Doyle v. Hasbro, Inc.

Decision Date23 December 1996
Docket NumberNo. 96-1337,96-1337
PartiesRICO Bus.Disp.Guide 9180 Patrick J. DOYLE and H.P. Leasing, Inc., Plaintiffs-Appellants, v. HASBRO, INC., et al., Defendants-Appellees.
CourtU.S. Court of Appeals — First Circuit

Jeffrey S. Entin and Sahady, Entin & Entin, P.C. on brief for appellants.

John A. Tarantino, Patricia K. Rocha and Adler Pollock & Sheehan Incorporated on brief for appellees Hasbro, Inc. and Alan Hassenfeld. J. Richard Ratcliffe and Temkin & Associates Ltd. on brief for appellees Israel and Miriam Laudon. William A. Jacobson and Kaplan and Jacobson, Inc. on brief for appellee David Thibodeau.

Before TORRUELLA, Chief Judge, CAMPBELL, Senior Circuit Judge, and BOUDIN, Circuit Judge.

TORRUELLA, Chief Judge.

Plaintiffs-appellants, H.P. Leasing, Inc., and Patrick J. Doyle ("Doyle"), H.P. Leasing's sole stockholder and President, brought this civil action against Hasbro, Inc.; Alan Hassenfeld ("Hassenfeld"), Hasbro's President, Chairman of the Board of Directors, and Chief Executive Officer; Israel Laudon ("Laudon"), Vice President of Hasbro's Traffic Department; Miriam Laudon, Laudon's wife; David Thibodeau, Laudon's assistant; Hugh Maxwell, an Executive Vice President at Hasbro; and Michael Oliva d/b/a Transport Services ("Oliva"). Plaintiffs claimed violation of the federal racketeering laws, 18 U.S.C. §§ 1962(c) & (d) ("RICO"), as well as the following violations of Massachusetts state law: breach of contract against all defendants (Count I); civil conversion and civil larceny against Laudon, Oliva and Thibodeau (Count II); intentional and malicious interference with an advantageous business relationship against Laudon, Oliva, and Thibodeau (Count III); intentional infliction of emotional distress against Laudon, Oliva, and Thibodeau (Count IV); fraud, deceit and misrepresentation against Laudon, Thibodeau, Hassenfeld, and Hasbro (Count V); and negligent entrustment or negligent supervision against Hasbro (Count VI).

The district court dismissed the RICO claim and Counts I through VI as to defendants Hassenfeld, Oliva, and Thibodeau. Doyle v. Hasbro, 884 F.Supp. 35, 42 (D.Mass.1995). In an order dated May 4, 1995, the claims against Israel and Miriam Laudon were also dismissed. The RICO claim against Hasbro was dismissed from the bench on March 27, 1995, see id. at 38-39, and Counts I, V, and VI were also dismissed as to Hasbro. 1 This appeal followed. 2

I. BACKGROUND

Plaintiffs' amended complaint alleges the following facts. In August and September 1980, plaintiffs met with Laudon, who agreed, on Hasbro's behalf, to retain the plaintiffs' services for hauling and delivering freight. In October 1980, Laudon required that Doyle pay to Oliva a "commission" of ten percent of the traffic charges billed by H.P. Leasing. Doyle acceded to Laudon's request, viewing the payments as a business expense that would ensure a consistent volume of business. Doyle was instructed by Laudon that receipt of the commissions was necessary for the continuance of the contracts. Early in the relationship, Laudon informed plaintiffs that business would increase and that additional tractor-trailers would be required. In reliance on these representations, plaintiffs purchased 28 tractors. The increase in business that materialized, however, did not merit such expansion.

As time went on, Oliva and Laudon reduced the volume of business sent to H.P. Leasing. Between 1982 and 1985, H.P. Leasing paid Laudon and Oliva commissions averaging $440,000 per year, but from 1990 to 1992, these payments averaged only $45,000.

Over the twelve years from 1980 to 1992, Laudon also forced Doyle to pay for yearly Christmas parties for Hasbro employees, to give gift certificates to Hasbro employees, to pay for personal vacations for Laudon and his wife, and to pledge $30,000 to the Holocaust Memorial. Doyle and his wife were personally contacted, harassed and threatened during the period. For example, Thibodeau, Laudon, and their wives would demand to be taken out to dinner. These demands were accompanied by comments such as "I own you" and "I can put you out of business and you won't have a house to live in." Laudon, Thibodeau and Hassenfeld worked closely together and were aware of each other's conduct.

In 1992, Laudon informed plaintiffs that H.P. Leasing ought to file for bankruptcy under Chapter 11 of the Bankruptcy Code. He promised that Hasbro would support H.P. Leasing with a minimum of $50,000 a week in revenue. Doyle felt he had no choice, and, on March 12, 1992, H.P. Leasing filed for bankruptcy. Defendants did not provide the support promised by Laudon.

In June 1992, Doyle stopped making commission payments to Laudon. Doyle perceived Hasbro's failure to award contracts to plaintiffs as a breach of the prior representations made to him. In November 1992, Doyle met with Hassenfeld, who directed that plaintiffs receive twenty to thirty thousand dollars per week in business. In January 1993, plaintiffs received $28,000 in business from Hasbro. On January 27, 1993, H.P. Leasing was closed for business.

II. STANDARD OF REVIEW

We review the motion to dismiss de novo. Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996). We accept as true "all well-pleaded factual averments and indulg[e] all reasonable inferences in the plaintiff's favor." Id. Dismissal under Federal Rule of Civil Procedure 12(b)(6) is appropriate if the facts alleged, taken as true, do not justify recovery. Id. The pleading requirement, however, is "not entirely a toothless tiger." The Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989). "The threshold [for stating a claim] may be low, but it is real." Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988). In order to survive a motion to dismiss, plaintiffs must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery." Id. at 515. Although all inferences must be made in the plaintiffs' favor, this court need not accept "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson, 83 F.3d at 3.

In conducting our review of the case, we are limited to those allegations contained in the amended complaint. This is true both as to facts, see Litton Indus., Inc. v. Coln, 587 F.2d 70, 74 (1st Cir.1978) ("[O]ur focus is limited to the allegations of the complaint. The question is whether a liberal reading of [the complaint] can reasonably admit of a claim." (internal quotations omitted)), and as to arguments, see McCoy v. Massachusetts Inst. of Technology, 950 F.2d 13, 22 (1st Cir.1991) ("It is hornbook law that theories not raised squarely in the district court cannot be surfaced for the first time on appeal."). We, therefore, do not consider factual allegations, arguments, and claims that were not included in the amended complaint.

III. THE RICO CLAIMS (COUNT VII)

We begin by considering plaintiffs-appellants' claims under 18 U.S.C. §§ 1962(c) and (d). Section 1962(c) reads:

It shall be 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.

18 U.S.C. § 1962(c). Section 1962(d) states that "[i]t shall be unlawful for any person to violate any of the provisions of subsections (a), (b), or (c) of this section." Id. § 1962(d).

For the section 1962(c) claim to survive a motion to dismiss, the amended complaint must allege: "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985); see also Arzuaga-Collazo v. Oriental Fed. Sav. Bank, 913 F.2d 5, 5-6 (1st Cir.1990). "In addition, the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation." Sedima, 473 U.S. at 496, 105 S.Ct. at 3285.

This court has held that under section 1962(c), "the unlawful enterprise itself cannot also be the person the plaintiff charges with conducting it." Arzuaga-Collazo, 913 F.2d at 6; see also Odishelidze v. Aetna Life & Casualty Co., 853 F.2d 21, 23 (1st Cir.1988) (per curiam); Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 29-30 (1st Cir.1986) (collecting cases). In order to succeed, therefore, the complaint must allege the existence of a "person" distinct from the "enterprise."

We must, therefore, determine if the amended complaint is sufficient to identify a "person" and an "enterprise." The amended complaint is reasonably clear with respect to the "person" requirement, stating that "all of said defendants are 'persons' within the meaning of this Act." Amended Complaint p 62 (emphasis added). The only reasonable interpretation of this statement includes all defendants: Hasbro, Hassenfeld, Israel Laudon, Miriam Laudon, Hugh Maxwell, Thibodeau, and Oliva. Later in the same paragraph, the complaint once again alleges that "all defendants can be shown to be persons within the meaning of this Act." Id. (emphasis added). In paragraph 64, where appellants allege the section 1962(d) violation, the amended complaint states that "plaintiff is entitled to relief against all defendants," (emphasis added) once again suggesting that each defendant is, individually, identified as a "person" under the Act.

The amended complaint fails to distinguish any subset of the defendants in its section 1962(c) claim. Indeed, plaintiffs-appellants do not mention any defendant by name in paragraphs 61-63, in which the violation of section 1962(c) is alleged. Thus, although appellants' brief would have us believe that only Hasbro is a "person" for RICO purposes, the amended complaint does not, even under a generous reading,...

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