FILED
United States Court of Appeals
Tenth Circuit
PUBLISH
June 29, 2006
UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
MOSHE TAL; BRICKTOWN 2000,
INC.; TAL TECHNOLOGIES, INC.,
Plaintiffs - Appellants,
No. 03-6293
v.
DAN RANDOLPH HOGAN;
TMK/HOGAN JOINT VENTURE,
also known as Commercial Real Estate
Services; HOGAN PROPERTY
MANAGEMENT, LLC;
BRICKTOWN-TMK/HOGAN
PARKING, LLC., also known as
Bricktown-SMC/Hogan, LLC;
BRICKTOWN-TMK/HOGAN
ENTERTAINMENT, LLC, also known
as Bricktown Entertainement, LLC;
MARK D. ELGIN; STONEGATE
MANAGEMENT COMPANY, LLC;
ELGIN DEVELOPMENT COMPANY,
LLC; TDC COMPANY, LLC; TIANA
P. DOUGLAS,
Defendants - Appellees.
_____________________
THE CITY OF OKLAHOMA CITY;
OKLAHOMA CITY URBAN
RENEWAL AUTHORITY,
Amici-Curie.
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 02-CV-324-F)
Submitted on the Briefs: *
Moshe Tal, pro se, Plaintiff-Appellant.
James E. Dunn, James E. Dunn & Associates, P.C., of Oklahoma City, Oklahoma,
for Plaintiffs-Appellants Bricktown 2000, Inc. and Tal Technologies, Inc.
Melvin R. McVay, Jr., Robert N. Sheets, Lloyd T. Hardin, Jr., Heather L. Hintz,
Phillips, McFall, McCaffrey, McVay & Murrah, P.C., Oklahoma City, Oklahoma,
for Defendants-Appellees Hogan, TMK/Hogan Joint Venture; Hogan Property
Management, LLC; Bricktown-TMK/Hogan Parking, LLC; Bricktown-
TMK/Hogan Entertainment, LLC; Mark D. Elgin; Stonegate Management
Company, LLC; Elgin Development Company, LLC, and TDC Company, LLC.
Gerard F. Pignato, Tom Cooper and Brad L. Roberson, Pignato & Cooper, P.C.,
Oklahoma City, Oklahoma, for Defendant-Appellee Tiana P. Douglas.
William R. Burkett, Daniel T. Brummitt, Office of Municipal Counselor,
Oklahoma City, Oklahoma, for Amicus Curiae The City of Oklahoma City.
Leslie V. Batchelor, Dan Batchelor, Center for Economic Development Law,
Oklahoma City, Oklahoma, for Amicus Curiae Oklahoma City Urban Renewal
Authority.
Before BRISCOE, MURPHY and O’BRIEN, Circuit Judges.
*
After examining the briefs and the appellate record, this panel has
determined unanimously that oral argument would not materially assist in the
determination of this appeal. See Fed. R. App. P. 34(a); 10 th Cir. R. 34.1. The
case is therefore ordered submitted without oral argument.
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O’Brien, Circuit Judge.
This case is the latest in a long running dispute between Moshe Tal, the
founder and president of both Tal Technologies, Inc., (Tal, Inc.) and Bricktown
2000, Inc. (Bricktown, Inc.), and Oklahoma City, the Oklahoma City Urban
Renewal Authority (Renewal Authority) and various private Developers 1 over the
condemnation of Tal, Inc.’s land and Bricktown, Inc.’s failure to acquire
redevelopment rights for the area in downtown Oklahoma City known as
Bricktown. On March 14, 2002, Tal, Tal, Inc. and Bricktown, Inc. filed suit in
the United States District Court for the Western District of Oklahoma against the
Developers and the executive director of the Renewal Authority, Tiana Douglas,
alleging violations of the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. § 1962, and the Sherman Act, 15 U.S.C. § 2. They also
asserted pendant state law claims for tortious interference with business and
fraudulent condemnation of Tal, Inc.’s land. On September 30, 2003, the district
court dismissed the claims and the plaintiffs appealed. We exercise jurisdiction
1
The Developers include: Dan Randolph Hogan; TMK/Hogan Joint
Venture, a.k.a. Commercial Real Estate Services Joint Venture; Hogan Property
Management, LLC.; Bricktown-TMK/Hogan Parking, LLC, a.k.a. Bricktown-
SMC/Hogan, LLC; Bricktown-TMK/Hogan Entertainment, LLC, a.k.a. Bricktown
Entertainment, LLC; Mark D. Elgin; Stonegate Management Company, LLC;
Elgin Development Company, LLC; and TDC Company, LLC.
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under 28 U.S.C. § 1291 and AFFIRM.
B ACKGROUND
Under the Oklahoma Urban Redevelopment Law, 11 O KLA . S TAT . TIT . §§
38-101 to 123, cities in Oklahoma may create urban renewal authorities, which
can prepare urban renewal plans for specific urban renewal areas. 11 O KLA .
S TAT . TIT . §§ 38-101(11), 38-106(A). The powers of an urban renewal authority
are exercised by commissioners. 11 O KLA . S TAT . TIT . § 38-107(E). However,
under 11 O KLA . S TAT . TIT . § 38-107(F), urban renewal authorities “may employ
an executive director . . . and such other agents and employees, permanent and
temporary, as it may require. . . .” The urban renewal plans must meet the
requirements of the statute and be approved by the municipal governing body. 11
O KLA . S TAT . TIT . § 38-106. One statutory requirement is that the plan allow
private developers the opportunity to obtain redevelopment contracts. 11 O KLA .
S TAT . TIT . § 38-104.
Pursuant to the Oklahoma Urban Redevelopment Law, Oklahoma City
created the Renewal Authority, “a public body corporate.” 11 O KLA . S TAT . TIT . §
38-107(A). In 1976, the Renewal Authority proposed an Urban Renewal Plan
covering an area in Oklahoma City known as Bricktown. In 1993, the residents of
Oklahoma City approved a sales tax to be used to redevelop sections of the city
under the guidance of the Oklahoma City Metropolitan Area projects program
(MAPS). The Bricktown redevelopment plan was amended in 1997 as the MAPS
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Sports-Entertainment-Parking Support Redevelopment Plan. Tiana Douglas
served as the executive director of the Renewal Authority during the period at
issue.
On March 25, 1997, the City brought a condemnation action against Tal,
Inc. seeking to condemn two parcels of Tal, Inc.’s land, totaling 1.4 acres, that
fronted a canal running into Bricktown. The City’s intended use was public
parking, public recreation and parks. Tal, Inc. objected to the condemnation,
challenging the public necessity of the taking. The trial court overruled Tal,
Inc.’s objection and entered a condemnation order on August 28, 1997, which was
modified on October 2, 1997. The City then transferred the land to the Renewal
Authority “with the proviso that [the] City would receive the net proceeds from
the sale of the property by [the Renewal Authority] and that the price paid to the
Urban Renewal Authority for the property would be not less than the actual fair
market value of [the] property.” City of Okla. City v. Okla. City Urban Renewal
Auth., 988 P.2d 901, 905 (Okla. 1999) (Tal I) (internal quotations omitted).
Also in 1997, in an effort to encourage development of a new sports and
entertainment district by private developers, the city council approved the
Bricktown redevelopment plan. Tal I, 988 P.2d at 905. The Renewal Authority
requested proposals from developers interested in obtaining the redevelopment
contract for Bricktown. Tal, Inc. and Bricktown, Inc. applied for the contract but
“the City Council, after widely publicized hearings and based on an extremely
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close vote, ultimately awarded the [redevelopment contract] to . . . TMK/Hogan
rather than to Tal’s group. The final decision was made by the City Council only
after two years of public meetings, public notices, public hearings, and citizen
review.” 2 Id. The Renewal Authority then “received fair market value for the
[condemned] property” from the Developers in the amount of $3.3 million. Id.
Subsequently, Tal along with the organization Taxpayers Against Ripoffs
(TAR), filed a state qui tam action against the Renewal Authority alleging Tal,
Inc.’s land had been impermissibly taken for private use and the redevelopment
contract was awarded amid “bid-rigging.” They also demanded that the City file
a lawsuit to recover the property and declare the contract void. Tal I, 988 P.2d at
903-04. On January 26, 1999, the City filed a declaratory action against the
Renewal Authority to settle whether the condemnation and the transfer to the
Renewal Authority had been valid. Id. at 904. Tal and TAR sought to intervene
twice but were denied. See Tal I, 988 P.2d at 904-05; Okla. ex rel. Tal v. City of
Okla. City, 19 P.3d 268 (Okla. 2000), cert. denied, 534 U.S. 814 (2001) (Tal III). 3
2
Specifically, the Renewal Authority and TMK/Hogan entered into the
redevelopment contract on July 21, 1998. The city council also awarded a
parking redevelopment contract to Bricktown Parking Investors, LLC, on
December 19, 1997. Bricktown Parking Investors, LLC is not a party to the
present dispute.
3
Tal II was an attempt by Tal and TAR to challenge the operation of a
baseball stadium located in Bricktown. The district court dismissed and the
Oklahoma Supreme Court affirmed. See Okla. ex rel. Tal v. Norick, 991 P.2d
999, 1001 (Okla. 1999) (Tal II). Tal IV was an appeal of the award of attorney’s
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On September 28 and November 2, 1999, almost two years after the entry
of the condemnation order, Tal, Inc. filed two motions to reconsider the
condemnation order based on newly discovered evidence. In both motions, Tal,
Inc. claimed the City had fraudulently deceived the court and delivered the land
to the Renewal Authority for sale to private developers, which it argued was a
non-public use. Tal, Inc. also argued the Renewal Authority had exceeded the
scope of its eminent domain power by condemning the land for use as parking, a
usage for which Tal, Inc. had already intended the land, and then by changing the
development of the land from parking to non-parking. The trial court denied both
motions. Tal, Inc. appealed to the Oklahoma Court of Civil Appeals which
construed the appeal as alleging that the City had obtained the condemnation
order by fraud. City of Oklahoma City v. Tal Techs., Inc., Case No. 94,045, at 5
n.3 (Okla. Civ. App. July 31, 2001). The Court of Civil Appeals affirmed,
holding Tal, Inc. had waived its fraud claim by failing to exercise due diligence in
discovering the fraud. It also concluded that the City had properly condemned
fees against Tal and TAR in Tal III. Although the Oklahoma Supreme Court
reversed the award of attorney’s fees, it did reiterate Tal III’s holding that Tal,
Inc. was precluded from asserting fraud was appropriate. See Okla. ex rel. Tal. v.
City of Okla. City, 61 P.3d 234, 247 (Okla. 2002) (Tal IV). The Oklahoma
Supreme Court recently dismissed as premature an appeal from summary
judgment in favor of the City and the Renewal Authority involving the validity of
the underlying transactions. See Okla. City Urban Renewal Auth. v. City of Okla.
City, 110 P.3d 550 (Okla. 2005) (Tal V). These enumerated Tal cases are separate
from the initial condemnation action and the corresponding direct appeals.
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Tal, Inc.’s land for a valid public purpose. Id. at 7. Tal, Inc.’s subsequent
petitions for certiorari to the Oklahoma Supreme Court and the United States
Supreme Court were denied. See Tal Techs., Inc. v. City of Okla. City, 535 U.S.
987 (2002).
On March 14, 2002, Tal, Bricktown, Inc. and Tal, Inc. filed a complaint
against the Developers and Douglas in the United States District Court for the
Western District of Oklahoma. They alleged the Developers and Douglas
conspired to fraudulently condemn Tal, Inc.’s land; plotted to monopolize under
the Sherman Act, 15 U.S.C. § 2; participated in “bid-rigging” in violation of
RICO, 18 U.S.C. § 1962, and engaged in tortious interference with business under
Oklahoma law. On April 1, 2002, Plaintiffs filed their First Amended Complaint.
Both the Complaint and the First Amended Complaint were signed by Tal,
appearing pro se for all three plaintiffs. On March 18, 2002, the district court,
acting sua sponte, ordered Bricktown, Inc. and Tal, Inc. to retain counsel within
thirty days. Tal filed a motion to reconsider, which was denied on July 2, 2002.
Thereafter, Tal, Inc. and Bricktown, Inc. secured counsel.
On May 31, 2002, the Developers and Douglas filed motions to dismiss the
First Amended Complaint. 4 The district court heard the motions on October 30,
2002, and entered a written order granting Defendants’ motions on October 31.
4
On June 4, 2002, the Renewal Authority and the City filed an amicus
curiae brief in support of the motions to dismiss.
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However, Bricktown, Inc. was granted leave to refile its RICO and Sherman Act
claims and Tal, Inc. was granted leave to refile its RICO claims. All of Tal’s
individual claims were dismissed.
On December 16, 2002, Tal, Inc. and Bricktown, Inc. filed a Second
Amended Complaint and a RICO Case Statement. Tal, Inc. realleged its
conspiracy to condemn by fraud claim against Douglas. 5 Tal, Inc. and Bricktown,
Inc. alleged RICO violations against the Developers under § 1962(b), against
Douglas under § 1962(c), and against the Developers and Douglas under §
1962(d). Bricktown, Inc. asserted conspiracy to monopolize under the Sherman
Act, 15 U.S.C. § 2, against the Developers and Douglas. The Second Amended
Complaint also included state law claims for tortious interference with business
against the Developers and conspiracy to condemn by fraud against Douglas. On
January 31, 2003, the Developers and Douglas filed motions to dismiss the
Second Amended Complaint under F ED . R. C IV . P. 12(b)(6).
On September 30, 2003, the district court granted the Developers and
Douglas’ motions to dismiss the Second Amended Complaint. This appeal
followed.
D ISCUSSION
5
The district court did not rule on the conspiracy to condemn by fraud
claim in its October 31, 2001 order because the claim had been voluntarily
withdrawn.
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A motion to dismiss under F ED . R. C IV . P. 12(b)(6) “admits all well-
pleaded facts in the complaint as distinguished from conclusory allegations.”
Mitchell v. King, 537 F.2d 385, 386 (10th Cir. 1976). “The court’s function on a
Rule 12(b)(6) motion is not to weigh potential evidence that the parties might
present at trial, but to assess whether the plaintiff’s complaint alone is legally
sufficient to state a claim for which relief may be granted.” Sutton v. Utah State
Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999) (quotation
omitted). The legal sufficiency of a complaint under Rule 12(b)(6) is a question
of law which this Court reviews de novo. Id.; see S. Disposal, Inc. v. Tex. Waste
Mgmt., 161 F.3d 1259, 1261-62 (10th Cir.1998). “In doing so, all facts alleged in
the complaint are taken as true and all reasonable inferences are indulged in favor
of the plaintiffs.” GF Gaming Corp. v. City of Black Hawk, Colo., 405 F.3d 876,
881 (10th Cir. 2005). “This court can affirm the district court’s dismissal on any
ground sufficiently supported by the record.” Id. at 882.
I. Tal’s Individual Claims
The district court dismissed Tal’s individual antitrust and RICO claims in
the First Amended Complaint for lack of standing. Tal challenges this ruling as
well as the district court’s order denying him the ability to represent Tal, Inc. and
Bricktown, Inc. pro se.
A. Standing to file antitrust and RICO claims
In order to have standing under Article III of the Constitution, a plaintiff
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must allege an “injury-in-fact.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992). However, the standing requirements in the antitrust context are more
rigorous than that of the Constitution. Thus, “[h]arm to the antitrust plaintiff is
sufficient to satisfy the constitutional standing requirement of injury in fact, but
the court must make a further determination whether the plaintiff is a proper party
to bring a private antitrust action.” Assoc. Gen. Contractors of Calif., Inc. v.
Calif. State Council of Carpenters, 459 U.S. 519, 535 n.31 (1983). This
additional determination stems from section 4 of the Clayton Act, 15 U.S.C. § 15,
which states “[a]ny person . . . injured in his business or property by reason of
anything forbidden in the antitrust laws may sue . . . and shall recover threefold
the damages . . . sustained, and . . . a reasonable attorney’s fee.” 6 Thus, antitrust
standing requires a private plaintiff to show “(1) an ‘antitrust injury’; and (2) a
direct causal connection between that injury and a defendant’s violation of the
antitrust laws.” Ashley Creek Phosphate Co. v. Chevron USA, Inc., 315 F.3d
1245, 1254 (10th Cir. 2003); see Sports Racing Services, Inc. v. Sports Car Club
of America, Inc., 131 F.3d 874, 882 (10th Cir. 1997); City of Chanute, Kan. v.
6
“The private antitrust action continues to be the principal mechanism by
which the antitrust laws are enforced. As many as 90% of antitrust cases are
brought by private plaintiffs.” H ERBERT H OVENKAMP , F EDERAL A NTITRUST
P OLICY : T HE L AW OF C OMPETITION AND I TS P RACTICE 593 (2d ed. 1999).
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Williams Natural Gas Co., 955 F.2d 641, 652 (10th Cir. 1992). 7 An antitrust
injury is defined as an “injury of the type the antitrust laws were intended to
prevent and that flows from that which makes defendants’ acts unlawful.”
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).
Section 4 of the Clayton Act has been held to exclude personal injuries,
Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979), as well as derivative injuries
such as loss of stock value or employment opportunities. Sharp v. United
Airlines, Inc., 967 F.2d 404, 407-08 (10th Cir. 1992); Curtis v. Campbell-Taggart,
Inc., 687 F.2d 336, 338 (10th Cir. 1982). “It is settled law that shareholders and
employees do not have standing to sue for antitrust violations that injure a
corporation.” Jones v. Ford Motor Co., 599 F.2d 394, 397 (10th Cir. 1979). This
prohibition also includes corporate officers. Nat’l Indep. Theatre Exhibitors, Inc.
v. Buena Vista Distrib. Co., 748 F.2d 602, 608 (11th Cir. 1984) (“Neither an
officer nor an employee of a corporation has standing to bring an action in his
own right for an antitrust violation causing injury to the corporation and its
7
In Reazin v. Blue Cross and Blue Shield of Kansas, Inc., we pointed out
that there may be some interdependence between “antitrust injury” and “antitrust
standing.” 899 F.2d 951, 960-61 (10th Cir. 1990). In City of Chanute, we
clarified “[a]n antitrust injury is different from antitrust standing. Standing
cannot be established without an antitrust injury, but the existence of an antitrust
injury does not automatically confer standing.” 955 F.2d at 652 n.14 (internal
citation omitted and emphasis added). See also Bell v. Dow Chem. Co., 847 F.2d
1179, 1182 (5th Cir. 1988) (“Antitrust injury is a component of the standing
inquiry, not a separate qualification.”).
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business.”).
Similarly, RICO allows “[a]ny person injured in his business or property by
reason of a violation of section 1962 of this chapter [to] sue therefor in any
appropriate United States district court and . . . recover threefold the damages he
sustains and the cost of the suit, including a reasonable attorney's fee. . . .” 18
U.S.C. § 1964(c). “Congress modeled § 1964(c) on the civil-action provision of
the federal antitrust laws, § 4 of the Clayton Act. . . .” Holmes v. Secs. Investor
Protection Corp., 503 U.S. 258, 267 (1992). Thus, like the Sherman Act,
standing for private individuals under RICO requires a plaintiff to have “been
injured in his business or property by the conduct constituting the violation.”
Sedima, S.P.R.L. v. Imrex, Co., 473 U.S. 479, 496 (1985). Similarly, corporate
presidents ordinarily do not have standing to assert an individual RICO claim for
conduct which harmed the corporation, because such injuries are derivative.
Manson v. Stacescu, 11 F.3d 1127, 1132-33 (2d Cir. 1993).
As the district court held, Tal does not have standing to assert his
individual RICO and antitrust claims because he has not shown that he suffered
an antitrust injury as a result of the Appellees’ actions. At best, Tal, Inc., as
owner of the condemned property, suffered from the alleged fraudulent
condemnation, and Bricktown, Inc., which submitted the redevelopment bid,
suffered from the alleged Sherman Act and RICO violations as they relate to the
award of development contracts. However, all of Tal’s claims derive from his
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role as the president of Tal, Inc. and Bricktown, Inc. These injuries are the
companies’ and the companies have the right to vindicate them. Tal cannot assert
personal injury based on the condemnation of property he did not own, nor may
he claim lost profits and business opportunities from the Appellees’ alleged “bid-
rigging.” Additionally, injury to his reputation, dignity and emotional damages
are not the type of injuries redressable by the antitrust laws or RICO which are
expressly limited to injuries to “business or property.” 15 U.S.C. § 15; 18 U.S.C.
§ 1964(c); see Reiter, 442 U.S. at 339; Manson, 11 F.3d at 1132.
B. Right to represent the corporations pro se
It has been our long-standing rule that a corporation must be represented by
an attorney to appear in federal court. 8 Consistent with that rule, Local Rule 17.1
8
See Harrison v. Wahatoyas, LLC, 253 F.3d 552, 556 (10th Cir. 2001) (“As
a general matter, a corporation or other business entity can only appear in court
through an attorney and not through a non-attorney corporate officer appearing
pro se.”); DeVilliers v. Atlas Corp., 360 F.2d 292, 294 (10th Cir. 1966) (“[A]
corporation can appear in a court of record only by an attorney at law.”); Flora
Constr. Co. v. Fireman’s Fund Ins. Co., 307 F.2d 413, 414 (10th Cir. 1962) (“The
rule is well established that a corporation can appear in a court of record only by
an attorney at law.”). See also Rowland v. California Men’s Colony, 506 U.S.
194, 201-02 (1993) (“It has been the law for the better part of two centuries . . .
that a corporation may appear in the federal courts only through licensed
counsel.”); Commercial & R.R. Bank of Vicksburg v. Slocomb, Richards & Co.,
39 U.S. (14 Pet.) 60, 65 (1840) (“[A] corporation cannot appear but by attorney. .
. .”) overruled in part by 43 U.S. (2 How.) 497 (1844); Osborn v. Bank of the
United States, 22 U.S. (9 Wheat.) 738, 830 (1824) (“A corporation, it is true, can
appear only by attorney, while a natural person may appear for himself.”). See
generally Strong Delivery Ministry Ass’n v. Bd. of Appeals of Cook County, 543
F.2d 32, 33-34 (7th Cir. 1976) (explaining the justification for the rule).
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of the United States District Court for the Western District of Oklahoma provides:
“[p]arties who are not natural persons may not appear pro se.” Thus, the district
court did not err in denying Tal the right to represent Tal, Inc. and Bricktown,
Inc. pro se and requiring the corporations to secure counsel.
Tal tries to avoid this result by arguing: (1) Oklahoma statutes give
directors the right to sue on behalf of the corporation; (2) allowing a shareholder
to be held liable for a company’s shortcomings but not allowing a shareholder to
appear pro se for the company creates a double standard; (3) small companies
may not be able to afford to hire an attorney; and (4) a company has a
constitutional right to allow its directors to represent it pro se.
Tal’s arguments are without merit. First, no Oklahoma statute confers on
directors the right to appear pro se, only the right to institute suits on behalf of a
corporation. See 18 O KLA . S TAT . TIT . § 1016(2). Moreover, such a right must be
exercised in conformity with court rules that require corporations to be
represented by counsel. See Massongill v. McDevitt, 828 P.2d 438, 439-40 (Okla.
Ct. App. 1989). Tal’s double standard argument ignores the benefits of corporate
status. Shareholders, including Tal, enjoy limited liability, unless the corporate
veil is pierced because the company is an instrumentality or alter ego of its
shareholders. See Key v. Liquid Energy Corp., 906 F.2d 500, 503-04 (10th Cir.
1990) (discussing piercing of corporate veil). Moreover, Tal’s argument ignores
his power as a director to institute a suit, through counsel, on behalf of Tal, Inc.
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and Bricktown, Inc. There is little reason to believe that a company director will
be hindered in advancing the interests of the company by requiring the company
to be represented by an attorney.
Finally, Tal seeks to stretch the Constitution beyond elastic limits by
arguing, “[i]f . . . a criminal defendant has the right to proceed Pro Se, the right
should [] apply with even greater force in a civil context. While criminal
defendants are entitled to representation by counsel at no charge, . . . no
comparable right exists for civil litigants.” (Tal’s Br. at 30.) Tal’s comparison
with a criminal defendant’s right to an attorney or to appear pro se fails for the
obvious reason that the Constitution only guarantees a right of representation to
criminal defendants. Tal may proceed pro se, but Tal, Inc. and Bricktown, Inc.
may not. Corporations bear the costs associated with filing suit until their claims
are vindicated.
II. Tal, Inc.’s Condemnation Claim and the Rooker-Feldman Doctrine
Tal, Inc. alleges Appellees violated RICO by engaging in a conspiracy to
condemn its property through fraud. The district court held this claim was barred
under the Rooker-Feldman doctrine as a prior state court case had addressed the
propriety of the condemnation. 9 Tal, Inc. tries to avoid this result by arguing: (1)
9
The Rooker-Feldman doctrine traces back to Justice Willis Van
Devanter’s seminal opinion in Rooker v. Fidelity Trust Coompany, 263 U.S. 413
(1923) and its elaboration in District of Columbia Court of Appeals v. Feldman,
460 U.S. 462 (1983).
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the City committed fraud on appeal to the Oklahoma Court of Civil Appeals and
this fraud creates new grounds for yet another appeal; (2) the Defendants in this
case were not the defendants in the prior case; (3) the state condemnation case is
still pending; (4) the Oklahoma courts ignored the difference in condemnation
powers possessed by municipalities and urban renewal authorities; and (5) the
condemned property was sold to the developers far below market value.
Pursuant to 28 U.S.C. § 1257(a), “federal review of state court judgments
can be obtained only in the United States Supreme Court.” Kiowa Indian Tribe of
Okla. v. Hoover, 150 F.3d 1163, 1169 (10th Cir. 1998). The Rooker-Feldman
doctrine precludes “cases brought by state-court losers complaining of injuries
caused by state-court judgments rendered before the district court proceedings
commenced and inviting district court review and rejection of those judgments.”
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 125 S. Ct. 1517, 1521-22 (2005).
Thus, the Rooker-Feldman doctrine prevents “a party losing in state court . . .
from seeking what in substance would be appellate review of [a] state judgment in
a United States district court, based on the losing party’s claim that the state
judgment itself violates the loser’s federal rights.” Johnson v. De Grandy, 512
U.S. 997, 1005-06 (1994).
The Rooker-Feldman doctrine “prohibits a lower federal court [both] from
considering claims actually decided by a state court, and claims inextricably
intertwined with a prior state-court judgment.” Kenmen Eng’g v. City of Union,
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314 F.3d 468, 473 (10th Cir. 2002) (internal citation and quotations omitted). 10 A
claim is inextricably intertwined if “the state-court judgment caused, actually and
proximately, the injury for which the federal-court plaintiff seeks redress.” Id. at
476. A federal case does not involve an “inextricably intertwined” state court
judgment if the complaint challenges the constitutionality of the state law, so long
as the state court did not address it and the plaintiff does not request the federal
court to upset the state court judgment. Id.
Here, the district court correctly concluded the Rooker-Feldman doctrine
precluded Tal, Inc.’s condemnation claim in federal court. Oklahoma courts
squarely considered and rejected Tal, Inc.’s claims that the initial condemnation
order had been obtained through fraud on the part of the City, City of Okla. City
v. Tal Techs., Inc., and that the property was undervalued. Tal I, 988 P.2d at 905
(“The property was appraised on three separate occasions by professional
appraisers before it was sold. The trial court found and the record supports that
the Urban Renewal Authority received fair market value for the property.”).
All of Tal, Inc.’s attempts to avoid this result are unavailing. It is true that
10
The Supreme Court has recently begun narrowing the scope of the
Rooker-Feldman doctrine. See Exxon Mobil Corp., 544 U.S. at 292 (holding
Rooker-Feldman inapplicable to parallel state and federal litigation); and Lance v.
Dennis, 126 S.Ct. 1198, 1202 (2006) (“The Rooker-Feldman doctrine does not bar
actions by nonparties to the earlier state-court judgment simply because, for
purposes of preclusion law, they could be considered in privity with a party to the
judgment.”) overruling in part, Kenmen Eng’g, 314 F.3d at 481. However, none
of these limitations are applicable to this case.
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new allegations of fraud might create grounds for appeal, but that appeal should
be brought in the state courts. See Rooker v. Fidelity Trust Co., 263 U.S. 413,
415 (1923). 11 Additionally, Tal, Inc. does not specifically raise new allegations of
fraud but only contends the City itself continues to make false claims: “[i]n its
9/20/00 response to [Tal, Inc.’s] Appeal, the City filed an Answer Brief which
contained numerous other false and/or inaccurate factual representations,
including, continuation of its false initial assertion that [Tal, Inc.’s] property was
condemned for ‘public use.’” (Corporate Br. at 7 (emphasis added).) Thus, the
Oklahoma Civil Court of Appeals was confronted with and reviewed the same
“fraud” as the trial court. Its holding is equally applicable to the “fraud” alleged
at the trial court level (or “before the trial court”) as it was to the “fraud”
allegedly perpetrated before its very eyes. Moreover, and not withstanding Tal,
Inc.’s disagreement, the Oklahoma courts’ determination that “public use”
11
In Rooker, the Court specifically stated that errors in state cases should
be reviewed and settled through the state appellate process.
If the constitutional questions stated in the bill actually arose in the
cause, it was the province and duty of the state courts to decide them;
and their decision, whether right or wrong, was an exercise of
jurisdiction. If the decision was wrong, that did not make the
judgment void, but merely left it open to reversal or modification in
an appropriate and timely appellate proceeding. Unless and until so
reversed or modified, it would be an effective and conclusive
adjudication.
Id.
-19-
includes economic development does not constitute fraud. See Kelo v. City of
New London, 125 S. Ct. 2655, 2665-66 (2005) (holding “public purpose” allows
economic development by private parties if the development may lead to new jobs
or increased tax revenue).
Tal’s addition of new defendants in federal court also does not change the
nature of the underlying state court ruling which upheld the validity of the
condemnation. Lavasek v. White, 339 F.2d 861, 863 (10th Cir. 1965). 12 The state
condemnation proceeding need not be final in order to serve as grounds for
Rooker-Feldman preclusion. Kenmen Eng’g, 314 F.3d at 474.
Finally, Tal’s challenge to the Renewal Authority’s power of condemnation
is irrelevant to the present case because the City, not the Renewal Authority,
condemned the land. Even if the Oklahoma courts had ignored the allegedly
critical differences between the condemnation powers of municipalities and urban
renewal authorities, it would not eliminate Rooker-Feldman preclusion. The
12
In Lavasek, we confronted a challenge to the condemnation of land by the
State of New Mexico. There we held:
The substance of the instant action is not changed by naming as
defendants the present public officials and a county. The acts
complained of are the outgrowth of a condemnation, judicially
sanctioned, and remain the acts of the State of New Mexico through a
complete privity of parties. Nor does appellants’ claim of a denial of
constitutional rights alter the situation.
Id.
-20-
doctrine would mean nothing if it applied only when federal courts agreed with
the state court holding. Tal, Inc. argued its case in the Oklahoma state courts and
even raised grounds for post-judgment relief. Its failure in state court does not
mean it can now seek to relitigate these issues in federal court. Just the opposite,
a loss in state court precludes a second round in federal court.
III. Tal, Inc. and Bricktown, Inc.’s Sherman Act claims
Tal, Inc. and Bricktown, Inc. alleged the Developers and Douglas conspired
to monopolize in violation of the Sherman Act. Specifically, Tal, Inc. and
Bricktown, Inc. claimed Appellees engaged in “bid-rigging” which led to the
award of the Bricktown redevelopment contract to the Developers. The district
court dismissed Tal, Inc.’s claim for lack of standing and held Defendants were
immune from liability for Bricktown, Inc.’s claim under Parker v. Brown, 317
U.S. 341 (1943), and the Noerr-Pennington doctrine. 13
A. Tal, Inc.’s antitrust standing
Like Tal, Tal, Inc. must allege, inter alia, a cognizable antitrust injury to
establish standing. Ashley Creek, 315 F.3d at 1254 . To establish an antitrust
injury, a plaintiff “must allege a business or property injury, an antitrust injury, as
defined by the Sherman Act.” City of Chanute, 955 F.2d at 652. The primary
13
The Noerr-Pennington doctrine is drawn from the Supreme Court’s
opinions in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc.,
365 U.S. 127 (1961) and United Mine Workers of American v. Pennington, 381
U.S. 657 (1965).
-21-
concern of the antitrust laws is the corruption of the competitive process, not the
success or failure of a particular firm. Brunswick Corp., 429 U.S. at 488 (“The
antitrust laws . . . were enacted for the protection of competition not
competitors.”) (internal quotation omitted). Thus, when a company fails because
of legitimate competitive forces, it is not entitled to recover under the antitrust
laws. Additionally, “only buyers and sellers in the defendants’ market are within
the target of the antitrust laws.” Comet Mech. Contractors, Inc. v. E.A. Cowen
Constr., Inc., 609 F.2d 404, 406 (10th Cir. 1980); see Reibert v. Atlantic Richfield
Co., 471 F.2d 727, 731 (10th Cir. 1973). This excludes secondary or remote
injuries, such as those suffered by companies that desire to obtain a subcontract
from a company injured by an antitrust violation. Comet, 609 F.2d at 406-07.
Tal, Inc. lacks standing because it did not suffer a cognizable antitrust
injury. Tal, Inc. was not a buyer or seller in the affected market. Rather, Tal,
Inc.’s allegation of an antitrust violation centers around the alleged “bid-rigging”
between the Developers and Douglas which resulted in Bricktown, Inc.’s failure
to receive the Bricktown redevelopment contract. Tal, Inc. claims it would have
benefitted had Bricktown, Inc. received the redevelopment contract because Tal,
Inc. would have received redevelopment subcontracts from Bricktown, Inc. and it
owned land adjacent to Bricktown, Inc.’s proposed development area of
Bricktown which would have increased in value had Bricktown, Inc.’s bid been
accepted. This alleged injury, however, is insufficient to support Tal, Inc.’s
-22-
antitrust claim. The fact Tal, Inc. could potentially benefit as a result of a
derivative future business relationship with Bricktown, Inc. or through incidental
and speculative increases in property value is insufficient to constitute an antitrust
injury. Comet, 609 F.2d at 406-07. Accordingly, Tal, Inc. lacks standing to bring
its antitrust claim.
B. The dismissal of Bricktown, Inc.’s Sherman Act claim against the
Developers and Douglas
Bricktown, Inc. alleges both the Developers and Douglas engaged in a
conspiracy to rig bids in violation of the antitrust laws in order to ensure the
Developers were awarded the Bricktown redevelopment contract. The district
court determined the Developers and Douglas were immune under the Parker and
Noerr-Pennington immunity doctrines. It also questioned whether Bricktown,
Inc. had adequately stated an antitrust claim.
1. Parker and Noerr-Pennington immunity doctrines
Bricktown, Inc. argues the Parker and Noerr-Pennington immunity
doctrines are unavailable to Appellees because the Developers are private persons
and Douglas was acting outside of her official duties. Additionally, it argues
these immunity doctrines “do not apply when conspiracy to rig public bids are at
issue.” (Corporate Br. at 31.)
-23-
a. Parker immunity
Generally, a state’s anticompetitive actions are immune from civil antitrust
laws. Parker v. Brown, 317 U.S. 341, 350-52 (1943). This federalism-based state
immunity can, under certain circumstances, apply to municipalities. Cmty.
Commc’ns Co. v. City of Boulder, Colo., 455 U.S. 40, 51 (1982). To be protected,
a municipality must be “authorized by the State pursuant to state policy to
displace competition with regulation or monopoly public service.” Town of
Hallie v. City of Eau Claire, 471 U.S. 34, 39 (1985) (internal quotation omitted).
This requires that the state legislature authorize the challenged action and intend
to displace competition with regulation. Jacobs, Visconsi & Jacobs, Co. v. City
of Lawrence, Kan., 927 F.2d 1111, 1120 (10th Cir. 1991).
In this case, the State of Oklahoma authorized the creation of urban renewal
authorities. 11 O KLA . S TAT . TIT . §§ 38-101 to -123. The district court held that the
authorizing statutes “clearly contemplate anticompetitive activity.” (Appellants’
App., Ex. 3 at 23.) In support, the district court cited 11 O KLA . S TAT . TIT . § 38-
108(a) which gives an urban renewal authority the power “[t]o undertake and carry
out the urban renewal projects within its area of operation . . . and to make and
execute contracts . . . necessary or convenient to the exercise of its powers under
this article.”
We agree with the district court’s analysis. In an analogous case, Buckley
Construction, Inc. v. Shawnee Civic & Cultural Development Authority, we upheld
-24-
state immunity for a development authority that coordinated bidding under the
Oklahoma Public Competitive Bidding Act of 1974, 61 O KLA . S TAT . TIT . §§ 101-
136 (1981). 933 F.2d 853, 856 (10th Cir. 1991). We held the Competitive Bidding
Act “clearly contemplates anticompetitive activity,” in part because the statute
“gives the public agency discretion to reject any or all bids if it determines that is in
the best interest of the State of Oklahoma.” Id. Like the Oklahoma Competitive
Bidding Act at issue in Buckley Construction, the statute at issue in this case gives
urban renewal authorities the discretion to make contracts “necessary or convenient
to the exercise of its powers.” This language has a foreseeable anticompetitive
effect no less than the Competitive Bidding Act which was found to confer
immunity in Buckley Construction. Thus, the Renewal Authority was not required
to select the lowest bidder for the redevelopment contract if it was not “convenient
to the exercise of its powers.” Consequently, Douglas, as the executive director of
the Renewal Authority, is entitled to Parker immunity, regardless of anticompetitive
results or intent, assuming her actions were in furtherance of her Renewal Authority
responsibilities.
Bricktown, Inc. alleges Douglas was acting outside of her official
responsibilities by engaging in “bid-rigging.” However, no facts support Bricktown,
Inc.’s claim, and there is no evidence Douglas had a personal interest in the contract
being awarded to the Developers. Moreover, the city council approved her actions
by adopting resolutions in support of the Developers’ proposal. Bricktown, Inc.’s
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naked allegations of a “bid-rigging” conspiracy do not render Douglas’ actions
outside of her official duties and thus do not deprive her of immunity.
b. Noerr-Pennington immunity
A corollary of Parker immunity is the Noerr-Pennington doctrine, which
“exempts from antitrust liability any legitimate use of the political process by
private individuals, even if their intent is to eliminate competition.” Zimomra v.
Alamo Rent-A-Car, Inc., 111 F.3d 1495, 1503 (10th Cir. 1997); see also City of
Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 379-80 (1991). The doctrine
is grounded in the First Amendment and “arises from the [Supreme] Court’s
conclusion that the Sherman Act was not intended to derogate the First Amendment
right of citizens to petition the government for a redress of grievances.” GF
Gaming Corp., 405 F.3d at 883. The actual intent of the parties petitioning the
government or of the government agent involved is irrelevant. City of Columbia,
499 U.S. at 380; Zimomra, 111 F.3d at 1503.
Of course, this immunity does not encompass fraudulent or illegal actions.
Oberndorf v. City & County of Denver, 900 F.2d 1434, 1440 (10th Cir. 1990). But,
to establish fraud or illegality, there must be more than a mere allegation of a
“conspiracy.” City of Columbia, 499 U.S. at 383. “[C]ultivating close ties with
government officials is the essence of lobbying.” Boone v. Redevelopment Agency
of the City of San Jose, 841 F.2d 886, 894 (9th Cir. 1988). “It would be unlikely
that any effort to influence legislative action could succeed unless one or more
-26-
members of the legislative body became . . . co-conspirators in some sense with the
private party urging such action.” City of Columbia, 499 U.S. at 383. Therefore,
“[f]or purposes of Noerr-Pennington, there is no distinction between petitioning
government officials and conspiring with them.” GF Gaming Corp., 405 F.3d at
883.
Bricktown, Inc. argues the Developers are not entitled to Noerr-Pennington
immunity because they are private entities and because Noerr-Pennington immunity
does not apply when a “conspiracy to rig public bids [is] at issue.” (Corporate Br.
at 31.) However, Bricktown, Inc. is clearly wrong that the Noerr-Pennington
doctrine does not apply to private entities; that is precisely for whom the immunity
was created. Zimomra, 111 F.3d at 1503. Nor does the fact the alleged antitrust
violation is a “bid-rigging” claim automatically remove it from Noerr-Pennington
immunity. 14 The Developers, even though potentially acting with anticompetitive
intent, are covered under the Noerr-Pennington doctrine unless there is some
colorable claim of fraud or illegality. In this case, there is only an allegation the
Developers participated in an abstract “bid-rigging conspiracy.” Bricktown, Inc.
does not proffer any facts that, if credited, would support the charge of conspiracy
14
Perhaps Bricktown, Inc. believes immunity is unavailable because “bid-
rigging” has been held a per se violation of Section 1 of the Sherman Act. United
States v. Flom, 558 F.2d 1179, 1183 (5th Cir. 1977); United States v. Finis P.
Ernest, Inc., 509 F.2d 1256, 1261 (7th Cir. 1975). But a per se violation only
means that if the Developers are found to be guilty of the complained conduct,
they can offer no business justification, not that they cannot assert immunity.
-27-
or indicate any fraudulent behavior on the part of the Developers or Douglas.
Bricktown, Inc.’s only specific factual allegations are that the Developers “made
two out of the five Urban Renewal’s Commissioner[s] partners in a number of
business ventures; managed an office building of a third Commissioner below
market value; and similarly, [were] the landlord[s] of Urban Renewal and leased it
office space in one [of] the Hogan Team’s downtown buildings below market
value.” (Corporate Br. at 37.)
According to the Developers, Bricktown, Inc. is merely complaining that they
“vigorously petitioned [the Renewal Authority] to consider [their] proposal for the
development of South Bricktown, lobbied the city council in promotion of [their]
development proposal, lobbied the city council to adopt the resolutions that would
be necessary to implement that proposal, and made legal campaign contributions.”
(Developers’ Br. at 31.) We agree and reject Bricktown, Inc.’s challenge to the
district court’s application of Noerr-Pennington immunity.
2. Failure to adequately plead an antitrust violation
Even if the Developers and Douglas were not immune under Parker and
Noerr-Pennington, Bricktown, Inc. failed to allege sufficient facts to support its
antitrust claim. Bricktown, Inc. alleges it adequately plead an antitrust violation
because it “clearly alleged that the Defendants engaged in a conspiracy scheme of
bid-rigging (pre-determined before publication of bid), and that the submission of
TMK/Hogan’s RFP Proposal was collusive, fabricated, and non-competitive.”
-28-
(Corporate Br. at 31.)
“A complaint is subject to dismissal where it does little more than recite the
relevant antitrust laws.” TV Commc’ns Network, Inc. v. Turner Network Television,
Inc., 964 F.2d 1022, 1027 (10th Cir. 1992) (internal quotation omitted). Conclusory
allegations are insufficient. Id. at 1024. Bare bones accusations of a conspiracy
without any supporting facts are insufficient to state an antitrust claim. Mountain
View Pharmacy v. Abbott Labs., 630 F.2d 1383, 1388 (10th Cir. 1980). Moreover,
“[t]he use of antitrust ‘buzz words’ does not supply the factual circumstances
necessary to support . . . conclusory allegations.” TV Commc’ns, 964 F.2d at 1026.
Bid-rigging has been found to violate Section 1 of the Sherman Act when two
or more competitors coordinate their bids to a third party. United States v. Mobile
Materials, Inc., 881 F.2d 866, 869 (10th Cir. 1989). However, Bricktown, Inc.’s
bid-rigging antitrust claim suffers from the lack of factual support. 15 Its bald
allegations of “conspiracy” and “bid-rigging” are insufficient to support an antitrust
claim and are no better than claiming that the defendants violated “the antitrust
laws” in the abstract. Indeed, Douglas had no economic interest in the Developers
receiving the bid as she was not a competitor or owner, nor was there any evidence
of bribery. At best, the conduct complained of includes the Developers’ zealous
15
An additional problem with Bricktown, Inc.’s claim is that the alleged
bid-rigging involved Douglas who was a third party, and not a competitor. A
traditional bid-rigging claim involves collusion among competitors against the
third party who requested the bid. See Mobile Materials, 881 F.2d at 869.
-29-
lobbying of the city council to approve their proposed renovation plan. This
conduct does not constitute collusion among competitors to fix a bid price, nor is
there anything illegal about lobbying. Absent specific factual allegations that
support a claim of bid-rigging, Bricktown, Inc.’s use of antitrust buzz-words and
parroting of general antitrust theories is insufficient to support a Sherman Act
violation.
IV. Tal, Inc. and Bricktown, Inc.’s Rico Claims
As stated previously, Tal, Inc. and Bricktown, Inc. brought RICO claims
against the Developers under 18 U.S.C. § 1962(b), against Douglas under 18 U.S.C.
§ 1962(c) and against the Developers and Douglas under 18 U.S.C. § 1962(d). The
elements of a civil RICO claim are (1) investment in, control of, or conduct of (2)
an enterprise (3) through a pattern (4) of racketeering activity. 18 U.S.C. § 1962(a),
(b), & (c). 16 “Racketeering activity” is defined in 18 U.S.C. § 1961(1)(B) as any
“act which is indictable” under federal law and specifically includes mail fraud,
wire fraud and racketeering. These underlying acts are “referred to as predicate
acts, because they form the basis for liability under RICO.” BancOklahoma
Mortgage Corp. v. Capital Title Co., 194 F.3d 1089, 1102 (10th Cir. 1999) (internal
16
Under 18 U.S.C. § 1964(c), persons injured in their business or property
by reason of a violation of § 1962 may bring a RICO claim and recover treble.
damages, costs and attorney’s fees.
-30-
quotation omitted). “[A] person does not have to be formally convicted of any
predicate act before liability under 18 U.S.C. § 1962[] may attach.” 17 Id.
In the Second Amended Complaint and RICO Case Statement, 18 Bricktown,
Inc. and Tal, Inc. alleged the Developers and Douglas engaged in predicate acts of
mail fraud in violation of 18 U.S.C. § 1341, wire fraud in violation of 18 U.S.C. §
1343 and bribery in violation of 18 U.S.C. § 201. 19 Specifically, Bricktown, Inc.
17
The Developers urge this Court to require an indictability standard in the
pleadings. The district court of Utah has required a plaintiff to show “that a party
has committed at least two indictable acts.” Bache Halsey Stuart Shields, Inc., v.
Tracy Collins Bank & Trust Co., 558 F.Supp. 1042, 1045 (D. Utah 1983) (internal
quotation omitted). Thus, “a party must allege two acts of ‘racketeering’ with
enough specificity to show there is probable cause the crimes were committed.
An offense is not ‘indictable’ merely because it is alleged. Rather, to be
indictable it must be ‘well-founded’ and based on probable cause.” Id. This
pleading standard, however, has never been adopted by this Court and has been
expressly rejected by the seventh circuit. Haroco, Inc. v. Am. Nat’l. Bank & Trust
Co. of Chicago, 747 F.2d 384, 403-04 (7th Cir. 1984). Although such a standard
would make this case easier to dispose of, a heightened pleading requirement is
not necessary to affirm the district court’s ruling, and we decline to consider it
here.
18
When evaluating the sufficiency of pleadings under Rule 12(b)(6) of the
Federal Rules of Civil Procedure, we may consider the allegations made in a
plaintiff’s RICO Case Statement in conjunction with the complaint. See Fox v.
Maulding, 112 F.3d 453, 460 (10th Cir. 1997).
19
Bricktown, Inc. and Tal, Inc. also argue the City’s allegedly fraudulent
condemnation of Tal, Inc.’s land constitutes a predicate act for purposes of RICO,
relying on Pelfresne v. Stephens, 35 F.Supp.2d 1064 (N.D. Ill. 1999). However in
this case, unlike in Pelfresne, we are confronted with a state court determination
that the condemnation of Tal, Inc.’s land was proper and are barred by the
Rooker-Feldman doctrine from reconsidering this determination on its merits. We
cannot consider the condemnation as a possible predicate act without calling into
question the validity of the state court judgment. Thus, Tal, Inc.’s allegation that
the condemnation was fraudulent and constituted a predicate act for RICO
-31-
and Tal, Inc. allege the Developers fraudulently procured the Bricktown
redevelopment contract by misrepresenting to the Renewal Authority and the city
council that they were backed by Torchmark Corporation. They also allege the
Developers “acquired or maintained . . . interest in or control over” the Renewal
Authority and the city council through bribery. (Appellants’ App., Ex. 1 at 58.)
The district court dismissed the subsection (b) claim against the Developers for
failure to specifically allege predicate acts and failure to show an interest in or
control over the Renewal Authority or the city council. It dismissed the subsection
(c) claim against Douglas for failure to specifically allege predicate acts and failure
to show a continuing threat to other parties from the alleged RICO activities. The
district court also dismissed the subsection (d) claim against the Developers and
Douglas for failing to sufficiently allege a predicate violation of subsections (b) or
(c). Because subsections (b) and (c) both require allegations of racketeering
activity, we first determine whether Bricktown, Inc. and Tal, Inc. sufficiently
purposes is inextricably intertwined with the state court judgment and precluded
by Rooker-Feldman. See Kenmen Eng’g, 314 F.3d at 473 (precluding claims
inextricably intertwined with state court case); Fox, 112 F.3d at 460 (excluding
RICO claim barred by failure to raise issue in state court). As to Bricktown,
Inc.’s use of the condemnation claim as a predicate act, it also fails because the
City, which was responsible for the condemnation, is not a named defendant but
is the alleged “enterprise.” The defendant must be separate from the enterprise.
See Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161-63 (2001);
Brannon v. Boatmen’s First Nat’l Bank of Okla., 153 F.3d 1144, 1146 (10th Cir.
1998); Bd. of County Comm’rs of San Juan County v. Liberty Group, 965 F.2d
879, 885 (10th Cir. 1992). This is true even if we credited Plaintiffs’ statement
that the Renewal Authority was also involved in the fraudulent condemnation.
-32-
alleged predicate acts that can serve as a basis for RICO liability.
A. Pattern of racketeering activity
Plaintiffs allege Defendants engaged in predicate acts of mail fraud, wire
fraud and bribery. To establish the predicate act of mail fraud, Bricktown, Inc. and
Tal, Inc. must allege “(1) the existence of a scheme or artifice to defraud or obtain
money or property by false pretenses, representations or promises, and (2) use of the
United States mails for the purpose of executing the scheme.” Bacchus Indus., Inc.
v. Arvin Indus., Inc., 939 F.2d 887, 892 (10th Cir. 1991). See United States v.
Kennedy, 64 F.3d 1465, 1475 (10th Cir. 1995). “The elements of wire fraud are
very similar, but require that the defendant use interstate wire, radio or television
communications in furtherance of the scheme to defraud.” BancOklahoma
Mortgage Corp., 194 F.3d at 1102 (internal quotation omitted).
[T]he common thread among . . . these crimes is the concept of “fraud.”
Actionable fraud consists of (1) a representation; (2) that is false; (3)
that is material; (4) the speaker’s knowledge of its falsity or ignorance
of its truth; (5) the speaker’s intent it be acted on; (6) the hearer’s
ignorance of the falsity of the representation; (7) the hearer’s reliance;
(8) the hearer’s right to rely on it; and (9) injury.
Id. at 1103. Failure to adequately allege any one of the nine elements is fatal to the
fraud claim.
The particularity requirement of Rule 9(b), Federal Rules of Civil Procedure,
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applies to claims of mail and wire fraud. 20 Robbins v. Wilkie, 300 F.3d 1208, 1211
(10th Cir. 2002); Farlow v. Peat, Marwick, Mitchell & Co., 956 F.2d 982, 989-90
(10th Cir. 1992); Cayman Exploration Corp. v. United Gas Pipe Line Co., 873 F.2d
1357, 1362 (10th Cir. 1989). Thus, “a complaint alleging fraud [must] ‘set forth the
time, place and contents of the false representation, the identity of the party making
the false statements and the consequences thereof.’” Koch v. Koch Indus., 203 F.3d
1202, 1236 (10th Cir. 2000) (quoting Lawrence Nat'l Bank v. Edmonds (In re
Edmonds), 924 F.2d 176, 180 (10th Cir. 1991)). A plaintiff asserting “fraud must
also identify the purpose of the mailing within the defendant's fraudulent scheme.”
McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir. 1992).
The federal anti-bribery statute, 18 U.S.C. § 201(b), requires the bribes to be
directed toward “public official[s]” or “person[s] . . . selected to be a public
official” within the meaning of 18 U.S.C. § 201(a). 21 Section 201(a) generally
limits application of the federal bribery statute to federal officials or persons “acting
for or on behalf of the United States, or any department, agency or branch of
Government thereof . . . .” 18 U.S.C. § 201(a)(1).
20
“In all averments of fraud or mistake, the circumstances constituting fraud
or mistake shall be stated with particularity. Malice, intent, knowledge, and other
condition of mind of a person may be averred generally.” F ED . R. C IV . P. 9(b).
21
18 U.S.C. § 201(a)(2) provides that “the term ‘person who has been
selected to be a public official’ means any person who has been nominated or
appointed to be a public official, or has been officially informed that such person
will be so nominated or appointed. . . .”
-34-
To determine whether any particular individual falls within this
category, the proper inquiry is not simply whether the person had
signed a contract with the United States or agreed to serve as the
Government's agent, but rather whether the person occupies a position
of public trust with official federal responsibilities. Persons who hold
such positions are public officials within the meaning of section 201
and liable for prosecution under the federal bribery statute.
Dixson v. United States, 465 U.S. 482, 496 (1984). The federal anti-bribery law
also applies to bribes offered to state and local officials if the “organization,
government, or agency receives in any one year period, benefits in excess of
$10,000 under a Federal program involving a grant, contract, subsidy, loan,
guarantee, insurance, or other form of Federal assistance.” 18 U.S.C. § 666(b).
Bricktown, Inc. and Tal, Inc. set forth their allegations of predicate acts in
Section X of their Second Amended Complaint. In support of their mail fraud
allegation, Bricktown, Inc. and Tal, Inc. listed forty-six letters with descriptions of
the parties, dates and general statements concerning the title or contents of the
letters. Tal, Inc. and Bricktown, Inc.’s allegations of mail fraud center around the
alleged “Torchmark misrepresentation.”
The “Torchmark misrepresentation” consists of TMK/Hogan’s alleged
intentional misrepresentation to the Renewal Authority and the city council during
the bidding process that it “was backed by the $11 billion Torchmark Corporation,”
(Appellants’ App., Ex. 2 at 2), which Tal, Inc. and Bricktown, Inc. allege “was a
major factor in [its] selection as [a] developer for the project, and in Plaintiffs’
failure to be selected as [the] developer . . . .” (Id., Ex. 1 at 29.) Tal, Inc. and
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Bricktown, Inc. alleged that Stonegate, not Torchmark was “the true 50% partner
[with] Defendant Hogan Property in Defendant TMK/Hogan.” (Id., Ex. 2 at 3.) In
other words, “Defendants’ Torchmark Misrepresentation stated that Defendant
TMK/Hogan is a 50/50 joint venture between Defendant Hogan Property and
Torchmark Development Corporation, and not between Defendant Hogan Property
and Defendant Stonegate, as the official Oklahoma Secretary of State’s record
shows.” 22 (Id. at 5.)
In support of their “Torchmark misrepresentation” claim, Tal, Inc. and
Bricktown, Inc. alleged Hogan sent a letter to the Renewal Authority on July 26,
1996, detailing TMK/Hogan’s qualifications and financial responsibility which
included a statement that “Defendant TMK/Hogan’s 50% partner was Defendant
TDC, identified by Defendants therein as ‘a wholly owned subsidiary’ of
Torchmark.” (Id., Ex. 1 at 14-15.) Tal, Inc. and Bricktown, Inc. also alleged Hogan
and Elgin mailed various financial documents detailing information about
Torchmark on several occasions. 23 This material itself is not alleged to have been
false, but rather was used in support of the initial misrepresentation.
In the district court, the Developers argued Stonegate was a wholly owned
subsidiary of Torchmark. In support, they cited to the public records of the
22
Stonegate refers to Stonegate Management Company, LLC.
23
These primarily included Torchmark’s 1995 through 1998 10-K Annual
Report and Financial Statements. (Id. at 47-48.)
-36-
Alabama Secretary of State which allegedly show that Torchmark formed TDC on
June 10, 1988, and was subsequently merged into TDC Company, LLC, on
November 24, 1999. Further, they argued that Oklahoma County Clerk records
indicated that TDC and Hogan Property Management filed a Fictitious Name
Certificate on January 12, 1996, which stated that those entities “associated
themselves as partners under the name of TMK/ Hogan Joint Venture.” 24
(Appellees’ Supp. App. Vol IV at 0966 (internal quotation omitted).) The
Developers also alleged that TDC assigned its interest in TMK/Hogan in November
1996 to its wholly-owned subsidiary Stonegate Management Corporation which was
then merged into Stonegate Management Company, LLC.
The Second Amended Complaint acknowledged that Stonegate Management
24
Exhibits attached to a complaint are properly treated as part of the
pleadings for purposes of ruling on a motion to dismiss. Indus. Constructors
Corp. v. United States Bureau of Reclamation, 15 F.3d 963, 964-65 (10th Cir.
1994). Ordinarily, consideration of material attached to a defendant’s answer or
motion to dismiss requires the court to convert the motion into one for summary
judgment and afford the parties notice and an opportunity to present relevant
evidence. F ED . R. C IV . P. 12(b); David v. City & County of Denver, 101 F.3d
1344, 1352 (10th Cir. 1996). However, facts subject to judicial notice may be
considered in a Rule 12(b)(6) motion without converting the motion to dismiss
into a motion for summary judgment. See Grynberg v. Koch Gateway Pipeline
Co., 390 F.3d 1276, 1278 n.1 (10th Cir. 2004) (citing 27A Fed. Proc., L.Ed. §
62:520 (2003)). This allows the court to “take judicial notice of its own files and
records, as well as facts which are a matter of public record.” Van Woudenberg
ex rel. Foor v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000), abrogated on other
grounds by McGregor v. Gibson, 248 F.3d 946, 955 (10th Cir. 2001). However,
“[t]he documents may only be considered to show their contents, not to prove the
truth of matters asserted therein.” Oxford Asset Mgmt., Ltd v. Jaharis, 297 F.3d
1182, 1188 (11th Cir. 2002).
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Company was formed on November 22, 1999, and Stonegate Management
Corporation was merged into it on November 24, 1999. It also alleged TDC
Company, LLC, was created on November 22, 1999, and merged with Torchmark
Development Corporation on November 24, 1999. But the complaint specifically
alleged there was no affiliation between Stonegate and Torchmark Development. 25
According to Tal, Inc. and Bricktown, Inc., the purpose of the separate creation and
mergers of Torchmark Development Corporation, Torchmark Development
Company, Stonegate Management Corporation and Stonegate Management
Company was to “retroactively cover up and conceal [the] Torchmark
Misrepresentation . . . by representing that Defendant Elgin Development is the
owner of Defendant TDC and that TDC wholly owns Defendant Stonegate.”
(Appellants’ App., Ex. 2 at 3.)
The district court’s order did not specifically address the “Torchmark
misrepresentation.” Rather, it found that none of the alleged mail communications
sufficiently pled fraud with particularity. We disagree. The details of the
“Torchmark misrepresentation” alleged in the Second Amended Complaint coupled
with the documents listed in support of that claim sufficiently satisfy Rule 9(b)’s
requirements. Tal, Inc. and Bricktown, Inc. identified the parties, the dates, the
25
According to the Second Amended Complaint, “TMK/Hogan’s two
partners, as of 1996, were Defendants Hogan Property and Stonegate, and not . . .
any entity affiliated with Torchmark.” (Id. at 15.)
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content of the communications, how they were allegedly fraudulent and how they
furthered the fraudulent enterprise. Although the Developers’ argument that
Stonegate is a wholly owned subsidiary of Torchmark may be fully borne out by the
public records of Alabama and Oklahoma, we decline to consider these materials. 26
Rule 12(b)(6) motions to dismiss are not designed to weigh evidence or consider the
truth or falsity of an adequately pled complaint. Sutton, 173 F.3d at 1236. This is
especially controlling in the face of a direct claim to the contrary in the complaint
and in the absence of a ruling on the issue from the district court. Thus, Tal, Inc.
and Bricktown, Inc. sufficiently alleged an act of mail fraud based on the alleged
“Torchmark misrepresentation.”
In addition, we agree with the district court that the May 18, 1998 letter
authored by Mr. Tolbert, which was allegedly caused to be mailed by the
Developers, satisfies the requirements of Rule 9(b). This letter allegedly supported
TMK-Hogan’s earlier fraudulent statement on July 17, 1997— that the Bricktown
Association was a partner with TMK/Hogan. (Appellants’ App., Ex. 1 at 36-37.)
26
Even assuming that Stonegate is a wholly owned subsidiary of
Torchmark, that fact does not necessarily foreclose a claim of misrepresentation.
Tal, Inc. and Bricktown, Inc. might still have a claim if the bid submitted to the
Renewal Authority by the Developers claimed Torchmark was a partner in
TMK/Hogan, when in fact Stonegate, a wholly owned subsidiary of Torchmark,
was Hogan’s partner at the time of the bid. Whether the listing of a parent of a
wholly owned subsidiary as a partner in a development company, rather than the
actual subsidiary partner, in a bid constitutes misrepresentation is an issue we
decline to address.
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Like the “Torchmark misrepresentation,” this allegedly false statement was designed
to increase the appeal of TMK/Hogan as a developer and help it secure the award of
the development contract.
As to the remaining letters, we again agree with the district court that they
“appear to be innocuous business communications.” (Appellants’ App., Ex. 3 at
13.) While the Second Amended Complaint references these letters their fraudulent
nature is not apparent on their face. This is especially problematic because Tal, Inc.
and Bricktown, Inc. not only failed to allege how these communications were
fraudulent but also how they specifically furthered the fraudulent enterprise.
Moreover, eighteen of the forty-six exchanges occurred after July 21, 1998, the date
the contract was awarded to the Developers. Thus, the eighteen post-award letters
were at best concealment and could not have been used “for the purpose of
executing the scheme.” See Kann v. United States, 323 U.S. 88, 94-95 (1944);
United States v. Cardall, 885 F.2d 656, 680-82 (10th Cir. 1989). Therefore,
Bricktown, Inc. and Tal, Inc.’s allegations of mail fraud as a predicate act are
limited to the documents involving the Torchmark and Bricktown Association
misrepresentations.
In support of their wire fraud allegation, Bricktown, Inc. and Tal, Inc. list
twenty-seven telephone calls, emails, faxes and cable broadcasts involving
Appellees and the process granting the development contract to the Developers. All
but three of the electronic transmissions relied upon suffer from the same problems
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as the majority of the communications supporting the mail fraud claim. Only three
were alleged with sufficient particularity to establish cognizable claims for wire
fraud: (1) the August 1, 1997 submission by Douglas to the city council of a fax sent
to Douglas by TMK/Hogan, (Appellants’ App., Ex. 1 at 32-33); (2) the August 5,
1997 broadcast of the city council meeting where Douglas allegedly made an
intentionally fraudulent statement about her role in the selection process, (id. at 33,
53); and (3) telephone conversations occurring between May 11, 1998, and May 18,
1999, between Hogan, Elgin and Douglas and Mr. Tolbert, the president of the
Bricktown Association. (Id. at 36, 54.) Unlike the other twenty-four wire
communications alleged (and the forty-six letters), these three communications not
only describe the date, the parties to the communication and the subject matter, but
also how they were fraudulent and what they were designed to accomplish. Thus,
Bricktown, Inc. and Tal, Inc. adequately alleged three acts of mail fraud in violation
of 18 U.S.C. § 1343.
In support of their bribery claim under 18 U.S.C. § 201, Bricktown, Inc. and
Tal, Inc. list ten actions by both the Developers and members of the Renewal
Authority, including Douglas, that arguably benefitted each other. 27 However,
27
Included in these acts are: (1) the renting of office space to the Renewal
Authority at below-market rates; (2) bribing Renewal Authority Commissioner
Hall by making him a 50% partner in an East Wharf development project; (3)
bribing Renewal Authority Commissioner Nichols by offering the Mid-American
Tower at below-market rates; (4) securing Commissioner Talbot a position on the
Myriad Garden Trust and the Renewal Authority; (5) bribing Councilman
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Douglas, the Renewal Authority Commissioners and the city council are all
municipal state actors with no ties to federal programs apparent from the pleadings.
This is fatal to Bricktown, Inc. and Tal, Inc.’s bribery claim because they fail to
adequately allege that the relevant parties are “public officials” or acting on behalf
of the federal government under 18 U.S.C. § 201(a) or § 666. Bricktown, Inc. and
Tal, Inc. conceded to the district court that they could not state a claim against
Douglas under the federal anti-bribery statute but argued she violated a state anti-
bribery statute. 28 While violations of state bribery laws can serve as predicate acts
under RICO, see United States v. Welch, 327 F.3d 1081 (10th Cir. 2003), the
plaintiffs failed to plead that Douglas had violated a state anti-bribery statute in
either their RICO Case Statement or their Second Amended Complaint.
Additionally, as noted by the district court, Bricktown, Inc. and Tal, Inc. never
requested leave to amend their complaint in order to allege a violation of a state
anti-bribery statute. (Appellants’ App., Ex. 3 at 14.)
Liebmann by contributing to a political fundraiser which led to his appointment to
political positions with various City trusts; and (6) bribing Mayor Humphreys.
28
Specifically, they allege Douglas violated 21 O KLA . S TAT . TIT . § 381
which makes it a felony to:
give[], offer[], or promise[] to any executive, legislative, county,
municipal, judicial, or other public officer, or any employee of the
State of Oklahoma or any political subdivision thereof, . . . any gift
or gratuity whatever, with intent to influence his act, vote, opinion,
decision, or judgment on any matter, question, cause, or proceeding
which then may be pending, or may by law come or be brought
before him in his official capacity . . . .
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Bricktown, Inc. and Tal, Inc.’s belated request on appeal that “if the Court
finds that some of the allegations stated in the almost 300 paragraphs and sub-
paragraphs are not too clear, at the least, the Court should point to the unclear
allegations and permit the Appellants to amend and clarify these issues,” comes too
late to offer escape from an adverse Rule 12(b)(6) order. (Corporate Br. at 43.)
Bricktown, Inc. and Tal, Inc. could and should have sought leave to amend their
Second Amended Complaint with the district court, not with this Court on appeal.
See The Tool Box, Inc. v. Ogden City Corp., 419 F.3d 1084, 1088 (10th Cir. 2005)
(“Courts have refused to allow a postjudgment amendment when, as here, the
moving party had an opportunity to seek the amendment before entry of judgment
but waited until after judgment before requesting leave.”) Thus the only allegations
sufficient to support a claim of a predicate act are the letters involving the
Torchmark and Bricktown Association misrepresentations and the three wire
communications which allege Douglas, Hogan and Elgin engaged in wire fraud.
As a final point, we question whether Plaintiffs’ allegations of predicate acts
satisfied the requirement of “a pattern of racketeering activity.” A “pattern” of
racketeering is defined as “at least two acts of racketeering activity, . . . which
occurred within ten years” of each other. 18 U.S.C. § 1961(5). However, because
“RICO is not aimed at the isolated offender,” Resolution Trust Corp., 998 F.2d at
1544, proof of two or more predicate acts are not sufficient to prove a pattern unless
there is a relationship between the predicate acts and a threat of continuing activity.
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H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989); Duran v. Carris,
238 F.3d 1268, 1271 (10th Cir. 2001). Continuity of threat requires both proof of “a
series of related predicates extending over a substantial period of time,” as well as a
“showing that the predicates themselves involve a distinct threat of long-term
racketeering activity . . . or that the predicates are a regular way of conducting the
defendant’s ongoing legitimate business or the RICO enterprise.” Resolution Trust
Corp., 998 F.2d at 1543. To determine continuity we examine both the duration of
the related predicate acts and the extensiveness of the RICO enterprise’s scheme.
Id. In determining the extensiveness of the predicate acts we consider a variety of
factors as well as “external facts that are not necessarily charged as predicate acts.”
Id. at 1544.
Here, none of the Appellants specifically allege a continuing threat by the
Developers and Douglas to control the Renewal Authority and the city council. The
allegations are confined to the award of one, albeit large, development contract to
the Developers. There is no reason to believe that the grant of one development
contract acquired through misrepresentation of financial backing and partnership
constitutes “a distinct threat of long-term racketeering activity.” Id. at 1543. In
theory, we could consider material outside of the alleged predicate acts to find a
more extensive threat to the Renewal Authority and the city council. Id. at 1544.
However, because the extensiveness of the threat is a question of fact, id., we will
assume for the purposes of this opinion that the predicate acts alleged by Bricktown,
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Inc. and Tal, Inc. establish a pattern of racketeering activity. We next consider
whether the pattern of racketeering activity states a claim under 18 U.S.C. §
1962(b), (c), or (d).
B. Section 1962(b)
18 U.S.C. § 1962(b) makes it illegal 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 . . . interstate . . . commerce.” The purpose of the statute is “to prohibit
efforts to muscle in on legitimate business through the commission of a pattern of
racketeering activity.” S MITH & R EED , C IVIL RICO, ¶6.04[5][b]. To state a claim
under section 1962(b), the plaintiff must allege the defendant (1) acquired or
maintained an interest in or control of (2) an enterprise engaged in interstate
commerce (3) through a pattern (4) of racketeering activity, or collection of an
unlawful debt. See Sowell v. Butcher & Singer, Inc., 926 F.2d 289, 296 (3d Cir.
1991). As with other section 1962 claims, the injury must be attributable to the
prohibited action. Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d
1220, 1231 (D.C. Cir. 1991).
Section 1962(b) claims are relatively uncommon because the first element
requires sufficient allegations of “an interest in or control of” an enterprise, as
opposed to the less demanding requirement of “association” with the enterprise in
section 1962(c) claims. “Interest in or control of” requires more than a general
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interest in the results of its actions, or the ability to influence the enterprise through
deceit. See Univ. of Maryland at Baltimore v. Peat, Marwick, Main & Co., 996 F.2d
1534, 1539-40 (3d Cir. 1993) (allegedly preparing false financial statements on
behalf of the enterprise is not participation). Rather, it requires some ownership of
the enterprise or an ability to exercise dominion over it. 29
Bricktown, Inc. and Tal, Inc.’s claims founder on the combination of elements
(1) and (4). They failed to adequately allege Appellees acquired or maintained an
interest in or control of the Renewal Authority or the city council through the
predicate acts. Bricktown, Inc. and Tal, Inc.’s alleged three acts of wire fraud fall
short of demonstrating control of or an interest in the Renewal Authority and the
city council; at best they show a misrepresentation to those bodies. Perhaps the
allegations of bribery might have been sufficient to demonstrate an interest in or
29
See United States v. Jacobson, 691 F.2d 110, 113 (2d Cir. 1982)
(“‘interest’ in fact encompasses all ‘property rights’ in a business enterprise” for
purposes of § 1962(b)); United States v. Martino, 681 F.2d 952, 954 (5th Cir.
1982) (en banc) (participation in the advantage, profit and responsibility of the
enterprise is an “interest”); Moffatt Enters., Inc. v. Borden Inc., 763 F.Supp. 143,
147 (W.D. Pa. 1990) (“it is clear that the ‘interest’ contemplated in . . . § 1962(b)
is in the nature of a proprietary one, such as the acquisition of stock, and that the
‘control’ contemplated is in the nature of the control one gains through the
acquisition of sufficient stock to affect the composition of a board of directors.”).
But see, Ikuno v. Yip, 912 F.2d 306, 310 (9th Cir. 1990) (“control within the
meaning of § 1962(b) need not be formal control and ‘need not be the kind of
control that is obtained, for example, by acquiring a majority of the stock of a
corporation.’”) (quoting Sutliff, Inc. v. Donovan Co., 727 F.2d 648, 653 (7th Cir.
1984)).
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control of the Renewal Authority or the city council, 30 if they had been adequately
plead. But in the absence of sufficient allegations of bribery, Bricktown, Inc. and
Tal, Inc. did not adequately allege the defendants acquired or maintained an interest
in or control of the Renewal Authority or the city council based on the three alleged
acts of wire fraud.
C. Section 1962(c):
18 U.S.C. § 1962(c) makes it illegal “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 . . . .” To
survive a Rule 12(b)(6) motion, a civil RICO claim must allege the defendants (1)
participated in the conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity. Cayman Exploration Corp., 873 F.2d at 1362; see Sedima,
S.P.R.L., 473 U.S.at 496. The Supreme Court has adopted the “operation or
management” test to determine whether the defendant has conducted or participated
in the conduct of the enterprise by having some part in directing the affairs of the
enterprise. Reves v. Ernst & Young, 507 U.S. 170, 179 (1993). “For liability to be
imposed under that test, the defendants must have participated in the operation or
30
But see In re Am. Honda Motor Co., Inc. Dealerships Relations
Litigation, 941 F.Supp. 528, 556 (D. Md. 1996) (holding bribery fails to establish
investment in or acquiring interest in an enterprise for RICO purposes).
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management of the RICO enterprise,” BancOklahoma Mortgage Corp., 194 F.3d at
1100, “although it is not necessary for the participant to have significant control.”
Resolution Trust Corp., 998 F.2d at 1541(internal quotation omitted).
In this case, Bricktown, Inc. and Tal, Inc. have failed to allege sufficient
predicate acts to establish Appellees participated in the operation or management of
the Renewal Authority or the city council. All the alleged predicate acts relate to
TMK/Hogan’s bid for the award of the Bricktown development contract, and at most
involve an attempt to influence the Renewal Authority and the city council through
misrepresentations, not through operation or management. Misrepresenting material
facts to influence a selection process is a serious allegation to be sure, but does not
rise to the level of participation in the operation or management of the Renewal
Authority and the city council. Again, had Appellants adequately alleged Douglas
was involved in any of the predicate acts, this would be a different case, as it would
be if the Appellants had adequately alleged bribery. See Resolution Trust Corp.,
998 F.2d at 1542 (holding chief executive officer of the enterprise participated in
the conduct of the enterprise); Reves, 507 U.S. at 184 (noting “[a]n enterprise also
might be operated or managed by others associated with the enterprise who exert
control over it . . . by bribery.”) (internal quotations omitted). As it stands,
Appellants’ allegations of mail and wire fraud fail to establish a violation of §
1962(c).
D. Section 1962(d):
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18 U.S.C. § 1962(d) makes it illegal “for any person to conspire to violate any
of the provisions of subsection (a), (b), or (c) of this section.” Tal, Inc. and
Bricktown, Inc.’s § 1962(d) claim also fails. By its terms, § 1962(d) requires that a
plaintiff must first allege an independent violation of subsections (a), (b), or (c), in
order to plead a conspiracy claim under subsection (d). See United States v.
Hampton, 786 F.2d 977, 978 (10th Cir. 1986) (“The object of a RICO conspiracy
must be to violate a substantive RICO provision.”); Schroder v. Volcker, 864 F.2d
97, 98 (10th Cir. 1988). If a plaintiff has no viable claim under § 1962(a), (b), or
(c), then its subsection (d) conspiracy claim fails as a matter of law. See Condict v.
Condict, 826 F.2d 923, 927 (10th Cir. 1987) (“[A]ny claim under § 1962(d) based
on a conspiracy to violate the provisions of 18 U.S.C. § 1962(a), (b), or (c) must
necessarily fall if the substantive claims are themselves deficient.”); BancOklahoma
Mortgage, 194 F.3d at 1103; Edwards v. First Nat’l Bank, Bartlesville, Okla., 872
F.2d 347, 352 (10th Cir. 1989); Grider v. Texas Oil & Gas Corp., 868 F.2d 1147,
1151 (10th Cir. 1989); Torwest DBC, Inc. v. Dick, 810 F.2d 925, 927 n.2 (10th Cir.
1987). Because Appellants have failed to allege a sufficient claim under
subsections (b) or (c), their subsection (d) conspiracy claim fails as a matter of law.
V. Pendant State Law Claims
Tal argues the district court improperly declined to exercise its pendant
jurisdiction over the state law claims of fraudulent condemnation and tortious
interference with business, because they alleged violations of the Fifth and
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Fourteenth Amendments. Conversely, both Douglas and the City argue the tort
claim should be dismissed with prejudice. Douglas argues the tort claim is barred
by the statute of limitations. The City argues it is barred by the Oklahoma
Governmental Tort Claims Act. We need not decide these issues.
The district court was precluded from considering the Appellants’ Fifth
Amendment claim by the Rooker-Feldman doctrine. As for the other state law tort
claims, we note that “[t]he Fourteenth Amendment [is not] a font of tort law.”
Daniels v. Williams, 474 U.S. 327, 332 (1986). Additionally, the court was not
required to consider either the merits or the procedural issues attendant to the state
law claims. Because the district court properly dismissed all of Appellants’ federal
claims, it was well within its discretion under 28 U.S.C. § 1367(c)(3) to decline to
exercise supplemental jurisdiction over plaintiffs' state-law claims. Exum v. United
States Olympic Comm., 389 F.3d 1130, 1138-39 (10th Cir. 2004); Lancaster v.
Indep. Sch. Dist. No. 5, 149 F.3d 1228, 1236 (10th Cir. 1998). The court, therefore,
did not err in dismissing the state interference with business claims without
prejudice.
C ONCLUSION
We AFFIRM the district court’s dismissal of Tal’s Complaint, and Tal, Inc.
and Bricktown, Inc.’s Second Amended Complaint under Rule 12(b)(6) of the
Federal Rules Civil Procedure. We also AFFIRM the district court’s dismissal of
the pendant state law claims without prejudice.
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Tal v. Hogan
Court: Court of Appeals for the Tenth Circuit
Date filed: 2006-06-29
Citations: 453 F.3d 1244
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