999 F.3d 641
8th Cir.2021Background
- Plaintiffs Nuevos Destinos, LLC (NDL), Nuevos Destinos Peru, S.A.C. (NDP), and William Cook contracted with Peruvian and U.S. defendants to buy/export Peruvian agricultural products and allege fraud causing roughly $1.6M in losses.
- Plaintiffs filed suit in D.C. in 2015 asserting federal RICO claims and related state-law claims (fraud, breach of contract, conspiracy); they pleaded federal-question jurisdiction and invoked supplemental jurisdiction for state claims, not diversity jurisdiction.
- Multiple defendants moved to dismiss for service defects, lack of personal jurisdiction, and failure to plead a RICO pattern; the D.C. court dismissed and transferred the case to North Dakota, where the transferee court dismissed several defendants for service/jurisdiction defects and dismissed the RICO claims for failure to plead a pattern.
- After dismissal of all federal claims the district court declined supplemental jurisdiction over remaining state-law claims and dismissed them; plaintiffs thereafter moved (too late) to amend their complaint in district court to add RICO particulars but failed to attach a proposed pleading and the court denied leave as untimely, futile, and prejudicial.
- On appeal plaintiffs sought for the first time to abandon RICO and instead rebase their remaining state-law claims on diversity jurisdiction under 28 U.S.C. § 1332(a)(3); the Eighth Circuit declined to allow amendment on appeal under 28 U.S.C. § 1653 and affirmed the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court should allow amendment on appeal to allege diversity jurisdiction under §1653 | Plaintiffs: permit amendment on appeal to recharacterize state claims as diversity-based so claims may proceed | Defendants: amendment is untimely, prejudicial, and plaintiffs had years to plead diversity below | Court: declined to allow amendment on appeal; plaintiffs had opportunity earlier and amendment would be unfair and untimely |
| Whether district court abused discretion by denying leave to amend (to add RICO predicate acts) | Plaintiffs: sought leave to amend to plead additional predicate acts to sustain RICO claims | Defendants: plaintiffs failed local rules, delay, futility, prejudice | Court: affirmed denial—failure to attach proposed pleading, untimeliness, futility, prejudice justified denial |
| Whether district court properly declined supplemental jurisdiction over state-law claims after dismissing federal RICO claims | Plaintiffs: implicitly sought federal adjudication of state claims | Defendants: asked court to decline supplemental jurisdiction; dismissal of federal claims warranted declining | Court: affirmed district court’s discretionary decision to decline supplemental jurisdiction |
| Whether dismissals for deficient service, lack of personal jurisdiction, and failure to prosecute were proper | Plaintiffs: do not contest many of these dismissals on appeal | Defendants: supported dismissal based on Rule 4, Goodyear personal-jurisdiction principles, and Rule 41(b) | Court: affirmed dismissals for defective service, lack of personal jurisdiction, and failure to prosecute |
Key Cases Cited
- Barclay Square Props. v. Midwest Fed. Sav. & Loan Ass’n of Minneapolis, 893 F.2d 968 (8th Cir. 1990) (court may permit amendment of jurisdictional allegations on appeal in discretion)
- Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (U.S. 1989) (federal jurisdiction normally depends on facts at time complaint filed)
- Crest Constr. II, Inc. v. Doe, 660 F.3d 346 (8th Cir. 2011) (standard for pleading a pattern of racketeering activity under RICO)
- Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635 (U.S. 2009) (district court discretion to decline supplemental jurisdiction after dismissing federal claims)
- Dubach v. Weitzel, 135 F.3d 590 (8th Cir. 1998) (noting parties may rely exclusively on supplemental jurisdiction)
- Reece v. Bank of N.Y. Mellon, 760 F.3d 771 (8th Cir. 2014) (exercising §1653 to correct pleading that alleged diversity of residence rather than citizenship)
- In re Medtronic, Inc., Sprint Fidelis Leads Prod. Liab. Litig., 623 F.3d 1200 (8th Cir. 2010) (post-dismissal motions to amend are disfavored; futility and delay justify denial)
- O’Neil v. Simplicity, Inc., 574 F.3d 501 (8th Cir. 2009) (district court may deny leave to amend when plaintiffs fail to follow procedural rules)