Otto Candies, LLC v. Citigroup Inc., 137 F.4th 1158

Background

Citigroup (through Banamex and its ICG division) operated a cash‑advance (accounts‑receivable factoring) facility that advanced over $3.3 billion to Mexican contractor Oceanografía (OSA) between 2008–2014. Plaintiffs allege many advances far exceeded Pemex contract values and were supported by forged Pemex authorizations.
Citigroup is alleged to have (1) approved large advances despite knowledge of OSA’s overleveraging and forged documents, (2) signed a secret 2012 “Regulatory Contract” letting OSA authenticate its own supporting documents, and (3) participated in bond issuances and investor materials that conveyed a healthier financial picture for OSA.
Regulators later found serious control failures: Mexican authorities criminally charged some Citigroup employees and seized OSA; the SEC fined Citigroup for deficient Banamex controls. Citigroup conducted internal discipline including multiple terminations.
Thirty plaintiffs (shipping/leasing companies, bondholders, and a bank) sued in federal court alleging RICO, RICO conspiracy, common‑law fraud, aiding and abetting fraud, common‑law conspiracy, and vicarious liability (actual and apparent agency). The district court dismissed all claims under Rule 9(b) for lack of particularity and for failing to plead knowledge/justifiable reliance.
The Eleventh Circuit reversed in part: it held plaintiffs satisfied Rule 9(b) (and related standards) on the pleaded issues and remanded for further proceedings, explaining proper pleading standards for knowledge and reliance and rejecting importation of the PSLRA’s scienter standard into ordinary fraud/aiding‑and‑abetting claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Aiding‑and‑abetting fraud — knowledge element	Plaintiffs alleged Citigroup agents knew of and participated in fraud (internal communications, SEC/foreign findings, terminations).	Citigroup: plaintiffs failed to plead a "strong inference" of actual knowledge; reliance on vague allegations.	Knowledge may be pleaded generally under Rule 9(b); plaintiffs sufficiently alleged facts permitting a reasonable inference Citigroup (through agents) knew of the fraud.
Aiding‑and‑abetting fraud — substantial assistance	Citigroup provided funds, approved advances, circulated investor materials, and vouched for OSA, thereby enabling the fraud.	Citigroup: actions were ordinary banking services or attributable only to Banamex, not Citigroup proper.	Plaintiffs pleaded substantial assistance with particular examples (advances, presentations, trustee roles); agency imputes Banamex/Citibank acts to Citigroup.
Common‑law fraud — misrepresentations/omissions & reliance	Plaintiffs identified specific misstatements/omissions (emails, investor presentations, Pareto materials) and alleged specific reliance by each plaintiff.	Citigroup: allegations are vague, conclusory, and insufficiently show justifiable or actual reliance; some statements made by OSA only.	Plaintiffs met Rule 9(b) by outlining who/what/when/where/how and alleging concrete reliance; third‑party statements can be attributed where maker intended dissemination to investors.
Substantive RICO — predicate acts, PSLRA bar, continuity	Plaintiffs alleged a pattern of wire/mail fraud (emails, calls) and long‑running scheme (2008–2014); scheme aimed to enrich Citigroup via interest.	Citigroup: claims are really securities fraud barred by PSLRA; insufficient continuity/closed‑ended pattern.	Plaintiffs satisfied pleading requirements for RICO predicate acts under Rule 9(b); PSLRA inapplicable where claims are not securities fraud in substance; continuity adequately pleaded given multi‑year allegations.
RICO & common‑law conspiracy — agreement element	Conspiracy can be inferred from conduct, close ties, mutual benefit, shared misrepresentations, and regulator findings.	Citigroup: plaintiffs failed to allege an agreement or overt acts by Citigroup; mere knowledge/should‑have‑known is insufficient.	Pleadings permitted reasonable inference of agreement from circumstantial allegations; conspiracy claims survive the pleading stage.

Key Cases Cited

Wood v. Moss, 572 U.S. 744 (2014) (accept factual allegations as true at motion‑to‑dismiss stage)
Otto Candies, LLC v. Citigroup, Inc., 963 F.3d 1331 (11th Cir. 2020) (prior interlocutory forum non conveniens reversal and background on the relationship)
Chang v. JPMorgan Chase Bank, N.A., 845 F.3d 1087 (11th Cir. 2017) (elements of Florida aiding‑and‑abetting‑fraud tort)
Mizzaro v. Home Depot, Inc., 544 F.3d 1230 (11th Cir. 2008) (Rule 9(b) does not require pleading state of mind with particularized facts for ordinary fraud)
Sun Life Assurance Co. v. Imperial Premium Fin., LLC, 904 F.3d 1197 (11th Cir. 2018) (states of mind may be alleged generally under Rule 9(b))
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283 (11th Cir. 2010) (RICO predicate‑act pleading requires Rule 9(b) for alleged mail/wire fraud)
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (RICO plaintiffs need not show reliance for wire/mail fraud predicates)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for drawing reasonable inferences)
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (RICO construed liberally to effectuate remedial purposes)
H.J., Inc. v. Nw. Bell Tel. Co., 492 U.S. 229 (1989) (open‑ and closed‑ended continuity for RICO pattern)
Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313 (11th Cir. 2015) (pleading structure and incorporation of factual allegations)