Puri v. Khalsa
3:10-cv-01532
D. Or.
Oct 5, 2017

Background

  • Plaintiffs (members/former managers of Oregon entities UI and SSSC) sued multiple individual and corporate defendants alleging fraud, negligent misrepresentation, tortious interference, declaratory relief, and federal RICO relating to control and asset transfers involving Golden Temple/GTO and board memberships.
  • The district court previously dismissed the First Amended Complaint; the Ninth Circuit affirmed in part, vacated in part, and remanded, directing dismissal without prejudice of various claims for failure to plead fraud with particularity but retaining claims against certain defendants (Sopurkh, Lambert, Schwabe) for further proceedings.
  • Plaintiffs filed a Second Amended Complaint (SAC) adding four defendants; many defendants moved to dismiss on Rule 12(b)(6), Rule 9(b), standing, and failure-to-state-a-RICO-claim grounds.
  • Plaintiffs conceded dismissal of several claims and limitations (including many derivative claims and ORICO/RICO state claims), narrowing the disputes the court considered.
  • The court dismissed most claims—often with prejudice—finding Plaintiffs repeatedly failed to cure pleading defects under Rule 9(b), lacked Article III standing as to certain defendants, or failed to plead RICO continuity/pattern.
  • Remaining claims after this decision: (1) limited declaratory relief (Bibiji’s claim to UI board seat and Plaintiffs’ claims to SSSC board seats), (2) fraud against Sopurkh, Kartar, Lambert, and Schwabe, (3) negligent misrepresentation by Bibiji against Lambert and Schwabe, and (4) tortious interference by Plaintiffs against Sopurkh, Lambert, and Schwabe.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Declaratory relief (derivative vs direct) Plaintiffs say requests are direct (management status) and necessary background, not barred derivative suits UI/SSSC: relief is derivative and barred by Ninth Circuit’s prior dismissal with prejudice Court: granted in part, denied in part — dismissed derivative requests; kept Bibiji’s UI-board and Plaintiffs’ SSSC-board direct claims
Fraud pleading under Rule 9(b) Plaintiffs contend SAC added details curing prior deficiencies and rely partly on information-and-belief allegations Defendants argue SAC repeats conclusory/group allegations lacking time, place, specific conduct and fails to state basis for beliefs Court: dismissed fraud as to many defendants (Peraim, Siri Ram, Karm, Karam, Gurudhan, Hari, Ajeet, EWTC) for failure to satisfy Rule 9(b); fraud survives only as to Sopurkh, Kartar, Lambert, Schwabe
Standing re: Horowitz & Lane Powell Plaintiffs assert continuing injury from a conspiracy including 2007–2008 events, tying earlier exclusions and later communications together Horowitz & Lane Powell argue Plaintiffs allege no personal injury from 2007–2008 events and any liability would be retroactive aiding/abetting lacking required facts Court: no Article III standing as to Horowitz and Lane Powell for fraud and tortious interference; those claims dismissed against them
RICO — pattern and continuity Plaintiffs allege series of emails/voicemail (2004–2005 and 2007–2008) show related predicate acts and ongoing threat Defendants contend alleged acts are isolated, temporally separated, have different purposes/victims, and do not show continuity or threatened future criminal activity Court: RICO dismissed against all defendants (including Sopurkh, Lambert, Schwabe) for failure to plead a pattern/continuity of racketeering

Key Cases Cited

  • Puri v. Khalsa, 844 F.3d 1152 (9th Cir. 2017) (Ninth Circuit opinion affirming in part and remanding; addressing ministerial-exception and pleading issues)
  • Puri v. Khalsa, [citation="674 F. App'x 679"] (9th Cir. 2017) (unpublished memorandum disposition directing dismissal without prejudice of fraud-based claims for lack of particularity as to many defendants)
  • Iqbal v. Ashcroft, 556 U.S. 662 (2009) (requirement that courts disregard conclusory allegations; plausibility standard)
  • Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim; labels and conclusions insufficient)
  • Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (Rule 9(b) requires particulars including time, place, content and separate allegations for multiple defendants)
  • Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (claims grounded in fraud must satisfy Rule 9(b))
  • Wool v. Tandem Computers Inc., 818 F.2d 1433 (9th Cir. 1987) (limited exception relaxing Rule 9(b) where facts are peculiarly within defendants' knowledge but requiring statement of facts supporting information-and-belief)
  • H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) (RICO requires related predicates and continuity; predicates over short period without threat of future conduct fail)
  • Valley Forge Christian Coll. v. Americans United for Separation of Church & State, 454 U.S. 464 (1982) (Article III standing requires personal injury fairly traceable to defendant and redressable)
  • Granewich v. Harding, 985 P.2d 788 (Or. 1999) (Oregon adoption of Restatement Section 876 standards for liability for third-party torts)
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