Carter Bryant v. Mattel Inc

MEMORANDUM in Opposition to Motions of the MGA Parties and IGWT 826 to Dismiss RICO and Creditor Claims [PUBLIC REDACTED VERSION]

C.D. Cal.May 17, 2010

QUINN EMANUEL URQUHART & SULLIVAN, LLP John B. Quinn (,Bar No. 090378 (j ohnquinn qumnemanuel.com Michael T. eller (Bar No. 196417} {michaelze I ler@quinnemanuel . com} 865 South Figueroa Street , 10th Floor Los Angeles , California 900 i 7-2543 Telephone : (213) 443-3000 Facsimile : (213) 443-3100 Attorneys for Mattel, Inc. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UMTED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION MATTEL, INC., a Delaware corporation, et al., Plaintiffs, vs. MGA ENTERTAINMENT, INC., a California corporation , et ai., Defendants. AND CONSOLIDATED ACTIONS PUBLIC REDACTED VERSION CASE NO. CV 04-9049 DOC {RNBx} Consolidated with Case No. CV 04-09059 Case No. CV OS-02727 Hon. David O. Carter MATTEL INC.' S OPPOSITION TO THE MGA PARTIES' AND IGWT 826'S MOTION TO DISMISS RICO AND CREDITOR CLAIMS Date: June 7, 2010 Time: 8:30 a.m. Courtroom: 9D Phase 1: is^ry Cut-Off: TBD Pre-Trial Conference: TBD Trial Date: TBD 15.0797S/3502479.1 OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 1 of 33 Page ID #:263418 1 2 3 4 5 6 7. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5.07975135407A4.2 TABLE OF CONTENTS Page I. MATTEL'S RICO CLAIMS ARE PROPERLY ALLEGED ............................... 2 A. Mattel Has Properly Alleged A RICO Enterprise ....................................... 2 B. MGA Mischaracterizes Mattel's Well-Pleaded Conspiracy Claim ............ 4 C. The Mail And Wire Fraud Predicate Acts Are Properly Pleaded ............... 5 1. Mattel Has Pleaded Mail And Wire Fraud With Particularity ......... 5 2. The Scheme To Defraud Is Pleaded With Particularity And The Attached Mail And Wire Fraud Acts Furthered That Scheme .............................................................................................. 6 (a} 18 U.S.C. § 1346 Is Expressly Included In RICO ................ 10 {b) Defendants ' Scheme To Defraud Mattel Through Trade Secret Theft Supports Mail And Wire Fraud .................. ..... 11 (c) Defendants ' Scheme Of Obstruction , Perjury, And Spoliation Supports Mail And Wire Fraud ........................... 12 {d) Defendants ' Scheme To Conceal Assets Through Fraudulent Transfers Supports Mail And Wire Fraud .......... 13 ^ II. III. ^ IV. D. MGA And Larian Traveled In And Used Interstate And Foreign Commerce With An Intent To Commit Commercial Bribery .................. 14 MGA' S RICO INJURY ARGUMENTS, RAISED VIA EMAIL, ARE MERITLE S S ........................................................................................................ 16 A. There Is No " Racketeering Injury" Requirement ...................................... 17 B. Defendants Substantially Injured Mattel ' s Business And Property..........17 C. Defendants ' Criminal Copyright Infringement Injured Mattel ................. 18 MATTEL'S FRAUDULENT TRANSFER AND DISTRIBUTION CLAIMS ARE PROPERLY PLEADED ............................................................19 A. Mattel's UFTA Claims Are An Integral Part Of This Case ...................... 19 B. Mattel States A Valid Claim For Actual Fraudulent Transfers ................ 20 C. Mattel States A Valid Claim For Prohibited Distributions ....................... 21 MGA' S INTENTIONAL DESTRUCTION OF PROPERTY HELD IN CONSTRUCTIVE TRUST FOR MATTEL IS ACTIONABLE ........................ 23 CONCLUSION .............................................................................................................. 25 _^_ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 2 of 33 Page ID #:263419 TABLE 4F AUTHORITIES 2 3 4 5 6 7 8' 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5.079751356D744,2 Page Cases Allard v . DeLorean, 884 F.2d 464 (9th Cir . 1989} ................................................................................13 Annod Corp . v. Hamilton & Samuels, 100 Cal . App. 4th i 286 (2002) ............................................................................. 21 Atkinson Anadarko Bank & Trust Co., 808 F . 2d 438 (5th Cir. 1987 ) .................................................................................. 3 Batt v . City and Countt-y o San Francisco, 155 Cal. App. 4th b5 2007) ................................................................................. 25 Blonder-Tongue Labs., Inc. v . Univ. of .Ill. Found. , 402 U.S . 313 (1971} .......... .................................................................................... 19 Bonyton v . Headwaters, Inc. , 243 Fed . Appx. 610 (Fed. Cir . 2007) .................................................................... 25 Bowoto v . Chevron Corp., 481 F. Supp . 2d 1010 (N.D. Cal. 2007 ) ................................................................ 16 Brid e v. Phoenix Bond & Indem. Co., 1^8 S. Ct. 2131 {2008 ) ............................................................................................6 Bryant v . Mattel, Inc., 573 F. Supp . 2d 1254 (C.D. Cal . 2007} .........................................................passim Cadle v. Schultz, 779 F . Supp . 392 (N .D. Texas 1991 } ...................................................................... 7 California Pharm. Mgmt, LLC v. Zenith Ins. Co., 669 F . Supp . 2d 1 152 {C.D . Cal. 2009) ..................................................................7 Carpenter v. U. S. , 484 U.S. 19 (1987} ... ................................................................................... 7, 1 i, 18 Cedric Kushner Promotions v. King, S33 U.S. 158 (2001 ) ................................................................................................3 City of Chicago v. Intl Coll. of Surgeons, 522 U.S. 156 {1997} ..............................................................................................20 In re Countrywide Fin. Cor ., 601 F. Supp. 2d 1201 (SpD . Cal. 2009} , cited by MGA ......................................... 4 Credit Managers Assn o S . Cal. v. Fed. Co., 629 F. Supp . 175 {C. .Cal. 1985) .......................................................................22 DLG Mortgage Capital v . Kontogiannis 594 F . Supp . 2d 308 (E.D.N.Y. 2009 .................................. .... 20............................ -11- OPAOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 3 of 33 Page ID #:263420 1 2 3 4 5 6 s 9 10 11 12 13, 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5,07975 /3500744.2 David v. Hermann 129 Cal. App. nth 672 (2005) ..............................................................................24 Deane v . Weyerhauser Mortg. Co. , 967 F. Supp . 30 {D. Mass. 1997 ) ............................................................................ 3 Doe v. Roe, 756 F . Supp. 353 (N.D. Ill. 1991 ) ......................................................................... I 1 Doe v. Roe, 95$ F.2d 763 (7th Cir. 1992 ) .................................:..............................................11 Dooley v . Crab Boat Owners Assn, 2004 WL 902361 (N.D. Cal . Apri126, 2004) ......................................................... 5 In re Dunoco Corp. , 56 B.R . 137 (lBarlkr . C.D. Cal. 1985) ...................................................................22 Elliot v . Elliot, 231 Cal . App. 2d 205 (1964) ................................................................................ 24 Engle v. Matrix Golf & Hospitality Phila. LLC, E D P M 31 2009)2009 WL 880680 20.......................................................... . a. ar . ,( Farmers Ins . Ex. v. Zerin, 53 Cal. App. 4th 445 (1997) ................................................................................ 24 Fideli Nat. Fin., Inc . v. Friedman, l A r 2009)27209 WL 1160234 (C D C 14......................................................, p .. . a , Fithian v . Fithian, 74 Cal . App. 3d 397 (1977} .................................................................................. 24 Flol 35aF. SugYe2d 1271geS^ .D. Fla. 2001 ...........Pp• ( ) ...................................................... i 3 Formax, Inc. v. Hostert 19884 F 2d 388 F d di 12} . .............................................................................1 . ( e . r.8 Glue-Fold, Inc. v . Slautterback Corp., 82 Cal. App. 4th 1018 (2000) ...............................................................................25 Greenstein v. Peters, 2009 WL 722067 (C.D. Cal. Mar. 16, 2009} ..........................................................3 Grunenthal GmbH v. Hotz, 712 F.2d 421 (9th Cir, 1983) ................................................................................16 Gutierrez v. Givens, 1 F. Supp . 2d i077 ( S.D. Cal . 1998} .....................................................................14 Heckmann v. Ahmanson, 168 Cal. App. 3d 119 (1985 ) ................................................................................24 -111 _ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 4 of 33 Page ID #:263421 Ideal Steel Supply Cor . v. Anza, 373 F.3d 251 {2d C^r. 2004), overruled on other cog unds, 547 U.S . 451 {2006}.18 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5.0747513500744.2 Katzman v. Victoria's Secret Catalogue, 167 F.R.D. 649 (S.D.N.Y. 1996) ............................................................................3 Liquidation Comm'n o f Banco Intercontinental, S.A. v. Renta, 530 F.3d 1339 {11th Cir. 2008} ............................................................................16 Living Denagns, Inc. v . E.I. Dupont de Nemours and Co., 431 F.3d 353 (9th Cir . 2005) 13, 18 Mackey v. Kudelski S.A., 2008 WL 65401 {S.D. Cal. Jan. 3, 2008} ................................................ ........15 McCarth v. Poulsen, 173 Cal. App. 3d 1212 {1985} ..............................................................................24 Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 {9th Cir. 2002} .............................................................................. 17 Munger v. City o Glasgow Police Dept., 227 F 3d 108 (9th C;ir 2000) 20. . .............................................................................. Natomas Gardens Inv. Group LLC v. Sinadinos, 2009 WL 1363382 (E.D. Cal. May 12, 2009} ..................................................... 17 Norton v. Bassett 154 Cal. 411 ^1908) .............................................................................................. 24 Odom v. Microsoft Cor ., 486 F 3d 541 h C^ 20079{. t r. ) ................................................................................ ..3 Olson v. Toy, 46 Cal. App. 4th 818 (1996) ................................................................................. 24 Omni Home Fin., Inc. v. Har ord Life & Annuity Ins. Co., 2008 WL 4616796 S D l A 008( . . a . ug. 1, 2 ) ........................................................ 20 Pa. Assn of Edwards Heirs v. Rightenour, 235 F.3d 839 (3d Cir. 2000} ................................................................................. ..4 Perrin v. U. S , 444 U.S. 37 {1979) ................................................................................................ 14 Pharmacare v. Caremark, 965 F. Supp. 1411 (D. Hawaii 1996} .................................................................... 15 Physicians Mut. Ins. Co. v. Greystone Svg. Corp., 2009 WL 855648 (S.D.N.Y. Mar. 25, 2009) ..........................................................3 In re PillowTex Corp., 2010 WL 1506922 (Bkrtcy. D. Del. 2010} ...........................................................20 OPPOSITION TO MOTION TO DISMISS RFCO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 5 of 33 Page ID #:263422 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5.079751350D7441 Poulos v. Ceasars World, Inc., 379 F.3d 654 (9th Cir . 2004) ................................................................................ 16 Re Alco Indus ., Inc. v. Nat'l Ctr. for Health Educ., Inc., 812 F. Supp. 387 (S.D.N.Y. 1993) ....................................................................... 16 Reves v. Ernst & Youn , ( ...............................................................................................4507 U.S. 170 1993 In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995 ) ................................................................................ 19 Riverwoods Cha paqua Corp. v . Marine Midland Bank, 30 F.3d 339 ^2d Cir. 1994^) ................................................................................... ..3 Rose v . Bartle, 871 F.2d 331 {3d Cir. 1989) ................................................................................. ..5 Rothberg -v. Chloe Foods Corp., 2007 VVZ 2128376 (E.D.N.Y. July 25 , 2007) ....................................................... 13 In re SDR Ca ital Mgmt ., Inc., 2007 WL 450999 (Bankr . N.D. Cal . Nov. 14 , 2007} ......................................... 22 SEC v. Clark, 915 F .2d 439 (9th Cir. 1990) ................................................................................ 12 Salinas v. U. S , 522 U . S. S2 (1997) ................................................................................................ ..4 Savage v . Glendale Union High Sch., 343 F.3d 1036 {9th Cir. 2003 ) .............................................................................. 19 Schmuck v. U. S , 489 U.S. 705 ( 1989) .............................................................................................. ..6 Sedima 473 U.S . 479 ......................................................................................................... 17 Sequa Cô̂r̂p. v. Gelmin 1996 WL 745448 (S^.D.N.Y. Dec. 31, 1996 , rev d on other grounds, 156 F.3d 136 (2d C^r. 1998) ...........................................11 Shoregood Neater Co. v. U. S. Bottling Co., 2009 U.S. Dist. LEXIS 69624 {D. Md. Aug. 10, 2009) .......................................23 Smith v. Jackson, 84 F.3d 1213 (9th Cir. 1996} ................................................................................12 Snider v. Consolidation Coal Co., 973 F.2d 555 {7th Cir. 1992), cert. denied, 113 S. Ct. 981 ..................................19 St. ,Tames Armenian Church o Los Angeles v. Kurkjian, 47 Cal. App. 3d 547 {197 ) ..................................................................................24 ^^_ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 6 of 33 Page ID #:263423 1 z 3 4 5 6 7 8 9 la 11 12 13 14 15 16 17 18 19 2a 21 22 23 24 25 2b 27 28 Steinberg v. Alpha Fi th Group , 2010 WL 133284 (S.D.FIa . 2010} ......................................................................20 Stochastic Decisions v. DiDomenico, 995 F.2d 115$ (2d Cir. 1993} ...............................................................................1 S Streck v. Peters, 855 F. Supp. 1156 {D. Haw. 1994) .......................................................................13 Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007} ..............................................................................................22 Torch Liquidatin Trust ex rel . Bridge Assocs. v. 5tockstill, 561 F.3d 377 ^Sth Cir. 2009 ) ................................................................................13 Tr. of the Constr. Indus. ^ Laborers Health & Welfare Trust v. Desert Tralley Landscape & Maint., Inc., 333 F.3d 923 (9th Cir. 2003) ..........................................................................19, 20 U. S. v. Fiander, 547 F.3d 1036 (9th Cir. 2008) ................................................................................4 U. S. v. Frega, 179 F.3d 793 {9th Cir. 1999} ..................................................................................5 U. S. v. Halbert, 640 F.2d 1000 (9th Cir . 1981 } .............................................................................. .. 6 U. S. v. Louderman, 576 F.2d 1383 {9th Cir. 1978} .............................................................................. 12 U. S v. Nader, 542 F.3d 713 (9th Cir . 2008) ................................................................................ 14 U. S. v. Pegg, 782 F 2d 1498 (9th Cir 1986) 25. . .............................................................................. U. S v. Pemberton 121 F.3d 1157 8th Cir. 1997} .............................................................................. .. 6 U. S v. Tille, 729 F.2d 615 {9th Cir . 1984) ................................................................................ .. S U. S. v. Welch, 327 F.3d 1081 {10th Cir. 2003} ............................................................................ 14 U. S. v. Bagnariol, 665 F.2d 877 (9th Cir . 1981) ................................................................................ 14 U. S. v. Bohonus, 628 F,2d 1167 {9th Cir. 1980) .............................................................................. 11 U. S. v. Phillip Morris USA, Inc., 566 F . 3d 1095 1130-31 (D .C. Cir. 2009) , pet. for , cert . f fed {U .S. Feb . 19, 2010) (No 09-980) ...........................................16 5,07975/3540744,2 -Uj_ OFFOSITION TO MOTION TO DISMISS AiCO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 7 of 33 Page ID #:263424 2 4 5 6 7 S 9 10 I1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5.07975I350^744.2 U. S. v. Tavelman, 650 F.2d 1133 {9th Cir. 1981) ..............................................................................16 U. S. v. Williams, 441 F.3d 716 (9th Cir. 2006} ..........................................................................10, 11 Van-Amer. Ins.. v. Schiapp a, 191 F.R.D. 537 (S.D. Uhio 2000) .........................................................................20 Watts v. Allstate Indem. Co., 1 OS 7 .Cal. Jul. 1, 2009) ............................................................3 World Wrestling Ent., Inc. v. Jakks Paci ac, Inc., 530 F. Supp. 2d 486 {S.D.N.Y. 200 ..................................................................11 Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020 (9th Cir. 2003) ..............................................................................19 Statutes 18 U.S.C. § 2 ..............................................................................................................4 1 S U.S.C. § 1346 .......... ........................................................................................10, 11 18 U.S.C. § 1952 .......... ..............................................................................................16 18 U.S.C. § 1961{1)(S} ..............................................................................................15 18 U.S.C. § 1962{c) ..... ................................................................................................4 1 S U.S.C. § 1962{d) ..... ............................................................................................2, 4 28 U.S.C. 2072(c} ......................................................................................................22 Civil Code § 3439. 01 .................................................................................................13 Corporation Code § 506 .............................................................................................22 Corporation Code § 506(b) ........................................................................................23 Penal Code § 641.3 ......................................................................................................6 Penal Code § 7 ...........................................................................................................16 Penal Code § 27(a) .....................................................................................................16 Federal Rule Civil Procedure 8 ..................................................................................20 Federal Rule Civil Procedure 8(a) ............................................................................... S Federal Rule Civil Procedure 8(a}{2} .........................................................................20 Federal Rule Civil Procedure 9(b) ..................................................................5, 20, 21 Federal Rule Civil Procedure 12 ................................................................................17 Federal Rule Civil Procedure 23.1 .............................................................................22 Federal Rule Civil Procedure 56 ................................................................................17 OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 8 of 33 Page ID #:263425 i 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2b 27 28 15.0797513502479.1 MEMORANDUM OF POINTS AND AUTHORITIES Preliminary Statement MGA'smotion re-hashes arguments rejected by the Court years ago. The Court 1 ago ruled that attaching the predicate acts of mail and wire fraud to Mattel's pleading woulc satisfy Rule 9(b); that Mattel's alleged enterprise consisting of MGA, MGA subsidiaries and employees, and certain Mattel employees was properly pleaded; that Mattel ' s Trave Act claim was viable ; and that RICO injuries "easily flow" from the alleged thefts of tradf secrets and copyright infringement at issue here. MGA challenges these long-settles rulings , and Mattel's claims , by mischaracterizing Mattel's allegations and repeatedh misstating the law. Its motion should be rejected in its entirety. Summary of Mattel' s Pleading Mattel 's RICO Allegations . Mattel alleges that from 1999 to the present, defendants Larian, MGA, MGA HK, MGA de Mexico, Bryant, Machado, and Dc defendants were and are associated-in-fact in a criminal enterprise. FAAC at ¶ 123. T1 purpose of the enterprise was and is to unlawfully and fraudulently compete with Mattel l: stealing Mattel's trade secrets and confidential information, depriving Mattel of its right ^ the honest services of its employees, and infringing on Mattel's rights; to conceal sus wrongdoing and fraudulently reap the benefits of it; and to obstruct the efforts of Mattel ar. the Court to uncover and address, this wrongdoing. Id. Mattel alleges numeraus predica acts, including mail fraud, wire fraud, spoliation and concealment of evidence, obstructic of justice, interstate travel in aid of commercial bribery, and criminal copyrig: infringement. FAAC at ¶ 124. The mail and wire fraud acts are alleged to be in furtheranc of a scheme to defraud Mattel by depriving it of its rights to maintain the secrecy of i confidential and trade secret information and to receive honest services, by stealing i confidential and trade secret information, by transferring the ill-gotten gains of these thef and wrongs, and by seeking to obtain priority over Mattel and to obstruct the judici process. FAAC at ¶ 124(a}, (b}. Maffei alleges numerous injuries to its business ar property as a direct and proximate result of this racketeering activity. Ems., FAAC at' -i- _ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 9 of 33 Page ID #:263426 1 2 3 4 5 6 7 8 9 10' 11 12 13 14 15 16 17 18 19 20 21 22 23 24 zs 26 27 28 15.07975/3502479, i 126-127, 132. Mattel also alleges that the above defendants, along with defendants $08 and IGWT 826, conspired together to further, promote, and facilitate the enterprise ^ violation of 18 U.S . C. § 1962 (d}. FAAC at ¶¶ 120-132. Defendants ' Challenges to the FAAC. Stripped of summary judgment arguments, ^ defendants' motion challenges Mattel's pleading in five respects: 1. Defendants' ability to form an enterprise; 2. Defendants' conspiracy to further the enterprise; 3. The particularity of Mattel' s mail and wire fraud allegations and scheme defraud under Rule 9(b}; 4. MGA and Larian's commission of Travel Act violations; and 5. Mattel's creditor and distribution claims. The MGA Parties previously raised the first, third, and fourth challenges in a 2007 ^ motion to dismiss. See Bryant v. Mattel, Inc., S73 F. Supp. 2d 1254 (C.D. Cal. 2007). In i Order, the Court upheld as properly pleaded Mattel's allegations that MGA, MGA HK MGA de Mexico, Larian, Bryant, and Machado had all associated-in-fact in a enterprise , and upheld Mattel's Travel Act allegations . Id. at 1262-64, 66-67. As to particularity of Mattel' s mail and wire fraud allegations , the Court granted Mattel leave amend and instructed Mattel to attach alleged acts of mail or wire fraud to its pleading. at 1264-65. Mattel did so in its Second Amended Counterclaims (she SAAC Exh. C}, ^ defendants did not move to dismiss thereafter , until now. In the FAAC, Mattel has attached alleged acts of mail or wire fraud, described which defendants are alleged to committed each such act, and described the aspect of the scheme to defraud that communications furthered. FAAC at ¶ 124(a), (b}, Exhs. O-W. Argument III. MATTEL'S RICO CLAIMS ARE PROPERLY ALLEGED A. Mattel Has Properly Alleged A RICO Enterprise MGA contends that Mattel' s enterprise claim is def cient because it consists ^^ "MGA, its two wholly-owned subsidiaries , and three key employees." Mot. at 14. The -L- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 10 of 33 Page ID #:263427 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 1$ 19 20 21 22 23 24 25 26 27 28 15.0797513502479. ] Court rejected that argument previously. See Bryant, 573 F. Supp. 2d at 1262. In upholding Mattel's RICO allegations, the Court noted that Cedric Kushner Promotions y. Kin , 533 U.S. 158, 161 (2001), "revers[ed the] lower court's ruling that no RICO claim was stated where [a] president and sole shareholder of a corporation was alleged to have associated with his wholly owned corporation as a RICO `enterprise,' and rel[ied] on [thej fact that person and corporation were separate legal entities." Id. MGA's argument that it cannot associate-in-fact with the other defendants fails now as it did in 2007. Indeed , two enterprise members, Machado and Bryant , were employed by Mattel when they joined the enterprise , I and neither continues to work for MGA. MGA :cannot avoid RICO liability by hiring fellow enterprise members after their unlawful association has begun. Moreover, MGA's entire argument is misguided; under Kushner, even Isaac Larian is deemed separate from MGA for RICO purposes despite being the president/owner ofMGA. Kushner, 533 U. S. at 160 {holding that Don King and Don King Productions were sufficiently separate}. Likewise, and as Ninth Circuit law provides, parent and subsidiary companies may form an associated-in-fact enterprise. See Odom v. Microsoft Corp.., 486 F.3d 541, 547 {9th Cir. 2007} (subsidiary is "a legally different entity with different rights and responsibilities due to its different legal status" and there is "nothing in the statute that requires more `separateness' than that") (quoting Kushner); Watts v. Allstate Indem. Co., 2009 WL 1905047, at *4-6 {E.D. Cal. 3u1. 1, 2009) (subsidiaries may be enterprise members because they are legally distinct}. The only published cases MGA cites were decided before Kushner, and the two unpublished cases are inapposite; in fact, neither even involved an alleged association-in-fact enterprise.3 a See FAAC at ¶¶ 27-35 (Bryant); ¶^ 37-40 43 -46 49-56 Machado .h o . at 15 (citing Riverwoods Cha a ua Coo . v, urine Midland ank 30 F.3d 339 (2d Cir. 1994); Atkinson a ar o a rust o., t Ir. 987; Deane v. We erhauser ort o., upp ass . 1997); Katzman v . Victoria s a o ue, (S.D.N.Y. I996 ee reenstein v. Peters, 2009 WL 722067 (C.D. Cal. Mar . 16, 2009}; Ph sicians Mut. Ins. ^ v . re stone v Co ., 2009 WL $55648 {S .D.N.Y. Mar. e p a^nt^ , s ^n t ase cases a ege t at a corporate defendant was itself the enter^nse , and that its subsidiaries andlor employees were the RICO "^^p_ersons." Greenstein, at 2; Ph sicians Mut. at *7. Neither case is relevant here, where 1Vlattel has a ege an associate -m- act Footnote continued) -^- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 11 of 33 Page ID #:263428 1 B. MGA Mischaracterizes Mattel ' s Well-Pleaded Conspiracy Claim To support its claim that Mattel has somehow pleaded "aiding and abetting" rather 7 8. 9 la 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15,07975/3502479. ] than conspiracy , MGA misquotes the FAAC. The FAAC does not allege , as MGA claims, a "conspiracy to `further[], promot[e] and facilitate[e] [sic]' a violation of section 1962(c)." ^ Mot. at 16. It alleges that defendants unlawfully conspired, in violation of § 1962(d), "by ^ ^ furthering, promoting, and facilitating the Criminal Enterprise ... in violation of 18 ^ U.S.C. § 1962(c)."4 Mattel alleges exactly what is required for conspiracy : an "agree[ment] to facilitate the objective of [a] RICO conspiracy ." U. S. y. Fiander , 547 F.3d 1036, 1043 {9th Cir. 2008); Salinas v. U. S., 522 U.S. 52, 65 (1997} ("it suff ces that [defendant] adopt the goal of furthering or facilitating the criminal endeavor"). MGA's cited cases are off point. Neither Reyes_v. Ernst & Young, 507 U.S. 170 ^ (1993}, nor Pa. Assn of Edwards Heirs v. Rightenour, 235 F.3d 839 (3d Cir. 2000}, involved a RICO conspiracy claim under ^ 1962(d); neither even mentions the word "conspiracy." The Reves Court ruled that, to impose liability under § 1962(c), a defendant must show "some participation in the operation or management ofthe enterprise," 507 U.S. at 185-86; Mattel's Second Counterclaim is for violations of § 1962(d), not (c). The plaintiff in Edwards Heirs pleaded a "common law-based RICO civil aiding and abetting claim," which does not exist. 235 F.3d at 840. Here there is no "aiding and abetting conspiracy" claim , as MGA would have it-there is a conspiracy claims Defendants argue Mattel must allege "which counter-defendant engaged in which particular overt acts," and allege "which counter-defendants agreed with whom to commit what substantive RICO violation and to commit what two predicate acts," and identify "racketeering activity" committed by IGWT. Mot. at 17. MGA provides only a "but cf." enterprise and described the roles of each defendant in that association in detail. As the Couz^ ruled in 2007, and as Kushner dictates , Mattel has adequately alleged an assoc^ation- in-fact. s FAAC at Second Counterclaim heading and ¶ 129 (em basis added).In re Count wide Fin. Co ., 601 F. Supp. 2d 1201 1224 S.D, Cal, 2009, cited by MGA,, mvo ve a c aim or ai mg and abetting under 1 S ^. S.C. ^ 2. The court eld it did not exist, but denied the motion to dismiss plaintiff's RICO conspiracy claim. OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 12 of 33 Page ID #:263429 1 2 3 4 5 6 7 8 9 la 11 I2 13 14 15 1b 17 18 19 20 21 22 23 24 25 26 27 28 15.07975/3502479.1 cite to Salinas as its claimed authority, recognizing that Salinas rejects MGA's argument. 522 U.S. at 63 -65 ("so long as the purpose of the agreement is to facilitate commission of a crime, the actor need not agree `to commit' the crime"; RICO conspiracy statute "broadened conspiracy coverage by omitting the requirement of an overt act; it did not, at the same time [require a plaintiff) to prove each conspirator agreed that he would be the one'' to commit two predicate acts."); see also U. S. v. Tille, 729 F.2d 615, 619 (9th Cir. 1984}, (Section 1962(d) "does not require proof that a defendant participated personally, or agreed to participate personally, in two predicate offenses"); U. S. v. Fres^a,179 F.3d 793, 810 n.21 (9th Cir. 1999); Dooley v. Crab Boat, Owners Assn, 2004 WL 902361, at *8 {N.D. Cal. Apr. 26, 2004) ("For purposes of conspiracy liability, a plaintiff is not required to show that each defendant agreed to commit two predicate acts.").^ Contrary to MGA's unsupported argument (Mot. at I7), Mattel's conspiracy allegations are not subj ect to Rule 9(b) and need not be pleaded with particularity. Rose v. Bartle, 871 F.2d 331, 366 (3d Cir. 1989) ("Allegations of conspiracy are not measured under the Fed. R. Civ. P. 9(b} standard ... ,but are measured under the more liberal Fed. R. Civ. P. 8{a) pleading standard.") (internal citations omitted). Nonetheless, the FAAC provides ample factual support for its conspiracy claim, as evidenced by MGA's complaint that "ninety paragraphs" of description is too many. Mot. at 17. C. The Mail And Wire Fraud Predicate Acts Are Properly Pleaded MGA claims Mattel's mail and wire fraud allegations lack particularity, yet spends seven pages of its brief discussing the allegations in detail, undercutting its own contention. atte as leaded Mail_And„Wire Fraud With Particu,.,,,,,_ _ _.larity The Court previously ruled that attaching mail and wire fraud acts to Mattel's pleading satisf es Rule 9(b).' Relying on the Court's Order-as it did with the ^ MGA also claims Mattel did not allege "agreements" by IGWT but that is simply false. See FAAC at ¶ 129 allegin IGWT "did conspire , combine , con^'ederate and agree ' to fart Il-er the Criminal Enterrprise . Bunt 573 F . Su . 2dat 1 ^64 rantin leave "to file a SAAC that inco orates and attaches " and''/or describes the commungicationgond contents"}. ^ OPPOSITION TO MOTION TO DISMI55 RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 13 of 33 Page ID #:263430 1 2 3 4 5 6 7 8 9 1a 11 12 13 '. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 unchallenged SAAC and TAAC-Mattel attached to the FAAC 126 exhibits constituting wire fraud acts8 and 28 exhibits constituting mail fraud acts.9 These 154 exhibits provide MGA with every possible detail of the alleged acts of mail and wire fraud. MGA's contention that "Mattel does not cite any of those documents" {Mot. at 23) is false; the FAAC cites them expressly , alleges that they furthered the fraudulent scheme and identifies the defendants associated with them.IO Mattel's mail and wire fraud acts need not "identify [] specific false statement[s]," as MGA asserts. Mot. at 23. Again, MGA ignores both binding law and the Court's prior Order that "given the broad scope of the alleged scheme to defraud ...otherwise innocuous and routine communications regarding day-to--day operations and product development may be found to be in furtherance of that scheme." ^ I "A defendant's activities can be a scheme or artifice to defraud whether or not any specific misrepresentations are involved." U. S. v. Halbert, 640 F.2d 1000, 1007 {9th Cir. 1981}; Bridge v. Phoenix Bond 8^ Indem._Co., 128 S. Ct. 2131, 2138-39 (2008) {"Using the mail to execute or attempt to execute a scheme to defraud is mail fraud, and hence a predicate act of racketeering under RICO, even if no one relied on any misrepresentation ."); Schmuck y. U. S., 489 U.S. 705, 712 (1989); U. S. y. Pemberton , 121 F.3d 1157, 1170-71 (8th Cir. 1997} ("an innocent mailing that is, a mailing that is entirely true-may satisfy the mailing element of amail-fraud conviction."). 2. i ri ire eme Faced with the detailed exhibits and descriptions of the wire and mail fraud acts, MGA argues Mattel does not plead facts showing a "scheme to defraud ." Mot. at 18, 22- 24. Not so. "[T]he words `to defraud' in the mail fraud statute have the common understanding of wronging one in his property rights by dishonest methods or schemes, and See FAAC, Exhs. S-W.g ee FAAC, Exhs. O-R. 1° ee AAC at ^¶ 124{a} (citing documents in Exhibits O, P, Q, and R and identifying the de^'endants invo ved in those communications }; 124(b) (same as to Exhibits S, T, , V, ands W . ^^ant 573 F. Supp . 2d at 1265 (citing Tellabs , Inc. v . Makor Issues &_Rights, Ltd., 551 0 S. 3U^ (2007)), h5.07975I3502479 .1 I I _^_ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 14 of 33 Page ID #:263431 1 2 3 4 5 6 7 8 9 10 '' 11 12 13 14 1S 16 17 18 19 20 21 22 23 24 25 26 27 28 ]5.07975/35D2479.1 usually signify the deprivation of something of value by trick, deceit, chicane or overreaching ." Carpenter v. U. S., 484 U.S. 19, 25 ( 1987} (internal quotations omitted).iz Mattel alleges a scheme "to defraud Mattel of its rights to receive honest services ^ from its employees and to maintain the secrecy of its confdential and trade secret ^ information and property; to transfer the i11-gotten gains from such thefts and wrongs, ^ secret MGA assets and purportedly obtain priority over Mattel; and to obstruct the judicial process and thwart the verdicts of the jury and Orders of the Court."13 This scheme is well- pleaded with dozens of supporting pages of details, and Mattel pleads numerous acts o mail and wire fraud that furthered it. MGA argues that "Mattel fails to identify any contact between the MGA Parties and defecting Mattel employees." Mot. at 23. That is simply false. Mattel alleges extensive contact between the MGA Parties and Mattel employees, including Carter Bryant,14 Machado/VargaslTrueba,15 Janine Brisbois,l6 and Yoon Jung Kim,l' while each was still employed by Mattel. Moreover, the documents attached to the FAAC show, among other things: " California Pharm . M mt LLC v. Zenith Ins. Co ., 669 F . Supp 2d. 1152, 1162 (C.D. Cal. arter, maI an wire au acts one to "effecfuat^e ] this scheme" of "intendin to deceive sufficiently pled); Cadle v. Schultz, 779 F. Sup 392, 399 (N.D. Texas 1 ^ 1) ("the lan ua^e of the mail au statute Is road enou h ^o encompass any conduct that fails to ref^ect moral uprightness, ...fundamental hones y, fair play and right dea^ng m the gen̂eral and business life of members of society"). See FAAC at ¶ 124(a (b) (incorporating by reference the details alleged in par^^ra X24-12 i of the FAA 3s ^ee e .^, FAAC at ¶ 2$- 9; 31 33 ;e5 e e: .FAAC at ^¶ 44-46 (a^legln `;frequent personal, telephonic and e-mail contact wltfi^GA personnel including Lgar^an for over two months before their ad Ig sst^ons on April 19, 2004 ,"^ including specifically through the p1ot04nae ,aol.corn e-mail ^ See e. ., FAAC at ¶ 61 ("Brisbois spoke with Larian, MGA's CEO, on September 22, a2^00^o-u^r ^da s before she resigned " from Mattel."}. ^ s F.A.AC at^81.See FAA , Exh. S-1 5-12.Ia FAAC , Exh. 5-15, Exh . V-3 {same); see also Exhs. 5-16 S-17 (MGA emailing Bratz agreements to Bryant before he left Mattel ; s . V-4, V-5 same). -r- OPPOSITiON TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 15 of 33 Page ID #:263432 2 4 5 b 7 9 10 11 12 13 14 15 1b 17 18 19 20 21 22 23 24 25 26 27 28 15.0797513562479. ] z MGA boldly claims "there are no facts" showing it induced Bryant to steal Mattel property, Mot. at 23, ignoring both Mattel's allegations and the Phase 1 jury's f ndings. Mattel alleges that "MGA and Larian knew that Bryant was employed by Mattel as a doll designer and that he owed duties of loyalty and trust to Mattel" and that they "encouraged, aided and financed Bryant's development of Bratz, knowing full well that Bryant, by performing such working, including design-related work ... would be, and was, in breach of his contractual , statutory and common law duties to Mattel ." FAAC at ¶ 33. Mattel also alleges, and the Phase 1 jury found , that MGA "fraudulently concealed" the theft of Bratz.23 Mattel alleges and attaches specific acts of mail and wire fraud in furtherance of this portion of the scheme.24 These include, among many others, 20 FAAC Exh. 5-18, Exh. V-6 {same. Z^ FAAC, Exh. 5-19; see also Exh. S-2 MGA acknowledging Bryant's work at MGA whiZl^ he was still employe^y Mattel and c^iscussin his compensation for that work). z3 FAAC, Exh. 5-45; see also Exhs. 5-58, 5-73 same).See Phase 1B Verdict at 18.24 ee FAAC at ^ 124 {a'}, {b ;see also id . at ¶¶ 24-35.2s FAAC, Exh. 5-21.26 FAAC, Exh. 5-22, 5-59. OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 16 of 33 Page ID #:263433 2 3 4 5 6 7 9 10' 11 12 13 14 15 16 17 18 19 z0 21 22 23 24 2S 26 27 28 l5.0797S/35ti2479.1 MGA claims there is no "factual support" for the wire and mail fraud acts in furtherance of its other thefts {Mot. at 24), but ignores MatteYs allegations. Mattel alleges the thefts in Mexico, Canada and the United States at length, {FAAC at ¶¶ 36-85), and! pleads numerous mail and wire fraud acts furthering that aspect of the scheme. These include, among many examples, 31 Finally, Mattel also alleges that MGA used the mail and wires to transfer or hide its ill-gotten gains and property. FAAC at ¶¶ 97-116. Mail and wire fraud acts alleged in the ^ FAAC furthered this portion of the scheme , including: 27 FAAC, Exh . 5-23; see also Exhs. O-l , O-4, 0-10; Exhs . S-S6 60, 65, 7S ; V-7. Among the many other allegatzons^Vlattel makes^MT attel alleges that the ante rise used the mail to deliver fraudulent applications to the U.S . Copyright Office and^he Patent & Trademark Office falsely re resenting the inventor and owner of Bratz, FAAC , Exhs. 0-5- 9, 11, and used the mail to phip products interstate and overseas to manufacture Bratz furtherln its theft. See FAAC Exh. 0-12, 0-13; see also P-1 through 7; Exhs. Q-^ thrg^tgh ^; T-1 throu ham; V-1, ^-2. FAAC , Exh. ^ 30.z^ FAAC, Exh. 5-31. 3° FAAC , Exh. S-37. FAAC Exh. 5-40• see also FAAC Exhs . 0-14 0-15; Exhs . R-1, R-2; Exhs. S-2S throu h 40 , S^, 63 , 64, 6^-^^80, 84 , $S, 86, 87 9d , 91, 92, 94; Exhs. U-1 througĥ 16; Exhs ^- 1 throu h 14 (communications between IV^achado, Vargas and Trueba andMGA while still em l^oyed at Mattel ; emalls of trade secret information between Vargas Machado and ^rueba days before their resignations from Mattel • ema^ls between MGA anc^ then-current Mattel employees , who later left and joined MBA, brin in stolen trade secrets; phone call records between Machado , Vargas and Trueba andgM^A personnel months prior to their departures from Mattel). "7- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 17 of 33 Page ID #:263434 MGA addresses four specific aspects of the scheme to defraud pleaded by Mattel. Its 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S 26 27 28 15.0797513502479.1 arguments as to each fail. (a) 18 U.S.C. ^ 1346 Is Expressly Included In RICO Workers may be "free to change jobs"( Mat. at 19), but they are not free to secretly work with, aid, and be paid by competitors while still employed by their employer, nor may ^ they deliver to competitors property stolen from their employer, nor may competitors induce such misconduct. Mattel alleges all of this and more, and it is precisely the sort of honest services deprivation § 1346 and RICO are designed to combat. Ignoring the clear language of 18 U.S.C. § 1346 and the very purpose for which ii ^ was created, MGA argues that depriving Mattel of its right to receive honest services is beyond the reach of the RICO statute.37 Congress expressly created 18 U.S.C. § 1346 tc make clear that a scheme to defraud by depriving another of the right to honest services cap and does support mail and wire fraud predicate acts. See U. S. v. Williams, 441 F.3d 716; 720 (9th Cir. 2006} ("Section 1346 thus codifies an `intangible rights' theory of fraud Under this theory, the object of the fraudulent scheme is the victim's intangible right tc receive honest services."}. Courts have repeatedly held that § 1346 can support predicate 32 See FAAC, Exhs . 5-41 42. 44, 49, 50, 54; see also Exhs . S-46 47, 78 (email: beteeiZarlan and the Omni SOS investors devising alto buy the VL^achovia debt). 34 Exh. 5-43.See FAAC, Exh. 48 to Exh. S -48; see also Exhs. 5-52, 53.35 ee FAAC, EXh. 5-51.36 Eris. 5-62, 77. 37 MGA's claim that deprivation of honest services "is not a predicate act"(Mot. at 18) also misses the point . The FAAC alleges defendants ' deprivation of honest servlces as ar aim of defendants ' overall scheme to defraud Mattel , which defendants furthered througr mail and wire fraud predicate acts. -^ ^^ OPPOSITION TO MOTION TO DI5MIS5 RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 18 of 33 Page ID #:263435 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S 26 27 28 acts of mail or wire fraud in the civil RICO context. See,e .^., World WrestlingEnt ., Inc. v. Jakks Pac., Inc., 530 F. Supp. 2d 486, 507 (S.D.N.Y. 2007) (RICO claim stated under § 1346); see also Doe v . Roe, 756 F . Supp . 353, 360 n.12 (N.D . Ill. 1991) (honest services fraud "could be evidence of a pattern of racketeering activity supporting a claim for civil liability"); Doe v. Roe, 958 F.2d 763, 769 n.5 (7th Cir . 1992) {"claim sounding in the loss of honest services ... could serve as predicate racketeering acts"}; Sequa Corp . v. Gelmin, 1996 WL 745448, at * 90-91 (S .D.N.Y. Dec. 3 1, 1996) (honest services claim under § 1346 is an alternative means of establishing the predicate acts required in civil RICO action), rev'd on other grounds , 156 F.3d 136 (2d Cir. 1998}. The Ninth Circuit held the same even before the statute was enacted . U. S. v. Bohonus, 628 F.2d 1167, 1172 (9th Cir. 1980} ("depriving an employer of one's honest services and of its right to have its business conducted honestly can constitute a `scheme to defraud' under [the mail fraud statute]").3$ (b} Throu n Citing no relevant authority, MGA argues that mail and wire fraud cannot "make a predicate act of trade secret theft ." Mot. at 20. The Court has expressly held that they can. Bryant, 573 F. Supp. 2d at 1269 (holding that "theft of trade secrets and confidential information committed by a direct competitor" easily qualifies as an "injur [y] flowing from predicate acts"}. Not only does MGA provide no basis for reconsidering this ruling , but the Court ' s prior Order hardly created a "new RICO predicate act" as MGA argues. Mot. at 20. "Confidential business information has long been recognized as property ." Carpenter v. U. S., 484 U.S. 19, 26 { 1987). Therefore , trade secret theft can support predicate acts of mail and wire fraud . Id. at 25 -28 {recognizing that "[cjonf dential information acquired or 3a Claimin^ that honest services fraud requires a fiduciary relationship , MGA cites U. S. v. Williams, 41 F.3d 716, 723-24 49th Cir. 2006. Mot. at 19. But that case expressly ec zne to decide whether ... ^ , 346 applies o persons who are not fiduciaries" in holding that the statute does apply `m the employeelempfoyercontcxt ." Id. In any event, the Court long ago ruled that Bryant , an enterprise member, owed Mattel a^iduciary duty, and the jury found MGA liable for aidin and abettor Bzyant ' s breach of that duty. See Final Jury -lnstructions As Given, dated^uly 10, 20^, at No. 28 ("As a matter of law Carter Bryant owed both a fiduciary duty and dut of loyalty to Mattel."); see also Final Verdict Form as Given, dated July 17, 2008, at ¶^9, 10. (5.07975/3502479.1 _ ^ ^ _ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 19 of 33 Page ID #:263436 1 2 3 4 5 6 7 8 9 10 it 12 13 I4 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15.0797513502479.1 compiled by a corporation in the course and conduct of its business is a species of property to which the corporation has the exclusive right to and benefit," and holding that "the conspiracy here to trade on the Journal's confidential information is not outside the reach of the mail and wire fraud statutes"). Many other courts have reached the same conclusion. See Formax, Inc. v. Hostert, 841 F.2d 38$, 390 {Fed. Cir. 1988} {"Activities such as those alleged in the instant case--misappropriation of trade secrets--fall within the definition of property and fraud under the mail and wire fraud statutes and thus can fulfill some elements of a RICO violation."); U. S. v. Louderman, 576 F.2d 1383, 1387 (9th Cir. 1978) (upholding wire fraud conviction based on scheme "to obtain intangible, commercial information which the telephone company and post office chose to keep confidential"}; SEC y. Clark, 91 S F.2d 439, 449 (9th Cir. 1990} (addressing securities fraud claims) {"It is well settled that misappropriation and use of confidential information in breach of a fiduciary or similar duty amounts to fraud within the meaning of [RICO] statutes.").3^ (c} coon, Peri Again citing no relevant authority (or indeed any authority at all), MGA argues that its acts of obstruction, perjury, and evidence tampering cannot support mail or wire fraud because its actions "were aimed at skewing the course of litigation and concealing prior misconduct" {Mot. at 21), which purportedly is not actionable. But Mattel alleges that MGA's actions were aimed at, among other things, "defraud[ing] Mattel of its rights to receive honest services from its employees and to maintain the secrecy of its confidential and trade secret information and property."40 These allegations must be accepted as true. Moreover, a scheme "aimed at skewing the course of litigation and concealing prior 39 MGA cites a series of irrelevant cases holding activities other than thefts of property not to be actionable under RICO. Mot. at 21 (citin Smith v. Jackson, 84 F.3 d 1213 ($th Cir. 1996} (u holding dismissal of RICO claims ^ecause, w ere fury had found no copyright ^ntringement "none of appellees' activity in disseminating their songls could ^be `fraudulent"'^}. MGA's other cases concerning wage claims, BCA vio ations, and trademark and patent infringement are similarly irrelevant. None of these cases addresses whether theft of trade secrets and other property may be part of a scheme to defraud, much less purport to overrule the numerous authorities which expressly hold that thefts of property can sup^rt mail and wire fraud claims. MGA's argument should be rejected. FAAC at ¶ 124(a). "' ^ G- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 20 of 33 Page ID #:263437 1 2 3 4 5 6 7 9' 10 11 12'. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15.07975!3502479.1 misconduct," is precisely the kind of fraudulent scheme actionable under RICO; Ninth Circuit law is clear that schemes involving obstruction of justice, perjury, and spoliation can serve as the basis for mail and wire fraud predicate acts, See Living Designs, Inc. v. E.I. Dupont de Nemours and Co_, 431 F.3d 353, 364-65 (9th Cir. 2005) {upholding claims for mail and wire fraud based on "falsification, destruction, and misrepresentation of evidence"}; see also Florida Evergreen Foliage, 135 F. Supp. 2d 1271, 1275-78 (S.D. Fla. 2001) ("fraudulent acts, such as concealing and altering data and defying judicial orders to turn over information[,] ...witness tampering and obstruction of justice ...may form the basis for predicate racketeering acts"}; Streck v. Peters, 855 F. Supp. 1156, i 162 (D. Haw. 1994) {"the better reasoned position is that acts of perjury may, under appropriate circumstances, constitute RICO predicate acts"). {d) Defendants' re t+ rau MGA claims its alleged scheme to encumber and transfer MGA's assets-includi money and Bratz intellectual property rights which were awarded to Mattel (FAAC at ¶¶ 97-121} was merely "to keep the MGA Parties' money from falling into Mattel's hands" (Mot. at 22), which is purportedly not actionable. But Mattel is a creditor of MGA's under California law,41 and MGA's scheme to transfer and encumber Mattel's rights and to prevent Mattel from enforcing them certainly are actionable under RICO. Rothber^g_v. Chloe Foods Corp., 2007 WL 2128376, * 11-12 (E,D.N.Y. July 25, 2007) {RICO injury stated by allegations that "the RICO Defendants manipulated a group of legal entities so as to fraudulently transfer the assets of [the defendant] to entities controlled by [another defendant] in a manner which rendered plaintiff's debt uncollectible ...and which also caused her to incur attorney's fees in her attempt to collect on the debt and in the present aI Under Cal . Civ. Code § 3439 . 01, a "creditor" is a "person who has a claim," and a "claim" is a "rI t to payment , whether or not the raght is reduced to judgment, liquidated, unliquidated, j^ed, contzn ent matured, unmatured disputed, undis uted, legal equitable, secured, or unsecured. ^al. ^lv. Code § 3439.01 emphasis added; Allard"v. ^eLorean, 884 F.2d 464 , 466 9th Cir . 1989 {"An individual with a contingent claim or amages Is a "creditor" within t e meaning o (al. Civ. Code § 3439.01."}. _ ^^_ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 21 of 33 Page ID #:263438 1 2I 3 4i, 5'' 6' 7 8 9 10 11 12 13 14 15 16 17 18 19 2a zl 22 23 24 25 26 27 28 15.0797SI3502479.1 action"}; Gutierrez v. Givens, 1 F. Supp . 2d 1077, 1086 (S.D. Cal. 1998) (RICO clai ^ properly based on defendants' scheme to coordinate fraudulent wire transfers and assets hindered plaintiff's ability to collect a judgment against defendant}; Fideli ^ Fin., Inc. v. Friedman, 2009 VVL 1160234, at * 17 (C.D. Cal. Apr. 27, 2009) {"Fidelity ^ raised questions of fact as to whether transfers conducted by ITSA were fraudul Because these transactions were conducted via wire, they potentially qualify as "predi ^ acts" under RICO."} (citing Gutierrez , 1 F. Supp. 2d at 1085-86). D. MGA And Larian Traveled In And Used Interstate And Forei n ommerce rt n ntent o omm^t ommerc^a ri ery MGA's argument that Mattel is "trying to stretch a federal crime well beyond its intended reach" through its Travel Act allegations (Mot. at 25), is contrary to precedent. B1-Yant, 573 F. Supp. 2d at 1266-67 (upholding Mattel's Travel Act allegations); see also Perrin v. U. S., 444 U.S. 37, 40-41, 50 (1979) (because "Congress intended `bribery ... in violation of the laws of the State in which committed' as used in the Travel Act to encompass conduct in violation of state commercial bribery statutes," affirming conviction under the Travel Act for bribing an employee in violation of state law); U. S. v. Welch, 327 F.3d 1081, 1090-91 (10th Cir. 2003) (violation of Utah commercial bribery statute supported Travel Act conviction). An intrastate mailing or phone call made in furtherance of the scheme is sufficient,42 and the Travel Act only requires intent to commit the underlying state offense.43 RICO expressly provides that it may be predicated on Travel Act violations.44 MGA argues that "Mattel fails to properly plead that MGA or Larian bribed any Mattel employees ." Mot. at 26. But in fact the FAAC alleges that MGA and Larian (1) "paid Bryant while he was still employed by Mattel" in order to steal Mattel ' s property;4s (2) "induced [Machado, Trueba and Vargas] to steal Mattel' s most sensitive and az U.S. v. Nader 542 F.3d 713, 722 {9th Cir. 2008); U. S. v. Ba nariol , 665 F.2d 877, 898439 t ir. 1 . 4a P armacare v. aremark, 965 F. Supp. 1411, 1416-17 (D. Haw. 1996). as FAAC at ¶ 2$; s. ^-17, 24. - i ^-r - OI'POSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 22 of 33 Page ID #:263439 2 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15.87975/3542479. f confidential business planning materials;"4^ (3) "offered Kim a job at MGA, as well as a substantial raise .... [and] also asked for `help' in copying Mattel files;"47 (4) "targeted Castilla-and the Mattel-specific knowledge that he possessed-and lured him to MGA;"48 and (5) "knowingly bribed and secretly used [Cabrera, Morales, and Salazar] to work on MGA products, including Bratz, while they were Mattel employees."49 These acts are not ordinary "competition" or "moonlighting." MGA and Larian used mail and interstate commerce, including interstate and foreign travel,5° with intent to promote the theft of Mattel's property. This was done "corruptly" because MGA and Larian intended to injure or defraud Mattel. BI-^, 573 F. Supp. 2d at 1260. MGA argues that § 641.3 "lacks language making it applicable extra-territorially" to its bribes of employees in Mexico and Canada, citing generic authority holding that California courts "should not ordinarily construe a [state] statute as regulating occurrences outside the state." Markey v.^Kudelski S.A., 2008 WL 65401, at * 12 n.9 (S.D. Cal. ran. 3, 2008). MGA and Larian, however, offered bribes to Machado, Trueba, Vargas, and Brisbois via emails and letters sent from California-Larian and MGA communicated with Mattel's employees in Mexico5 ° and Canada,sZ via phone, email, fax, and letter, with intent to promote the theft of Mattel's trade secrets and confidential information. The act of bribery was committed, "in whole or in part," in California, for the benef t of a California corporation. Cal. Penal Code § 27(a) (penal code applies to "[a]11 persons who commit, in whole or part, any crime within this state").53 All the elements of a Travel Act a6 Td. at ¶ 36-43. a8 I-d. at 'g 1; Exhs . S-64, 79, 87.Td at 77; Exh. 5-72.49 ^ at ¶ 86-90; 50 ld. at 43 (Larian and Kuemmerle traveled to New York to meet Machado }}'•' id. at ¶ 44 ^^.arian and Kuemmerle traveled to Mexico City to meet Machado Var as , and ^`rueba . FAAC at¶¶ 36, 43-47, 52 , 56; Exh. 0-14; Exhs . R-1, 2; Exhs. ^-266 , 55; Exhs. L1- 1-4^2Exhs. W-1-6. s3 Id. at ¶¶ 61-63; Exh. 0-15; Exhs. 5-40, 80.`^[T^]he word p` erson' includes a corporation as well as a natural person ...." Cal. Penal Codde § 7. MUA argues that a California crime committed abroad cannot serve as a RICO predicate . But see Bowoto v . Chevron Co ., 481 F . Supp . 2d i O 10, 1016 n.4 (N.D. Cal. 2007 ) (TraveT^n y requires t at suc conduct be chargeable as a general matter; ^.e., that such conduct is criminal under state law"). _ - i 1- _ _ OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 23 of 33 Page ID #:263440 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 i9 20 z1 22 23 24 25 26 27 28 15,07975/3502379. ] violation occurred in California: the use of an interstate facility, the intent to commit the crime, and the overt act in furtherance of the crime . Extraterritorial application is irrelevant.54 In any case, Mattel alleges numerous acts of bribery that occurred in California, including payments made to at least four Mattel employees to work on Bratz while employed by Matte1.55 Consequently, Mattel has alleged a violation of the Travel Act with regard to both Mattel's domestic and foreign employees. IL MGA'S RICO INJURY ARGUMENTS, RAISED VIA .EMAIL, ARE After the Court struck section II of MGA's motion-the only portion raising issues regarding Mattel's showing ofinjury-MGA's lead counsel purported to raise the issue via email, claiming that it "is discussed in several places" in the motion other than Section II and declaring that the issue "was not stricken by the Court."56 MGA's email assertion is incorrect: the Notice of Motion does not include a motion to dismiss related to RICO injury at all see Notice of Motion at 1:13-28}, and MGA's injury arguments, both in the Notice and in the brief, are styled solely as Rule 56 arguments. When Mattel asked MGA where, other than in the stricken Section II, MGA's injury arguments are made,5^ MGA', chose not to respond . MGA's effort to use a one paragraph email as a substitute for a motion it did not make should be rejected; there is no motion pending on injury issues. '`` See U. S. v. Tavelman , 650 F.2d 1133, 113 8 (9th Cir. 19$1 ) {violation of § 1952 require ŝ interstate commerce or use of an interstate facility {2 ) with intent to promote an unla^wfu activity and {3} a subsequent overt act in furtherance of that unlawful activity ^. Even if some commercial bribery also occurred outside of the United States, the Ninth Circuit has held that RICO applies to extraterritorial predicate acts if either the "conduct" or "effects" test is satisfied . Poulos v. Ceasars World Inc. 379 F.3d 654, 663 (9th Cir. 2004). Both tests are satisf e ere . e con uct test is satisfied because GA's and Larian ' s use of the mail or facility in interstate commerce occurred in California and the beneficiaries of the theft reside in California . See Grunenthal GmbH v. Hotz, 712 ^.2d 421 424 9th Cir. 1983}; Li uidation Comm 'n oT^anco ntercontmenta ^l^v. Renta 530 F^.3d 1 39 , 1352 {11th ir. e e ects testis sates ie ecause t e t e o attel ' s trade secrets and confidential information by Machado, Trueba, Vargas, and Brisbois included information re arding the United States market that was ex roited here b MGA and Larian. U. S. v.^hilli Morris USA Inc ., 566 F .3d 1095, 1 l^g-31 {D.C . Cir. 2009^^ et. for cert . i e e o. 9-980). See FAAC, at ¶^ , -s6 -^ May 14,, 20 0 email from A. Hurst (stating that the MGA Parties and IGWT "intend to ress the issue" of whether "Mattel has failed to plead facts showing a plausible ent^tllemen^to relief ...because it has failed to plead facts showing RICO harm'). See May 14, 2010 email from D. Proctor to A. Hurst. - ^ ^- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 24 of 33 Page ID #:263441 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2a 21 22 23 24 25 26 27 28 15.07975/3542479.1 Nonetheless, out of an abundance of caution, Mattel briefly summarizes injuries flowing ^ from defendants' racketeering activity. A. There Xs No "Racketeering injury" Requirement MGA repeatedly argues, in the stricken Section II, that Mattel has failed to prove a "racketeering injury." Mot. at 30, 32. There is no such requirement. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 {1985) {"A reading of the statute belies any ` racketeering injury' requirement."). Mattel need only provide "general factual allegations of injury resulting from the defendant's conduct." Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th ^ Cir. 2002). Any further requirement, including a specific showing of proximate cause, is ^ not required at the pleading stage. Id. at 1168-69 (reversing dismissal under Rule 12 because proximate cause elements required factual development}; Natomas Gardens Inv. Group _L_ LC v. Sinadinos , 2009 WL 1363382, at * 13 (E.D. CaI. May 12, 2009 ) {proximate cause is typically not an issue that is well-suited for dismissal on the pleadings). B. Defendants Substantiall^ju,red Mattel 's Business And Property MGA claims Mattel has proven no injuries flowing from defendants' racketeering activity, but the FAAC is replete with factual allegations of injury, both general and specific. FAAC at ¶¶ 84, 85, 91-93, 113, 115, 117, and 121. There is no reason to reconsider the Court's prior ruling that RICO injuries "easily flow from theft of trade secrets and confidential information committed by a direct competitor" {Bryant, 573 F. Supp. 2d at 1269), particularly in light of the Supreme Court's ruling in Carpenter, discussed supra at 1.1. "[W]here a complaint contains allegations of facts to show that the ^ defendant engaged in a pattern of fraudulent conduct that is within the RICO definition racketeering activity and that was intended to and did give the defendant a competitive advantage over the plaintiff, the complaint adequately pleads proximate cause, and the plaintiff has standing to pursue a civil RICO claim." Ideal Steel SupplyCorp. v. Anza, 373 F.3d 251, 262-63 {2d Cir. 2004), overruled on other grounds, 547 U.S. 451 {2006). In addition to injuries flowing from thefts of property, Mattel alleges injuries to its business or property suffered as a direct result of MGA's obstruction, perjury, and evidence -i r- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 25 of 33 Page ID #:263442 1 2 3 4 5 6 7 S''. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ]5.0797513502479.1 tampering , including the payment of nearly $2 million in auditor fees . FAAC at ¶¶ 121, 126-127. These are recoverable RICO injuries . 58 Mattel has also alleged injuries caused by Omni , including harm to Mattel's rights as a judgment creditor of MGA. FAAC at ^ 115. C. Defendants' Criminal Copyright Infringement Injured Mattel Mattel also alleges injuries from defendants' criminal copyright infringement. FAAC at ¶ 126. MGA seeks to adjudicate such issues by relying on the Phase 1 jury verdict that it did not act willfully in infringing Mattel's Bratz copyrights . Mot. at 29-3 0. It is hard to see how this issue could be raised on a motion to dismiss (and it was not), but it fails under any standard , for numerous reasons. These include : ( 1) Mattel ' s criminal copyright infringement allegations are not limited to the infringement of Bratz copyrights, but also include the copying of knowingly stolen trade secret and confidential documents5g; (2) issues of MGA's post-verdict infringement of Bratz copyrights have yet to be tried; and (3} MGA's efforts to apply collateral estoppel to the II Phase 1 willfulness finding thus fail: "A party has not had the requisite full and fair II opportunity if he or she was unable to present critical evidence in the initial proceeding." Snider v. Consolidation Coal Co., 973 F.2d 555, 559 (7th Cir. 1992} (citations omitted), f ^ cert. denied , 113 S. Ct. 981; Jack Faucett Assocs ., lnc. v . Am. Tel. and Tel. Co., 744 F.2d I^ 118, 128--29 {D.C. Cir. 1984) ("[N]ewly discovered evidence, even if insufficient to justify 58 See Stochastic Decisions v. DiDomenico 995 F.2d 1158, 1167 (2d Cir. 1993 {fees expende^C by ^u gment cre ztor xn co ec Ong u gments constituted a RICO inju, };1^ i__ vine Designh, 431 F.3d at 36$ -69 ([E]vidence t^at^knowledge of the withheld ev^ence .. . wouilddall vrey yincreased the settlement value of the case substantially" is sufficient to show ^^^ FAAC}at ^ 124{6o September 22, 009 In Chamhe^s Hearing Tr . at 8:22-25 {emphasis added}. -^n- OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 26 of 33 Page ID #:263443 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1S I6 17 18 19 2a 21 22 23 24 2S 26 27 28 15.07975/3502479.1 ^ setting aside a judgment, may warrant refusal to give the judgment preclusive effect inI other actions."}.61 Finally, MGA's appeal of the Phase 1 verdict undercuts its effort to accord it collateral estoppel effect. ^ III. MATTEL'S FRAUDULENT TRANSFER AND DISTRIBUTION CLAIMS A. Mattel's UFTA Claims Are An Inte ral Part Of This Case MGA's argument that, six years into this litigation, the Court should sever Mattel's state law claims is misguided. Mattel's state law claims involve the "same facts and circumstances that form the basis of [its RICO claims]" and are thus appropriate for pendent jurisdiction. Savage y. Glendale Union Hi hg Sch., 343 F.3d 1036, I OS I (9th Cir. 2003}; Tr. of the Constr._ Indus. & Laborers Health & Welfare Trust v. Desert Valley Landscape__& Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003) (pendent jurisdiction appropriate where many of the same issues would arise at both a federal and state trial). Trying Mattel's state law claims against the interrelated entities in this case clearly serves "the principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine." Ci of Chica o v, Intl Coll. of Sur eons, 522 U.S. 156, 172-73 (1997} (internal cites omitted). This Court's "familiarity with this complex case and the lengthy history of litigation" weighs in favor of exercising pendent jurisdiction. Omni Home Fin., Inc. v. Hartford Life & Annuity Ins. Co., 2008 WL 4616796, at * 1-2 {S.D. Cal. Aug. 1, 2008}; Mun er v. Cit of Glas ow Police De t., 227 F.3d 1082, 1089 n.4 (9th Cir. 2000}. MGA's argument that because some claims arise under state law or conceal "non- diverseparties" the Court should not exercise jurisdiction has been squarely rejected by the Supreme Court. City of Chicago, 522 U.S. at 167 ("The whole point of supplemental jurisdiction is to allow the district courts to exercise pendent jurisdiction over claims as to which original jurisdiction is lacking."}. 6I Defendants cite dicta from In re Rhone-Poulenc Rorer Inc. 51 F.3d 1293, 1303 {7th Cir. 1995} which decertif ed a class ase on t e Istrlct court s p an to have serial trials on issues such as prox>5.07975/3502479.1 instead, a judgment for money damages." St. tames Armenian Church of Los. Angeles v. Kurkjian, 47 Cal. App. 3d 547, 553 (1975}. "The constructive trust doctrine is a remedial device which would lose its efficacy if a trustee were permitted to defeat recovery by wrongfully permitting the res to become valueless, as here. The courts have recagnized the right of a beneficiary under a constructive trust to obtain a money judgment in lieu of a destroyed res, and to recover the value of trust property commingled by a constructive trustee with his own properties, so that the identity thereof could no longer be traced." Elliot v. Elliot, 231 Cal. App. 2d 205, 209-10 (1964} (internal citations omitted). Courts in California and the Ninth Circuit have recognized that breach of constructive trust is a valid cause of action. See U. S. v. Pe^^, 782 F,2d 1498, 1498-1501 (9th Cir. 1986} (affirming money judgment for breach of constructive trust}; Bonyton v. Headwaters, Inc., 243 Fed. Appx. 610, 613 (Fed. Cir. 2007} ("[I]n order to have a claim for breach of constructive trust, a party must first obtain a judicial decision creating a constructive trust."); Farmers Ins. Ex. v. Zerin, 53 Cal. App. 4th 445, 451, 457 (1997) {plaintiff did not properly plead a claim for breach of constructive trust because it had "no lien, equitable or otherwise, on any portion" of the res). MGA cites two California cases for the proposition that a constructive trust is a ^ remedy only , and not a claim. Mot. at 39 (citing Batt y. City and County_of San Francisco, 155 Cal. App. 4th 65, $2 {2007} and Glue-Fold, Inc. v. Slautterback Corp., 82 Cai. App. 4th 1018, 1023 n.3 (2000)}. But both cases address claims to impose a constructive trust, not claims for beach of a constructive trust.^0 In Glue-Fold, the Court noted that plaintiff's claim "seeking imposition of a constructive trust" is not itself a claim but "merely a type of remedy" that is "dependent upon a substantive basis of liability." 82 Cal. App. 4th at 1023 n.3. Mattel does not allege a claim for "imposition of a constructive trust" here; the Court 74 The same applies to MGA'sout-of state authorit See Re-Alto Indus. inc. v. Nat'l Ctr. for Health Educ. Inc., 812 F. Supp. 387, 390 n.l ^S. e case i not ^nvo ve a situation w ere the plaintiff sought damages for devaluation of the res after the constructive trust was imposed by the Court. Rather, laintiff simply sought the imposition of a constructive trust that had not yet been imposedp Id. OPPOSITION TO MOTION TO DISMISS RICO AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 32 of 33 Page ID #:263449 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 f5.079T5fS501133.1 already imposed that equitable remedy. The FAAC alleges that MGA breached its duty to preserve and protect the Bratz assets already held in constructive trust. Courks recognize that claim for breach , and MGA provides no contrary authority. Conclusion For the foregoing reasons, the Court should deny defendants ' motions to dismiss. the Court is inclined to grant the motions in any respect , Mattel requests leave to amend address those concerns.^I DATED: May 17, 2010 ^UINN EMANUEL URQUHART & S LIVAN. LLP By ohn B. Quinn Attorneys for Mattel. Inc. 71 The Ninth Circuit has consistently held that "re uests for leave to amend should be ranted with `extreme liberality. "' Couch v. Cate 200 WL 1936277 at * 1 n.3 (9th Cir. ^ay 14, 2010) {quoting Mass v. U. ecret erv^ce, 572 F .3d 962, 9'^2 (9th Cir. 2009)). OPPOSITION TO MOTION TO DISMISS RICD AND CREDITOR CLAIMS Case 2:04-cv-09049-DOC -RNB Document 7870 Filed 05/17/10 Page 33 of 33 Page ID #:263450