Benjamin Burgess v. Religious Technology Center, Inc.
600 F. App'x 657
| 11th Cir. | 2015Background
- Plaintiffs (former/would-be patients) filed a putative class action after paying for drug/alcohol rehabilitation at Narconon of Georgia (NNGA), alleging misrepresentations about success rates, cure claims, staff credentials, undisclosed Scientology ties, unlicensed/residential operations, referral commissions, and licensing violations.
- Defendants: Religious Technology Center (RTC), Association for Better Living and Education (ABLE), Narconon International (NI), and NNGA; case removed to federal court under CAFA.
- Plaintiffs asserted ten counts including fraudulent misrepresentation, breach of contract, unjust enrichment, detrimental reliance, negligence per se, and multiple Georgia civil RICO predicates (theft by deception, mail/wire fraud, false statements to government, credit card fraud, identity theft).
- RTC moved to dismiss for lack of personal jurisdiction (12(b)(2)); ABLE/NI/NNGA moved to dismiss for failure to state a claim and failure to plead fraud with particularity (12(b)(6) and Fed. R. Civ. P. 9(b)).
- District court dismissed RTC for lack of personal jurisdiction (plaintiffs failed to show agency between RTC and other defendants) and dismissed claims against ABLE/NI/NNGA for failure to plead fraud/RICO with particularity and for other pleading defects; Eleventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over RTC | RTC is subject to Georgia long-arm via agency relationship with ABLE/NI/NNGA; jurisdictional discovery should be allowed | RTC denies agency; its president affidavit says RTC only holds Scientology religious marks and has no contracts/financial ties to ABLE/NI/NNGA | No jurisdiction: plaintiffs failed to show express/implied/ratified agency; discovery denial not an abuse given plaintiffs' lack of diligence |
| Fraud and Georgia civil RICO (predicate fraud) — Rule 9(b) | Plaintiffs identified misrepresentations and time period; RICO predicates not all fraud-based so 9(b) inapplicable to some counts | Allegations lump multiple defendants, lack dates, speakers, places, and illustrative instances required by 9(b) | Dismissed: fraud and RICO claims fail Rule 9(b) — plaintiffs did not plead particular instances or identify which defendant made each misrepresentation |
| Breach of contract (NNGA) | Plaintiffs sufficiently alleged contractual breach and bad-faith performance; identified contractual documents in response brief | Complaint failed to attach or identify specific contract provisions or which contract was breached; only NNGA was a contracting party | Dismissed as pleaded: plaintiffs did not allege the specific term breached or attach/plead the relevant contract; implied-covenant claim cannot stand absent breach of an express term |
| Unjust enrichment; negligence per se; leave to amend | Unjust enrichment alleged in the alternative; negligence per se based on licensing rules; plaintiffs requested leave to amend in response brief | Existence of contract precludes unjust enrichment vs. NNGA; plaintiffs failed to allege benefit conferred on ABLE/NI; licensing definitions/regulations do not create negligence-per-se duties; procedural rules require a motion to amend | Dismissed: unjust enrichment fails for lack of benefit allegations and is precluded where an enforceable contract exists; negligence per se not supported by cited statute/regulations; court did not abuse discretion in denying leave to amend where plaintiffs did not properly move or proffer amendments |
Key Cases Cited
- Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339 (11th Cir. 2013) (standard for reviewing personal jurisdiction de novo and factual findings for clear error)
- United Techs. Corp. v. Mazer, 556 F.3d 1260 (11th Cir. 2009) (plaintiff’s burden to plead prima facie jurisdiction and effect of defendant affidavits)
- Madara v. Hall, 916 F.2d 1510 (11th Cir. 1990) (burden shifting when defendant submits affidavits challenging jurisdiction)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (labels/conclusions insufficient; factual plausibility required)
- Findwhat Investor Grp. v. FindWhat.com, 658 F.3d 1282 (11th Cir. 2011) (Rule 9(b) particulars for fraud pleadings)
- U.S. ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002) (relaxed 9(b) standard for multi-act schemes but still requires illustrative specifics)
- Rosenberg v. Gould, 554 F.3d 962 (11th Cir. 2009) (procedural requirements for seeking leave to amend and that opposition brief footnote is insufficient)