Elsevier Inc. v. Memon

Decision Date23 March 2015
Docket NumberNo. 13–CV–0257 JSAKT.,13–CV–0257 JSAKT.
Citation97 F.Supp.3d 21
PartiesELSEVIER INC.; Elsevier B.V.; Elsevier Ltd.; Elsevier Ireland Ltd. ; John Wiley & Sons, Inc.; Wiley Periodicals, Inc.; and Blackwell Publishing, Ltd. Plaintiffs, v. Haroon MEMON; Bob Memon; Kulsoom Memon, Hanif Memon; Samina Memon a/k/a Samina Khmisa; Iqbal Gaba a/k/a Iqbal Hussain Gaba a/k/a Iqbal H. Gaba a/k/a Mr. Ikqbal Jaba a/k/a M.I. Gaba a/k/a Mr. Gaba a/k/a Dr. I. Gaba; Haji Suleman Gaziani a/k/a Suleman Haji a/k/a H. Suleman; Mohammad Iqbal Gaziani a/k/a Mohammad Iqbal a/k/a Mohammad Gaziani; Javaria Iqbal a/k/a Javaria Gaziani a/k/a Javaria Iqbal Gaziani; Muhammad Owais; Abdul Karar; Iqbal Kapadwala; Muhammad Tobria a/k/a M. Tobria; Zahida Jamal; Muhammad Shahid ; Sardar Ahmed a/k/a S. Ahmed ; and Feroza Bano, Defendants.
CourtU.S. District Court — Eastern District of New York

James A. Moss, Esq., Nicole Haff, Esq., Balber Pickard Maldonado & Van Der Tuin PC, New York, NY, for Plaintiffs.

Arshad Majid, Esq., Majid & Associates, P.C., Hauppauge, NY, for Defendants Haroon Memon, Bob, Memon, Kulsoon Memon, Hanif Memon, Samina, Memon, Abdul Karar.

Iqbal Gaba, London, UK, pro se.

Haji Suleman Gaziani, Karachi, Pakistan, pro se.

Iqbal Kapadwala, Valley Stream, NY, pro se.

Mohammad Iqbal Gaziani, Karachi, Pakistan, pro se.

No appearances for Remaining Defendants.

MEMORANDUM & ORDER

SEYBERT, District Judge:

This action was commenced on January 16, 2013 by eight publishing companies against sixteen separate individual defendants (collectively, Defendants). Plaintiffs Elsevier Inc., Elsevier B.V., Elsevier Ltd., Elsevier Ireland Ltd., John Wiley & Sons, Inc., Wiley Periodicals, Inc., and Blackwell Publishing, Ltd. (collectively, Plaintiffs) assert claims against Defendants for violating the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C § 1961 et seq. (RICO), and state law claims for fraud, conspiracy to commit fraud, aiding and abetting fraud, breach of contract, and conversion. Two motions are pending before the Court. First, defendants Haroon Memon, Bob Memon, Kulsoom Memon, Hanif Memon, Samina Memon a/k/a Samina Khmisa, Muhammad Tobria a/k/a M. Tobria, and Abdul Karar (collectively the Memon Defendants) move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). (Docket Entry 84.) Second, Plaintiffs move to strike the Answer filed by defendants Haji Suleman Gaziani and Mohammad Iqbal Gaziani (collectively, the Gaziani Defendants) and enter a default judgment against them pursuant to Federal Rules of Civil Procedure 37(b)(2) and 55(a). (Docket Entry 146.) For the foregoing reasons, the Memon Defendants' motion for judgment on the pleadings is GRANTED IN PART and DENIED IN PART, and Plaintiffs' motion to strike the Gaziani Defendants' Answer is GRANTED.

BACKGROUND1
I. Factual Background

Plaintiffs publish leading academic journals in the fields of science, technology, and medicine. (Compl. ¶ 1.) The journals are composed of peer-reviewed articles and are sold to two types of end users—individuals and institutions. (Compl. ¶¶ 1, 29.) Individuals pay a discounted rate for subscriptions, while institutions—such as hospitals, schools, and government entities—pay full price because of their “larger expected readership.” (Compl. ¶ 31.) To accomplish the work of selling subscriptions, Plaintiffs use “subscription agents” as intermediaries between themselves and customers. (Compl. ¶ 36.) Using subscription agents is convenient because customers can purchase subscriptions from different publishers at one location and streamline the billing process. (Compl. ¶ 36.)

To protect the higher price that institutions pay for journals, Plaintiffs' terms and conditions prohibit the “resale, or institutional use” of discounted subscriptions sold to individuals. (Compl. ¶¶ 41–45.) However, Plaintiffs' terms and conditions are located in different places. For example, “Wiley's terms and conditions are found on the agent price list and Elsevier's terms and conditions are referenced in its invoices and purchase order forms.” (Compl. ¶ 38.) To enforce their terms and conditions, Plaintiffs require subscription agents to “identify the end user” for each sale. (Compl. ¶ 39.) Plaintiffs also rely on end users to correctly identify themselves to the subscription agent as either an institution or individual subscriber. (Compl. ¶ 40.)

Infotech and Progressive are two of Plaintiffs' subscription agents (Compl. ¶ 47.) All of the Defendants are alleged to be associated with these two companies. (See generally Compl.) Defendant Bob Memon, for example, is alleged to be the owner of Infotech, (Compl. ¶ 60), while defendant Mohammad Iqbal Gaziani is allegedly the owner of Progressive, (Compl. ¶ 66). Plaintiffs claim that Defendants used Infotech and Progressive to perpetrate a subscription fraud scheme against them. (Compl. ¶ 48.) Specifically, Plaintiff allege that Defendants participated in an organized effort to order discounted subscriptions under the names of individuals, then resold the journals they received to institutions at higher prices. (See Compl. ¶¶ 48, 50.) Through this scheme, Defendants allegedly deprived Plaintiffs of the revenue they should have received if the institutions had paid full price for journal subscriptions. (See Compl. ¶¶ 48, 50.)

In total, Plaintiffs claim that defendants purchased 880 discount subscriptions between 1998 and 2010 that were intended for institutional, rather than personal use. (Compl. ¶¶ 52–53.) Plaintiffs' forty-six page Complaint provides some details about the transactions at issue and the purported nature of the scheme. Orders were placed by mail, by phone, and over the internet. (Compl. ¶ 55.) Defendants used their own names, as well as the names of friends and fictitious names. (Compl. ¶ 51.) Many of the subscriptions were ordered to Infotech's business address at 21 Meyer Avenue in Valley Stream, New York, which is co-owned by defendants Haroon Memon and Kulsoom Memon. (Compl. ¶¶ 77–79.) However, subscriptions were also sent to P.O. boxes and other business and residential addresses. (Compl. ¶ 96.)

Plaintiffs assert that there is evidence linking Defendants to the same fraudulent scheme. Specifically, Plaintiffs claim both Infotech and Progressive used 21 Meyers Avenue to purchase purportedly fraudulent discount subscriptions. (Compl. ¶¶ 89, 114.) In addition, Plaintiffs allege that Defendants are linked together through personal relationships, as evidenced by social media connections. (Compl. ¶ 122.) Finally, Plaintiffs claim that checks issued in sequence that were used to pay for certain discount rate subscriptions links a number of the defendants together. (Compl. ¶ 112.)

Below is a recitation of the specific allegations pertaining to each individually named defendant who now moves for judgment on the pleadings:

A. Haroon Memon

Haroon Memon is an owner of Infotech. (Compl. ¶ 60.) The Complaint alleges that he ordered discount subscriptions in his own name which were not for his own use. (Compl. ¶ 59.) The Complaint also alleges that he provided false names and addresses of others to Plaintiffs in order to obtain discount subscriptions. (Compl. ¶ 59.) Further, the Complaint alleges that Haroon Memon sold the discount subscriptions on a website he operated, www.wholesalebooks. net. (Compl. ¶ 59.) The Complaint also provides the names of the journal issues and the year they were purchased. (Compl. ¶¶ 80–86.)

B. Kulsoom Memon

The Complaint alleges, upon information and belief, that Kulsoom Memon is a co-owner of the house located at 21 Meyers Avenue, Infotech's business address. (Compl. ¶ 79.) An email as well as checks numbered in sequence that were received as payment for magazine subscriptions links him to the purchasing activities of several other defendants. (Compl. ¶¶ 112, 121.) The Complaint also provides the names and dates of various journals he purchased from Defendants. (See Compl. Schedule A.)

C. Hanif Memon

Hanif Memon is the son of Haroon Memon. The Complaint alleges, upon information and belief, that Hanif Memon is one of the “leaders” of Infotech. (Compl. ¶ 58.) The Complaint further alleges that Hanif Memon ordered and received discount subscriptions in his own name that were not for his personal use and registered websites on behalf of Infotech to resell journals to institutions. (Compl. ¶ 61, 94.) The Complaint also provides the names and dates of various journals that Hanif Memon individually purchased from Defendants. (See Compl. Schedule A.)

D. Samina Memon

The Complaint asserts that Samina Memon is one of the “leaders” of Infotech and the daughter of Haroon Memon. (Compl. ¶¶ 58, 62.). She resides at 21 Meyer Avenue, Infotech's business address, and ordered discount subscriptions in her own name to that address. (Compl. ¶¶ 16, 147–48.) Plaintiffs claim that Samina Memon ordered and received discount subscriptions in her name that were not for her personal use and provides the names and dates of various journals that she purchased. (See Compl. ¶¶ 62, 87, 88, Schedule A.)

E. Abdul Karar

The Complaint alleges upon information and belief that Abdul Karar is one of the “leaders” of Infotech. (Compl. ¶ 58.) Abdul Karar allegedly ordered and received discounted subscriptions in his own name that were not for his personal use. (Compl. ¶ 63.) He ordered discount subscriptions to a P.O. box used by other alleged co-conspirators to order similar discount subscriptions. (Compl. ¶ 96.) The Complaint also provides the names and dates of various journals that he purchased from Defendants. (See Compl. Schedule A.)

F. Muhammad Tobria

The Complaint alleges upon information and belief that Muhammad Tobria is one of the “leaders” of Infotech and that he ordered discounted subscriptions in his own name that were not for his personal use. (Compl. ¶¶ 58, 65.) The Complaint identifies the names and dates of the journals that he purchased and alleges that he used the same P.O. box to order subscriptions as Abdul Karar. (Compl...

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