Cedeño v. Castillo
457 F. App'x 35
2d Cir.2012Background
- Cedeño and Cedel International Investment Ltd. sued under RICO for alleged money laundering and extortion by a Venezuelan-associated enterprise.
- District court dismissed for failure to state a domestic RICO claim, finding the alleged conduct insufficiently connected to the United States.
- Appellate review is de novo on the Rule 12(b)(6) dismissal; leave-to-amend standard reviewed for abuse of discretion.
- Court assesses whether RICO has domestic focus or pattern-of-racketeering focus and whether the enterprise is domestically located.
- Court considers whether extraterritorial application of RICO is warranted when predicates (18 U.S.C. §§ 1951, 1956) may apply abroad.
- Court affirms district court’s dismissal, concluding the complaint lacks a domestic nexus and proximate causation between injuries and predicates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the complaint allege a domestic RICO claim? | Cedeño argues the focus test includes U.S. conduct within RICO’s solicitude. | Defendants contend the case lacks sufficient U.S. contacts to state a domestic claim. | No; insufficient U.S. conduct to plead domestic RICO. |
| Is the enterprise locus domestic or foreign under plausible standards? | Cedeño asserts a domestically focused enterprise. | District court and court reject domestically located enterprise; enterprise is foreign. | Enterprise is patently foreign under any proposed standard. |
| Can RICO be applied extraterritorially via domestic predicate acts? | Predicate offenses apply extraterritorially and RICO incorporates them. | Extraterritoriality should be recognized only if predicates and RICO scope align. | RICO not applicable extraterritorially despite extraterritorial predicates. |
| Did the district court abuse its discretion by denying amendment/repleading? | Cedeño sought leave to replead with more particular U.S. contacts. | No adequate details were provided to remedy Morrison deficiencies. | No abuse; no remand for amended pleading. |
Key Cases Cited
- Morrison v. Nat'l Austl. Bank Ltd., 130 S. Ct. 2869 (U.S. 2010) (domestic focus requires meaningful U.S. nexus)
- Norex Petroleum, Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010) (extraterritorial RICO not tied to predicates' scope)
- Hemi Grp. LLC v. N.Y.C., 130 S. Ct. 983 (U.S. 2010) (proximate cause requirement for RICO injuries)
- Holmes v. Secs. Investor Prot. Corp., 503 U.S. 258 (U.S. 1992) (proximate causation standard for RICO injuries)
- Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010) (domestic focus and extraterritorial concerns for RICO)
- ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (standards for leave to amend in Rule 12(b)(6) context)