Marcia Harris v. Orange Business Services U.S., Inc.Marcia Harris v. Orange Business Services U.S., Inc.
The district court‘s Heck ruling is not a final decision and, unlike its order dеnying qualified immunity, does not fall within the collateral order doctrine. See Plaintiff A v. Schair, 744 F.3d 1247, 1253 (11th Cir.2014) (noting the “stringent” preconditions necessary to application of the collateral order doctrine); Mitchell v. Forsyth, 472 U.S. 511, 525, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) (“A major characteristic of the denial or granting of a claim appealable under Cohen‘s collateral order doctrine is that unless it can be reviewed before [the proceedings terminate], it can never be reviewed at all.“) (internal quotation marks and citation omitted). Neither is the Heck ruling “inextricably intertwined” with—or indeed even closely related to—the qualified immunity issue. Sеe Swint v. Chambers Cty. Comm‘n, 514 U.S. 35, 51, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1996) (suggesting that courts should not extend their Cohen jurisdiction to rulings that are not otherwise immediately appealable except where it is “essential to the resolution of [a] properly appealed collateral order[]“) (citation omitted). Rather, the Heck and qualified immunity issues are governed by entirely separate and unrelated analyses. Accordingly, the Court lacks jurisdiction to review the Heck ruling. Id.; see also Harris v. Bd. of Educ. of the City of Atlanta, 105 F.3d 591, 595 (11th Cir. 1997) (declining interlocutory jurisdiction over issues that were not “sufficiently interwoven with qualified immunity“).
CONCLUSION
For the reasons discussed above, we agree with the district court that Plaintiff has pled a viable basis for overcoming qualified immunity and holding Defendant individually liable under
Marcia Harris, Chicago, IL, pro se.
Daniel Schimmel, Foley Hoag LLP, New York, NY, Kevin Gregory Meeks, Troutman Sanders, LLP, Atlanta, GA, for Defendant-Appellee.
PER CURIAM:
Marcia Harris appeals the district court‘s dismissal of her complaint against Orange Business Services U.S., Inc. (“OBS“), a Delaware corporаtion located in Georgia; Orange S.A. (“Orange“), a corporation located in France; Almerys S.A.S. (“Almerys“), a corporation located in France; Dr. Patrice Cristofini; Dr. Yves Miaux; Barbara Ngouyombo; Hammond Bale Solicitors L.L.P. (“HB“), a law firm located in the United Kingdom; Griffin and King Ltd (“GK“), a law firm located in the United Kingdom; and Landwell & Associés/Partners (“Landwell“), a partnership located in France, in her action alleging violations of the Georgia Trade Secrets Act,
On appeal, Harris argues that the district court erred in dismissing her claims against the non-OBS defendants for failure to serve them. She further argues that the district court erred in concluding that she lacked standing to bring federal RICO claims, state RICO claims, and claims under the GTSA against OBS. Finally, as to her fraud claims, she argues—for the first time on appeal—that the district court erred in dismissing her fraud claims for failure to state a claim on the basis that OBS did not owe her a fiduciary duty. After careful consideration, we affirm.
I. BACKGROUND
Harris, who proceeds pro se but is licensed to practice law, filed a complaint alleging violations of the GTSA against all defendants (Count 1), violations of the fеderal RICO Act against all defendants (Count 2), violations of the Georgia RICO Act against all defendants (Count 3), and common law fraud against OBS and Orange (Count 4).
Harris was a director, shareholder, and employee of Anoigma Ltd. (“Anoigma“), a British high tech health care company. Initially, she, Ngouyombo, and Miaux were
After OBS discovered the IP‘s profit potential, it encouraged Orange to express interest in Anoigma and to install Cristofini as a shareholder and officer there. Not long after, Cristofini became the fourth shareholder of Anoigma and obtained a director position in the company. Sometime after Cristofini joined Anoigma, he, Miaux, and Ngouyombo secretly created a new company, Cloud Sante S.A.S. (“CS“), and transferred the IP to CS. The defendants then began efforts to remove Harris from her directorship of Anoigma, which they ultimately succeеded in doing.
Harris brought an action in England against Anoigma and CS, alleging, among other things, wrongful termination. Neither Anoigma nor CS appeared to contest Harris‘s allegations. The English court awarded Harris a monetary judgment consisting of loss of earnings, loss of statutory rights, improperly deducted wages, and other costs.
After her removal as director, Harris entered negotiations to purchase the IP, with the intention of setting up a company to market it in the United States. She became aware of the IP‘s transfer to CS during the course of these negotiations. Before Harris could collect her wrongful termination judgment or complete her purchase of the IP, the defendants deliberately moved Anoigma into bankruptcy. The defendants then transferred the IP from CS to Almerys, a subsidiary of Orange, and engineered the bankruptcy of CS.
Harris filed suit against Orange, Cristofini, Miaux, Ngouyombo, and HB in the Northern District of Illinois (the “Illinois Action“) alleging claims similar to those she alleges here. The district court in that case dismissed the action on the basis of forum non conveniens, noting that Harris should have brought her complaint in a foreign court. Harris did not appeal the district court‘s judgment.
Harris then filed the current action, contending that both transfers of the IP were fraudulent. Her complaint alleges that, as a result of the fraudulent transfers of the IP and the bankruptcies, she was deprived “of the value of her shares,” prevented from collecting on the money judgment awarded to her by the English court, and prevented from purchasing the IP “for commercialization in the U.S.” She seeks to distinguish this action from the Illinois Action by naming additional defendants and adding allegations of fraud arising from declarations made during the Illinois Action. She alleges that these declarations “were designed to divert attention away from the central role of OBS, a U.S. company,” in the alleged conspiracy, thereby compelling dismissal of the action on forum non conveniens grounds and allowing the defendants to further the conspiracy. She also contends that she relied on fraudulent omissions the defendants committed during the Illinois Action in deciding not to appeal the court‘s dismissal of that action, and “was damaged thereby in terms of the costs of the previous lawsuit, and the loss of time (and potential loss of evidence) in pursuing the present lawsuit.”
The district court next issued an order to show cause why the action as to the remaining defendants should not be dismissed for lack of service, observing that the action had, at that point, been pending for more than eight months without any proof of service or substantial proceedings of record taking place with respect to any defendant other than OBS. Harris argued in response that the six-month time limit to еffectuate service in the Federal Rules of Civil Procedure does not apply to service in a foreign country. She also requested that the district court not enter its proposed order due to her pending appeal of the November Order.
The district court dismissed the action against the non-OBS defendants, noting that Harris‘s only response to the show cause order was that the rules of service do not apply in a foreign country. The court ruled that Harris was required to show diligence in serving foreign defendants and had failed to do so. The court then enterеd a final judgment dismissing the action against all remaining defendants.2
II. STANDING
We first address the district court‘s dismissal of Harris‘s federal and Georgia RICO and GTSA claims against OBS for lack of standing. When a district court dismisses a plaintiff‘s claim for lack of standing, we review the court‘s legal conclusions de novo, and its factual findings for clear error. McCullum v. Orlando Reg‘l Healthcare Sys., Inc., 768 F.3d 1135, 1141 (11th Cir.2014).
RICO Claims
The federal RICO act makes it illegal “for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise‘s affairs through a pattern of racketeering activity.”
In order to state a civil claim under either statute, a plaintiff must establish that the alleged injury directly was caused by the RICO violation. Bivens Gardens Office Bldg., Inc. v. Barnett Banks of Florida, Inc., 140 F.3d 898, 906 (11th Cir. 1998).3 The plaintiff must have been injured in her business or her property by the racketeering conduct constituting the violation, and the damages must flow from commission of the predicate acts. Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1291 (11th Cir.2006). Thus, “a party whose injuries result ‘merely from the misfortunes visited upon a third person by the defendant‘s acts’ lacks standing to pursue a claim under RICO.” Bivens, 140 F.3d at 906 (quoting Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 267, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992)). Applying this principal, we have held that “losses suffered by a company‘s stakeholders as a result of racketeering activity against the company do not give them standing under RICO” because “[s]uch an injury is too indirect or ‘derivative’ to confer RICO standing.” Bivens, 140 F.3d at 906. Notably, “[a] plaintiff‘s status as a creditor or stockholder, however, does not preclude standing for RICO violations if the plaintiff has alleged an injury proximately caused by the defendants’ acts of racketeering that target the plaintiff.” Beck v. Prupis, 162 F.3d 1090, 1096 n. 10 (11th Cir.1998) aff‘d, 529 U.S. 494, 120 S.Ct. 1608, 146 L.Ed.2d 561 (2000).
The critical question in determining whether a shareholder has standing to file a RICO action is whether or not the plaintiff suffered a hаrm that stands separate and distinct from the harm suffered by the corporation. Bivens, 140 F.3d at 908. Our precedent is clear that a shareholder lacks RICO standing “if the injury alleged was suffered only as a result of harm to the corporation.” Id. In other words, the harm suffered by the plaintiff shareholder cannot be “purely contingent” on the harm suffered by the corporation. Holmes, 503 U.S. at 271, 112 S.Ct. 1311.
Harris‘s claims fail this test. Each of Harris‘s primary alleged injuries flowed from her status as a shareholder and the diminution in the value of her shares.4 Indeed, she explicitly stated as much eight times in her complaint, alleging that her injuries were “based on her shareholding.” Her complaint principally alleged that she received no compensation as a shareholder of Anoigma when the company‘s IP was transferred to CS, was deprived of the value of her shares in Anoigma, and was prevented from purchasing the IP.
Accepting Harris‘s allegations as true, her injuries are indistinguishable from the injuries inflicted on Anoigma. In the ab-
In apparent recognition of this Court‘s clear precedent as regards shareholder standing, Harris attempts to distinguish her circumstances by arguing that she suffered a distinct and peculiar injury not suffered by Anoigma‘s оther shareholders. She reasons that Miaux, Ngouyombo, and Cristofini all became shareholders of CS, the entity to whom the IP was transferred. As such, in a sense, she was the only party deprived of the value of the IP. She contends that suffering an injury distinct from other shareholders (but not the corporation) is sufficient to confer standing.
We are unpersuaded by Harris‘s argument because it misconstrues the relevant case law. True, some courts have recognized standing in situations “where the shareholder suffers an injury which is separate and distinct from that of other shareholders.” Grafman v. Century Broad. Corp., 727 F.Supp. 432, 435 (N.D.Ill.1989). However, far from creating an exception to the general rule that a shareholder must suffer an injury distinct from that of the corporation to have standing, these cases are wholly consistent with it. Tellingly, none of the cases Harris cites held that a plaintiff shareholder has individual standing to sue for an injury suffered by a corporation. In fact, most of the cases Harris cites explicitly note the general rule “that there is no shareholder standing to assert RICO claims where the harm is derivative of harm to the corporation.” Sparling v. Hoffman Constr. Co., 864 F.2d 635, 640 (9th Cir.1988); see also Leach v. FDIC, 860 F.2d 1266, 1273-74 (5th Cir.1988) (recognizing cases holding that “minority shareholders laсked standing under RICO to sue because they had not alleged any injury to their property that was distinct from any injury the corporation may have suffered“); Rand v. Anaconda-Ericsson, Inc., 794 F.2d 843, 849 (2d Cir. 1986) (holding that plaintiffs lacked standing because “[t]he legal injury, if any, was to the firm“).
The few cases Harris cites that have recognized a plaintiff shareholder‘s standing to sue concerned injuries inflicted directly on the plaintiff shareholder, not the corporation. In Bivens, for example, we recognized standing for a creditor to sue for the undervaluation of a company‘s assets during bankruptcy proceedings becausе “[t]he sale of the [asset] for a higher price would have directly benefitted major creditors ... because they would have been able to recover a greater percentage of the debts owed to them. In contrast, the sale of the [asset] for a higher price would have little impact on the shareholders and the corporation, since the additional funds from the sale would have been used to satisfy creditors instead of going to shareholders.” 341 F.3d at 908 (emphasis added). Another case, Grafman, recognized a plaintiff‘s standing to sue defendants who had acted to dilute his voting shares. 727 F.Supp. at 434. These actions singled out the plaintiff from other shareholders and harmed him. Imрortantly, however, they did not harm the corporation at all. In fact, the district court in that case explicitly dismissed any “allegations concern[ing] harm to [the cor-
This result becomes clear when considering the policy goals governing RICO standing requirements. In evaluating whether a plaintiff has suffered a direct injury sufficient to confer standing, we consider the motivating principles animating the injury requirements in RICO cases. See Williams, 465 F.3d at 1288 (quoting Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 458, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006)) (discussing the proximate cause standard in RICO cases).5 These principles include (1) reducing the difficulty in ascertaining the amount оf damages attributable to the RICO violation as distinct from other independent factors and (2) reducing the risk of duplicative recoveries. Id. Granting standing to Harris in this case would advance neither of these principles. First, it would be difficult, if not impossible, to determine accurately the proportionate reduction in Anoigma‘s value attributable to the defendants’ conduct as opposed to factors like market conditions, poor business practices, or failure to anticipate developments in the financial markets. See Holmes, 503 U.S. at 272-73, 112 S.Ct. 1311. Second, to the еxtent that the defendants’ conduct has harmed Anoigma‘s value, Anoigma can be counted on to vindicate that interest. See id. Recognizing Harris‘s right to sue for the same injury would only increase the risk of duplicative recovery, particularly since she proposes no method of apportioning a possible recovery between herself and Anoigma. See id.
Harris did allege one injury that is unrelated to her status as an Anoigma shareholder. She pled that the defendants’ racketeering activity moved Anoigma and CS into bankruptcy, thus preventing her from collecting on her English judgment for wrongful termination. Although this injury does not arise out of Harris‘s status as a shareholder, it does arise out of her status as a creditor. It thus raises analogous standing issues as her other injuries. Like a shareholder, “[a] creditor will have RICO standing only when his injury passes the directness test ... which will not be the case if the injury alleged was suffered only as a result of harm to the corporation.” Bivens, 140 F.3d at 908. This injury, like the others Harris alleges, is insufficient to confer RICO standing. Harris‘s inability to collect on her English judgment is a direct result of harm to Anoigma and CS. Had the defendants never harmed Anoigma and CS by deliberately moving them into bankruptcy, Harris would have collected her judgment and suffered no injury.
GTSA Claims
To file a claim under the GTSA,
But we need not decide that issue here. Regardless of whether mere possession of misappropriated property is sufficient to confer standing or whether ownership is required, Harris failed to allege that she had an actionable interest in the IP. She admitted in her complaint that “the actual owner of the trade secret was Anoigma.” Moreover, she alleged neither that she is in possession nor that she was ever in possession of the IP. Indeed, such an allеgation seemingly would conflict with her claim that she was injured by deprivation of an opportunity to purchase that same IP. Further, Harris advances no legal authority supporting her assertion that the deprivation of an opportunity to purchase property is an interest sufficient to confer standing. Absent any actionable interest in the IP, Harris‘s GTSA claim fails for lack of standing.
III. FAILURE TO STATE A CLAIM
Harris‘s next claim is for common law fraud. We review de novo the district court‘s dismissal for failure to state a claim. Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1187 (11th Cir.2002). In doing so, we accept the plaintiff‘s factual allegations as true. Id. at 1188. We note, however, that conclusory allegations and cоnjecture are insufficient to survive a motion to dismiss. Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1064 (11th Cir.2007).
Under Georgia law, a plaintiff asserting a claim for fraudulent misrepresentation must prove five essential elements: (1) the defendant made representations, (2) knowing they were false, (3) intentionally and for the purpose of deceiving the plaintiff, (4) which the plaintiff reasonably relied on, (5) with the proximate result that the plaintiff incurred damages. Williams v. Dresser Indus., Inc., 120 F.3d 1163, 1167 (11th Cir.1997).
Harris does not allege that OBS made any affirmative misrepresentations to her. Instead, she argues that OBS had an obligation to disclose certain facts about its involvemеnt in the e-health industry and her prior lawsuit. The suppression of a material fact that a party is under obligation to communicate may constitute fraud. Williams, 120 F.3d at 1167. Generally speaking, “[w]here one person sustains towards another a relation of trust and confidence, his silence when he should speak or his failure to disclose what he ought to disclose constitutes fraud in law just as do actual affirmative false representations.” Tigner v. Shearson-Lehman Hutton, Inc., 201 Ga.App. 713, 411 S.E.2d 800, 802 (1991) (citing Perkins v. First Nat‘l. Bank of Atlanta, 221 Ga. 82, 143 S.E.2d 474, 484 (1965)). This obligation to communicate or disclose may arise from the confidential relations of the parties or from the particular cirсumstances of the case, but it must exist before a party may be found liable for fraud based upon an omission or concealment. Williams, 120 F.3d at 1167. Business relationships generally are not confidential relationships, unless the parties have a history of business dealings or the kind of relationship that is not arms-length. Id. at 1168.
Here, the district court did not err in dismissing Harris‘s fraud claim. The only argument she advances on appeal is that Cristofini was acting as an agent for OBS, and that because Cristofini owed her a fiduciary duty as a fellow shareholder of Anoigma, as Cristofini‘s principal, OBS owed her the same duty. She reasons that because of this duty, OBS‘s failure to affir-
Although Harris alleged in her complaint that Cristofini was acting as an agent for OBS, she never explained to the district court why or how an agent‘s individual fiduciary duty to a third party arising out of the agent‘s relationship with the third party would create an affirmative obligation on the part of his principal to disclose material facts about its own operations to the third party. Even now, she cites no legal authority for that proposition. Harris‘s shareholder relationship with Cristofini may have imposed on Cristofini an affirmative obligation to disclose information to her, but she had no such relationship with OBS. Her relationship with OBS—to the extent there was a relationship prior to the Illinois Action—was hardly one of “trust and confidence.” Tigner, 411 S.E.2d at 802. Harris presents no basis for any obligation on the part of OBS to disclose to her. Regardless, Harris failed to raise this issue before the district court, and, as a result, we need not consider it. Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004).
IV. FAILURE TO EFFECT TIMELY SERVICE ON NON-OBS DEFENDANTS
Harris‘s only remaining claims concern the nоn-OBS defendants.6 We review for abuse of discretion the district court‘s dismissal of the claims against the non-OBS defendants for failure to effectuate timely service on those defendants. Rance v. Rocksolid Granit USA, Inc., 583 F.3d 1284, 1286 (11th Cir.2009). Under this standard, we will affirm unless the district court made a clear error of judgment or applied the wrong legal standard. Id.
Federal Rule of Civil Procedure 4 generally requires a plaintiff to effectuate service on a defendant within 120 days after a complaint is filed.
Specific time limits aside, “[m]ost courts faced with a challenge to the timeliness of foreign service have applied a ‘flexible due diligence’ standard to determine whether the delay should be excused.” Lozano v. Bosdet, 693 F.3d 485, 488-89 (5th Cir.2012) (internal quotation marks omitted). We have affirmed decisions based on similar considerations in the context of domestic service of process. Lepone-Dempsey v. Carroll Cty. Comm‘rs, 476 F.3d 1277, 1282 (11th Cir.2007). We see no reason why such a standard would fail to apply to foreign service of process. We thus join the majority of circuits to
On appeal, Harris admits that she made no effort to serve the foreign defendants. Rather, she asserts that she misunderstood the service rеquirements. Having appealed the November Order, she claims she assumed that she would not need to serve the non-OBS defendants until she received a decision from this Court concerning the viability of her claims vis-à-vis OBS.
We find no abuse of discretion in the district court‘s decision to dismiss Harris‘s claims against the foreign defendants for failing to exercise diligence in attempting service. The fact that Harris may have erred in good faith does not immunize her claims from dismissal. The district court operated well within its discretion in rejecting her explanation. To avoid dismissal for lack of diligencе, a plaintiff must demonstrate “at least as much as would be required to show excusable neglect, as to which simple inadvertence or mistake of counsel or ignorance of the rules usually does not suffice.” Lambert v. United States, 44 F.3d 296, 299 (5th Cir.1995) (quoting Winters v. Teledyne Movible Offshore, Inc., 776 F.2d 1304, 1306 (5th Cir. 1985)) (emphasis omitted); see also Lepone-Dempsey, 476 F.3d at 1282 (“While the plaintiffs might have had good reason to think that they could rely on [the agent for service‘s] assertion that he would sign and return the waiver forms, the plaintiffs were responsible for formally serving the defendants when the waiver forms were not returned.“).
Furthermore, Harris‘s alleged mistake does little to excuse her lack of diligence. The only explanation shе advances for her delay in serving the non-OBS defendants is that she was waiting for this Court to resolve her appeal from the November Order. But nothing excuses her puzzling failure to make any attempt to serve the non-OBS defendants prior to her receipt of the November Order. Harris filed her initial complaint in the Northern District of Georgia on March 4, 2014; the district court issued a preliminary order dismissing her claims against OBS on November 26, 2014.7 More than twice the number of days allowed by Rule 4(m), 268 days, elapsed before the district court entered the November Order. During this time, Harris failed to serve а single one of the eight non-OBS defendants. Indeed, it does not appear from the record that she made any attempt whatsoever to do so. In the absence of any excuse for this failure, it was well within the district court‘s discretion to determine that she failed to prosecute her action.
V. CONCLUSION
The district court did not err in dismissing Harris‘s federal and Georgia RICO and GTSA claims for lack of standing, nor did it err in dismissing her common law fraud claims for failure to state a claim. Further, as to the non-OBS defendants, the district court did not abuse its discretion in dismissing Harris‘s claims for failure to effectuate service of process.
AFFIRMED.