Odishelidze v. Aetna Life & Cas Co., 87-1901

• Citation: 853 F.2d 21
• Decision Date: 03 August 1988
• Docket Number: No. 87-1901,87-1901
• Parties: 1988-2 Trade Cases 68,167, 11 Fed.R.Serv.3d 1410, RICO Bus.Disp.Guide 7019 Alexander ODISHELIDZE, Plaintiff, Appellant, v. AETNA LIFE & CASUALTY CO., et al., Defendants, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 21

853 F.2d 21

1988-2 Trade Cases 68,167, 11 Fed.R.Serv.3d 1410,

RICO Bus.Disp.Guide 7019

Alexander ODISHELIDZE, Plaintiff, Appellant, v. AETNA LIFE & CASUALTY CO., et al., Defendants, Appellees.

No. 87-1901.

United States Court of Appeals, First Circuit.

Submitted July 11, 1988.

Decided Aug. 3, 1988.

Harry Anduze Montano, Santurce, P.R., on brief, for plaintiff, appellant.

David P. Freedman, Edgar Cartagena-Santiago, Jorge I. Peirats, and O'Neill & Borges, Hato Rey, P.R., on brief, for defendants, appellees.

Before CAMPBELL, Chief Judge, COFFIN and SELYA, Circuit Judges.

PER CURIAM.

Appellant, Alexander Odishelidze, commenced an action in the district court for the District of Puerto Rico on November 18, 1985. He asserted jurisdiction pursuant to 28 U.S.C. Secs. 1331 (federal question) and 1332 (diversity). He alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sec. 1962(c), the Sherman Antitrust Act, 15 U.S.C. Sec. 1, and various state law claims. Odishelidze also asserted pendent jurisdiction regarding the state law claims. As defendants, Odishelidze named Aetna Life & Casualty Co., and its subsidiaries Aetna Variable Annuity Life Insurance Compana [sic] a.k.a. and/or d.b.a. Aetna Life Insurance and Annuity Company, Aetna Financial Services, Inc. and Aetna Life Insurance Company; in addition, he named as individual defendants William O. Bailey, Dean E. Wolcott, James R. Bailey, Thomas L. West and Stanley W. Thompson--all officers or employees of the above corporations.

BACKGROUND

Odishelidze, a resident of Puerto Rico, was an exclusive general agent for Aetna in Puerto Rico from 1971 to 1976 and from 1978 until 1982. In 1981, as part of a reorganization of its operations, Aetna decided to close all of its general agencies throughout the country. As a result, Aetna, in 1982, terminated Odishelidze's general agency and offered him a position as the manager of a newly created office within Aetna--the Puerto Rico Personal Financial Security Division Marketing Office. In this position, Odishelidze was an employee of Aetna. In 1984, Aetna decided to close the Puerto Rico marketing office. According to Aetna, it offered Odishelidze a position in Florida, but Odishelidze turned it down and was discharged. However, Odishelidze alleges that his employment was terminated in 1984 after he unsuccessfully attempted to secure adequate conditions for his San Juan office.

Basically, Odishelidze claims that Aetna accomplished the termination of the general agencies by fraudulent misrepresentations and inducements concerning salary and other benefits he would receive as an employee. He alleges that defendants conspired to deprive him of his "vested interests, property and contractual rights" as an exclusive agent. See Complaint, p 14. This "concerted activity" allegedly was in restraint of trade because general agents were frozen out or boycotted while Aetna gained more control of the market. Odishelidze also claimed that this same behavior violated RICO because the fraudulent representations were "racketeering activities" carried out through use of the wires and mail, see 18 U.S.C. Sec. 1961(1)(B), and harmed him in his business. See id. Sec. 1964(c).

On May 8, 1986, Aetna moved to dismiss the complaint for, among other reasons not relevant here, failure to state a claim upon which relief could be granted. See Fed.R.Civ.P. 12(b)(6). Aetna addressed both the state and federal claims in its Rule 12(b)(6) motion. On August 26, 1987, the district court dismissed the complaint. Odishelidze v. Aetna Life & Casualty Co., 668 F.Supp. 94 (D.P.R. 1987). It found that Odishelidze had failed to state both a cognizable antitrust claim and an actionable civil RICO cause of action. It also found that diversity jurisdiction was lacking due to the averment in Odishelidze's complaint that "Aetna Life and Casualty Co. is a corporation organized and existing under the laws of the State of Connecticut, with its principal place of business in Puerto Rico." 668 F.Supp. at 96 n. 2 (emphasis in On September 15, 1987, Odishelidze filed a motion for reconsideration and to vacate judgment. In addition to rearguing his antitrust and RICO claims, he argued that diversity jurisdiction did in fact exist. He stated that the information in paragraph 3 of his complaint that Aetna Life & Casualty Co. had its principal place of business in "Puerto Rico" was a typographical error and that the paragraph was meant to read that the principal place of business of Aetna Life & Casualty Co., as with all the other corporate defendants, was in Connecticut, thereby creating proper diversity jurisdiction. The court denied this motion, without opinion, on September 23, 1987. On September 23, Odishelidze filed a timely notice of appeal both from the original dismissal of his complaint and the denial of his motion for reconsideration.

                original). 1   The court, therefore, did not consider the merits of the state law claims, dismissing them for lack of pendent jurisdiction.   Id. at 95, 99.  It also ordered the complaint dismissed "for failure to plead a cognizable claim under federal jurisdiction" and noted that the dismissal was "without prejudice of Odishelidze filing another action in the proper local forum."   Id. at 99 (emphasis added)
                

DISCUSSION

1. The Federal Claims

We affirm the dismissal of Odishelidze's antitrust and RICO claims. As for the antitrust claim, Odishelidze's failure to state a "contract, combination... or conspiracy" is obvious and fatal to his Sec. 1 claim. ² Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). Copperweld clearly rejected the intra-enterprise conspiracy doctrine. That is, for Sec. 1 purposes, the activities of a corporation and its wholly owned subsidiaries are viewed as that of a single enterprise. Id. at 771, 104 S.Ct. at 2741-42. Because unilateral action is not prohibited by Sec. 1 of the Sherman Act, Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984), the actions of a parent corporation, its subsidiaries or sister corporations, and its employees cannot be considered concerted action. See VII P. Areeda, Antitrust Law paragraphs 1464(f), 1470 (1986) (Copperweld holding applies to sister corporations owned by a third entity and to officers or employees of those corporations, citing cases).

As for Odishelidze's RICO claim, it is clear that under Sec. 1962(c) ³ the "person" alleged to be engaged in a racketeering activity (the defendant, that is) must be an entity distinct from the "enterprise;" under Sec. 1962(c) the enterprise is not liable. Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 29-30 (1st Cir.1986). That is, the Aetna companies and their officers or employees (the named defendants) cannot be the entity that conducts its own affairs through a pattern of racketeering activity. See id. at 30. Throughout his brief and pleadings below, Odishelidze has continued to characterize the enterprise as Aetna and its subsidiaries and employees without specifically identifying a defendant, distinct from the enterprise, which conducted the enterprise's activities through a pattern of racketeering activity. For example, in paragraph 28 of his complaint, Odishelidze states:

The defendant corporation and its named subsidiaries, its officers, directors, and employees, to wit: Aetna Life and Casualty Company; Aetna Variable Annuity Life Insurance Company; Aetna Financial Services, Inc.; Aetna Life Insurance Company; William O. Bailey; Dean E. Wolcott; James R. Bailey, Thomas L. West; Edward F. Dwight; Stanley W. Thompson and other [sic] agreed and entered as employees and agents of the defendant enterprise into a pattern of activities directed to defraud plaintiff...."

As the court in Schofield stated, " 'It is only a person, or one associated with an enterprise, not the enterprise itself, who can violate the provisions of the section.' " Id. at 30 (quoting Van Schaick v. Church of Scientology of California, 535 F.Supp. 1125, 1136 (D.Mass.1982)).

2. Diversity Jurisdiction

Fed.R.Civ.P. 8(a)(1) requires a complaint to set forth "a short and plain statement of the grounds upon which the court's jurisdiction depends...." Under this standard, Odishelidze's complaint technically is defective because it erroneously designates the principal place of business of Aetna Life & Casualty Co. as Puerto Rico instead of Connecticut. ⁴ See 28 U.S.C. Sec. 1332(c); District of Columbia v. Transamerica Insurance Co., 797 F.2d 1041, 1043-44 (D.C.Cir.1986) (in a properly pleaded diversity action against a corporate defendant, plaintiff will advert to both factors set out in Sec. 1332(c)--place of incorporation and principal place of business). Although Fed.R.Civ.P. 12(h)(3) states that "[w]henever it appears ... that the court lacks jurisdiction of the subject matter, the court shall dismiss the action," courts should heed the admonition of Fed.R.Civ.P. 15 to allow amendments "freely" if it appears possible that plaintiff can correct the jurisdictional defect. See 3 J. Moore, Moore's Federal Practice p 15.10 (2d ed. 1985) (footnote omitted).

Indeed, amendment to show that diversity jurisdiction actually exists, although defectively pleaded, is specifically allowed by 28 U.S.C. Sec. 1653 which provides that "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." See Moore, supra, p 15.09, at 15-102. This statute is normally construed liberally so as to avoid dismissals of complaints on technical grounds. Topp v. CompAir, Inc., 814 F.2d 830, 832 n. 2 (1st Cir.1987) (citation omitted). Thus, such technical defects in jurisdictional pleadings usually are not fatal. Id.

Even though a final judgment had already been entered dismissing Odishelidze's complaint, he is not barred from seeking to cure the defective jurisdictional allegations. See...