John Muldoon v. DePuy Orthopaedics, Inc.

Opinion

Case No. 15-cv-02723-PJH Plaintiff,

v. ORDER GRANTING DAVID DODGIN’S MOTION TO DISMISS PLAINTIFF’S DEPUY ORTHOPAEDICS, INC., et al., RICO CAUSE OF ACTION Defendants. Re: Dkt. No. 98

Before the court is defendant David Dodgin’s motion to dismiss plaintiff’s Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–68 (“RICO”) cause of action as alleged against him. Dkt. 98. The matter is fully briefed and suitable for decision without oral argument. Having read the parties’ papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows. This action was filed by plaintiff John Muldoon on June 17, 2015, as a class action. Dkt. 1. With motions to dismiss pending, the lawsuit was removed to the Multi-District Litigation and stayed. Dkt. 21. The case was remanded back to this court on January 17, 2023. Dkt. 26. Plaintiff filed a second amended complaint (“SAC”) on July 14, 2023, eliminating the class allegations. Dkt. 42. The SAC alleged eighteen causes of action against numerous defendants, all relating to damages plaintiff alleges he suffered from his hip-replacement surgery who performed the hip implant procedure in 2007), John Muir Health (the facility at which the 2007 procedure was performed),1 and Medical Device Business Services, Inc. f/k/a DePuy Orthopaedics, Inc., DePuy, Inc., Johnson & Johnson, Johnson & Johnson Services, Inc., and Johnson & Johnson International (the entities responsible for producing and/or manufacturing the hip components that were used). On April 30, 2024, this court granted Dodgin’s motion to dismiss plaintiff’s RICO cause of action (Claim 13 of the SAC) as alleged against him. Dkt. 76. The court granted plaintiff leave to amend “to include allegations establishing statutory standing and identifying with particularity Dodgin’s role and actions in the alleged enterprise”. Id. at 19. On October 18, 2024, plaintiff filed his third amended complaint (“TAC”). Dkt. 90. The TAC includes, as its eighth cause of action, a RICO claim alleged against all defendants, including Dodgin. Id. at 31. On December 2, 2024, Dodgin filed the present motion to dismiss the RICO cause of action from the TAC. Dkt. 98. The motion is fully briefed. See Dkt. 103 (Opp.); Dkt. 107 (Reply). A. Legal Standard A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199–1200 (9th Cir. 2003). A complaint may be dismissed if the plaintiff fails to state a cognizable legal theory or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013). While the court is to accept as true all the factual allegations in the complaint, legally conclusory statements not supported by actual factual allegations need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 558–59 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘shown’—that the pleader is entitled to relief.” Id. at 679. Because plaintiff’s RICO claim sounds in fraud, that claim must also meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Rule 9(b) requires a party alleging fraud or mistake to state with particularity the circumstances constituting fraud or mistake. To satisfy this standard, the “complaint must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false.” Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013) (internal quotation marks omitted). “Allegations of fraud under [RICO] section 1962(c) ‘must identify the time, place, and manner of each fraud plus the role of each defendant in each scheme.’” Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 541 (9th Cir. 1989) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). Review is generally limited to the contents of the complaint, although the court can also consider a document on which the complaint relies if the document is central to the claims asserted in the complaint and no party questions the authenticity of the document. See Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). The court may also consider matters that are properly the subject of judicial notice. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001). If dismissal is warranted, it is generally without prejudice unless it is clear that the complaint could not be saved by amendment. Polich v. Burlington N., Inc., 942 F.2d 1467, 1472 (9th Cir. 1991). “Leave to amend may also be denied for repeated failure to 733, 742 (9th Cir. 2008) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). B. Analysis “To state a civil RICO claim under 18 U.S.C. § 1964(c), a plaintiff must allege ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to the plaintiff's ‘business or property.’” Abcarian v. Levine, 972 F.3d 1019, 1028 (9th Cir. 2020) (quoting Grimmett v. Brown, 75 F.3d 506, 510 (9th Cir. 1996)). Dodgin argues that plaintiff’s complaint fails to state a RICO claim as a matter of law because it fails to allege an enterprise, predicate acts, and injury to property or business. Muldoon argues that he has adequately alleged those elements. The court turns first to predicate acts. 1. Whether the TAC Adequately Alleges Predicate Acts Plaintiff argues that he alleges Dodgin committed predicate acts by committing mail fraud and wire fraud. Mail fraud occurs whenever a person, “having devised or intending to devise any scheme or artifice to defraud,” uses the mail “for the purpose of executing such scheme or artifice or attempting so to do.” Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 658 (2008) (citing 18 U.S.C. § 1341). “The elements of mail fraud and wire fraud are essentially identical: the government must show (1) a scheme to defraud, (2) the use of either the mail or wire, radio, or television to further the scheme, and (3) the specific intent to defraud.” United States v. Brugnara, 856 F.3d 1198, 1207 (9th Cir. 2017). “[W]ire fraud requires the intent to deceive and cheat — in other words, to deprive the victim of money or property by means of deception.” United States v. Miller, 953 F.3d 1095, 1103 (9th Cir. 2020). “Federal Rule of Civil Procedure 9(b) requires a pleader of fraud to detail with particularity the time, place, and manner of each act of fraud, plus the role of each defendant in each scheme. The Ninth Circuit has repeatedly insisted that this rule be followed in RICO actions alleging the predicate act of mail fraud.” Lancaster Cmty. Hosp. (allegations that defendant “used the mails to submit claims for reimbursement to state and federal health care financing agencies for services rendered to patients . . . pursuant to illegal kickback schemes” were “insufficient” where “no specific mailings are mentioned”). Moreover, “the pleader must state the time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation.” Miscellaneous Serv. Workers v. Philco-Ford Corp., 661 F.2d 776, 782 (9th Cir. 1981); accord Schreiber Distributing Co. v. Serv-Well Furniture, 806 F. 2d 1393, 1401 (9th Cir. 1986) (same). Plaintiff argues that he adequately alleges Dodgin committed a predicate act by submitting “claims for payment to various insurers that contained false, fraudulent, and misleading charges.” Opp. at 14 (citing TAC ¶¶ 80–83). But the TAC’s allegations on this point are so general and lacking in particulars that they fail to satisfy the heightened pleading requirements or Rule 9(b). For example, the complaint does not allege (and plaintiff’s opposition does not argue) the timeframe during which Dodgin allegedly submitted false claims to “various insurers”. See Opp. at 14–15 (citing TAC ¶¶ 81–84). Nor has plaintiff alleged the identities of those involved in the alleged transmissions. Plaintiff merely alleges that Dodgin submitted false “claims for payment to various insurers”. Id. (citing TAC ¶ 81). Even with respect to Dodgin’s surgery on Muldoon himself, the complaint alleges that Dodgin recorded a different serial number on the “implant log” than the serial number that was on the device actually used, but the complaint fails to allege any details about the transmission of that log. See TAC ¶ 24. Instead, the complaint only vaguely refers to Muldoon’s “insurance company(ies)” in such a manner that fails to specify any actual recipient of Dodgin’s allegedly-fraudulent mailings (or even how many such recipients might exist). See id. ¶ 82. Such vagueness and lack of specificity as to who received the offending transmissions—which form the core of the RICO claim’s predicate acts—fail to satisfy Rule 9(b)’s requirement that plaintiff’s allegations be made “with particularity”. Fed. R. Civ. P. 9(b); see Miscellaneous misrepresentation”); Schreiber Distributing Co., 806 F. 2d at 1401 (same). Plaintiff next argues that his complaint adequately alleges RICO predicate acts by alleging that “Defendants utilized the U.S. Mail and wires to exchange money, written agreements between them and the hospitals to which Depuy sold its medical devices, transmitted fraudulent and fabricated clinical data and marketing materials to each other and to victims . . . to support their false claims about the efficacy of the Depuy Components, to plan and devise the steps to be taken by each regarding the implementation of their fraudulent scheme, and to execute together each part of their illegal plan and scheme.” Opp. at 15 (citing TAC ¶ 210). The complaint only generally alleges that the defined term “Defendants” “utilized the U.S. Mail and wires”, which fails to allege which particular defendant did which act. See TAC ¶ 210. It further alleges at a very abstract level that the wires were used to “exchange money” and “written agreements” between all “Defendants” and unidentified “hospitals”. Id. It further alleged that “fraudulent and fabricated clinical data” was transmitted “to each other [each Defendant] and to victims such as Mr. Muldoon and many other unwitting patients”. Id. Plaintiff’s pleading does not identify any specific individual or entity that was party to such transmissions (referring instead to the defined term “Defendants” collectively and “hospitals” and “patients” as collective abstractions), and the complaint even fails to identify the particular defendant that transmitted fabricated clinical data directly to plaintiff. At bottom, the pleading assumes—rather than alleging with particularity—that Dodgin must have transmitted some false information over the mail and wires to advance his alleged scheme. But such abstract pleading based on suppositions rather than particular circumstances fails to satisfy Rule 9(b)’s requirement that plaintiff’s allegations be made “with particularity”. Fed. R. Civ. P. 9(b); see Lancaster Cmty. Hosp., 940 F.2d at 405 (allegations that defendant “used the mails to submit claims for reimbursement to state and federal health care financing agencies for services rendered to patients . . . mentioned”). Given the above general and vague allegations, the complaint does not offer specific allegations as to what defendant used the mail or wires, what specific impermissible conduct was carried out over the wires or mail, or when such conduct occurred. Such allegations fail to satisfy Rule 9(b)’s pleading requirements. In view of this finding, the court need not address the other elements of a RICO cause of action. Accordingly, plaintiff’s RICO cause of action as alleged against Dodgin is DISMISSED. 2. Whether Plaintiff Should Be Given Leave to Amend Dodgin argues that dismissal of plaintiff’s RICO cause of action should be with prejudice, as plaintiff has had “ten years and four attempts” to “set forth facts that constitute a cause of action for RICO.” Reply at 9. Plaintiff argues that if his RICO cause of action against Dodgin is dismissed, it “can be readily cured by amendment” and therefore he “should be allowed leave to amend the TAC”. Opp. at 20. Plaintiff offers no explanation as to how his defective pleading can be cured by amendment. Federal Rule of Civil Procedure 15(a)(1) entitles a plaintiff the right to “amend its pleading once as a matter of course” before responsive pleadings are filed. Fed. R. Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party’s written consent or the court’s leave. The court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). Denial of leave to amend is appropriate “where the district court could reasonably conclude that further amendment would be futile.” Sylvia Landfield Tr. v. City of Los Angeles, 729 F.3d 1189, 1196 (9th Cir. 2013) (citing Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1530 (9th Cir. 1995)). “Leave to amend may also be denied for repeated failure to cure deficiencies by previous amendment.” Abagninin, 545 F.3d at 742. Further, dismissal with prejudice is appropriate “when the movant presented no new facts but only ‘new theories’ and ‘provided no satisfactory explanation for his failure to fully develop his contentions originally.’” Allen v. City of Beverly Hills, 911 F.2d 367, 374 (9th Cir. 1990) (quoting Vincent v. Trend Western Technical Corp., 828 F.2d 563, 570–71 (9th Plaintiff asserted a RICO cause of action against Dodgin in his first complaint filed on June 17, 2015. Dkt. 1. The cause of action was stated again in his first amended complaint. Dkt. 10. Dodgin first moved to dismiss the RICO cause of action on July 16, 2015. Dkt. 18. The case was transferred to the MDL before the motion was resolved, but plaintiff filed his second amended complaint on July 14, 2023, with the benefit of knowing Dodgin’s arguments concerning the RICO claim. Dkt. 42. Dodgin again moved to dismiss the RICO cause of action (Dkt. 50), which the court granted (Dkt. 76). Plaintiff was given leave to amend to cure deficiencies in the pleading with respect to allegations supporting statutory standing and the specificity of allegations identifying the “specific conduct . . . at issue in this action”, “which actor plaintiff alleges committed which act”, and “the ‘time, place, and manner’ of the fraud actually alleged in the complaint”. Dkt. 76 at 9. Plaintiff subsequently filed a third amended complaint (Dkt. 90), which as described above again failed to plead the “specific conduct . . . at issue in this action”, “which actor plaintiff alleges committed which act”, and “the ‘time, place, and manner’ of the fraud actually alleged in the complaint” with the specificity required under Rule 9(b). Plaintiff has had multiple opportunities to cure the very deficiencies still present in his pleading. Furthermore, his most recent opportunity to amend was presented with an explanation of the SAC’s deficiencies. In response, rather than pleading facts identifying specific predicate acts, plaintiff’s most recent amendment largely presented “only ‘new theories’ and ‘provided no satisfactory explanation for his failure to fully develop his contentions originally.’” Allen, 911 F.2d at 374 (quoting Vincent, 828 F.2d at 570–71). As plaintiff has repeatedly failed to cure deficiencies by previous amendment, and as the court concludes that further amendment would be futile, plaintiff’s request for leave to amend the complaint is DENIED. For the foregoing reasons, Dodgin’s motion to dismiss the RICO cause of action is GRANTED. Plaintiff’s eighth cause of action under the RICO statute as asserted against Dodgin is DISMISSED WITH PREJUDICE. Dated: February 3, 2025 /s/ Phyllis J. Hamilton PHYLLIS J. HAMILTON United States District Judge