Titan Global, LLC v. Organo Gold Int'l, Inc
5:12-cv-02104
N.D. Cal.Dec 2, 2012Background
- Titan Global LLC and the Rasmussens sued Organo Gold International, Holton Buggs, Romacio Fulcher, Rramon Fulcher, Tyra Fulcher, and Solon over MLM activities.
- Plaintiffs allege Defendants recruited Titan Global’s downstream independent representatives (IRs) away from Titan Global.
- The IR Agreement with ACN and the ACN Compensation Plan govern downstream commissions and information ownership.
- Plaintiffs assert RICO violations, multiple business torts, and defamation, plus an oral car rental claim (ninth claim).
- Court granted-in-part and denied-in-part Organo Gold’s 12(b)(6) motion: dismissing RICO and defamation claims; dismissing ninth claim; denying/retaining business tort claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO standing and proximate cause. | Titan Global is an intended beneficiary and suffers commercial harms from lost downstream commissions. | Plaintiff lacks Article III standing and causation; acts aren’t the proximate cause. | Plaintiffs have standing as third-party beneficiaries; but proximate causation not shown for RICO claims; dismissed with leave to amend. |
| Pattern of interstate wire fraud under RICO. | Multiple interstate wire communications show a pattern. | Only one adequate act; fails Rule 9(b) and pattern requirement. | Only one adequately pled act; insufficient pattern; RICO claims dismissed with leave to amend. |
| Causation and direct injury for RICO standing. | Defendants’ recruitment caused lost commissions to Plaintiffs. | Injuries are speculative and not directly caused by alleged acts. | Even if pled, causation insufficient; dismisses RICO claims for lack of proximate causation; leave to amend. |
| Standing to pursue business tort claims; preemption by CUTSA. | Plaintiffs are third-party beneficiaries with rights to commissions. | No standing since not parties to IR Agreements; CUTSA preemption. | Plaintiffs have Article III standing as third-party beneficiaries; CUTSA preemption not applicable to non-misappropriation claims. |
| Defamation sufficiency; leave to amend. | Defamatory statements identified generally affected Plaintiffs’ leadership reputation. | Statements described too generally; not identified with specificity. | Defamation claim dismissed with prejudice for lack of specificity; leave to amend granted. |
| Pendant jurisdiction over the ninth claim for breach of oral agreement. | Claim arises from same facts and parties as other claims. | No common nucleus of fact; separate state-law claim. | Court lacks pendant jurisdiction; ninth claim dismissed with prejudice. |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standards for Article III standing (injury, causation, redressability))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading requires plausible claims; 'short and plain' statement)
- Conley v. Gibson, 355 U.S. 41 (1957) (abrogated by Twombly for pleading standard)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (proximate causation; pattern of racketeering standing factors)
- Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002) (proximate causation factors in RICO standing)
- Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992) (proximate cause; injury must be direct enough to warrant recovery)
- Hammes Co. Healthcare, LLC v. Tri-City Healthcare Dist., 801 F. Supp. 2d 1023 (S.D. Cal. 2011) (third-party beneficiary standing under contract law)