Steven Wodka v. Causeway Capital Management

FILED
NOT FOR PUBLICATION MAY 16 2011

MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS

FOR THE NINTH CIRCUIT

STEVEN H. WODKA, individually, No. 09-56733
derivatively and on behalf of all others
similarly situated, D.C. No. 2:09-cv-02625-R-RC

Plaintiff - Appellant,
MEMORANDUM *
v.

CAUSEWAY CAPITAL
MANAGEMENT LLC; SARAH H.
KETTERER; HARRY W. HARTFORD;
JAMES A. DOYLE; JONATHAN P.
ENG; KEVIN DURKIN; TURNER
SWAN; GRACIE V. FERMELIA; MARK
CONE; JOHN A. G. GAVIN; ERIC H.
SUSSMAN; CAUSEWAY CAPITAL
MANAGEMENT TRUST, Nominal
Defendant, DBA Causeway International
Value Fund,

Defendants - Appellees.

Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding

Argued and Submitted May 2, 2011
Pasadena, California

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
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Before: SILVERMAN, TALLMAN, and CLIFTON, Circuit Judges.

Steven Wodka appeals the district court’s dismissal of his claims under the

Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. We

have jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo the district

court’s dismissal for failure to state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6), see Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149

(9th Cir. 2000), and we affirm.

To state a civil RICO claim, a plaintiff must show “that a RICO predicate

offense ‘not only was a “but for” cause of his injury, but was the proximate cause

as well.’” Hemi Group, LLC v. City of New York, — U.S. —, 130 S. Ct. 983, 989

(2010) (quoting Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992)).

“When a court evaluates a RICO claim for proximate causation, the central

question it must ask is whether the alleged violation led directly to the plaintiff’s

injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006) (emphasis

added). There must be “‘a direct causal connection’ between the predicate wrong

and the harm.” Hemi Group, 130 S. Ct. at 994 (quoting Anza, 547 U.S. at 460).

“A link that is ‘too remote,’ ‘purely contingent,’ or ‘indirec[t]’ is insufficient.” Id.

at 989 (quoting Holmes, 503 U.S. at 271, 274).
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Applying these principles, we hold that the district court correctly dismissed

Wodka’s claims for lack of proximate causation under RICO. The decline in the

value of Wodka’s shares of the Causeway International Value Fund was not the

direct result of the defendants’ alleged ownership and financing of illegal gambling

operations. Rather, Wodka’s losses were directly caused by a series of intervening

actions undertaken by independent, third party actors during the summer and fall of

2006, including the passage of the Unlawful Internet Gambling Enforcement Act

of 2006, 31 U.S.C. § 5361 et seq., several law enforcement actions taken against

two other Internet-based gambling companies, PartyGaming’s withdrawal from the

U.S. market, and various decisions made by investors to sell off their shares of

PartyGaming and NETeller stock. Given all of these factors, we conclude that the

cause of Wodka’s asserted harm was “a set of actions . . . entirely distinct from the

alleged RICO violation” and thus too attenuated for RICO purposes. See Anza,

547 U.S. at 458; see also Hemi Group, 130 S. Ct. at 990; cf. Bridge v. Phoenix

Bond & Indem. Co., 553 U.S. 639, 658-59 (2008).

Because Wodka fails to allege facts sufficient to establish a direct causal

connection between his injury and the defendants’ alleged racketeering activities,

we affirm the district court’s Rule 12(b)(6) dismissal. We need not reach the

alternative grounds for affirmance offered by the defendants, including the
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question whether the defendants’ purchases of PartyGaming and NETeller stocks

constitute RICO predicate acts.

AFFIRMED.