Town of Gulf Stream, On Its Own Behalf And, Wantman Grp., Inc. v. O'Boyle

• Decision Date: 21 June 2016
• Docket Number: No. 15-13433,15-13433
• Parties: TOWN OF GULF STREAM, a municipality organized and existing under the laws of Florida on its own behalf and on behalf of those municipalities similarly situated, WANTMAN GROUP, INC., a domestic company on its own behalf and on behalf of those companies similarly situated, Plaintiffs - Appellants, v. MARTIN E. O'BOYLE, an individual, CHRISTOPHER O'HARE, an individual, WILLIAM RING, an individual, JONATHAN O'BOYLE, an individual, DENISE DEMARTINI, an individual, GIOVANI MESA, an individual, et al., Defendants - Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

TOWN OF GULF STREAM, a municipality organized and existing under the lawsof Florida on its own behalf and on behalf of those municipalities similarly situated,WANTMAN GROUP, INC., a domestic company on its own behalfand on behalf of those companies similarly situated, Plaintiffs - Appellants, v. MARTIN E. O'BOYLE, an individual,CHRISTOPHER O'HARE, an individual,WILLIAM RING, an individual, JONATHAN O'BOYLE,an individual, DENISE DEMARTINI, an individual,GIOVANI MESA, an individual, et al., Defendants - Appellees.

No. 15-13433

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

June 21, 2016

[DO NOT PUBLISH]

Non-Argument Calendar

D.C. Docket No. 9:15-cv-80182-KAM Appeal from the United States District Court for the Southern District of Florida

Before WILSON, ROSENBAUM and JILL PRYOR, Circuit Judges.

PER CURIAM:

The Town of Gulf Stream, Florida ("Gulf Stream" or the "town") and its contractor Wantman Group, Inc. ("Wantman") (collectively the "plaintiffs") appeal the dismissal of their class action complaint¹ under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(c), 1964(c). The plaintiffs' complaint was premised on, among other actions, the defendants' alleged efforts to inundate the town with public records requests in an attempt to cause a violation of Florida's Public Records Act, Fla. Stat. § 119.07 (the "Act"), and then to threaten litigation and the possibility of liability for attorneys' fees toextort an unreasonable settlement. The district court recognized the "very difficult situation" the plaintiffs allegedly found themselves in, Doc. 47 at 4, but nevertheless held that the plaintiffs failed to allege at least two predicate acts in support of their RICO claim. After careful review, we agree that the plaintiffs' allegations, although troubling, fail to state a claim under RICO. Therefore, we affirm.

I.

Gulf Stream is a tiny town of under 1,000 residents and just 17 full time employees.² The defendants—Martin E. O'Boyle, William F. Ring, Christopher O'Hare, Jonathan R. O'Boyle, Denise DeMartini, and their associated companies—pummeled the town with nearly 2,000 public records requests, many of them frivolous, with no intention of actually reviewing the results. Examples of such requests included

• "All email addresses created or received by the Town of Gulf Stream," Compl. Ex. B, Doc. 4-2 at 2 (No. 1);

• "All phone numbers in the town's records," id. (No.3); and

• "Any and all records containing a social security number," id. at 10, No. 322.

These and other bogus requests were "an essential first-step" in a "scheme to defraud and extort money from the class members." Compl. ¶ 37, Doc. 1.

The purpose of this onslaught of records requests was to induce a violation of the Act and then threaten a lawsuit, or actually file one, which could entitle the defendants to prevailing party attorneys' fees under Fla. Stat. § 119.12.³ "It is this threat of prevailing party attorneys' fees," the plaintiffs alleged, "that is the nucleus around which the Defendants created their scheme to defraud and extort, and organized their RICO Enterprise to carry out that scheme." Compl. ¶ 52, Doc. 1. The defendants then demanded unreasonable settlements and threatened to file more frivolous records requests if the town did not settle the claims. Since 2013, the defendants have filed 43 public records suits against the town.⁴

In addition, defendant O'Hare employed aliases when making public records requests to avoid incurring a special service charge the town would have otherwise imposed. Florida authorizes the town to condition public records production on the payment of certain costs and expenses, but only "[i]f the nature or volume of public records requested to be inspected or copied . . . is such as to require extensive use of information technology resources or extensive clerical or supervisory assistance by personnel of the agency involved, or both." Fla. Stat. § 119.07(4)(d). When the town began to assess special service charges against O'Hare for his voluminous requests, he started using fake names to hide his identity.

The defendants also lodged a bogus public records request with Wantman, a government contractor also covered by the Act. See Fla. Stat. § 119.0701.⁵ When the defendants did not receive the document requested, they filed suit and promptly demanded nearly $4,000 to settle the claim.

Based on these and similar allegations, the plaintiffs filed a class action complaint on their own behalf and on behalf of other similarly situated state or local municipalities, municipal agencies, or private contractors. They alleged that each defendant committed at least one predicate act of mail fraud, wire fraud, or extortion, constituting a pattern of racketeering activity in violation of RICO, 18 U.S.C. §§ 1962(c), 1964(c). The defendants moved to dismiss arguing, among other points, that neither filing frivolous public records requests nor threatening to file or actually filing a lawsuit is a predicate act under RICO. The district court agreed, granted the defendants' motions to dismiss, and dismissed the case with prejudice. This appeal followed.

II.

"We review de novo the district court's grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim, accepting the complaint's allegations as true and construing them in the light most favorable to the plaintiff." Chaparro v. Carnival Corp., 693 F.3d 1333, 1335 (11th Cir. 2012) (internal quotation marks and citation omitted). A "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint is insufficient if it "tenders naked assertions devoid of further factual enhancement." Id. (internal quotations marks and citationomitted). To survive a motion to dismiss, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

III.

To establish a federal civil RICO violation under §§ 1962(c) and 1964(c), the plaintiffs must prove the conduct of an enterprise through a pattern of racketeering activity and an injury to business or property by reason of the RICO enterprise. See Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1282-83 (11th Cir. 2006). The district court dismissed the plaintiffs' RICO claim on the ground that the plaintiffs failed to allege a pattern of racketeering activity. We therefore focus on this element of the claim.

A RICO "pattern of racketeering activity" requires at least two "qualifying predicate acts," each of which constitutes "a violation of one of the state or federal laws described in 18 U.S.C. § 1961(1)." Raney v. Allstate Ins. Co., 370 F.3d 1086, 1087 (11th Cir. 2004). The plaintiffs argue that they have adequately pled two types of predicate acts: (1) extortion under the Hobbs Act, 18 U.S.C. § 1951, and (2) mail and wire fraud under 18 U.S.C. §§ 1341, 1343. See 18 U.S.C. § 1961(1) (listing violations of the Hobbs Act and the mail and wire fraud statutes). We consider each type of predicate act in turn.

A.

The Hobbs Act prohibits extortion, defined as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." 18 U.S.C. § 1951(b)(2). The plaintiffs contend that the defendants' "systematic use of unjustified lawsuits as part of a more extensive extortion scheme to obtain money" supports a claim of extortion under the Hobbs Act. Appellants' Br. at 18. Our precedent commands otherwise.

We held in United States v. Pendergraft that a "threat to file litigation against [the government], even if made in bad faith and supported by false affidavits, [was] not 'wrongful' within the meaning of the Hobbs Act." 297 F.3d 1198, 1208 (11th Cir. 2002). The issue was whether a threat to add a bogus claim in a federal lawsuit against a county government in an effort to force a large settlement could support a Hobbs Act violation. "[U]nder our system," we explained, "parties are encouraged to resort to courts for the redress of wrongs and the enforcement of rights." Id. at 1206. Thus, "litigants may be sanctioned for only the most frivolous of actions." Id. And even then, such sanctions—through tort actions for malicious prosecution, for example—"are heavily disfavored." Id. We also expressed confidence in the "time-tested procedures" of the courts to resolve disputes in litigation by "separating validity from invalidity, honesty fromdishonesty." Id. Moreover, citizens have a constitutional right to petition the government for redress under the First Amendment. Id. at 1207. For these reasons, we rejected the contention that a threat to file litigation against the government can trigger Hobbs Act liability. Id. at 1206-1207.

We clarified in Raney, a civil RICO case, that Pendergraft applies both to threats of litigation and actual litigation. Raney, 370 F.3d at 1088. In Raney, the plaintiff alleged that the defendants filed frivolous lawsuits in an effort to extort money from him. Id. at 1087. We held unequivocally that "the filing of a lawsuit may not state a claim for extortion under the federal RICO statutes." Id.

The material difference between this case and Pendergraft or Raney is the number of times the defendants allegedly threatened to file a lawsuit or actually sued in an effort to extort money. Indeed, assuming the allegations in the complaint are true, as we must, the defendants have engaged in a pattern of frivolous litigation activity while abusing, on a grand scale, their statutory right to request public documents from the government. Nonetheless, the same concerns driving our decisions in Pendergraft and Raney are equally present here. Our judicial system, and the Act in particular, encourages citizens to use the courts to...