Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.

871 F. Supp. 2d 933, 2012 U.S. Dist. LEXIS 65826, 2012 WL 1657108
CourtDistrict Court, N.D. California
DecidedMay 10, 2012
DocketNo. 11-2861 SC
StatusPublished
Cited by11 cases

This text of 871 F. Supp. 2d 933 (Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc., 871 F. Supp. 2d 933, 2012 U.S. Dist. LEXIS 65826, 2012 WL 1657108 (N.D. Cal. 2012).

Opinion

ORDER DENYING MOTIONS TO PARTIALLY DISMISS SECOND AMENDED COMPLAINT

SAMUEL CONTI, District Judge.

I. INTRODUCTION

Now before the Court are two motions to partially dismiss the Second Amended Complaint, ECF No. 72 (“SAC”), of Plaintiff Mitsui O.S.K. Lines, Ltd. (“MOL”), a Japanese corporation. Specifically, the motions seek dismissal of the SAC’s fourth and fifth claims, arising under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and 1962(d). The first motion to dismiss was brought by Defendants Seamaster Logistics, Inc. ■ (“Seamaster”) and Toll Global Forwarding (Americas) Inc., formerly named Summit Logistics International, Inc. (“Summit”), and the second was brought by Defendant American Global Logistics LLC (“AGL”) (collectively, “Moving Defendants”).

Both motions are fully briefed. ECF Nos. 77 (“SM/SL MTD”), 78-1 (“AGL MTD”), 80 (“MOL Opp’n”), 82 (“SM/SL Reply”), 84 (“AGL Reply”). Pursuant to Civil Local Rule -7-1 (b), both motions are suitable for decision without oral argument. For the reasons set forth below, the Court DENIES both motions.

II. BACKGROUND

The Court assumes familiarity with Magistrate Judge James’s October 19, 2011, 2011 WL 4974476, Order dismissing MOL’s original Complaint. ECF No. 38. Therefore, the Court will only briefly summarize the case, supplementing Judge James’s account with allegations contained in the SAC. The Court recounts additional, specific allegations as part of the discussion sections below, and takes all of the SAC’s well-pleaded allegations as true. Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

MOL is a Vessel Operating Common Carrier (“VOCC”) — that is, an ocean shipper — operating between foreign and U.S. ports, including the Port of Oakland. Moving Defendants are, in industry parlance, “NVOCCs,” that is, Non-Vessel Operating Common Carriers. Like MOL, they are shippers, but unlike MOL, they do not operate seafaring vessels. NVOCCs such as the Moving Defendants essentially are trucking companies that en[936]*936gage only in inland or “door” carriage, while VOCCs like MOL may engage in ocean shipping. See SAC ¶ 16.

Sometimes, in addition to providing ocean carriage, MOL is hired to arrange inland carriage. See id. On those jobs, called “through” or “door-to-door” carriage, MOL pays NVOCCs to arrange for the inland leg (or legs) of the trip on MOL’s behalf. Id. MOL alleges that Defendants engaged in a scheme to charge MOL for unnecessary or nonexistent inland carriage. In essence, MOL alleges that Defendants routinely represented to MOL that they had performed inland carriage to or from a port serviced by MOL, but in actuality third parties would make the inland shipments. As a result, MOL allegedly was induced into paying for inland carriage that it never received. See id. ¶¶ 24-31. MOL alleges that some of this conduct occurred in inland China and some in the United States. See MOL Opp’n at 7-8 (identifying allegations of SAC which purportedly pertain to U.S. conduct).

The SAC’s fourth and fifth claims assert that, by using postal mail, faxes, and the Internet to communicate with and bill MOL in connection with these shipments, Defendants engaged in wire and mail fraud — predicate acts that can support civil RICO liability under 18 U.S.C. §§ 1962(c) and (d), respectively.1 See SAC ¶¶ 78-91. Moving Defendants’ position, in brief, is that MOL cannot state viable RICO claims against them because the case primarily concerns conduct that took place in inland China and effected MOL in Japan, and that, under Morrison v. National Australia Bank Ltd., — U.S. -, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010), RICO has no extraterritorial application.

III. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). “Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988). “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The allegations made in a complaint must be both “sufficiently detailed to give fair notice to the opposing party of the nature of the claim so that the party may effectively defend against it” and “sufficiently plausible” such that “it is not unfair to require the opposing party to be subjected to the expense of discovery.” Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir.2011).

IV. DISCUSSION

A. Morrison and Its Progeny

Moving Defendants have not challenged the sufficiency of MOL’s factual allega[937]*937tions. See SM/SL Reply at 7-8 (acknowledging that MOL’s claims are sufficiently pled). Instead, Moving Defendants rest their challenge to MOL’s RICO claims on Morrison, a securities action, and the handful of cases that have applied its reasoning in the RICO context. Because the post-Morrison RICO cases have yet to settle on a single approach, the Court will briefly survey the field. It concludes that European Community v. RJR Nabisco, Inc., No. 02-CV-5771 (NGG)(WP), 2011 WL 843957 (E.D.N.Y. Mar. 8, 2011), supplies the governing rule in this case.

1. Territoriality in the Securities Context

In Morrison, the Supreme Court considered whether § 10(b) of the Securities and Exchange Act of 1934 has extraterritorial application. 130 S.Ct. at 2876-77. The Morrison plaintiffs, all Australian nationals, had purchased stock in an Australian bank on an Australian stock exchange. Their complaint alleged that officers of the bank’s U.S. subsidiary had, in the United States, made fraudulent statements that caused some of the subsidiary’s assets to appear more valuable than they really were. Id. at 2876.

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871 F. Supp. 2d 933, 2012 U.S. Dist. LEXIS 65826, 2012 WL 1657108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mitsui-osk-lines-ltd-v-seamaster-logistics-inc-cand-2012.