the pleadings were governed by a notice type pleading standard.
Recently I read a negligence complaint where the body of the complaint was one page long. It led to a full surrender of the auto policy. It went something like this. Note the artfulness:
On or about February 31, 2017, at on or about 2:00 P.M., at the intersection of Putin Street and Lev Lane, in the town of Stalingrad, County of Minsk, [Upstate New York] the Plaintiff’s motor vehicle lawfully entered the aforesaid intersection. At the same above time in the same above intersection the Defendant’s motor vehicle entered the intersection in a negligent and reckless manner, which negligence and recklessness was the sole cause of the Defendant’s motor vehicle colliding with the motor vehicle driven by the Plaintiff. As a result the Plaintiff was thereby caused to be rendered sick, sore and lame.
The complaint gives general notice to the Defendant as to what the alleged actionable conduct (“negligent and reckless”) as well as the resultant damage … “sick, sore and lame.” It is therefore a sufficient “notice pleading.” Move on to discovery.
The above notice type pleading was with limited exceptions including RICO – mentioned above – the federal standard. You will see.
Then came 2007 and a quiet but massive revolution that was just another way for wealthy interests to steal from and brutalize citizens. I am talking about the abomination that is Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). In Twombly the Supreme Court “retired” the notice pleading standard that was set in stone by long and recent precedent. The Court retired the standard like it was Tom Brady walking off the field with no contract after the New England loss in the playoffs. “See you Tommy boy – it was good – but the wind is blowing a different direction.”
Of course the lack of any respect for its own precedent is a hallmark of the U.S. Extreme Court today – but not so long ago it was rare.
Out went the trusted Tom Brady notice pleading standard and in came the “plausibility standard.” I do not want to give too much away because this will be the subject of a very brutal future article that will not make me popular.
Suffice it to say that for a complaint to pass muster under the “plausibility standard” the allegations must be “plausible” not merely conceivable. The problem is this – what does “plausible” mean? And who decides? The net result is that on a motion to dismiss the Judge becomes a fact finder … the Judge literally becomes the jury … usurps the jury. And decides such sacred jury issues as credibility. None of this is within the purview of a judge when a party elects to have the case tried before a jury – and in civil case any party can decide it wants a jury. Most do. It is the last bastion of justice in Courts.
What is the end result and I will demonstrate this statistically in the future entry: Civil rights cases and other such cases against powerful interests are now the mainstay of what is thrown out on motions to dismiss. The Judge simply says: “I say good man that is just not plausible.” “I say good man it is not plausible that the Department of Justice would team up with private industry to flake people.” You could plead a mountain of evidence. Even cite to and include damning documents. But according to the Court it is just “not plausible.” The Court will even stick its nose so deep into the jury function and perform a credibility analysis on paper on motion to dismiss. It is so downright disgusting
Well you might ask … what are you complaining about? You are trying to get a complaint dismissed. But when a powerful interest is the Plaintiff the “plausibility standard” goes out the window. “I say my good man that is absolutely plausible.” Weeks or months later the Court will then say “And Defendant is not entitled to any discovery from the people that brought the RICO.”
Here is what the majority said about retiring the Tom Brady standard – Judge Souter who lived to regret it – and what my favorite Judge John Paul Stevens said in a skewering dissent. Again I will try to keep it short because we will visit this issue and the real blood and tears it sheds:
We could go on, but there is no need to pile up further citations to show that Conley’s “no set of facts” language [the term for Notice Pleadings from the Supreme Court] has been questioned, criticized, and explained away long enough. To be fair to the Conley Court, the passage should be understood in light of the opinion’s preceding summary of the complaint’s concrete allegations, which the Court quite reasonably understood as amply stating a claim for relief. But the passage so often quoted fails to mention this understanding on the part of the Court, and after puzzling the profession for 50 years, this famous observation has earned its retirement. The phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard
Then comes Stevens (the real deal):
Under the relaxed pleading standards of the Federal Rules, the idea was not to keep litigants out of court but rather to keep them in. The merits of a claim would be sorted out during a flexible pretrial process and, as appropriate, through the crucible of trial. See Swierkiewicz, 534 U. S., at 514 …
The pleading paradigm under the new Federal Rules was well illustrated by the inclusion in the appendix of Form 9, a complaint for negligence. As relevant, the Form 9 complaint states only: “On June 1, 1936, in a public highway called Boylston Street in Boston, Massachusetts, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway.” Form 9, Complaint for Negligence, Forms App., Fed. Rules Civ. Proc., 28 U. S. C. App., p. 829 (hereinafter Form 9). The complaint then describes the plaintiff’s injuries and demands judgment. The asserted ground for relief—namely, the defendant’s negligent driving—would have been called a “‘conclusion of law’ ” under the code pleading of old. See, e.g., Cook 419. But that bare allegation suffices under a system that “restrict[s] the pleadings to the task of general notice-giving and invest[s] the deposition-discovery process with a vital role in the preparation for trial.” Hickman v. Taylor, 329 U. S. 495, 501 (1947); see also Thomson v. Washington, 362 F. 3d 969, 970 (CA7 2004) (Posner, J.) (“The federal rules replaced fact pleading with notice pleading”).
Consistent with the design of the Federal Rules, Conley’s “no set of facts” formulation permits outright dismissal only when proceeding to discovery or beyond would be futile. Once it is clear that a plaintiff has stated a claim that, if true, would entitle him to relief, matters of proof are appropriately relegated to other stages of the trial process. Today, however, in its explanation of a decision to dismiss a complaint that it regards as a fishing expedition, the Court scraps Conley’s “no set of facts” language. Concluding that the phrase has been “questioned, criticized, and explained away long enough,” ante, at 16, the Court dismisses it as careless composition.
If Conley’s “no set of facts” language is to be interred, let it not be without a eulogy.That exact language, which the majority says has “puzzl[ed] the profession for 50 years,” ibid., has been cited as authority in a dozen opinions of this Court and four separate writings. In not one of those 16 opinions was the language “questioned,” “criticized,” or “explained away.” Indeed, today’s opinion is the first by any Member of this Court to express any doubt as to the adequacy of the Conley formulation. Taking their cues from the federal courts, 26 States and the District of Columbia utilize as their standard for dismissal of a complaint the very language the majority repudiates: whether it appears “beyond doubt” that “no set of facts” in support of the claim would entitle the plaintiff to relief.
Petitioners have not requested that the Conley formulation be retired, nor have any of the six amici who filed briefs in support of petitioners. I would not rewrite the Nation’s civil procedure textbooks and call into doubt the pleading rules of most of its States without far more informed deliberation as to the costs of doing so. Congress has established a process—a rulemaking process—for revisions of that order. See 28 U. S. C. §§2072–2074 (2000 ed. and Supp. IV).
Game. Set. Fucking Match. Stevens.
What was Twombly all about? It was about protecting big money. Big business was being accused of monopoly. Can you imagine that? And Plaintiffs were suing. Their complaints were withstanding motions to dismiss which meant expensive discovery for big business. We can’t have profits go down for corporations that pay no taxes so let us devise a way to get rid of these cases before they get expensive. Meanwhile Courts could care less about legal expenses of an ordinary citizen.
Now let us look at the plausibility standard as argued in the aforementioned motion to dismiss. It sounds formidable. But remember it is just bullshit if you are an ordinary citizen.
"'To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Sarmiento v. United States, 678 F.3d 147, 152 (2d Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
"A pleading that offers 'labels and conclusions' or 'formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 556 U.S. at 678 (citations omitted) (Emphasis added).
"Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of 'entitlement to relief.'"
Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). "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." Id. (citations and internal quotation marks omitted) (Emphasis added).
The district court is "not bound to accept as true a legal conclusion couched as a factual allegation." Id.
In considering a motion to dismiss for failure to state a claim, the Court should follow a "two-pronged approach" to evaluate the sufficiency of the complaint. Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). "A court 'can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.'" Id. (quoting Iqbal, 556 U.S. at 679). "At the second step, a court should determine whether the 'well- pleaded factual allegations,' assumed to be true, 'plausibly give rise to an entitlement to relief.'" Id. (quoting Iqbal, 556 U.S. at 679).
Wow. Sounds formidable. Combine it with the RICO pleadings standards and it sounds like you better have a decent case before you accuse someone of being a criminal; ruining their reputation; destroying their business and costing them hundreds of thousands of dollars plus in legal fees. I think Rule 11 says that too.
But if you’re a powerful corporation … hey … not to worry. The plausibility pleading standard is really just bullshit. Judge preference is everything; and judges prefer powerful interests. “God fights on the side of the bigger armies” said Napoleon. So does justice.
Statistically that is where the federal bench comes from – powerful interests; and the Second Circuit will back its District Court judges’ preferences to all manners of extreme except in rare cases – if a District Court sustains a Bivens complaint against the U.S. Attorney for example.
But just for fun let us see how the RICO/Plausibility standard wreaks havoc on garbage pleadings. This again is taken from the memorandum of law I recently submitted to the EDNY regarding a real case:
“When the complaint alleges fraud, Rule 9(b) requires that somewhat more of counsel's investigative efforts be revealed so that the number of unfounded "strike suits" is minimized and defendants are protected "from the harm that comes to their reputations or to their goodwill when they are charged with serious wrongdoing." Segan v. Dreyfus Corp., 513 F.2d 695 (2d Cir. 1975) (citations omitted)
We note there is every species of conclusory incantation and speculation pled in the Complaint presented as fact as already demonstrated. But I cannot contain myself. So for example, a pleading that provides justification for other pleadings in the Complaint states:
Many of the medical offices where Smith controls the use of the premises through purported subleases are known “medical mills” suspected of operating under the ownership and control of unlicensed laypersons – such as the Management Defendants [Smith and Smithco] – and that house a revolving door of hundreds of fraudulent No Fault providers operating in accordance with schemes similar to the scheme at the Elmont Clinic.
The above pleading referencing unknown medical offices at multiple unknown locations, concluding that they are all “medical mills” wherein hundreds of medical providers perpetrate fraud “in accordance with the Elmont Clinic [the location upon which the Complaint is based]” – is rank speculation without a scintilla of supporting factual pleadings. This is not worthy of a Walter Winchell column. The word “controls” is not a magical incantation that turns a cesspool pleading into a mountain stream of detailed factual allegations.