# Root, Inc. v. Silver

> District Court, S.D. Ohio · January 8, 2024

URL: https://www.frixlaw.com/law-library/cases/10383976

## Case

- **Court:** District Court, S.D. Ohio
- **Decided:** January 8, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10383976

## How later opinions describe it (automated extraction)

- finding that continuity was established because, if the defendant had not been caught, there was no reason to believe he would have stopped submitting fraudulent insurance claims

## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

ROOT, INC., et al.,

:
Plaintiffs,

Case No. 2:23-cv-512

v. Judge Sarah D. Morrison

Magistrate Judge Elizabeth A.

Preston Deavers

BRINSON CALEB SILVER, et al.,
:

Defendants.

OPINION AND ORDER
Root, Inc., Caret Holdings, Inc., and Root Insurance Agency, LLC (together,
“Root”) filed this action asserting claims of racketeering, fraud, conversion, theft,
breach of contract, breach of fiduciary duties, and civil conspiracy. (SAC, ECF No.
173.) Root asserts its claims against seven defendants, which can be grouped into
three. First, Brinson Caleb “BC” Silver, Collateral Damage, LLC, and Eclipse Home
Design, LLC are the “Silver Defendants.” Next, William Campbell, Quantasy &
Associates, LLC, and Quantasy, LLC are the “Quantasy Defendants.” Finally, Paige
McDaniel stands alone.
This matter is before the Court on the Quantasy Defendants’ Motion to
Dismiss (Mot. Dismiss, ECF No. 94), the Silver Defendants’ Motion to Stay
Proceedings (ECF No. 137), and the Quantasy Defendants’ Motion to Quash (ECF
No. 185). For the reasons below, the Motion to Dismiss is GRANTED in part and
DENIED in part; the Motion to Stay is DENIED as moot; and the Motion to
Quash is DENIED in part and REFERRED in part.
I. MOTION TO DISMISS
A. Factual Background1

1. SOW #1
Root is a publicly-traded insurance technology company based in Columbus,
Ohio. (SAC, ¶¶ 1, 11–13.) In November 2021, Root hired BC Silver to act as its Chief
Marketing Officer. (Id., ¶ 2.) Mr. Silver was previously acquainted with William
Campbell, CEO of Los Angeles-based advertising firm Quantasy. (Id., ¶¶ 26, 17–18.)
Two weeks after joining Root, Mr. Silver contacted Mr. Campbell about Root
retaining Quantasy as a vendor. (Id., ¶ 26.) The two negotiated a scope of work
(“SOW”) agreement directly. (Id., ¶¶ 27–29.)

On February 3, 2022, Root and Quantasy executed SOW #1. (Id., ¶ 30; see
also SOW #1, ECF No. 20-3.) Jill Neely, VP Creative, signed for Root; Mr. Campbell
signed for Quantasy. (SOW #1, PAGEID # 154.) Under SOW #1, Quantasy was to
provide specific services under the banners of Client Partnerships, Brand Strategy,
and Creative Services/Development Support. (Id., PAGEID # 151–52.) The project
was to be staffed by eighteen individuals from Quantasy’s Account Management,

1 All well-pled factual allegations in the Second Amended Complaint are
considered as true for purposes of a Rule 12(b)(6) motion. See Gavitt v. Born, 835
F.3d 623, 639–40 (6th Cir. 2016). This summary draws from the Second Amended
Complaint and the documents integral to and incorporated in it. (Per Root’s Motion
for Leave to File Second Amended Complaint, the exhibits attached to the First
Amended Complaint (ECF Nos. 20-1–20-42) apply identically to the Second. See
ECF No. 165, PAGEID # 1379.) As to the portion of the motion made under Rule
12(b)(2), the Court also considers the sworn declaration submitted by Root.
Strategy, Creative, Social, and Program Management teams. (/d., PAGEID # 153.)
Root was to pay a total fee of $1,184,445, representing ten-thousand man-hours
billed at blended rates of $100—$150 per hour. (/d., PAGEID # 153.) The fee would
be paid in three installments: $473,778 upon commencement; $414,555.75 on
February 18, 2022; and $296,111.25 on March 1, 2022. Udd., PAGEID # 154; see also
SAC 9 30.) Quantasy sent Root an initial invoice requesting $473,778 for “Brand
Services.” (ECF No. 20-4.) Root paid Quantasy’s invoice on February 9. (SAC, 33.)
Before the initial invoice was paid, Mr. Silver sent Mr. Campbell the
following message on the private messaging platform, WhatsApp:

Hey, hope all is well.

Account Number a
D Routing Numbers a
Collateral Damage LLC
45 South Arroyo Pkwy
Pasadena, Ca 91105

(SAC, § 32; ECF No. 20-5.) Then, on February 11, Mr. Silver sent another
WhatsApp message to Mr. Campbell. Ud., J 34.) This one contained a PDF labeled
Quantasy Invoice — January. (ECF No. 20-7.) It sought $153,778, payable to
Collateral Damage, for “2020 Promotion Plan” and “Campaign Design Support.”
(SAC, § 34.) Mr. Silver and Mr. Campbell met that day at Quantasy’s offices. (d.,
{ 36.)

Two days later, the men exchanged the following WhatsApp messages (with
Mr. Silver on the left and Mr. Campbell on the right):

800,000 0 (20% of original invelce]
384,444 CD (balance)
CB Payments split in bwo payments within
first two inwoices
1.5192,000 beginning Feb
2.-5153-000 mid feb
Quantasy will have 3 payments in two
months totaling S800
Vs original plan had the same total spread across 12
meanths,

Nah. Let's just divide It equally across the 3. Keeps It
simple
The three invoices are equal amounts
My Gad, | understand that part, | méan pra rata across the
3 per the percentages, 40/35/25
Sure if you prefer that
didn't preter ta match one deal with another
it's what | explained to my controller
That's why | did it 50/50. The first to pops are big
enough □□ absorb the 9050, and O final payment
is-all provit
You are want to split 67/37 across 3 payments

SS Es

[emaoae [easy [ame [a

Yes, you are saying you prefer ta straight line as
a percent acrass J payments

(d., { 37 (reproduced as written).) Root alleges that, in these messages, Mr. Silver
and Mr. Campbell decided how to divvy up the payments Root made under SOW #1
between Quantasy and Collateral Damage. (/d., 4] 37-38.) The next day, Quantasy
wired $153,778 to Collateral Damage, using the wire instructions provided in Mr.
Silver’s February 7 WhatsApp message. (/d., J 39.)
On February 23, 2022, Mr. Campbell sent Root a Quantasy invoice for
$414,555.75. Ud., | 40; see also ECF No. 20-8.) The following day, Mr. Campbell met
via videoconference with members of Root’s management team “to present
Quantasy’s ideas for Root’s marketing campaigns.” (SAC, 4 41.) Afterwards, Mr.
Silver sent the following text messages to Mr. Campbell:

awesome job
| had to explain some things to
leaders, but they finally kinda
Started to see the light
That said, it doesn't really
matter, | have autonomy to do
what | need to

(ECF No. 20-9.)
Mr. Campbell sent Mr. Silver a WhatsApp message on March 2, asking him
to have Lauren “send the invoice for phase 2[.]” (ECF No. 20-11.) “Lauren” refers to
Lauren Lanskie, a then-former employee of Mr. Silver whose name and old email
address were used by Mr. Silver without her knowledge or consent. (SAC, 4 44—
45.)

On March 4, 2022, Mr. Campbell texted Mr. Silver, advising that Quantasy
had not been paid on the February 23 invoice. (/d., § 46.) Root paid $414,555.75 on
March 7. (d., § 47.) Mr. Campbell confirmed receipt of the payment via text
message, before switching to WhatsApp to send the following:

Lauren can you resend, Our team
can handle right away

| 48; see also ECF No. 20-13.) Mr. Silver responded with a PDF titled
Quantasy Invoice — February, seeking $134,555.75 for “2021 Promotion Plan” and
“Campaign Design Support.” (SAC, § 49; ECF No. 20-13; ECF No. 20-14.) Quantasy
paid the invoice by bank wire that day. (SAC, 4 49.)
Mr. Silver subsequently instructed Mr. Campbell to send Quantasy’s invoices
to him directly, ostensibly because others at Root had not handled the prior invoice
on a satisfactory timeline. U/d., §] 50.) The next day, Quantasy sent the final invoice
to Root (through Mr. Silver) for $296,111.25. Ud., 4 51.) Root paid that invoice on
March 24. Ud., 52.)

On March 25, Mr. Silver and Mr. Campbell exchanged the following
WhatsApp messages:

You should have received the
payment today.
Dope hang on
Yes thank you
Confirmed
Please have Lauren send an
invoice
| will over the next hour
She just sent me a text saying she
sent the invoice. Let me know
when you all send out.

{ 53; ECF No. 20-17.) Mr. Campbell then received an email from
lauren@collateraldamage.agency with an invoice attached, requesting payment to
Collateral Damage in the amount $96,111.25 for “Campaign Design Support.” (SAC,
4 54; ECF Nos. 20-17, 20-18.) Quantasy wired the funds to Collateral Damage on
March 28. (SAC, § 55.)
2. SOW #2
Around April 1, Root and Quantasy executed a second scope of work
agreement (“SOW #2”). Ud., § 57; SOW #2, ECF No. 20-19.) The Services to be
provided under SOW #2 were identical to those in SOW #1. (Compare SOW #1, and
SOW #2.) But SOW #2 differed from SOW #1 in many ways. Among them: instead

of Ms. Neely, Mr. Silver executed SOW #2 on behalf of Root; instead of a detailed
agency staffing plan, SOW #2 included a provision allowing Quantasy to
“subcontract third parties .. . to perform certain Services’; and instead of
$1,184,445 paid over two months, SOW #2 provided for $14,900,000 paid over two
weeks. (/d.)
Mr. Campbell emailed two invoices to Root (through Mr. Silver) on April 1,
2022, totaling $7,350,000. (SAC, 4 58.) Root paid the invoices on April 4. Ud., J 59.)
The next day, Mr. Silver sent Mr. Campbell a WhatsApp message:

will have Lauren forward the
invoice this morning

(d., { 60; ECF No. 20-22.)
On April 6, 2022, Mr. Campbell sent an email to Mr. Silver’s personal email
account (i.e., an account not affiliated with Root). (SAC, 4 61.) In the email, Mr.
Campbell described excitement about working “with Root Insurance and you” and
advised that his team “ha[d] already started putting together a subcontracting
agreement between Quantasy and your company, Collateral Damage.” (ECF No. 20-
23.) Mr. Campbell then expressed “that the advertising industry .. . ha[d] been very
focused on the issues of subcontracting with interested parties and payments to
agencies that include payments to third parties.” Ud.) He advised that Quantasy’s
attorney “recommend|ed] that the relationship between Quantasy and Collateral
Damage be approved by Root.” Ud.) Mr. Silver responded with a WhatsApp message
representing that he had been “completely removed from any previous ownership”

of Collateral Damage. (SAC, ¶ 63; ECF No. 20-24.) Four days later, Paige McDaniel
(Mr. Silver’s sister) filed a certificate of organization with the Georgia Secretary of
State for Collateral Damage LLC. (ECF No. 20-25.)

Meanwhile, Mr. Silver and Mr. Campbell continued to communicate via
WhatsApp about the flow of funds between Root, Quantasy, and Collateral Damage.
(SAC, ¶¶ 66–67.) The messages included direction from Mr. Silver to “make sure
invoices are less than $10M . . . [s]o they don’t need board approval.” (Id., ¶ 67; ECF
No. 20-28.) It was the day that direction was given that Mr. Campbell sent Root the
two invoices totaling $7,350,000. (SAC, ¶ 68; ECF No. 20-29.)
Quantasy then wired $2.8 million to Collateral Damage: $500,000 each on

April 11, April 13, and April 15; and $1.3 million on April 20. (Id., ¶¶ 66, 69.)
After Root paid Quantasy on April 25, Mr. Campbell received an email from
lauren@collateraldamage.agency with a Form W-9 signed by “Paige Lynette” and an
invoice for $5.6 million, due in installments on April 1 and April 15. (Id., ¶¶ 70–72;
ECF No. 20-30.) Quantasy wired $1.5 million to Collateral Damage that day, and
$1.3 million the next. (SAC, ¶¶ 73–74.)
Over the next three weeks, Mr. Silver and Mr. Campbell continued in the
same fashion. Mr. Silver’s messages to Mr. Campbell expressed increasing urgency
about the remaining payments to Collateral Damages, culminating on May 17,
2022, when Mr. Silver pressed Mr. Campbell: “This is major for me today, in the
next hour[.]” Ud., 83, fig. 4.) He continued:

Please jet me.knoay a5 soon E's sent
Mans if staling at mech es she can,
Bil seller seks she iat the atone
inesciow, she tanrunt lip
As youkinow legit wile howl have
ea) He veSay WE ye Dea
Bble to-stall die ta this delay on the
lieninermnat (ile) search, However, |f
the geeren gets back betore vines
food, we nein breach at contract
[in Waiting to gond thea agcigncdum te
them, because | don't wank in| seller
towek Mada she's peoeheesd the
NIE,

Ud., fig. 5.) Mr. Campbell responded with a photo of himself standing in front of a
Chase Bank branch and wired $1.5 million to Collateral Damage. CUd., fig. 6; id.,
84.)
In all, Root paid Quantasy $14.7 million under SOW #2. Quantasy passed
$9.1 million of those funds along to Collateral Damage. Root alleges that it received
nothing from Collateral Damage substantiating the fee paid and nothing of value in
exchange. (/d., J 85.)

10

3. Internal Inquiry
In the summer of 2022, Root’s finance department begin investigating
unplanned spending under Mr. Silver. U/d., § 92.) Root alleges that Mr. Silver and
Mr. Campbell responded to “this heightened scrutiny” by executing “a series of
change orders in an attempt to cover their tracks[.|” Ud., § 93.) Mr. Campbell also
executed a Subcontractor Agreement, effective February 2, 2022, and signed August
20, 2022, by himself as CEO of Quantasy and “Paige Lynette” as President of
Collateral Damage. (ECF No. 20-36.)
On August 22, 2022, Root’s internal audit team questioned Mr. Campbell
about Quantasy’s work on Root matters “to determine whether there was
justification for the millions of dollars Root had paid to Quantasy.” (SAC, 4 97.) Mr.
Campbell did not disclose the existence of Collateral Damage or that significant
money had been passed along to it. Ud.) Over the next day, Mr. Silver sent Mr.
Campbell screenshots of the internal audit team’s preliminary findings over
WhatsApp. Ud., 4 99; ECF Nos. 20-28, 20-29.) He added:

for you to trust me and hold the
fine

One month later, Root questioned Quantasy employee David Rodriguez via
email. Ud., J 98.) Mr. Rodriguez represented that $10.7 million was
unallocated/uncommitted and “c[ould] be used for paid media in 2023.” (ECF No. 20-
37.)

11

Mr. Silver was terminated from Root on November 9, 2022. (SAC, ¶ 101.) On
November 16, Mr. Rodriguez revealed the existence of Collateral Damage to Root
for the first time. (Id., ¶ 103.) Root investigated the relationship, and opened an

inquiry to determine whether any of the marketing department’s other vendors had
dealings with Collateral Damage. (Id., ¶ 104.) They uncovered evidence of a similar
scheme, in which vendor Ben-Her Marketing transferred in excess of $500,000 to
Collateral Damage. (Id., ¶ 105.)
This lawsuit followed.
B. Procedural Background
Root filed its Verified Complaint for Damages and Injunctive Relief on

February 2, 2023. (ECF No. 1.) The operative Second Amended Complaint for
Damages and Injunctive Relief was filed more than eighteen months later. (SAC,
ECF No. 173.) Substantial litigation took place in the interim, mostly involving the
Silver Defendants. As to the Quantasy Defendants, the Second Amended Complaint
alleges the following:
Count I: Civil RICO (Racketeer Influenced Corrupt Organizations), 18
U.S.C. § 1962(c)
All Defendants

Count II: Fraudulent Concealment
Silver, Campbell, Quantasy

Count III: Fraudulent Misrepresentation
Silver, Campbell, Quantasy

Count IV: Conversion
All Defendants

Count V: Civil Theft, Ohio Rev. Code §§ 2307.60, 2307.61
All Defendants
Count VI: Civil Telecommunications Fraud, Ohio Rev. Code § 2913.05
Silver, Campbell, Quantasy, Collateral Damage

Count VIII: Breach of Contract
Quantasy

Count X: Civil Conspiracy
All Defendants
They now move to dismiss all claims for lack of personal jurisdiction and failure to
state a claim upon which relief may be granted. (Mot. Dismiss.)
C. Personal Jurisdiction
1. Legal Standard
Rule 12(b)(2) provides for dismissal of a lawsuit for lack of personal
jurisdiction. Fed. R. Civ. P. 12(b)(2). The plaintiff bears the burden of proving that
jurisdiction exists, Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991),
“over each defendant independently.” Beydoun v. Wataniya Rests. Holding, Q.S.C.,
768 F.3d 499, 504 (6th Cir. 2014) (quoting Days Inns Worldwide, Inc. v. Patel, 445
F.3d 899, 904 (6th Cir. 2006)). “[I]n the face of a properly supported motion for
dismissal, the plaintiff may not stand on his pleadings but must, by affidavit or
otherwise, set forth specific facts showing that the court has jurisdiction.”
Theunissen, 935 F.2d at 1458. If a court rules on a Rule 12(b)(2) motion before trial,
“it has the discretion to adopt any of the following courses of action: (1) determine
the motions based on affidavits alone; (2) permit discovery, which would aid in
resolution of the motion; or (3) conduct an evidentiary hearing on the merits of the
motion.” Intera Corp. v. Henderson, 428 F.3d 605, 614 n.7 (6th Cir. 2005) (citation
omitted). “[T]he decision whether to grant discovery or an evidentiary hearing
before ruling on a 12(b)(2) motion is discretionary.” Burnshire Dev., LLC v. Cliffs
Reduced Iron Corp., 198 F. App’x 425, 434 (6th Cir. 2006) (citation omitted). Here,
no party has requested further discovery or an evidentiary hearing, and the Court

concludes that neither is necessary to rule on the Quantasy Defendants’ motion as
it pertains to jurisdiction.
When a court resolves a Rule 12(b)(2) motion based on “written submissions
and affidavits . . . , rather than resolving the motion after an evidentiary hearing or
limited discovery, the burden on the plaintiff is ‘relatively slight,’ and ‘the plaintiff
must make only a prima facie showing that personal jurisdiction exists in order to
defeat dismissal.’” Air Prods. & Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544,

549 (6th Cir. 2007) (quoting Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th
Cir. 1988); Theunissen, 935 F.2d at 1458) (cleaned up). A plaintiff can meet the
burden by “establishing with reasonable particularity sufficient contacts between
[it] and the forum state to support jurisdiction.” Neogen Corp. v. Neo Gen Screening,
Inc., 282 F.3d 883, 887 (6th Cir. 2002) (internal quotation and citation omitted). In
the absence of an evidentiary hearing, courts apply the prima facie standard

weighing the evidence in the light most favorable to the plaintiff. Dean v. Motel 6
Operating L.P., 134 F.3d 1269, 1272 (6th Cir. 1998). Nonetheless, the court may
consider a defendant’s undisputed factual assertions. Conn v. Zakharov, 667 F.3d
705, 711 (6th Cir. 2012). If “there does not appear to be any real dispute over the
facts relating to jurisdiction, the prima facie proposition loses some of its
significance.” Id. (internal quotations and citation omitted).
In support of their Response, Root filed a sworn declaration of Megan
Binkley, Root’s Chief Financial Officer and Treasurer. (ECF No. 135-1.)
2. Analysis

“Federal courts ordinarily follow state law in determining the bounds of their
jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014) (citing
Fed. R. Civ. P. 4(k)(1)(A)). Where, as here, subject-matter jurisdiction is based on a
federal question, a court may exercise personal jurisdiction over a defendant if it is
“both authorized by the forum State’s long-arm statute and in accordance with the
Due Process Clause of the Fourteenth Amendment.” AlixPartners, LLP v.
Brewington, 836 F.3d 543, 549 (6th Cir. 2016) (citation omitted).

a) Ohio’s Long-Arm Statute2
“Ohio’s long-arm statute grants Ohio courts personal jurisdiction over a non-
resident if his conduct falls within the nine bases for jurisdiction listed by the
statute.” Conn, 667 F.3d at 712. Root asserts that five such bases confer personal
jurisdiction over the Quantasy Defendants. Because the Court finds that the

2 Ohio’s long-arm statute was amended effective April 7, 2021, to provide that
“[in] addition to a court’s exercise of personal jurisdiction under division (A) . . . , a
court may exercise personal jurisdiction over a person on any basis consistent with
the Ohio Constitution and the United States Constitution.” Ohio Rev. Code
§ 2307.382(C). Neither the Ohio Supreme Court nor the Sixth Circuit has decided
whether the long-arm statute, as amended, is co-extensive with the Due Process
Clause. But see LG Chem, Ltd. v. Goulding, 194 N.E.3d 355, 358–59 (Ohio 2022)
(analyzing personal jurisdiction under both the state long-arm statute and the Due
Process Clause, even after the amendment went into effect). District courts have
taken differing views. See AmaTech Grp. Ltd. v. Fed. Card Servs., LLC, No. 1:21-cv-
406, 2022 WL 44674, at *4–5 (S.D. Ohio Jan. 5, 2022) (Cole, J.) (collecting cases).
Without more clarity, the Court will analyze the two separately. Accord A.B. Pratt
& Co. v. Bridgeport Grp., LLC, No. 1:22-CV-1579-PAB, 2023 WL 2865640, at *8
(N.D. Ohio Apr. 10, 2023).
Quantasy Defendants transacted business in the state of Ohio, it need not examine
the other four bases.
Ohio’s long-arm statute “permit[s] jurisdiction over nonresident defendants

who are transacting any business in Ohio.” Ky. Oaks Mall Co. v. Mitchell’s Formal
Wear, Inc., 559 N.E.2d 477, 480 (Ohio 1990) (citing Ohio Rev. Code § 2307.382(A)(1))
(emphasis in original). This “very broadly worded” provision has been interpreted to
encompass activities including
to prosecute negotiations; to carry on business; to have dealings * * *.
The word embraces in its meaning the carrying on or prosecution of
business negotiations but it is a broader term than the word ‘contract’
and may involve business negotiations which have been either wholly or
partly brought to a conclusion * * *.
Id. (quoting BLACK’S LAW DICTIONARY (5th ed. 1979)) (emphasis in original). Mr.
Campbell, on behalf of Quantasy, presented via videoconference to a group of
management-level Root staff based in Ohio. He also signed a Statement of Work
counter-signed by Root’s VP of Creative, who was based in Ohio. And he sent
invoices to Root employees based in Ohio. This is the transaction of business in
Ohio, plain and simple.
b) Due Process Clause
Having found that Ohio’s long-arm statute is satisfied, the Court moves on to
determine whether personal jurisdiction comports with the Due Process Clause. To
satisfy due process, a court’s exercise of its power over an out-of-state defendant
must “not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). “[T]he defendant’s
conduct and connection with the forum State [must be] such that he should
reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297 (1980). The Fourteenth Amendment’s Due Process
Clause recognizes two types of personal jurisdiction—general and specific—either

one of which is adequate to confer jurisdiction over a defendant. Goodyear Dunlop
Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).
“If a court has general jurisdiction over a defendant, it can adjudicate any
claims involving that defendant, regardless of where the cause of action arose.”
Maclin v. Reliable Reports of Tex., Inc., 314 F. Supp. 3d 845, 849 (N.D. Ohio 2018).
“For an individual, the paradigm forum for the exercise of general jurisdiction is the
individual’s domicile; for a corporation, it is an equivalent place, one in which the

corporation is fairly regarded as at home[,]” such as the corporation’s place of
incorporation and its principal place of business. Goodyear, 564 U.S. at 924. General
jurisdiction may also exist over an out-of-state corporation when its contacts with
the forum state “are so continuous and systematic as to render [it] essentially at
home in the forum state.” BNSF Ry. Co. v. Tyrrell, 581 U.S. 402, 413 (2017)
(internal quotations and citations omitted). Root does not argue that this Court has

general jurisdiction over the Quantasy Defendants.
“Specific jurisdiction refers to jurisdiction over claims arising from or related
to a defendant’s contacts with the forum state.” Maclin, 314 F. Supp. 3d at 849. The
Sixth Circuit uses a three-prong test to “guide[] the determination of whether
specific jurisdiction exists” while protecting a defendant’s due process rights. Intera
Corp., 428 F.3d at 615.
First, the defendant must purposefully avail himself of the privilege of
acting in the forum state or causing a consequence in the forum state.
Second, the cause of action must arise from the defendant’s activities
there. Finally, the acts of the defendant or consequences caused by the
defendant must have a substantial enough connection with the forum
state to make the exercise of jurisdiction over the defendant reasonable.
S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968). “Failure to
meet any one of the three prongs means that personal jurisdiction may not be
invoked.” Maclin, 314 F. Supp. 3d at 849.
(1) Purposeful Availment
Under Southern Machine, the Court first looks to whether the Quantasy
Defendants purposefully availed themselves of the privilege of conducting business
in Ohio. The Court determines that they have. “In the Sixth Circuit, the emphasis
in the purposeful availment inquiry is whether the defendant has engaged in some
overt actions connecting the defendant with the forum state.” Beydoun, 768 F.3d at
506 (internal quotation and citation omitted). “[T]he issue is not the quantity, but
the quality of a defendant’s contacts with the forum state.” MAG IAS Holdings, Inc.
v. Schmückle, 854 F.3d 894, 901 (6th Cir. 2017) (citations omitted). Although
“physical presence in the forum state is not required,” it “is certainly a relevant
contact.” Id. at 900 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985); Walden v. Fiore, 571 U.S. 277, 285 (2014)). The Sixth Circuit has found
purposeful availment when a business relationship was “intended to be ongoing in
nature,” despite a “paucity” of evidence that the nonresident defendant was

physically or tangibly present in the state. CompuServe, Inc. v. Patterson, 89 F.3d
1257, 1264–65 (6th Cir. 1996). A defendant’s creation of business “obligations . . .
[that] have a realistic impact on the commerce of” the forum state may give rise to
specific jurisdiction when it is reasonably foreseeable that those obligations “would
have consequences” in the forum state. Id. (quoting Mohasco Indus., 401 F.2d at

382–83). Similarly, courts have also held that directing correspondence to the forum
state is a relevant contact and can itself establish personal jurisdiction when the
correspondence gives rise to the action. See, e.g., Schmückle, 854 F.3d at 902.
Here, the Quantasy Defendants corresponded with, and attended virtual
meetings with, Root employees based in Ohio. And Quantasy, through Mr.
Campbell, entered into two contracts to provide marketing services to Root, an
Ohio-based company. This activity would be indicative of an active business

relationship—instead, Root alleges that it comprised (or concealed) a tortious
scheme to siphon funds away from Root for others’ private benefit. These contacts
are sufficient to establish that the Quantasy Defendants purposefully availed
themselves of the privilege of conducting business in Ohio.
(2) Arising From
The Court next examines whether Root’s claims arise out of the Quantasy
Defendants’ activities in Ohio. The Sixth Circuit has explained,

[t]o satisfy the “arising from” prong of the Southern Machine test, the
plaintiff must demonstrate a causal nexus between the defendant’s
contacts with the forum state and the plaintiff's alleged cause of action.
See Burger King Corp., 471 U.S. at 474, 105 S.Ct. 2174 (“[I]t may well
be unfair to allow [out-of-state parties] to escape having to account in
other States for consequences that arise proximately from such
activities.”). As our circuit has explained, “the cause of action
must . . . have a substantial connection with the defendant’s in-state
activities.” [Dean, 134 F.3d at 1275] (quotation marks omitted). Put
another way, “[t]he ‘arising from’ requirement under the second prong
[of the Southern Machine test] is satisfied when the operative facts of
the controversy arise from the defendant's contacts with the state. ‘Only
when the operative facts of the controversy are not related to the
defendants contact with the state can it be said that the cause of action
does not arise from that contract.’” Calphalon Corp. v. Rowlette, 228 F.3d
718, 723–24 (6th Cir. 2000) (quoting S. Mach. Co., 401 F.2d at 384 n. 29);
see also Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 451 (6th Cir.
2012) (“Even a single act by a defendant directed toward the relevant
forum that gives rise to a cause of action can support” a finding of
personal jurisdiction. (emphasis added, citation, quotation marks, and
alterations omitted)).
Beydoun, 768 F.3d at 506–07. Mr. Campbell’s and Quantasy’s dealings with Root
are part and parcel of the conduct giving rise to Root’s claims against them.3 They
form a part of the operative facts of the Second Amended Complaint, which
therefore arises out of the Quantasy Defendants’ contacts with Ohio.
(3) Reasonableness
Finally, the Court must determine whether its exercise of jurisdiction over
the Quantasy Defendants is reasonable. “When the first two prongs of our personal
jurisdiction test are met, there is an inference of reasonableness and ‘only the
unusual case will not meet this third criteria.’” Schmückle, 854 F.3d at 903–04
(quoting Air Prods. & Controls, Inc., 503 F.3d at 554). The reasonableness
determination is made upon review of the following three factors: “(1) the burden on
the defendant; (2) the forum state’s interest; and (3) the plaintiffs’ interest in
obtaining relief.” Id. (citation omitted).
There is nothing unusual about this case that would rebut the inference of
reasonableness. The Quantasy Defendants do not argue otherwise. Further, Ohio

3 There is overlap between the first and second prongs of the Southern
Machine analysis. Beydoun, 768 F.3d at 507 (citations omitted).
has an interest in ensuring that its citizens are able to conduct their business free
from tortious harm, such as that alleged here.
c) RICO’s Nationwide Service Provision

The Quantasy Defendants argue only that RICO’s nationwide service of
process clause does not grant this Court jurisdiction because the “ends of justice” do
not require it. (Mot. Dismiss, PAGEID # 802.) But the Court has found jurisdiction
over the Quantasy Defendants without needing to consult RICO.
The Quantasy Defendants’ Motion to Dismiss for lack of personal jurisdiction
is DENIED.
D. Failure to State a Claim

1. Legal Standard
Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim
with sufficient specificity to “give the defendant fair notice of what the claim is and
the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007) (internal alteration and quotations omitted). A complaint which falls short of
the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief
can be granted. Fed. R. Civ. P. 12(b)(6). The Supreme Court has explained:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged. The
plausibility standard is not akin to a probability requirement, but it asks
for more than a sheer possibility that a defendant has acted unlawfully.
Where a complaint pleads facts that are merely consistent with a
defendant’s liability, it stops short of the line between possibility and
plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotations
omitted). The complaint need not contain detailed factual allegations, but it must
include more than labels, conclusions, and formulaic recitations of the elements of a

cause of action. Id. (citing Twombly, 550 U.S. at 555.) “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. In reviewing a motion to dismiss, the Court “construe[s] the complaint
in the light most favorable to the plaintiff[.]” DirecTV, Inc. v. Treesh, 487 F.3d 471,
476 (6th Cir. 2007).
Plaintiffs face a heightened pleading standard with respect to claims
sounding in fraud. See Fed. R. Civ. P. 9(b) (requiring that the circumstances

constituting fraud must be pled “with particularity”). To satisfy Rule 9(b)’s
heightened standard, a complaint must “allege the time, place, and content of the
alleged misrepresentations on which he or she relied; the fraudulent scheme; the
fraudulent intent of the defendants; and the injury resulting from the fraud.” Coffey
v. Foamex L.P., 2 F.3d 157, 161–62 (6th Cir. 1993) (internal quotation and citation
omitted). Rule 9(b) “should not be read to defeat the general policy of simplicity and

flexibility in pleadings contemplated by the Federal Rules.” U.S. ex rel. SNAPP, Inc.
v. Ford Motor Co., 532 F.3d 496, 503–04 (6th Cir. 2008) (internal quotation and
citation omitted). Instead, Rule 9(b) is intended to “provide a defendant with ‘at
least the minimum degree of detail necessary to begin a competent defense’” and
“discourage fishing expeditions . . . which appear more likely to consume a
defendant’s resources than to reveal evidence of wrongdoing.” Scotts Co. LLC v.
Liberty Mut. Ins. Co., 606 F. Supp. 2d 722, 736 (S.D. Ohio 2009) (Graham, J.)
(quoting U.S. ex rel. SNAPP, 532 F.3d at 504) (cleaned up).
2. Count I: Civil RICO

Count I of the Second Amended Complaint asserts a civil RICO claim against
all Defendants. (See SAC, ¶¶ 106–17.) Under RICO, it is
unlawful for any person employed by or associated with any enterprise
engaged in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in the conduct
of such enterprise’s affairs through a pattern of racketeering activity or
collection of unlawful debt.
18 U.S.C. § 1962(c). To state a RICO claim, a plaintiff must plead the following
elements: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering
activity.” Ouwinga v. Benistar 419 Plan Servs., Inc., 694 F.3d 783, 791 (6th Cir.
2012) (internal quotation and citation omitted). The Quantasy Defendants argue
that Root fails to allege facts supporting each element.
a) Conduct
As to element one, the Quantasy Defendants argue that Root fails to allege
the degree of ‘conduct’ necessary—specifically, that they cannot be held liable under
RICO even if they participated in the scheme because Root fails to allege that the
Quantasy Defendants “operat[ed] or manage[d]” the enterprise. (Mot. Dismiss,
PAGEID # 773 (quoting Reves v. Ernst & Young, 507 U.S. 170, 185 (1993)). The
Supreme Court has indeed held that defendants must have “conducted or
participated in the conduct of the ‘enterprise’s affairs’” to be liable—“not just their
own affairs.” Reves, 507 U.S. at 185 (citing 18 U.S.C. § 1962(c)). To satisfy this
standard, the Sixth Circuit requires a showing that the defendant “ma[de] decisions
on behalf of the enterprise or [] knowingly carr[ied] them out.” Ouwinga, 694 F.3d
at 792 (internal quotation, citation, and emphasis omitted). The Second Amended
Complaint alleges exactly that. Among other things, Root alleges that Mr. Campbell

devised and agreed to a payment distribution framework with Mr. Silver before any
invoices were generated; that Quantasy issued invoices to Root, and subsequently
issued wires to Collateral Damage, in accordance with that framework; that Mr.
Campbell expedited wiring more than $1 million to Collateral Damage so that Mr.
Silver could complete a real estate transaction (far beyond the scope of marketing
services); that Mr. Campbell and other Quantasy employees misrepresented the
availability of Root’s funds for future marketing spend; and that Mr. Campbell took

and apparently heeded Mr. Silver’s advice to “hold the line.” That is enough at this
stage.
b) Enterprise
As to element two, the Quantasy Defendants argue that the Second Amended
Complaint fails to allege an “association in fact” enterprise. The argument is
unavailing. RICO punishes “any person employed by or associated with any
enterprise[.]” 18 U.S.C. § 1962(c). Though not an exhaustive definition, the statute

provides that “‘enterprise’ includes any individual, partnership, corporation,
association, or other legal entity, and any union or group of individuals associated
in fact although not a legal entity[.]” 18 U.S.C. § 1961(4); Boyle v. United States, 556
U.S. 938, 944 n.2 (2009). This latter “concept of an association in fact is expansive.”
Boyle, 556 U.S. at 944. It means “simply a continuing unit that functions with a
common purpose.” Id. at 948. Though the Supreme Court has emphasized that an
association-in-fact need not have a formal structure, it does require “a purpose,
relationships among those associated with the enterprise, and longevity sufficient to
permit these associates to pursue the enterprise’s purpose.” Id. at 946.

The Quantasy Defendants challenge the sufficiency of allegations showing
relationships among those in the enterprise. In particular, they argue that the
Second Amended Complaint fails to allege that the Quantasy Defendants had any
awareness of or connection to Ms. McDaniel or Eclipse Home Design. Instead, they
believe the allegations describe a “rimless hub-and-spoke arrangement,” with Mr.
Silver at the center, and all other Defendants as spokes. Notably, courts outside the
Sixth Circuit have held that “a group of individuals related by a structure that

mimics so-called ‘rimless hub-and-spoke’ conspiracies cannot be considered a RICO
association-in-fact.” D’Addario v. D’Addario, 901 F.3d 80, 101 (2d Cir. 2018)
(collecting cases). But this Court disagrees with the Quantasy Defendants’ reading
of the Second Amended Complaint. Instead of a rimless hub-and-spoke (which
might be, for example, Mr. Silver running a series of parallel frauds against Root),
the Complaint describes a group of individuals and corporate entities working

together to jointly execute a scheme of fraud and embezzlement. Mr. Campbell
executed an agreement co-signed by Ms. McDaniel (albeit, using her alias) and
wired funds to Collateral Damage after receiving a Form W-9 signed by Ms.
McDaniel. The funds wired out to Collateral Damage were a pre-determined
percentage of the funds Root paid to Quantasy two days prior. That is enough to
adequately allege an association-in-fact.
c) Pattern
As to element three, the Quantasy Defendants argue that Root has not
alleged continuous racketeering activity sufficient to establish a pattern. Root
argues that it has alleged open-ended continuity and the Court agrees. A pattern of

racketeering activity requires, at a minimum, two acts of racketeering activity
within ten years of each other. 18 U.S.C. § 1961(5). The Supreme Court has held,
however, that the minimum two acts are not necessarily sufficient and that a
plaintiff must show “that the racketeering predicates are related, and that they
amount to or pose a threat of continued criminal activity.” H.J. Inc. v. Nw. Bell Tel.
Co., 492 U.S. 229, 239 (1989) (emphasis in original). This is known as the

“relationship plus continuity” test. Ouwinga, 694 F.3d at 795. There is no argument
here that the alleged predicate acts are not related.
Continuity “is both a closed- and open-ended concept[.]” H.J. Inc., 492 U.S. at
241. A ‘closed-ended’ pattern is “a series of related predicate acts extending over a
substantial period of time,” where an ‘open-ended’ pattern is “a set of predicate acts
that poses a threat of continuing criminal conduct extending beyond the period
within which the predicate acts were performed.” Heinrich v. Waiting Angels

Adoption Servs., Inc., 668 F.3d 393, 409–10 (6th Cir. 2012) (cleaned up). As the
Sixth Circuit has explained,
[o]ften a RICO action will be brought before continuity can be
established by showing predicate acts spanning a substantial period of
time. In such cases, liability depends on whether the threat of continuity
is demonstrated. So the plaintiffs must plausibly allege that there was
a threat of continuing criminal activity beyond the period during which
the predicate acts were performed. Determining whether the predicate
acts establish open-ended continuity requires a court to examine the
specific facts of the case. The threat of continuing racketeering activity
need not be established, however, exclusively by reference to the
predicate acts alone; rather, a court should consider the totality of the
circumstances surrounding the commission of those acts.
Id. at 410 (internal quotations, citations, and alterations omitted). “Subsequent
events are irrelevant to the continuity determination[.]” Id. Instead, “the threat of
continuity must be viewed at the time the racketeering activity occurred.” Id.
(quoting United States v. Busacca, 936 F.2d 232, 238 (6th Cir. 1991)).
Here, Root alleges that the Quantasy Defendants sent fraudulent multi-
million-dollar invoices to Root, which were approved by Mr. Silver. The resulting
payments were divided between the Quantasy Defendants and the Silver
Defendants according to the percentage scheme worked out in advance between Mr.
Campbell and Mr. Silver on WhatsApp, a private messaging service. Those funds
were retained for Defendants’ personal benefit. This was not an “inherently
terminable scheme” with a “built-in ending point” but rather one that likely would

have continued into the future had Root not terminated Mr. Silver and investigated
the irregular spending in his department. Heinrich, 668 F.3d at 410; see also Blue
Cross and Blue Shield of Mich. v. Kamin, 876 F.2d 543, 545 (6th Cir. 1989) (finding
that continuity was established because, if the defendant had not been caught,
there was no reason to believe he would have stopped submitting fraudulent
insurance claims).
The Quantasy Defendants argue that the scheme was not interminable,

because Mr. Silver left Root for reasons unrelated to the fraud. “[F]acts external to
the predicate acts may, and indeed should, be considered.” Busacca, 936 F.2d at
238. But Root also alleges that the Silver Defendants engaged in a similar kickback
scheme with Ben-Her Marketing, another “sham” vendor. Had Root not
investigated and brought this suit, the Quantasy Defendants could have sent the

same type of overstated invoiced to any future employer of Mr. Silver. See H.J. Inc.,
492 U.S. at 242 (“[T]he threat of continuity may be established by showing that the
predicate acts or offenses are part of an ongoing entity’s regular way of doing
business.”).
Given the full scope of the allegations against the Quantasy Defendants—
including: that Mr. Campbell devised a payment distribution schedule with Mr.
Silver before any invoices were sent to Root; that Mr. Campbell expedited wiring of

more than $1 million so that Mr. Silver could complete a real estate transaction;
and that Quantasy misrepresented to Root the availability and location of Root-paid
funds when asked—the Court cannot conclude that the parties intended this
scheme to last for only a finite period of time. There is no indication that, at the
time of the predicate acts alleged, the Quantasy Defendants’ pattern of behavior
would not have continued indefinitely into the future. Cf. Busacca, 936 F.2d at 237–

38 (finding that there was an “implicit threat of continuity” where the defendant
“demonstrated his complete ability to control the dispensation of monies . . .
while . . . pursuing and establishing his scheme” even where there were only six
predicate acts committed in a span of two and one-half months). Based on the
totality of the facts alleged in the Second Amended Complaint, Root states a pattern
of racketeering activity under the open-ended continuity theory.
d) Racketeering Activity
Finally, as to element four, the Quantasy Defendants argue that Root fails to
adequately plead the necessary predicate acts of racketeering activity. Root
responds that it has alleged numerous instances of wire fraud, which constitute

predicate acts under RICO. The Court agrees. RICO lists those acts that constitute
predicate offenses. 18 U.S.C. § 1961(1). The list includes, among other crimes, wire
fraud. See id. (citing 18 U.S.C. § 1343). Wire fraud consists of (1) a scheme to
defraud, and (2) use of interstate wire communications in furtherance of the
scheme. 18 U.S.C. § 1343. “A scheme to defraud includes any plan or course of
action by which someone uses false, deceptive, or fraudulent pretenses,

representations, or promises to deprive someone else of money.” Heinrich, 668 F.3d
at 404 (internal quotation and citation omitted). A plaintiff alleging a scheme to
defraud must satisfy the heightened pleading standard under Fed. R. Civ. P. 9(b)
and show “some direct relation between the injury asserted and the injurious
conduct alleged.” Id. at 405 (internal quotation and citation omitted).
Root alleges that the Quantasy Defendants sent four invoices for false
marketing services to Root. Those invoices were approved by Mr. Silver, triggering

payments from Root’s bank accounts to Quantasy. Quantasy then wired a pre-
determined portion of those payments to Collateral Damage—an entity Mr.
Campbell himself described as an “interested party.” Later, when asked whether
those funds were still available to Root for future marketing spend, a Quantasy
employee falsely represented that they were. The Second Amended Complaint
states the dates that the fraudulent invoices and misrepresentations were received
by Root, the amount of the invoices, the dates the associated payments were wired
to Quantasy and then on to Collateral Damages, and the amount of the wire
transfers. That is enough. Bird v. Delacruz, No. 04-CV-661, 2005 WL 1625303, at *6

(S.D. Ohio July 6, 2005) (holding that, to state a valid wire fraud claim as a
predicate act under RICO, “the plaintiff must, within reason, describe the time,
place, and content of the wire communications, and it must identify the parties to
these communications” (internal quotations omitted)); FFL Holdings, LLC v.
Moeller, No. 3:14CV693V, 2014 WL 4322804, at *6 (N.D. Ohio Aug. 29, 2014)
(explaining that sufficiently pled predicate acts include the “who, what, when,
where” of the specific false statements or misrepresentations that drove the

scheme). Root sufficiently alleged multiple acts of wire fraud, satisfying the
racketeering element of its RICO claims against Defendants.
The Quantasy Defendants argue for the opposite conclusion by re-casting the
facts alleged in the Second Amended Complaint. In their telling, Mr. Campbell and
Quantasy are also victims of Mr. Silver’s fraud, having been led to believe that they
were legitimately and simply sub-contracting work to Collateral Damage. But Root

does not allege that Collateral Damage was Quantasy’s sub-contractor; it alleges
that Collateral Damage was Quantasy’s co-conspirator in a scheme to defraud Root.
At this stage, the Court must accept all well-pled factual allegations as true and
view them in the light most favorable to Root. With the benefit of discovery, the
Quantasy Defendants’ theory (which is possible) may prove to be true. But, at this
point, the Court is bound to accept Root’s (which is plausible).
The Quantasy Defendants’ Motion to Dismiss is DENIED as to Count I (Civil
RICO).
3. Counts II and III: Fraudulent Concealment, Fraudulent
Misrepresentation
The Second Amended Complaint next asserts claims against Mr. Silver and
the Quantasy Defendants for fraudulent concealment (Count II) and fraudulent
misrepresentation (Count III). (See SAC, ¶¶ 118–33.) The claims’ elements are

similar, but not identical. As an Ohio4 appeals court recently explained:
To prevail on a claim of fraudulent misrepresentation, the plaintiff must
establish “(1) a representation or, when there is a duty to disclose,
concealment of a fact, (2) which is material to the transaction at hand,
(3) made falsely, with knowledge of its falsity, or with such utter
disregard as to whether it is true or false that such knowledge may be
inferred, (4) with the intent of misleading another into relying upon it,
(5) with justifiable reliance on the misrepresentation or concealment,
and (6) an injury proximately caused by that reliance.” Doctor v.
Marucci, [No. 2013-L-056, 2013 WL 6880935, at *2 (Ohio Ct. App. Dec.
13, 2013)]. Similar elements are necessary for fraudulent concealment,
which also requires the actual concealment of a material fact and
knowledge of the fact concealed. Thaler v. Zovko, [No. 2008-L-091, 2008
WL 5389607, at *6 (Dec. 26, 2008)].
Cianfaglione v. Lake Nat’l Bank, 134 N.E.3d 661, 666 (Ohio Ct. App. 2019).
a) Fraudulent Concealment
Root alleges that the Quantasy Defendants fraudulently concealed the
following information from Root:

4 “A federal court exercising supplemental jurisdiction over state law claims
is bound to apply the law of the forum state to the same extent as if it were
exercising its diversity jurisdiction.” Super Sulky, Inc. v. U.S. Trotting Ass’n, 174
F.3d 733, 741 (6th Cir. 1999) Where the parties apply Ohio law without dispute, the
Court will do the same.
1) Quantasy’s intent to subcontract marketing work for Root to
Collateral Damage;
2) Quantasy’s intent to work out a private payment structure with
Silver that was not disclosed to anyone else at Root; [and]
3) that instead of performing marketing work for Root, Quantasy
and Campbell were channeling funds to Collateral Damage even
though Collateral Damage was not performing marketing
services.
(SAC, ¶ 120 (formatting added).) To survive a motion to dismiss, Root must “specify
the who, what, when, where, and how of the alleged omission[s].” Smith v. Gen.
Motors LLC, 988 F.3d 873, 884 (6th Cir. 2021). The Court finds that it has.
The Second Amended Complaint alleges that Mr. Silver brought Quantasy on
as a vendor at Root, after negotiating SOW #1 with Mr. Campbell directly. SOW #1
was signed on February 3, 2022, by Root’s VP of Creative, Jill Neely. (SOW #1.)
SOW #1 includes, among other things, a thorough description of services to be
performed, a staffing plan listing eighteen individuals, a fee and payment schedule,
and terms and conditions. (Id.) The terms and conditions contemplate that
Quantasy may procure third party services and materials, but states that “billing
for any such third-party materials will be based on estimates to be approved[.]” (Id.,
PAGEID # 155.)
That day, Mr. Campbell sent a nearly half-million-dollar invoice to Ms. Neely.
Before Root paid the invoice, Mr. Campbell received (via private message from Mr.
Silver) Collateral Damage’s address and bank account and routing numbers. Just
two days after Root paid the invoice, on February 11, Mr. Campbell received (again
via private message from Mr. Silver) a Collateral Damage invoice, purportedly for
“Campaign Design Support.” On February 13, Mr. Silver and Mr. Campbell (via
private message) devised a schedule dividing future payments from Root between
Quantasy and Collateral Damage. Root paid Quantasy $1,184,444 under SOW #1,
and Quantasy sent $384,444 of that sum to Collateral Damage. But Root “received

no documents or other materials from Collateral Damage to substantiate” that fee,
and “received no value” for it either.
SOW #2 was executed on April 1, 2022, by Mr. Silver (as CMO of Root) and
Mr. Campbell (as CEO of Quantasy). (SOW #2.) SOW #2 covered the same services
as SOW #1, for substantially more money. Instead of an agency staffing plan, SOW
#2 stated that Quantasy “may subcontract third parties . . . to perform certain
Services (including without limitation physical production services, talent

procurement, consulting and media services)[.]” (Id., PAGEID # 193.) After SOW #2
was executed, the pattern continued—Root paying Quantasy’s invoices, and
Quantasy paying Collateral Damage’s invoices in rapid succession. Although the
Collateral Damage invoices purported to be for services covered by SOW #2, Root
alleges that, on May 17, 2022, Mr. Campbell personally went to a Chase Bank
branch to wire $1.5 million to Collateral Damage for a transaction that Mr. Silver

said was “major” for him and involved a “lien/permit (title) search.” Yet, none of the
services identified in SOW #2 or the Collateral Damage invoices pertain to real
estate.
Three months later, Root’s internal audit team questioned Mr. Campbell
“directly about Quantasy’s work for Root to determine whether there was
justification for the millions of dollars Root had paid to Quantasy.” Mr. Campbell
responded without revealing the existence of Collateral Damage or their
relationship.
While parties to an arm’s length business transaction generally do not have a

duty to disclose material information to each other, see Blon v. Bank One, Akron,
N.A., 519 N.E.2d 363, 367 (Ohio 1988), Ohio courts have long recognized “a duty to
make full disclosure in those circumstances where such disclosure is necessary to
dispel misleading impressions that are or might have been created by a partial
revelation of the facts.” Connelly v. Balkwill, 174 F. Supp. 49, 58 (N.D. Ohio 1959).
Further, “Ohio courts have held that fraudulent inducement claims, based on a
party’s intent not to perform their terms at the time of contracting, are viable.”

Redhawk Global, LLC v. World Projects Int’l, Inc., 2:11-cv-666, 2017 WL 4862485,
at *7 (S.D. Ohio Sept. 26, 2017) (Sargus, J.) (internal quotation and citation
omitted). The facts alleged in the Second Amended Complaint and recounted above
support an inference that the Quantasy Defendants knew, when executing SOW #1,
that they intended to engage in a course of conduct that made the representations
inside of SOW #1 misleading, and knew when executing SOW #1 that they did not

intend to perform the promised services. The Second Amended Complaint
sufficiently pleads a claim for Fraudulent Concealment.
b) Fraudulent Misrepresentation
The Quantasy Defendants next argue that Root fails to state a claim in Count
III (Fraudulent Misrepresentation). As to the following statements, the Court
agrees:

1) Mr. Campbell’s statements during the February 24, 2022 presentation
to Root management;
2) Mr. Campbell’s statements to the internal audit team on August 22,
2022, about the work Quantasy had performed for Root; and
3) A Quantasy employee’s statement on September 22, 2022, that $10.7
million was available for Root’s future marketing spend.
(SAC, ¶¶ 125–27.)
Rule 9(b)’s heightened pleading standard requires a plaintiff to allege “the
time, place, and content of the alleged misrepresentation.” Smith, 988 F.3d at 883
(internal quotations and citations omitted) (emphasis added). The pleadings do not
allege with particularity the contents of the first statement. Although the second
and third statements’ content is more particularly alleged, they are alleged to have
been made after Root transferred funds to Quantasy and after Quantasy transferred
funds to Collateral Damage. The allegations thus do not support an inference that
Root relied on these statements, or that such reliance proximately caused Root’s
injury. Root cannot pursue its fraudulent misrepresentation claim against the
Quantasy Defendants based on the three statements identified above.
In its response, Root argues that Quantasy’s invoices can support its
fraudulent misrepresentation claim. The Court agrees. Root alleges that the
Quantasy Defendants, in furtherance of an established fraudulent kickback scheme,
sent invoices to Root charging amounts they did not intend to keep for services they
did not intend to perform. The Complaint recites the dates on which the invoices
were sent, to whom and from whom they were sent, and their contents. In short, the
Second Amended Complaint provides the Quantasy Defendants with the detail

necessary to begin a competent defense to a claim on those grounds.
c) Counts II and III are not duplicative of Count VIII.
Finally, the Quantasy Defendants argue that Root’s fraud claims are
duplicative of its breach of contract claim. As an initial matter, and as Root points
out, the Second Amended Complaint does not assert a breach of contract claim
against Mr. Campbell. The argument thus fails as against him. Additional analysis
is required for Quantasy.

Ohio law “generally prohibits tort actions arising out of contract claims.”
Popovich v. Sony Music Ent., No. 1:02 CV 359, 2005 WL 8171846, at *12 (N.D. Ohio
Feb. 10, 2005) (citation omitted). An exception exists, however, where:
(1) [] the breaching party also breaches a duty owed separately from that
created by the contract, that is, a duty owed even if no contract existed;
and (2) the fraud action includes actual damages attributable to the
wrongful acts of the alleged tortfeasor which are in addition to those
attributable to the breach.
Id. (internal quotation marks and citations omitted). That exception applies here.
Quantasy had a duty to disclose the allegedly concealed and misrepresented
facts, as already discussed. And Root alleges that the damages resulting from the
Ben-Her Marketing scheme stemmed from Quantasy’s fraud. Although, with the
benefit of discovery, those damages may prove too far attenuated from Quantasy’s
conduct to be viable, the allegation is sufficient to survive at this stage. See
Stratesphere LLC v. Kognetics Inc., No. 2:20-cv-2972, 2021 WL 11457420, at *2 (S.D.
Ohio May 4, 2021) (Watson, J.).
The Quantasy Defendants’ Motion to Dismiss is DENIED as to Count II

(Fraudulent Concealment) and GRANTED in part and DENIED in part as to
Count III (Fraudulent Misrepresentation).
4. Count IV: Conversion
In Count IV, Root alleges that the defendants converted Root’s funds “by
transferring the funds to Quantasy and then to Collateral Damage[,]” and further
“to Eclipse to purchase multiple multi-million dollar coastal properties.” (SAC,
¶ 136.) Root further alleges that the Quantasy Defendants “refused to return all of

the stolen funds” when asked. (Id., ¶¶ 137–38.) The elements of conversion under
Ohio law are:
(1) plaintiff’s ownership or right to possession of the property at the time
of the conversion; (2) defendant’s conversion by a wrongful act or
disposition of plaintiff’s property rights; and (3) damages.
NPF IV, Inc. v. Transitional Health Servs., 922 F. Supp. 77, 81 (S.D. Ohio 1996)
(Graham, J.). A claim for conversion of money additionally requires that the money
“is ‘earmarked’ or is specific money capable of identification, such as money in a
bag[.]” Id; see also RAE Assocs., Inc. v. Nexus Commc’ns, Inc., 36 N.E.3d 757, 765–
66 (Ohio Ct. App. 2015). The funds alleged to have been converted here were not
earmarked, or otherwise specifically identifiable. Root simply asserts a right to a
certain sum of money. That cannot form the basis of a conversion claim. RAE
Assocs., 36 N.E.3d at 765–66; Fed. Ins. Co. v. Benchmark Bank, No. 2:17-cv-135,
2018 WL 527285, at *10 (S.D. Ohio Jan. 24, 2018) (Smith, J.).
The Quantasy Defendants’ Motion to Dismiss is GRANTED as to Count IV
(Conversion).
5. Counts V and VI: Civil Theft, Telecommunications Fraud

Ohio Revised Code § 2307.60(A)(1) provides that “[a]nyone injured in person
or property by a criminal act has, and may recover full damages in, a civil action
unless specifically excepted by law.” See Jacobson v. Kaforey, 75 N.E.3d 203, 205
(Ohio 2016). A related statute allows a property owner to bring a § 2307.60(A) claim
to recover damages resulting from “a theft offense.” Ohio Rev. Code § 2307.61(A).
Root asserts two such claims: Count V for Theft; and Count VI for
Telecommunications Fraud. The Quantasy Defendants argue that these claims fail

first, because the statute does not authorize claims for damages based on breach of
contract; second, because Root fails to allege an intent to defraud; and third,
because Root gave express or implied consent to the conduct. Each argument fails.
To begin, nothing in Ohio Rev. Code § 2307.60 or § 2307.61 limits the
available claims to tort actions. Section 2307.60(B) identifies certain conditions for
recovery when the claim is a tort action—but those conditions do not limit the

universe of viable claims to tort actions. Cf. Jacobsen, 75 N.E.3d at 207 (holding
that § 2307.60 creates a civil cause of action for damages resulting from any
criminal act”).
Moving on, the Quantasy Defendants argue that the Second Amended
Complaint “makes no factual allegations whatsoever that would be sufficient to
support a conclusion that either Quantasy or Campbell intended to defraud Root[.]”
(Mot. Dismiss, PAGEID # 796.) For the reasons already described (see § I.C.3,
supra), Root has alleged facts sufficient to support an inference that the Quantasy
Defendants intended to defraud Root. The pleadings are sufficient to survive a

motion to dismiss.
Finally, the Quantasy Defendants argue that Root fails to state a claim for
theft because the conduct was carried out through a Root executive and thus done
with Root’s express or implied consent. See Ohio Rev. Code § 2913.02(A)(1)–(2). But,
as Root points out, the statute also applies to deprivation of property procured by
deception. Ohio Rev. Code § 2913.02(A)(3). “Deception” is defined as
knowingly deceiving another or causing another to be deceived by any
false or misleading representation, by withholding information, by
preventing another from acquiring information, or by any other conduct,
act, or omission that creates, confirms, or perpetuates a false impression
in another, including a false impression as to law, value, state of mind,
or other objective or subjective fact.
Ohio Rev. Code § 2913.01(A). The Second Amendment Complaint alleges facts
sufficient to support the inference that Mr. Campbell prepared and submitted,
through Quantasy, invoices for services that Quantasy did not intend to perform. In
other words, it adequately alleges that the Quantasy Defendants obtained or
exerted control over Root’s funds by means of deception.
The Quantasy Defendants’ Motion to Dismiss is DENIED as to Count V
(Civil Theft) and VI (Telecommunications Fraud).
6. Count VIII: Breach of Contract
Under Ohio law, a breach-of-contract claim requires the plaintiff to prove
that (i) a contract existed, (ii) the defendant failed without legal excuse to perform
when performance was due, and (iii) the plaintiff was damaged by that failure.
Lucarell v. Nationwide Mut. Ins. Co., 97 N.E.3d 458, 469 (Ohio 2018). Only the
second element is in dispute.

Root alleges that Quantasy breached SOW #1 and SOW #2 by failing to
provide “the agreed-upon marketing services,” “entering into a purported
subcontract with Collateral Damage,” and breaching the implied covenant of good
faith and fair dealing. (SAC, ¶ 161.) Quantasy argues that Root fails to adequately
allege a breach because Quantasy provided services, SOW #1 and SOW #2 allow
subcontracting, and breaching the implied covenant of good faith and fair dealing
“does not create a standalone cause of action.” (Mot. Dismiss, PAGEID # 800.)

On this issue, Quantasy not only fails to persuade, it approaches the
outermost boundaries of good-faith argument. At this stage of the litigation, the
Court is bound of accept all well-pled factual allegations as true and view them in
the light most favorable to the plaintiff. (Id., PAGEID # 763 (citing Twombly and
Iqbal).) Root alleges that, save for the February 24, 2022 presentation, Quantasy
“provided little in the way of services to Root”—despite having been contracted to

provide a litany of specific deliverables. (SAC, ¶ 93; see also SOW #1, SOW #2.) Root
further alleges that Quantasy violated SOW #1 and SOW #2 by purporting to
engage Collateral Damages to provide certain of those deliverables. SOW #1
contemplates that Quantasy may procure third-party services—but does not
authorize billing for such services without providing estimates to Root (which,
according to the Second Amended Complaint, Quantasy did not do). Similarly, SOW
#2 expressly allows Quantasy to engage subcontractors—but only to the extent the
subcontractor provides “Services” (which, according to the Second Amended
Complaint, Collateral Damage did not do). Because Root has adequately alleged a

claim based on those independent breaches, the good-faith-and-fair-dealing
component does not “stand alone.”
Quantasy’s Motion to Dismiss is DENIED as to Count VIII (Breach of
Contract).
7. Count X: Civil Conspiracy
To state a claim for civil conspiracy, a plaintiff must allege (1) a malicious
combination; (2) of two or more persons; (3) resulting injury to person or property;

and (4) the existence of an unlawful act independent from the actual conspiracy.
Rosy Blue, NV v. Lane, 767 F. Supp. 2d 860, 868 (S.D. Ohio 2011) (citing Aetna Cas.
& Sur. Co. v. Leahey Constr. Co., 219 F.3d 519, 534 (6th Cir. 2000)). The Quantasy
Defendants argue that Root fails to allege an underlying unlawful act. Having
concluded that Root can proceed on several of its claims, the Court disagrees.
The Quantasy Defendants’ Motion to Dismiss is DENIED as to Count X

(Civil Conspiracy).
8. Personal Liability
Finally, the Quantasy Defendants argue that the Second Amended
Complaint fails to allege that Mr. Campbell is personally liable to Root. In their
view, “[t]he basis of [Mr.] Campbell’s claimed liability is not precisely clear from
the” Second Amended Complaint. (Mot. Dismiss, PAGEID # 789.) The Court
disagrees. The Second Amended Complaint alleges that Mr. Campbell personally
engaged in tortious conduct, and thus seeks personal liability. The Quantasy
Defendants’ Motion to Dismiss is DENIED to the extent it seeks to prevent Root

from pursuing its claims against Mr. Campbell personally.
II. MOTION TO STAY
The Silver Defendants moved to stay these proceedings until the related
criminal case against Mr. Silver has been resolved. (ECF No. 137.) Mr. Silver
recently pled guilty to a bill of information charging him with offenses arising out of
the conduct underlying the Second Amended Complaint. See United States v. Silver,
No. 2:23-cr-201 (S.D. Ohio, docket no. 41). The motion is thus DENIED as moot.

III. MOTION TO QUASH
Finally, the Quantasy Defendants filed a Motion to Quash Subpoenas for
Financial Records and to Stay Discovery as to the Quantasy Defendants. (ECF No.
185.) As to the requested stay, that motion is DENIED as moot. The balance of the
motion is REFERRED to the Magistrate Judge for consideration.
IV. CONCLUSION
For the reasons above, the Motion to Dismiss (ECF No. 94) is GRANTED in
part and DENIED in part; the Motion to Stay (ECF No. 137) is DENIED as

moot; and the Motion to Quash (ECF No. 185) is DENIED in part and
REFERRED in part.
IT IS SO ORDERED.
/s/ Sarah D. Morrison
SARAH D. MORRISON
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10383976. Public record. Not legal advice.