Sunland Construction Inc v. Borek et al

RESPONSE to Motion re MOTION to Dismiss For Failure to State a Claim claims of computer fraud and abuse act and the RICO claim

W.D. La.February 25, 2019

1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION SUNLAND CONSTRUCTION, INC., Civil Action No. 6:17-cv-00540 Petitioner, versus District Judge Mary Ann Vial Lemmon RICHARD BOREK, JR. STATIX ENTERPRISES, LLC Magistrate Judge Joseph C. Wilkinson, Jr. Boreks PLAINTIFF SUNLAND CONSTRUCTION INC.'S OPPOSITION TO DEFENDANT RICHARD BOREK’S MOTION TO DISMISS /s/ Jennifer L. Englander Jennifer L. Englander, La. Bar No. 29572 Atoyia S. Harris, La. Bar No. 36012 Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 701 Poydras St., Suite 3500 New Orleans, LA 70139 Telephone: (504) 648-3840 Facsimile: (504) 648-3859 jennifer.englander@ogletreedeakins.com atoyia.harris@ogletreedeakins.com Attorneys for Plaintiff Sunland Construction, Inc. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 1 of 16 PageID #: 282 i TABLE OF CONTENTS A. Rule 12(b)(6) Motion to Dismiss. ......................................................................................... 2 B. Sunland adequately pleaded facts with sufficient particularity to support a cause of action under the Computer Fraud and Abuse Act. ........................................................... 2 1. The Complaint sufficiently shows that Borek has accessed a protected computer. ... 3 2. The Complaint sufficiently shows that Borek was without authorization and/or exceeded his authorization in accessing the protected computer and did so knowingly and with intent to defraud. ............................................................................ 4 3. The Complaint sufficiently shows that Borek furthered the intended fraud allowing him to obtain value far exceeding $5,000 in damages. .................................................. 5 C. Sunland adequately pleaded facts with sufficient particularity to support a cause of action under RICO. .............................................................................................................. 6 1. Sunland adequately alleged and proved the existence of RICO person and enterprise. .......................................................................................................................... 7 2. Sunland adequately alleged and proved the existence of a RICO pattern of racketeering activity. ........................................................................................................ 8 D. Regardless of how the Court rules on Sunland’s Motion to Dismiss on its’ CFAA claim and its’ RICO claim, this Court can retain supplemental jurisdiction over Sunland’s state law claims. ........................................................................................ 10 CONCLUSION ........................................................................................................................... 11 Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 2 of 16 PageID #: 283 ii TABLE OF AUTHORITIES Cases Abraham v. Singh, 480 F.3d 351 (5th Cir. 2007) .................................................................................................... 10 Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ................................................... 2 Associated Pump & Supply Co., LLC v. Dupre, 2014 WL 1330196 (E.D. La. Apr. 3, 2014) ................................................................................ 3 Baker v. Farmers Elec. Co-op, Inc., 34 F.3d 274 (5th Cir. 1994) ...................................................................................................... 12 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ............................................................. 2 Boyle v. U.S., 556 U.S. 938 (2009) .................................................................................................................... 8 Bridal Expo, Inc. v. van Florestein, 2009 WL 255862 (S.D. Tex. Feb. 3, 2009) ................................................................................ 3 Delta Truck & Tractor, Inc. v. J.I. Case Co, 855 F.2d 241 (5th Cir.1988), cert. denied, 489 U.S. 1079 (1989) .............................................. 7 Edvisors Network, Inc. v. Husser, 2014 WL 3853457 (M.D. La. Aug. 5, 2014) .......................................................................... 7, 8 H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989) ........................................................................................................ 8, 10, 11 Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045 (5th Cir. 1982) .................................................................................................... 2 Landry v. PosiGen, Inc., 2018 WL 806227 (E.D. La. February 8, 2018) ........................................................................... 9 Larco Towing, Inc. v. NewPark Drilling Fluids, LLC, 2010 WL 1416550 (E.D. La. March 31, 2010) ......................................................................... 11 Mendoza v. U.S., 481 F. Supp. 2d 643 (W.D. Tex. 2006)..................................................................................... 12 Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 3 of 16 PageID #: 284 iii Merritt Hawkins & Associates, LLC v. Gresham (Hawkins II), 79 F. Supp. 3d 625 (N.D. Tex. 2015) ......................................................................................... 4 Schlumberer Technology Corp. v. McReynolds, 2016 WL 4597627 (W.D. La. September 1, 2016) ................................................................. 3, 4 Spector v. USAA Casualty Ins. Co., et al, CV 18-8806, 2019 WL 629866 E.D. La. Feb. 14, 2019)............................................................ 2 States v. Turkett, 452 U.S. 576 (1981) .................................................................................................................... 8 U.S. v. John, 597 F.3d 263 (5th Cir. 2010) .................................................................................................. 4, 5 U.S. v. Turkett, 452 U.S 576 (1981) .................................................................................................................... 7 Statutes 18 U.S.C. § 1030(a)(4) ................................................................................................................ 2, 3 18 U.S.C. § 1030(c)(4)(A)(i)(I), (g) ................................................................................................ 3 18 U.S.C. §1030(e)(6) ..................................................................................................................... 4 18 U.S.C. §1030(e)(2)(B) ............................................................................................................... 3 18 U.S.C. § 1961(4) ........................................................................................................................ 7 18 U.S.C. §§ 1961–1968 ................................................................................................................. 6 18 U.S.C. §1961(3) ......................................................................................................................... 6 18 U.S.C. § 1961(4) ........................................................................................................................ 7 Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 4 of 16 PageID #: 285 1 Plaintiff, Sunland Construction, Inc. (“Sunland” or Plaintiff) submits this Opposition to Defendant’s (“Borek” or Defendant) Motion to Dismiss. In support of the Motion to Dismiss, Borek merely states that he moves to dismiss Sunland’s federal claims under the Computer Fraud and Abuse Act (“CFAA”) and under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) “for not being adequately alleged and proven as a matter of law.”1 Borek provides no specifics as to how or why Sunland has failed to plead adequate facts in the complaint sufficient to state plausible claim under the CFAA or under RICO. Borek also seeks to dismiss Sunland’s RICO claims as a matter of law for failure “to adequately allege and prove the existence of a ‘RICO’ ‘enterprise’, the existence of a ‘RICO’ ‘pattern of racketeering activity,’ including the ‘predicate acts’ standard and ‘continuity’ standard under ‘RICO’”. Borek further claims that by dismissing the federal claims the Court loses pendant jurisdiction over the state law claims for breach of fiduciary duty, conversion/civil theft and unjust enrichment. Sunland’s Complaint pleads facts with sufficient particularity to support causes of action under the CFAA and RICO. Additionally, Sunland adequately pleaded the existence of a RICO enterprise and RICO pattern of racketeering activity, as set forth below. Finally, it is premature to assess whether the Court would maintain supplementary jurisdiction over state law claims in the event that the Court dismisses Sunland’s federal claims. Even so, a federal court can maintain jurisdiction over state law claims after considering judicial economy, convenience, fairness and comity. In light of the foregoing and as set forth below, Defendant’s Motion to Dismiss should be denied. 1 See Borek’s Motion to Dismiss, R. Doc. 51, p. 1. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 5 of 16 PageID #: 286 2 A. Rule 12(b)(6) Motion to Dismiss. A motion to dismiss for failure to state a claim is “viewed with disfavor and is rarely granted.”2 To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.”3 “Factual allegations must be enough to raise a right to relief above the speculative level.”4 A claim has facial plausibility when the Sunland pleads factual content that allows the court to draw the reasonable inference that the Borek is liable for the misconduct alleged.5 B. Sunland adequately pleaded facts with sufficient particularity to support a cause of action under the Computer Fraud and Abuse Act. CFAA provides for civil liability where a person, knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $5,000 in any 1-year period. 18 U.S.C. § 1030(a)(4). “To establish a civil claim under § 1030(a)(4), a Sunland must prove the following five elements: (1) the Borek has accessed a protected computer; (2) the Borek has done so without authorization or by exceeding such authorization as was granted; (3) the Borek has done so knowingly and with intent to defraud; (4) in doing so the Borek has furthered the intended fraud and obtained anything of value; and (5) the Sunland has incurred ‘loss ... during any 1-year period 2 Spector v. USAA Casualty Ins. Co., et al, CV 18-8806, 2019 WL 629866, at *3 (E.D. La. Feb. 14, 2019) (quoting Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)). 3 Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). 4 Twombly, 550 U.S. at 556. 5 Id. (citing Twombly, at 556, 127 S.Ct. 1955). Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 6 of 16 PageID #: 287 3 ... aggregating at least $5,000 in damages.’”6 Here, the Complaint contains sufficient facts, which taken as true, state a plausible claim under the CFAA. 1. The Complaint sufficiently shows that Borek has accessed a protected computer. The CFAA defines a protected computer as “a computer … which is used in or affecting interstate or foreign commerce or communications.”7 To affect interstate commerce, the pleading need only assert that the Borek accessed a computer connected to the internet or; the Sunland’s business used its computers to engage in global financial markets by selling products across state lines or; the Sunland’s business communicates between offices across state lines.8 Here, as asserted in the Complaint, Sunland sells products across state lines and communicates between offices across state lines: “Sunland is a leader in pipeline construction and related services with operations across the United States. . . . [with] 11 Sunland offices; providing customer service to a diverse and remote group of 300 Sunland users.”9 Likewise, Sunland’s entire Complaint sets forth how Borek used the internet to defraud Sunland by purchasing products and services from AT&T, Verizon, and CDW (all global companies) using “Sunland’s computer equipment, software, operating systems, storage media, network accounts providing electronic mail, World Wide Web browsing and/or file transfer protocol, to cause Sunland to purchase 3,376 cellular phones from AT&T and Verizon and the 42 CDW Tablets so that he could resell them for 6 See Schlumberer Technology Corp. v. McReynolds, 2016 WL 4597627, *2 (W.D. La. September 1, 2016) (citing 18 U.S.C. § 1030(a)(4), (c)(4)(A)(i)(I), (g)); Associated Pump & Supply Co., LLC v. Dupre, 2014 WL 1330196, at *5 (E.D. La. Apr. 3, 2014) (citing Bridal Expo, Inc. v. van Florestein, 2009 WL 255862, at *8 (S.D. Tex. Feb. 3, 2009)). 7 See 18 U.S.C. §1030(e)(2)(B). 8 See Schlumberer Technology, 2016 WL 4597627 at *3 (allegations that plaintiff was headquartered in Texas and did business across the globe, and defendant worked in Louisiana were sufficient to show that the computer used to commit a CFAA violation affected interstate commerce and so was a protected computer) . 9 See Complaint ¶¶ 12, 15. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 7 of 16 PageID #: 288 4 his own personal benefit.”10 Thus, Sunland has adequately proved that Borek accessed a protected computer. 2. The Complaint sufficiently shows that Borek was without authorization and/or exceeded his authorization in accessing the protected computer and did so knowingly and with intent to defraud. Also, the Complaint shows that Borek was without authorization and/or exceeded his authorization in accessing the protected computer equipment and did so knowingly and with intent to defraud. Section 1030(e)(6) defines exceeds authorized access as “access[ing] a computer with authorization and [using] such access to obtain or alter information in the computer that the accesser is not entitled to obtain or alter.”11 “Since the Fifth Circuit’s decision in United States v. John, 597 F.3d 263 (5th Cir. 2010), [] district courts in the Fifth Circuit have held that ‘a user exceeds his authorization if he knows or reasonably should know that he has exceeded the purposes for which he was granted access.’”12 Ultimately, the employee in U.S. v. John exceeded her authorization, even where she “was authorized to view and print all of the information that she accessed,” because she used that information to perpetrate fraud which was contrary to the employee policies.13 Here, the entire Complaint sets forth how Borek accessed Sunland’s protected computers, created false emails, false invoices, false billing accounts, false service agreements, to knowingly commit a fraud that would allow Borek to swindle Sunland’s money for Borek’s benefit.14 Borek knowingly accessed the protected computers all in contravention of Sunland’s Information Technology Policies, which state that Sunland’s “computer equipment, software, operating 10 See generally Complaint and Complaint ¶ 48. 11 See 18 U.S.C. §1030 (e)(6). 12 Schlumberer Technology, 2016 WL 4597627, *3 (citing Merritt Hawkins & Associates, LLC v. Gresham (Hawkins II), 79 F. Supp. 3d 625, 634 (N.D. Tex. 2015) (citing U.S. v. John, 597 F.3d 263, 271-73(5th Cir. 2010)). 13 U.S. v John, 597 F.3d 263, 272 (5th Cir. 2010). 14 Complaint ¶¶ 20-64 and ¶¶ 65-74. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 8 of 16 PageID #: 289 5 systems, storage media, network accounts providing electronic mail, WWW browsing, and FTP . . . are to be used for business purposes in serving the interests of the company, and of our clients and customers in the course of normal operations. . . .”15 Thus, the Complaint plead facts sufficient to establish that Borek knowingly exceeded his authorized access of a protected computer to further his fraud. 3. The Complaint sufficiently shows that Borek furthered the intended fraud allowing him to obtain value far exceeding $5,000 in damages. The Complaint sufficiently shows that Borek furthered the intended fraud allowing him to obtain value far exceeding $5,000 in damages.16 Specifically, the Complaint alleges that Borek used Sunland’s computer equipment and network accounts to create a false email account purporting to be that of Sunland’s CEO which Borek used to communicate with Verizon to further his Cellular Phone Scheme detailed in the Complaint.17 The Complaint shows that Borek extorted over $2.4 million plus $230,000 from Sunland and funneled the money through Borek’s bank accounts and various Borek enterprises such as Statix Enterprises LLC, Borek Automotive Group, L.L.C, Borek Machine Dynamics, and Southern Systems, among others.18 In light of the foregoing, the Complaint pleads facts which, if true, plausibly establish that Borek violated the CFAA when he used Sunland’s computer equipment and network services to further his Cellular Phone and Statix Schemes as described more fully in the Complaint. 15 Complaint ¶18-19. 16 See Complaint ¶¶ 36a-i, 36-49, 54, 59a-l, 62. 17 See Complaint, ¶¶ 27-36. 18 See Complaint ¶¶ 34, 37, 50-64. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 9 of 16 PageID #: 290 6 C. Sunland adequately pleaded facts with sufficient particularity to support a cause of action under RICO. RICO imposes criminal and civil liability on those who engage in “prohibited activities”.19 Prohibited activities are defined in section 1962 and generally include “a pattern of racketeering activity associated with an enterprise.”20 Success in a civil RICO suit is dependent upon a Sunland establishing that the Borek violated at least one of the four subsections of § 1962.21 “[I]n plain English, the [four] subsections state: (a) a person who has received income from a pattern of racketeering cannot invest that income in an enterprise. (b) a person cannot acquire or maintain an interest in an enterprise through a pattern of racketeering. (c) a person who is employed by or associated with an enterprise cannot conduct the enterprise’s affairs through a pattern of racketeering. (d) a person cannot conspire to violate subsections (a), (b), or (c).”22 All four subsections have three common elements: 1) a person, 2) a pattern of racketeering activity, and 3) an enterprise.23 A person is any individual or entity capable of holding a legal or beneficial interest in property and poses a continuous threat of engaging in acts of racketeering.24 Pattern requires at least two acts of racketeering activity – such as wire fraud, or mail fraud or interstate transportation of stolen goods, among other activity – where the racketeering activities are related and amount to or pose a threat of continued criminal activity.25 Finally, enterprise is defined as “any individual, partnership, corporation, association, or other legal entity, and any union or group 19 See 18 U.S.C. §§ 1961–1968. 20 See Edvisors Network, Inc. v. Husser, 2014 WL 3853457, *2 (M.D. La. August 5, 2014). 21 Id. 22 See Edvisors, 2014 WL 3853457 at *3. 23 See Delta Truck & Tractor, Inc. v. J.I. Case Co, 855 F.2d 241, 242 (5th Cir.1988), cert. denied, 489 U.S. 1079 (1989). 24 See Edvisors, 2014 WL 3853457 at *2 (citing 18 U.S.C. ¶1961(3) and Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241, 242 (5th Cir. 1988)). 25 See Edvisors, 2014 WL 3853457 at *2 (citing H.J. Inc. v. Northwestern Bell Telephone, Co., 492 U.S. 229, 239 (1993)). Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 10 of 16 PageID #: 291 7 of individuals associated in fact although not a legal entity.”26 The Complaint sufficiently alleges facts to support these elements of a RICO claim. 1. Sunland adequately alleged and proved the existence of RICO person and enterprise. First, Sunland has adequately alleged and proved that Borek is a person capable of holding a legal or beneficial interest in property who posed a continuous threat of engaging in acts of racketeering. Borek had an interest in his home and various companies that he used to engage in continuous acts of racketeering.27 Likewise, Sunland has adequately alleged and proved the existence of a RICO enterprise. Borek contends that a single person, acting alone, with no other participants, does not satisfy the “enterprise” standard. Borek misreads and misapplies 18 U.S.C. § 1961(4), as evidenced by Borek’s reliance on Boyle v. U.S., 556 U.S. 938 (2009) and States v. Turkett, 452 U.S. 576 (1981), both cases addressing the association-in-fact enterprise rule under RICO. Borek reads §1961(4) to mean that an enterprise must include a group of individuals that are not a legal entity (must be an association-in-fact). This is incorrect. Under RICO 18 U.S.C. § 1961(4) an “enterprise” includes any legal entity, such as an LLC like Statix Enterprises, LLC28 and can alternatively expand to include a non-legal entity that encompasses a group of individuals as an association-in- fact enterprise.29 Here, there is no need to do an association-in-fact analysis because Statix is a legal entity and thus a RICO enterprise.30 26 See 18 U.S.C. §1961(4). 27 See Complaint ¶¶ 7, 8, 34, 20-64 and 75-93. 28 Landry v. PosiGen, Inc., 2018 WL 806227, *3 (E.D. La. February 8, 2018) (a limited liability company is a RICO enterprise) (slip copy). 29 See U.S. v. Turkett, 452 U.S 576, 581-82 (1981) (enterprise includes two categories of associations that encompass enterprise – a legal entity such as a partnership or a group of individuals associated-in-fact but not a legal entity). 30 Borek also used his company Borek Automotive Group, LLC to effectuate transactions through AT&T to extort money from Sunland. Borek directed payment from AT&T to Borek Automotive Group, LLC’s physical address located at 605 Lagneaux Road, Duson, Louisiana 70529 beginning March 10, 2016 through July 23, 2016. See Complaint, ¶¶ 34-36. The Louisiana Secretary of State’s database shows that Borek Automotive Group, L.L.C’s Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 11 of 16 PageID #: 292 8 The Complaint asserts that Borek is the founder and Managing Member of Statix, an LLC organized under the laws of Texas, and that “Statix is a separate and distinct entity from Defendant Borek.”31 The Complaint also alleges that Statix is a RICO enterprise.32 Thus, the facts in the Complaint, taken as true, plausibly establish that Statix is an enterprise, Borek is the RICO person in this case, and Borek directed all operations for the Statix enterprise, as pleaded in Sunland’s Complaint.33 2. Sunland adequately alleged and proved the existence of a RICO pattern of racketeering activity. Sunland adequately alleged and proved the existence of a RICO pattern of racketeering activity in its Complaint. Facts specifically related to the Statix scheme and pattern of racketeering activity are set forth in Sunland’s Complaint in Paragraphs 50-64 and 75-93. Borek argues that his racketeering activity with Statix was not continuous enough to rise to the level of a pattern of racketeering, as it occurred only over a nine-month period from November 2015 to July 2016. Borek further states that to constitute a pattern of racketeering there must be an indefinite continued threat; he contends that by resigning from Sunland, he removed any indefiniteness of a continued threat. However, the fact that Borek was caught does not preclude a finding that there was an indefinite continued threat of racketeering. Likewise, the fact that his racketeering activity was conducted in the regular course of Borek’s legitimate business as Sunland’s IT Manager is sufficient to establish a threat of continued criminal activity. Under the RICO statute, to prove a pattern of racketeering activity there must be a showing of at least two acts of racketeering activity that are related and amount to continued criminal domiciliary and mailing addresses are located at 605 Lagneaux Road, Duson, Louisiana 70529 and Christy Borek, Richard Borek’s wife, is a member of Borek Automotive Group. 31 See Complaint, ¶¶ 8, 78, 83. 32 See Complaint, ¶ 81. 33 See Complaint, ¶¶ 75-83. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 12 of 16 PageID #: 293 9 activity or posed a threat of continued criminal activity.34 The H.J. Inc. case relied on by Borek sets forth the rule for assessing continuity of the criminal activity.35 To show continuity, Sunland need only show that the criminal activity amounted to continued criminal activity or posed a threat of continued criminal activity.36 The Court can consider whether the criminal activity posed a threat of continued criminal activity by establishing (1) that there was a specific threat of repetition that would extend indefinitely into the future or (2) that the predicates are a regular way of conducting the Borek’s ongoing legitimate business.37 Here, the Complaint alleges that through Statix, Borek invoiced Sunland for fraudulent host-servicing contracts on a monthly basis.38 These contracts posed a threat of continued racketeering activity since they provided an indefinite continuing stream of income to Statix and Borek.39 Interestingly, Borek contends that his resignation removed the threat of continued criminal activity. Borek resigned because Sunland discovered his criminal activity; his contention that his resignation was voluntary is misleading and is irrelevant to the determination of a pattern of racketeering – if Borek had not been caught, he would have continued extorting money from Sunland.40 Additionally, in H.J. Inc. the court held that posing a threat of continued criminal activity can be satisfied “where it is shown that the predicates are a regular way of conducting Borek’s ongoing legitimate business…or of conducting or participating in an ongoing and legitimate RICO 34 Edvisors Network, Inc. v. Husser, 2014 WL 3853457, *2 (M.D. La. Aug. 5, 2014). 35 See H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 241 (1989). 36 Id. 37 Abraham v. Singh, 480 F.3d 351, 355 (5th Cir. 2007). 38 See Complaint, ¶59d-e and g-h, and j-l. 39 See H.J. Inc., 492 U.S. at 242 (fraudulent insurance business collecting premiums monthly constitutes threat of continued racketeering activity because the monthly premiums could go on indefinitely). 40 Larco Towing, Inc. v. NewPark Drilling Fluids, LLC, 2010 WL 1416550, *3 (E.D. La. March 31, 2010) (conduct could have extended indefinitely into the future but for a suit being filed, but for the discovery of the criminal activity or but for the perpetrator getting terminated). Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 13 of 16 PageID #: 294 10 ‘enterprise’.”41 In other words, as alleged in the Complaint, Borek was extorting money from Sunland through activity that would appear to be in the normal course of his legitimate business as Sunland’s IT manager42 – it was expected that Borek as IT manager would purchase cell phones and other devices for Sunland and would secure hosting services for Sunland’s website and internet. Sunland had no reason to believe that Borek’s purchases and service commitments were not in the normal course of his legitimate business duties, as supported by the allegations in the Complaint that Sunland paid all of the fraudulent Statix invoices in the normal course of business,43 which could have gone on indefinitely. Thus, Borek’s contention that Sunland has not shown a continuous pattern of racketeering activity is erroneous. All of Borek’s acts of wire fraud vis-a-vis Statix as set forth in the Complaint were related, multiple, and ongoing criminal episodes and constituted a pattern of racketeering activity which caused millions of dollars in losses to Sunland. D. Regardless of how the Court rules on Sunland’s Motion to Dismiss on its’ CFAA claim and its’ RICO claim, this Court can retain supplemental jurisdiction over Sunland’s state law claims. It is premature to consider whether the federal court will continue to exercise jurisdiction over supplemental state law claims if the Court decides to dismiss the federal claims before trial. Nonetheless, “a district court retains the power to hear a supplemental claim after dismissal of all federal claims if, on balance, the underlying values of judicial economy, convenience, fairness and comity indicate that it should be heard [in the Federal court].”44 Here, Sunland’s state law claims 41 H.J. Inc., 492 U.S at 243. 42 See Complaint, ¶ 15 (“[Borek’s] duties [as Sunland’s IT Manager] included but were not limited to: . . . maintaining current and accurate inventory of technology hardware, software, licenses and resources on behalf of Sunland; negotiating license agreements and asset purchases with channel partners and vendors on behalf of Sunland; and developing and managing technology budget and monitoring and approving related expenditures for Sunland.”) and ¶¶ 20-64. 43 See Complaint, ¶¶ 53-59. 44 Mendoza v. U.S., 481 F. Supp. 2d 643 (W.D. Tex. 2006) (citing Baker v. Farmers Elec. Co-op, Inc., 34 F.3d 274, 283 (5th Cir. 1994)). Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 14 of 16 PageID #: 295 11 against Borek are the subject of Plaintiff’s Motion for Partial Summary Judgment, for which briefing has closed.45 Although Sunland has pleaded sufficient facts to state a plausible claim under the CFAA and RICO, even if these claims are dismissed, judicial economy and convenience support this Court’s retention of supplemental jurisdiction to rule on Sunland’s Motion for Partial Summary Judgment and grant it judgment as a matter of law on its state law claims against Borek. CONCLUSION To conclude, Borek’s Motion to Dismiss should be denied. Sunland more than adequately alleged and proved the existence of a CFAA violation and a RICO violation. Additionally, the Court can retain supplemental jurisdiction over Sunland’s state law claims regardless of whether the Court affirms or denies Sunland’s Motion for Summary Judgment on its RICO claim. /s/ Jennifer L. Englander Jennifer L. Englander, La. Bar No. 29572 Atoyia S. Harris, La. Bar No. 36012 Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 701 Poydras St., Suite 3500 New Orleans, LA 70139 Telephone: (504) 648-3840 Facsimile: (504) 648-3859 jennifer.englander@ogletreedeakins.com atoyia.harris@ogletreedeakins.com Attorneys for Plaintiff Sunland Construction, Inc. 45 See R. Docs. 48-50, 53. Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 15 of 16 PageID #: 296 12 CERTIFICATE OF SERVICE I hereby certify that a copy of the above and foregoing has been served on Richard W. Borek, Jr., via Federal Express to the following: Richard W. Borek, Jr. 20260-035 Lafayette Parish Correctional Center 916 Lafayette Street Lafayette, LA 70501 This 25th day of February, 2019. /s/ Jennifer L. Englander 37545738.2 Case 6:17-cv-00540-MVL-JCW Document 55 Filed 02/25/19 Page 16 of 16 PageID #: 297