Appendix — In Re Huff Et Ux
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Supreme Court, U.S.
Fite D
031285 JAN 23 2004
OPFTGEEOF THE CLERK
SUPREME COURT OF THE UNITED STATES
October Term, 2003
No.
“In re
REGGIE D. HUFF AND LISA G. HUFF
Petitioners”
v.
SUSAN P. GRABER, RONALD M. GOULD
AND REGGERO J. ALDISERT,
Circuit Court Judges for the 9th Circuit
Respondents
THE ROBERT JACKSON FAMILY TRUST; L. B. LAND, an
Oregon corp.; JOH SERVICES INC., an Oregon corp.; JOHN D.
HALLSWORTH, JR.;ROBERT K. JACKSON; LUANN
JACKSON; RODERICK A. BOUTIN,
Co- Respondents
APPENDIX
PETITION FOR WRIT OF MANDAMUS
AGAINST 9" CIRCUIT PANEL
(Oral Arguments Requested)
(Expedited Procedure Requested)
Reggie D. Huff & Lisa G. Huff
PO Box 4351
Warren, OH 44482
Ph: (330)372-6615; Fax: (330)372-63 16
Counsel for Petitioners
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 2003
No.
“In re
REGGIE D. HUFF AND LISA G. HUFF
Petitioners”
v.
SUSAN P. GRABER, RONALD M. GOULD
AND REGGERO J. ALDISERT,
Circuit Court Judges for the 9th Circuit
Respondents
THE ROBERT JACKSON FAMILY TRUST; L. B. LAND, an
Oregon corp.; JOH SERVICES INC., an Oregon corp.; JOHN D.
HALLSWORTH, JR.;ROBERT K. JACKSON; LUANN
JACKSON; RODERICK A. BOUTIN,
Co- Respondents
PETITION FOR WRIT OF MANDAMUS
AGAINST 9" CIRCUIT PANEL
(Oral Arguments Requested)
(Expedited Procedure Requested)
Reggie D. Huff & Lisa G. Huff
PO Box 4351
Warren, OH 44482
Ph: (330)372-6615; Fax: (330)372-63 16
Counsel for Petitioners
2
TABLE OF CONTENTS
OPINION — Judge King, September 6, 2001 | 3
OPINION -— Judge King, January 3, 2002 20
Plaintiffs’ Motion for Reconsideration/Amend Judgment 29
Appellants’ Opening Brief — Front page only 40
Letter of Reassignment to Oral Argument Panel 42
Letter of Thanks and Acknowledgement of Oral Arguments 43
Schedule for September 11] & 12, 2003 Oral Arguments 44
ORDER of Submission Without Oral Argument 45
ORDER Denying Motion for Reconsideration of Order for Case
Submission Without Oral Arguments 46
MEMORANDUM - 9" Circuit Panel — Affirming 47
PETITION: Investigate Discrimination & Suspension Pending
Disposition & For Rehearing — En Banc Requested 51
AFFIDAVIT in Support of Petition 68
ORDER to File Petition 70
ORDER Denying Petition 7]
AMENDED MEMORANDUM - 9" Circuit — Affirming 73
ORDER Denying Appellants’ Motion to Recall Mandate, to
Clarify Amended Memorandum, to Reconsider Order to
Reconsider Recusal of Panel, to Return Court Fee 78
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC; an
Oregon Corp.;
REGGIE D. HUFF and
LISA A. HUFF,
Plaintiffs,
v.
THE ROBERT JACKSON
FAMILY TRUST; L. B.
LAND, INC., an Oregon
Corp; JOH SERVICES
INC., an Oregon Corp.;
JOHN D. HALLSWORTH,
JR.; ROBERT K.
JACKSON; LUANN
JACKSON; and
RODERICK A. BOUTIN,
Defendants.
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Civil No. 01-447 KI
OPINION
FILED
2001 SEP -6 -3:05
CLERK U.S. DISTRICT
COURT
DISTRICT OF OREGON
PORTLAND, OREGON
BY JL
David B. Adler
520 East Denney Way
Seattle, WA 98122
Herbert George Grey
14355 S.W. Allen Bivd.
Suite 100
Beaverton, OR 97005-4404
Attorneys for Plaintiffs
- and -
Roderick A. Boutin
Bowerman & Boutin, LLP
P.O. Box 100
Oregon City, Oregon 97045
David K. Miller
Miller & Wagner, LLP
2210 N. W. Flanders
Portland, Oregon 97210
William H. Stockton
Brisbee & Stockton
139 N. E. Lincoln Street
P.O. Box 567
Hillsboro, Oregon 97124
Attorneys for Defendants
KING, Judge:
Plaintiffs Reggie and Lisa Huff ' allege that defendants
engaged in various schemes to steal the Huffs’ business, plaintiff
Acro-Tech, Inc., away from them. Previously before the court
were: (1) defendants Hallsworth and JDH Services, Inc.’s motion
to dismiss or to stay or to enlarge time (326) and; (2) defendants
PEEL HER SLIPPING SLMS LER LEP FEO NIELS IED PEND LENGE OF 0 ‘
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Robert and Luann Jackson’, the Robe.t K. Jackson Family Trust
(“Jackson Trust”) and LB Land, Inc.’s motion to dismiss or to stay
or to enlarge time (#24) . After oral argument, I agreed to defer
ruling on these motions because of several procedural difficulties
with removal and remand of a related case and to allow defendants
to move against the merits of the complaint. Currently before the
court are: (1) defendant Boutin’s motion to dismiss (#46);
defendants Hallsworth and JDH Services, Inc.’s motions to dismiss
(#48); defendants Robert Jackson, Luann Jackson, The Robert K.
Jackson Family Trust and LB Land, Inc.’s motion to dismiss (#50);
and plaintiff's motion to strike (#54).
ALLEGED FACTS
Plaintiffs Reggie and Lisa Huff are the founders and
majority shareholders of plaintiff Acro-Tech, Inc. Huff patented
four inventions related to internal combustion engine performance
and environmental compatibility. He assigned some of the patents
to Acro-Tech. Plaintiffs allege that defendants, actin through an
enterprise, tried to acquire Acro-Tech through unlawful means and
for no compensation in order to gain control of its patents.
Defendants’ methods included: (1) ruses to gain access to Acro-
Tech’s confidential business information; (2) threatening Acro-
Tech directors to resign and give up their shares in the corporation;
(3) forcing Acro-Tech to defend frivolous lawsuits concerning its
leased office space; and (4) threatening litigation if plaintiffs did
not trade stock as defendants wished.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) will only be
granted if it “appears beyond doubt that the plaintiff can prove no
set of facts in support of his complaint which would entitle him to
relief.” Gilligan v. Jamco Development Corp., 108 F.3d 246, 248
(9" Cir. 1997). Normally, the review is limited to the complaint,
‘I will refer to Reggie Huff as “Huff” and his wife as “Lisa Huff.”
? I will refer to Robert Jackson as “Jackson” and his wife as
“Luann Jackson.”
6
and all allegations of material fact are taken as true and viewed in
the light most favorable to the non-moving party. Id.
A court may deny leave to amend when any proposed
amendment would be futile. Reddy v. Litton Industries, Inc., 912
F.2d 291, 296 (9" Cir. 1990), cert. denied, 502 U.S.C. § 1962
prohibits the following:
(a) It shall be unlawful for any person who has received any
income derived, directly or indirectly, from a pattern of
racketeering activity or through collection of an unlawful debt
in which such person has participated as a principal within the
meaning of section 2, title 18, United States Code, to use or
invest, directly or indirectly, any part of such income, or the
proceeds of such income, in acquisition of any interest in, or
the establishment or operation of, any enterprise which is
engaged in, or the activities of which affect, interstate or
foreign commerce. A purchase of securities on the open
market for purposes of investment, and without the intention of
controlling or participating in the control of the issuer, or of
assisting another to do so, shall not be unlawful under this
subsection if the securities of the issuer held by the purchaser,
the members of his immediate family, and is or their
accomplices in any pattern or racketeering activity or the
collection of an unlawful debt after such purchase do not
amount in the aggregate to one percent of the outstanding
securities of any one class, and do not confer, either in law or
in fact, the power to elect one or more directors of the issuer.
(b) It shall be unlawful for any person through a pattern of
racketeering activity or through collection of an unlawful debt
to acquire or maintain, directly or indirectly, any interest in or
control of any enterprise which is engaged in, or the activities
of which affect, interstate or foreign commerce.
(c) It shall be 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
4 Pe oe
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enterprise’s affairs through a pattern of racketeering activity or
collection of unlawful debt.
(d) It shall be unlawful for any person to conspire to violate any of
the provisions of subsection (a), (b), or (c) of this section.
18 U.S.C. § 1962.
Plaintiffs allege claims under each section of the statute
against various defendants.
A. Section 1962(c) (Claim One)
A violation under § 1962(c) requires proof of: (1) conduct;
(2) of an enterprise; (3) through a pattern; (4) of racketeering
activity. Howard v. America Online, Inc., 208 F.3d 741, 746 (9"
Cir.), cert. denied, 531 U.S. 828 (2000).
. Enterprise
Defendants contend that plaintiffs do not adequately allege
a separate enterprise and do not allege how the enterprise engaged
in interstate commerce.
An enterprise under RICO includes groups with a formal
legal structure and groups whose members merely associate in fact.
Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1083 (9"
Cir.), amended on other grounds, 234 F.3d 428 (9" Cir. 2000), cert.
denied, 121 S. Ct. 843 (2001). A group cannot be an enterprise,
however, unless it exists independently from the racketeering
activity in which it engages. It must have some sort of structure for
making decisions and mechanisms for controlling and directing the
affairs of the group on an on-going basis rather than an ad hoc
basis. A conspiracy is not a RICO enterprise. Id.
Plaintiffs allege * the following facts concerning the structure of
the enterprise. The enterprise is an association in fact comprised of
Jackson, Jackson Trust, Hallsworth, LB Land, and JDH Services. It
is operated, managed and/or controlled by all of them. Defendant
corporations, LB Land and JDH Services, adopted or approved the
’ First Amended Complaint at 13 ¢C; AT 149.G; AT 16
49 52-54; AT 20 § 74, 77.
8
unlawful activities of Jackson and Hallsworth. The Jackson Trust
is an alter ego of Jackson created to protect assets of Jackson and
to provide tax benefits. Boutin, as attorney for Jackson and
Hallsworth, filed a mandamus action against Acro-Tech
concerning shareholder access to corporate records. Boutin filed
the action as part of an effort to direct and control the enterprise
and its efforts to acquire control over Acro-Tech. Boutin’s actions
in representing defendants were a significant managerial act of
control over the enterprise.
Plaintiffs also allege under the RICO conspiracy claim that
Boutin used his legal skills to direct and control the efforts of the
enterprise to acquire control over Acro-Tech and to evade a
judgment entered in an FED action between the parties. He also
directed and managed the affairs of the enterprise in its appearance
before the courts and aided and abetted Jackson, Luann Jackson,
LB Land, and Hallsworth in their efforts to remove Hall from
control of Acro-Tech.
Plaintiffs contend that the inclusion of two corporations in
the enterprise satisfies the requirement that the enterprise is an
entity separate and apart from the pattern of racketeering activity I
which it engages, relying on Chang v. Chen, 80 F.3d 1293 (9" Cir.
1996). Chang held that the involvement of a corporation which has
an existence separate from its participation in the racketeering
activity can satisfy the enterprise element’s requirement of a
separate structure. The court went on to find that although the
corporation was named as a member of the enterprise, the
complaint did not allege how the corporation was related to or
participated in the alleged enterprise. Consequently the court held
that the complaint did not properly allege an enterprise. Id. At
1300-01. '
Plaintiffs allege that Acro-Tech employed JDH Services to
perform accounting services, giving JDH Services access to Acro-
Tech’s confidential business and financial information. LB Land
was the landowner for the premises Acro-Tech leased, allowing
LB Land to use the lease as a basis for FED litigation. This is
adequate to meet the test under Chang for a separate entity.
aa
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Plaintiffs, however, do not sufficiently allege the structure
of the enterprise or its mechanisms for directing its affairs. It is not
alleged whether decisions are consensual, with all members having
an equal say, or whether there is a hierarchy within the enterprise.
Plaintiffs allege that Boutin, who is not an alleged member of the
enterprise, controls its affairs. I conclude that the enterprise is not
adequately pleaded.
ya Predicate Acts
Plaintiffs allege predicate acts of mail fraud, wire fraud,
extortion, Travel Act violations, and Interstate Transportation of
Fraudulently obtained Money violations. Defendants contend that
the facts alleged do not constitute violations of these criminal
statutes.
Predicate acts must be conduct which is indictable.
Howard v. America Online, Inc., 208 F.3d 741, 748 cg" Cir.), cert.
denied, 531 U.S. 828 (2000); § 1961(1).
i. Mail and Wire Fraud
RICO actions alleging the predicate act of fraud must
plead with particularity the time, place, and manner of each act of
fraud, plus the role of each defendant in each scheme. Lancaster
Community Hospital v. Antelope Valley Hospital District, 940
F.2d 397, 405 (9° Cir. 1991) (mail fraud), cert. denied, 502 U.S.
1094 (1992). The complaint must allege what is false about a
representation and why it is false. In re Glenfed Inc. Securities
Litigation, 42 F.3d 1541 (9" Cir. 1994) (Rule 9(b) requirement
applied to federal securities claims).
To allege a violation of the mail fraud statute, 18 U.S.C. §
1341, a plaintiff must show: — (1) defendants formed a scheme or
artifice to defraud; (2) defendants used the United States mail or
caused a use of the mail in furtherance of the scheme, and (3)
defendants did so with the specific intent to deceive or defraud.
Rothman v. Vedder Park Management, 912 F .2d, 315, 316 cg" Cr.
1990).
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The crime of wire fraud under 18 U.S.C. § 1343 has the
same elements but substitutes used of the wires for use of the mail.
United States v. Garlick, 240 F.3d 789, 792 (9" Cir. 2001).
After reviewing the first amended complaint, all of the
allegations plaintiffs consider to be predicate acts of wire and mail
fraud lack specificity as required under the case law. For example,
in { 38(j) and (k), plaintiffs allege:
By falsely communicating by wire and mail to Plaintiff
Reggie Huff that John Hallsworth would review the
company’s books and papers and thereby inducing plaintiffs to
trust and rely upon these representations to authorize
Hallsworth to access the confidential books and records of
Acro-Tech.
By executing fraudulent documents which were used and
communicated through the U.S. mails in order to further the
scheme to defraud Plaintiffs of their property interest in Acro-
Tech.
This fails to allege the times, the roles of each defendant,
what is false about the representation that Hallsworth would
review the corporate books, which documents were fraudulent, and
why they were fraudulent.
il. Extortion
The statute states:
Whoever in any way or degree obstructs, delays, or affects
commerce or the movement of any article or commodity in
commerce, by robbery or extortion or attempts or conspires so
to do, or commits or threatens physical violence to any person
or property in furtherance of a plan or purpose to do anything
in violation of this section shall be fined......
Extortion is defined as the “obtaining of property from
another, with his consent, induced by wrongful use of actual or =
threatened force, violence, or fear, or under color of official right.”
18 U.S.C. § 1951(a), (b)(2).
Plaintiffs allege that in January 1997, Jackson demanded
that the Huffs surrender all but 3% of their Acro-Tech stock at less
1]
than market value or face a ruinous class action lawsuit which the
Huffs and the corporation could not afford to defend. In April
1997, Jackson, Luann Jackson, and John Hallsworth demanded
that plaintiffs purchase these defendants’ stock at an inflated price
or risk legal action. Jackson and Hallsworth threatened the Huffs
with economic damage from the sue of confidential business
information gained by Hallsworth while working as an accountant
for Acro-Tech. I consider these sufficient allegations for three
predicate acts of extortion.
Plaintiffs also allege that Jackson threatened to destroy the
value of Huff's patents. This does not adequately plead extortion
because it does not allege the wrongful way in which the value of
the patents would be destroyed. One way to destroy the value of a
patent, by inventing something better, is not wrongful.
Defendants allegedly used their status as shareholders to
threaten Acro-Tech board members that their personal assets were
at risk from shareholder litigation. Although the substance of the
extortion is adequately pled, I doubt that all seven defendants were
involved. I will not consider this as a predicate act until plaintiffs
specify which defendants engaged in the conduct.
On numerous occasions, Jackson and Hallsworth allegedly
attempted to coerce plaintiffs into signing a promissory note on
behalf of Acro-Tech to pay for the repurchase of shares from
Jackson Trust, with the note secured by all assets of Acro-Tech,
including its patents. I will not consider this a predicate act until
plaintiffs specify the coercion and approximate time frame. The
coercion details are necessary to determine if there was extortion
and the time frames are necessary when analyzing below if a
pattern exists.
Plaintiffs also allege that Jackson and Hallsworth
demanded in March 1997 that Reggie Huff meet with them and a
board member. There is nothing wrongful about this conduct as
alleged.
Jackson and Hallsworth allegedly made extortionate
demands for improvements to the property leased to plaintiffs
which plaintiffs did not owe under the terms of the lease. Plaintiffs
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must give specifics of what demands were made and why they
were wrongful under the terms of the lease.
ili. Trave! Act
Among other things, the Travel Act prohibits use of the
mails or any facility of interstate commerce, including the
telephone system, with the intent to promote, manage, establish,
carry on, or facilitate the promotion, management, establishment,
or carrying on, of certain unlawful activity, namely extortion as
alleged by plaintiffs. 18 U.S.C. § 1952(a)(3). None of the predicate
acts of extortion which are sufficiently alleged, as explained above,
allege that the mail or facilities of interstate commerce were
involved. Thus, there are no predicate acts of violation of the
Travel Act under the current allegations.
iv. Transportation of Stolen Money
The violation of the act prohibiting the transportation of
stolen goods or money, as alleged by plaintiffs, states that whoever
transports, transmits, or transfers in interstate commerce $5,000 or
more of money, known to be stolen or taken by fraud, violates the
statute. 18 U.S.C. § 2314. Plaintiffs allege that money in excess of
$5,000 obtained from a fraudulently obtained lease between Acro-
Tech and LB Land was deposited in various banking institutions
knowing that the money was obtained by fraud. Acro-Tech
allegedly entered into a three-year lease with LB Land in reliance
on representations from Jackson. No specifics are alleged on how
the lease was fraudulently obtained. This predicate act is not
sufficiently alleged.
sa Pattern
Defendants contend that plaintiffs do not adequately allege
a pattern of racketeering activity because the actions do not give
rise to the required continuity.
A pattern is at least two acts of racketeering activity within
ten years of each other. Howard v. America Online, Inc., 208 F.3d
741, 746 (9" Cir.), cert. denied, 531 U.S. 828 (2000); 18 U.S.C. §
1961(5). Although two acts are necessary, they are not sufficient to
13
find a violation. A pattern requires a showing of a relationship
between the predicates and of the threat of continuing activity. Id.
at 746.
“Related conduct embraces criminal acts that have the
same or similar purposes, results, participants, victims, or methods
of commission, or otherwise are interrelated by distinguishing
characteristics and are not isolated events.” Id. at 749 (quoting
H.J., Inc. v. northwestern Bell Telephone Co., 492 U.S. 229, 240,
109 S. Ct. 2893 (1989)) (internal quotation marks omitted). Having
the same participants, by itself, ic insufficient to establish
relatedness. Id.
The continuity requirement requires a plaintiff to prove
either “a series of related predicates extending over a substantial
period of time [, i.e., closed-ended continuity], or “past conduct
that by its nature projects into the future with a threat of repetition
[i.e., open-ended continuity]” Id. at 750 (internal citations
omitted). Predicate acts extending over a few months are not
sufficiently continuous to meet the requirement for close-ended
continuity. Id. Open-ended continuity is shown by predicate acts
that specifically threaten repetition or become a “regular way of
doing business.” Id.
Based on the analysis above, plaintiffs currently allege
three predicate acts of extortion: (1) in January 1997, Jackson
demanded that the Huffs surrender all but 3% of their stock at less
than market value; (2) in April 1997, Jackson, Luann Jackson, and
John Hallsworth demanded that plaintiffs purchase these
defendants’ stock at an inflated price; and (3) Jackson and
Hallsworth threatened the Huffs with economic damage from the
use of confidential business information gained by Hallsworth.
Plaintiffs generally allege that defendants are trying to
acquire Acro-Tech for no compensation to gain control of its
patents. The second predicate act, a demand to repurchase
defendants’ stock, is opposed to that purpose.
I am unable to say that the three predicates show open-
ended continuity because the current situation of stock ownership
and the value of the patents, such as when they expire, is not
alleged. Thus, I have no way to determine if a scheme to gain
ee
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control of the patents would likely continue into the future. I
cannot say that the three predicates show close-ended continuity
because the two which are tied to dates took place only three
months apart. Consequently, plaintiffs have failed to allege a
pattern of racketeering activity.
In summary, the alleged violation of RICO § 1962f© is
dismissed for failure to adequately plead an enterprise and a
pattern of racketeering activity.
B. Section 1962(a) and (b) (Claim Two)
The second claim alleges violations of sections (a) and (b)
of RICO:
(a) It shall be unlawful for any person who has
received any income derived, directly or indirectly, from a
pattern of racketeering activity or through collection of an
unlawful debt in which such person has participated as a
principal within the meaning of section 2, title 18, United
States Code, to use or invest, directly or indirectly, any part of
such income, or the proceeds of such income, in acquisition of
any interest in, or the establishment or operation of, any
enterprise which is engaged in, or the activities of which
affect, interstate or foreign commerce. A purchase of securities
on the open market for purposes of investment, and without the
intention of controlling or participating in the control of the
issuer, or of assisting another to do so, shali not be unlawful
under this subsection if the securities of the issuer held by the
purchase, the members of his immediate family, and his or
their accomplices in any pattern or racketeering activity or the
collection of an unlawful debt after such purchase do not
amount in the aggregate to one percent of the outstanding
securities of any one class, and do not confer, either in law or
in fact, the power to elect one or more directors of the issuer.
(b) It shall be unlawful for any person through a
pattern of racketeering activity or through collection of an
unlawful debt to acquire or maintain, directly or indirectly, any
interest in or control of any enterprise which is engaged in, or
the activities of which affect, interstate or foreign commerce.
ria
LOT FES NAS PR IT AE
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18 U.S.C. § 1962.
Defendants first contend that the arguments above also
apply to this claim. This is not true concerning whether an
enterprise is sufficiently alleged.
The “enterprise” referred to in subsections (a) and (b) is
thus something acquired through the use of illegal activities or
by money obtained from illegal activities. The enterprise in
these subsections is the victim of unlawful activity....
By contrast, the “enterprise” in subsection (c) connotes
generally the vehicle through which the unlawful pattern of
racketeering activity is committed, rather than the victim of the
activity.
National Organization for Women, Inc. v. Scheidler, 510 U.S. 249,
259, 114 S. Ct. 798 (1994). Plaintiffs are correct that the enterprise
referred to in this claim is Acro-Tech itself.
The § 1962(a) and (b) claim fails because plaintiffs have
not adequately alleged a pattern of racketeering activity. Moreover,
none of the three remaining predicate acts allegedly resulted in
control of Acro-Tech. Plaintiffs do not allege that they capitulated
in any of the extortion. This is fatal to the § 1962(b) part of claim
two. The § 1962(a) part of claim two also suffers from lack of any
income being derived from the remaining predicate acts. The only
income to defendants alleged by plaintiffs would be the rent, but
none of the predicate acts predicate acts concerning the rent were
adequately pleaded. Cleim Two is dismissed..
B. Sectiow 1962(d) (Claim Three)
Defendants note that this conspiracy claim must fail
because the substantive RICO claims are not adequately pleaded.
Boutin also contends that plaintiffs do not adequately allege an
argument.
“To establish a violation of section 1962(d) [conspiracy],
Plaintiffs must allege either an agreement that is a substantive
violation of RICO or that the defendants agreed to commit, or
participated in, a violation of two predicate offenses.” A § 1962(d)
16
conspiracy claim cannot survive if the substantive claim does not
state an action upon which relief could ever be granted. Howard v.
America Online, Inc., 208 F.3d 741, 751 cg" Cir.), cert. denied,
531 U.S. 828 (2000).
Because “he substantive RICO violations are being
dismissed, the conspiracy claim must also be dismissed.
Il. Oregon RICO
Oregon RICO, ORS 166.715-166.735, is modeled after the
federal statute. Federal cases interpreting the federal statute are
persuasive in interpreting the intent of the Oregon legislature. State
v. Blossom, 88 Or. App. 75, 78-79, 744 P.2d 281 (1987), rev.
denied, 305 Or. 22 (1988).
In claim 4, plaintiffs allege a violation of ORS 166.720(3),
which parallels § 1961(c). Consequently, Claim 4 is dismissed for
insufficiently alleging an enterprise.
In Claim 5, plaintiffs allege a violation of ORS 166.720(2),
which parallels § 1962(b). Claim 5 is dismissed for insufficiently
alleging a pattern of racketeering activity.
Plaintiffs allege in Claim 6 a violation of ORS 166.720(4),
which parallels § 1961(d), a RICO conspiracy. Claim 6 is
dismissed for lack of a properly pleaded substantive Oregon RICO
claim.
Il. State Common Law Claims
A. Abuse of Process
An abuse of process is the “perversion of legal procedure
to accomplish an ulterior purpose when the procedure is
commenced improper form and with probable cause.” Kelly v.
McBarron, 258 Or. 149, 154, 482 P.2d 187 (1971). The elements
of abuse of process are: (1) an ulterior purpose; (2) a willful act in
the use of process not proper in the regular conduct of the
proceeding; (3) injuries beyond those which are a common burden
on parties to litigation; and (4) an actual arrest or a seizure of
property. Larsen v. Credit Bureau, 279 Or. 405, 408, 568 P.2d 657
(1977); Clausen v. Carstens, 83 Or. App. 112, 118, 730 P.2d 604
17
(1986) (imposition of a receiver on spouse’s business during a
dissolution proceeding which caused immediate interference with
the business and its income and credit is a special injury);
Reynolds v. Given, 72 Or. App. 248, 256, 695 P.2d 946 (1985)
(counterclaim in a replevin action for plaintiff to receive property
awarded to defendant by probate court; plaintiff never had the
property so it was not seized from her).
Plaintiffs allege that the two FED actions and the
mandamsis proceeding for access to corporate records werz
brought to divert their resources into the defense of litigation
claims, furthering defendants’ goal of taking control of Acro-Tech.
No arrest or seizure of property is pleaded. Plaintiffs distinguish
Reynolds because it is also an action for replevin of property.
Clausen was not, however. Its underlying case was a bitter
dissolution proceeding in which the spouse’s business was
“seized” by the receiver. Moreover, the court reaffirmed this
element in Lee v. Mitchel, 152 Or. App. 159, 179, 953 P.2d 414
(1998). Plaintiffs also do not plead any injuries beyond having to
defend the actions. In Clausen, the business collapsed. Finally,
plaintiffs allege no willful act improper in the normal course of the
proceedings.
The abuse of process claim is dismissed.
B. Interference with Business Relations
Defendants contend that plaintiffs do not allege
interference with existing contracts or other business relations
Acro-Tech had with other parties. Defendants also contend that the
allegations that defendants were trying to take over the business
does not state a claim for this tort.
The elements of the torts of intentional interference with
economic relations are: (1) the existence of a professional or
business relationship; (2) intentional interference with the
relationship; (3) by a third party, (4) accomplished through
improper means or for an improper purpose; (5) a causal effect
between the interference and damage to the economic relationship;
and (6) damages. McGanty v. Staudenraus, 321 Or. 532, 535, 901
P.2d 841 (1995).
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The only allegations I see that relate to any type of a
relationship with a third party are those concerning some of
defendants coercing two board members to resign. There are no
allegations that these are economic relationships or of the damages
caused by the resignations. This claim is dismissed.
‘. Breach of Contract
Plaintiffs allege that the Jacksons, Jackson Trust, and LB
Land breached the lease dated March 19, 1996, by interfering with
plaintiffs’ right to the quiet and peaceful enjoyment of the leased
premises, by filing wrongful FED actions, and by seeking to
impose repair costs incident to a potential termination of the lease
which are unauthorized by the lease agreement.
Defendants contend that plaintiffs failed to allege
interference with plaintiffs’ use or occupation of the premises, as
opposed to annoyance caused by defendants’ actions, do not allege
that the lease prohibits filing FED actions, and are talking about
prospective conduct only concerning the repair costs, which is not
a current breach of the lease.
Defendants’ arguments are well taken. Plaintiffs
acknowledge that they failed to allege that they were eventually
forced from the premises. I also note that a contract can only be
breached by a party to the contract. Likewise, damages for breach
of contract are only suffered by a party to the contract or a third
party beneficiary. Paragraph 15 alleges that Acro-Tech leased the
premises from LB Land. Typically, these two parties are the only
ones involved in a breach of the lease.
The breach of contract claim is dismissed.
IV. Leave to Replead
Defendants ask that the action be dismissed with prejudice
because of the numerous previous cases between the parties.
Although that is true, I intend to ignore the past history unless an
event is relevant to a claim before me or a court ruling has
preclusive effect. Neither of these affect whether repleading will be
futile. Consequently, I will give plaintiffs a chance to replead the
complaint to correct the problems discussed above.
19
I make a few other requests of plaintiffs. With this many
parties in a case, it is hard to track which claims are alleged by and
against which parties. I ask that plaintiffs keep their use of the
generic terms “plaintiffs” and “defendants” to instances in which
they apply to all plaintiffs or all defendants. Otherwise, list out the
proper parties taking part in the conduct being alleged. In
particular, in the title for each claim, list the defendants who are
allegedly liable for the claim. Also remember that longer is not
necessarily better. The first amended complaint contains a lot of
redundant information, making it difficult to find the allegations
which support a claim. For example, J§ 15, 17, 19 could have been
combined into one much shorter paragraph while conveying the
same information. Paragraphs 36, 38(d), and 38(f) appear to be
talking about the same conduct. Paragraphs 20 and 21 are not
relevant to any of the claims. The complaint should be streamlined
before the additional required details are added.
CONCLUSION
Plaintiff's motion to strike (#54) is granted. The analysis is
based on the allegations in the complaint.
Defendant Boutin’s motion to dismiss (#46), defendants
Hallsworth and JDH Services, Inc.’s motions to dismiss (#48), and
defendants Robert Jackson, Luann Jackson, The Robert K. Jackson
Family Trust and LB Land, Inc.’s motion to dismiss (#50) are
granted. Plaintiffs may file a second amended complaint within 20
days of the date of this opinion. Discovery will remain stayed until
the court rules on any motions to dismiss the second amended
complaint, or until defendants’ time to respond to the second
amended complaint passes, whichever is later.
Defendants Hallsworth and JDH Services, Inc.’s motion to
dismiss or to stay or to enlarge time (#26) and defendants Robert
and Luann Jackson, The Robert K. Jackson Family Trust (“Jackson
Trust”) and LB Land, Inc.’s motion to dismiss or to stay or to
enlarge time (#24) are denied as moot.
Dated this 6" day of September, 2001.
GARR M. KING
United States District Judge
20
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC; an
Oregon Corp.;
REGGIE D. HUFF and
LISA A. HUFF,
Plaintiffs,
Civil No. 01-447 KI
OPINION
Vv.
)
)
)
)
)
)
THE ROBERT JACKSON )
FAMILY TRUST; L.B. )
LAND, INC., an Oregon +) FILED
)
)
)
)
)
)
)
)
)
Corp; JDH SERVICES 2002 JAN -3 A 9:29
INC., an Oregon Corp.; CLERK U.S. DISTRICT
JOHN D. HALLSWORTH, COURT
JR.; ROBERT K. DISTRICT OF OREGON
JACKSON; LUANN PORTLAND, OREGON
JACKSON; and BY JIL
RODERICK A. BOUTIN,
Defendants.
21
Herbert G. Grey
14355 S.W. Allen Boulevard, Suite 1000
Beaverton, Oregon 97005-4404
David B. Adler
520 East Denney Way
Seattle, Washington 98122
Attorneys for Plaintiffs
Roderick A. Boutin
Bowerman & Boutin, LLP
P.O. Box 100
Oregon City, Oregon 97045
S. Michael Rose
David K. Miller
Miller & Wagner
2210 N. W. Flanders
Portland, Oregon 97210
William H. Stockton
Brisbee & Stockton, LLC
139 N. E. Lincoln Street
P.O. Box 567
Hillsboro, Oregon 97124
Attorneys for Defendants
KING, Judge:
Plaintiffs Reggie and Lisa Huff allege that defendants
engaged in various schemes to steal the Huff’s business, plaintiff
Acro-Tech, Inc., away from them. On September 6, 2001, I
granted all defendants’ motions to dismiss the first amended
complaint but gave plaintiffs leave to file a second amended
complaint. Defendants moved against the second amended
22
complaint (corrected) (““Complaint”)'. Before the court are
defendants Hallsworth and JDH Services, Inc.’s motion to dismiss
(72), defendants Robert Jackson, Luann Jackson, The Robert K.
Jackson Family Trust and LB Land, Inc.’s motion to dismiss all
RICO claims with prejudice and decline supplemental jurisdiction
on the remaining state common law claims.
" Plaintiffs discovered some small errors in the Second
Amended Complaint and filed a corrected version. I will refer to
the corrected version as the “Complaint.”
OVERVIEW OF ALLEGED FACTS
Plaintiffs Reggie and Lisa Huff are the founders and
majority shareholders of plaintiff Acro-Tech, Inc. Huff patented
four inventions related to internal combustion engine performance
and environmental compatibility. He assigned some of the patents
to Acro-Tech. Plaintiffs allege that defendants, acting through an
enterprise, tried to acquire Acro-Tech through unlawful means and
for no compensation in order to gain control of its patents.
Defendants’ methods included three schemes: (1) attempt to
acquire Acro-Tech and gain control of the patents; (2) use of
positions as shareholders to demand that Acro-Tech buy them out
at an inflated price or risk legal action; and (3) force Acro-Tech to
defend frivolous lawsuits concerning its leased office space.
LEGAL STANDARDS
A motion to dismiss under Rule 12(b)(6) will only be
granted if it “appears beyond doubt that the plaintiff can prove no
set of facts in support of his complaint which would entitle him to
relief.” Gilligan v. Jamco Development Corp., 108 F.3d 246, 248
(9" Cir. 1997). Normally, the review is limited to the complaint,
and all allegations of material fact are taken as true and viewed in
the light most favorable to the non-moving party. Id. The court,
however, may consider whether conclusory allegations follow
from the description of facts alleged. Holden v. Hagopian, 978
F.2d 1115, 1121 (9 Cir. 1992).
et ae ee eee ay
eR Sor ke sae
Siew balipet had ol Maeetadee ices
23
A court may deny leave to amend when any proposed
amendment would be futile. Reddy v. Litton Industries, Inc., 912
F.2d 291, 296 (9" Cir. 1990), cert. denied, 502 U.S. 921 (1991).
DISCUSSION
I. Preliminary Matters
Before the court are motions to dismiss for failure to state
a claim. Accordingly, the analysis will be based on the allegations
as they stand in the current Complaint. Therefore, I deny plaintiffs’
motion for Rule 56(f) discovery because I am not going to engage
in any fact finding, as they contend. I also will not consider the
additional evidence contained in the Declaration of Reggie Huff.
Il. RICO
A. Section 1962 (Claim One)
The Racketeer Influence and Corrupt Organizations Act
(“RICO”) prohibits the following:
(c) It shall be 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).
A violation under § 1962(c) requires proof of: (1) conduct;
(2) of an enterprise; (3) through a pattern; (4) of racketeering
activity. Howard v. America Online, Inc., 208 F.3d 741, 746 cg"
Cir.), , 208 F.3d 741, 746 (9" Cir.), cert. denied, 531 U.S. 828
(2000).
Defendants contend that plaintiffs do not adequately allege
a separate enterprise.
An enterprise under RICO includes groups with a formal
legal structure and groups whose members merely associate in
fact. Simon v. Value Behavior Health, Inc., 208 F.3d 1073, 1083
(9" Cir.), amended on other grounds, 234 F.3d 428 (9" Cir. 2000),
24
cert. denied, 121 S. Ct. 843 (2001). A group cannot be an
enterprise, however, unless it exists independently from the
racketeering activity in which it engages. It must have some sort of
structure for making decisions and mechanisms for controlling and
directing the affairs of the group on an on- -going basis rather than
an ad hoc basis. A conspiracy is not a RICO enterprise. Id.
Plaintiffs allege the following facts concerning the
structure of the enterprise. The enterprise is an association in fact
comprised of Jackson, Jackson Trust, Hallsworth, LB Land, and
JDH Services. Jackson, Luann Jackson, and Hallsworth controlled
the enterprise through their positions as officers and directors of
the corporations which are members of the enterprise. Decisions
were collectively made by Jackson and Hallsworth and each
worked in cooperation with the other as indicated by the exchange
of stock between them and the sharing of confidential information
learned by Hallsworth from his work as an accountant for Acro-
Tech. Boutin controlled the enterprise as counsel of record in
various court proceedings and as trustee on deeds of trust.
Plaintiffs do not sufficiently allege the structure of the
enterprise or its mechanism for directing its affairs. The conclusory
allegation, made on information and belief, that Jackson and
Hallsworth collectively make decisions is based on the separate
conduct each was engaged in, the allegation that the two men
owned JDH Services together, and the transfer of stock between
them. The allegations of misconduct vary greatly, allegedly
ranging from extortion of board members to groundless FED
actions to complaints filed with government agencies regulating
securities. Considering this, the allegations are insufficient to plead
control of the enterprise on an on-going rather than an ad hoc
basis. Moreover, plaintiffs allege that Boutin, who is not an alleged
member of the enterprise, controls its affairs. That would be a most
unusual management structure. There is also no allegation that the
enterprise utilized a structure separate and apart from the predicate
acts to distribute the proceeds of the transactions. See Chang v.
Chen, 80 F.3d 1293, 1300 (9" Cir. 1996).
Plaintiffs contend that the inclusion of two corporations in
the enterprise satisfies the requirement that the enterprise is an
PERI AN ERT igs BEDE TON AE TATA A
RAID TA OR
25
entity separate and apart from the pattern of racketeering activity
in which it engages, relying on Chang. Chang held that the
involvement of a corporation which has an existence separate from
its participation in the racketeering activity can satisfy the
enterprise element’s requirement of a separate structure. The court
went on to find that although the corporation was named as a
member of the enterprise, the complaint did not allege how the
corporation was related to or participated in the alleged enterprise.
Consequently, the court held that the complaint did not properly
allege an enterprise. Id. at 1300-01.
I previously stated that the employment of JDH Services to
perform accounting services, thus giving JDH Services access to
Acro-Tech’s confidential business and financial infurmation, and
LB Land’s use of the lease as a basis for FED litigation was
adequate to meet the test under Chang for a separate entity. On
further reflection, I have changed my mind.
In Planned Parenthood v. American Coalition of Life
Activists, 945 F. Supp. 1355 (D. Or. 1996), reh’g en banc granted,
268 F.3d 908 (9" Cir. 2001), the court held that the American
Coalition of Life Activists (“ACLA”), a national organization, was
the RICO enterprise. The other defendants and enterprise members
were also members of ACLA, including a separate organization,
Advocates for Life Ministries. The court dismissed the single
defendant who did not belong to the ACLA. Thus, the
organizational structure of the ACLA was one and the same as the
organizational structure of the enterprise. Id. at 1384-85.
Likewise, in Webster v. Omnitrition International, Inc., 79
F.3d 776 (9" Cir.), cert. denied, 519 U.S. 96 (1996), the
corporation which was allegedly running a pyramid sales scheme
was found to be the RICO enterprise. Id. at 876-87. The other
members of the enterprise were officers and other principals of the
corporation, and its outside counsel.
Finally, in Simon v. Value Behavior health, Inc., 208 F.3d
1073 (9" Cir.), amended on other grounds, 234 F.3d 428 (9" Cir.
2000), cert. denied, 121 S. Ct. 843 (2001), the court held that
plaintiff alleged that defendants collaborated to defraud health plan
beneficiaries but did not adequately allege a RICO enterprise. The
26
numerous defendants, primarily insurance companies and their
agents, insurance industry trade groups, employee benefit plans,
employers, and governmental entities, included many corporations.
Based on a study of the facts in these cases, I conclude that
plaintiffs have not adequately alleged how an enterprise consisting
of two corporations, a trust, and two men who allegedly control the
three entities, are structured and operate as an enterprise as
opposed to an ad hoc conspiracy. Accordingly, the § 1962(c)
RICO claim (claim one) is dismissed.
B. Section 1962(b) (Claim Two)
The second claim alleges violations of section (b) of
RICO:
(b) It shall be unlawful for any person through a pattern of
racketeering activity or through collection of an unlawful debt
to acquire or maintain, directly or indirectly, any interest in or
control of any enterprise which is engaged in, or the activities
of which affect, interstate or foreign commerce.
18 U.S.C. § 1962(b).
Defendants contend that plaintiffs fail to allege a pattern of
racketeering activity and fail to allege that anything was acquired
through the use of illegal activities.
Plaintiffs allege that some of the defendants attempted to
gain control of Acro-Tech through the nonmonetary means of
pressuring board members to resign and filing complaints with
state agencies regulating securities. “Control” under § 1962(b)
does not require formal control such as holding a majority of stock
or being named as an officer or director. Ikuno v. Yip, 912 F.2d
306, 310 cg" Cir. 1990). The control required, however, is
obtaining a financial interest in the enterprise. See National
Organization for Women, Inc. v. Scheidler, 510 U.S. 249, 259
(1994) (victim enterprise must be an entity that was acquired).
The only financial interest or control of Acro-Tech alleged
by plaintiffs is that on July 16, 1996, Jackson Trust purchased
$50,000 of Acro-Tech stock which was later transferred among
various defendants. There is no allegation that this stock was
niet pete a llth IMRT i
EPL IN FS eT IN ERI PROPIA IT AES Ree 1 pay Ig
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b
ei
27
obtained through racketeering activity. It appears to be a legitimate
purchase which was allegedly later used as leverage by defendants.
That allegation, however, does not state a claim under § 1962(b).
Compare Gagan v. American Cablevision, Inc., 77 F.3d 951, 961
(7" Cir. 1996) (evidence of defendants acquiring interests in
limited partnerships with stolen funds and funds converted from
the limited partners themselves supports a § 1962(b) claim) with
Discon, Inc. v. Nynex Corp., 93 F.3d 1055, 1062 (2™ Cir. 1996)
(control of victim enterprise legally acquired during a divestiture
fails to state a claim under § 1962(b)), cert. denied, 522 U.S. 908
(1997).
Consequently, plaintiffs’ second claim under § 1962(b) is
dismissed.
.. Section 1962(d) (Claim Three)
“To establish a violation of section 1962(d) [conspiracy],
Plaintiffs must allege either an agreement that is a substantive
violation of RICO or that the defendants agreed to commit, or
participated in, a violation of two predicate offenses.” A § 1962(d)
conspiracy claim cannot survive if the substantive claim does not
state an action upon which relief could ever be granted. Howard v.
America Online, Inc., 208 F.3d 741, 751 (9" Cir.), cert. denied,
531 U.S. 828 (2000).
Because the substantive RICO violations are being
dismissed, the conspiracy claim must also be dismissed.
Ill. Oregon RICO
Oregon RICO, ORS 166.715-166.735, is modeled after the
federal statute. Federal cases interpreting the federal statute are
persuasive in interpreting the intent of the Oregon legislature. State
v. Blossom, 88 Or. App. 75, 78-79, 744 P.2d 281 (1987), rev.
denied, 305 Or. 22 (1988).
In Claim Four, plaintiffs allege a violation of ORS
166.720(3), which parallels § 1962(c). Consequently, Claim Four
is dismissed for insufficiently alleging an enterprise.
In Claim Five, plaintiffs allege a violation of ORS
166.720(2), which parallels § 1962(b). Claim Five is dismissed for
-“
28
insufficiently alleging an interest acquired by racketeering
activities.
Plaintiffs allege in Claim Six a violation of ORS
166.720(4), which parallels § 1962(d), a RICO conspiracy. Claim
Six is dismissed for lack of a properly pleaded substantive Oregon
RICO claim.
IV. Type of Dismissal for RICO Claims
Although the Complaint is entitled the Second Amended
Complaint (Corrected), it is the fourth complaint plaintiffs filed in
this action. I wrote a lengthy opinion dismissing the First
Amended Complaint which explained in detail the deficiencies in
the allegations and gave plaintiffs permission to replead.
Consequently, all RICO and Oregon RICO claims dismissed in the
Second Amended Complaint (Corrected) are dismissed with
prejudice.
IV. State Common Law Claims
Plaintiffs’ remaining claims, for abuse of process,
intentional interference with business and economic relations, and
breach of contract, all arise under Oregon common law. All federal
claims have been dismissed and there is no diversity jurisdiction. I
decline to exercise supplemental jurisdiction over the three state
law claims and dismiss them without prejudice. 28 U.S.C. §
1367(c)(3).
CONCLUSION
Defendant Hallsworth and JDH Services, Inc.’s motions to
dismiss (#72), defendants Robert Jackson, Luann Jackson, The
Robert K. Jackson Family Trust and LB Land, Inc.’s motion to
dismiss (#74), and defendant Boutin’s motion to dismiss (#76) are
granted in part. The action is dismissed.
DATED this 2 day of January 2002.
GARR M. KING
United States District Court Judge
= et eo |
29
HERBERT G. GREY, OSB 81025
14355 SW Allen Boulevard, Suite 1000
Beaverton, OR 97005-4404
Telephone: 503-641-4908
Email: hgrey.law@gte.net
A TRUE COPY
DAVID B. ADLER, WSBA 16585 Herbert Grey
520 East Denney Way
Seattle, Washington 98122
Tel: 206-343-5991
Fax: 206-343-7807
Email: Dlawyer48@aol.com
Attorneys for the Plaintiffs
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
ACRO-TECH, INC; an )
Oregon Corp., REGGIE
D. HUFF; and LISA G.
HUFF,
CASE No. CV’01-447 KI
PLAINTIFFS’ MOTION FOR
RECONSIDERATION/
AMEND JUDGMENT
Plaintiffs,
vs.
THE ROBERT JACKSON
FAMILY TRUST; L. B.
LAND, INC., an Oregon
)
)
)
)
)
) Non-Discovery Motion
)
)
Corp; JOH SERVICES )
)
)
)
)
)
)
)
Oral Argument Requested
INC., an Oregon Corp.;
JOHN D. HALLSWORTH,
Jr.; ROBERT K.
JACKSON; LUANN
JACKSON; and
RODERICK A. BOUTIN
Plaintiffs, by and through their undersigned counsel, '
respectfully move this Court to reconsider and reverse its Opinion
and Judgment of January 2, 2002 dismissing with prejudice the
federal RICO claims and the State ORICO claims in the Second
Amended Complaint, and declining jurisdiction over the state
claims. ? For the following reasons, Plaintiffs contend that the
Court’s application of the RICO substantive law requirements at
the pleading stage was in error, and further that the Court erred in
" At present undersigned counsel are counsel of record for
1) Acro-Tech Inc.; 2) Lisa Huff; and 3) Reggie Huff. Mr. Reggie
Huff, as an individual, has informed his attorneys that he is
asserting his right to represent himself and has directed his counsel
to cease representing him as his personal attorney on this case.
However, LR 83.11, (D. Or.) states that counsel may withdraw
only “with leave of court” and following the filing of a motion to
withdraw. There is some conflict between the client’s direction to
his attorneys, which would leave the client in a pro se status, and
the Court’s rules on the method and timing for withdrawal.
Therefore, this Motion for Reconsideration is filed on behalf of
Reggie Huff only pending the Court’s approval nunc pro tunc and
issuance of an Order once a motion to withdraw as attorney for
Reggie Huff is filed by counsel.
? The Judgment was entered upon a Rule 12(b)(6) Motion
to Dismiss. Plaintiffs respectfully suggest that the use of the term
“Judgment” for entry of an Order of Dismissal may be
inappropriate. Judgments are normally listed in Rules 55-57
dealing with an Order which has the effect of awarding some king
of affirmative relief upon a specific claim to the moving party. A
Rule 12(b)(6) Motion seeks no such relief. However, an Order of
dismissal of the Complaint has the effect of a “Judgment” for
purposed of the right to appeal. See FRCivP Rule 54(a).
Given the Court’s entry of a “Judgment”, Rule 59(d) and
(e) appear appropo the filing of a motion for reconsideration. This
Motion for Reconsideration or Amendment of Judgment is styled
to conform with that Rule even though there has been no trial or
award of relief upon a claim.
BEST RAN NNR OF RHE mE pL SCP OR” > —
—
EN
2
ee ee eT ae en eo . aoe. ered
31
not allowing the Plaintiffs the opportunity to file a Third
Amended Complaint to satisfy the changed interpretation of
RICO’s “Enterprise” requirements as set forth in the Court’s
opinion. Plaintiffs submit that by reversing its earlier opinion on
the meaning of Chang v Chen, 80 F. 3d 1293 (9" Cir., 1996) , 80
F. 3d 1293 (9" Cir., 1996) after the Second Amended Complaint
had been filed, the Court should allow the Plaintiffs to file a
revised Complaint in conformity with the Court’s new explanation
of RICO. See Rule 15(a), F.R. Civ. Proc.
1. The § 1962(c) RICO claim, 18 U.S.C. § 1962(c) was
dismissed upon the Court’s conclusion that the Second Amended
Complaint (hereinafter deemed simply “the Complaint’) failed
to adequately allege the existence of an Enterprise independent
of the racketeering activity in which it engages, i.e. with a
“structure for making decisions and mechanisms for controlling
and directing the affairs of the group on an ongoing basis rather
than an ad hoc basis.” Opinion, page 4. In so ruling the Court did
not decide that any other grounds for dismissal of the various
RICO claims as raised by Defendants existed. Accordingly,
Plaintiffs assume that the other bases for dismissal asserted by
the Defendants was/were denied. Plaintiffs urge this Court to
reconsider its decision on the Enterprise element and reverse its
Judgment of dismissal of this claim..
2. The Court also has dismissed the Complaint with prejudice
without leave to file an Amended Complaint ‘« conform to the
Court’s new opinion on the pleading requires “nts imposed by
RICO. In so doing, the Court reversed its ow . earlier opinion
[which had dismissed the First Amended complaint for lack of a
pattern] which found there was an Enterprise based on Chang v
Chen, 80 F. 3d 1293 (9" Cir., 1996). That earlier opinion
imposed guidelines for the drafting of the Second Amended
Complaint. Se Opinion page 5: “I have changed my mind.” This
mid-trial modification in how the court is applying RICO results
in extreme prejudice to the Plaintiffs as they are now punished
with a dismissal with prejudice for not conforming to a Judicial
opinion that did not exist and could not be anticipated during the
drafting of the Second Amended Complaint. Not only has the
_emnseaaanaaasaamaammmmaaaamm i 2,
SE Gl ih KR ee Se
32
court tightened the standards for pleading under Rule 8, but it
has imposed new pleading requirements not found in RICO and
which are inconsistent with the RICO statue itself. See Infra.
Now not only must a structure within the meaning of Chang be
alleged, but the Plaintiff must also be able to divine and plead
the internal structure of the Enterprise that is seeking to take over
its business and is engaging in racketeering activities that are
known only by the impact they have on the victim-Plaintiffs.
The use of rew pleading rules and the revision to this
Court’s own explication of Chang v Chen warrant that Plaintiffs
be permitted to file another Amended Complaint. Otherwise the
Plaintiffs are punished for the Court’s own actions which benefit
only Defendants without the participation of Plaintiffs in the
litigation/motions process. Rule 15 commands that leave to
amend be granted liberally. That standard includes the
opportunity to insert in the Complaint those facts which comport
with the Court’s current declaration of the law.
3. DISMISSAL OF THE § 1962(c) CLAIM WAS IN ERROR.
The Court’s view of the necessary elements of an Enterprise
which must be alleged (not proven) at the pleading stage is
erroneous. See Opinion at pp. 5-7. The Court has incorrectly
grafted an economic analysis onto the RICO statute contrary to
several explicit opinions from the Supreme Court rejecting such
any revisionist interpretation of the plain language of the RICO
Statute.
a. The Court requires that the Complaint allege how the
“proceeds of the transactions” were distributed and relate that
to the structure of the Enterprise. This is a new requirement for
a RICO complaint. The Supreme Court has focused on the
decision making process with regard to the commission of the
predicate acts, not to the later-in-time distribution of
“proceeds”, whatever that term may mean. A RICO violation
foes not require proof of any “proceeds” or any other
economic benefit to the defendants. RICO has always been
understood, by Congress, the Supreme Court, and other federal
courts as punishing those who would use racketeering
activities to exert control over other persons or organizations
33
such that interstate commerce is affected. See, e.g. See U.S. v
Santoni, 585 F.2d 667, at 673 (4 Cir., 1978), cert. den. 440
U.S. 910 (Extortion conviction based on loss of the property
right “to make a business decision free form outside pressure
wrongfully imposed...Extortion ... does not require a direct
benefit to the extortionist, the gravamen of the offense is loss
to the victim; and such loss includes intangible as well as
tangible property” (citations omitted); Reeves _v_Ernst_&
Young, 507 U.S. 170 (1993); Nat’! Org. for Women_v
Scheifler, 510 U.S. 249 (1994).
b. In NOW v Scheidler the Supreme Court specifically held
that RICO does not require an economic motive. Hence there
can be no requirement that a Complaint address how proceeds
are distributed since there need be no proceeds at all. Id at 258-
261. “Predicate acts may not benefit the protesters
[defendants] financially but may drain money from the
economy by harming businesses....”. As the Supreme Court
noted, the language of subsection (b) does not mandate that the
Enterprise be a “profit-seeking” entity. Nothing further is
required for a Subsection (c) Enterprise. In that situation the
Enterprise is engaging in unlawful activities directed at other,
yet “it need not have ... an economic motive for engaging in
illegal activity; it need only be an association in fact that
engages in a pattern of racketeering activity”. Id at 259.
c. The Court has erred in interpreting the definition of
Enterprise under Chang v Chen as requiring that the members
of the Association-in Fact Enterprise also be participants,
employees, or owners of the corporation that is used to give
structure to the Enterprise within the meaning of Chang v
Chen. See Opinion, page 6. The Court erred in dictating that in
an association in fact Enterprise, 18 U.S.C. § 196 4) requires
that a corporation be synonymous, if not identicai, with the
Enterprise. See Opinion, page 6. Again the court’s application
of Chang v Chen is used to re-write the RICO statue itself and
impose requirements and restrictions not found within the
statute itself. This the Court cannot do. See Sedima v Imrex,
473 U.S. 479 (1985); U.S. v_Turkette, 452 U.S. 579, 581
ee |
eee ween
34
(1981); H.J. Inc. v Northwestern Bell Tel., 492 U.S. 229, 248
(1989). An Enterprise includes any entity capable of making a
decision. It may consist solely of a corporation or it may
consist of a corporation acting together with other individuals
associated in fact even though the group itself is “not a legal
entity”. See 18 U.S.C. § 1961(4). The that the group need not
be a legal entity is contrary to this Court’s Opinion holding
that individuals and separate corporations that make up the
Enterprise must be bound together in some form of singular
“legal entity’. The Court’s interpretation of Planned
Parenthood v_ American Coalition of Life Activists, 945 F.
Supp. 1355 (D. Or., 1966) reh. En banc granted, 268 F.3d 908
(9" Cir., 2001); Webster v Omnitrition Int’]. Inc., 79 F.3d 776 :
(9" Cir.,) cert. den. 519 U.S. 96 (1996); and Simon v Value
Behavioral health, Inc., 208 F.3d 1073 (9" Cir.), amended on
other grounds 234 F.3d 428 (9" Cir., 2000), cert. den, -U.S.-,
121 S.Ct. 843 (2001) rewrites the statutory definition of an
Enterprise and directly limits the statute to prosecution of only
intra-corporate conspiracies as association in fact enterprises.
d. The Court’s requirement that a Complaint alleging an
association in fact enterprise, which includes a corporation
must also describe how operational decisions are made within
the Enterprise, is incorrect and puts the trial cart before the
discovery horse. Rule 8 does not require that this kind of proof :
be elaborated within the Complaint itself. Rule 56 is the proper
procedural vehicle for claiming that the facts do not indicate a
structured decision making process as opposed to an ad hoc
conspiracy. Rule 56 authorizes a Court to make a factual
determination of whether and how the Enterprise operates.
This new requirement for RICO pleading incorporates the
issue of control required in order to make an individual liable
as a participant for the predicate acts committed by and
through the Enterprise, See Reeves v Ernst & Young, 507 U.S.
LEON OTE ETN MO IROL GEOL! TORO. A RN FN
PIER SOME ET
170 (1993), into the basic definition of the Enterprise for
pleading purposes. 18 U.S.C. § 1961(4) does not contain in its
definition any limitation on Enterprise to those groups of
35
individuals associated in fact which have any one form of
structure and/or operation.
e. The Complaint adequately alleges how the Enterprise
operates. It alleges that Jackson and Hallsworth are partners in
JDH Services, and as partners each controlled that corporation.
It alleges that Jackson owns and controls both JDH Services
and LB Land, Inc. and also The Jackson Family Trust. It
alleges that Defendant Boutin directed and controlled the
Enterprise in his efforts to gain control over the patents on
behalf of the Enterprise and that he also served as Trustee on
various Deeds of Trust executed by the Jackson Family Trust.
The Trust was also the corporate vehicle used to purchase
shares of stock in Acro-Tech which shares were later
exchanged between the Trust and Hallsworth, who was also
Jackson’s partner in JDH Services. Unless someone was taking
notes, there is nothing more that can be alleged in the
Complaint in advance of discovery on the decision-making
process. There is no factual basis upon which this Court can
rely to conclude that decisions were not made collectively by
Defendants Jackson, Hallsworth, and Boutin.
f. The Court erred in characterizing the Enterprise as simply an
“ad hoc conspiracy”. See Opinion, page 6. The Court did not
grant the Defendants’ Rule 12(b)(6) motion to dismiss on the
basis that no pattern was adequately alleged. The allegation of
a pattern is inconsistent with the finding of an “ad hoc
conspiracy”. “Ad hoc” and “Pattern” are mutually exclusive
terms. Once the pattern is shown, the Plaintiff is entitled to
prove either a substantive violation under §§ 1962(b) or (c) or
a conspiracy under § 1062(d). Proof of a conspiracy does not
negate the existence of an Enterprise. See Salinas v U.S., 522
U.S. 52 at 65 (1997) [§1962(c) violations are often conducted
by more than one person thus making it “difficult to determine
just where the enterprise ends and the conspiracy begins...”]
The Court’s opinion has erred in using the existence of a
conspiracy to deny the existence of an Enterprise.
4. THE DISMISSAL OF THE §1962(B) CLAIM WAS IN
ERROR. The Court again demands factual proof in the
36
Complaint of damages suffered by Acro-Tech and has imposed
the duty to plead the obtaining of a financial interest in the
Enterprise in a §1962(b) Claim. This is contrary to the Supreme
Court’s clear ruling in NOW v Scheidler, 510 U.S. 259 (1994)
that no economic motive need be alleged. Acquisition of a
financial interest is but one means of acquiring control. In NOW
v_Scheidler the defendant protesters were not trying to obtain
any financial interest in the targeted corporation. Rather they
were trying to prevent it from operating. The Supreme Court
upheld the use of RICO to fight this type of enterprise activity
under 18 U.S.C. §1962(c). The Court’s citation to NOW_v
Scheidler, 510 U.S. at 259 is a misreading of the decision. The
Supreme Court only held that under a §1962(a) or (b) claim the
Enterprise is the entity that is being acquired through illegal
activity. The preceding portion of that sentence stated that “...(b)
does not mandate that the enterprise be a ‘profit-seeking”
entity”. For a §1962(c) violation the Enterprise is not required to
have any “economic motive for engaging in economic activity”.
Id at 259.
a. The Complaint alleges the acquisition of control over Acro-
Tech through a pattern of racketeering, i.e. extortion and mail
fraud. “Control” as a noun is defined by Black’s Law
Dictionary as: “The ability to exercise a directing or
restraining influence over something”. The allegations in the
Complaint meet that definition under the §1962(b) claim.
b. Defendants Jackson and Hallsworth and the Jackson Family
Trust acquired a financial interest in Acro-Tech which they
then used to acquire control through acts of racketeering.
c. The Defendants acquired their stock ownership, or financial
interest in Acro-Tech, through acts of racketeering, to wit:
Mail and Wire Fraud as is alleged in the Complaint. The lease
of office space LB Land is alleged to have been induced by
acts of mail and wire fraud. The rent money and the value of
improvements to the leased space was then used by the
Defendants to purchase stock in Acro-Tech. The Court’s
opinion disregards the continuing line between the initial
predicate acts and the use of the proceeds from the
——
37
racketeering to acquire a stock-ownership interest in Acro-
Tech as the victim Enterprise under §1962(b).
5. THE COURT ERRED IN DISMISSING THE CONSPIRACY
CLAIM, §1962(d). For the reasons stated in Salinas v. ULS., 522
U.S. 52, 63-66 (1997) and the RICO statue itself, the Court erred
in concluding that the conspiracy claim cannot exist independent
of the substantive RICO claims under §1962(b) and (c),
a. To sustain a §1962(b) or (c) claim, two or more overt
(predicate) acts must be proven to establish the pattern of
racketeering. The RICO conspiracy claim does not require
proof of any overt predicate act by a co-conspirator. At most,
some act must be proven as part of the damages or standing
aspect of the claim which limits recovery to those persons
injured “by reason of” a §1962 violation. See 18 USC
§1964(c). The Court’s Opinion indicates that a pattern of
racketeering was shown by the Complaint. In Salinas the
Court ruled that under §1962(d) “there is no requirement of
some overt act or specific act... the RICO conspiracy
provision is, then, even more comprehensive that the general
conspiracy offense in §371.” id at 63, “The RICO conspiracy
statue §1962(d), broadened conspiracy coverage by omitting
the requirement of an over act...” Id at 64. Based on this the
Supreme Court held:
“It is elementary that a conspiracy may exist and be
punished whether or not the substantive crime ensues,
for conspiracy is a distinct evil, dangerous to the
public and so punishable in itself.” Id at 65.
b. Congress intended that a conspiracy claim could be asserted
independent of the substantive claims. Otherwise it would
have relied upon the general conspiracy statute, 18 U.S.C.
§371 to punish persons who conspire to violate §§1962(b) or
(c). The creation of a separate RICO conspiracy statute
together with the language of §1964(c) means that a
conspiracy claim may be asserted with or without a violation
of the substantive crimes in subsections (a), (b) or (c).
§1964(c) treats equally without distinction the separate
subsections of §1962(a), (b), (c) or (d) in authorizing civil
38
suit by persons injured by reason of the racketeering activity
This Court’s opinion has rewritten the statute and rendered
superfluous the specific language used by Congress in
creating four separate causes of action in 18 USC §1962.
EXERCISE OF SUPPLEMENTAL JURISDICTION
OVER STATE COMMON LAW CLAIMS
The court specifically declined to exercise supplemental
jurisdiction over plaintiffs’ state law claims, relying on 28 USC §
1367(c)(3). Opinion, p. 8. While plaintiffs appreciate the court’s
dismissal of those claims was without prejudice, the reality is
plaintiffs will be hard-pressed to successfully prosecute those
claims anywhere except this court.
As represented to the court previously, plaintiffs dismissed
their predecessor state lawsuit in Columbia County Circuit court in
light of Judge Ashmanskas’ remand in USDC Case No. CVO1-
00212 AS and were prepared to litigate all their state and federal
claims fully in the instant action. It is likely those claims cannot be
filed or revived in state court due to potential claim preclusion
and/or statute of limitations defenses. The running of the statute of
limitations on a pendent state law claim is a salient factor to be
evaluated in deciding whether the federal court should retain
jurisdiction of such claims. O’Connor v. Commonwealth Gas Co.,
251 F.3d 262 (1" Cir, 2001). Clearly the same rationale obtains
with respect to possible claim preclusion.
With particular reference to RICO claims, supplemental
jurisdiction was found to exist over state law claims, even though
individual plaintiffs lacked standing to bring RICO claims, and no
diversity existed, because all the claims arose from the same
nucleus of operative facts. Jerry Kubecka, Inc. v. Avellino, 898 F.
Supp. 963 (EDNY, 1995).
Respectfully, the court should retain jurisdiction over
Plaintiffs’ state common law claims, irrespective of the disposition
of the federal statutory claims.
CONCLUSION:
The Court’s judgment should be vacated and its Opinion
rescinded. The motions to dismiss should be denied. It cannot be
39
said that there are no set of facts under which the RICO claims
cannot be proven, once the Court reconsiders and amends its
erroneous interpretation of the RICO statute. For the same reasons
the ORICO claims should be reinstated and the Court should
accept ancillary jurisdiction over the Oregon state law claims.
DATED this 14" day of January, 2002.
Herbert G. Grey, OSB # 81025
David B. Adler, WSBA # 16585
Of Attorneys for Plaintiffs
40
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
\y)
/V\
ACRO-TECH,INC;an ) — U.S.D.C. Or. “
Oregon Corp.; ) No: CV’01-447 KI
ee ) Ninth Circuit
and ) No. 02-35176
REGGIE D. HUFF; LISA G.)
HUFF )
Plaintiffs— Appellants _)
a | ) RICO
THE ROBERT JACKSON )
FAMILY TRUST; L.B. _ )
LAND, INC., an Oregon __)
Corp; JOH SERVICES )
INC., an Oregon Corp.; )
JOHN D. HALLSWORTH, )
Jr.; ROBERT K. )
JACKSON; LUANN )
JACKSON; RODERICK _ )
A. BOUTIN )
Defendants — Appellees _)
Informal
APPELLANTS’ BRIEF
4]
Appeal from judgment of dismissal with prejudice in part
and without prejudice in part and orders denying reconsideration
for relief from judgment of the U.S. District Court for the District
of Oregon.
The Honorable Garr M. King, U.S.D.C. Judge
Reggie D. Huff and
Lisa G. Huff
34685 Bachelor Flat Road
St. Helens, Oregon 97051
(503)366-0223 or (800)936-9394
Plaintiff — Appellants Pro se
42
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
95 Seventh Street, P.O. Box 193939
San Francisco, CA 94119-3939
December 5, 2002
CA No. 02-35176 Acro-tech Inc. v. The Robert K.
Recently you received notice that the United States Court
of Appeals was considering submitting your case without oral
argument. That notice reflected the tentative assignment of your
case to a panel of the Court assigned to decide cases without oral
argument.
Upon further consideration, the Court has decided that
your case should be reassigned to an oral argument panel.
Although in most instances a reassigned case will receive oral
argument, the panel of judges to whom the case will be assigned
has discretion to order the case submitted on the briefs without oral
argument. When the time and place for argument before or
submission to an argument panel has been determined by the
Court, our office will notify you by mail.
Very truly yours,
Cathy A. Catterson
Court Clerk
By: Tim Hom
Deputy Clerk
See Rn ne ner et ne nent cee ci eS AS a nnn Ns tc ennennnecr eee ee cseommcnsor senna meee
43
From the desk of:
Reggie D. Huff
SPO Box 4651
Warren, OH 44483
(330)372-6615
Cathy A Catterson and/or Tim Hom
Clerk of Court / Deputy Clerk
U. S. Court of Appeals for the Ninth Circuit
95 Seventh Street
PO Box 193939
San Francisco, CA 94119-3939 “
RE: CA No. #02-35176 Acro-tech Inc. v. The Robert K.
June 24, 2003
Dear Ms. Catterson and/or Mr. Hom:
I am in receipt of your letter dated December 5, 2002 regarding
submission of the above case to the court for oral arguments.
Thank you for your astute administration of this matter. I agree
that a case of this rare, classic RICO nature should be given every
opportunity to be fully heard and analyzed. Upon further reflection
I should have requested oral arguments. Please forgive my
trepidation.
While the thought of making oral arguments before the Ninth
Circuit would understandably make me a little nervous, please
inform the court that I intend to embrace the responsibility. |
intend to be prepared and able to answer most questions one would
anticipate in this case.
Also, I should not have a problem scheduling a trip to San
Francisco at any time between now and at least the end of the year.
Thank you again for your astute administration.
Very truly yours, cc: S. Michael Rose; Michael T.
Reggie D. Huff— Appellant Stone; Roderick Boutin/Defendant
44
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LOCATION OF HEARING FOR SEPTEMBER CALENDAR:
United States District Court
Mark O. Hatfield United States Courthouse
1000 Southwest Third Avenue
Portland, OR 97204-2902
Date of Notice
July 22, 2003
wria@ Picture ID required to enter Courthouse
All CJA Counsel call (415) 556-9853 for travel authorization
Thursday, September 11, 2003 9:30 a.m. Courtroom 16
( ) * 02-35460 Gibertson v. Albright
( ) * 02-35470 Graham v. Barnhart
( ) * 02-3548] Hodge v. Barnhart
( ) * 02-35541 Cochrane v. Barnhart
( ) * 02-35203 _ Conaway v. Baker County
( ) * 02-35268 Rotec v. Mitsubishi Corp.
Friday, September 12, 2003 9:30 a.m. Courtroom 16
(¥) * 02-35176 Acro-Tech, Inc. v. Jackson Family Trust
( ) * 02-35240 James W. Fowler v. Norchem, Inc.
( ) * 02-35252 Brooks v. Barnhart
( ) * 02-35264 Thrush v. Barnhart
( ) * 02-35278 Oatman v. Barnhart
( ) * 02-35374 Desyllas v. Bernstine
( ) * 02-35398 Arboireau v. adidas-Salomon
( ) * 02-35471 Batson v. Barnhart
*Maximum argument time 10 minutes per side
+Maximum argument time 15 minutes per side
Other Cases 20 minutes per side
Please return the enclosed Acknowledgment
of Hearing Notice to the Clerk’s Office
www.ca9.uscourts.gov
fe ssa
RS Ma be AO ye es alk A Nebr had
aA Nahely
CAS, ro eS TAS at baal
chaine Fastioin Sa
Ce tet Oat ion Nine RS i ict ict nN Sash CHAS
45
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp.,
Plaintiff,
and,
REGGIE D. HUFF and LISA G. HUFF,
Plaintiffs — Appellants,
v.
THE ROBERT JACKSON FAMILY
TRUST; LB LAND, INC., an Oregon
Corp.; JOH SERVICES INC., an Oregon
Corp., JOHN D. HALLSWORTH, JR.;
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
No. 02-35176
D.C. No. CV-01-447-KI
ORDER
FILED
AUG 26 2003
CATHY A.
CATTERSON,
CLERK
U.S. COURT OF
APPEALS
This case shall be submitted on the briefs and record,
without oral argument, on September 12, 2003, in Portland,
Oregon, pursuant to Fed. R.App. P. 34(a)(2).
FOR THE COURT
CATHY A CATTERSON
CLERK OF COURT
By.
Howard Hom
Deputy Clerk
46
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp., | No. 02-35176
Plaintiff, D.C. No. CV-01-447-KI
and,
REGGIE D. HUFF and LISA G. HUFF,| ORDER
Plaintiffs — Appellants,
FILED
v. AUG 28 2003
CATHY A.
THE ROBERT JACKSON FAMILY CATTERSON,
TRUST; LB LAND, INC., an Oregon CLERK
Corp.; JOH SERVICES INC., an Oregon U.S. COURT OF
Corp., JOHN D. HALLSWORTH, JR.; APPEALS
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
Appellants’ Motion for Reconsideration of Order for Case
Submission Without Oral Arguments is DENIED.
Pursuant to Federal Rule of Appellate Procedure 28(j), a
citation of supplemental authority may be provided by letter at any
time before the court renders its decision.
FOR THE COURT
CATHY A CATTERSON
CLERK OF COURT
By:
Howard Hom
Deputy Clerk
i
EPI SMA EM PI PTET it ANE RBCS, CNet SSE “igh hehe
LEASES cat di
47
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp.,
Plaintiff,
and,
REGGIE D. HUFF and LISA G. HUFF,
Plaintiffs — Appellants,
V.
THE ROBERT JACKSON FAMILY
TRUST; LB LAND, INC., an Oregon
Corp.; JDH SERVICES INC., an Oregon
Corp., JOHN D. HALLSWORTH, JR.;
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
No. 02-35176
D.C. No. CV-01-447-KI
MEMORANDUM
FILED
SEP 30 2003
CATHY A.
CATTERSON,
CLERK
U.S. COURT OF
APPEALS
Appeal from the United States District Court
for the District of Oregon
Garr M. King, District Judge, Presiding
* This disposition is not appropriate for publication and
may not be cited to or by the courts of this circuit except as may be
provided by Ninth Circuit Rule 36-3.
48
Submitted September 12, 2003**
Portland, Oregon
Before: ALDISERT,*** GRABER, and GOULD, Circuit Judges.
Plaintiffs Reggie and Lisa Huff appeal the district court’s
dismissal of their state and federal RICO actions against
Defendants.
1. The district court did not err in dismissing Plaintiffs’
18 U.S.C. § 1962(c) RICO and Oregon Revised Statute (“ORS”) §
166.720(3) ORICO claims. Reviewing de novo, we agree with the
district court’s holding that Plaintiffs’ Second Amended Complaint
did not adequately plead “enterprise.”
Plaintiffs alleged that Hallsworth and Robert Jackson
made decisions together and worked cooperatively. This allegation
is one of conspiracy — it does not satisfy the standard that an
enterprise must, “[a]t minimum, ... have some sort of structure ...
for the making of decision s and some mechanisms for controlling
and directing the affairs of the group on an on-going, rather than an
ad hoc, basis.” Simon v. Value Behavioral Health, Inc., 208 F.3d
1073, 1083 (9" Cir. 2000) (internal quotation marks omitted).
Plaintiffs’ allegation that Boutin exercised control over the
enterprise is also inadequate. Boutin was not a member of the
alleged enterprise. Further, it is unclear how Boutin could have
“exercised control” over the enterprise via “consultation and
advice” to Jackson and Hallsworth, who themselves were alleged
to have “exercised control.”
Including two corporations in the enterprise does not per
se satisfy the requirement that the enterprise be a separate entity
apart from the pattern of racketeering activity in which it engages.
Chang v. Chen, 80 F.3d 1293, 1300 (9" Cir. 1996): see also
Simon, 208 F.3d at 1083-84. In this case, Plaintiffs failed to allege
** This panel unanimously finds this case suitable for
decision without oral argument. Fed. R. App. P. 34(a)(2).
*** The Honorable Ruggero J. Aldisert, Senior Judge,
United States Court of Appeals for the Third Circuit, sitting by
designation.
- - :
LANE ARN Me aD 5 ee Ss hee te Sl
“oe.
BO ian ARO ae i ictd LOEB ithe
EA tag Mec ED
49
either that a system of authority existed in a Separate enterprise or
that Defendants utilized a structure apart from the predicate acts to
distribute the proceeds of the racketeering activity.
Oregon’s RICO is modeled after the federal statute.
Federal cases interpreting the federal statute are persuasive in
interpreting the parallel Oregon provision. State v. Blossom, 744
P.2d 281, 283 (Or. Ct. App. 1987). ORS § 166.720(3) parallels §
1962(c). Because the district court correctly dismissed Plaintiffs’ §
1962(c) claim, the court also correctly dismissed Plaintiffs’ ORS §
166.720)3) claim.
2. The district court did not err in dismissing Plaintiffs’
18 U.S.C. § 1962(b) RICO and ORS § 166.720(2) ORICO claims.
The district court erred in its application of the “control” standard.
See Ikuno v. Yip, 912 F.2d 306, 310 (9" Cir. 1990). Nevertheless,
Plaintiffs failed to adequately allege that Defendants gained
control of Acro-Tech through racketeering activity. We therefore
affirm the dismissal on this ground supported by the record. See
Keyser v. Sacramento City Unified Sch. Dist., 265 F.3d 741, 750
(9 Cir. 2001).
Plaintiffs allege that Defendants gained control of Acro-
Tech through three courses of conduct. F irst, Plaintiffs allege that
Defendants exercised control over Acro-Tech as the owner of
$50,000 in stock. However, as the district court noted, the stock
purchase was legal, and therefore did not involve the acquiring of
control through racketeering activity.
Second, Plaintiffs allege that Defendants sought to gain
control of Acro-Tech as lessors on the lease for Acro-Tech’s office
space. Third, Plaintiffs allege that Defendants sought to gain
control of Acro-Tech by hiring Hallsworth as accountant and
bookkeeper. Defendants allege that the business lease and
accounting services were induced by fraud and, thus, represent an
attempt to gain control through racketeering activity. Plaintiffs’
allegations of fraud, however, are general and do not provide the
necessary particularity. See Advocacy Org. for Patients &
Providers v. Auto Club Ins. Ass’n, 176 F.3d 315, 322 (6" Cir.
1999). Therefore, Plaintiffs failed to adequately allege that
Defendants gained control of Acro-Tech through racketeering
50
activity. For the same reasons, Plaintiffs failed to adequately plead
an ORS § 166.720(2) claim, which tracks § 1962(b).
3. The district court did not abuse its discretion when it
denied Plaintiffs’ leave to amend their § 1962(c) claim. In this
case, two factors support the court’s denial of leave to amend:
futility of amendment and the fact that Plaintiffs previously
amended the complaint. See Allen v. City of Beverly Hills, 911 F
2.d 367, 373 (9" Cir. 1990). The district court noted that Plaintiffs’
Second Amended Complaint (Corrected) was in fact the fourth
complaint Plaintiffs filed in this action. Plaintiffs were represented
by counsel when they filed their Second Amended Complaint, and
that filing followed the district court’s September 2001 order,
which had explained in detail what needed to be pleaded.
4. The district court did not abuse its discretion in
declining jurisdiction over Plaintiffs’ remaining non-RICO state-
law claims. 28 U.S.C. § 1367(c)3).
5. The district court did not abuse its discretion in its
award of costs and fees to Defendants. Defendants were the
prevailing party, and the district court therefore had the discretion
to award fees under Federal Rule of Civil Procedure 54(d) and
ORS § 166.725(14).
The district court awarded Defendants Hallsworth and
JDH Services fees in the amount of $20,000; Defendant Boutin
$15,000; and Defendants Luann and Robert K. Jackson, LB Land,
and the Family Trust $20,000. In the light of the number of
motions, orders and amended complaints filed in this action, a total
award of fees of $55,000 was reasonable.
AFFIRMED.
51
Reggie D. Huff - Appellant
‘ Lisa G. Huff - Appellant
i PO Box 4351
: Warren, OH 44482
Phone: 330-372-6615
Fax: 330-372-6316
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
U. S. Court of Appeals Docket Number: 02-35176
Lower Court Docket Number: CV-01-447 KI
ACRO-TECH, INC; an ) PETITION TO APPOINT
RODERICK A. BOUTIN,
Defendants — Appellees.
Oregon Corp., ) INDEPENDENT
Plaintiff, ) COMMITTEE TO
; : INVESTIGATE CHARGES
and ) OF ILLEGAL
DISCRIMINATION UPON
) a omer; LIRA ge CLASS OF PEOPLE BY
: . THE 9°" CIRCUIT,
Plaintiffs — Appellants, _) AND
i ) PETITION TO SUSPEND
JUDGES GRABER, GOULD,
THE ROBERT JACKSON ) AND ALDISERT PENDING
FAMILY TRUST; L. B. ) DISPOSITION OF
LAND, an Oregon Corp; ___) CHARGES
| JDH SERVICES INC.,an_ ) _ AND/OR
; Oregon Corp.; JOHN D. s+) PETITION FOR
HALLSWORTH, JR.; ) REHEARING
ROBERT K. JACKSON; )
LUANN JACKSON; ) (EN BANC REQUESTED)
)
)
52
Appellants Reggie D. Huff and Lisa G. Huff and in lieu of
ACRO-TECH, Inc. an Oregon Corporation unable to appear
respectfully assert facts charging that 9" Circuit judges Graber,
Gould, and Aldersert did in fact engage in discrimination upon
individuals as of class based solely on their ability to afford
counsel, irregardless of subject matter relevancy to cause for
insolvency.
Said conduct has in fact deliberately abridged appellants
“right” to an appeal in direct contravention of the 14"
Amendment of the United States Constitution, by depriving
appellants of liberty and property without “due process of law”,
and of “equal protection” therein. Said conduct results in an
indirect violation of the 7 Amendment of the United States
Constitution as well.
STATEMENT OF RICO & CIvIL RICO
Congress designed RICO to be a powerful weapon against
organized crime that fronts as legitimate enterprise while targeting
legitimate enterprises for theft, control of assets, and/or violent
destruction for non-capitulation.
In Sedima (Sedima v. Imrex 473 U.S. 479} the U. S.
Supreme Court defined Congress’s intent for civil RICO. Congress
recognized that organized criminals often avoid criminal
prosecution for a myriad of reasons that have nothing to do with
innocence. Congress saw the value in victims being able to protect
themselves and simultaneously deter crime through a powerful
“quasi criminal” proceeding.
Civil RICO was not designed to be a weapon against
minor business fraud, common securities fraud, and _ political
protestors, etc. However, these types of cases have enjoyed some
success in the courts including the 9” Circuit. In fact, this
bastardization has resulted in the targeted RICO cases, involving
extortion, blackmail, bribes, combined with fraud, obstruction of
justice, and threats of physical harm becoming the extreme
exception. This is especially true on the West Coast. (See 10 Am
Jur Proof of Facts 3d-299)
53
STATEMENT OF THE SERIOUS NATURE OF THE CASE AT BAR
In light of the statement above:
U. S. District Court Judge GARR M. KING was forced to
recuse himself from this case due to the discovery of personal
and professional interests tied to the defendants. The racketeers
paid a law firm a large sum of money to engage in serious
misconduct on their behalf. Judge King had practiced law with
a defendant and his partner for the same client, sometimes on
the same cases, in the recent past. Further, it was discovered
that Judge King’s most valua¥le client was misappropriating
funds to pay for the said RICO defendants’ defense. This
course of conduct put Judge King’s personal friends and
colleagues at serious risk of discipline, lost income, lost
employment, and lawsuits from other law firms or worse,
mainly if the funds were lost due to this case being successful.
These discoveries and the recusal came after Judge King’s
dismissal of this case. Judge King’s dismissal of this case was
so prejudicial and illegal that it prompted the investigation that
led to these discoveries.
After Judge King was caught His clerk called appellants’
counsel, Herb Grey, to inform him that Judge King had
ordered the marshals office to begin an investigation of
appellant Reggie D. Huff. This freaked out appellants’ counsel
and caused serious damage to the appellants. Later it was
discovered that the claimed order of investigation was false,
apparently designed to frighten appellants away from pursuing
the issue of Judge King’s disqualification. Judge King is
responsible for his clerks and may have directed this serious
extra judicial misconduct. This matter should be investigated
openly before the public. Judge King and his staff should all be
questioned under oath in a manner consistent with a desire to
verify the truth.
Appellants had desired not to raise this issue on appeal.
However, defendants had already lied about this and spun it to
claim that appellants had engaged in misconduct and Judge
King was merely an innocent victim. Since this is a lie,
54
nonetheless, very favorable to some judges who may rule on
our case, not defending oneself is not an option. You can
directly thank the defendants for this ¢oming out.
This case includes classic criminal RICO elements such as:
Extortion
Blackmail
Coercion
Travel act violations
Obstruction of justice
Threats of physical harm
. Ete.
This case includes classic criminal RICO evidence not limited
to and including:
a. Secret audio-tapes, already deemed by court as legal, in
which the main defendant explains in explicit terms
ultimatum threats. In one tape Jackson discusses a
previous victim circumsiance in which gun play
occurred and the victim was forced to flee under threat
of death.
b. Damning documents in perp’s own handwriting.
c. Sworn testimony of many highly credible and
unimpeachable witnesses.
d. Fraudulent public documents of the smoking gun
variety.
e. Perjury wherein perp’s absolute material sworn
statements are directly impeached by perp’s own
explicit tape-recorded statements.
Many facts and evidence have been tested before an actual
jury. The jury concluded that the defendants’ conduct was so
egregious and relentless that it reduced the value of the
victims’ commercial lease to zero (0). That judgment stands.
This RICO case was originally pled under the signature of a
former federal prosecutor and RICO specialist with perhaps
more experience in RICO on both sides than any other attorney
in the northwest, (at least 6 cases).
Other victims, elderly, that have no affiliation to plaintiffs in
this case have come forward and have lodged similar
mmeacse
OREM
“JL. —
55
complaints to the local DA, Steven Atchison. (Phone # 503-
397-0300 )
7. The victim enterprise engaged in very promising
e1:vironmental research that was funded in part by the EPA.
8. At this point all courts involved are required by law to accept
all facts alleged including 30+ crimes in the complaint as true.
9. The true number of victims that have suffered quantifiable as
well as non-quantifiable damage as a result of the noted “true”
crimes is approximately 150.
THE CHARGE
Despite the factual character of the case, available upon
the reviewable record, the assigned appellate panel treated this case
as frivolous, and violated the 14" Amendment right to due process
and equal protection under the law. This treatment was purely
based on the fact that the case is currently represented by pro se
appellants, rather than a famous attorney or law firm. After
expending much capital for a RICO specialist, the pro se
representation itself is prima fascia evidence of the “control” effect
of the ongoing crime that is true, and remaining unanswered by the
defendants, must by law be accepted as true in this court.
The fact that the victim enterprise can no longer afford
counsel and had to drop out of the appeal, and that individual
victims were forced into pro se service in light of the crimes,
should have led to this case being treated much more seriously
than the run of the mill civil case. Instead the exact opposite
occurred.
The crux of the charge here today is not merely that
appellants received an improper appeal, aithough elements are
clearly improper, but that fundamentally appellants received no
appeal at all.
While to many it may make perfect sense to assume that
judges from this court may abuse their power to protect a fellow
District Court judge from his own improper conduct, which
resulted in his belated recusal, appellants here are NOT making
that charge. Appellants currently have no evidence to support this
56
charge. However, appellants respectfully point out that to the
public the treatment of this case does not look good.
FACTS & EVIDENCE SUPPORTING THE CHARGE
Appellants conducted a study of 9" Circuit cases using
West Law ® to determine if, in fact, there is a large statistical
difference in the outcome of cases in which appellants were pro se
v. those that could afford counsel. A large enough difference
simply cannot be reconciled with arguments of frivolity, etc.
The parameters of study are as follows:
1. Sample only from the mos* recent cases backward.
Sample approximately 200 civil cases for each category.
3. The pro se sample obviously must exclude cases where
attorneys are acting pro se and it is obvious to the court, or
where pro se appellant is one of several, where others are
represented by counsel.
4. This court has been accused, rightly or wrongly, of being a
pro-criminal court. As obvious law-abiding victims of crime,
appellants here are interested in the treatment of law-abiding
pro se appellants. Therefore convicted criminals and illegal
aliens are excluded.
The pro se sample reveals only two (2) cases resulting in
reversal in favor of pro se appellants. They are: Newdow v. U. S.
Congress 292 F.3d. 597 and Hall v. Norton 266 F.3d 969. This is
approximately 1%. However it must be noted that both of these
cases involve controversial issues of public policy in the areas this
court has been previously noted for having favored for
advancement of certain political causes and not necessarily the
law. ' Noting this distinction it would appear that victims of crime
1 Appellants are in fact environmentalists. Appellant Reggie D. Huff
takes great pride in and has been recognized for his work in reducing auto
emissions through increased efficiency. Mr. Huff is a holder of four (4)
patents. He has won a competitive research contract with the EPA. His
work has been published by the EPA, Popular Science, Motor Trend
Magazine, and a host of lessor known publications. Dr. Edgar Berkey, of
Center for hazardous Material Research, or CHMR, has formally
57
who are unable to present an issue of the “politically correct”
variety have ZERO (0) percent chance of having the errors against
them reversed.
The comparison sample reveals that, at a minimum, the
District Courts commit error on approximately 50% of their cases
that are brought before the Appeals Court. Therefore, an argument
that pro se appellants receive fair and actual review on the law is
also an argumeni that the lower courts’ error rate magically drops
to at or near zero (0) only where pro se appellants are involved.
Some judges like to claim that judges in general go out of
their way to be fair to pro se litigants. Reality tells a different story,
especially in cases wherein the opposing side has counsel and no
chance to win on the law. The goal is to kill competition against
attorneys. ” Therefore, pro se litigants find their intelligence being
insulted. The law, binding precedent, court rules, and plain
common sense are routinely suspended or violated in a manner
consistent with assisting the attorneys on the other side. These
errors are simply hidden within the perceived complexities of the
law and the perception that the appellant system is an effective
check.
In addition, appellants’ short study shows that there is
virtually no accountability through the appellate system. The lack
of accountability would always tend to make the error rate increase
and never would allow it to reduce 50 times to 1% or less. Even if
one could prove that lower court judges are three (3) times more
accurate when dealing with pro se litigants the sample should
reveal approximately 33 cases of reversal, not just two (2)
‘politically correct’ ones.
recognized and praised Mr. Huff’s work.
2 The legal profession is akin to a major industry in which many have
become very affluent and powerful by promoting the perception that one
has no chance of success unless one hires one of its sanctioned
practitioners. Judges are a product of that industry and have the power to
Squash competition and hide the fact, all while rationalizing there is some
greater good in it. Surely not all do this.
58
No industry in the world, if given the opportunity to put a
legal stamp upon an illegal squashing of its competition, would not
do so. To ask judges to exercise restraint in dealing with pro se
litigants is asking them to go against human nature. Nonetheless,
the Constitution demands it.
It is clear that many judges are simply biased against pro
se appellants for being pro se. This puts the pro se appellants on an
unequal footing before a single argument is read, if the arguments
are even read at all.
In Douglas v. California 372 U.S. 3531 83 S. Ct. 814 (1963)
Justice Clark, dissenting, argued against 14° Amendment
protection for pro se appellants saying: ~
“We all know that the overwhelming percentage of in forma
p?uperis appeals are frivolous.”
He then cited some statistics in a footnote to support his
arguments. First, he assumes that all pro se appeals are given the
exact same respect, time, energy, and fair objective analysis in
determining their merits. Then he simultaneously contends that
they are virtually all a waste of the court’s time. The statistics back
this up in his mind, which teaches to disrespect pro se appeals as a
waste of time, which leads to high failure rates, which are then
used to prove they are frivolous and a waste of time, and so on.
This becomes a circular argument and a self-fulfilling prophecy.
Justice Clark used this bias to describe the appointment of counsel
to indigent appellants as a “useless gesture” and an “utter
extravagance and a waste of the state’s funds.”
Apparently, in Justice Clark’s world, the mere fact one
finds oneself poor, without respect to cause or intelligence, is proof
enough of the ‘utter uselessness’ of one’s case before a single fact
or argument is even read. i
HUFF V. JACKSON
Once in a lifetime a case develops into the perfect test case
to prove judicial bias against pro se appellants. Such a case may
serve well for many years as the poster child of the evils of pro se
discrimination.
rl
ee ee eee ee ye
shea ho i al,
59
The extremely fortuitous elements in this case that form
the ultimate test case are not limited to and include the following:
1. Serious non-frivolous nature that is not debatable. (See
“Statement of Serious Nature of This Case.”)
2. The reason the pro se appellants are pro se is honorable and
acts as prima fascia evidence in support of the merits of the
case itself. -
3. Pro se appellants are otherwise credible contributors to society,
and victims of relentless crime.
4. The case is at a stage where the charges of crime are not
debatable, but are all “true”.
5. The case does not directly involve certain types of politically
correct subject matter that may skew the test.
6. The case is 100% reversible upon fair and actual review on the
law, both current and common.
7. Briefs are written with direct assistance of an attorney with a
record of winning appeals in the 9" Circuit. This eliminates the
false argument that pro se appellants are incapable of
presenting cognizable legal arguments.
8. The case contains the highly unusual effective stipulation of
reversible error on the record by the lower court itself. This
eliminates debate as to whether there is error plain enough that
any fair and actual review simply could and would not miss it.
9. A former federal prosecutor found the court’s errors so
plentiful and egregious that he called them “extreme
prejudice” and demanded the courts entire Opinion be
“rescinded”.
A test case is very important for verification of the
Statistical evidence and to support the charge of illegal
discrimination.
The statistical evidence, and the actual experience of pro
se litigants as a class, as well as the inherent bias among many
Judges, such as Justice Clark, would predict that this test case
would be treated merely as an opportunity to rubber stamp the
District Court’s illegal rulings and administration. No actual
absolute statutory right of appeal would be respected. Whole
questions on appeal under this court’s non-discretionary
60
jurisdiction will be completely ignored, and not ruled on, in direct
violation of appellants’ right to an appeal. Any memorandum
produced will not contain one shred of evidence that a single word
of the appellants’ arguments, precedent, facts, authorities, etc.,
were even read, let alone considered.
Others would predict the exact opposite, claiming that all
appeals receive the saine thorough, exacting, fair, complete and
actual review. And any actual reversible error would be reversed,
regardless of the ability of the appellants to afford counsel.
ANALYSIS OF FACTUAL TREATMENT OF TEST CASE
The Notice of Appeal in this case states clearly what is
being appealed:
1. “Final Order denying the Second Amended Motion for
Reconsideration”
2. “Final Order denying Motion for Relief from Judgment”
The actual orders were included with the Notice of Appeal.
The First Amended Notice of Appeal states:
“Final Order denying the Motions (2) for Reconsideration”
2. “Final Order denying Motion for Relief from Judgement”
And the actual orders were included with the Notice.
The Appeilants’ Brief included on its title page the
following:
“Appeal from ... orders denying reconsideration for relief
from judgment of the U. S. District Court for the District of
Oregon.”
The Appellants’ Brief includes in the statement of issues
presented for review the following:
(5) Did the District Court abuse discretion in denial of
plaintiffs’ various motions for reconsideration under FRCP
59(e) and/or 60(b) and 15(a)?”
Also, it is self-evident that appellants paid their court fees
and met all statutory requirements for asserting “appeal as of
right.”
ee
+
After some eighteen (18) months appellants have received
no review or ruling on these final orders. They were simply
ignored. This is key to the charge.
61
Further, appellants raised the issue in their Brief:
“(4) Did the District Court abuse discretion under FRCP
15(a)?”
Yet the panel only ruled that the court did not abuse
discretion in disallowing repleading in one claim, 18 USC
§1962(c), and did not rule on five (5) other RICO claims.
Further, appellants raised the issue:
“(3) Did the District Court err in making improper conclusions
of fact at the non-discovery pleading stage under FRCP
12(b)(6) motions regarding the legality of defendants’ control
of or interest in the victim enterprise under 18 USC
§1962(b)....?”
This question was also ignored as presented, which is key.
Further, appellants raised the issue:
“(2) Did the District Court err in its application of pleading
requirements exceeding FRCP 8(a) at the court ordered
instantly fatal mid-trial point, creating prejudice to plaintiffs?”
This question is entirely valid in light of the court’s actual
administration and was completely ignored.
Therefore, it is clear upon the record that the appeal the
appellants paid for, have an absolute statutory and constitutional
right to, and have waited eighteen (18) months for simply has not
occurred. This is a clear basis for rehearing en banc, or with a new
panel |
Further, it is clear that the questions that were addressed
were completely devoid of any consideration of the appellants’
arguments, facts, and precedent. No argument that the appellants
received an actual appeal has any credibility where the “pro se”
appellants are clearly invisible to the actual process of review.
Counsel in this case below, David Adler, was absolutely
dumbfounded at the court’s tactics in dismissing. The actions were
consistent with desperation to dismiss an extremely strong case
that threatened personal and professional interests. The appellants
respectfully, but definitively detailed much of this in the record on
appeal, not limited to and including:
1. The court stated in its first opinion that the presence of the two
defendant corporations interchangeably owned by three other
62
defendants was sufficient to meet the separate entity test under
Chang v. Chen 80 F.3d 1293 (9" Cir. 1996). The court ordered
plaintiffs to focus re-pleading only on areas that were deemed
deficient, and required that the document be kept as short as
possible.
In its Second Opinion the court said: “I’ve changed my
mind,” using Simon v. Behavior Health Sciences 208 F.3d
1073 (9" Cir.) as the basis, and summarily dismissed claim 18
USC 1962(c) with prejudice, creating a pleading trap.
In its First Opinion the court said it required a statement of
how internal decision-making was done in the criminal
enterprise as if appellants had a crystal ball. This is clearly
outside FRCP 8(a) pleading rules. Thus the question presented
for review and ignored by the panel. Nonetheless, appellants
complied.
In the Second Opinion the court concluded that this
statement was not acceptable, because it was not based on
identical conduct. The court provided no basis for this again,
and further added anew that the manner of distribution of
proceeds was necessary. Appellants still cannot conceive how
any gang of organized crooks could all engage in identical
corduct and even operate. This seems asinine. (See ER 205-
215, authored by David Adler, Esq.) This also created a
pleading trap.
In the District Court’s First Opinion the court concluded that a
“pattern” was not adequately pled. In its Second Opinion the
court had no concerns about the pattern, but shifted to the issue
of “control”. The court created a brand new pleading standard
that ignores the strength of the “pattern” entirely and any
“control” that emanates from that pattern and restricts the
control to mean only ‘direct’ financial “control”. The court
ignored the direct statutory language of 18 USC §1962(b) and
binding authority of the 9" Circuit. (See ER 205-215, Motion
for Reconsideration, authored by David B. Adler, Esq.) In
addition, the District Court plainly ignored a square allegation
in the pleading stating the financial interest was illegal, and
summarily declared it as legal, making an illegal conclusion of
63
controverted fact. This was the sole basis for the dismissal of
the 18 USC §1962(b) claim.
4. The District court’s Second Opinion included a footnote as
follows:
“Plaintiffs discovered some small errors in the Second
Amended complaint and filed a corrected version.”
Judge King was well informed that the corrections were
highly technical in nature, namely accidentally placing names
of defendants under the heading of the wrong claim. si
At the end of his opinion Judge King stated:
“Although the complaint is entitled the Second
Amended Complaint (corrected) it is the fourth complaint
plaintiffs filed in this action.”
Judge King could provide no basis, under Foman or
otherwise, for not allowing re-pleading, other than to
misrepresent the number of actual pleading opportunities, in
clear contradiction of his own footnote in the same document.
(See Eminence Capital, LLC vy. Aspeon, Inc. 316 F.3d 1048.
Counting pleadings, especially in complex cases, is not a basis
for denying re-pleading any more in the 9 Circuit.)
The dismissal of this case is fraught with errors, including
illegal pleading requirements, contradictions, improper conclusions
of law, pleading traps, misrepresentation, violations of court rules,
etc., all in a manner that benefited only the defendants.
Appellants’ RICO specialist counsel found the dismissal
so bad he called it “extreme prejudice” and stated that the court’s
opinion should be “rescinded”. At this time appellants would like
to include that document in this petition as if set out in full. It can
be found at ER 205-215.
Only months-ago this court took a more solid position
under Foman, 37 U.S. 182, than the appellants have found
anywhere else in the U.S. The case is Eminence Capital, LLC vy.
Aspeon, Inc. (Jan. 2003) 316 F.3d 1048. '
It is clear now that it is not proper to merely count
pleading attempts when determining right to re-plead, especially in
complex cases. This being so, a deliberate attempt to inflate the
actual number of real pleading opportunities should be disfavored
64
in the extreme. Appellants augmented their already well supported
arguments with this new case authority well before final decision.
(See the record.) The appellate panel completely ignored it and
merely repeated the District Court’s false count of pleading
opportunities in direct contravention with known binding
precedent. The only explanation is that appellants are treated as
invisible because they cannot presently afford an attorney.
The violation of the 14" Amendment is very plain and
simple to illustrate in this case. This is how it works:
> . Case A (Eminence Capital, LLC v. Aspeon, Inc. for
example):
1. Appellants can afford counsel.
2. Complex case
3. Dismissal with prejudice; No Foman factors invoked;
Complete reliance on count of pleading opportunities in
determining futility in re-pleading.
= Appellant’s arguments fully considered
Reversal & Remand & Rebuke from 9" Circuit
Case B (Huff v. The Jackson Family):
Appellants cannot afford counsel for good reason.
Complex case
Dismissal with prejudice; No Foman factors invoked;
complete reliance on (disingenuous) count of pleading
opportunities in determining futility in re-pleading.
= Appellant’s arguments (same as above, same
authorities, etc.) completely ignored.
= Affirmed from 9” Circuit (No reason for the difference
given.)
This is an egregious example of unequal protection under
the law. This is an additional clear basis for rehearing.
Further, the appellate panel’s utter refusal to even
acknowledge the obligation to review and rule on the Orders
denying Motion for Reconsideration and Relief from. Judgment is
extremely fortuitous for the defendants and the District Court.
These motions prove the plaintiffs can re-plead to any standard the
court wants, whether legal or not.
wee
65
The court claims that because there are two defendant
corporations and not just one then it needs a more cognizable
structure to the enterprise and information on how proceeds are
distributed.
In the various motions for reconsideration and relief on the
record plaintiffs stated they are in possession of sworn testimony
of John Hallsworth, Jr. wherein he reluctantly admitted that JDH
Services, (the second corporation), has only one client, that being
L. B. Land, (the first corporation).This means that IDH Services is
merely a subsidiary of L. B. Land. This turns two corporations into
one. This also makes Robert Jackson the king pin of the whole
operation, as owner of L.B. Land and part owner of JDH Services.
Further, plaintiffs established on the record that they
possess cancelled checks where money from a fraudulent lease
flowed through JDH Services to L. B. Land. Plaintiffs also have
documents showing money going from L. B. Land to the law firm
of Bowerman & Boutin, wherewith Roderick A. Boutin received
payment.
Stunning, is it not? Most pleaders would not have this
information without discovery, which we were denied twice, but
we do. This produces overwhelming doubt that re-pleading would
be futile.
Also, plaintiffs showed how the District Court’s
conclusion that the Second Amended Complaint (corrected) did
not claim that a financial interest was acquired through
racketeering was just flat wrong. Once again the appellate panel
merely parroted the District Court’s illegal conclusion of facts,
making appellants invisible just because they cannot afford an
attorney.
One of the factors that make this case unique is the lower
court’s self-contradiction, which creates a stipulation of reversible
error on the record by the court itself. Debate on court errors is
removed where it is simply not possible for the court to be correct
in both opinions that contradict each other. Whether the court’s
first or second opinion is in error is irrelevant where plaintiffs are
damaged in either case. The court’s judgment must be reversed and
the case remanded under these circumstances. Once again, there is
66
no reference from the appellate panel to these facts. They are
simply ignored. They cannot be ignored while claiming an actual
fair review occurred.
CONCLUSION
Owing to the fact that many attorneys are paid well to file
appeals with little chance for success, at the direction of their
clients, the reversal rate indicates that a strong majority of cases
filed in this court receive a thorough, fair, and objective review.
There is no evidence of bias in favor of the lower courts. This is
commendable, especially in light of this court’s current workload.
However these positive facts only make appellants charge of
discrimination much more credible and powerful.
It is a clear violation of the 14" Amendment to assume
that appellants who either choose or are forced to exercise their
right to self-representation have automatically waived their right to
effective representation and therefore have no interest in a fair and |
legal outcome. Pro se appellants have an absolute Constitutional
right to receive exactly the same chance of reversal on questions of
clear error as those that can afford an attorney. Clearly this case
proves this is not occurring in this court, and it clearly did not
happen in this case.
That’s not due process!
That’s not equal protection!
How could it be, when this court now stands ready to force
the appellants to give $55,000 to criminals who have already taken
everything, without even reading their Briefs?
The public will see this case as just another example of the
9" Circuit favoring criminals over victims. If this is a false
perception then no one benefits except the defendants. It is good
public policy for this or any court once in a while to demonstrate to
the people who own the court that it is not being run by a bunch of
heartless bastards. All the appellants are asking for is a single fair
and thorough hearing of this case, which they have an absolute
right to demand. °
3 It should not be assumed that appellants intend to go through an
entire RICO trial without counsel.
67
Cases such as Douglas v. California 372 U.S. 353 and
Evitts v. Lucey 469 U.S. 387 deal with the issue of due process and
equal protection as it relates to an appeal.
In Douglas the court stated:
“Equal protection of the law does not exist if the kind of an
appeal a man enjoys depends on the amount of money he has.
U.S.C.A. Const. Amend. 14.”
These cases dealt with the issue of whether the state should
pay for counsel for criminal defendants.
The question appellants raise today is a different and more
serious one. Not being given a free attorney is not necessarily the
end of the road, whereas being summarily denied the right to a fair
and thorough and actual review probably is.
In light of the above facts, appellants respectfully request a
rehearing En Banc, or, in the alternative, a re-panel hearing.
Appellants contend that Judges Graber, Gould, and Aldisert are not
impartial, especially in light of the charges within this petition.
Appellants further request oral argument, and that this matter be
given priority due to the amount of time already invested.
Respectfully submitted this 14" day of October 2003.
By:
Reggie D. Huff, Pro se
By:
Lisa G. Huff, Pro se
_ ce or
68
Reggie D. Huff
Lisa G. Huff
PO Box 4351
Warren, OH 44482
Phone: 330-372-6615
Fax: 330-372-6316
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
U. S. Court of Appeals Docket Number: 02-35176
Lower Court Docket Number: CV-01-447 KI
ACRO-TECH, INC; an ) AFFIDAVIT IN SUPPORT
Oregon Corp., ) OF: PETITION TO
Plaintiff ) APPOINT INDEPENDENT
are COMMITTEE TO
and ) | INVESTIGATE CHARGES
OF ILLEGAL
egal dina — ie DISCRIMINATION UPON
CLASS OF PEOPLE BY
Plaintiffs — Appellants, _) THE 9™ CIRCUIT,
VS. ) AND
THE ROBERT JACKSON ) PETITION TO SUSPEND
FAMILY TRUST; L.B. ) | JUDGES GRABER, GOULD,
LAND, an Oregon Corp; __) AND ALDISERT PENDING
JDH SERVICES INC.,an ) DISPOSITION OF
Oregon Corp.; JOHN D. i+) CHARGES
HALLSWORTH, JR. +)
ROBERT K.JACKSON; ) AND/OR
LUANN JACKSON; ) PETITION FOR
RODERICK A. BOUTIN, ) | REHEARING
)
Defendants — Appellees. (EN BANC REQUESTED)
69
F State of Ohio }
} ss.
County of Trumbull }
I, Reggie D. Huff, being first duly sworn, do depose and say that:
1. Iam an appellant in the above case.
2. I authored the PETITION TO APPOINT INDEPENDENT
COMMITTEE TO INVESTIGATE CHARGES OF ILLEGAL
DISCRIMINATION UPON CLASS OF PEOPLE BY THE 9™
CIRCUIT, AND PETITION TO SUSPEND JUDGES GRABER,
GOULD, AND ALDISERT PENDING DISPOSITION OF CHARGES
AND/OR PETITION FOR REHEARING with the assistance of co-
appellant Lisa G. Huff. We alone are responsible for it.
3. All of the facts and assertions of facts contained within the said
petition are true to the best of my knowledge, and are
: presented for a good and proper purpose, and not for needless
delay.
The above is true as I verily believe.
ee Pe UT SY Pe pce eee, oY
Reggie D. Huff
Subscribed and sworn to before me this day of 2003.
BRR SS STR SES
NOTARY PUBLIC FOR OHIO
My commission expires:
RD RI IT ee BNes eae
AA, Te I EN DS |
70
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp.,
Plaintiff,
and,
REGGIE D. HUFF and LISA G. HUFF,
Plaintiffs — Appellants,
Vv.
THE ROBERT JACKSON FAMILY
TRUST; LB LAND, INC., an Oregon
Corp.; JOH SERVICES INC., an Oregon
Corp., JOHN D. HALLSWORTH, JR.;
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
No. 02-35176
D.C. No. CV-01-447-KI
ORDER
FILED
OCT 24 2003
CATHY A.
CATTERSON,
CLERK
U.S. COURT OF
APPEALS
Before: ALDERSERT,* GRABER, and GOULD, Circuit Judges
The “Petition to Appoint Independent Committee to
Investigate Charges of Illegal Discrimination Upon Class of People
by the 9" Circuit, and Petition to Suspend Judges Graber, Gould,
and [Aldisert] Pending Disposition of Charges and/or Petition for
Rehearing (En Banc Requested)” received October 16, 2003, is
ordered to be filed.
* The Honorable Ruggero J. Aldersert, Senior Judge,
United States Court of Appeals for the Third Circuit, sitting by
designation.
71
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp.,
Plaintiff,
and,
REGGIE D. HUFF and LISA G. HUFF,
Plaintiffs — Appellants,
v.
THE ROBERT JACKSON FAMILY
TRUST; LB LAND, INC., an Oregon
Corp.; JOH SERVICES INC., an Oregon
Corp., JOHN D. HALLSWORTH, JR.;
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
No. 02-35176
D.C. No. CV-01-447-KI
ORDER
FILED
NOV 24 2003
CATHY A.
CATTERSON,
CLERK
U.S. COURT OF
APPEALS
Before: ALDERSERT,* GRABER, and GOULD, Circuit Judges ~
We construe the Petition filed October 16, 2003
(“Petition”), to be, in part, a petition for panel rehearing and
petition for rehearing en banc.
The memorandum disposition filed September 30, 2003,
is amended. With the filing of the amended memorandum
disposition contemporaneously with this order, the panel has voted
to deny the petition for panel rehearing. Judges Graber and Gould
* The Honorable Ruggero J. Aldersert, Senior Judge,
United States Court of Appeals for the Third Circuit, sitting by
designation.
72
have voted to deny the petition for rehearing en banc, and Judge
Aldersert has so recommended.
The full court has been advised of the petition for
rehearing en banc and no judge of the court has requested a vote on
it.
The petition for panel rehearing and petition for rehearing
en banc are DENIED. No further petitions for rehearing or
rehearing en banc may be filed.
We also construe the Petition, to be, in part, a motion to
recuse the members of the panel. So construed, the motion is
DENIED.
Finally, we construe the Petition to be, in part, a complaint
of judicial misconduct. So construed, the complaint has been
forwarded to the Clerk of the Court for such further proceedings as
may be appropriate.
73
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp.,
Plaintiff,
and,
REGGIE D. HUFF and LISA G. HUFF,
Plaintiffs — Appellants,
v.
THE ROBERT JACKSON FAMILY
TRUST; LB LAND, INC., an Oregon
Corp.; JOH SERVICES INC., an Oregon
Corp., JOHN D. HALLSWORTH, JR.;
ROBERT K. JACKSON; LUANN
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
No. 02-35176
D.C. No. CV-01-447-KI
AMENDED
MEMORANDUM
FILED
NOV 24 2003
CATHY A.
CATTERSON,
CLERK
U.S. COURT OF
~ APPEALS
Appeal from the United States District Court
for the District of Oregon
Garr M. King, District Judge, Presiding
*’ This disposition is not appropriate for publication and
may not be cited to or by the courts of this circuit except as may be
provided by Ninth Circuit Rule 36-3.
74
Submitted September 12, 2003**
Portland, Oregon
Before: ALDISERT,*** GRABER, and GOULD, Circuit Judges. |
Plaintiffs Reggie and Lisa Huff appeal the district court’s
denial of their motion to reconsider the dismissal of their state and
federal RICO actions against Defendants. We review for abuse of
discretion a district court’s denial of a motion to reconsider an
order granting summary judgment. Sch. Dist. No. 1J, Multnomah
County, Or. V. AC&S, Inc., 5 F.3d 1255, 1262 (9° Cir. 1993).
Reconsideration is appropriate if the district court: (1) is presented
with newly discovered evidence; (2) committed clear error or the
initial decision was manifestly unjust; or (3) if there is an
intervening change in controlling law. Id. At 1263. The first and
third grounds are inapplicable in this case. We therefore consider
only whether the district court committed clear error and whether
its decision was manifestly unjust.
1. The district court did not err in dismissing Plaintiffs’
18 U.S.C. § 1962(c) RICO and Oregon Revised Statute (“ORS”) §
166.720(3) ORICO claims. Reviewing de novo, we agree with the
district court’s holding that Plaintiffs’ Second Amended Complaint
did not adequately plead “enterprise.”
Plaintiffs alleged that Hallsworth and Robert Jackson
made decisions together and worked cooperatively. This allegation
is one of conspiracy — it does not satisfy the standard that an
enterprise must, “[a]t minimum, ... have some sort of structure ...
for the making of decision s and some mechanisms for controlling
and directing the affairs of the group on an on-going, rather than an
ad hoc, basis.” Simon v. Value Behavioral Health, Inc., 208 F.3d
1073, 1083 (9" Cir. 2000) (internal quotation marks omitted).
** This panel unanimously finds this case suitable for
decision without oral argument. Fed. R. App. P. 34(a)(2).
*** The Honorable Ruggero J. Aldisert, Senior Judge,
United States Court of Appeals for the Third Circuit, sitting by
designation.
75
Plaintiffs’ allegation that Boutin exercised control over the
enterprise is also inadequate. Boutin was not a member of the
alleged enterprise. Further, it is unclear how Boutin could have
“exercised control” over the enterprise via “consultation and
advice” to Jackson and Hallsworth, who themselves were alleged
to have “exercised control.”
Including two corporations in the enterprise does not per
se satisfy the requirement that the enterprise be a separate entity
apart from the pattern of racketeering activity in which it engages.
Chang v. Chen, 80 F.3d 1293, 1300 (9" Cir. 1996): see also Simon,
208 F.3d at 1083-84. In this case, Plaintiffs failed to allege either
that a system of authority existed in a separate enterprise or that
Defendants utilized a structure apart from the predicate acts to
distribute the proceeds of the racketeering activity.
Oregon’s RICO is modeled after the federal statute.
Federal cases interpreting the federal statute are persuasive in
interpreting the parallel Oregon provision. State v. Blossom, 744
P.2d 281, 283 (Or. Ct. App. 1987). ORS § 166.720(3) parallels §
1962(c). Because the district court correctly dismissed Plaintiffs’ §
1962(c) claim, the court also correctly dismissed Plaintiffs’ ORS §
166.720)3) claim.
2. The district court did not err in dismissing Plaintiffs’
18 U.S.C. § 1962(b) RICO and ORS § 166.720(2) ORICO claims.
The district court erred in its application of the “control” standard.
See Ikuno v. Yip, 912 F.2d 306, 310 (9" Cir. 1990). Nevertheless,
Plaintiffs failed to adequately allege that Defendants gained control
of Acro-Tech through racketeering activity. We therefore affirm
the dismissal on this ground supported by the record. See Keyser v.
Sacramento City Unified Sch. Dist., 265 F.3d 741, 750 (9" Cir.
2001).
Plaintiffs allege that Defendants gained control of Acro-
Tech through three courses of conduct. F irst, Piaintiffs allege that
Defendants exercised control over Acro-Tech as the owner of
$50,000 in stock. However, as the district court noted, the stock
purchase was legal, and therefore did not involve the acquiring of
control through racketeering activity.
76
Second, Plaintiffs allege that Defendants sought to gain
control of Acro-Tech as lessors on the lease for Acro-Tech’s office
space. Third, Plaintiffs allege that Defendants sought to gain
control of Acro-Tech by hiring Hallsworth as accountant and
bookkeeper. Defendants allege that the business lease and
accounting services were induced by fraud and, thus, represent an
attempt to gain control through racketeering activity. Plaintiffs’
allegations of fraud, however, are general and do not provide the
necessary particularity. See Advocacy Org. for Patients &
Providers v. Auto Club Ins. Ass’n, 176 F.3d 315, 322 (6” Cir.
1999). Therefore, Plaintiffs failed to adequately allege that
Defendants gained control of Acro-Tech through racketeering
activity. For the same reasons, Plaintiffs failed to adequately plead
an ORS § 166.720(2) claim, which tracks § 1962(b).
3. The district court did not abuse its discretion when it
denied Plaintiffs’ leave to amend their § 1962(c) claim. In this
case, two factors support the court’s denial of leave to amend:
futility of amendment and the fact that Plaintiffs previously
amended the complaint. See Allen v. City of Beverly Hills, 911 F
2.d 367, 373 co" Cir. 1990). The district court noted that Plaintiffs’
Second Amended Complaint (Corrected) was in fact the fourth
complaint Plaintiffs filed in this action. Plaintiffs were represented
by counsel when they filed their Second Amended Complaint, and
that filing followed the district court’s September 2001 order,
which had explained in detail what needed to be pleaded.
4. The district court did not abuse its discretion in
declining jurisdiction over Plaintiffs’ remaining non-RICO state-
law claims. 28 U.S.C. § 1367(c\3).
5. The district court did not abuse its discretion in its
award of costs and fees to Defendants. Defendants were the
prevailing party, and the district court therefore had the discretion
to award fees under Federal Rule of Civil Procedure 54(d) and
ORS § 166.725(14).
The district court awarded Defendants Hallsworth and
JDH Services fees in the amount of $20,000; Defendant Boutin
$15,000; and Defendants Luann and Robert K. Jackson, LB Land,
and the Family Trust $20,000. In the light of the number of
77
motions, orders and amended complaints filed in this action, a total
award of fees of $55,000 was reasonable.
6. Because the district court’s orders granting summary
judgment and attorneys’ fees reached the correct outcome under
the controlling law, the district court did not abuse its discretion
when it denied Plaintiffs’ motion for reconsideration.
AFFIRMED.
78
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ACRO-TECH, INC., an Oregon Corp., | No. 02-35176
Plaintiff, D.C. No. CV-01-447-KI
and,
REGGIE D. HUFF and LISA G. HUFF,| ORDER
Plaintiffs — Appellants,
m FILED
THE ROBERT JACKSON FAMILY ye apy
TRUST; LB LAND, INC., an Oregon CATTERSON
Corp.; JDH SERVICES INC., an Oregon CLERK _
Corp., JOHN D. HALLSWORTH, JR.; U.S. COURT OF
ROBERT K. JACKSON; LUANN APPEALS
JACKSON; and RODERICK BOUTIN,
Defendants — Appellees.
Before: ALDERSERT,* GRABER, and GOULD, Circuit Judges
Appellants’ “Motion to Recall Mandate” is DENIED.
Appellants’ “(1) Motion to Clarify ‘Amended
Memorandum’ and (2) Motion to Clarify ‘Judgment’ and (3)
Motion to Reconsider Order Denying Recusal of Panel or (4)
Motion to Return Court Fee” received December 24, 2003, is
construed as a motion for leave to file and is DENIED. The
mandate in this case has issued.
We also construe the motions to be, in part, a complaint of
judicial misconduct. So construed, the complaint has been
forwarded to the Clerk of the Court for such further proceedings as
may be appropriate. .
* The Honorable Ruggero J. Aldersert, Senior Judge,
United States Court of Appeals for the Third Circuit, sitting by
designation.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.