Elsevier, Inc. v. Grossman, 199 F. Supp. 3d 768

Background

Elsevier (group of publishers) sued PTI, IBIS, and Pierre Grossman for buying individual‑rate subscriptions at a discount and reselling them to ineligible Brazilian institutions; PTI and IBIS defaulted, Grossman went to trial.
Jury found Grossman liable under RICO §1962(c), breached contract, and converted property; awarded $11,108 (RICO) and $6,201 (contract), but no conversion damages.
Grossman moved under Fed. R. Civ. P. 50 for JMOL on RICO grounds; Plaintiffs moved for JMOL as to RICO damages (or a new trial), sought final default judgment against PTI/IBIS, and attorneys’ fees.
Court accepted that Plaintiffs proved an enterprise distinct from Grossman (applying Cedric Kushner), but held Plaintiffs failed to plead or prove a domestic injury under RICO §1964(c) after RJR Nabisco.
Court granted Grossman’s Rule 50 motion on RICO (but allowed Plaintiffs 30 days to seek a new trial limited to proving domestic injury with a proffer), denied damages motion, granted default judgment against PTI/IBIS on breach‑of‑contract only (awarding $22,854 plus interest), and denied fee motion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiffs proved a RICO "person" distinct from the alleged enterprise	Grossman, PTI/IBIS and Saad formed an enterprise; Grossman participated separately	Grossman argued the enterprise and the responsible "person" were the same corporate actor (Riverwoods problem)	Court: Cedric Kushner controls — Grossman (a natural person) is distinct from corporate enterprise; RICO distinctiveness satisfied
Whether RICO applies extraterritorially and whether the mail‑fraud predicates support liability	Plaintiffs relied on domestic use of IBIS/NY activities and U.S. mailing to establish predicate domestic conduct and injury	Grossman argued RICO cannot be applied extraterritorially and mail/wire predicates lack sufficient U.S. focus; injuries occurred abroad	Court: §1962 can reach foreign enterprise when predicates have domestic application; sufficient U.S. conduct (IBIS, NY office, U.S. mails) for predicates exists
Whether Plaintiffs pleaded/proved a "domestic injury to business or property" under §1964(c) after RJR Nabisco	Plaintiffs argued their business and property injuries were tied to U.S. activities (orders/checks mailed to U.S., shipments to NY address)	Grossman argued injuries occurred in Brazil or in Europe (fulfillment centers); Plaintiffs conceded complaint lacks explicit domestic‑injury allegation	Court: Plaintiffs failed to prove domestic injury — harms (lost sales, property diversion) occurred in Brazil or Netherlands; RICO claim fails without domestic injury
Remedy and post‑trial relief (new trial / default judgments / fees)	Plaintiffs sought new trial on RICO damages, final default judgment vs PTI/IBIS on RICO, and fees under §1964(c)	Grossman opposed; also argued inconsistent verdicts	Court: Denied damages/JMOL relief to Plaintiffs; allowed limited procedures — default judgment entered only on breach‑of‑contract against PTI/IBIS ($22,854 + interest); denied fees; Plaintiffs may move for a new trial or to amend pleadings within 30 days with proffer of evidence of domestic injury

Key Cases Cited

Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (natural person distinct from corporate enterprise satisfies RICO distinctiveness requirement)
RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (RICO §1964(c) requires proof of a domestic injury; limits on extraterritorial application)
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (RICO's private‑damages remedy and broad remedial purpose)
Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339 (corporate person cannot be the distinct RICO "person" when enterprise is corporation plus its agents)
Pasquantino v. United States, 544 U.S. 349 (domestic execution of a fraud can still produce foreign injury)
United States v. Binday, 804 F.3d 558 (mail‑fraud essential elements: scheme, object of money/property, and use of mails)