Brian Grant v. Darryl Turner
505 F. App'x 107
3rd Cir.2012Background
- Plaintiffs filed a putative class action in May 2009 against Travel Club Defendants and Credit Card Defendants alleging a travel-club fraud scheme.
- Plaintiffs claimed that memberships were sold with promised discounts and rewards that never materialized.
- Plaintiffs alleged mail and wire fraud as predicate acts under RICO and asserted related state-law claims.
- The District Court dismissed for failure to plead with Rule 9(b) specificity and later denied relief after amendments.
- On appeal, the Third Circuit affirmed as to VTC and FIA Card Services but vacated and remanded as to the remaining Travel Club Defendants.
- The Court addressed whether Rule 9(b) pleading sufficiency and RICO conspiracy claims warranted proceeding against the remaining defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 9(b) pleading suffices for predicate acts against Travel Club Defendants | SAC/Case Statement supplied specificity linking misrepresentations to defendants | District Court found grouping violated notice requirement | 9(b) satisfied for remaining Travel Club Defendants; insufficient for VTC and FIA |
| Whether RICO conspiracy claims survive against Travel Club Defendants | Conspiracy pleaded with predicate acts | Need explicit agreement and knowledge; some defendants grouped | Conspiracy claims against Travel Club Defendants revived; dismissed as to FIA Card Services; VTC/Travel Club remanded for further proceedings |
| Whether the court properly dismissed and/or remanded under 28 U.S.C. §1367 regarding state claims | State claims should proceed if related to federal claims | District Court declined jurisdiction | Remand/continuation to address remaining Travel Club Defendants on state claims if appropriate |
Key Cases Cited
- Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 791 (3d Cir. 1984) (purpose of 9(b) is to put defendants on notice of precise fraud)
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007) (pleading fraud with sufficient particularity to notice defendants)
- Lum v. Bank of America, 361 F.3d 217 (3d Cir. 2004) (pattern requires at least two predicate acts and particularity under 9(b))
- In re Merck & Co. Sec. Litig., 432 F.3d 261 (3d Cir. 2005) (plenarily reviews Rule 12(b)(6) rulings; heightened 9(b) standard applies to fraud claims)
- Rose v. Bartle, 871 F.2d 331 (3d Cir. 1989) (elements of RICO conspiracy under §1962(d))