Farag v. XYZ Two Way Radio Service Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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AHMED FARAG, MOHAMED ABDELHAMID,

PIERRE MANKIT CHAN, SI CHAN CHEN, YAU

CHEUNG, YUK CHOR LUI, et al., MEMORANDUM & ORDER

20-cv-4191(EK)(LB)

Plaintiffs,

-against-

XYZ TWO WAY RADIO SERVICE, INC.,

MOHAMED MOWAD, SANDY CHECK, JERRY

CHING HOR, AHMED MOHARREM, et al.,

Defendants.

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ERIC KOMITEE, United States District Judge:

Plaintiffs are a group of former shareholders of

defendant XYZ Two Way Radio Service, Inc., which provides

ground-transportation services. Plaintiffs allege that XYZ

wrongfully terminated them and forced them to sell their shares

at below-market prices. They sued XYZ and eight members of its

board of directors (including Mohamed Mowad, who is XYZ’s

president, in addition to serving on the board).1

Plaintiffs assert claims under the Racketeer

Influenced and Corrupt Organizations Act (“RICO”) and various

state laws. Defendants move to dismiss the complaint pursuant

to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For

1 The eight directors named in the complaint as individual defendants

are Mohamed Mowad, Sandy Check, Jerry Ching Hor, Ahmed Moharrem, Chi Yuen Lo,

Shengwe Zhang, Mohamed Salem, and Dindyal Rampersaud.

the following reasons, I grant the motion to dismiss for failure

to state a claim under Rule 12(b)(6).

Background

A. Factual Background

The following factual allegations are drawn from the

amended complaint. Defendant XYZ coordinates “black car” ground

transportation services. First Amended Compl. (“FAC”) ¶ 26, ECF

No. 2. Each share of XYZ entitles a shareholder to drive, or

rent to a third party, one car. Id. Plaintiffs allege that in

February 2019, they discovered that XYZ’s President, defendant

Mowad, “had committed various wrongdoings, unethical behavior,

breaches of fiduciary duty and theft, self-dealing” to benefit

himself and the Board at Plaintiffs’ expense. Id. ¶ 52.

The complaint is short on specifics, but Plaintiffs

allege (among other things) that Defendants engaged in

“oppressive conduct that destroy[ed] or substantially

diminish[ed] the value” of their shares, id. ¶ 42; threatened

them “on a daily basis . . . with arbitrary and unwarranted

fines” and the “expulsion and forced sale of their shares,” id.

¶ 45; “confiscate[d]” the shares, and “through self-dealing,

convert[ed] these shares to their own use and benefit.” Id.

¶ 40.

Plaintiffs contend that the forced redemption of their

shares, and their concomitant expulsion from the firm, were done

in retaliation for the plaintiffs having demanded an

investigation into Mowad’s earlier wrongful acts. Id. ¶ 54.

They say that Defendants filed a series of baseless grievances —

what the parties call “10-5 violations” — against Plaintiffs.2

Id. ¶ 58. Defendants then “terminated, expelled and fined all

of the Plaintiffs individually herein in excess of $20,000.00

without any cause, reason, or justification.” Id. ¶ 58.

Upon termination, Defendants forced Plaintiffs to sell

their shares of XYZ at “an extremely diluted value below the

fair market value of such shares.” Id. ¶ 54. Each share sold

for $5,000, which Plaintiffs claim was a “gross undervaluation.”

Id. ¶ 83. These actions, Plaintiffs allege, were all part of a

long-term “scheme,” beginning in 2010, to enable members of the

Board to obtain additional shares at artificially low prices.

Id. ¶¶ 77, 119.

B. Procedural History

This lawsuit is the latest in a series of actions —

heretofore all unsuccessful — by Plaintiffs and other former XYZ

shareholders. In September 2011, a group of former XYZ

2 Both parties use the term “10-5 violations” to describe the notices

XYZ sent Plaintiffs to inform them of disciplinary charges, so I refer to

them as such. The parties do not, however, explain why these notices are

called “10-5.” XYZ’s by-laws state that the Security Chairman is responsible

for issuing “10-5’s,” but the by-laws also do not define them. Copies of

these “10-5” notices, submitted by Plaintiffs, say “Security Charge/Hearing

Notice” at the top. See, e.g., Part 1 of Exs. to Pls.’ Opp. 12-13, ECF No.

20-1.

shareholders, including one current plaintiff (Abdelhamid), sued

XYZ and certain directors in New York State Supreme Court on

behalf of themselves and “all other Shareholders of XYZ.” See

Ex. 3 to Declaration of Deana Davidian (“Davidian Decl.”), ECF

No. 17-3. They challenged (1) their terminations and fines,

(2) the sale of their shares for “less than market value,”

(3) embezzlement of funds, and (4) Mowad’s acquisition of

certain XYZ shares. Id. The court dismissed the majority of

these claims in April 2013, see Ex. 4 to Davidian Decl., ECF No.

17-4, and the remainder in January 2014. See Ex. 5 to Davidian

Decl., ECF No. 17-5.3

In April 2019, several of the plaintiffs here sued

Defendants — again in New York State Supreme Court — alleging,

among other things, that (1) XYZ’s disciplinary charges against

them were “false,” (2) XYZ had imposed “unwarranted” fines in

“retaliation” for their having accused Mowad of misconduct, and

(3) their shares were sold for less than fair market value.4 See

Ex. 6 to Davidian Decl. 5-6, ECF No. 17-6. The court dismissed

3 The Supreme Court’s order dismissing this 2011 case mentions three

previous lawsuits involving similar subject matter. Ex. 4 to Davidian Decl.

12, ECF No. 17-4.

4 The plaintiffs in the April 2019 action included all of the plaintiffs

in this action except Tian, Hui, and Zou. See Ex. 6 to Davidian Decl. 2, ECF

No. 17-6.

this action in July 2019. See Ex. 11 to Davidian Decl. 7, ECF

No. 17-11.5

In December 2019, plaintiffs Abdelhamid, Abdelnaby,

Chan, Elbaridi, and Farag filed yet another lawsuit against XYZ

and Mowad, again in New York State Supreme Court. They

challenged their terminations, alleging violations of New York

Labor Law (“NYLL”), including that they were terminated “in

retaliation for the complaints [they] lodged” at the February

2019 annual XYZ shareholder meeting. Ex. 12 to Davidian Decl.

10, 13, 16, 19, ECF No. 17-12. In March 2020, those plaintiffs

stipulated to the dismissal of their NYLL claims with prejudice.

Ex. 14 to Davidian Decl. 2, ECF No. 17-14.

Defendants advise that, in addition to these

unfavorable terminations in prior cases, several plaintiffs have

waived claims against XYZ, either in the course of prior actions

or during their separation from the company.6 Defendants seek to

5 In dismissing the April 2019 complaint, the court held (1) that

plaintiffs’ terminations, the fines imposed against them, and the sale of

their radios were lawful, proper, and required or permitted by XYZ’s by-laws;

(2) that “there is no evidence” that the defendants breached any fiduciary

duty owed to plaintiffs; and (3) that plaintiffs’ other allegations,

including that Mowad abused his power, obtained a life insurance policy paid

for by XYZ, and diverted funds that XYZ recovered from a settlement, were

“conclusory and unsubstantiated.” See Ex. 11 to Davidian Decl. 7, ECF No.

17-11 (state court order dated July 25, 2019).

6 For example, Defendants point to (i) a release-of-claims form executed

and signed by plaintiff Tian, see Ex. 2 to Declaration of Yuk Man Lee (“Lee

Decl.”), ECF No. 18-2 (document entitled “RELEASE” in bold, capital letters,

stating that Tian “releases and discharges” XYZ, its directors, and officers

from all actions or claims relating to “any matter[,] cause or thing

dismiss certain claims based on those releases. Defs.’ Mem. in

Supp. of Mot. to Dismiss, ECF No. 16 (“Defs. Br.”), at 6, 21. I

do not consider the releases at this stage, however, because

these documents are outside the pleadings, and not all of the

relevant documents were made part of the court record in the

prior actions (such that I could take judicial notice of them

here).

Plaintiffs filed the instant action on September 9,

2020. ECF No. 1. They amended their complaint as of right one

day later. ECF No. 2. The amended complaint alleges eight

claims: one civil RICO claim, under 18 U.S.C. § 1962(c) and (d)

(Count Eight), and state-law claims for wrongful termination and

retaliation, breach of fiduciary duty, unjust enrichment,

conversion or embezzlement, and self-dealing (Counts One through

Seven). Id.

At a pre-motion conference in December 2021,

Plaintiffs heard Defendants’ articulated bases for dismissal and

then declined the Court’s invitation to amend the complaint

whatsoever from the beginning of the world to the day of the date of this

RELEASE . . . .”); (ii) legends appearing on checks made out to and deposited

by plaintiffs Bouhmaza, Xiao Hua Chen, and Zou, which state that by “cashing

this check, you are releasing all claims against XYZ and its directors [and]

officers,” see Exs. 4-9 to Lee Decl., ECF Nos. 18-4 to 18-9; and (iii) the

2020 stipulation pursuant to which plaintiffs Abdelhamid, Abdelnaby, Chan,

Elbaridi, and Farag, agreed to dismiss with prejudice their state-court

retaliation claims. Ex. 14 to Davidian Decl., ECF No. 17-14 (plaintiffs’

claim “for alleged violations of Section 215 of the NYLL . . . is dismissed

with prejudice”). Because these alleged releases are not part of the record

before me, I do not consider them in connection with this motion.

further. See Pre-Motion Conference Tr., ECF No. 32; see also

Defs.’ Ltr. Requesting a Pre-Motion Conference, ECF No. 12.

Defendants then moved to dismiss for lack of jurisdiction —

arguing Plaintiffs lack standing — and failure to state a claim.

Defs. Br.

Legal Standard

As discussed below and in the margin, Defendants’ RICO

standing argument presents no jurisdictional impediment and is

properly reviewed under Rule 12(b)(6), not 12(b)(1).7 In the

12(b)(6) analysis, I reach the merits on only the RICO claim, as

that is the sole basis for federal jurisdiction.

To overcome a Rule 12(b)(6) motion, a plaintiff must

plead factual allegations sufficient “to state a claim to relief

that is plausible on its face.” Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 570 (2007).8 A claim is plausible “when the

7 The Second Circuit has explained that RICO standing should be

addressed under Rule 12(b)(6): “lack of RICO standing does not divest the

district court of jurisdiction over the action, because RICO standing, unlike

other standing doctrines, is sufficiently intertwined with the merits of the

RICO claim that such a rule would turn the underlying merits questions into

jurisdictional issues.” Lerner v. Fleet Bank, N.A., 318 F.3d 113, 116–17 (2d

Cir. 2003), as amended (Apr. 16, 2003), abrogation on other grounds

recognized by Am. Psych. Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352,

359 (2d Cir. 2016); see also Am. Psych., 821 F.3d at 359 (“The Supreme Court

has recently clarified . . . that what has been called ‘statutory standing’

in fact is not a standing issue, but simply a question of whether the

particular plaintiff has a cause of action under the statute.” (citing

Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1387

(2014)).

8 Unless otherwise noted, when quoting judicial decisions this order

accepts all alterations and omits all citations, and internal quotation

marks.

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009). The Court must accept all factual allegations in the

complaint as true and draw all reasonable inferences in the

plaintiff’s favor. See Lundy v. Catholic Health Sys. of Long

Island Inc., 711 F.3d 106, 113 (2d Cir. 2013).

Discussion

Plaintiffs level their civil RICO claim against all

Defendants. For the reasons set forth below, this claim is

dismissed. Plaintiffs’ state-law claims are dismissed as

abandoned because Plaintiffs’ opposition brief does not address

Defendants’ arguments that Plaintiffs fail to state claims for

each such claim. See Pls.’ Mem. in Opp. to Mot. to Dismiss, ECF

No. 20 (“Pls. Opp.”).

A. RICO Claim

Plaintiffs allege that Defendants violated RICO by

conspiring to deprive them of the value of their XYZ stock. FAC

¶ 119. To establish a civil RICO claim, a plaintiff must allege

“(1) conduct, (2) of an enterprise, (3) through a pattern (4) of

racketeering activity,” as well as “injury to business or

property as a result of the RICO violation.” Lundy, 711 F.3d at

119.

1. RICO Standing

Defendants argue, as a threshold matter, that

Plaintiffs lack standing to bring a RICO claim because they are

alleging harms against XYZ and not against them personally.

This argument is not jurisdictional, for the reasons set out in

note 7 supra. It is also not correct, at least as applied to

the instant factual allegations.

“To satisfy RICO’s standing requirements, a plaintiff

must demonstrate (1) a violation of section 1962; (2) injury to

business or property; and (3) causation of the injury by the

violation.” Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135

(2d Cir. 2003). “The requirement that the injury be to the

plaintiff’s business or property means that the plaintiff must

show a proprietary type of damage.” Gotlin v. Lederman, 367 F.

Supp. 2d 349, 356 (E.D.N.Y. 2005).

It is generally settled that shareholders lack

standing to bring a claim in their individual capacities for

injuries to the corporation – i.e., claims that are derivative

of the corporation’s injury. See, e.g., Lakonia Mgmt. Ltd. v.

Meriwether, 106 F. Supp. 2d 540, 551 (S.D.N.Y. 2000) (“A

decrease in value of a holder’s shares which merely reflects the

decrease in value of the firm as a result of the alleged illegal

conduct is derivation rather than direct in nature and cannot

confer individual standing under RICO.”).

New York courts have applied Delaware’s framework to

determine whether a claim is direct or derivative:

[A] court should look to the nature of the wrong and

to whom the relief should go. The stockholder’s

claimed direct injury must be independent of any

alleged injury to the corporation. The stockholder

must demonstrate that the duty breached was owed to

the stockholder and that he or she can prevail without

showing an injury to the corporation.

Yudell v. Gilbert, 949 N.Y.S.2d 380, 384 (App. Div. 2012)

(adopting test framed by Delaware Supreme Court in Tooley v.

Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1039 (Del.

2004)). “Thus, under Tooley, a court should consider (1) who

suffered the alleged harm (the corporation or the stockholders);

and (2) who would receive the benefit of any recovery or other

remedy (the corporation or the stockholders individually).”

Yudell, 949 N.Y.S.2d at 384.

Plaintiffs satisfy this requirement because they

allege injuries that are distinct from injuries to the

corporation itself, and Plaintiffs themselves — not XYZ — would

receive the benefit of any recovery. They claim that Defendants

“confiscate[d]” and “convert[ed],” or improperly redeemed, the

shares they held, FAC ¶ 40, rather than simply diminishing the

value of those shares by looting the corporation. See, e.g.,

id. ¶¶ 45, 74-75, 119, 123. Indeed, the complaint is devoid of

any real suggestion that Defendants’ conduct diminished XYZ’s

enterprise value. Accordingly, they have statutory standing to

bring the RICO claim.

2. Pattern of Racketeering Activity

Despite having standing, Plaintiffs fail to state a

RICO claim because they do not allege a pattern of racketeering

activity. A pattern of racketeering activity must consist of

two or more predicate acts. 18 U.S.C. § 1961(5). Plaintiffs

allege that Defendants committed — as predicate acts — mail

fraud, 18 U.S.C. § 1341, and money laundering, 18 U.S.C. § 1957.

But Plaintiffs fail to plead a valid claim of mail fraud.9

Mail fraud requires “the existence of a fraudulent

scheme and a mailing in furtherance of the scheme.” Lundy, 711

F.3d at 119. The “gravamen” of mail fraud is the “scheme to

defraud.” Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639,

647 (2008). “Allegations of mail fraud . . . must be made with

the particularity required by Rule 9(b), which requires that the

complaint allege content, date, place, or intent of any alleged

misrepresentation.” Entretelas Americanas S.A. v. Soler, 840 F.

App’x 601, 603 (2d Cir. 2020), as amended (Jan. 7, 2021); see

also Fed. R. Civ. P. 9(b) (“[A] party must state with

9 Because Plaintiffs fail to make out a claim for mail fraud, I do not

reach the question of whether they have adequately alleged money laundering.

particularity the circumstances constituting fraud or

mistake.”).

“Pursuant to this higher pleading standard, the

complaint must adequately specify the statements it claims were

false or misleading, give particulars as to the respect in which

plaintiffs contend the statements were fraudulent, state when

and where the statements were made, and identify those

responsible for the statements.” Entretelas Americanas, 840 F.

App’x at 603-04. Where “multiple defendants are asked to

respond to allegations of fraud, the complaint should inform

each defendant of the nature of his alleged participation in the

fraud.” DiVittorio v. Equidyne Extractive Indus., Inc., 822

F.2d 1242, 1247 (2d Cir. 1987). The complaint falls well short

of meeting these standards.

First, the allegations of fraud are not particularized

as to any individual defendant other than Mowad. Plaintiffs are

required to “plead facts that describe each defendant’s

involvement in the fraud,” see LLM Bar Exam, LLC v. Barbri,

Inc., 271 F. Supp. 3d 547, 587 (S.D.N.Y. 2017), aff’d, 922 F.3d

136 (2d Cir. 2019), but the complaint describes only the

involvement of defendant Mowad. See generally FAC. Otherwise,

Plaintiffs simply refer generically to the conduct of

“Defendants.” E.g., id. ¶¶ 40-42, 55, 58-60, 65-66, 80, 119,

123-129. Even as to Mowad, the allegations are insufficient for

the reason that follows.

Second, Plaintiffs identify no fraudulent

communications and provide no detailed description of any

underlying scheme. The complaint speaks to the motive for the

alleged fraud, describing a “scheme” to “sell shares of stocks

[sic] . . . to members of the Board of Directors at an extremely

diluted and depressed value,” id. ¶ 74; to “criminally deprive

the value of [Plaintiffs’] stocks . . . for the ultimate illegal

financial gains of the [board] members,” id. ¶ 123; and to

“wrongfully terminate employment agreement [sic] of the

Plaintiffs with XYZ and purchase the capital stocks of the

Plaintiffs at a diluted price.” Id. ¶ 82. But the complaint

says next to nothing specific about the modus operandi of the

alleged fraud.

The only misrepresentations that Plaintiffs point to

are the allegedly false statements about Plaintiffs’ conduct —

the allegations underpinning the “10-5” violations. See FAC

¶ 50 (alleging “erroneous or false 10-5 violations against

Plaintiffs to fine or to terminate their employment”); see also

¶ 58 (Defendants issued “false, unwarranted and baseless

violations (10-5) against all Plaintiffs” and then “terminated,

expelled and fined all of the Plaintiffs individually herein in

excess of $20,000.00 without any cause, reason, or

justification.”). Plaintiffs do not explain what these “10-5

violations” were, where and when they were issued, or how they

were false. Cf. Sky Med. Supply Inc. v. SCS Support Claims

Servs., Inc., 17 F. Supp. 3d 207, 228 (E.D.N.Y. 2014) (mail

fraud claim contained sufficient particularity where it

identified specific reports containing fraudulent statements,

and specific false statements within those reports; date of

mailing and recipient; and “the manner in which those statements

were false by alleging specific facts that, if true, would

support the existence of a fraudulent scheme”). Moreover, it is

not clear how these statements could be calculated to deceive

Plaintiffs, given that they would have been aware (by

definition) of their own conduct.

Likewise, Plaintiffs provide no “detailed description”

of the underlying scheme. Curtis & Assocs., P.C. v. L. Offs. Of

David M. Bushman, Esq., 758 F. Supp. 2d 153, 176-77 (E.D.N.Y.

2010), aff’d sub nom. Curtis v. L. Offs. of David M. Bushman,

Esq., 443 F. App'x 582 (2d Cir. 2011); see also, e.g., A. Terzi

Productions, Inc. v. Theatrical Protective Union, 2 F. Supp. 2d

485, 500 (S.D.N.Y. 1998) (allegations of threats and abusive

conduct do not constitute scheme to defraud). For example, the

complaint provides no basis at all — let alone a plausible basis

— to support the allegation that the redemption price paid was

below fair market value. The complaint states, again in

conclusory fashion, that Plaintiffs’ shares were redeemed at

$5,000 per share, “a fraction of the[ir] true value.” But it

alleges nothing about the “true value” of the shares or why this

was a “gross undervaluation.” Id. ¶ 82-83.10 Further, the

complaint does not allege which board members participated, or

how. Again, Plaintiffs fall back on conclusions. E.g., id.

¶ 94 (“Defendants have improperly deprived the shareholders of

their money and their property through the use of trickery,

deceit and fraudulent practices.”). These allegations are not

sufficiently particularized to meet Rule 9(b)’s higher pleading

standard.

Without plausibly alleging mail fraud, Plaintiffs

cannot establish two or more predicate acts to show a “pattern

10 In opposing the motion to dismiss, Plaintiffs filed a series of

declarations providing supplemental information regarding the value of their

shares and details about Defendants’ alleged wrongdoing. See Exs. 1-2 to

Pls. Opp., ECF Nos. 20-1 to 20-2. These declarations were prepared

subsequent to the filing of Defendants’ motion to dismiss. “Because a Rule

12(b)(6) motion challenges the complaint as presented by the plaintiff,

taking no account of its basis in evidence, a court adjudicating such a

motion may review only a narrow universe of materials,” Goel v. Bunge, Ltd.,

820 F.3d 554, 559 (2d Cir. 2016), comprised of “the facts alleged in the

complaint, documents attached to the complaint as exhibits, and documents

incorporated by reference in the complaint.” United States ex rel. Foreman

v. AECOM, 19 F.4th 85, 106 (2d Cir. 2021). “A district court therefore errs

when it considers affidavits and exhibits submitted by defendants, or relies

on factual allegations contained in legal briefs or memoranda in ruling on a

12(b)(6) motion to dismiss.” Id. at 107. Because Plaintiffs’ additional

materials are outside the pleadings and not “integral” to the complaint, I

have not considered them in deciding this motion. See e.g., Toretto v.

Donnelley Fin. Sols., Inc., No. 20-CV-2667, 2022 WL 348412, at *5 (S.D.N.Y.

Feb. 4, 2022) (declining to consider a document that was not integral to the

complaint).

of racketeering activity” under Section 1961(5).11 Their RICO

claim thus fails as a matter of law and is dismissed with

prejudice.

Dismissing the RICO claim with prejudice is

appropriate because Plaintiffs were given notice of Defendants’

specific objections and offered the opportunity to amend, but

declined multiple times. See City of Pontiac Policemen's &

Firemen's Retirement Sys. v. UBS AG, 752 F.3d 173, 188 (2d Cir.

2014) (district court’s denial of leave to amend and dismissal

with prejudice were appropriate where plaintiffs had an

opportunity to amend their complaint after notice of pleading

deficiencies). At the pre-motion conference, after Defendants

set forth the various bases for dismissal, I asked Plaintiffs

whether they wished to amend; they said no.12 Based on that

demurrer, I set a briefing schedule for this motion.

11 Defendants do not argue that Plaintiffs fail to allege money

laundering. The Court need not reach this question, however, because a

pattern of racketeering requires two or more predicate acts.

12 At the beginning of the conference, I explained that the purpose of

pre-motion conference is “to circumvent the situation where a motion to

dismiss is filed, is fully briefed, is orally argued, and only then does the

plaintiff identify certain proposed amendments . . . to the pleadings,

thereby necessitating that we start the entire cycle over again,” Pre-Motion

Conference Tr. 3:2-7, ECF No. 32. I clarified that the pre-motion conference

was not a venue to argue the merits of the motion to dismiss; rather, “the

ultimate question” for Plaintiffs would be whether “they want to proceed to

briefing and arguing the motion based on complaint as is . . . or, having

heard a preview of the defense’s arguments, [whether they] want to avail

[themselves] of right to amend at this stage?” Id. at 3:23-4:7; see also id.

at 17:6-8 (reminding counsel that the “purpose of the premotion conference .

. . is to decide whether you want to amend the complaint now or not”). After

It was a surprise, then, when Plaintiffs’ opposition

brief requested leave to amend as an “alternative” to granting

Defendants’ motion, see Pls. Opp. 25, but Plaintiffs provided no

proposed amendments. This violates not only Rule III.A.1 of

this Court’s Individual Rules (requiring a proposed complaint

and redline), but also established procedure. See Fed. R. Civ.

Pro. 7(b) (“A request for a court order must be made by motion.

The motion must . . . state with particularity the grounds for

seeking the order.”); see also Credit Chequers Info. Servs.,

Inc. v. CBA, Inc., 205 F.3d 1322, 1322 (2d Cir. 2000)

(“[A]ppellant has given no indication of what amendment is

proposed that would state a valid claim for relief.”).

Plaintiffs again received notice, and an opportunity

to request leave to amend, at oral argument on this motion. I

asked Plaintiffs’ counsel to confirm whether Plaintiffs were

seeking to amend the complaint: “[L]et me just make sure the

record is clear here. . . . [I]n response to my question, are

you seeking leave to amend now? You’re saying in response, no,

we are not seeking leave to amend now; is that correct?” Oral

going through each element of a RICO claim, the heightened pleading standard

under Rule 9(b), and specifically asking Plaintiffs’ counsel whether he

wanted to amend the RICO claim, counsel replied that “we believe, at the

pleading stage, we have sufficiently alleged” it. Id. at 18:6-7. At the end

of the conference, I presented the issue to counsel again: “[T]hat is your

choice and if you want to say, we rest on the complaint as currently drafted,

then we’re happy to set a briefing schedule right now . . . .” Id. at 26:10-

13. Counsel stated: “We think we have pleaded enough. Whether or not we can

ultimately win, that’s a different story. We think we have met . . . the

very beginning hurdle to allege a civil RICO claim.” Id. at 27:11-13.

Argument Tr. 17:18-22, ECF No. 33. Counsel replied, “Yes . . .

because we think we have already alleged sufficiently . . . at

least for me sustain a . . . motion to dismiss.” Id. at 17:23-

25. Plaintiffs maintained their position that they sufficiently

alleged a RICO violation, but said they wished to amend, after a

decision, if the Court granted Defendants’ motion. Id. at 18:1-

4.13 That kind of optionality, however, is not and should not be

available at this late stage.

For the reasons set out above, Plaintiffs’ RICO claim

is dismissed with prejudice.14

13 Plaintiffs’ counsel stated: “[A]fter you render a decision, and you

think there’s . . . a deficiency there, . . . we would like to be given an

opportunity to amend the complaint to address those deficiencies.” See also

id. at 27:4-5 (Q: “So are you asking for leave to amend right now? A: “I’m

not asking for leave to amend on the elements that the plaintiff has [sic].”

Q: “[Y]ou are, or you are not?” A: “[A]fter you make a decision, and if you

think we . . . have not alleged sufficient acts to sustain mail fraud, then

we’ll be asking for the opportunity to amend. But currently we are confident

that we have already . . . stated sufficient facts . . . to sustain our

allegations, at least to sustain against a motion to dismiss.”).

14 I note that, in response to the Court’s directive to submit briefing

on the question of dismissal with or without prejudice, Oral Argument Tr. 23-

24, ECF No. 33. Plaintiffs’ letter addressed the different question of

whether leave to amend would be appropriate. Pls’. Ltr. dated March 2, 2022,

ECF No. 29. However, during oral argument Plaintiffs’ counsel expressly

confirmed that he was requesting that dismissal be without prejudice – not

for leave to amend. Id. at 18:5-10 (Q: “I think you’re really saying that

any dismissal of the complaint should be without prejudice.” A: “Correct.” Q:

“Alright, so we don’t . . . have a live request for leave to amend.”). To

the extent Plaintiffs’ letter is a belated request to amend the complaint,

that request is denied due to Plaintiffs’ undue delay, multiple opportunities

to amend, and prejudice to Defendants. E.g., Ruotolo v. City of New York,

514 F.3d 184, 191 (2d Cir. 2008) (affirming district court’s denial of leave

to amend, based on plaintiff’s “delay in seeking leave to amend was

inexcusable given the previous opportunities to amend, and the defendants’

burden and prejudice”).

B. State-Law Claims

Plaintiffs’ state-law claims are dismissed because

Plaintiffs have abandoned them. “District courts in this

circuit have found that a plaintiff’s failure to respond to

contentions raised in a motion to dismiss claims constitute an

abandonment of those claims.” Laface v. E. Suffolk Boces, 349

F. Supp. 3d 126, 161 (E.D.N.Y. 2018); see also, e.g., Burchette

v. Abercrombie & Fitch Stores, Inc., 8-CV-8786, 2009 WL 856682,

at *9 (S.D.N.Y. Mar. 30, 2009) (dismissing, as abandoned, claim

that plaintiff failed to address in her opposition to

defendant’s motion to dismiss); Hanig v. Yorktown Cent. Sch.

Dist., 384 F. Supp. 2d 710, 722–23 (S.D.N.Y. 2005) (“Because

Plaintiff did not address Defendant’s motion to dismiss with

regard to this claim, it is deemed abandoned.”); Lipton v. Cty.

of Orange, 315 F. Supp. 2d 434, 446 (S.D.N.Y. 2004) (“This Court

may, and generally will, deem a claim abandoned when a plaintiff

fails to respond to a defendant’s arguments that the claim

should be dismissed.”).

Here, Defendants moved to dismiss each of Plaintiffs’

state-law claims – Counts One through Seven – for failure to

state a claim. See Defs. Br. 21-29. Yet Plaintiffs’ opposition

brief did not address any of Defendants’ specific arguments,

instead stating simply that “Plaintiffs have stated a claim for

each and every cause of action listed in the Complaint.” Pls.

Opp. 26.15 Plaintiffs also stated that they “are not seeking

damages for any claims beyond the RICO cause of action.” Id.

The Court thus deems these claims abandoned, and they are

dismissed with prejudice. See e.g., Laface, 349 F. Supp. 3d at

161-62 (dismissing abandoned claim with prejudice); Rae v.

County of Suffolk, 693 F. Supp. 2d 217, 230 (E.D.N.Y. 2010)

(same).

Conclusion

For these reasons, Defendants’ motion to dismiss is

GRANTED. Plaintiffs’ complaint is dismissed with prejudice.

The Clerk of Court is respectfully directed to enter judgment

and close the case.

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United States District Judge

Dated: August 1, 2022

Brooklyn, New York

15 At oral argument, Plaintiffs acknowledged that they did not address

these arguments. Plaintiffs’ counsel said Plaintiffs “didn’t respond [to the

arguments] because we don’t think they deserve a response.” Oral Argument

Tr. 14:3-4, ECF No. 33; see also id. 16:3-7 (“Even if we do not respond, it

doesn’t mean we abandon the claims. We just simply not worth [sic] . . . any

response here.”).