1 2 3 4 5 6 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 WHITESLATE, LLP, Case No.: 20cv2026-LAB-AHG 11 Plaintiff faint, ORDER: 12 V. 13 || THIRD AVENEWS, LLC, et al., 1) DISMISSING STATE LAW CLAIMS; 14 Defendants. 15 2) DENYING PLAINTIFF’S EX 16 PARTE APPLICATION FOR WRIT OF POSSESSION 17 [Dkt. 3]; AND 18 3) ORDERING PLAINTIFF TO 19 SHOW CAUSE 20 21 Plaintiff Whiteslate, LLP filed a Complaint alleging seventeen state law 22 |\claims and one federal claim against Defendants Third Avenews, LLC, 23 |/2131 3rd Ave Daily Transcript, LLC, Meissner Jacquet, Tim Foley, Randy 24 ||Goodson, CRBE, Inc., Camille Doan, and twenty Doe defendants. 25 ||Whiteslate contends that the Court can exercise diversity jurisdiction or 26 || federal question jurisdiction over the case, Compl., Dkt. 1, 99 11, 15 (citing 27 ||28 U.S.C. §§ 1331, 1332(a)), and it has now filed an Application for Return 28
1 ||of Personal Property seeking a writ of possession under California law. 2 ||Dkt. 3. The Court finds that the Complaint establishes a basis for federal 3 ||question jurisdiction, but not diversity jurisdiction. While the Court has 4 ||supplemental jurisdiction over the state law claims, it declines to exercise it. 5 As discussed below, the Court declines to take on the state law claims 6 DISMISSES them WITHOUT PREJUDICE. In addition, because the 7 ||Application is based on those state law claims, the Court DENIES it 8 || WITHOUT PREJUDICE. Whiteslate is ORDERED TO SHOW CAUSE why 9 federal Racketeer Influenced and Corrupt Organizations Act claim 10 ||shouldn’t be dismissed under Fed. R. Civ. P. 12(b)(6). 11 L. Whiteslate Doesn’t Allege a Basis for Diversity Jurisdiction 12 Whiteslate fails to sufficiently allege that the Court has diversity 13 ||jurisdiction over this case. Diversity jurisdiction isn’t available unless the 14 ||parties are completely diverse—the plaintiff can’t be a citizen of any state of 15 ||which any defendant is a citizen. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 16 ||67-68 (1996). But Whiteslate fails to fully allege its own citizenship or that of 17 Defendant. 18 Whiteslate and two Defendants are California limited liability entities 19 ||whose citizenship is established by the citizenship of their members. 20 || Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th 21 || Cir. 2006). But the Complaint doesn’t allege the citizenship of each member 22 the limited liability entities, so it is deficient in establishing diversity. 23 || Dkt. 1 FF 1-3. 24 The citizenship of individual Defendants is established by their domicile 25 ||— meaning their residence to which they intend to remain or return. Kanter 26 ||v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001). But the 27 ||Complaint alleges only that the individual Defendants reside in California. 28 || Dkt. 1 9] 4-6, 8. Without allegations as to whether those Defendants intend
1 remain or return, their citizenship cannot be determined. Kanter, 265 F.3d 2 857-58. 3 The remaining Defendant is a corporation, which is a citizen of its place 4 |/of incorporation and its principal place of business. Hertz Corp. v. Friend, 5 ||559 U.S. 77, 88 (2010). Whiteslate alleges that the corporation, either 6 ||CRBE, Inc. or CBRE, Inc., is a Delaware corporation, but omits to list its 7 ||principal place of business. See Dkt. 1 § 7 (alleging that corporation 8 || “conduct[s] business in California’). The corporation is allegedly a citizen of 9 || Delaware and another unknown state. 10 Given these deficiencies, the Court can’t exercise diversity jurisdiction 11 this action. 12 ll. The Court Declines Supplemental Jurisdiction over the State 13 Law Claims 14 The Court does have original jurisdiction over Whiteslate’s federal 15 |/RICO claim, see 28 U.S.C. § 1331, and supplemental jurisdiction over 16 ||Whiteslate’s other claims. See 28 U.S.C. § 1367(a). But the Court has 17 ||discretion to decline exercising supplemental jurisdiction over the non- 18 federal claims where they substantially predominate over the federal claim. 19 || See 28 U.S.C. § 1367(c)(2); San Pedro Hotel Co., Inc. v. City of Los Angeles, 20 F.3d 470, 478 (9th Cir. 1998) (courts may decline supplemental 21 ||jurisdiction on substantial predominance grounds’ without further 22 explanation). That’s the case here. 23 Whiteslate’s federal claim is premised on_ five _ alleged 24 ||misrepresentations made through the mail and wire communications. 25 ||Dkt. 1 [| 285-93. By contrast, the seventeen state law claims cover a wide 26 || array of alleged conduct and theories ranging from breach of contract, fraud, 27 negligence to trespass to chattels, extortion, and abuse of process. The 28 ||scope of the state law claims substantially predominates over the narrower
1 ||federal claim. See United Mine Workers v. Gibbs, 383 U.S. 715, 726-27 2 ||(1966) (state claims may substantially predominate in terms of scope of 3 |/issues raised). Moreover, it is alleged that the parties have already begun 4 litigation in state court for alleged breach of one of the lease agreements at 5 |/issue in this case. See Dkt. 1 J§ 279-84 (alleging abuse of process in 6 ||connection with “[Case] Nos. X0-2020-005-XXXXXxX”). For these reasons, 7 ||the Court declines to exercise supplemental jurisdiction over Whiteslate’s 8 ||state law claims, taking into account “considerations of judicial economy, 9 || convenience, and fairness.” Gibbs, 383 U.S. at 726. 10 lll. The Complaint Fails to State a Claim under RICO 11 Whiteslate’s remaining claim arises under RICO, but the Complaint 12 ||fails to allege a violation of that statute.’ RICO is intended to provide civil 13 || remedies to victims of “long-term criminal conduct.” H.J. Inc. v. Northwestern 14 || Bell Tel. Co., 492 U.S. 229, 242 (1989). Whiteslate’s RICO claim here rests 15 allegations that Defendants engaged in several instances of alleged mail 16 ||and wire fraud in connection with a single transaction with Whiteslate. But a 17 ||RICO claim requires more than multiple instances of racketeering activity. A 18 || plaintiff must allege acts amounting to a pattern. 18 U.S.C. § 1962. 19 “[W]hile two acts are necessary [to establish a pattern], they may not 20 |/be sufficient . . . ‘It is [the] factor of continuity plus relationship which 21 ||combines to create a pattern.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 22 ||479, 496 n. 14 (1985) (quoting S. Rep. No. 91-617, p. 158 (1969)).
Free access — add to your briefcase to read the full text and ask questions with AI
1 2 3 4 5 6 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 WHITESLATE, LLP, Case No.: 20cv2026-LAB-AHG 11 Plaintiff faint, ORDER: 12 V. 13 || THIRD AVENEWS, LLC, et al., 1) DISMISSING STATE LAW CLAIMS; 14 Defendants. 15 2) DENYING PLAINTIFF’S EX 16 PARTE APPLICATION FOR WRIT OF POSSESSION 17 [Dkt. 3]; AND 18 3) ORDERING PLAINTIFF TO 19 SHOW CAUSE 20 21 Plaintiff Whiteslate, LLP filed a Complaint alleging seventeen state law 22 |\claims and one federal claim against Defendants Third Avenews, LLC, 23 |/2131 3rd Ave Daily Transcript, LLC, Meissner Jacquet, Tim Foley, Randy 24 ||Goodson, CRBE, Inc., Camille Doan, and twenty Doe defendants. 25 ||Whiteslate contends that the Court can exercise diversity jurisdiction or 26 || federal question jurisdiction over the case, Compl., Dkt. 1, 99 11, 15 (citing 27 ||28 U.S.C. §§ 1331, 1332(a)), and it has now filed an Application for Return 28
1 ||of Personal Property seeking a writ of possession under California law. 2 ||Dkt. 3. The Court finds that the Complaint establishes a basis for federal 3 ||question jurisdiction, but not diversity jurisdiction. While the Court has 4 ||supplemental jurisdiction over the state law claims, it declines to exercise it. 5 As discussed below, the Court declines to take on the state law claims 6 DISMISSES them WITHOUT PREJUDICE. In addition, because the 7 ||Application is based on those state law claims, the Court DENIES it 8 || WITHOUT PREJUDICE. Whiteslate is ORDERED TO SHOW CAUSE why 9 federal Racketeer Influenced and Corrupt Organizations Act claim 10 ||shouldn’t be dismissed under Fed. R. Civ. P. 12(b)(6). 11 L. Whiteslate Doesn’t Allege a Basis for Diversity Jurisdiction 12 Whiteslate fails to sufficiently allege that the Court has diversity 13 ||jurisdiction over this case. Diversity jurisdiction isn’t available unless the 14 ||parties are completely diverse—the plaintiff can’t be a citizen of any state of 15 ||which any defendant is a citizen. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 16 ||67-68 (1996). But Whiteslate fails to fully allege its own citizenship or that of 17 Defendant. 18 Whiteslate and two Defendants are California limited liability entities 19 ||whose citizenship is established by the citizenship of their members. 20 || Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th 21 || Cir. 2006). But the Complaint doesn’t allege the citizenship of each member 22 the limited liability entities, so it is deficient in establishing diversity. 23 || Dkt. 1 FF 1-3. 24 The citizenship of individual Defendants is established by their domicile 25 ||— meaning their residence to which they intend to remain or return. Kanter 26 ||v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001). But the 27 ||Complaint alleges only that the individual Defendants reside in California. 28 || Dkt. 1 9] 4-6, 8. Without allegations as to whether those Defendants intend
1 remain or return, their citizenship cannot be determined. Kanter, 265 F.3d 2 857-58. 3 The remaining Defendant is a corporation, which is a citizen of its place 4 |/of incorporation and its principal place of business. Hertz Corp. v. Friend, 5 ||559 U.S. 77, 88 (2010). Whiteslate alleges that the corporation, either 6 ||CRBE, Inc. or CBRE, Inc., is a Delaware corporation, but omits to list its 7 ||principal place of business. See Dkt. 1 § 7 (alleging that corporation 8 || “conduct[s] business in California’). The corporation is allegedly a citizen of 9 || Delaware and another unknown state. 10 Given these deficiencies, the Court can’t exercise diversity jurisdiction 11 this action. 12 ll. The Court Declines Supplemental Jurisdiction over the State 13 Law Claims 14 The Court does have original jurisdiction over Whiteslate’s federal 15 |/RICO claim, see 28 U.S.C. § 1331, and supplemental jurisdiction over 16 ||Whiteslate’s other claims. See 28 U.S.C. § 1367(a). But the Court has 17 ||discretion to decline exercising supplemental jurisdiction over the non- 18 federal claims where they substantially predominate over the federal claim. 19 || See 28 U.S.C. § 1367(c)(2); San Pedro Hotel Co., Inc. v. City of Los Angeles, 20 F.3d 470, 478 (9th Cir. 1998) (courts may decline supplemental 21 ||jurisdiction on substantial predominance grounds’ without further 22 explanation). That’s the case here. 23 Whiteslate’s federal claim is premised on_ five _ alleged 24 ||misrepresentations made through the mail and wire communications. 25 ||Dkt. 1 [| 285-93. By contrast, the seventeen state law claims cover a wide 26 || array of alleged conduct and theories ranging from breach of contract, fraud, 27 negligence to trespass to chattels, extortion, and abuse of process. The 28 ||scope of the state law claims substantially predominates over the narrower
1 ||federal claim. See United Mine Workers v. Gibbs, 383 U.S. 715, 726-27 2 ||(1966) (state claims may substantially predominate in terms of scope of 3 |/issues raised). Moreover, it is alleged that the parties have already begun 4 litigation in state court for alleged breach of one of the lease agreements at 5 |/issue in this case. See Dkt. 1 J§ 279-84 (alleging abuse of process in 6 ||connection with “[Case] Nos. X0-2020-005-XXXXXxX”). For these reasons, 7 ||the Court declines to exercise supplemental jurisdiction over Whiteslate’s 8 ||state law claims, taking into account “considerations of judicial economy, 9 || convenience, and fairness.” Gibbs, 383 U.S. at 726. 10 lll. The Complaint Fails to State a Claim under RICO 11 Whiteslate’s remaining claim arises under RICO, but the Complaint 12 ||fails to allege a violation of that statute.’ RICO is intended to provide civil 13 || remedies to victims of “long-term criminal conduct.” H.J. Inc. v. Northwestern 14 || Bell Tel. Co., 492 U.S. 229, 242 (1989). Whiteslate’s RICO claim here rests 15 allegations that Defendants engaged in several instances of alleged mail 16 ||and wire fraud in connection with a single transaction with Whiteslate. But a 17 ||RICO claim requires more than multiple instances of racketeering activity. A 18 || plaintiff must allege acts amounting to a pattern. 18 U.S.C. § 1962. 19 “[W]hile two acts are necessary [to establish a pattern], they may not 20 |/be sufficient . . . ‘It is [the] factor of continuity plus relationship which 21 ||combines to create a pattern.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 22 ||479, 496 n. 14 (1985) (quoting S. Rep. No. 91-617, p. 158 (1969)). Where 23 || predicate acts don’t occur over a “substantial period,” they aren’t continuous 24 29 “[A] trial court may act on its own initiative to note the inadequacy of a 26 ||complaint and dismiss it for failure to state a claim[,]” so long as it gives the 97 ||Plaintiff notice of its intent to do so and an opportunity to respond. Wong v. Bell, 642 F.2d 359, 361-62 (9th Cir. 1981) (internal marks and citations 28 || omitted).
1 || without “a specific threat of repetition extending indefinitely into the future” or 2 ||indications “that the predicate acts were part of an ongoing entity’s regular 3 || way of doing business.” Northwestern Bell, 492 U.S. at 242. 4 Whiteslate doesn’t allege a continuous pattern here. Its claim relies on 5 || five alleged instances of mail and wire fraud spanning, at most, eight or nine 6 ||months.? Dkt. 1 § 289. This period, on its own, generally isn’t long enough to 7 ||establish continuity. See, e.g., Religious Technology Ctr. v. Wollersheim, 8 ||971 F.2d 364, 366 (9th Cir. 1992) (“less than a year” is rarely, if ever, a 9 || “substantial period” for RICO pattern). Likewise, Whiteslate doesn’t allege 10 threat of repetition, nor do its allegations support an inference that the 11 alleged are part of Defendants’ regular way of doing business. The 12 ||misrepresentations described in the Complaint didn’t occur over a 13 ||substantial period of time and there’s no reason to believe based on the 14 Complaint that the conduct extends beyond Defendants’ handling of a single 15 || property transaction with a single victim and its predecessor entity. The Court 16 ||finds that the alleged misconduct doesn’t amount to a continuous pattern of 17 ||related misconduct, nor does it suggest the type of long-term criminal activity 18 19 20 ||? The period may be shorter still—the Complaint doesn’t clearly allege when 94 |Jany pattern might have begun. The earliest alleged misrepresentation appears to have occurred sometime on or before December 24, 2019, but 22 ||no specific date is alleged. See Dkt. 1 J] 289(d), 37, 39; Dkt. 1-3 at 34. And 93 Court can’t treat either that misrepresentation or the next in time as the beginning of any pattern because those misrepresentations aren't sufficiently 24 alleged. Whiteslate doesn’t sufficiently allege the misrepresentations’ time, 25 ||Place, or specific content, the parties to them, or whether the relevant Defendant(s) Knew the statements to be false. See Dkt. 1 J] 289(d)-(e); 26 || Schreiber Distributing Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 97 1400-01 (9th Cir. 1986) (applying Rule 9(b) to wire fraud RICO claim); Ashcroft v. Iqbal, 556 U.S. 662, 686-87 (2009) (conclusory allegations 28 || insufficient to allege knowledge and intent “generally” under Rule 9(b)).
1 || necessary to bring the conduct within RICO’s scope. Whiteslate has failed to 2 || sufficiently allege a RICO claim. 3 IV. Conclusion 4 Because the Court declines supplemental jurisdiction, Whiteslate’s 5 ||First through Seventeenth Causes of Action are DISMISSED WITHOUT 6 || PREJUDICE. The Court DENIES the Application premised on those state 7 claims WITHOUT PREJUDICE. 8 Whiteslate is ORDERED TO SHOW CAUSE why the Court shouldn’t 9 || dismiss the remaining RICO claim under Rule 12(b)(6). Any brief Whiteslate 10 || files in response to this order shall be limited to no more than ten pages and 11 no later than noon on Friday, November 13, 2020. In the alternative, 12 ||Whiteslate may amend its Complaint by the same date without affecting its 13 ||right to amend as a matter of course under Fed. R. Civ. P. 15(a)(1). 14 Defendants’ obligation to respond to the Complaint is STAYED 15 ||pending further Order or the filing of an amended pleading. Should 16 ||Whiteslate file an amended pleading, Defendants must respond within 17 ||21 days after being served with the summons, complaint, and that amended 18 || pleading. 19 20 IT IS SO ORDERED. 21 22 || Dated: October 29, 2020 ‘ve A 23 Hon. f A 200 WY 24 Chief United States District Judge 25 26 27 28