Anitora Travel, Inc. v. Lapian

• Decision Date: 20 January 1988
• Docket Number: No. 87 Civ. 0015 (PKL).,87 Civ. 0015 (PKL).
• Citation: 677 F. Supp. 209
• Parties: ANITORA TRAVEL, INC., Plaintiff, v. Zvi (Steve) LAPIAN, Defendant.
• Court: U.S. District Court — Southern District of New York

677 F. Supp. 209

ANITORA TRAVEL, INC., Plaintiff, v. Zvi (Steve) LAPIAN, Defendant.

No. 87 Civ. 0015 (PKL).

United States District Court, S.D. New York.

January 20, 1988.

COPYRIGHT MATERIAL OMITTED

J. Owen Zurhellen, III, New York City, for plaintiff.

Wistendahl & Folkenflik, New York City (Max Folkenflik, Douglas Capuder, of counsel), for defendant.

OPINION AND ORDER

LEISURE, District Judge:

Plaintiff filed an amended complaint (the "amended complaint") in this action on April 23, 1987, seeking damages for breach of an employment contract, and treble damages pursuant to the civil provisions of the RICO statute, 18 U.S.C. §§ 1961-1964. Plaintiff also seeks injunctive relief directing defendant to return any business records he took from plaintiff and impressing a constructive trust on the proceeds of certain moneys obtained by defendant.

This Court has federal question jurisdiction over plaintiff's RICO claim. 28 U.S.C. § 1331. All other claims are pendent state law claims.

Defendant has moved to dismiss the amended complaint pursuant to Fed.R. Civ.P. 9(b) and 12(b)(6).

FACTUAL BACKGROUND

On a motion to dismiss, the complaint must be read generously and every reasonable inference drawn in favor of the plaintiffs. Pross v. Katz, 784 F.2d 455, 457 (2d Cir.1986); Yoder v. Orthomolecular Nutrition Institute, Inc., 751 F.2d 555, 558 (2d Cir.1985); Metzner v. D.H. Blair & Co., Inc., 663 F.Supp. 716, 719 (S.D.N.Y.1987) (Weinfeld, J.). The complaint should only be dismissed if it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Stone v. Chung Pei Chemical Industry Co. Ltd., 790 F.2d 20, 22 (2d Cir.1986).

So reading the complaint for purposes of defendant's motion, the relevant facts are as follows:

Plaintiff, Anitora Travel, Inc., is a New York corporation. Plaintiff is a registered travel agency selling tickets for interstate passenger air travel.

Defendant is a resident of New York. Beginning in May 1983, defendant was employed by plaintiff as an "outside sales agent." The parties entered into an agreement (the "Employment Agreement") which provided, inter alia, that:

a) plaintiff would provide office, local telephone, and other facilities to defendant;

b) defendant would arrange for and sell travel services to customers under plaintiff's name;

c) commissions earned for services sold by defendant would be shared, 62% to defendant and 38% to plaintiff, with the exception of one client, Emerson Radio Corporation, to which a different arrangement applied;

d) defendant would pay, or reimburse plaintiff for, certain expenses, including messenger and courier charges and long-distance telephone charges;

e) defendant would repay to plaintiff any commission share previously paid to defendant when later events, such as a ticket refund by an airline, required plaintiff to refund the commission to the vendor;

f) all sales of travel services made by defendant would be subject to the commission-sharing arrangement; and

g) defendant would be responsible for the payment of all airline or "ARC" debit memos for unpaid tickets, under-paid tickets, or any ticket irregularities, as well as any fines resulting therefrom, and for payment of like amounts due to suppliers other than airlines, such as hotel and car rental services.

Defendant resigned from his employment as plaintiff's outside sales agent in October 1986. During the same period in late 1986, plaintiff became aware that defendant had engaged in certain conduct which plaintiff believed breached defendant's obligations under the employment agreement, breached defendant's fiduciary and implied obligations to plaintiff, and violated the federal mail and wire fraud statutes. Plaintiff determined that defendant's improper conduct involved four general types of activity.

First, plaintiff determined that defendant had sold travel services, while acting under the terms of the Employment Agreement, solely for defendant's own account and that defendant had failed to pay to plaintiff its share of commissions on such sales. Amended Complaint at ¶ 6(a).

Second, plaintiff determined that defendant, in order to prevent disclosure of his wrongful activities, had intercepted mail addressed to plaintiff. Amended Complaint at ¶ 6(c).

Third, plaintiff determined that defendant had taken possession of business records belonging to plaintiff and had refused to return them, despite plaintiff's demand to do so. Amended Complaint at ¶ 6(d).

Fourth, plaintiff determined that defendant, apparently acting in concert with certain customers, defrauded certain airlines by selling discount fare tickets and thereafter converting the tickets to non-discounted, or lesser discounted, tickets without obtaining the price differential. Plaintiff determined that these fraudulent acts were committed through three types of schemes.

In one type of scheme allegedly used by defendant, upon receipt of a request for an airline ticket, defendant would prepare and issue a ticket (which consists of multiple copies, or coupons) for travel on a date sufficiently in the future to permit a discounted fare, but would call in to the relevant airline reservations for travel on a different date actually requested by the customer. The ticket would state the correct price for travel on the dates shown. Defendant then would put stickers on the "flight coupons" (the portions which are presented to, and kept by, the airlines) providing for travel on the false future travel date, and would issue a boarding pass for the actual travel date. The price of travel on the actual travel date was greater than the discounted price charged to, and paid by, the customer. The ticket portions, or "coupons", given to plaintiff (the "agency coupon") and sent by mail to the Airline Reporting Corporation (the "auditor's coupons") for audit purposes, were not changed to show the actual travel dates.

Plaintiff alleges, for example, that on or about October 1, 1984, defendant received a request from United Feather & Down Co., of Brooklyn, New York, for tickets for a Mr. Belfer and Mr. Palmer to travel from New York City to Chicago on October 2, 1984, and return on October 3, 1984. Defendant issued two tickets for travel from New York to Chicago for October 10, 1984, with return tickets for October 16, 1984, at the discount price appropriate for such travel. On October 10, 1984, defendant caused an invoice to be issued to United Feather & Down Co., showing travel on October 2 and 3, 1984, but listing tickets which were written for travel on October 10 and 16, 1984.

Plaintiff alleges that when defendant himself was unable to issue a boarding pass, defendant employed a slightly different scheme. Upon receipt of a request for a ticket, defendant would issue a ticket to his customer showing the correct date(s) of travel — but also showing a discount fare not actually available for that travel date. Defendant would also create a "dummy" ticket showing travel on the same date(s) at the correct price, and would show the "dummy" ticket at the airline office in order to obtain a boarding pass. Upon returning to plaintiff's office, defendant would then "void" the dummy ticket and affix the boarding pass to the discount ticket issued to the customer. The customer would pay the discounted price.

For example, plaintiff alleges that on or about May 1, 1985, defendant received a request for two tickets, one for a Mrs. Rosenbrand and the other for a Mrs. Asoulay, for travel from new York to West Palm Beach on May 2, 1985, and returning May 5, 1985. Defendant issued two "dummy" tickets for that travel showing a correct price ($278 per ticket), and defendant used those "dummy" tickets to obtain boarding passes from Delta Airlines. The same day, and very shortly after issuing the "dummy" tickets, defendant issued two other tickets, which bore the very next two serial numbers, but which showed a price of $178 each — the price actually paid by the customers.

In a third type of scheme, defendant would issue tickets out of sequence by back-dating the tickets, in order to take advantage of advance purchase discounts. Defendant would issue tickets for a discount fare, and the customers would pay the discount fare, even though in fact the tickets were not purchased sufficiently in advance of travel to permit the discount fare. Auditors coupons would be sent by mail to the Airline Reporting Corporation showing dates of travel which would allow the discount fare.

For example, plaintiff alleges that during the week of May 18, 1986, defendant submitted "auditors coupons" for 5 members of the Azouly family for travel from New York to Florida and back in late May 1986. However, the tickets themselves all show an issue date of April 28, 1986.

DISCUSSION

18 U.S.C. § 1964(c) provides a civil remedy to "any person injured in his business or property by reason of a violation of section 1962 of this chapter." In its complaint, plaintiff alleges that the fraudulent schemes employed by defendant violated "18 U.S.C.A. § 1962(a) and/or (c)." Amended Complaint at ¶ 8.

It is well established that to claim a violation of 18 U.S.C. § 1962(c), a plaintiff must allege 1) conduct 2) of an enterprise 3) through a pattern 4) of racketeering activity. Sedima, S.P.L.R. v. Imrex, 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed. 2d 346 (1985). To claim a violation of § 1962(a), a plaintiff must allege that 1) income derived from a pattern of racketeering activity 2) has been used or invested 3) to acquire an interest in, or establish or operate 4) an enterprise. 18 U.S.C. § 1962(a).

Defendant argues that plaintiff's amended complaint must be dismissed because plaintiff has failed properly to plead the existence of a pattern of racketeering activity; has failed to plead the existence of an enterprise; and has failed to plead...