Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 1 of 36

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1 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 1 of 36 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEORGIA AUGUSTA DIVISION RESOLUTE FOREST PRODUCTS, INC., RESOLUTE FP US, INC., RESOLUTE FP AUGUSTA, LLC, FIBREK GENERAL PARTNERSHIP, FIBREK U.S., INC., FIBREK INTERNATIONAL, INC., and RESOLUTE FP CANADA, INC. v. Plaintiffs, GREENPEACE INTERNATIONAL (aka GREENPEACE STICHTING COUNCIL, GREENPEACE, INC., GREENPEACE FUND, INC., FORESTETHICS, DANIEL BRINDIS, AMY MOAS, MATTHEW DAGGETT, ROLF SKAR, TODD PAGLIA, and JOHN AND JANE DOES 1-20, Defendants. CIVIL ACTION FILE NO. 1:16-cv-0071-JRH-BKE MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS OF DEFENDANTS STAND AND PAGLIA FOR FAILURE TO STATE A CLAIM COME NOW Defendants Stand, formerly known as ForestEthics ( Stand, and Todd Paglia ( Mr. Paglia, and submit this memorandum of law in support of their motion to dismiss Plaintiffs complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b(6 of the Federal Rules of Civil Procedure. INTRODUCTION This is the archetypal strategic lawsuit against public participation -- commonly known as a SLAPP action. The complaint is a massive, yet insufficiently pleaded, document asserting claims against nine named defendants and twenty unnamed defendants in an effort to prevent them

2 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 2 of 36 from exercising their right of free speech in the marketplace of public ideas. Mr. Paglia and Stand have been critical of Plaintiffs destructive logging practices. But rather than making a genuine effort to work with Mr. Paglia, Stand, and other environmental advocacy groups to reform its practices, Plaintiffs filed this action in an effort to silence legitimate criticism of their operations. Despite its remarkable girth, a review of the complaint reveals it as a classic shotgun pleading that, in the end, says very little of legal significance. It begins by scattering vague and disparate factual allegations over 200 separate paragraphs that span nearly 100 pages. It then lodges 11 separate legal counts asserted collectively by all seven Plaintiffs against almost 30 named and unnamed Defendants in only a little over 30 pages. The legal counts sketch out, in rote and formulaic fashion, the basic elements of the causes of action with essentially no effort to connect the preceding 100 pages of factual assertions to the legal elements of the asserted theories of recovery, or to any individual Plaintiff or any individual Defendant in particular. Thus, the staggering length of the complaint appears to be nothing more than an attempt to conceal the inadequacy of the specific factual allegations directed at specific defendants such as Mr. Paglia and Stand. For example, of the 267 statements Plaintiffs specifically reference in the complaint, only 11 were alleged to have been made by Mr. Paglia or Stand. And of those 11 statements, only one was made within Georgia s one-year limitations period for defamation claims. Moreover, all 11 statements appear to be intended to apply to every claim that all seven Plaintiffs collectively assert in their complaint, ranging from federal RICO to defamation and tortious interference to trademark infringement. And yet Plaintiffs make no effort to explain how any of the statements allegedly made by any of the Defendants actually supports the various claims they are asserting. -2-

3 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 3 of 36 Not only do Plaintiffs fail to explain how the same statements can support both federal RICO and Georgia defamation claims, but Plaintiffs also fail to allege how Mr. Paglia s and Stand s cameo appearances in the complaint give rise to the claims of liability that Plaintiffs have asserted against them. Indeed, the complaint lumps all of the Defendants together in an indiscriminate and nebulous manner, nearly always alleging that all of the Defendants engaged in all of the same allegedly-illegal conduct. Plaintiffs fail to make any effort to link the tiny number of times that they make specific allegations about Mr. Paglia or Stand in the body of the complaint with the broadly-alleged causes of action at the end of the complaint. Moreover, despite the heightened pleading standard that attends almost all of Plaintiffs claims, the complaint conspicuously eschews any attempt to divulge the basic who, what, when and where of the illegal conduct alleged against any Defendant, thus preventing Mr. Paglia and Stand from discerning precisely what each of them is accused of doing wrong. The inclusion of Mr. Paglia and Stand, therefore, appears to be nothing more than an afterthought, and a poorly-executed one at that. Plaintiff s effort is contrary to law and is made in a complaint that, on its face, fails to state a legal claim. ARGUMENT AND CITATION OF AUTHORITIES For purposes of a motion to dismiss for failure to state a claim, the Court is required to accept as true the well-pleaded factual allegations of the complaint. See Spivey v. American Cas. Co., 128 F. Supp. 3d 1281, 1283 (S.D. Ga Accordingly, although Mr. Paglia and Stand intend to dispute almost all of Plaintiffs outlandish factual assertions if the complaint is not dismissed, for purposes of this motion Mr. Paglia and Stand will not undertake to refute the allegations against them. Here, even if the well-pleaded allegations are assumed, arguendo, to be -3-

4 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 4 of 36 true, they nevertheless fail to support any of the causes of action asserted in the complaint. Therefore, the complaint should be dismissed. See id. at A. Plaintiffs vague and formulaic assertions are facially inadequate. It is well settled that plaintiffs have an obligation to provide the grounds for [their] entitlement to relief, which requires more than labels and conclusions.... [A] formulaic recitation of a cause of action s elements will not do. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007 (internal quotation marks and punctuation omitted. To avoid dismissal, Plaintiffs claims must be more than merely conceivable, and must allege enough facts to state a claim to relief that is plausible on its face. Id. at 570. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009. To state a claim properly, Plaintiffs must allege a factual basis for each element of each claim they assert, setting forth enough factual matter (taken as true to suggest [each] required element. Watts v. Fla. Int l Univ., 495 F.3d 1289, 1295 (11th Cir The Eleventh Circuit has condemned shotgun pleadings [such as the one at bar] upwards of fifty times. Davis v. Coca-Cola Bottling Co., 516 F.3d 955, n.54 (11th Cir (citing cases, abrogated on other grounds by Iqbal, 556 U.S Thus, in Beckwith v. Bellsouth Telecommunications, Inc., 146 F. App x 368 (11th Cir. 2005, the Eleventh Circuit dismissed as a facially-deficient scattershot pleading a complaint that named multiple defendants but failed to specify which of the allegations and claims related to which defendants. Id. at 372. Likewise, Plaintiffs complaint impermissibly lumps all of the defendants together, alleging that all of them did nearly everything about which all of the Plaintiffs collectively complain. A complaint is also rendered an improper shotgun pleading when each count incorporates by reference the allegations made prior to each count, resulting in a complaint with -4-

5 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 5 of 36 counts that are replete with factual allegations that could not possibly be material to that specific count, and... any allegations that are material are buried beneath innumerable pages of rambling irrelevancies. Magluta v. Samples, 256 F.3d 1282, 1284 (11th Cir This type of pleading completely disregards Rule 10(b s requirement that discrete claims should be [pleaded] in separate counts, and is the type of complaint that [the Eleventh Circuit has] criticized time and again. Id. (citations omitted. In the complaint, seven separate Plaintiffs name nine separate Defendants plus an additional twenty unidentified John and Jane Does. Those named and unnamed Defendants are then lumped together with additional unidentified parties under the label of the Greenpeace Enterprise. (Compl., 41. Throughout the complaint, Plaintiffs allege that the entirety of that Greenpeace Enterprise made false statements, often even providing supposedly-direct quotes of the allegedly-false statements, but without bothering to reveal who specifically uttered or wrote the false statements, to whom they were made, or when or how they were made. (See, e.g., id. 71, 74-76, 84-85, 88 n.1, 100 n.2, Plaintiffs generate further confusion -- perhaps intentionally -- by labeling as the Greenpeace Defendants a different group of organizations and individuals that does not include Mr. Paglia and Stand, (see Compl. at p. 1, and by then alleging that the Greenpeace Defendants supposedly made other statements. (See, e.g., id., 71, 91, 101. Then, to enhance the confusion further, Plaintiffs sometimes allege that Greenpeace -- a separate and wholly-undefined term -- committed other purportedly bad acts. (See, e.g., id., 106 n.3, , 226. Plaintiffs then assert their legal causes of action as though all of the Defendants performed every action supporting each one of the seven separate Plaintiffs claims. (See, e.g., id. at 222, 239, 250, 258, 274, 280, 291, 300, 306, 311, 318. Thus, in summary, Plaintiffs have haphazardly and impermissibly intertwined all of the Defendants together in the -5-

6 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 6 of 36 allegations contained in the scattershot complaint, forcing Mr. Paglia and Stand to guess at what conduct Plaintiffs actually attribute to each of them. For this reason alone, Plaintiffs complaint fails the teachings of Iqbal and Twombly and must be dismissed. Plaintiffs also improperly incorporate by reference into each count all of their preceding factual allegations, whether or not relevant to that count or to each named Defendant. (See id., 218, 237, 245, 254, 271, 279, 288, 297, 305, 310, 317. Because Plaintiffs do not allege which facts in the first 100 pages of their complaint support which of the causes of action that are thinly outlined in the last 30 pages of the complaint as against each Defendant, it is impossible for each Defendant to know which facts support which causes of action against them. Mr. Paglia and Stand should not be forced to speculate about which factual allegations Plaintiffs will use to support their various claims against them. But Plaintiffs complaint forces them to do just that. For this additional reason, Plaintiffs complaint should be dismissed. In addition to these global pleading deficiencies, each asserted cause of action is itself infected with its own fatal defects. Those defects are explained further below and each of them warrants dismissal of certain counts of the Complaint. B. Plaintiffs have failed to state a federal RICO cause of action in Counts I, II, and III of their complaint. 1. Plaintiffs RICO claims are insufficiently pleaded to state a claim against Mr. Paglia and Stand. The general pleading deficiencies described above are even more acute when considered in the context of Plaintiffs RICO claims. Civil RICO claims, which are essentially a certain breed of fraud claims, must be pled with an increased level of specificity. Ambrosia Coal & Constr. Co. v. Morales, 482 F.3d 1309, 1316 (11th Cir. 2007; accord Club Car, Inc. v. Club Car (Quebec Import, Inc., 276 F. Supp. 2d 1276, 1283 (S.D. Ga ( [I]t is imperative that the -6-

7 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 7 of 36 court and the defendant be placed on clear notice as to what is being alleged [in a RICO complaint], and what the substance of the [RICO] claim is, in order to facilitate a decision on the merits of the case.. This means that the plaintiff must plead the who, what, when, where, and how of its claims. Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1237 (11th Cir The complaint must set forth (1 precisely what statements were made in what documents or oral representations or what omissions were made, and (2 the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making same, and (3 the content of such statements and the manner in which they misled the plaintiff, and (4 what the defendants obtained as a consequence of the fraud. Tello v. Dean Witter Reynolds, Inc., 494 F.3d 956, 972 (11th Cir Additionally, [i]n a case involving multiple defendants... the complaint should inform each defendant of the nature of his alleged participation in the fraud. Ambrosia, 482 F.3d at When a complaint lumps the defendants together, alleging that each of them committed the bad acts underlying the plaintiffs claims without explaining what each defendant allegedly did wrong, the complaint should be dismissed. Brooks v. Blue Cross & Blue Shield of Florida, Inc., 116 F.3d 1364, (11th Cir In recognition of the heightened pleading standard for RICO claims, this Court has adopted a local rule requiring RICO plaintiffs specifically and separately to identify each violation and to complete a Civil RICO Case Statement responding to a series of specific questions contained in the form. See LR 9.1. Plaintiffs utterly failed to comply with Rule 9.1. Instead of providing additional Court-mandated details to support the RICO claims outlined in their complaint and instead of specifying which Defendants committed which acts, Plaintiffs merely paraphrase (or sometimes even parrot verbatim the inadequate allegations in their complaint. For example, Question 2 requires that Plaintiffs [l]ist each defendant and state the alleged misconduct and basis of liability of each defendant. Id. (emphasis added. In response, after listing all of the Defendants in a single sentence, Plaintiffs simply allege that each of the Defendants were responsible for an extensive laundry list of allegedly-illegal conduct. Plaintiffs make no effort to state which Defendants committed which acts. Rather, just as they did in the complaint, they merely assert that every Defendant committed every act. This plain failure to comply with Rule -7-

8 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 8 of 36 Despite its considerable length, Plaintiffs complaint fails to provide specific factual allegations to support its federal RICO counts (or any of the other counts, for that matter. It simply alleges that all of the Defendants lumped together without specific identification were associated in an enterprise, and then conducted the affairs of (or invested money in that enterprise through a pattern of mail fraud, wire fraud, extortion, illegal interference with commerce, and money laundering. (Compl., , , For example, the complaint alleges that Defendants without specifying which ones submitt[ed] materially false and misleading tax submissions and financial information. (Id., 224. But it fails to allege who made the submissions, what was false about the submissions, or even to whom and when those submissions were made. The complaint also alleges that the Greenpeace Enterprise, a defined term that includes all of the named Defendants in addition to unidentified non-parties, used extortive threats against Plaintiffs customers. But it conspicuously fails to allege which Defendants made those supposed threats, which customers were threatened, how those threats were communicated, or what was said. (Id., 229. The complaint also asserts that the Greenpeace Enterprise... misappropriate[d] proprietary customer, sourcing and other trade secret information under false pretenses from Resolute. (Id., 230. Again, however, Plaintiffs fail to identify who engaged in the alleged misappropriation, what proprietary information was taken, or what false pretenses were used. Similar examples are repeated dozens of times throughout the complaint warrants dismissal of the complaint and serves to highlight the fundamental defects in Plaintiffs RICO claims. (Doc. No. 3, pp Additional examples of Plaintiffs failure to plead the elements of their RICO claim include a failure to explain how Mr. Paglia or Stand could have possibly engaged in witness tampering, in violation of 18 U.S.C (see Compl., 223. Perhaps this is a reference to events relating to Plaintiffs long-pending Canadian dispute with certain of the Greenpeace defendants, in which Mr. Paglia and Stand have had no involvement. But it is impossible to know given Plaintiffs failure to provide the required specificity for their claims. -8-

9 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 9 of 36 Plaintiffs also fail to state which of them was damaged by each of the alleged predicates, and how each of them was damaged. This omission, along with Plaintiffs failure to segregate the claims and damages of each Plaintiff, appears to be an effort to avoid explaining how Plaintiffs, as Canadian entities or entities owned by Canadian entities (see Compl., 24, have suffered an injury in the United States. See RJR Nabisco, Inc. v. European Community, U.S., 136 S. Ct. 2090, 2111 (2016 ( Section 1964(c [of the federal RICO statute] requires a civil RICO plaintiff to allege and prove a domestic injury to business or property and does not allow recovery for foreign injuries.. Additionally, because Plaintiffs fail to link the allegations they make in the first nearly 100 pages of their complaint to their substantive RICO counts, it is impossible for Mr. Paglia and Stand to identify specific defenses against those claims. For example, Plaintiffs allege that Stand initiated an attack against one of Plaintiffs customers in (Compl., 165. Civil RICO claims are, of course, subject to a 4-year statute of limitations. See Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156 (1987. Accordingly, if Plaintiffs are asserting that this alleged attack supports their RICO claims, then it is plainly time-barred. But Plaintiffs do not disclose whether this attack, or any of the others alleged in the complaint, form the basis for the RICO claims. Thus, Mr. Paglia and Stand cannot fully and fairly examine whether this and other claims are barred by the applicable statute of limitations. Indeed, the Court should be particularly suspicious of and give particular scrutiny to Plaintiffs RICO claims that are based on supposedly-defamatory statements that harmed their reputation. Courts are universally hostile to attempts to spin an alleged scheme to harm [the plaintiff s] reputation into a viable RICO claim because it is firmly established that defamation and many other similar allegations do not provide the requisite predicate for RICO violations. -9-

10 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 10 of 36 Kimberlin v. National Bloggers Club, No. GJH , 2015 WL , at *9 (March 17, 2015 D. Md. (citations omitted (collecting cases. In short, Plaintiffs have failed to allege how each Defendant, including Mr. Paglia and Stand, violated each relevant provision the federal RICO statute, and how each Plaintiff was damaged. Given the repetition and consistency of these failures, they could hardly be unintentional. Rather, Plaintiffs intentionally pleaded their claims in a manner that attempts to conceal their lack of factual support and that impedes Defendants ability to defend them. Because Plaintiffs have failed to allege their RICO claims with sufficient particularity, the Court should dismiss each of those counts for failure to state a claim. See Ambrosia, 482 F.3d at (affirming the district court s dismissal of the plaintiffs RICO complaint for failure to state a claim; see also LR 9.1 (requiring the dismissal of a complaint that does not specifically state each alleged violation of the federal RICO statute. 2. Plaintiffs RICO claims should be closely scrutinized because they are the only basis for personal jurisdiction over Mr. Paglia and Stand. The Court should also closely scrutinize the sufficiency of Plaintiffs RICO claims because, at least as to Mr. Paglia and Stand, they form the only colorable basis for the assertion of personal jurisdiction over them in this district. Indeed, the pleading defects in these claims is so stark that it appears they must have been asserted solely to attempt to manufacture a basis for jurisdiction where none would otherwise exist. Without the RICO claims, this Court clearly lacks personal jurisdiction over Mr. Paglia and Stand. The federal RICO statute allows courts to exercise personal jurisdiction over defendants that would not normally be subject to jurisdiction under a traditional analysis of minimum contacts with the forum state. The federal RICO statute contains a provision permitting nationwide service of process. See 18 U.S.C. 1965(d. The Eleventh Circuit has construed that provision to allow -10-

11 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 11 of 36 every district court in the country to exercise personal jurisdiction over any defendant who has sufficient minimum contacts with the United States as a whole regardless of that defendant s lack of contacts with the state where the district court sits, based on a due process analysis under the Fifth Amendment, as opposed to the traditional personal jurisdiction analysis under the Fourteenth Amendment. See Republic of Panama v. BCCI Holdings (Luxembourg S.A., 119 F.3d 935, (11th Cir Under that Fifth Amendment due process analysis, Mr. Paglia and Stand, as U.S. residents and citizens, arguably have sufficient contact with the United States to be subject to personal jurisdiction. But had Plaintiffs had not sued Mr. Paglia and Stand under the federal RICO statute, they would clearly be unable to establish personal jurisdiction over them in this Court. All of Plaintiffs remaining claims are based on state law. Thus, jurisdiction for those claims would have to be based upon Georgia s long-arm statute and also satisfy the due process requirements of the Fourteenth Amendment. See Diamond Crystal Brands, Inc. v. Food Movers Int l, Inc., 593 F.3d 1249, 1257 (11th Cir Georgia s long-arm statute does not provide a basis for personal jurisdiction over Mr. Paglia and Stand in this case. 3 Mr. Paglia and Stand do not transact business in Georgia, they have 3 Georgia s long-arm statute limits personal jurisdiction over nonresidents to specificallydelineated and circumscribed circumstances: A court of this state may exercise personal jurisdiction over any nonresident... as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he or she were a resident of this state, if in person or through an agent, he or she: (1 Transacts any business within this state; (2 Commits a tortious act or omission within this state, except as to a cause of action for defamation of character arising from the act; (3 Commits a tortious injury in this state caused by an act or omission outside this state if the tortfeasor regularly does or solicits business, or engages in any other -11-

12 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 12 of 36 not committed a tortious act or omission within Georgia, they do not own any real property in Georgia, and they do not regularly do business, engage in any persistent course of conduct, or derive substantial revenue from services rendered in Georgia. (See Declaration of Todd Paglia, filed contemporaneously with this Motion, [ Paglia Dec. ] at 7-15, Although Mr. Paglia had two telephone conversations with an individual who is probably a Georgia resident regarding Plaintiffs, those phone calls do not form the basis of Plaintiffs claims against Mr. Paglia or Stand. (Id., 8. But even if they did, Georgia courts have ruled that when a defendant uses the telephone or to contact a Georgia resident defendant's conduct occurs at the place where defendant speaks into the telephone or types and sends his . LABMD, Inc. v. Tiversa, Inc., 509 F. App x 842, 844 (11th Cir (citations omitted. Accordingly, Georgia s long-arm statute does not provide grounds for personal jurisdiction over Mr. Paglia and Stand. Likewise, Mr. Paglia and Stand do not have sufficient minimum contacts with Georgia to satisfy the due process requirements of the Fourteenth Amendment, which require that Mr. Paglia and Stand could have reasonably anticipated being haled into court in Georgia. See Diamond Crystal Brands, 593 F.3d at Stand s operations are not directed at Georgia. In 2015, only 0.52% of Stand s individual donors lived in Georgia, and only 0.28% of Stand s total donations received came from Georgia. (Paglia Dec., 6, 7. Mr. Paglia s and Stand s insignificant contacts with Georgia have nothing to do with Plaintiffs claims against them. Thus, the Fourteenth Amendment s due process requirements are not satisfied here. See Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220 (11th Cir (requiring that the defendant s persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state; [or] (4 Owns, uses, or possesses any real property situated within this state;.... O.C.G.A

13 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 13 of 36 contacts with the forum... relate to the plaintiff s cause of action or [gave] rise to it in order for a court in that forum to exercise personal jurisdiction over the defendant. When a plaintiff fails to state a colorable claim under the RICO statute, it cannot use that statute s jurisdictional provision to obtain personal jurisdiction over the defendants. See Courboin v. Scott, 596 Fed. App x 729, 732 (11th Cir (affirming the dismissal of the plaintiff s complaint because the plaintiff had not alleged a viable RICO claim, and thus, the plaintiff could not use the RICO statute s nationwide service of process provision to assert personal jurisdiction over the defendants. Accordingly, because Plaintiffs have failed to state a federal RICO claim, Plaintiffs have also failed to establish personal jurisdiction over Mr. Paglia and Stand. For these reasons, Court should thus give particular scrutiny to Plaintiffs attempt to manufacture personal jurisdiction over Mr. Paglia and Stand through its half-baked federal RICO claims. If that claim is dismissed, then the remaining claims against Mr. Paglia and Stand must be dismissed pursuant to Rule 12(b(2 of the Federal Rules of Civil Procedure. 3. Plaintiffs have failed to plead the necessary elements of their federal RICO claims. Plaintiffs allege that Mr. Paglia and Stand, together with numerous unidentified individuals and Greenpeace entities, are a part of a criminal enterprise that engages in racketeering activity. Specifically, Plaintiffs assert that the entire enterprise has used the U.S. mail and wires to spread misrepresentations about Plaintiffs in an effort to induce donations from unnamed private citizens who are not parties to this case. Plaintiffs also assert (but even less specifically that the enterprise used allegedly false information to convince Plaintiffs customers either to stop using Plaintiffs as suppliers or to require that Plaintiffs change their environmentally harmful behavior. Without pausing to specify how, Plaintiffs simply conclude that these activities constitute mail fraud, wire -13-

14 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 14 of 36 fraud, extortion, and money laundering, 4 and that they form a pattern of racketeering activity that has harmed Plaintiffs. These reckless assertions not only lack a factual basis, but even if true, they would not support a federal RICO claim. The federal RICO statute makes it illegal to conduct, participate in, or invest in a criminal enterprise that engages in a pattern of racketeering activity. See 18 U.S.C. 1962(a, (c. It is also illegal to conspire to do any of those things. See 18 U.S.C. 1962(d. Plaintiffs three federal RICO counts are based on alleged violations of subsections (a, (c, and (d of 1962 of the RICO statute: Count I is based on 1962(c, making it illegal to conduct a RICO enterprise; Count II is based on 1962(a, making it illegal to obtain money from racketeering activity and then to invest that money in a RICO enterprise; and Count III is based on 1962(d, making it illegal to conspire to violate the RICO statute. To show a violation of 1962(c, a plaintiff must allege that a defendant (1 conduct[ed] (2... an enterprise (3 through a pattern (4 of racketeering activity. Rock v. BAE Sys., Inc., 556 Fed. App x 869, 872 (11th Cir To establish a violation of 1962(a, the plaintiff must allege that each defendant (1 receiv[ed] income from a pattern of racketeering activity, and (2 invest[ed] that income in an enterprise. Club Car, Inc. v. Club Car (Quebec Import, Inc., 276 F. Supp. 2d 1276, 1288 (S.D. Ga The RICO statute defines the term enterprise to be either a formal association of entities or any union or group of individuals [or entities] associated in fact. 18 U.S.C. 1961(4. A pattern of racketeering activity means at least two acts of racketeering activity occurring within ten years. 18 U.S.C. 1961(5. The RICO statute lists dozens of acts that constitute racketeering activity (generally referred to as predicate acts. 4 And possibly (but certainly not clearly even witness tampering. (See Compl., 223 [citing without explanation 18 U.S.C as an unspecified other crime and predicate RICO act[] ]. -14-

15 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 15 of 36 That list includes mail fraud, wire fraud, extortion, and most of the other predicate RICO acts that Plaintiffs allege in their complaint. 5 See 18 U.S.C. 1961(1. Finally, to have standing to bring a civil RICO claim, a plaintiff must show that the alleged RICO violation proximately caused injury to its business or property. See 18 U.S.C. 1964(c; Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268 (1992. As explained further below, Plaintiffs RICO claims do not suffer from a lack of chutzpah. But they do suffer from a variety of fatal defects that require their dismissal, including most prominently a lack of proximate cause and standing, and the absence of a RICO enterprise. a. Plaintiffs lack standing because the damages allege were not proximately caused by the purported violations. To assert a viable RICO claim, a plaintiff must allege sufficient facts to establish that its claimed damages were proximately caused by the violations alleged. See Rock v. BAE Sys., Inc., 556 Fed. App x 869, (11th Cir (affirming dismissal of plaintiff s RICO complaint because plaintiff had not sufficiently pleaded proximate cause. The Eleventh Circuit has instructed district courts to scrutinize proximate causation at the pleading stage and carefully evaluate whether the injury pled was proximately caused by the claimed RICO violations. Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1287 (11th Cir This is because the proximate cause requirement has a restrictive significance and helps to assure that RICO is not expanded to provide a federal cause of action and treble damages to every tort plaintiff. 5 Plaintiffs nebulously allege the same predicate acts for each federal RICO count in their complaint: mail fraud under 18 U.S.C. 1341; wire fraud under 18 U.S.C. 1343; extortion and unspecified other crimes under 18 U.S.C , 880 and 18 U.S.C [regarding witness tampering]; illegal interference with commerce under 18 U.S.C. 1951; illegal money transactions (i.e., money laundering under 18 U.S.C. 1957; and corresponding Georgia statutes criminalizing the same conduct. (Compl., 223, 240, 247. The RICO statute s enumerated list of predicate acts does not include violations of 18 U.S.C , 880 as asserted by Plaintiffs. See 18 U.S.C. 1961(

16 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 16 of 36 Ironworkers Local Union 68 v. AstraZeneca Pharm, LP, 634 F.3d 1352, 1361 (11th Cir In recognition of those requirements, it is well settled that RICO plaintiffs do not sufficiently plead proximate cause merely by tacking a conclusory allegation onto their assertions that their injuries were caused by RICO violations. Simpson v. Sanderson Farms, Inc., 744 F.3d 702, 713 (11th Cir Yet, that is precisely what Plaintiffs did here. When a court evaluates a RICO claim for proximate causation, the central question it must ask is whether the alleged violation led directly to the plaintiff s injuries. Anza v. Ideal Steel Supply Corp., 547 U.S. 451, (2007. [O]ne or more of the predicate acts must not only be the but for cause of the injury, but the proximate cause as well. Green Leaf Nursery v. E.I. DuPont De Numours & Co, 341 F.3d 1292, 1307 (11th Cir A violation of the RICO statute is a proximate cause of the plaintiffs injury only if it is a substantial factor in the sequence of responsible causation. Rock, 556 Fed. App x at 872. The Supreme Court has articulated three reasons why proximate cause is such an important element in the analysis of the pleading sufficiency of a RICO claim: First, the less direct an injury is, the more difficult it becomes to ascertain the amount of a plaintiff s damages attributable to the violation, as distinct from other, independent, factors. Second, quite apart from problems of proving factual causation, recognizing claims of the indirectly injured would force courts to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, to obviate the risk of multiple recoveries. And, finally, the need to grapple with these problems is simply unjustified by the general interest in deterring injurious conduct, since directly injured victims can generally be counted on to vindicate the law as private attorneys general, without any of the problems attendant upon suits by plaintiffs injured more remotely. Holmes v. Securities Investor Prot. Corp., 503 U.S. 258, (1992 (citations omitted. The Eleventh Circuit has distilled the factors articulated by the Holmes Court into the following three considerations: (1 the directness of the injury, (2 the difficulty of apportioning damages among potential victims, and (3 whether there are direct victims of the alleged violation that could better -16-

17 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 17 of 36 vindicate the policies underlying the RICO statute. See Southeast Laborers Health & Welfare Fund v. Bayer Corp., 444 Fed. App x 401, (11th Cir Plaintiffs were not proximately injured by the RICO violations they have alleged for at least two distinct, but related, reasons. First, Plaintiffs cannot plausibly allege that the only reason that Stand received donations was its alleged misrepresentations about Plaintiffs. As Plaintiffs admit in the complaint, the Defendants pursue advocacy campaigns for many different causes, including nuclear waste, climate change, disappearing ice shelves, harmful commercial fishing tactics, and endangered animal species. (Compl., 52-53, 57, 59, Plaintiffs likewise admit that Stand engages in many campaigns other than the one directed at Resolute. (Id., 41(m. If, as Plaintiffs concede, Stand receives donations for many different reasons, and engages in many different campaigns, then the donations allegedly funding the supposed RICO enterprise are not proximately caused by any of the alleged misrepresentations or other predicate acts. Therefore, the donations Stand receives and uses to pay expenses are not attributable to the [alleged RICO violations], as distinct from other, independent, factors. Holmes, 503 U.S. at 269. Additionally, it would be impossible for the Court to require Stand to disgorge[] its allegedly illicit proceeds attributable only to donations caused by the statements that are the subject of Plaintiffs claims. (See Compl., 236, 244, 253. Stand s donors presumably were motivated by any number of advocacy campaigns and other factors, very few of which relate specifically to Plaintiffs. As the Supreme Court has stated, the difficulty in adopt[ing] complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts militates against a finding of proximate cause. Holmes, 503 U.S. at 269. Second, Plaintiffs are not the victims of the allege scheme; rather the donors are. Assuming, arguendo, that Plaintiffs RICO claims have factual merit, then Mr. Paglia and Stand -17-

18 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 18 of 36 face the risk of multiple recoveries against them for the same alleged violations. Stand s donors are the directly injured victims of the RICO violations asserted by Plaintiffs because the donors are the ones who acted in reliance upon the misrepresentations alleged, and it is those donors who can generally be counted on to vindicate the law as private attorneys general, if what Plaintiffs allege is true. See Holmes, 503 U.S. at Plaintiffs have no standing to vindicate harm to Stand s donors. In Kimberlin v. National Bloggers Club, No. GJH , 2015 WL , at *13 (March 17, 2015 D. Md., the District of Maryland found a lack of proximate cause in a case with facts that are strikingly similar to those at bar. The plaintiff in Kimberlin alleged that the defendants had formed a criminal enterprise to spread false and defamatory information about him to raise money from people who believed and supported the [defendants ] false narrative. Id. at *1. The court found that the plaintiff had failed to establish proximate cause, explaining that the direct victims of the mail fraud, wire fraud, and money laundering are the individuals who were induced into making donations. If [the plaintiff s] allegations are true, these individuals may pursue their own remedies under the law. Id. at *13. Accordingly, the court dismissed the plaintiff s RICO claims. Plaintiffs are likewise seeking to recover damages for alleged predicate acts that were directed at third parties. Plaintiffs claimed harm was not proximately caused by the alleged racketeering activity. The complaint likewise fails to explain how Plaintiffs were proximately harmed by the other predicate acts they allege, like extortion and money laundering. Nor have Plaintiffs explained how they were proximately injured by Defendants alleged investment in a RICO enterprise under 18 U.S.C. 1962(a. In short, Plaintiffs have failed to plead an injury proximately caused by their RICO claims. Thus, those claims must be dismissed. -18-

19 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 19 of 36 b. Plaintiffs have not alleged a RICO enterprise. The existence of a criminal enterprise is a central element of a RICO claim ; therefore, it must be pled with specificity. Almanza v. United Airlines, Inc., No. CV , 2016 WL , at *8 (S.D. Ga. February 19, 2016, appeal filed. The RICO statute defines an enterprise to include individuals and entities that are associated in fact. 18 U.S.C. 1961(4. The Supreme Court has explained that an association-in-fact RICO enterprise, such as the one alleged here, must be made up of a group of individuals or entities that are associated for a common purpose and function as a continuing unit. Boyle v. United States, 556 U.S. 938, (2009. Plaintiff s enterprise allegations fail for two distinct reasons. i. Plaintiffs have not alleged how Mr. Paglia or Stand participated in the purported enterprise. The first flaw in Plaintiffs RICO enterprise allegations is that they fail to establish how Mr. Paglia or Stand actually conducted or participated in the purported enterprise. Plaintiffs merely allege that Mr. Paglia and Stand engaged in conduct similar to the other Defendants. Allegations that entities engaged in collective or parallel conduct, by themselves, do not plausibly establish a RICO enterprise. American Dental Ass n v. Cigna Corp., 605 F.3d 1283, (11th Cir (affirming the district court s dismissal of the plaintiffs RICO claims because the plaintiffs had failed to allege anything more than parallel conduct by the defendants. Here, Plaintiffs merely allege in conclusory fashion that Mr. Paglia and Stand, along with the other named and unnamed defendants as well as unknown nonparties, constitute an enterprise of associated-in-fact persons and entities. But they fail to allege how that enterprise actually works. (Compl., 41. Instead, they merely insist vaguely that Stand has strong ties to Greenpeace, that Stand and Greenpeace are close all[ies], and that they collaborat[e] on campaigns together. (Compl., 41(m. But Plaintiffs do not allege or explain the formation of -19-

20 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 20 of 36 an actual agreement between Stand and any of the other Defendants to engage in a pattern of racketeering activity. Although Plaintiffs conclude that Mr. Paglia is the Executive Director of Stand and was responsible for Stand s role and participation in the Greenpeace Enterprise s campaign directed at Resolute, they fail to allege what Mr. Paglia actually did to conduct the alleged enterprise. (Id., 41(n. They also claim nebulously that Stand follow[s] Greenpeace s blueprint in conducting its own advocacy campaigns, but they fail to assert that Stand and Greenpeace actually agreed on a common blueprint. (Id., 41(m. Plaintiffs also assert that Stand worked closely with two Greenpeace entities in both the dissemination of disinformation and the subsequent aggressive attacks on Resolute s customers. (Id., 48. But Plaintiffs do not explain how Stand coordinated with those two entities (or with any of the other defendants in the alleged enterprise. Nor do they explain the supposed role of Stand or Mr. Paglia in the supposed enterprise, other than to claim that Stand and Mr. Paglia like the other Defendants induced donations to themselves by making misrepresentations about Plaintiffs. These allegations are plainly insufficient to establish a RICO enterprise. This Court s decision in Almanza is particularly instructive here. In that case, the plaintiffs sued several airlines alleging that the airlines had engaged in a criminal enterprise that wrongfully charged a tourism tax to exempt passengers, including the plaintiffs. Although the plaintiffs asserted that there was an agreement among the airlines to collect the improper tax, the plaintiffs did not provide sufficient specific allegations to establish that such an agreement existed. The Court expressly disregarded conclusory allegations that the defendants had reached an explicit or tacit agreement because, like the instant complaint, the plaintiffs had failed to provide any facts to support these assertions WL , at *9. The plaintiffs argued that they had sufficiently pleaded an enterprise by alleging that the defendants were all international airlines -20-

21 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 21 of 36 belonging to the same trade organization and that the defendants had all collected the tax in the same improper way. This Court rejected that argument because the plaintiffs had failed to offer any specifics as to where or when [an] agreement may have occurred, or the terms thereof. Id. In particular, the plaintiffs had alleged nothing in the Complaint as to who, what, when, where or any other flesh on those bones... to suggest that [the defendants] ever coordinated their activities. Id. Because it was equally possible that each Defendant independently determined that its own business interests supported charging the Tax indiscriminately, the Court held that the plaintiffs had failed to plead a RICO enterprise and dismissed the complaint. Id. at *10. Just like the plaintiffs in Almanza, Plaintiffs have not alleged any details of an agreement between Stand and Mr. Paglia, on the one hand, and any of the other members of the alleged Greenpeace Enterprise, on the other. Allegations that Stand and Mr. Paglia were allies with Greenpeace, or that they worked closely with some of the defendants, are patently insufficient to establish a RICO enterprise. Assuming, arguendo, the existence of the campaign imagined by Plaintiffs in the complaint, Mr. Paglia and Stand, like the defendants in Almanza, may have plausibly decided on their own, and independent of the various Greenpeace defendants, to engage in the campaign against Plaintiffs for no other reason that they believe in the campaign s goals. Thus, Plaintiffs have failed to plead the existence of a RICO enterprise because they have not alleged any facts to demonstrate that Stand or Mr. Paglia agreed or coordinated with the other members of the alleged enterprise. Plaintiffs have, in the words of the Almanza Court, failed to put any flesh on [the] bones of their conclusory allegations. As such, their complaint fails to state a cognizable RICO claim. Additionally, although a formal position in the enterprise may not be necessary, plaintiffs pursuing a RICO claim must allege at a minimum that the defendants had some part in directing -21-

22 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 22 of 36 the enterprise s affairs. Reves v. Ernst & Young, 507 U.S. 170, 185 (1993 (emphasis in original. Oher than bare allegations that Stand and Mr. Paglia participated in the Greenpeace Enterprise, Plaintiffs have not stated what Mr. Paglia and Stand did to direct the enterprise s affairs. Plaintiff s claims fail for this additional reason. ii. The Plaintiffs have not alleged how the alleged RICO enterprise is distinct from the pattern of acts Mr. Paglia and Stand purportedly committed. To establish an enterprise, the plaintiff must show[] that the defendants conducted or participated in the enterprise s affairs, not just their own affairs. Reves, 507 U.S. at 185 (emphasis in original. The enterprise is not the pattern of racketeering activity ; it is an entity separate and apart from the pattern of activity in which it engages. The existence of an enterprise at all times remains a separate element which must be proved. United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524, 2529, 69 L. Ed. 2d 246 (1981. Alleging that the defendants supposed predicate acts were a part of the defendants usual activities does not constitute sufficient allegations of a RICO enterprise, and RICO claims based on such allegations should be dismissed. See Super Vision Int l, Inc. v. Mega Int l Commercial Bank Co., 534 F. Supp. 2d 1326, (S.D. Fla (dismissing RICO claims against the defendant banks because the plaintiff had not alleged that the banks purported participation in the alleged enterprise was anything more than engaging in usual banking activities. Yet that is precisely what Plaintiffs have done here. Plaintiffs have not alleged an enterprise that is distinct from the pattern of predicate acts that they claim. Plaintiffs have alleged that Stand and Mr. Paglia made false statements about Plaintiffs to induce donations to Stand and thereby fund Stand s operations. (See Compl., 41(m, 41(n, 48. Plaintiffs have not alleged how those acts (i.e., Stand s and Mr. Paglia s purportedly false statements benefit the RICO enterprise, which is made up of the other -22-

23 Case 1:16-cv JRH-BKE Document 55-1 Filed 09/08/16 Page 23 of 36 defendants, each of whom is also alleged to have made false representations about Plaintiffs to induce donations to their own respective organizations. In other words, Plaintiffs have not alleged an enterprise that is distinct from the predicate acts themselves. Plaintiffs complaint impermissibly attempts to allege the existence of a RICO enterprise based on a pattern of allegedly bad acts that Mr. Paglia and Stand (and all of the other Defendants committed in the independent operations of their own respective organizations. Thus, Plaintiffs have not alleged the existence of a distinct criminal enterprise; they have merely alleged a pattern of parallel activity purportedly committed by all of the Defendants for the benefit of their own organizations and not for the benefit of the alleged enterprise itself. For this additional reason, Plaintiffs have failed to set forth sufficient allegations to support the existence of a RICO enterprise. B. The Court should decline to retain Plaintiffs remaining pendant state law claims. Plaintiffs allege that subject matter jurisdiction over their pendent state law claims is proper under 28 U.S.C (See Compl., 21. The Eleventh Circuit, however, encourage[s] district courts to dismiss any remaining state claims when, as here, the federal claims have been dismissed. Raney v. Allstate Ins. Co., 370 F.3d 1086, (11th Cir (affirming the district court s dismissal of the plaintiff s pendent state law claims after the district court found that the plaintiff had failed to state a federal RICO claim. Because Plaintiffs have failed to state cognizable federal RICO claims, there is no reason for the Court to continue to exercise jurisdiction over the Plaintiffs state law claims, particularly given that none of the Defendants have answered and issue has not yet been joined. Accordingly, those claims should be dismissed as well. But even if the Court were to consider those claims on their merits, they should also be dismissed for the reasons explained further below. -23-