Joaquin v. Directv Group Holdings, Inc. et al

BRIEF in Support

D.N.J.August 21, 2018

4835-5043-1086.1 LEWIS BRISBOIS BISGAARD & SMITH LLP Attorneys for Defendants Lonstein Law Office, P.C., Wayne Lonstein and Julie Cohen Lonstein One Riverfront Plaza, Suite 800 Newark, New Jersey 07102 973-577-6260 ANGELA JOAQUIN, on behalf of herself and all others similarly situated, Plaintiff, v. LONSTEIN LAW OFFICES, P.C., a New York Professional Corporation; JULIE COHEN LONSTEIN; WAYNE LONSTEIN; SIGNAL AUDITING, INC. and STEVEN LEVINE, Defendants. : : : : : : : : : : : : : : : : : : : : UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Civil Action No. 15-8194 (MAS) (DEA) MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS LONSTEIN LAW OFFICE, P.C., WAYNE LONSTEIN AND JULIE COHEN LONSTEIN’S MOTION FOR SUMMARY JUDGMENT DISMISSING THE SECOND AMENDED COMPLAINT Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 1 of 37 PageID: 1916 i TABLE OF CONTENTS Page I. PRELIMINARY STATEMENT .........................................................................................1 II. THE PERTINENT FACTS..................................................................................................2 III. STANDARD OF REVIEW .................................................................................................4 IV. ARGUMENT .......................................................................................................................5 A. PLAINTIFF’S NJ RICO CLAIM FAILS ................................................................5 I. THE APPLICABLE LAW ..........................................................................6 II. PLAINTIFF FAILS TO ESTABLISH PREDICATE CRIMINAL ACTIVITY ...................................................................................................7 III. PLAINTIFF CANNOT PROVE A NJ RICO PATTERN OR ENTERPRISE ............................................................................................14 IV. PLAINTIFF LACKS STANDING DUE TO THE ABSENCE OF DAMAGES ................................................................................................18 V. PLAINTIFF CANNOT PROVE SCIENTER ............................................23 VI. THE CONDUCT WAS PRIVILEGED UNDER THE FIRST AMENDMENT..........................................................................................24 VII. THE CONDUCT WAS SUBJECT TO THE LITIGATION PRIVILEGE ...............................................................................................29 CONCLUSION ..............................................................................................................................30 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 2 of 37 PageID: 1917 ii TABLE OF AUTHORITIES Cases In re Agape Litig., 681 F. Supp.2d 352 (E.D.N.Y. 2010) .................................................................................. 17 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................................................................... 5 Azrielli v. Cohen Law Offices, 21 F.3d 512, 521 (2d Cir. 1994)............................................................................................... 17 Bankers Trust Co. v. Rhoades, 859 F.2d 1096 (2d Cir. 1988), cert. denied, 490 U.S. 1007, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989) .................................................................................................................. 19 Barq's Inc. v. Barq's Beverages, Inc., 677 F. Supp. 449 (E.D. La. 1987) ............................................................................................ 26 Baumer v. Pachl, 8 F.3d 1341 (9th Cir. 1993) ..................................................................................................... 17 BE&K Constr. Co. v. NLRB, 536 U.S. 516 (2002) ................................................................................................................. 28 Beauvoir v. Israel, 794 F.3d 244 (2d Cir. 2015)..................................................................................................... 22 Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494 (3d Cir. 1998)............................................................................................... 12, 13 Brownsville Golden Age Nursing Home, Inc. v. Wells, 839 F.2d 155 (3d Cir. 1988)..................................................................................................... 26 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................................................... 4, 5 Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119 (3d Cir. 1999)..................................................................................................... 26 Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358 (5th Cir. 1983) ................................................................................................. 26 Columbia Pictures Indus., Inc. v. Professional Real Estate Investors, Inc., 944 F.2d 1525 (9th Cir. 1991) ................................................................................................. 26 Component Hardware Grp. v. Trine Rolled Moulding Corp., No. 05-891 (MLC), 2007 U.S. Dist. LEXIS 54900 (D.N.J. July 27, 2007) ............................ 29 Crowe v. Henry, 43 F.3d 198 (5th Cir. 1995) ..................................................................................................... 17 Dippolito v. United States, No. 13-0175, 2015 U.S. Dist. LEXIS 170498 (D.N.J. Dec. 21, 2015) .................................... 22 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 3 of 37 PageID: 1918 iii DirecTV, Inc. v. Cavanaugh, 321 F. Supp.2d 825 (E.D. Mich. 2003) .................................................................................... 15 DirecTV, Inc. v. Karpinsky, 269 F. Supp.2d 918 (E.D. Mich. 2003) .................................................................................... 11 DirecTV, Inc. v. Milliman, No. 02-74829, 2003 U.S. Dist. LEXIS 20938 (E.D. Mich. Aug. 26, 2003) ............................ 25 DirecTV, Inc. v. Shouldice, No. 5:03-CV-62, 2003 U.S. Dist. LEXIS 19689 (W.D. Mich. Oct. 20, 2003) ........................ 25 DirecTV, Inc. v. Weikel, No. 03-5300, 2005 U.S. Dist. LEXIS 9902 (D.N.J. May 25, 2005) ........................................ 11 DirecTV, LLC v. Alvarez, No. 1:15-cv-06827, 2017 U.S. Dist. LEXIS 159133 (D.N.J. Sep. 27, 2017) ................ 9, 13, 28 DirecTV, LLC v. Spina, No. 1:15-cv-00104-JMS-TAB, 2016 U.S. Dist. LEXIS 116235 (S.D. Ind. Aug. 30, 2016)........................................................................................................... 9 DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 U.S. Dist. LEXIS 102976 (E.D. Mich. July 29, 2014) ............................. 9 Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) ................................................................................................................. 24 Fagan v. Fischer, No. 14-7013, 2016 U.S. Dist. LEXIS 10042 (D.N.J. Jan. 28, 2016) .................................................................................................................................. 19, 21 First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir.)................................................................................................................ 19 Galicki v. New Jersey, No. 14-169, 2016 U.S. Dist. LEXIS 126076 (D.N.J. September 15, 2016) ............................ 15 Giles v. Phelan, Hallinan & Schmieg, LLP, No. 11-6239, 2013 U.S. Dist. LEXIS 78161 (D.N.J. June 4, 2013) ........................................ 24 Handeen v. Lemaire, 112 F.3d 1339 (8th Cir. 1997) .................................................................................................. 17 Hawk Mt. LLC v. Mirra, No. 13-2083, 2016 U.S. Dist. LEXIS 72962 (D. Del. June 3, 2016)....................................... 17 Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F. Supp. 248 (S.D.N.Y. 1997) ......................................................................................... 17 Holmes v. Sec. Investor Protection Corp., 503 U.S. 258 (1992) ................................................................................................................. 20 I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265 (8th Cir. 1984) ................................................................................................... 12 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 4 of 37 PageID: 1919 iv Interchange State Bank v. Veglia, 286 N.J. Super. 164 (App. Div. 1995) ............................................................................... 20, 22 J&J Sports Prods. v. Gonzalez, No. 12-6313, 2013 U.S. Dist. LEXIS 162250 (E.D. Pa. Nov. 14, 2013) .................................. 9 Joe Hand Promotions, Inc. v. That Place, LLC, No. 11-CV-931, 2012 U.S. Dist. LEXIS 90536 (E.D. Wis. June 29, 2012).............................. 9 Joe Hand Promotions, Inc. v. Zani, No. 11- C-43192013, U.S. Dist. LEXIS 144565 (N.D. Ill. 2013) ............................................. 9 Kennedy Funding, Inc. v. Lion’s Gate Dev., LLC, No. 05-4741, 2006 U.S. Dist. LEXIS 21227 (D.N.J. Apr. 18, 2006) ...................................... 13 Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir.1993)........................................................................................................ 18 Maio v. Aetna, 221 F.3d 472 (3d Cir. 2000)......................................................................................... 18, 19, 22 Marshall v. Fenstermacher, No. 04-3477, 2007 U.S. Dist. LEXIS 74263 (E.D. Pa. Oct. 2, 2007) ..................................... 17 McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552 (11th Cir. 1992) ............................................................................................... 25 National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900 (6th Cir. 2001) ................................................................................................... 10 Peterson v. Phila. Stock Exch., 717 F. Supp. 332 (E.D. Pa. 1989) ............................................................................................ 12 Primetime 24 Joint Venture v. Nat'l Broad. Co., 219 F.3d 92 (2d Cir. 2000)....................................................................................................... 26 Prof'l Real Estate Investors, Inc. v. Columbia Pictures, 508 U.S. 49 (1993) ............................................................................................................. 27, 28 Prudential Ins. Co. of Am. v. Bank of Am., 14 F. Supp.3d 591 (D.N.J. 2014) ............................................................................................... 7 Reves v. Ernst & Young, 507 U.S. 170 (1993) ................................................................................................................. 17 Rickenbach v. Wells Fargo Bank, N.A., 635 F. Supp. 2d 389 (D.N.J. 2009) .......................................................................................... 29 Rolo v. City Investing Co. Liquidating Tr., 845 F. Supp. 182 (D.N.J. 1993) ............................................................................................... 17 Sarpolis v. Tereshko, 26 F. Supp. 3d 407 (E.D. Pa. 2014) ......................................................................................... 22 Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 404 (2003) ......................................................................................................... 10 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 5 of 37 PageID: 1920 v In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012)....................................................................................................... 7 Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985) ................................................................................................................. 19 Shan Indus., LLC v. Tyco Int'l (US), Inc., 04-1018, 2005 U.S. Dist. LEXIS 37983 (D.N.J. Sept. 9, 2005) .............................................. 18 Simon Prop. Grp. v. Palombaro, 682 F. Supp. 2d 508 (W.D. Pa. 2010) ...................................................................................... 24 Sosa v. DirecTV, Inc., 437 F.3d 923 (9th Cir. 2006) ..................................................................... 10, 24, 25, 26, 27, 28 Standardbred Owners Ass'n v. Roosevelt Raceway Assocs. L.P., 985 F.2d 102 (2d Cir. 1993)..................................................................................................... 19 State v. Ball, 141 N.J. 142 (1995) ....................................................................................................... 7, 15, 16 State v. Cagno, 211 N.J. 488 (2012) ................................................................................................................... 7 Sweet St. Deserts, Inc. v. Chudleigh's Ltd., No. 12-3363, 2013 U.S. Dist. LEXIS 49283 (E.D. Pa. Apr. 4, 2013) ..................................... 25 Tobing v. Parker McCay, P.A., No. 3:17-cv-00474, 2018 U.S. Dist. LEXIS 71639 (D.N.J. Apr. 30, 2018) ............................ 26 United Mine Workers of America v. Pennington, 381 U.S. 657 (1965) ................................................................................................................. 24 United States v. Boyer, 694 F.2d 58 (3d Cir.1982)........................................................................................................ 23 United States v. Klein, 515 F.2d 751 (3d Cir.1975)...................................................................................................... 23 United States v. Pearlstein, 576 F.2d 531 (3d Cir.1978)...................................................................................................... 23 United States v. Pendergraft, 297 F.3d 1198 (11th Cir.2002) ................................................................................................ 12 United States v. Vastola, 670 F. Supp. 1244 (D.N.J. 1987) ............................................................................................. 14 Va. Sur. Co. v. Macedo, No. 08-5586, 2009 U.S. Dist. LEXIS 90603 (D.N.J. Sep. 30, 2009) ...................................... 10 Walter v. Drayson, 538 F.3d 1244 (9th Cir. 2008) ................................................................................................. 17 Walter v. Palisades Collection, LLC, 480 F. Supp. 2d 797 (E.D. Pa. 2007) ....................................................................................... 22 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 6 of 37 PageID: 1921 vi We, Inc. v. Univ. of Pennsylvania, 174 F.3d 322 (3d Cir. 1999)...................................................................................................... 24 Weiss v. First Unum Life Ins., No. 02-4249, 2003 U.S. Dist. LEXIS 27863 (D.N.J. Aug. 27, 2003) ............................... 18, 19 Winsome Shoppe, Inc. v. Cynwyd Inv., No. 91-7013, 1992 U.S. Dist. LEXIS 16715 (E.D. Pa. Nov. 3, 1992) .................................... 12 Winters v. De Rosa, No. 04-736 (JBS), 2005 U.S. Dist. LEXIS 46020, at *27 (D.N.J. Mar. 18, 2005) .................. 10 Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163 (3d Cir. 1987)................................................................................................... 22 Statutes 18 U.S.C. § 1964(c) ...................................................................................................................... 19 47 U.S.C. §605. ............................................................................................................. 2, 3, 4, 9, 21 47 U.S.C. §605(e)(3)(C)(ii) .......................................................................................................... 13 47 U.S.C. §605(e)(3)(C)(i)(II) ...................................................................................................... 13 N.J.S.A. 2C:20-5 ........................................................................................................................... 10 N.J.S.A. 2C:41-1(a) ........................................................................................................................ 7 N.J.S.A. 2C:41-1(a)(1)(h) ............................................................................................................... 6 N.J.S.A. 2C:41-1(a)(1)(o) ............................................................................................................... 6 N.J.S.A. 2C:41-1(a)(2) .................................................................................................................... 6 N.J.S.A. 2C:41-2(a) .................................................................................................................... 1, 6 N.J.S.A. 2C:41-2(b) ........................................................................................................................ 6 N.J.S.A. 2C-41-2(c) .................................................................................................................. 6, 15 N.J.S.A. 2C:41-2(d) ........................................................................................................................ 6 N.J.S.A. 2C:41-4(c) ................................................................................................................ 18, 19 N.J.S.A. 2C:21-7(h) ...................................................................................................................... 13 Rules Fed. R. Civ. P. 56 ............................................................................................................................ 5 Fed. R. Civ. P. 56(c) ....................................................................................................................... 4 Constitutional Provisions U.S. Const. amend. I. .................................................................................................................... 24 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 7 of 37 PageID: 1922 1 I. PRELIMINARY STATEMENT Defendants Julie Cohen Lonstein, Wayne Lonstein and Lonstein Law Office, P.C. (collectively the “Lonstein Defendants”), by their attorneys Lewis Brisbois Bisgaard & Smith LLP, respectfully submit this motion for summary judgment dismissing Plaintiff’s second amended complaint (“Second Amended Complaint” or “2 A.C.”).1 The Second Amended Complaint also pleaded a claim for relief under the New Jersey Consumer Fraud Act, which was dismissed. (Dkt. No. 80.) Plaintiff filed this putative class action against the Lonstein Defendants, as well as the co-defendants, Signal Auditing, Inc. (“SAI”) and Steven Levine (the “Signal Defendants”), asserting a claim under the New Jersey Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-2(a) (“NJ RICO”). Fact discovery has now been completed. Notwithstanding Plaintiff having been afforded a full opportunity to develop a factual record that would lend support to her claims, it is clear that she cannot muster any evidence that would raise a genuine issue of material fact to support her NJ RICO claim. She cannot prove intentional conspiratorial conduct, and lacks standing because she is unable to identify any damages she suffered, or that 1 Also submitted herewith in support of the motion are the declaration of Jeffrey Y. Spiegel, Esq. (the “Spiegel Dec.”), Defendants’ Statement of Undisputed Facts, and the declaration of Julie Cohen Lonstein (the “J. Lonstein Dec.”). The transcript of Plaintiff’s deposition is cited as “Joaquin Dep.”, the transcript of Megan Osterhoudt’s deposition is cited as “Osterhoudt Dep.”, and the transcript of Steven Levine’s deposition is cited as “Levine Dep.”. All documents referenced herein are attached to the Spiegel Dec. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 8 of 37 PageID: 1923 2 would have been suffered, by members of the putative class as narrowed in her pending class certification motion, attributable to the Lonstein Defendants’ alleged conduct. Plaintiff cannot establish that the Lonstein Defendants engaged in any criminal activity, as required under the statute, and the demand letters which forms the basis of her NJ RICO claim are not actionable and are protected under the First Amendment and the litigation privilege.2 II. THE PERTINENT FACTS The Lonstein Defendants are attorneys who have represented DirecTV for over 12 years in handling its nationwide claims for commercial misuse/piracy by its customers. (J. Lonstein Dec. ¶ 2.) On a regular basis, the Lonstein Defendants, on behalf of DirecTV, assert formal and informal claims based on 47 U.S.C. §605 et seq., a strict liability statute, against customers who use DirecTV’s residential cable and internet services in commercial establishments without contracting for permission to do so. (Id. ¶ 29-32, 44.) The Lonstein Defendants do not identify the pirating customers; that is handled by SAI. (Id. ¶ 20-27, 35.) SAI manages a network of independent contractors who are given access to a list generated by DirecTV of 2 The Lonstein Defendants incorporate herein all arguments set forth in support of their Oppositions to Class Certification. The Lonstein Defendants also incorporate herein all arguments set forth in support of the Signal Defendants’ Motion for Summary Judgment and Opposition to Class Certification. All briefings have been filed concurrently to this Motion. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 9 of 37 PageID: 1924 3 commercial establishments in a given area that have authorizations to view various DirecTV commercial programming. (Id. ¶ 14, 16; Osterhoudt Dep. 54:16-55:3.) SAI’s contractors visit establishments in that area which are not on the lists to identify whether the location was exhibiting DirecTV commercial programming. (Osterhoudt Dep. 54:16-55:3.) If the contractor determined that an establishment was displaying DirecTV commercial programming, it would document its investigation; Defendants do not determine whether a user is authorized. (J. Lonstein Dec. ¶ 27.) SAI would then provide the results of its investigation to DirecTV, which would make its own inquiry to determine whether the exhibition was authorized. (Id.) If the programming was found to be unauthorized, DirecTV would instruct the Lonstein Defendants to enforce DirecTV’s rights under 47 U.S.C. §605 et seq., by serving attorney demand letters, negotiating settlements, or initiating litigation. (Id. at ¶ 29.) The Lonstein Defendants have never been involved with DirecTV’s offering of services or its inquiry into whether a particular exhibition of DirecTV’s programming was authorized. (Id.) In the instant case, Plaintiff maintains a beauty salon that was a DirecTV subscriber under a residential classification which prohibited her from broadcasting DirecTV satellite television services to commercial customers. (Joaquin Dep. at 8:23- 25, 26:23-27:21; PL80.) On June 1, 2015, the Signal Defendants independently conducted an audit whereby an auditor visited Plaintiff’s establishment and observed Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 10 of 37 PageID: 1925 4 DirecTV services being broadcast to commercial customers. (PL21.) Thereafter, DirecTV provided to LLO Plaintiff’s information and the investigation results so that LLO could communicate with Plaintiff about her unauthorized use of the services and potential liability. (J. Lonstein Dec. ¶ 42.) On August 6 and 17, 2015, the Lonstein Defendants mailed letters to Plaintiff informing her of DirecTV’s claim for misuse, seeking to avoid litigation by amicably resolving the claim. (Id. ¶ 43.) The August 17 letter specifically demands no more than $10,000, which is the strict liability penalty under 47 U.S.C. §605. (Id. ¶ 44.) Plaintiff did not pay any money to settle with DirecTV, and neither DirecTV nor Lonstein Law initiated legal proceedings against Joaquin. (Id. ¶¶ 45, 46.) Instead, Joaquin filed the instant lawsuit, on behalf of herself and others similarly situated, against DirecTV and Verizon –whom the claims the Court granted a motion to dismiss because Plaintiff had agreed to arbitrate any disputes – as well as the Lonstein Defendants and the Signal Defendants. (Dkt. No. 1.) III. STANDARD OF REVIEW Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of stating the basis for its motion, Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 11 of 37 PageID: 1926 5 Celotex, 477 U.S. at 323, but that burden can be discharged if the moving party can show the court that there is “an absence of evidence to support the nonmoving party’s case.” Id. at 325. When the moving party has discharged its burden, the nonmoving party must then designate specific facts showing that there is a genuine issue of material fact. Id. at 324. Issues of fact are “genuine only if a reasonable jury, considering the evidence present, could find for the nonmoving party,” and a fact is “material” if it may affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Summary judgment is appropriate when the record shows that “there is no genuine issue of material fact and [ ] the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. at 322. IV. ARGUMENT A. PLAINTIFF’S NJ RICO CLAIM FAILS Plaintiff cannot raise any genuine issues of material fact with respect to her putative NJ RICO claim for several reasons, as explained below. According to the Second Amended Complaint, the Lonstein Defendants engaged in a scheme to threaten Plaintiff and others with prosecution or litigation based on their unauthorized use of satellite television services, in violation of the Federal Communications Act, by sending demand letters in order to receive money (2 A.C. ¶ 41.) The Lonstein Defendants allegedly knew or acted in reckless disregard of that fact that DirecTV had Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 12 of 37 PageID: 1927 6 installed non-commercial services and equipment at Plaintiff’s establishment. (Id. ¶ 43.) This conduct was allegedly a fraudulent practice, extortion or mail fraud as defined in N.J.S.A. 2C:41-1(a)(1)(h) and (o) and 2C:41-1(a)(2) and is therefore a racketeering activity subject to NJ RICO (Id. ¶ 79.) Defendants allegedly violated the following sections of NJ RICO: • 2C:41-2(a) by receiving income from unlawful debt in the form of monthly fees, indebtedness, settlement payments, civil judgments and/or attorneys’ fees and costs in the operation of the enterprise; • 2C:41-2(b) by acquiring and maintaining an interest in or control of enterprises through a pattern of racketeering activity or collection of an unlawful debt; • 2C-41-2(c) by conducting or participating in the conduct of the affairs of an enterprise through a pattern of racketeering activity or the collection of unlawful debt; and •2C:41-2(d) by conspiring to engage in racketeering activity. (Id. ¶¶ 79-82.) The Third Count alleges further that Plaintiff, and others similarly situated, have been harmed in the amount of the monthly fees, indebtedness, settlement payments, civil judgments and/or attorneys’ fees either paid or to be paid. (Id. ¶ 84.) i. The Applicable Law To prove a claim for relief under section 2C:41-2(c), Plaintiff must demonstrate (1) the existence of an enterprise, (2) that the enterprise engaged in or its activities affected trade or commerce, (3) that defendant was employed by, or associated with the enterprise, (4) that defendant participated in the conduct of the affairs of the enterprise, and (5) that defendant participated through a pattern of racketeering Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 13 of 37 PageID: 1928 7 activity or collection of unlawful debt. State v. Ball, 141 N.J. 142, 181-187 (1995). NJ RICO defines “racketeering activity” as any one of a number of crimes, including, among other things, bribery, extortion, forgery and fraudulent practices, securities fraud, and all crimes set forth in chapter 21 of Title 2C of the New Jersey Statutes. See N.J.S.A. § 2C:41-1(a). In order to demonstrate a pattern of racketeering activity, Plaintiff must show (1) that the defendant committed at least two predicate acts and (2) that the incidents of racketeering activity embrace criminal conduct that has either the same or similar purposes, results, participants or victims or methods of commission or are otherwise interrelated by distinguishing characteristics and are not isolated incidents. See Ball, 141 N.J. at 184-185.3 ii. Plaintiff fails to establish predicate criminal activity Plaintiff cannot identify any criminal conduct by the Lonstein Defendants that qualifies as a predicate act under NJ RICO. To the extent Plaintiff is alleging mail fraud because the Lonstein Defendants’ letters were mailed, the claim fails because there is nothing fraudulent about the letters. 3 It is appropriate to seek guidance concerning NJ RICO in case law under the federal RICO statute as to areas in which the two statutes are consistent. In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 245 (3d Cir. 2012); State v. Cagno, 211 N.J. 488, 508 (2012); Prudential Ins. Co. of Am. v. Bank of Am., 14 F. Supp.3d 591, 614 (D.N.J. 2014). New Jersey courts heed federal case law in construing NJ RICO. State v. Ball, 141 N.J. 142, 156 (1995). Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 14 of 37 PageID: 1929 8 The Lonstein Defendants’ attorney demand letters cite to Plaintiff’s unauthorized use of cable television in violation of the Federal Communications Act. (D-6; D-7.) The letters were accurate in that Plaintiff was using residential services at her commercial establishment apparently without authorization. (Joaquin Dep. at 26:23-27:21; 2 A.C. ¶ 31; D-6, D-7.) Since at least November 26, 2012, Plaintiff had been made aware via Verizon correspondence and invoices that she was receiving residential services at her commercial establishment. (PL82-PL164.) Specifically, on November 26, 2012, Plaintiff received a letter from Verizon stating: “Verizon Freedom Essentials is for residential customers. Offer is for residential voice use only. It is not available for business customers.” (PL82.) From December 2012 to March 2015, on each of Plaintiff’s subsequent invoices, there included a line item entitled “Verizon Freedom Essentials”. (PL84-PL164.) Further, on November 19, 2013, DirecTV sent Plaintiff a letter which informed her on its reverse side that she is “a current residential DirecTV customer….” (PL24.) And in DirecTV’s customer services agreement, there included a notice that the services provided were for “private non-commercial use, enjoyment and home viewing.” (PL10.) Thus, it is apparent that for at least several years before the Lonstein Defendants’ involvement, Plaintiff was on notice that she was receiving residential services at her commercial establishment. And Plaintiff presents no evidence to support any argument to the Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 15 of 37 PageID: 1930 9 contrary, as there is no testimony from either DirecTV, or Verizon, that her display of programming was authorized at her place of business. Importantly, the Federal Communications Act, 47 U.S.C. § 605 et seq., provides strict liability remedies for the unauthorized use of services. DirecTV, LLC v. Alvarez, No. 1:15-cv-06827, 2017 U.S. Dist. LEXIS 159133, at *5 (D.N.J. Sep. 27, 2017); J&J Sports Prods. v. Gonzalez, No. 12-6313, 2013 U.S. Dist. LEXIS 162250, at *7 (E.D. Pa. Nov. 14, 2013). Plaintiff’s reception and display of residential services at her commercial establishment makes her liable for damages - regardless of defendants’ intent or motive. See DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 U.S. Dist. LEXIS 102976, at *2 (E.D. Mich. July 29, 2014) (Court held that the fact that DirecTV installer told defendant it could pay the lower residential rate because it was a small business was irrelevant to the issue of whether defendants were liable under the statute); DirecTV, LLC v. Spina, No. 1:15-cv-00104-JMS-TAB, 2016 U.S. Dist. LEXIS 116235, at *58-59 (S.D. Ind. Aug. 30, 2016) (same); Joe Hand Promotions, Inc. v. Zani, No. 11- C-43192013, U.S. Dist. LEXIS 144565, *4 (N.D. Ill. 2013) (Court held that defendants liable for § 605 violation where DirecTV mistakenly set up residential account for commercial establishment); Joe Hand Promotions, Inc. v. That Place, LLC, No. 11-CV-931, 2012 U.S. Dist. LEXIS 90536, at *4 (E.D. Wis. June 29, 2012) (Court held that even if “there was no unauthorized 'interception' because [defendant] was authorized to receive the Broadcast, the Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 16 of 37 PageID: 1931 10 defendants have still violated the Act because they were not authorized to 'divulge or publish' the Broadcast to the patrons of a commercial establishment...."); National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 916 (6th Cir. 2001) (same). Simply, the Lonstein Defendants did not act fraudulently in that they merely advised Plaintiff of her potential liability to their client DirecTV and proposed a resolution. Further, the Lonstein Defendants’ demand letters cannot be fraudulent because they contain only statements of law and statements of fact within the knowledge of Plaintiff. Statements of law are not actionable as fraud. “It is well established . . . that misrepresentations of the law are not actionable as fraud, including under the mail and wire fraud statutes, because statements of the law are considered merely opinions and may not be relied upon absent special circumstances.” Va. Sur. Co. v. Macedo, No. 08-5586, 2009 U.S. Dist. LEXIS 90pen603, at *23 (D.N.J. Sep. 30, 2009) quoting Sosa v. DirecTV, Inc., 437 F.3d 923, 940 (9th Cir. 2006). Similarly, there was no theft by extortion, as the statute requires a defendant to have actually obtained property. See N.J. Stat. § 2C:20-5; Winters v. De Rosa, No. 04- 736 (JBS), 2005 U.S. Dist. LEXIS 46020, at *27 (D.N.J. Mar. 18, 2005); Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 404 (2003)(“[W]e have construed the extortion provision of the Hobbs Act at issue in these cases to require not only the deprivation but also the acquisition of property . . . a person must “obtain” property from another party to commit extortion . . . .”). And Plaintiff Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 17 of 37 PageID: 1932 11 admittedly paid no sums of money to the Lonstein Defendants (Joaquin Dep. at 68:6- 9), and seeks to represent a class of “who did not pay any amounts in resolution, remuneration, or settlement.” (Dkt No 101-1, pg. 4.) (emphasis original). Plaintiff alleges no facts that support any interference with her property, and without evidence that Defendants “obtained” anything, Plaintiff cannot satisfy her burden to prove there was an extortion. Further, Plaintiff has no evidence that the alleged conduct constitutes a “wrongful use” of “fear” of economic loss as a threat to file a litigation based on theft of DirecTV services. Therefore, any alleged threat of litigation via demand letter is legally insufficient to support a claim of extortion and is therefore not a predicate act. DirecTV, Inc. v. Weikel, No. 03-5300, 2005 U.S. Dist. LEXIS 9902, at *15 (D.N.J. May 25, 2005) (“RICO statute does not contemplate that asserting a potential legal cause of action or settling potential or existing litigation could be construed as constituting a predicate act.”); DirecTV, Inc. v. Karpinsky, 269 F. Supp.2d 918, 929- 930 (E.D. Mich. 2003), vacated in part on other grounds, 274 F. Supp.2d 918 (E.D. Mich. 2003). Plaintiff alleges, however, that the threat of litigation was criminal because the Lonstein Defendants knew or were reckless in knowing that the contents of the letters they sent on behalf of DirecTV were “false.” (2. A.C. ¶¶ 43, 45.) Even if these threats of litigation were made in bad faith, which they were not, this could not be Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 18 of 37 PageID: 1933 12 grounds for extortion. See United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002)(“threat to file litigation…even if made in bad faith…was not "wrongful" within the meaning of the Hobbs Act…[t]hus the allegations for conspiracy to commit extortion and … extortion fail as a matter of law.”); see also I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding that groundless threats of litigation cannot constitute extortion under the Hobbs Act); Winsome Shoppe, Inc. v. Cynwyd Inv., No. 91-7013, 1992 U.S. Dist. LEXIS 16715, at *12 (E.D. Pa. Nov. 3, 1992)(same); Peterson v. Phila. Stock Exch., 717 F. Supp. 332, 336 (E.D. Pa. 1989)(“The ordinary resort to legal process does not rise to the level of a "wrongful use" of force or fear.”). Regardless, even if such arguments could be advanced, which they cannot, there is no evidence that Plaintiff had a preexisting right to be free of the alleged economic fear, which is a requirement under the Hobbs Act. 4 See Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) (“[T]he Hobbs Act is limited in cases, such as this one, which involve the use of economic fear in a transaction between two private parties. The limitation we apply is . . . that a defendant is not guilty of extortion if he has a lawful claim to the property obtained.”). 4 Plaintiff claims of extortion are unspecific. Therefore, the Lonstein Defendants address arguments under both state and federal extortion laws. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 19 of 37 PageID: 1934 13 Further, the letters cannot be construed as furthering an extortion scheme as they did nothing more than demand $10,000, which is the amount of damages DirecTV is entitled to under this strict liability statute.5 47 U.S.C. § 605(e)(3)(C)(i)(II); Alvarez, 2017 U.S. Dist. LEXIS 159133, at *5 n.5. As the Third Circuit instructs, it is not the case that every business dispute can be turned into a RICO case by invoking the mail fraud statute. Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494, 529 (3d Cir. 1998) (“[D]efendant’s heavy-handed business tactics . . . cannot be made to fit within the statutory and doctrinal constraints of the mail and wire fraud statutes.”) Lastly, to the extent Plaintiff’s alleges a deceptive business practice of “[m]ak[ing] a false or misleading written statement for the purpose of obtaining property or credit” in the course of business under N.J.S.A. 2C:21-7(h), this equally fails. To establish a claim under N.J.S.A. 2C:21-7(h), Plaintiff must prove that Defendants, in the course of business, made a false statement with the purpose of obtaining property or credit from her. See Kennedy Funding, Inc. v. Lion’s Gate Dev., 5 Compare § 605(e)(3)(C)(i)(II) ("[T]he party aggrieved may recover an award of statutory damages for each violation . . . in a sum of not less than $1,000 or more than $10,000 . . . ."), with id. § 605(e)(3)(C)(ii) ("In any case in which the court finds that the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain, the court in its discretion may increase the award of damages, whether actual or statutory, by an amount of not more than $100,000 for each violation of subsection (a)."). Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 20 of 37 PageID: 1935 14 LLC, No. 05-4741, 2006 U.S. Dist. LEXIS 21227, at *5 (D.N.J. Apr. 18, 2006). There is no supporting evidence in the record that supports this section. The record is clear: DirecTV makes its own determination about whether Plaintiff or any other person used its service without authorization, and DirecTV unilaterally instructs the Lonstein Defendants of which establishments it chooses to enforce its rights. (J. Lonstein Dec. ¶¶ 28, 29.) The Lonstein Defendants could not commence litigation without authorization from DirecTV, nor has it ever been part of the inquiry into whether a particular exhibition of DirecTV’s programming was authorized. (Id. ¶ 29) Thus, there is no evidence to support this violation. Plaintiff’s inability to identify actual fraudulent conduct confirms that NJ RICO has no application to the fact pattern that underlies this case. The Lonstein Defendants’ routine attorney correspondence on behalf of their client is not improper and is not a predicate act for NJ RICO purposes. iii. Plaintiff Cannot Prove a NJ RICO Pattern or Enterprise Plaintiff cannot raise an issue of fact as to the purported pattern of racketeering activity since she cannot identify two separate predicate acts by the Lonstein Defendants. United States v. Vastola, 670 F. Supp. 1244, 1257 (D.N.J. 1987) (RICO pattern requires two separate events). Plaintiff’s allegation that Lonstein Defendants committed mail fraud by sending two letters addressing the same issue concerning her unauthorized commercial exhibition of DirecTV programming are not two discrete Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 21 of 37 PageID: 1936 15 acts for purposes of the statute - even assuming such a letter were a predicate act in the first place. DirecTV, Inc. v. Cavanaugh, 321 F. Supp.2d 825, 839 (E.D. Mich. 2003) (dismissing RICO claim based on DirecTV’s having sent two letters seeking to enforce its rights). Plaintiff only received two letters, and the Lonstein Defendants never filed any lawsuit against her. Thus, the alleged short lived scheme is insufficient to support a claim under the statute. See Ball, 141 N.J. at 168 (the pattern of racketeering activity "should be, or threaten to be, ongoing" and that "some degree of continuity, or threat of continuity, is required and is inherent"); see also Galicki v. New Jersey, No. 14-169, 2016 U.S. Dist. LEXIS 126076, *1 (D.N.J. September 15, 2016) (dismissing class action NJ RICO claim, with prejudice, on the same grounds as Ball). Plaintiff’s claim fails for the additional reason that she cannot muster any proof that there was a NJ RICO enterprise at all. There is no record evidence of any unlawful conspiracy by DirecTV or any other party. DirecTV sought to deal with customers pirating its services; it enlisted the defendants to assist and they went about their assigned tasks in a lawful manner. Similarly, Plaintiff cannot identify any facts supporting the charge that the Lonstein Defendants participated in the putative NJ RICO enterprise. “Under N.J.S.A. 2C:41-2(c), a person is ‘employed by or associated with an enterprise’ if he or she has a position or a functional connection with the enterprise that enables him or her to Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 22 of 37 PageID: 1937 16 engage or participate directly or indirectly in the affairs of the enterprise.” Ball, 141 N.J. at 175. The Lonstein Defendants did not engage in any alleged fraudulent sale of services to Plaintiff or otherwise. Rather, commencing some years after Plaintiff’s purchase of DirecTV resident services, they appeared as attorneys for their client (a client which the original Complaint had alleged was a scheme participant). An attorneys’ act on behalf of a client of communicating with a third party who has infringed on the client’s rights is simply not enough to enmesh the attorney within the putative enterprise to give rise to NJ RICO liability. According to Plaintiff’s testimony, it was only Verizon and DirecTV which signed up customers such as Plaintiff supposedly on false pretenses and installed the cable equipment (Joaquin Dep. at 55:10-17; 2 A.C. ¶ 27-28, 30), not the Lonstein Defendants, who only came on the scene later when proof was obtained as to customers’ improper commercial use of DirecTV services under residential contracts (Id. at 51:10-12.) The Lonstein Defendants confirmed that they did not play any part in the fraudulent sale of services or in any scheme to defraud. Accordingly, there is no issue of fact as to whether they were part of any conspiracy. The Lonstein Defendants’ actions as attorney for DirecTV in seeking redress for piracy is not actionable as participation in the fraud. An attorney’s performance of services is not such participation. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 23 of 37 PageID: 1938 17 The Lonstein Defendants cannot be liable for having “conducted” either enterprise due to the absence of any evidence that they “participate[d] in the operation or management of the enterprise itself” by virtue of having performed legal services. Reves v. Ernst & Young, 507 U.S. 170, 185 (1993); Rolo v. City Investing Co. Liquidating Tr., 845 F. Supp. 182, 232 (D.N.J. 1993). It is not credible and cannot be proven that the professionals directed the enterprise. Marshall v. Fenstermacher, No. 04-3477, 2007 U.S. Dist. LEXIS 74263, at *44 (E.D. Pa. Oct. 2, 2007); Hawk Mt. LLC v. Mirra, No. 13-2083, 2016 U.S. Dist. LEXIS 72962, *65 (D. Del. June 3, 2016).6 Because the attorneys were ultimately performing services for a client, it is also not credible that they could have directed the affairs of the purported enterprise sufficiently to meet the participation requirement. Outside counsel could not have masterminded the supposed scheme to profit from extorting DirecTV’s customers by tricking them into buying packages that did not permit commercial exhibition by representing that commercial exhibition was permissible. There is no evidence outside counsel was involved at all at that stage. The Lonstein Defendants were enlisted long 6 See also, e.g., Handeen v. Lemaire, 112 F.3d 1339, 1348 (8th Cir. 1997); Walter v. Drayson, 538 F.3d 1244, 1248-49 (9th Cir. 2008); Crowe v. Henry, 43 F.3d 198, 204 (5th Cir. 1995); Azrielli v. Cohen Law Offices, 21 F.3d 512, 521 (2d Cir. 1994); Baumer v. Pachl, 8 F.3d 1341, 1344 (9th Cir. 1993); Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F. Supp. 248, 254 (S.D.N.Y. 1997); In re Agape Litig., 681 F. Supp.2d 352, 369 (E.D.N.Y. 2010). Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 24 of 37 PageID: 1939 18 after the alleged solicitations were made by Verizon or DirecTV to its prospective customers. Further, because Plaintiff’s NJ RICO claim fails for the reasons set forth above, her baseless charge of a NJ RICO conspiracy also fails. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1191 (3d Cir.1993), rev'd in part on other grounds, 181 F.3d 505 (3d Cir. 1999). iv. Plaintiff Lacks Standing Due to the Absence of Damages Plaintiff’s NJ RICO claim also founders because Plaintiff cannot prove that she sustained damages proximately caused by conduct on the part of the Lonstein Defendants that violated NJ RICO. The statute makes clear that a claim lies only if the plaintiff has been damaged: "Any person damaged in his business or property by reason of a violation of [NJ RICO] may sue therefor in any appropriate court and shall recover threefold any damages he sustains and the costs of the suit . . .” N.J.S.A.2C:41-4(c). The requirement that Plaintiff is "injured in [her] business or property" has a "restrictive significance . . . which helps to assure that RICO is not expanded to provide a federal cause of action and treble damages to every tort plaintiff." Maio v. Aetna, 221 F.3d 472, 483 (3d Cir. 2000); Weiss v. First Unum Life Ins., No. 02-4249, 2003 U.S. Dist. LEXIS 27863, at *11 (D.N.J. Aug. 27, 2003). Although courts have acknowledged that an injury to business or property is difficult to define, “the Third Circuit has held that physical and emotional injuries are insufficient…and has Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 25 of 37 PageID: 1940 19 require[d] proof of a concrete financial loss " Maio, 221 F.3d at 483 (internal citations omitted). Plaintiff lacks standing because she cannot prove “that the NJ RICO violation proximately caused her injuries.” Fagan v. Fischer, No. 14-7013, 2016 U.S. Dist. LEXIS 10042, *46 (D.N.J. Jan. 28, 2016). Plaintiff has no standing because her business was not injured as a result of the allegedly unlawful conduct. “For a civil RICO plaintiff to have standing he must … ultimately prove an injury to his ‘business or property’ proximately caused ‘by the conduct constituting the violation.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985); accord 18 U.S.C. § 1964(c); N.J. Stat. Ann §2C:41-4(c); Weiss, 2003 U.S. Dist. LEXIS 27863, at *10-11. As the Second Circuit held under the federal RICO statute: A RICO plaintiff “only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985) [. . .] Furthermore, as a general rule, a cause of action does not accrue under RICO until the amount of damages becomes clear and definite. See Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1106 (2d Cir. 1988), cert. denied, 490 U.S. 1007, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989). First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 769 (2d Cir.), cert. denied, 513 U.S. 1079 (1995).7 7 See also, Standardbred Owners Ass'n v. Roosevelt Raceway Assocs. L.P., 985 F.2d 102, 104 (2d Cir. 1993) (“To show that an injury resulted `by reason of' the (footnote continued) Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 26 of 37 PageID: 1941 20 Similarly, under NJ RICO: In order to establish standing to institute a civil action under NJRICO, it must be shown that ‘plaintiff's harm was proximately caused by the NJRICO predicate acts alleged, i.e., that there was a direct relationship between plaintiff's injury and defendant's conduct.’” This requires a showing not only that the offender's alleged NJRICO violation was the ‘but for’ cause of the plaintiff's injury, but also that the violation was the proximate cause. [citing Holmes v. Sec. Investor Protection Corp., 503 U.S. 258, 265, 268, 269-70 (1992) (requiring a showing of direct injury to demonstrate standing in light of the difficulty of ascertaining damages where the cause is indirect)]. Interchange State Bank v. Veglia, 286 N.J. Super. 164, 178 (App. Div. 1995), certif. denied, 144 N.J. 377 (1996). Despite these well-established governing requirements that mandate a causal connection between the alleged racketeering activity and resulting damages, the record is devoid of any actual injury proximately caused by the Lonstein Defendants’ alleged NJ RICO violations inasmuch as Plaintiff did not pay the sums demanded by the Lonstein Defendants’ letter and suffered no other consequences. (Joaquin Dep. at 67:24-68:9) To the extent Plaintiff claims that her damage is her exposure to the amount demanded by DirecTV (via the Lonstein Defendants) attributable to her alleged defendant's action, and therefore to have standing under [civil] RICO, the plaintiff must allege `that the defendant's violations were a proximate cause of the plaintiff's injury, i.e., that there was a direct relationship between the plaintiff's injury and the defendant's injurious conduct’). Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 27 of 37 PageID: 1942 21 unauthorized reception and display of DirecTV programming, and the attorneys’ fees she expended to defend against that claim, the Lonstein Defendants’ conduct did not proximately cause those purported damages. If Plaintiff was exposed to any liability and damages to DirecTV under the Federal Communications Act or otherwise, that exposure results from her own conduct violating the Federal Communications Act when she decided to purchase a residential bundle from DirecTV, which she allegedly did in reliance on the representations of the salespeople who visited her business, not the Lonstein Defendants (Joaquin Dep. at 55:10-17.) That occurred well before any involvement by the Lonstein Defendants, who were only engaged after DirecTV would determine that the non-commercial account was using unauthorized commercial services. (J. Lonstein Dec. at ¶ 29.) After the determination is made, DirecTV then instructs LLO to enforce its rights under 47 U.S.C. §605 et seq., by serving attorney demand letters, negotiating settlements, or initiating litigation. (Id.) It is patent that there is no nexus between Plaintiff’s conduct and the Lonstein Defendants’ subsequent activity. The Lonstein Defendants’ conduct occurred well after the fact, and thus it could not have proximately caused Plaintiff to infringe or to be liable for any supposed damages. Fagan v. Fischer, 2016 U.S. Dist. LEXIS 10042, *51 (dismissing common law fraud claim as to defendants who were not alleged to have had any involvement with the initial, allegedly fraudulent activities giving rise to the claim).Thus, this count should be dismissed based on the absence of the required Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 28 of 37 PageID: 1943 22 direct causal nexus between the Lonstein Defendants’ alleged conduct and the claimed injury. Interchange State Bank v. Veglia, 286 N.J. Super. at 178-183. Moreover, to the extent Plaintiff argues that defendants imposed a wrongful debt on Plaintiff’s property by use of the demand letter, the threat of litigation and a demand for money derived from violation of a statute is not the equivalent of a debt and is insufficient to establish a claim under RICO. See Beauvoir v. Israel, 794 F.3d 244, 247 (2d Cir. 2015); Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163, 1168 (3d Cir. 1987), (“[N]othing in the statute or the legislative history leads us to believe that Congress intended to equate asserted tort liability with asserted consumer debt.”). It is critical in this regard that Plaintiff concedes that she did not give in to the alleged threats by making payment to DirecTV. (Joaquin Dep. at 67:24-68:9.) Any damage to Plaintiff based on purported threats that did not materialize is entirely theoretical and does not furnish a basis for recovery. See Maio, 221 F.3d at 495 (when speculation as to future events is required, there is no RICO injury). Further, Plaintiff has admittedly never paid any money to her attorneys’ in legal fees. (Joaquin Dep. at 70:21-71:9.) To the extent Plaintiff claims she might be responsible to her attorneys for a contingency fee, RICO liability cannot attach to future contingent damages. Walter v. Palisades Collection, LLC, 480 F. Supp. 2d 797, 804 (E.D. Pa. 2007); see also Maio, 221 F.3d at 495 (3d Cir. 2000) (speculation of economic loss is insufficient to support a cause of action under RICO); Sarpolis v. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 29 of 37 PageID: 1944 23 Tereshko, 26 F. Supp. 3d 407, 424 (E.D. Pa. 2014); Dippolito v. United States, No. 13-0175, 2015 U.S. Dist. LEXIS 170498, at *18 (D.N.J. Dec. 21, 2015). Having failed to identify any damages stemming from the alleged NJ RICO violations in which the Lonstein Defendants are alleged to have taken part, Plaintiff cannot recover under the statute against the Lonstein Defendants even if she were otherwise able to raise any genuine issue of fact as the other elements of the claim, which she is not able to do. v. Plaintiff Cannot Prove Scienter To successfully prosecute a RICO claim, Plaintiff must prove scienter. See United States v. Boyer, 694 F.2d 58, 60 (3d Cir.1982); United States v. Pearlstein, 576 F.2d 531, 537 (3d Cir.1978) (in prosecution for mail fraud government must prove willful participation in fraudulent scheme with knowledge of its falsity); United States v. Klein, 515 F.2d 751, 754 (3d Cir.1975) (mail fraud statute requires proof of specific intent to defraud.) Plaintiff cannot muster any proof that the Lonstein Defendants ever knew that a DirecTV representative wrongfully provided Plaintiff with non- commercial services at her commercial establishment long before their involvement. The testimony is to the contrary. (Joaquin Dep. at 51:10-12) Since they were not even involved, they had no reason to know of the conduct of Verizon or DirecTV when it was occurring. In sum, Plaintiff cannot raise an issue of fact as to this critical element of her claim. Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 30 of 37 PageID: 1945 24 vi. The Conduct Was Privileged Under the First Amendment An additional basis for dismissal is provided by the Noerr-Pennington doctrine, which precludes imposition of RICO liability based on an attorney demand letter. Sosa v. DIRECTV, Inc., 437 F.3d at 942. The Noerr-Pennington doctrine derives from the Supreme Court’s decisions in United Mine Workers of America v. Pennington, 381 U.S. 657 (1965), and Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and stems. derives from the First Amendment's guarantee of "the right of the people . . . to petition the Government for a redress of grievances." U.S. Const. amend. I. Under the doctrine, persons who petition the government for redress are immune from statutory liability for that conduct. We, Inc. v. Univ. of Pennsylvania,174 F.3d 322, 326 (3d Cir. 1999). As Judge Simandle of this Court has also recognized, that doctrine precludes a federal RICO count. Giles v. Phelan, Hallinan & Schmieg, LLP, No. 11-6239, 2013 U.S. Dist. LEXIS 78161, *24 (D.N.J. June 4, 2013) (dismissing claim predicated on the prosecution of a state court foreclosure action); Simon Prop. Grp. v. Palombaro, 682 F. Supp. 2d 508, 511 (W.D. Pa. 2010) (applying the doctrine’s immunity principle in the context of federal RICO). In applying the Doctrine, the Ninth Circuit ruled correctly in Sosa that sending demand letters constitutes protected petitioning activity. 437 F.3d at 933. In Sosa, the Court recognized that an “invitation to engage in negotiations to settle legal claims is a common, if not universal, feature of modern litigation.” Id. at 936. The Court found Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 31 of 37 PageID: 1946 25 that the “practice [of sending attorney demand letters] permits parties to frame their legal positions, often streamlining any subsequent litigation, and thereby reducing legal costs and facilitating access to the courts.” Id. Because the attorney demand is too closely intertwined with litigation, it could not be separated from the right of petitioning the judiciary, and it is thus a protected activity. Id; see also DirecTV, Inc. v. Shouldice, No. 5:03-CV-62, 2003 U.S. Dist. LEXIS 19689, at *20 (W.D. Mich. Oct. 20, 2003) (holding in nearly identical circumstances that “[t]he acts of DirecTV in sending out pre-suit letters and making threats of litigation…are the type of litigation activities covered by the Noerr-Pennington doctrine.”); DirecTV, Inc. v. Milliman, No. 02-74829, 2003 U.S. Dist. LEXIS 20938, at *25-26 (E.D. Mich. Aug. 26, 2003)(same). Although this Court has not specifically ruled on whether the right to petition encompasses private pre-suit demand letters in similar contexts, at least one court in the Third Circuit believes that it would hold similarly to Sosa. The Eastern District of Pennsylvania held: “Since Noerr-Pennington immunity is "based" on "First Amendment principles”…there is little intelligible reason why presuit demand letters in the antitrust context should be treated differently than those in analogous statutory contexts.” Sweet St. Deserts, Inc. v. Chudleigh's Ltd., No. 12-3363, 2013 U.S. Dist. LEXIS 49283, at *18 (E.D. Pa. Apr. 4, 2013). Similarly, courts from around the country have extended the Noerr-Pennington doctrine to encompass prelitigation Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 32 of 37 PageID: 1947 26 letters. See McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1560 (11th Cir. 1992) (litigation threats are protected); Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358, 1367-68 (5th Cir. 1983) (same); Barq's Inc. v. Barq's Beverages, Inc., 677 F. Supp. 449, 452-53 (E.D. La. 1987) (prelitigation rights to enforcement of trademark litigation); Columbia Pictures Indus., Inc. v. Professional Real Estate Investors, Inc., 944 F.2d 1525, 1528-29 (9th Cir. 1991) (extending the doctrine to settlement letters); Primetime 24 Joint Venture v. Nat'l Broad. Co., 219 F.3d 92, 99-100 (2d Cir. 2000) (extending the doctrine to pre-litigation threat letters). The Lonstein Defendants’ pre-suit demand letters are entitled to the same protections found in Sosa, and this Court should not hesitate to rule that NJ RICO claims are also subject to the same constraints. The Noerr-Pennington doctrine is readily applied to claims under state statutes, regulations or common law theories that violate the Petition Clause. E.g., Brownsville Golden Age Nursing Home, Inc. v. Wells, 839 F.2d 155 (3d Cir. 1988) (holding that the doctrine precluded tort liability for petitioning to shut down a nursing home operating in violation of applicable regulations); Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 128 (3d Cir. 1999) (applying the doctrine’s immunity applies to New Jersey tort claims); Tobing v. Parker McCay, P.A., No. 3:17-cv-00474, 2018 U.S. Dist. LEXIS 71639, at *24 (D.N.J. Apr. 30, 2018) ("This court, along with other courts, has by analogy extended Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 33 of 37 PageID: 1948 27 the Noerr-Pennington doctrine to offer protection to citizens' petitioning activities in contexts outside the antitrust area as well.") (internal citations omitted). Here, Plaintiff accuses Defendants of violating NJ RICO via attorney demand letters that “improperly threatened Plaintiff and others similarly situated with prosecution and/or litigation for purportedly unauthorized use of satellite cable television services from DirecTV.” (2 A.C. ¶¶ 41, 43-45, 78.) Plaintiff also asserts that these pre-suit demand letters constitute a fraudulent practice, extortion, and/or mail fraud. (Id. at ¶ 78.) Thus, in this case, a successful NJ RICO “claim would quite plainly burden [the Lonstein Defendants’ and their client’s] ability to settle legal claims short of filing a lawsuit.” Sosa, 437 F.3d at 932. Accordingly, a ruling that a RICO claim may lie based on attorney demand letters such as those at issue here would inhibit the First Amendment right to petition and pursue litigation. Therefore, this Court should apply the doctrine and dismiss the Second Amended Complaint. The Noerr-Pennington doctrine has an exception in that it does not apply to sham litigations. The Supreme Court has adopted a two-prong test to identify a sham litigation: First, "the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits"; second, the litigant's subjective motivation must "conceal[] an attempt to interfere directly with the business relationships of a competitor . . . through the use [of] the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon." Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 34 of 37 PageID: 1949 28 Prof'l Real Estate Investors, Inc. v. Columbia Pictures, 508 U.S. 49, 60-61 (1993). To fall within this exception, a lawsuit "must be a sham both objectively and subjectively." BE&K Constr. Co. v. NLRB, 536 U.S. 516, 526 (2002). Plaintiff has not satisfied the objective prong of the sham litigation test. For objective reasonableness, "[a] winning lawsuit is by definition a reasonable effort at petitioning for redress and therefore not a sham." Prof'l Real Estate Investors, 508 U.S. at 60, n.5. Further, as held in Sosa, “presuit letters threatening legal action and making legal representations in the course of doing so cannot come within a statutory restriction unless the statute unavoidably so requires, absent representations so baseless that the threatened litigation would be a sham.” 437 F.3d at 940. This is a demanding standard to meet, particularly where, as here, the attorney demand letter concerns a federal strict liability statute for which the plaintiff had violated by the unauthorized use of DirecTV’s programming. Alvarez, 2017 U.S. Dist. LEXIS 159133, at *5. Therefore, it necessarily follows that the Lonstein Defendants were objectively reasonable in concluding that Plaintiff had violated the statute when, in fact, she had. Plaintiff cannot meet this demanding standard. The second prong requires an analysis into a defendant's subjective motivation to determine whether an action was pressed for improper or malicious purpose, or to interfere directly with the business relationships of a competitor. Prof'l Real Estate Inv'rs, Inc., 508 U.S. at 59-60. Given that the statute calls for strict liability and the Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 35 of 37 PageID: 1950 29 Lonstein Defendants’ conducts was therefore objectively reasonable, there is no cause to inquire into the their motives. Id. at 65. And the Court need not analyze the second prong of the sham litigation test and examine the litigant's subjective motivation. Id. at 60. Therefore, it is appropriate to hold that the challenged conduct is protected by Noerr-Pennington immunity and to grant summary judgment. vii. The Conduct Was Subject to the Litigation Privilege The conduct of the Lonstein Defendants alleged by the Plaintiff is protected by the litigation privilege, which “insures that statements by attorneys, parties and their representatives made in the course of judicial or quasi-judicial proceedings are absolutely privileged and immune from liability. The privilege is expansive. New Jersey courts have extended the reach of the litigation privilege even to statements made by attorneys outside the courtroom, such as in attorney interviews and settlement negotiations.” Rickenbach v. Wells Fargo Bank, N.A., 635 F. Supp. 2d 389, 401 (D.N.J. 2009) (internal citations and quotations omitted). “In order for the statements to fall under litigation privilege, they must: (1) be made in judicial or quasi-judicial proceedings; (2) be made by litigants or other participants authorized by law; (3) be made to achieve the objects of the litigation; and (4) have some connection or logical relation to the action." Component Hardware Grp. v. Trine Rolled Moulding Corp., No. 05-891 (MLC), 2007 U.S. Dist. LEXIS 54900, at *15 (D.N.J. July 27, 2007) (internal citations and quotations omitted). Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 36 of 37 PageID: 1951 30 Here, Plaintiff’s allegations stem from the Lonstein Defendants communications and settlement demand in the course of their representation of DirecTV. As such, the communications are privileged, and the Court should grant summary judgment. CONCLUSION For the foregoing reasons, the Court should grant the instant motion and dismiss this action with prejudice as against the movants. LEWIS BRISBOIS BISGAARD & SMITH LLP By:/s/ Jeffrey Spiegel Jeffrey Spiegel Peter Shapiro Attorneys for Defendants Lonstein Law Office, P.C., Julie Cohen Lonstein, and Wayne Lonstein One Riverfront Plaza Newark, New Jersey 07102 973-577-6260 Jeffrey.spiegel@lewisbrisbois.com Peter.shapiro@lewisbrisbois.com Dated: August 21, 2018 Case 3:15-cv-08194-MAS-DEA Document 106 Filed 08/21/18 Page 37 of 37 PageID: 1952