Amos v. Franklin Financial Services Corp.
509 F. App'x 165
| 3rd Cir. | 2013Background
- Amos and 24 former CFI shareholders sue Franklin Financial and Gates alleging civil RICO violations.
- CFI merged into Franklin Financial; CFI ceased to exist and shareholders were paid cash.
- Amos alleges Gates diluted CFI value pre-merger by a fraudulent scheme aimed at Amos and others.
- Plaintiffs asserted RICO claims under 18 U.S.C. §§ 1962(b), (c), (d) based on mail and wire fraud.
- District court dismissed the first amended complaint for failure to plead RICO; cited securities fraud exception.
- Court of appeals affirms, adopting district court’s Rule 12(b)(6) analysis and upholding dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proximate cause/standing in RICO | Amos contends injury is direct, not derivative to CFI. | Defendants argue injury is derivative to CFI and lacks proximate causation. | Affirmed district court on proximate cause/standing. |
| Pattern of racketeering requirement | Amos asserts two or more predicate acts alleged within 10 years. | Defendants argue no valid pattern established for all defendants. | Affirmed district court on failure to plead a pattern of racketeering. |
| Association-in-fact enterprise existence | Amos claims an association-in-fact enterprise among defendants. | Defendants dispute existence of a cognizable enterprise. | Affirmed district court on lack of valid association-in-fact enterprise. |
| Racketeering conspiracy under § 1962(d) | Amos contends conspiracy claims depend on § 1962(b)/(c) violations. | Defendants argue conspiracy claim fails without underlying violations. | Affirmed district court; conspiracy claim rejected due to failure of underlying elements. |
Key Cases Cited
- Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479 (U.S. Supreme Court 1985) (requires proving conduct, through an enterprise, via a pattern of racketeering with standing)
- Lum v. Bank of America, 361 F.3d 217 (3d Cir. 2004) (pattern requires at least two predicate acts within ten years)
- H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (U.S. Supreme Court 1989) (defines pattern of racketeering and relevance to enterprise)
- United States v. Pharis, 298 F.3d 228 (3d Cir. 2002) (elements of mail and wire fraud in predicate acts)
- Banks v. Wolk, 918 F.2d 418 (3d Cir. 1990) (no RICO liability without two or more predicate offenses)
- Tabas v. Tabas, 47 F.3d 1280 (3d Cir. 1995) (RICO damages require injury by the violation)
- Holmes v. Sec. Protection Corp., 503 U.S. 258 (U.S. Supreme Court 1992) (proximate causation requirement for standing in RICO)