Andersen v. Smithfield Foods, Inc., 8:01CV441T17TBM.

• Decision Date: 24 June 2002
• Docket Number: No. 8:01CV441T17TBM.,8:01CV441T17TBM.
• Parties: Eugene C. ANDERSEN, et al., Plaintiffs, v. SMITHFIELD FOODS, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

207 F.Supp.2d 1358

Eugene C. ANDERSEN, et al., Plaintiffs, v. SMITHFIELD FOODS, INC., et al., Defendants.

No. 8:01CV441T17TBM.

United States District Court, M.D. Florida, Tampa Division.

June 24, 2002.

Diana Lynn Fuller, Smith & Fuller, P.A., Tampa, Fl, Stephen Herre Echsner, J. Michael Papantonio, Neil Duane Overholtz, Levin, Middlebrooks, Thomas, Mitchell, Echsner, Proctor & Papantonio, P.A., Pensacola, Fl, Joe R. Whatley, Jr., Whatley Drake, L.L.C., Birmingham, AL, Herbert Tobias Schwartz, F. Kenneth Bailey, Jr., Williams Bailey Law Firm, Houston, TX, Charles F. Speer, Payne, Jones, Overland Park, KS, Robert F. Kennedy, Jr., White Plains, NY, Hirma Eastland, Eastland Law Offices, Greenwood, MS, Thomas M. Sobol, Jan Schlichtmann, Lieff, Cabraser, Heiman & Bernstein, Boston, MA, Howard F. Twiggs, Douglas B. Abrams, Twiggs, Abrams, Strickland & Trehy, Raleigh, NC, Stephen Weiss, Seeger Weiss LLP, New York City, Richard H. Middleton, Jr., Suggs, Kelly & Middleton, Savannah, GA, for Plaintiffs.

Benjamin H. Hill, III, Hill, Ward & Henderson, P.A., Tampa, FL, J. William Boland, Richard Cullen, Rosewell, III, Anne MArie Whittmore, Eugene E. Mathews, III, David E. Evans, McGuire Woods, LLP, Richmond, VA, Ira H. Raphaelson, John B. Owens, O'Melveny & Myers LLP, Washington, DC, for Defendants.

ORDER

KOVACHEVICH, Chief Judge.

THIS CAUSE is before the Court on Defendant Smithfield Food, Inc.'s Motion to Dismiss Second Amended Class Action Complaint and Memorandum of Law in support thereof (Dkt.Nos.69-70); Defendant Joseph W. Luter, III's Motion to Dismiss Second Amended Class Action Complaint and Memorandum of Law in support thereof (Dkt.Nos.67-68); Plaintiffs' Memorandum of Law in Opposition to Defendants' Joint Motion to Dismiss the Second Amended Complaint (Dkt. No. 73); Plaintiffs' Memorandum of Law in Opposition to Defendant Luter's Motion to Dismiss (Dkt. No. 74); and Plaintiffs' Second Amended Class Action Complaint (Dkt. No. 65).

Background

Eugene C. Andersen, Cynthia Bailey Watson, Roger Dae Pickett, Marvin Carnagey, Keith Dotson, Jim Braun, Linus Solberg, and Netty Janssen, individually and on behalf of the proposed Primary Class(Plaintiffs), have filed suit against Smithfield Foods, Incorporated (Defendant Smithfield) and Joseph W. Luter, III (Defendant Luter) for violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, Title 18, United States Code, Section 1961, et seq.¹

Defendant Smithfield is a large pork processor and hog producer, which manufactures a wide variety of processed meats. Defendant Luter was Chairman of the Board, President, and/or Chief Executive Operating Officer for Defendant Smithfield, during the time period of Plaintiffs' allegations. Plaintiffs allege that Defendant Smithfield has systematically and pervasively violated RICO, such that the business and property of thousands of rural Americans has been injured. According to Plaintiffs, Defendants have engaged in fraudulent and extortionate conduct by gaining Plaintiff's "trust," which has forced Plaintiffs to suffer injury to their business and property; thereby, violating RICO. Essentially, Plaintiffs are alleging that Defendants, as a result of carrying on its business, have misrepresented the damage that Defendants' business causes to Plaintiffs' land, and have engaged in acts of mail fraud, wire fraud, extortion and violations of the Travel Act. Thus, these acts serve as the predicate acts necessary to establish a violation of RICO.

Previously, Defendants filed motions to dismiss the first amended complaint on the grounds that Plaintiffs failed to state a claim of relief upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which this Court granted on February 13, 2002 (February Order). Plaintiffs filed their Second Amended Complaint on March 15, 2002, and Defendants again move to dismiss the complaint on the grounds that it fails to state a claim for which relief can be granted. Specifically, Defendants claim that Plaintiffs' complaint fails to allege that Defendants' actions caused Plaintiffs' injury, that Defendants committed any predicate acts, that Defendants engaged in a pattern of racketeering activity, or that a RICO enterprise exists.

Standard of Review

In ruling on a motion to dismiss, the court should not dismiss a complaint unless it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 56-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In considering a motion to dismiss, the court must take all material allegations of the complaint as true and liberally construe those allegations in favor of the Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). However, a Plaintiff may not merely "label" claims to survive a motion to dismiss. Blumel v. Mylander, 919 F.Supp. 423, 425 (M.D.Fla.1996).

At a minimum, the complaint must provide a "short and plain statement of the claim" that "will give the defendant fair notice of what the Plaintiff's claim is and the grounds upon which it rests." Conley, 355 U.S. at 47, 78 S.Ct. 99 (quoting Fed. R.Civ.P. 8(a)(2)). When, on the basis of a dispositive issue of law, no construction of the factual allegation will support the cause of action, dismissal of the complaint is appropriate. Executive 100, Inc. v. Martin County, 922 F.2d 1536 (11th Cir. 1991). "Claims under RICO must be subjected to scrutiny due to their potential for abuse by civil litigants." Bill Buck Chevrolet v. GTE Fla., 54 F.Supp.2d 1127, 1137 (M.D.Fla.1999) (quoting Ste Ame Isorait v. Atlantic Mutual Co., 1993 WL 37330, at *3 (E.D.N.Y.1993)).

Discussion

I. Defendant Smithfield's Motion to Dismiss

Defendants claim that Plaintiffs' complaint should be dismissed because it fails to state a claim under the Federal Racketeering Influenced and Corrupt Organizations Act (RICO), Title 18, United States Code, Section 1961, et seq. Specifically Defendants argue that Plaintiffs' complaint fails to allege that Defendants' actions caused Plaintiffs' injury, that Defendants had the requisite scienter for the predicate acts, or that a RICO enterprise exists.

The RICO Claim

Congress designed RICO as a flexible tool to fight organized crime. As such, it makes the following activities unlawful:

(a) investing income derived, directly or indirectly, from a pattern of racketeering activity through collection of an unlawful debt in any enterprise which affects interstate commerce; (b) acquiring or maintaining an interest in any enterprise which affects interstate commerce through a pattern of racketeering activity or through collection of an unlawful debt; (c) conducting or participating in the affairs of any enterprise which affects interstate commerce through a pattern of racketeering activity or collection of an unlawful debt; or (d) conspiring to violate any of the provisions of Section 1962(a)-(c).

18 U.S.C. § 1962.

"Racketeering activities" covers a wide-range of federal and state crimes, including acts that are "`chargeable' under several generically described state criminal laws, any act `indictable' under numerous specific federal criminal provisions, including mail and wire fraud, and any `offense' involving bankruptcy or securities fraud or drug-related activities that [are] `punishable' under federal law." Sedima, S.P.R.L. v. Imrex Co. Inc., 473 U.S. 479, 482, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (quoting 18 U.S.C. § 1961(1)).

To engage in a "pattern of racketeering activity," the defendant must have participated in "at least two acts of racketeering activity, one of which occurred after the effective date of [RICO] and the last of which occurred within ten years (excluding any term of imprisonment) after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5). Finally, "enterprise" is defined under the statute as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." Id. § 1961(c).

RICO establishes both criminal and civil penalties for violations of Section 1962. The civil remedies provision provides a private cause of action for "any person injured in his business or property by reason of a violation of Section 1962." 18 U.S.C. § 1961(c). However, as the United States Supreme Court noted, "in its private civil version, RICO is evolving into something quite different from the original conception of its enactors." Sedima, 473 U.S. at 482, 105 S.Ct. 3275. The elements of a civil RICO claim are: "(1) a violation of section 1962; (2) injury to business or property; and (3) that the violation caused the injury." Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.1991).

A. Violation of Section 1962

To establish a violation of Section 1962, the plaintiff must allege facts demonstrating that the defendant engaged in a pattern of racketeering activity and that an enterprise existed. Bill Buck Chevrolet v. GTE Fla., 54 F.Supp.2d 1127, 1137 (M.D.Fla.1999).

Pattern of Racketeering Activity

In showing a pattern of racketeering activity, the plaintiff must allege at least two racketeering predicate acts that are related and that amount to, or threaten the likelihood of, continued criminal activity. H.J. Inc. v. Northwestern Bell Tele. Co., 492 U.S. 229, 237-238, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). Therefore, in order to survive a motion to dismiss, the plaintiff must allege facts sufficient to support at least two of the predicate acts. Republic of Panama v. BCCI Holdings, 119 F.3d 935, 949 (11th Cir.1997).

1. Racketeering Activity

Plaintiffs allege that Defendants engaged in the following predicate acts: mail fraud in violation of Title 18, United States Code, Section 1341; wire fraud in violation of Title 18, United States Code, Section 1343; extortion in violation of Title 18, United States Code, Section 1952; and acts in...