654 F. App'x 439
11th Cir.2016Background
- The Town of Gulf Stream and contractor Wantman sued several individuals and their companies under RICO, alleging a scheme to overwhelm small Florida municipalities with frivolous public-records requests to induce violations of the Florida Public Records Act and then extract settlements or attorneys’ fees.
- Defendants allegedly submitted nearly 2,000 requests (many facially absurd), filed dozens of public-records lawsuits, and in at least one instance used aliases to avoid special service charges.
- Plaintiffs asserted predicate acts of Hobbs Act extortion and mail/wire fraud to establish a RICO “pattern of racketeering activity.”
- Defendants moved to dismiss under Rule 12(b)(6), arguing that threats to sue or filing lawsuits cannot constitute Hobbs Act extortion and that there was no duty-to-disclose supporting mail/wire fraud allegations.
- The district court dismissed the complaint with prejudice for failure to plead at least two qualifying predicate acts; the plaintiffs appealed.
- The Eleventh Circuit affirmed, holding the allegations—though troubling—did not state RICO predicate acts under controlling precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether threats to sue and filing frivolous public-records suits can be Hobbs Act extortion predicate acts | Defendants’ repeated threats and suits were a scheme to obtain property (money) by wrongful threats, satisfying Hobbs Act extortion | Threats to litigate and filing suits—even in bad faith—are not "wrongful" extortion under the Hobbs Act; courts and petition rights protect litigation conduct | Court held such litigation threats/filings cannot constitute Hobbs Act extortion (Pendergraft and Raney control) |
| Whether systematic abuse of public-records requests (to induce violations) can be a RICO predicate under Hobbs Act | Abuse of the Public Records Act to force fees/settlements is extortionate conduct forming RICO predicate acts | Such abuse should be remedied in individual suits or by state law; RICO/Hobbs Act do not reach this conduct | Court held alleged abuse does not qualify as Hobbs Act extortion; remedies lie in state proceedings or sanctions, not RICO |
| Whether using aliases to avoid a special service charge gives rise to mail/wire fraud predicates | Concealing identity to avoid fees amounted to nondisclosure in furtherance of a scheme to defraud, with use of mail/wires | No duty to disclose requester identity; Florida law permits anonymous public-records requests, so nondisclosure cannot support mail/wire fraud | Court held plaintiffs failed to plead a duty to disclose, so mail/wire fraud predicates were not adequately alleged |
| Whether pleading multiple related acts here satisfied RICO’s requirement of at least two qualifying predicate acts | The combination of extortion and mail/wire fraud allegations established a pattern of racketeering activity | Because neither alleged extortion nor mail/wire fraud predicates were legally sufficient, plaintiffs failed to plead two qualifying predicate acts | Court held plaintiffs failed to plead the required pattern; RICO claim dismissed and affirmed |
Key Cases Cited
- United States v. Pendergraft, 297 F.3d 1198 (11th Cir. 2002) (threats to file litigation are not "wrongful" extortion under the Hobbs Act)
- Raney v. Allstate Ins. Co., 370 F.3d 1086 (11th Cir. 2004) (filing lawsuits—even frivolous ones—does not constitute Hobbs Act extortion for civil RICO)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state a plausible claim to survive dismissal)
- McCulloch v. PNC Bank Inc., 298 F.3d 1217 (11th Cir. 2002) (nondisclosure can constitute mail/wire fraud only where a duty to disclose exists)
- United States v. Maxwell, 579 F.3d 1282 (11th Cir. 2009) (elements of mail and wire fraud)
- Williams v. Mohawk Indus., Inc., 465 F.3d 1277 (11th Cir. 2006) (elements required to state a civil RICO claim)