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Cevdet Aksüt Oğullari Koll. Sti v. Cavusoglu

United States District Court, D. New Jersey

March 28, 2017

ROBIN A. CAVUSOGLU, et al, Defendants.


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiff Cevdet Aksüt Oğullari Koll. Sti (“Plaintiff”) brings this action against Huseyin 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 Plaintiff's 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 Plaintiff's previous customer. Museoglu recommended Cavusoglu as a business partner, representing that he was a “big player” in the Turkish-food-import business. Id. at ¶ 137. After Plaintiff had delivered most of its goods, Museoglu recanted his previous statements and admitted that he knew Cavusoglu to be dishonest and that he took unfair advantage of his suppliers. See id. at ¶ 157. In return for kickbacks from the sale of Plaintiff's goods, Museoglu conspired with Cavusoglu to induce Plaintiff to transact with the RICO enterprise by making false representations about Cavusoglu's personal integrity, intentions, market share, customer base and past acts. See id. at ¶¶ 158, 160. Finally, the record reflects that Plaintiff's invoices concerning some, but not necessarily all, of the shipped goods indicate “FOB.IZMIR.” See id., Ex. 15.

         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., 136 S.Ct. 2090 (2016), Plaintiff's RICO claims fail as a matter of law because Plaintiff cannot show that it suffered a “domestic injury” to its business or property. See Defs.' Mot. at 3. In applying a legal test adopted by the Southern District of New York, Sunrise asserts that any injury to Plaintiff occurred in Turkey because Plaintiff maintained no business operations in the United States and Plaintiff relinquished possession of its goods when it delivered them to a third-party shipper in Turkey. See id. at 10-12.

         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 Plaintiff's 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 Plaintiff's claim of damage to its judgment as property fails because it is a “downstream effect” of Plaintiff's initial injury. See id. at 12. Moreover, Plaintiff's judgment concerns only one transaction between Sunrise and Cavusoglu, which does not satisfy a pattern of racketeering as required by law, and Plaintiff's “lost-debt” theory of damages is not yet cognizable before the Court. See id. at 13-15. Dicker joins Sunrise's arguments in reply and further asserts that any RICO claim against him fails because he has had no relationship or involvement with any of the parties since 2007. See Letter, ECF No. 136. Sunrise notes, and Plaintiff does not contest, that the New Jersey RICO statute is nearly identical to the federal RICO statute. See Defs.' Mot. at 3 n.2. The Court, therefore, will consider both claims together.


         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., 416 F.3d 214, 220 (3d Cir. 2005). The court “must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.” Id. In deciding a motion for judgment on the pleadings, the court “considers only the complaint, any attached exhibits, documents relied upon in the complaint, matters of public record, and any indisputably authentic documents.” See Hlista v. Safeguard Props., LLC, 649 F. App'x 217, 218 n.2 (3d Cir. 2016) (quotation and citations omitted).


         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 ...

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