RSM Production Corp. v. Freshfields Bruckhaus Deringer U.S. LLP
401 U.S. App. D.C. 238
| D.C. Cir. | 2012Background
- RSM appeals the district court's 12(b)(6) dismissal of its RICO §1962(d) conspiracy claim against Freshfields arising from Grenada arbitration.
- The district court held the suit barred by res judicata due to RSM's prior NY litigation over the same licensing dispute.
- RSM alleged that Freshfields, by representing Grenada in ICSID arbitration, knew of and sought to facilitate a bribery-racketeering scheme to defeat RSM's offshore license.
- Grenada's exclusive license for offshore exploration, initially granted to RSM, was challenged; arbitration defense was funded by Global Petroleum and Model through various entities.
- RSM's New York suit against related parties was dismissed; an ICSID panel later ruled Grenada’s license submission untimely, with subsequent appellate proceedings.
- Freshfields moved to dismiss on grounds including res judicata, immunity, statute of limitations, and failure to plead a RICO conspiracy; the court affirmed dismissal on the alternative ground that the §1962(d) claim was not plausibly alleged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RSM pleaded a plausible §1962(d) conspiracy claim against Freshfields | RSM contends Freshfields knowingly joined and furthered the conspiracy. | Freshfields argues it provided ordinary legal services and had no knowledge or agreement to further racketeering. | Plaintiff's claim fails; insufficient plausible inference of knowledge or agreement. |
| Whether knowledge of bribery allegations suffices to state §1962(d) liability | RSM asserts Freshfields knew of the bribery scheme and agreed to help it. | Freshfields contends knowledge alone does not establish agreement to further the enterprise. | Knowledge without an explicit agreement to further the conspiracy is insufficient. |
| Whether third-party funding and fee sources establish the conspiracy | RSM claims funding by Global Petroleum and others shows intent to assist the scheme. | Freshfields argues funding sources are consistent with normal arbitration practice and do not show conspiracy. | Funding by third parties does not plausibly prove Freshfields joined or furthered the racketeering enterprise. |
| Whether the complaint alleges a direct predicate act by Freshfields | RSM alleges Freshfields benefited from the conspiracy through legal fees. | Freshfields did not commit any predicate acts; it provided standard legal services. | No allegation that Freshfields personally committed predicate acts; improper for §1962(d). |
| Whether res judicata forecloses RSM's claim against Freshfields | RSM argues lack of privity with NY defendants and need to add Freshfields in the prior suit. | Freshfields contends the district court properly dismissed on res judicata (alternative basis). | Court addresses alternative ground under de novo review and affirms on §1962(d) dismissal. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (S. Ct. 2009) (plausibility standard for pleading claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (S. Ct. 2007) (plausibility pleading standard)
- Salinas v. United States, 522 U.S. 52 (S. Ct. 1997) (need not show direct participation to prove conspiracy liability)
- Reves v. Ernst & Young, 507 U.S. 170 (U.S. 1993) (enterprise involvement and liability standards for RICO)
- Mountain States Legal Found. v. Bush, 306 F.3d 1132 (D.C. Cir. 2002) (conspiracy pleading adequacy and plausibility standard)
- Handeen v. Lemaire, 112 F.3d 1339 (8th Cir. 1997) (limits on attorney liability for providing routine legal services)
- Baumer v. Pachl, 8 F.3d 1341 (9th Cir. 1993) (limits on professional liability under RICO for lawyers)
- United States v. Wilson, 605 F.3d 985 (D.C. Cir. 2010) (defining conspiracy liability standards in related contexts)