OPINION
Plaintiff Cevdet Aksüt Ogullari Koll. Sti (“Plaintiff’) brings this action against Hu-seyin Cavusoglu and multiple associates, including American Pistachio Commodities Corporation d/b/a Sunrise Commodities, David Cottam, and Andrew Rosen (collectively “Sunrise Defendants” or “Sunrise”), and Mordy Dicker, alleging thirteen counts of New Jersey, federal and common law violations, in connection with the fraudulent importation of food products from Turkey to the United States. This matter comes before the Court on Sunrise Defendants’ partial motion to dismiss under Federal Rule of Civil Procedure 12(c) for judgment on the pleadings with respect to Counts IV and V of the Complaint. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, Defendants’ motion to dismiss is GRANTED and Counts IV and V are DISMISSED.
I. BACKGROUND
In general, the Complaint alleges that Sunrise Defendants, Dicker and others conspired with Cavusoglu in operating a fraudulent enterprise that induced Turkish food suppliers to ship their goods to Defendants for sale in the United States (the “RICO enterprise”). Plaintiff seeks to collect an unpaid debt of approximately $1.1 million in connection with its business dealings with the RICO enterprise. The Court assumes the parties’ familiarity with the facts of this case, which are summarized in two opinions addressing previous motions to dismiss filed by Sunrise and Dicker. See Op. 3-8, ECF No. 69; Op. 2-3, ECF No. 71.
The Court underscores a few facts that are particularly relevant to the instant motion. Plaintiff is a Turkish corporation with its principal place of business in Nazilli, Turkey. Compl. ¶ 5, ECF No. 1. Sunrise Defendants and Dicker are residents of the United States. Id. at ¶¶ 30, 33, 35, 37. Cavusoglu is also a United States resident and operated several shell corporations in connection with the alleged RICO enterprise out of Linden, New Jersey. See id. at ¶¶ 6, 39-40. Cavusoglu coordinated with Sunrise and Dicker to have Plaintiffs goods stored at the Linden property. See id. at ¶¶ 69-83, 90-95, 147-56.
Plaintiff was first introduced to Cavusoglu through an individual named Aret Museoglu, who was a representative of Plaintiffs previous customer. Museoglu recommended Cavusoglu as a business partner, representing that he was a “big player” in the Turkish-food-import busi
Sunrise now moves to dismiss only Counts IV and V of the Complaint, which allege violations of the New Jersey Racketeer Influenced Corrupt Organizations (“RICO”) Act, N.J.S.A. § 2C:41-1 et seq., and the United States RICO Act, 18 U.S.C. § 1961 et seq., (collectively the “RICO claims”). See Compl. at ¶¶ 276-94; Br. in Supp. of Mot. to Dismiss Pl.’s RICO Claims (“Defs.’ Mot”) 1, ECF No. 126-1. Dicker joins the motion. See Letter, ECF No. 127. Sunrise argues that, in light of the Supreme Court’s recent ruling in RJR Nabisco, Inc. v. European Cmty., — U.S. -,
Plaintiff responds that the RJR decision is distinguishable because all of the alleged RICO predicate acts in RJR occurred in Europe, whereas all of the predicate acts in the instant case occurred in the United States. See Pl.’s Br. in Opp’n to the Mot. to Dismiss (“Pl.’s Opp’n”) 6-7, ECF No. 134. Furthermore, the RJR plaintiffs waived their damages claims to domestic injuries. Id Second, Plaintiff argues that its domestic property was injured because of losses it incurred as a result of its inability to satisfy a judgment that it obtained in 2011 against an entity connected to the RICO enterprise. See id. at 7-10. Third, in applying a different test established by the Central District of California, Plaintiff argues that this Court should look to where nearly all of the unlawful conduct took place—i.e., the United States—in determining where the economic injury occurred. See id at 13-15. Finally, Plaintiff asserts that its domestic business was injured because it had approximately $1 million of annual sales to customers in the United States prior to transacting with the RICO enterprise. See id at 16,
In its reply, Sunrise counters that the case upon which Plaintiff relies is an outlier from the multitude .of other district court decisions applying the RJR holding and is otherwise distinguishable from the instant case because the plaintiff in that case maintained substantial business operations within the United States. See Reply Br. in Further Supp. of Mot. to Dismiss PL’s RICO Claims (“Defs.’ Reply”) 4-8, ECF No. 135. Sunrise argues that Plaintiffs claim of damage to its domestic business fails because, it never maintained any business operations within the United States and, therefore, cannot allege damage to a United States-based business operation. See id at 9-10. Sunrise further argues that Plaintiffs claim of damage to its judgment as property fails because it is a “downstream effect” of Plaintiffs initial
II. LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 12(c), judgment on the pleadings will be granted only if “the. movant clearly establishes there are no material issues of fact, and he is entitled to judgment as a matter of law.” Sikirica v. Nationwide Insurance Co.,
III. DISCUSSION
The critical question before the Court is whether a foreign corporation, with its principal place of business located in a foreign country, can allege a “domestic injury” under RICO civil liability for predicate acts committed by U.S. residents while located in the United States. Before answering that question, the Court will first address the Supreme Court’s analysis of RICO civil liability, which established that a RICO civil plaintiff must allege a “domestic injury.” The Court will next consider decisions issued by various district courts in the aftermath of the RJR decision, including those brought to the fore by the parties’ papers.
A. The Domestic Injury Requirement
RICO civil liability creates a cause' of action for “[a]ny person injured in his business or' property” as a consequence of RICO predicate’ acts. See 18 U.S.C. § 1964(c). In RJR, the Supreme Court addressed whether the civil cause of action applied extraterritorially—i.e., “to events occurring and injuries suffered outside the United States.” See
The Supreme Court was confronted with two questions: (1) whether RICO’s substantive prohibitions under § 1962 ap
In answering the second question, the Court held that § 1964(c) did not overcome the presumption against extraterritoriality regardless of whether the alleged predicate acts under § 1962 applied extraterri-torially. See id. at 2106. Consequently, a private RICO plaintiff “must allege and prove a domestic injury to its business or property.” Id. (emphasis original). The Court acknowledged the potential for “international friction” if RICO civil-liability allowed recovery for foreign injuries in U.S. courts, including treble damages, which might exceed recovery in foreign states. See id. at 2106-08. In applying the first step of its inquiry, the Court found that “[njothing in § 1964(c) provides a clear indication that Congress intended to create a private right of action for injuries suffered outside of the United States.” Id. at 2108. The Court declined to apply the second step, however, because the plaintiffs waived their damages claims for domestic injuries at the district court level. See id. at 2111. Consequently, the Supreme Court never addressed the issue present now: whether a foreign corporation with no substantial business operations in the United States can nevertheless allege a domestic injury under § 1964(c) for predicate acts committed by U.S. residents that occurred within .the United States. - Indeed, as the Court presciently counseled, “[t]he application of this rule in any given case will not always be self-evident, as disputes may arise as to whether a particular alleged injury is ‘foreign’ or ‘domestic.’ ” Id.
B. District Courts’ Applications of the Domestic Injury Requirement
Several district courts have considered the meaning of “domestic injury” in light of the Supreme Court’s RJR decision. As the parties’ papers indicate, two separate, and apparently conflicting, lines of reasoning have emerged from these opinions. The first line, for which Sunrise advocates, focuses on where the alleged injury was suffered. The second line, for which Plaintiff advocates, focuses on where the conduct occurred that caused the injury. Obviously, the outcome of the present dispute hinges on the prevailing line of reasoning, which the Court will now consider.'
In Elsevier, Inc. v. Grossman, the Southern District of New York (“SDNY”) considered the domestic injury question where plaintiffs, who were publishing companies based in Amsterdam, Paris, London and New York, alleged RICO claims related to the fraudulent conduct of defendant, who was a Brazilian citizen and resident.
A month later, in Baseman v. Elsaca, the SDNY applied similar reasoning where the individual plaintiff and defendants were Chilean citizens and" residents, and corporate plaintiffs and defendants were incorporated in either Chile or the British Virgin Islands. No. 15-cv-2009,
In Tatung Co., Ltd. v. Shu Tse Hsu, the Central District of California departed from the SDNY and applied the second line of reasoning, which focused on where the RICO predicate acts occurred that caused the alleged harm. See No. 13-cv-1743,
Other courts have considered the “domestic injury” question under varying circumstances, but most of them did not focus on where the RICO predicate acts occurred; rather, most of the courts appear to have focused on where plaintiffs’ injuries were felt. See, e.g., Absolute Activist Value Master Fund Ltd. v. Devine, No. 15-cv-328,
Notably, however, a sister court in this district looked to where defendant’s conduct occurred. See Akishev v. Kapustin, No. 13-cv-7152,
These cases exhibit a wide array of factual scenarios and justifiable reasoning, with no clear victor in the “domestic injury” debate. What is clear from the statute and the Supreme Court is that the “focus” of § 1964(c) is the injury suffered and not the predicate acts that caused the injury. See RJR,
C. Plaintiff Cannot Allege a Domestic Injury to Its Property.
Plaintiff first alleges damage to its property in the form of its $1.12 million judgment against Cavusoglu in a previous case. Plaintiff argues that a judgment is domestic property under § 1964(c) and that Plaintiff “has suffered actual monetary loss and out-of-pocket loss since its 2010 lawsuit claims became,- as a matter -of law, ‘property’ -upon the entry of judgment against [Cavusoglu’s shell entity] in July 2011.”. See PL’s Opp’n at 7-10, It is well settled that all claims sounding in fraud, including RICO claims, must be alleged with particularity. See Fed. R. Civ. P. 9(b); Lum v. Bank of Am.,
The original subject of the RICO enterprise’s fraudulent scheme was Plaintiffs food products and the initial injury was the fraudulent conversion thereof. To be clear, the Court agrees that judgments are generally considered to be property, but that does not mean that they constitute the type of property that may be subject to recovery under § 1964(c) in all cases. Here, the judgment is a byproduct of Plaintiffs attempt to remedy its initial injury. In other words, the judgment is a “downstream effect of the initial injury” and it does not constitute damage to Plaintiffs business or property under § 1964(c). See Exeed Indus.,
Furthermore, the Court agrees with Sunrise that Plaintiffs “lost-debt” theory of out-of-pocket loss is not presently cognizable given Plaintiffs ongoing attempt to satisfy its judgment through the instant litigation, Plaihtiff cannot currently show that its debt cannot be collected. Consequently, it cannot show a concrete financial loss, which RICO law requires for recovery. See Maio v. Aetna, Inc.,
Plaintiffs second claim of domestic property damage is naturally the fraudulent conversion of its food products. Plaintiff asserts that-it remained the lawful owner of its goods until its bank released the bill of lading to Cavusoglu’s bank and the goods were unloaded at a port in the United States. See Decl. of Oguz Kanyilmaz (“Kanyilmaz Decl.”) ¶¶ 4-6, ECF No. 134-2. As a result, Plaintiff argues that its injuries, began to accrue in the United States and thus the fraudulent conversion is a domestic injury. See id. at ¶ 7.
Furthermore, the Court is skeptical of Plaintiffs claim that the presence of “FOB” on its invoices is meaningless with respect to where it released control of the goods. See Kanyilmaz Decl. at ¶ 4. As the parties are undoubtedly aware, “FOB” is an acronym for “free on board,” which is a contractual term that generally presumes that the property passes from seller to buyer at the point indicated. See Swift Canadian Co. v. Banet,
D. Plaintiff Cannot Allege a Domestic Injury to Its Business
Plaintiff argues, without pointing to any evidence in the record, that the damage to its business caused by the RICO enterprise is a domestic injury. Plaintiff claims that it maintained approximately $1 million of annual business for four years prior to its dealings with Cavusoglu and Sunrise. See Pl.’s Opp’n at 16. Plaintiff cites to a trial transcript from a previous case as support, apparently unaware of the limits placed on this Court by Rule 12(c). See Mele v. Fed. Reserve Bank of N.Y.,
Even assuming that Plaintiff can establish its previous business earnings at summary judgment, the Court finds that Plaintiff cannot allege a domestic injury to its business because its business is entirely located in and operated out of Turkey. Plaintiff would have this Court employ the Tatung court’s reasoning in looking to where the RICO predicate acts occurred to determine that it suffered a domestic injury. See Pl.’s Opp’n at 10-11. Plaintiffs reliance on Tatung is misguided. In Tatung, plaintiffs clearly maintained substantial business operations within the United States and contractually availed themselves to dispute resolution via arbitration within the United States. See Tatung,
In the instant case, Plaintiff never maintained any operations, instrumentalities or other presence in the United States. See id. Furthermore, Plaintiff never “traveled” through the internet to Defendants’ United States-based website, as was the case in Akishev. See Akishev,
Irrespective of Museoglu, the Court returns to the question of where the impact of Plaintiffs injury was felt. The Court finds that Plaintiffs injury was felt in the only place that it has ever been located, in Turkey. See Devine,
IV. CONCLUSION
For the reasons stated above, Sunrise Defendants’ motion to dismiss is GRANTED and Plaintiffs RICO claims, Counts IV and V, are DISMISSED WITH PREJUDICE. An appropriate order follows.
Notes
. Exhibits filed in connection with defendants’ motion for summary judgment in Ta-tung indicated that plaintiff maintained warehouses where it stored inventory in El Paso, Texas, and Los Angeles, California, to which it referred as the "El Paso HUB” and “Los Angeles HUB.” See Decl. of Gopi K. Panchapakesan in Supp. of Bird Marella Defs.’ Opp’n to Tatung’s Mot. for Partial Summ. J. 89, 233, ECF No. 793-2.