Calavan v. First Love Int'l Ministries
| Docket Number | 21 C 185 |
| Decision Date | 09 March 2022 |
| Citation | 590 F.Supp.3d 1131 |
| Parties | Katherine CALAVAN, individually and on behalf of all others similarly situated, Plaintiff, v. FIRST LOVE INTERNATIONAL MINISTRIES, et al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Elizabeth A. Fegan, Nathaniel Donald French, Fegan Scott, LLC, Chicago, IL, Michael J. Summerhill, Nixon Peabody LLP, Chicago, IL, for Plaintiff.
Steven Blair Borkan, Andrew M. Cook, Christiane Elizabeth Murray, Emily Erin Schnidt, Nicholas Kenton Fedde, Timothy P. Scahill, Whitney Newton Hutchinson, Borkan & Scahill, Ltd., Chicago, IL, for Defendants First Love International Ministries, Steven Johnson, Jerry Winslow, Paul Loner, Philip Guske, Robert Opperman, Phoebe Wilhelm, Dale Gray, Thomas Clinton, Robert Clinton.
Richard Lane Miller, II, CTM Legal Group, Chicago, IL, for Defendant Loving Indeed, Inc.
Before the Court is Defendants’ Motion to Dismiss Plaintiff Katherine Calavan's Complaint and Motion to Dissolve the Preliminary Injunction. For the following reasons, the Court grants the Motions.
For the purposes of these motions, the Court accepts as true the following facts from the Complaint. Alam v. Miller Brewing Co. , 709 F.3d 662, 665–66 (7th Cir. 2013). All reasonable inferences are drawn in Calavan's favor. League of Women Voters of Chi. v. City of Chi. , 757 F.3d 722, 724 (7th Cir. 2014).
Defendant First Love International Ministries ("First Love") claims it is a "non-denominational mission agency founded for the purpose of bringing love and hope to people residing in impoverished regions of the world." Dkt. # 1, ¶ 94. It operates several orphanages, called Cultural Care Institutions ("CCIs"), in Kenya. However, according to Calavan, First Love's former Director of Social Services, this claim is false; the orphanages are not filled with "orphans" as the term is commonly understood in the United States, but rather children who have one or more living parents and extended family members.
Calavan says First Love built a solicitation network, which she calls the First Love Solicitation Enterprise (the "Enterprise"), made up of First Love, Defendant Loving InDeed, Inc. ("Loving InDeed"), First Love's officer and directors—Defendants Steven Johnson, Jerry Winslow, Paul Loner, Philip Guske, Robert Opperman, Phoebe Wilhelm, Dale Gray, Thomas Clinton, and Robert Clinton (collectively, the "Individual Defendants")—and various John Doe Co-Conspirators, as well as third-parties Little Lambs Kenya and Abba's House. Calavan alleges the Enterprise solicits American donors online for money to build CCIs and seeking "voluntourists" to visit the CCIs. She says the Enterprise solicits the donations by building a "deceptive tapestry" of Kenyan children in need, but the donations are actually used for Defendants’ own personal economic gain and to perpetuate the alleged sham orphanages.
Based on these allegations, Calavan claims Defendants: (1) violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. 1962(c) (Count I); (2) conspired to violate RICO, 18 U.S.C. 1962(d) (Count II); (3) violated all 50 states and the District of Columbia's consumer protection acts, see Dkt. # 1, at ¶ 271 () (Count III); and (4) were unjustly enriched (Count IV). In support of her RICO claims, Calavan alleges Defendants committed wire and mail fraud by making misleading communications about First Love and its orphanages to solicit donations. She also says Defendants committed witness tampering by harassing her and others in order to prevent reports to the Kenyan government. Defendants now move to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
A Rule 12(b)(1) motion challenges a court's subject matter jurisdiction. As in resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, but not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC , 815 F.3d 1082, 1087 (7th Cir. 2016) ( Rule 12(b)(6) ); Silha v. ACT, Inc. , 807 F.3d 169, 173 (7th Cir. 2015) ( Rule 12(b)(1) ). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in the non-movant's brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1019–20 (7th Cir. 2013).
A motion to dismiss under Rule 12(b)(6) "tests the sufficiency of the complaint, not the merits of the case." McReynolds v. Merrill Lynch & Co. , 694 F.3d 873, 878 (7th Cir. 2012). The allegations in the complaint must set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A plaintiff need not provide detailed factual allegations but must provide enough factual support to raise its right to relief above a speculative level. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
A claim must be facially plausible, meaning that the pleadings must "allow ... the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The claim must be described "in sufficient detail to give the defendant ‘fair notice of what the ... claim is and the grounds upon which it rests.’ " E.E.O.C. v. Concentra Health Servs., Inc. , 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). "[T]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are insufficient to withstand a Rule 12(b)(6) motion to dismiss. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.
Defendants move to dismiss the Complaint and to dissolve the preliminary injunction. We address the Motion to Dismiss first.
Calavan alleges violations of RICO and various state law claims. We begin our analysis with Calavan's RICO claims.
Defendants move to dismiss Calavan's RICO claims for several reasons. First, Defendants argue Calavan lacks standing to bring a RICO claim. They also contend Calavan alleges an impermissible extraterritorial application of RICO. Finally, Defendants assert Calavan fails to sufficiently allege her RICO claims. We address each argument in turn.
Defendants first argue the RICO claims must be dismissed under Rule 12(b)(1) because Calavan lacks standing. Defendants contend Calavan alleges only intangible emotional harms. To have standing under RICO, a plaintiff must allege an injury to their business or property. Doe v. Roe , 958 F.2d 763, 767 (7th Cir. 1992). The phrase "in his business or property" excludes "personal injuries." Id. "Thus, ‘a civil RICO action cannot be premised solely upon personal or emotional injuries.’ " Sabrina Roppo v. Travelers Com. Ins. Co. , 869 F.3d 568, 590 (7th Cir. 2017) (quoting Doe , 958 F.2d at 767 ).
Here, Calavan alleges more than intangible emotional harm. Calavan claims she lost money through donations to First Love. And "[m]oney, of course, is a form of property." Reiter v. Sonotone Corp. , 442 U.S. 330, 338, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979). Thus, Calavan alleges an injury to her property and has standing to bring her RICO claims. See Exec. Comm. Representing Signing Petitioners of Archdiocese of W. U.S. v. Kaplan , 2004 WL 6084228, at *3 (C.D. Cal. 2004) ().
Next, Defendants argue Calavan is impermissibly seeking to apply RICO extraterritorially. We agree.
"It is a longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Morrison v. Nat'l Australia Bank Ltd. , 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (cleaned up). When a statute gives no clear indication of an extraterritorial application, it has none. Id. This presumption helps "avoid the international discord that can result when U.S. law is applied to conduct in foreign countries." RJR Nabisco, Inc. v. Eur. Cmty. , 579 U.S. 325, 335, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016).
The Supreme Court has identified two questions for resolving extraterritoriality issues in civil RICO cases: (1) whether RICO's substantive prohibitions apply to conduct that occurs in foreign countries; and (2) whether RICO's private right of action applies to injuries suffered in foreign countries. Id. As to the first question, the Supreme Court determined there is extraterritorial application "only to the extent that the predicates alleged in a particular case themselves apply extraterritorially." Id. at 326, 136 S.Ct. 2090. And the Supreme Court definitively answered the second question: RICO's private right of action applies only to domestic injuries. Id. at 354, 136 S.Ct. 2090.
The Court follows a two-step analysis to determine whether a statute applies extraterritorially. "At the first step, we ask whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially." Id. at 337, 136 S.Ct. 2090. If Congress clearly rebutted that presumption, then we need not proceed to the second step; but if Congress did not, then the second step is to determine if the case involves a domestic application of the statute by looking at the statute's "focus." Id. "If the conduct relevant to the statute's focus occurred in the United States, then the case involves a permissible...
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