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Eastlawn Corp. v. Bankers Equip. Leasing Co.
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Moore v. Am. Suzuki Motor Corp.
Time Ins. Co. v. FULTON-DeKALB, ETC.
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Etheridge v. CHARTER PEACHFORD HOSP. INC.
DPS INDUS. v. Safeco Ins. Co.
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Driggers v. Continental Grain Co.
Dixieland Truck Brokers, Inc. v. Intl. Indem. Co.
Browning v. Federal Home Loan Mortgage Corp.
Nottingham Co. v. Resource Materials Corp.
TILLETT BROS. CONSTRUCTION COMPANY, INC. v. Dept. of Transp.
Colonial Penn Life Insurance Co. v. Market Planners Ins. Agency, Inc.
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Cagle v. AMEAGLE CONTRACTORS, INC.
Central Warehouse & Development Corporation v. Nostalgia, Inc.
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Travelers Insurance Company v. Southern Electric, Inc.

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Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 2014 › Eclectic Props. East v. The Marcus & Millichap Co.
Plaintiffs filed suit against defendants under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962. Plaintiffs alleged that defendants conspired to pay inflated rent payments so that the properties sold to plaintiffs would appear far more valuable to third parties. The court held that the complaint did not meet the pleading standards by Bell Atlantic Corp. v. Twombly, Ashcroft v. Iqbal, and In re Century Aluminum Co. Securities Litigation. The court concluded that the complaint's factual allegations did not support a plausible inference that defendants had the required specific intent to defraud, nor do they tend to exclude the alternative explanation that the transactions at issue were merely a group of business deals gone bad during a deep recession. The court affirmed the dismissal of plaintiffs' RICO allegations and the dismissal of plaintiffs' allegations of RICO conspiracy.
Court Description: RICO. The panel affirmed the dismissal of an action under the Racketeering Influenced and Corrupt Organizations Act. The panel held that the plaintiffs did not plead facts sufficient under Federal Rules Civil Procedure 8(a) and 9(b) to support a plausible theory of RICO and RICO conspiracy violations in connection with an alleged real estate scheme. The panel held that the complaint did not meet the pleading standards required by Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal because it did not contain adequate factual allegations to plausibly infer that the defendants specifically intended to defraud, and therefore did not show a plausible entitlement to relief.
FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ECLECTIC PROPERTIES EAST, LLC, a California limited liability company; RISOLA FAMILY LP II, a Florida limited partnership; CECA 3000, LP, a Nevada limited partnership; CHEATHAM PROPERTIES, LLC, a California limited liability company, successor in interest of John and Mary Cheatham; VAS ENTERPRISES I LLC, a California limited liability company; AMNON DANUS; RIVKA DANUS; LINDA FARRELL; JOSEPH W. AMIRKHAS; JOSEPH W. AMIRKHAS, as Trustee under the Amirkhas Trust, dated January 14, 2000; JUSTUS L. AHREND; SUSAN W. AHREND, Trustees of the Justus and Susan Ahrend Trust, dated December 6, 1990; KEVORK BELIKIAN; SYLVIA S. BELIKIAN, Trustees under the Kevork Belikian and Sylvia S. Belikian Living Trust, dated July 10, 2000; MANI ETEMAD; SUSAN KHOSHNOOD, Trustee of the Mani Etemad and Susan Khoshhood 2001 Revocable Trust; EUGENIA GAGNON, Trustee of the Genie Debs Revocable Trust, dated October 10, 1995; THOMAS H. LINDEN; SYLVIA No. 12-16526 D.C. No. 5:09-cv-00511RMW OPINION 2 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. E. LINDEN, Trustees of the Thomas H. Linden and Sylvia E. Linden Family Trust, dated September 19, 2000; JOHANNES MODERBACHER; EILEEN STARR MODERBACHER, as Trustees of the Moderbacher Family Trust, established by Declaration of Trust, dated February 1, 2006; RICHARD W. SIEBERT; DEBRA M. SIEBERT, Trustees of the Siebert Family Trust U/DT, dated January 13, 2003; ALLEN ERNEST HOM, Trustee for the Allen Ernest Hom Trust, dated August 19, 1992; LINDA J. CALL, Trustee for the Linda Jeanne Call Family Trust, dated September 12, 2002, Plaintiffs-Appellants, v. THE MARCUS & MILLICHAP COMPANY, a California corporation; MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES INC., a California corporation; MARCUS & MILLICHAP REAL ESTATE INVESTMENT BROKERAGE COMPANY, a California corporation; SOVEREIGN INVESTMENT COMPANY, a California corporation; SOVEREIGN SCRANTON LLC, a Delaware limited liability company; SOVEREIGN CC, ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 3 LLC, a Delaware limited liability company; SOVEREIGN JF, LLC, a California limited liability company; PAUL A. MORABITO, individually and as the alter-ego of Eureka Petroleum Inc., a New York corporation, Tibarom Inc., a Delaware corporation, Tibarom NY LLC, a Nevada limited liability company, Tibarom PA LLC, a Nevada limited liability company, Scranton Lube, LLC a Delaware limited liability company; EUREKA PETROLEUM, a New York corporation; TIBAROM INC., a Delaware corporation; TIBAROM NY LLC, a Nevada limited liability company; TIBAROM PA LLC, a Nevada limited liability company; SCRANTON LUBE, LLC, a Delaware limited liability company; NY SEVEN LUBE, LLC, a Delaware limited liability company; NEW YORK LUBE NUMBER 3, LLC, a Delaware limited liability company; ROCHESTER LUBE, LLC, a Delaware limited liability company; BARUK MANAGEMENT, INC., a California corporation; JACK WAELTI, individually and as the alter-ego of the QSR Group One, LLC, a Florida limited liability company, The QSR Group, LLC, a Florida limited 4 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. liability company, and the QSR Group II, LLC, a Florida limited liability company AKA The QSR Group Two, LLC; THE QSR GROUP ONE, LLC, a Florida limited liability company; THE QSR GROUP, LLC, a Florida limited liability company; THE QSR GROUP II, LLC, a Florida limited liability company, AKA The QSR Group Two, LLC; PGP VALUATION, INC., an Oregon corporation; GLEN D. KUNOFSKY; MARCUS MUIRHEAD; ALEXANDER MICKLE; SEAN PERKIN; DONALD EMAS; ANDREW LESHER; STEWART WESTON; BRICE HEAD; DAIZY GOMEZ; BRET KING, Defendants-Appellees. Appeal from the United States District Court for the Northern District of California Ronald M. Whyte, Senior District Judge, Presiding Argued and Submitted March 14, 2014 San Francisco, California Filed May 7, 2014 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 5 Before: J. Clifford Wallace and Ronald M. Gould, Circuit Judges, and Paul C. Huck, Senior District Judge.* Opinion by Judge Gould * The Honorable Paul C. Huck, Senior District Judge for the U.S. District Court for the Southern District of Florida, sitting by designation. 6 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. SUMMARY** RICO The panel affirmed the dismissal of an action under the Racketeering Influenced and Corrupt Organizations Act. The panel held that the plaintiffs did not plead facts sufficient under Federal Rules Civil Procedure 8(a) and 9(b) to support a plausible theory of RICO and RICO conspiracy violations in connection with an alleged real estate scheme. The panel held that the complaint did not meet the pleading standards required by Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal because it did not contain adequate factual allegations to plausibly infer that the defendants specifically intended to defraud, and therefore did not show a plausible entitlement to relief. COUNSEL Susan Alexander (argued), Sanford Svetcov, and Andrew S. Love, Robbins Geller Rudman & Dowd LLP, San Francisco, California; David J. George and Bailie L. Heikkinen, Robbins Geller Rudman & Dowd LLP, Boca Raton, Florida; and Bonny E. Sweeney and Phong L. Tran, Robbins Geller Rudman & Dowd LLP, San Diego, California, for PlaintiffsAppellants. ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 7 Daniel Purcell (argued), John W. Keker, and Dan Jackson, Keker & Van Nest LLP, San Francisco, California, for Defendants-Appellees The Marcus & Millichap Company, Sovereign Investment Company, Sovereign Scranton LLC, Sovereign CC, LLC, and Sovereign JF, LLC. David C. Scheper, Julio V. Vergara, and Katherine B. Farkas, Scheper Kim & Harris LLP, Los Angeles, California, for Defendants-Appellees Marcus & Millichap Real Estate Investment Services, Inc., Marcus & Millichap Real Estate Investment Brokerage Company, Marcus Muirhead, Sean Perkin, Donald Emas, Andrew Lesher, Stewart Weston, Brice Head, and Bret King. Dennis C. Vacco and Brendan H. Little, Lippes Mathias Wexler Friedman LLP, Buffalo, New York, for DefendantsAppellees Paul A. Morabito and Baruk Management, Inc. Timothy A. Horton, McKenna Long & Aldridge LLP, San Diego, California, for Defendants-Appellees Tibarom NY, LLC and Tibarom PA, LLC. Scott Wm. Davenport, Manning & Kass, Ellrod, Ramirez, Trester LLP, Irvine, California, for Defendant-Appelle PGP Valuation, Inc. Eugene Ashley, Hopkins & Carley, ALC, San Jose, California, for Defendants-Appellees Glen Kunofsky and Daizy Gomez. 8 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. OPINION GOULD, Circuit Judge: We consider whether Plaintiffs-Appellants have pleaded facts sufficient under Federal Rules of Civil Procedure 8(a) and 9(b) to support a plausible theory of Racketeering Influenced and Corrupt Organizations Act ( RICO ) and RICO conspiracy violations against Defendants-Appellees. We have jurisdiction under 28 U.S.C. § 1291, and we hold that Plaintiffs complaint does not meet the pleading standards required by Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009); Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011); and In re Century Aluminum Co. Securities Litigation, 729 F.3d 1104 (9th Cir. 2013). The complaint does not contain adequate factual allegations to plausibly infer that Defendants specifically intended to defraud, and therefore does not show a plausible entitlement to relief.1 The district court did not err in dismissing Plaintiffs complaint on the pleadings. I The scheme alleged by Plaintiffs began when defendants Paul Morabito and Jack Waelti purchased 22 commercial real estate properties in bulk for a total of about $20.3 million. Morabito, Waelti, and their related companies then added a commercial lease for a franchise on each property. Morabito and his related entities placed Jiffy Lube franchises 1 Because we hold that Plaintiffs did not plead a plausible intent to defraud as to all Defendants, we do not reach the individual defendants independent personal defenses as to other elements of RICO or corporate liability. ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 9 on the properties he owned, while Waelti and his related entities placed Church s Chicken franchises on theirs.2 The Morabito and Waelti entities executed sale-leaseback transactions with Sovereign Investment Company or a related entity,3 becoming tenants on the real estate that they had purchased. According to Plaintiffs, the fair market value of the 22 commercial real estate properties was not $20.3 million, but $11.1 million. Plaintiffs allege that the Morabito, Waelti, and Sovereign entities conspired to pay inflated rent payments so that the properties would appear far more valuable to third parties. Sovereign Investments then marketed the properties for sale to the public through the Marcus & Millichap Company 2 Some of the Jiffy Lube leases were held by Defendants Eureka Petroleum, Tibarom Inc., Tibarom NY, LLC, Tibarom PA, LLC, and Scranton Lube, LLC, all of which are alleged to be alter-egos of Paul Morabito and are also separately named as defendants. Other Jiffy Lube leases were held by Defendants New York Seven Lube LLC, New York Lube Number 3, LLC, and Rochester Lube, LLC. These Defendants are alleged to have been controlled by Morabito. We refer to these two groups collectively as the Morabito entities. The Church s Chicken leases were held by Defendants The QSR Group, LLC, The QSR Group One, LLC, all of which are alleged to be alter-egos of Jack Waelti and are also separately named as defendants. Collectively, we refer to this group as the Waelti entities. We take no position on the allegations relating to the corporate relationships in these groups alleged in the complaint. See footnote 1, supra. 3 The complaint alleges that Defendants Sovereign Scranton LLC, Sovereign CC, LLC, and Sovereign JF, LLC, are all alter-egos of Defendant Sovereign Investment Company. We refer to this group as the Sovereign entities. Again, we take no position on the allegations in the complaint relating to the corporate relationships in this group. See footnote 1, supra. 10 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. ( M&M ).4 Plaintiffs allege that the brokers used sham appraisals performed by defendant PGP Valuation, Inc., to support the inflated property values. Plaintiffs purchased all of the properties in a series of independent transactions for a combined $30.3 million in 2004, 2005, and 2006. The Morabito and Waelti entities at first performed on their leases, some for up to four years, making a total of about $8.1 million in rent payments to Plaintiffs. The franchisees began having problems making their rent payments in 2006 and 2007, and eventually each breached its lease, leaving more than $59 million in future rent payments unpaid. Plaintiffs tried to mitigate their losses, but could not find tenants at comparable rents. Plaintiffs filed suit alleging that each of the defendants had violated RICO, 18 U.S.C. § 1962(c), and that Defendants had collectively violated 18 U.S.C. § 1962(d) s prohibition on RICO conspiracies, along with related state common law and statutory claims. The district court dismissed the case under Federal Rule of Civil Procedure 12(b)(6), concluding that Plaintiffs had not met their burden under Rules 8(a) and 9(b) to plausibly allege that Defendants specifically intended to defraud Plaintiffs. Because the district court dismissed the individual RICO claims, it also dismissed the RICO conspiracy claim against all Defendants. Finally, after dismissing all of the federal claims, the district court declined 4 The complaint alleges that Marcus & Millichap Real Estate Investment Services, Inc. and Marcus & Millichap Real Estate Investment Brokerage Company are alter egos of the Marcus & Millichap Company. The complaint also lists a number of individual employees of the M&M entities as individual defendants. We refer to this group collectively as M&M but take no position on the allegations relating to the corporate relationships in this group. See footnote 1, supra. ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 11 to exercise supplemental jurisdiction over Plaintiffs state law claims. Plaintiffs filed a timely notice of appeal. II We review de novo the district court s judgment granting a motion to dismiss for failure to state a claim under Rule 12(b)(6). Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007). In reviewing an appeal from a motion to dismiss, all facts are taken from the complaint and construed in the light most favorable to the non-moving party. Id. III Rule 8 requires a complaint to include a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). To meet this requirement, the Supreme Court has held that an entitlement to relief requires more than labels and conclusions . . . . Factual allegations must be enough to raise a right to relief above a speculative level. Twombly, 550 U.S. at 555. Although a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof is improbable, id. at 556, plaintiffs must include sufficient factual enhancement to cross the line between possibility and plausibility. Id. at 557.5 This 5 Rule 9(b) requires that circumstances constituting fraud must be alleged with particularity but allows fraudulent intent to be alleged generally. Federal Rule of Civil Procedure 9(b). We have held that the plausibility analysis of Twombly and Iqbal applies equally to Rule 9 as it does to Rule 8. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). Accordingly, although the language of Rule 9 poses no barrier in itself to general pleading of fraudulent intent, Twombly and Iqbal s pleading standards must still be applied to test complaints that contain claims of fraud. 12 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. standard represents a balance between Rule 8 s roots in relatively liberal notice pleading and the need to prevent a plaintiff with a largely groundless claim from tak[ing] up the time of a number of other people, with the right to do so representing an in terrorem increment of settlement value. Id. at 557 58 (quoting Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347 (2005)). Establishing the plausibility of a complaint s allegations is a two-step process that is context-specific and requires the reviewing court to draw on its judicial experience and common sense. Iqbal, 556 U.S. at 679. First, a court should identif[y] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. Then, a court should assume the veracity of well pleaded factual allegations and determine whether they plausibly give rise to an entitlement to relief. Id. Where a complaint pleads facts that are merely consistent with a defendant s liability, it stops short of the line between possibility and plausibility of entitlement to relief. Id. at 678 (citation omitted). When considering plausibility, courts must also consider an obvious alternative explanation for defendant s behavior. Id. at 682 (quoting Twombly, 550 U.S. at 567). We have applied Twombly and Iqbal s plausibility standard in two recent cases. In Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011), we analyzed the apparent shift in the Supreme Court s analysis of Rule 8 pleading standards, comparing the more demanding Twombly and Iqbal standard to the more lenient rule applied in Swierkiewicz v. Sorema, N.A., 534 U.S. 506 (2002) and Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam). Starr, 652 F.3d at 1216. We noted that in Swierkiewicz, the Supreme Court held that Rule 8(a) establishes a pleading standard without regard to ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 13 whether a claim will succeed on the merits. Indeed, it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test. Starr, 652 F.3d at 1215 (quoting Swierkewicz, 534 U.S. at 514 15). Similarly, we recognized that in Erickson, the Supreme Court reversed our sister circuit s determination that a complaint was overly conclusory and held that a relatively sparse complaint satisfied Rule 8(a) s pleading standards. Starr, 652 F.3d at 1215 (citing Erickson, 551 U.S. at 94). Despite a potential conflict between the two groups of cases, we concluded that the Supreme Court s precedents established the following principles: First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation. Starr, 652 F.3d at 1216. We applied these principles to hold: If there are two alternative explanations, one advanced by defendant and the other advanced by plaintiff, both of which are plausible, plaintiff s complaint survives a motion to dismiss under Rule 12(b)(6). Plaintiff's complaint may be dismissed only when defendant s plausible alternative explanation is so convincing that plaintiff's explanation is implausible. Id. (emphasis in original). 14 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. A more recent examination of Rule 8(a) confronted the application of the plausibility standard to a complaint with less factual support than that in Starr. In re Century Aluminum Co. Secs. Litig., 729 F.3d 1104 (9th Cir. 2013). We affirmed the dismissal of the complaint in Century because, [w]hen faced with two possible explanations, only one of which can be true and only one of which results in liability, plaintiffs cannot offer allegations that are merely consistent with their favored explanation but are also consistent with the alternative explanation. Something more is needed, such as facts tending to exclude the possibility that the alternative explanation is true, in order to render plaintiffs allegations plausible. 729 F.3d at 1108 (internal quotation marks and citations omitted) (quoting Iqbal, 556 U.S. at 678; citing Twombly, 550 U.S. at 554). Unlike Starr, where the plaintiff s plausible complaint survived a motion to dismiss by offering facts that tended to exclude the defendant s innocuous alternative explanation, we held that the complaint in Century established only a possible entitlement to relief, and thus could not support further proceedings. Century, 729 F.3d at 1108. IV Applying Twombly, Iqbal, Starr, and Century to the complaint at issue in this appeal, we conclude that Plaintiffs have not made the kind of factual allegations that nudg[e] their claims across the line from conceivable to plausible. Twombly, 550 U.S. at 570. A We start with the elements a plaintiff must plead to state a RICO violation. See Iqbal, 556 U.S. at 675. The RICO ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 15 statute sets out four elements: a defendant must participate in (1) the conduct of (2) an enterprise that affects interstate commerce (3) through a pattern (4) of racketeering activity or collection of unlawful debt. 18 U.S.C. § 1962(c). In addition, the conduct must be (5) the proximate cause of harm to the victim. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496-97 (1985). To show the existence of an enterprise under the second element, plaintiffs must plead that the enterprise has (A) a common purpose, (B) a structure or organization, and (C) longevity necessary to accomplish the purpose. Boyle v. United States, 556 U.S. 938, 946 (2009). Racketeering activity, the fourth element, requires predicate acts, which in this case are alleged to be mail and wire fraud under 18 U.S.C. §§ 1341 and 1343. The mail and wire fraud statutes are identical except for the particular method used to disseminate the fraud, and contain three elements: (A) the formation of a scheme to defraud, (B) the use of the mails or wires in furtherance of that scheme, and (C) the specific intent to defraud. Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir. 1986). It is this final sub-element, the defendant s specific intent to defraud, that is at issue here. In order to prove a violation of 18 U.S.C. § 1341, there must be a showing of a specific intent to defraud. The intent to defraud may be inferred from a defendant s statements and conduct. United States v. Peters, 962 F.2d 1410, 1414 (9th Cir. 1992). In the absence of direct evidence of intent, the party asserting fraud must first prove the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension, and then, by examining the scheme itself the court may infer a defendant s specific intent to defraud. United States v. Green, 745 F.2d 1205, 1207 (9th Cir. 1984) (internal 16 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. quotation marks omitted) (quoting United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir. 1980)). Plaintiffs fraud theory requires them to show more than a business deal gone bad for economic and non-fraudulent reasons. They must establish that Defendants had the specific intent to defraud, and Plaintiffs may establish that intent by showing the existence of a plausible fraudulent scheme. The level of factual specificity needed to satisfy this pleading requirement will vary depending on the context. Century, 729 F.3d at 1107 (citing Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir. 2008)). When companies engage in sale-leaseback transactions that are facially legitimate, pay rent and operate legitimate businesses for years thereafter, and otherwise act as routine participants in American commerce, a significant level of factual specificity is required to allow a court to infer reasonably that such conduct is plausibly part of a fraudulent scheme. B We proceed in our analysis by removing conclusory statements of law from the complaint. Iqbal, 556 U.S. at 679. Trimmed of legal conclusions and threadbare recitals of a cause of action, Id. at 678, Plaintiffs argument that the alleged scheme reflects an intent to defraud contains two prongs. First, Plaintiffs point to the rapid increase in the price of the properties from the alleged true market value at the time of the Morabito or Waelti entities initial purchase to the prices at the time that the properties were sold to Plaintiffs, and the Plaintiffs subsequent inability to sell the properties at those higher prices, or to lease the properties at rental rates reflecting those higher prices, after the leases were breached. Second, they argue that Defendants portrayed the real estate ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 17 investments as safe and secure, despite the fact that the tenants were not rated by credit agencies. We conclude that neither argument contains sufficient factual allegations to state a plausible entitlement to relief. 1 The key factual allegation that supports Plaintiffs first argument is that Defendants sold property worth $11.1 million to Plaintiffs for $30.3 million while spending $8.1 million on rent to maintain the alleged scheme until all properties were sold. We conclude that this allegation does not create a plausible entitlement to relief for two reasons. First, although the increase in price is consistent with Defendants alleged fraudulent intent, it does not tend to exclude a plausible and innocuous alternative explanation. See Century, 729 F.3d at 1108. The alternative explanation in this case comes from Plaintiffs own complaint: they allege that long-term commercial real estate leases typically support future property sales at a multiple of the actual market value. Although the increase here appears large nearly three times the alleged original true value Plaintiffs plead no facts that would tend to show that this increase was not typical, appropriate, or the product of legitimate market forces. Further, relying on our judicial experience and common sense, Iqbal, 556 U.S. at 679, we note that real estate values can be variable, and that fluctuations in prices over a period of years are not necessarily unusual, nor are they conclusive proof of wrong-doing, as changes may reflect market conditions. This is particularly true when, as here, the culminating events that harmed Plaintiffs took place in the midst of a deep national recession that seriously affected the 18 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. real estate market.6 All of the facts Plaintiffs have presented are consistent with both their theory of liability and this innocent alternative, that the recession decreased business viability and property values. Plaintiffs have not met their burden to do [s]omething more to render [their] allegations plausible within the meaning of Iqbal and Twombly. Century, 729 F.3d at 1108. Second, the complaint alleges no specific facts supporting its conclusion that the properties true fair market valu[e] was just $11.1 million. The complaint does not cite any documents or sources for this value, nor does it explain the methodology by which this value was derived. Further, Plaintiffs complaint alleges that Defendants had purchased the properties from independent third parties (not alleged to be a part of the conspiracy or named as defendants in this case) for about $20.3 million. Absent factual support showing that the true market value was $11.1 million, and taking into account the evidence in Plaintiffs own complaint that undermines their allegation that the property was worth only $11.1 million, we decline to accept the conclusory assertions of property values as facts. See First Nationwide 6 We take judicial notice of the recession in the US economy from December 2007 to June 2009. See W. Coast Hotel Co. v. Parrish, 300 U.S. 379, 399 (1937) ( We may take judicial notice of the unparalleled demands for relief which arose during the recent period of depression and still continue to an alarming extent despite the degree of economic recovery which has been achieved. ); see also The National Bureau of Economic Research, U.S. Business Cycle Expansions and Contractions, http://www.nber.org/cycles (establishing the dates of the recession); The Bureau of Labor Statistics, United States Department of Labor, The Recession of 2007 2009, http://www.bls.gov/spotlight/2012 /recession/pdf/recession_bls_spotlight.pdf (compiling data on employment, consumer spending, and economic output). ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 19 Bank v. Gelt Funding Corp., 27 F.3d 763, 770 (2d Cir. 1994) (holding that allegations of a methodologically unreliable appraisal were not sufficient to establish property values as a fact in a RICO complaint).7 Removing this conclusory valuation allegation from our consideration of the complaint s factual allegations supports the Defendants alternative explanation that the changing sale prices reflected not fraud but changing market conditions. Removal of this allegation shrinks the amount the property values were alleged to have changed over time and establishes that Defendants paid out most of their alleged gains to Plaintiffs in rental payments and other operating expenses required to run the fast food and auto maintenance businesses for up to four years. Far from establishing a plausible entitlement to relief, Plaintiffs preferred reading of the complaint requires us to draw implausible inferences that Defendants had the specific intent to defraud Plaintiffs. Starr, 652 F.3d at 1216 (emphasis in original).8 The Plaintiffs fraud theory is not plausible when considered in light of the innocent explanation that failure of franchise businesses in making rental payments, and their abandonment of leases, took place in the context of a deep national recession. We hold the Plaintiffs 7 Plaintiffs theory and its after-the-fact, conclusory property valuations requires us to believe that Defendants also overpaid for the properties by more than $9 million, a proposition that itself is implausible. 8 Our conclusion here is not in conflict with Starr. The principle that case establishes is that a tie goes to the plaintiffs when there are multiple plausible theories at the pleadings stage of litigation. Starr, 652 F.3d at 1216 17. But the problem here is that in the context of Defendants specific intent to defraud, Plaintiffs complaint alleges facts that support at best a possible basis to believe that Defendants specifically intended to defraud, not a plausible one. See Century, 729 F.3d at 1108 (distinguishing Starr). 20 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. fraud theory is not plausible, but we do not consider or make any statement about whether their theory is probable or dismiss their complaint because it does not meet a probability requirement. Rule 8 does not impose such a requirement. Twombly, 550 U.S. at 556; Starr, 652 F.3d at 1217. 2 Plaintiffs also contend that we can infer Defendants specific intent to defraud from the fact that Defendants allegedly concealed the risky nature of the real estate investments. Plaintiffs contend that their argument that Defendants concealed the risks is supported by the allegation of three sets of facts: 1) that the tenants had not been rated by credit agencies, 2) that Defendants were aware of this, and 3) that Defendants described the investments as safe and secure or other similar assertions. But these facts do not allow us to make the Plaintiffs preferred inference that Defendants had the necessary specific intent to defraud Plaintiffs. First, the statements by Defendants about the relative security of the investments constitute puffing or related expressions of opinion that are common in sales and not actionable as fraud. See United States v. Gay, 967 F.2d 322, 328 29 (9th Cir. 1992). Second, for this kind of behavior to support a claim of fraud, Plaintiffs must show deceitful concealment of material facts, Bohonus, 628 F.2d at 1172 (9th Cir. 1980), but the complaint does not allege deceit. There is no allegation that Plaintiffs requested properties with credit-rated tenants, or even requested information about whether the tenants on the properties they were being sold had been so rated. In short, Plaintiffs have not alleged facts sufficient to show the ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 21 existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension, Green, 745 F.2d at 1207 (9th Cir. 1984), and without such a showing, we cannot properly infer fraudulent intent. V The complaint purported to allege intentional fraud in the inflation of property values on properties sold to Plaintiffs. However, the complaint s factual allegations do not support a plausible inference that Defendants had the required specific intent to defraud, nor do they tend to exclude the alternative explanation that the transactions were merely a group of business deals gone bad during a deep recession. Because we affirm the dismissal of Plaintiffs RICO allegations, we also affirm the dismissal of Plaintiffs allegations of RICO conspiracy. See Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 368 n.8 (9th Cir. 1992). We affirm the district court s dismissal of this complaint.9 AFFIRMED. 9 Plaintiffs did not raise the district court s dismissal without prejudice of their state law claims or its denial of their complaint without leave to amend in their briefing to us, so the state law and leave to amend issues are waived. United States v. Kama, 394 F.3d 1236, 1238 (9th Cir. 2005). We express no opinion on whether viable state law claims have been or could be pleaded by Plaintiffs.


Came on to be considered the motion of movant, Anthony Steven Aguilar, under 28 U.S.C. § 2255 to vacate, set aside, or correct sentence. Having reviewed the motion and memorandum in support thereof, the government's response with appendix, the record, and applicable legal authorities, the court concludes that the motion should be denied.
On December 14, 2005, movant was charged, with various co-defendants, with one count of a fourteen-count indictment, alleging that he conspired to possess with intent to distribute more than fifty grams of pure methamphetamine, in violation of 21 U.S.C. § 846 and 841(b)(1)(A). Attorney Brett Boone ("Boone") was appointed as movant's trial counsel on January 5, 2006. Movant pleaded not guilty, and, after a two-day trial, a jury found him guilty as charged on March 14, 2006. Following his conviction, movant filed a motion for new trial, which the court denied on March 22, 2006. On June 30, 2006, the court sentenced movant to a term of 360 months' imprisonment followed by a five-year term of supervised release. On August 28, 2006, movant retained attorney Mick Mickelsen ("Mickelsen") to represent him on appeal. The United States Court of Appeals for the Fifth Circuit affirmed movant's conviction and sentence on July 20, 2007. United States v. Aguilar, 237 F. App'x. 956 (5th Cir. Aug. 16, 2007). Movant's petition for writ of certiorari to the United States Supreme Court was denied on February 25, 2008. Movant timely filed the instant motion seeking relief under 28 U.S.C. § 2255.
Movant asserts that the legal representation given by his attorneys at trial, sentencing, and on appeal violated his right to effective assistance of counsel. Movant argues that Boone was ineffective as trial counsel because he: (1) failed to adequately investigate the charges against movant and develop a reasonable trial strategy; (2) failed to call movant to testify and prevented him from testifying; and (3) failed to call Edgardo Gutierrez ("Gutierrez") as a witness to impeach the testimony of a government witness, Priscilla Pena ("Pena"). Movant further argues that Boone was ineffective as sentencing counsel because he failed to call witnesses to rebut critical information in the Presentence Report ("PSR") that resulted in an increased sentence based on (1) the amount of drugs attributable to movant; (2) possession of a firearm by movant; and (3) movant's role as a manager or supervisor of an individual named Matthew Becker ("Becker"). Finally, movant claims Mickelsen was ineffective as appellate counsel because he failed to raise the trial court's refusal to allow the testimony of defense witness Karlee Trimble ("Trimble"), movant's girlfriend, and failed to raise the ineffective assistance of trial and sentencing counsel.
After conviction and exhaustion, or waiver, of any right to appeal, courts are entitled to presume that a defendant stands fairly and finally convicted. United States v. Frady, 456 U.S. 152, 164 (1982); United States v. Shaid, 937 F.2d 228, 231-32 (5th Cir. 1991). A defendant can challenge his conviction or sentence after it is presumed final only on issues of constitutional or jurisdictional magnitude and may not raise an issue for the first time on collateral review without showing both "cause" for his procedural default and "actual prejudice" resulting from the errors. Shaid, 937 F.2d at 232. Section 2255 does not offer recourse to all who suffer trial errors. It is reserved for transgressions of constitutional rights and other narrow injuries that could not have been raised on direct appeal and would, if condoned, result in a complete miscarriage of justice. United States v. Capua, 656 F.2d 1033, 1037 (5th Cir. 1981). Conclusory allegations are insufficient to prove a claim of ineffective assistance of counsel. Miller v. Johnson, 200 F.3d 274, 282 (5th Cir. 2000).
To prevail on his ineffective assistance of counsel claim, movant must show that (1) counsel's performance fell below an objective standard of reasonableness and (2) there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceedings would have been different.Strickland v. Washington, 466 U.S. 668, 688, 694 (1984). This standard applies regardless of whether the movant pleaded guilty or not guilty. Hill v. Lockhart, 474 U.S. 52, 58 (1985). Both prongs of the Strickland test must be met to demonstrate ineffective assistance. Strickland, 466 U.S. at 687. Judicial scrutiny of this type of claim must be highly deferential, and the movant must overcome a strong presumption that his counsel's conduct falls within the wide range of reasonable professional assistance. Id. at 689. Counsel's decision regarding trial tactics and strategy cannot support a claim for ineffective assistance of counsel unless "it is so ill chosen that it permeates the entire trial with obvious unfairness." Cotton v. Cockrell, 343 F.3d 746, 752-53 (5th Cir. 2003) (internal citations omitted). Further, "[a] court need not address both components of an ineffective assistance of counsel claim if the movant makes an insufficient showing on one." United States v. Stewart, 207 F.3d 750, 751 (2000). To prevail on a claim of ineffective assistance of appellate counsel, movant would have to prove both that counsel's legal representation was objectively unreasonable and that, but for counsel's unreasonable failure, there is a reasonable probability movant would have prevailed on his appeal. See Smith v. Robbins, 528 U.S. 259, 285 (2000).
Movant is not entitled to relief based on the alleged ineffective assistance of Boone or Mickelsen because he has not shown that their performance fell below an objective standard of reasonableness, nor has he shown that there is a reasonable probability that, but for counsel's alleged failures, the result of any of the proceedings would have been different. See Strickland, 466 U.S. at 687.
Movant asserts that he was denied effective assistance of trial counsel because Boone: (1) failed to adequately investigate and develop a trial strategy; (2) failed to call movant to testify and prevented him from testifying; and (3) failed to call Gutierrez as a witness to impeach the testimony of Pena.
Movant complains that Boone failed to investigate all the charges against him and failed to develop a reasonable trial strategy. Counsel's decision about a particular investigation "must be directly assessed for reasonableness in all the circumstances, applying a heavy measure of deference to counsel's judgments." Strickland, 466 U.S. at 691. Movant's conclusory allegations are insufficient to establish his claims of ineffective assistance of counsel on this basis. Miller v. Johnson, 200 F.3d 274, 282 (5th Cir. 2000). Movant must "allege with specificity what the investigation would have revealed and how it would have altered the outcome of the trial." United States v. Green, 882 F.2d 999, 1003 (5th Cir. 1989). Movant fails to make the required showing, as he does not specifically allege what a reasonable investigation would have revealed or how it would have altered the outcome of his trial. See Green, 882 F.2d at 1003.
As part of his claim of lack of investigation and reasonable trial strategy, movant further claims that Boone: told him that the government offered him a twenty-year sentence in exchange for a guilty plea and then gave him only one hour to decide or go to trial; had minimum contact with him and never discussed trial strategy; and failed to discuss information in the DEA-6 forms or other discovery materials pertaining to co-defendants which could have been used to impeach the credibility of the government's witnesses.
In response, the government submitted the affidavit of Boone, wherein he stated that he met with movant on several occasions, including for over two hours on one specific occasion to discuss whether movant would enter a plea agreement or proceed to trial, and if the latter, which witnesses to call for trial. Boone provides examples of the specific considerations he discussed with movant.
Movant fails to show prejudice. Movant does not identify the unspecified discovery he claims Boone should have reviewed, nor does he describe the specific information supposedly contained in that discovery or in the DEA-6 forms, or how that information could have been used to impeach other witnesses, nor does he even identify the government's witnesses or the inconsistencies in their testimony that could have been impeached. In short, movant has done nothing but provide the court with conclusory allegations and has failed to show that Boone's trial strategy was "so ill chosen that it permeate[d] the entire trial with obvious unfairness." Cotton, 343 F.3d at 752-53.
Your Honor, I wish I would have taken the stand during trial, Your Honor, but I didn't and I wish I would have. More than likely, I wouldn't be standing here today, Your Honor, if I would have gotten on that stand. I believe in my heart.
Sentencing Tr. at 28. In his affidavit, Boone states that, after discussions between movant and counsel, movant made the decision not to testify. Movant's statement fails to fulfill his burden to show that counsel rendered ineffective assistance. While he states that he wishes he had taken the stand, nowhere does he indicate that his attorney prevented him from testifying. Nor has movant fulfilled the prejudice prong. Movant failed at sentencing and in his motion to vacate to explain what his testimony would have been or how there is a reasonable probability that his testimony would have resulted in a different outcome, especially given the substantial evidence of his guilt submitted at trial. United States v. Harris, 408 F.3d 186, 192 (5th Cir. 2005);Sayre v. Anderson, 238 F.3d 631, 635 (5th Cir. 2001).
Movant further complains that Boone called only two witnesses at trial and that his examination of both failed to attack the substance of the charges against him. "[D]ecisions as to whether or not to call certain witnesses to the stand, whether to ask or refrain from asking certain questions, and the like, are tactical determinations. Errors, even egregious ones, in this respect, do not provide a basis for postconviction relief." United States v. Rubin, 433 F.2d 442, 445 (5th Cir. 1970); United States v. Hughes, 635 F.2d 449, 452-53 (5th Cir. 1981).
Movant also contends that counsel refused his request to call Gutierrez to testify on his behalf. According to movant, Gutierrez would have impeached the testimony of Pena, a government witness who testified that she had seen movant at locations where drug activity occurred. Complaints based on the testimony of uncalled witnesses are particularly disfavored because the presentation of witnesses is a matter of strategy that is within trial counsel's discretion, and allegations of what a witness's testimony would have been are largely speculative. Alexander v. McCotter, 775 F.2d 595, 602 (5th Cir. 1985); Sayre, 238 F.3d at 635-36. "Where the only evidence of a missing witnesses' testimony is from the defendant," the court must view claims of ineffective assistance premised on the uncalled testimony with "great caution." Id. at 636 (internal citations omitted). A prisoner's conclusory assertion that a particular witness should have been called does not overcome the strong presumption that his counsel's actions were reasonable.Id. Conclusory assertions are all that movant has provided the court with respect to Gutierrez's testimony.
Movant must also show prejudice, meaning a "`reasonable probability' that the uncalled witnesses would have made any difference to the result." Id. at 603. Here, movant fails to show prejudice. Boone's affidavit states that Gutierrez was present and available as a witness during trial. However, because Pena affirmatively stated on direct examination that she did not know movant, but only knew of him, counsel concluded there was no need to attempt to impeach her testimony. Given the overwhelming evidence of movant's guilt, he can neither show prejudice nor establish that Boone's decision not to call Gutierrez constituted ineffective assistance of counsel.
Movant contends that Boone rendered ineffective assistance at sentencing because he failed to call witnesses to rebut hearsay statements in the PSR that resulted in an increased sentence based on (1) the amount of drugs attributable to movant; (2) the court's finding that movant was in possession of a firearm; and (3) movant's role as a supervisor of Becker.
The PSR "generally bears sufficient indicia of reliability to be considered as evidence by the sentencing judge in making factual determinations required by the sentencing guidelines."United States v. Trujillo, 502 F.3d 353, 357 (5th Cir. 2007). The defendant bears the burden of showing that the information in the PSR relied on by the court is materially untrue, a burden movant has failed to carry. See id.
Specifically, movant complains that Boone's failure to call Manny Cortez ("Cortez"), Pena, Mario Bertram ("Bertram"), Rodney Miller ("R. Miller"), Katy Miller ("K. Miller"), and Frank Flores ("Flores") to testify at sentencing constituted ineffective assistance of counsel.
Movant makes the conclusory assertion that had the above-identified witnesses testified at sentencing, their testimony would have supported his objections and refuted alleged hearsay statements in the PSR. Complaints of uncalled witnesses are viewed with disfavor, as allegations of what a witness would have testified to are largely speculative. Sayre, 238 F.3d at 635-36. Movant's bald assertion is insufficient to prove that counsel was ineffective for failing to call Cortez, Pena, Beltran, R. Miller, K. Miller, and Flores to testify at sentencing. Movant offers nothing to show these witnesses would have agreed to testify on his behalf, or that they would have testified in support of his objections. Flores and K. Miller testified for the government at trial, and Pena testified that she knew of movant but did not know him. The court discounted the letter Cortez submitted, wherein he claimed he never told anyone he purchased drugs from movant, as Cortez is a prisoner in the state penitentiary and could be motivated not to be perceived as an informant. Movant offers nothing to show what the testimony of any of these witnesses would have been. The court concludes that there is no reasonable probability that, had movant submitted the testimony of any of these witnesses, he would have received a lesser sentence.
Movant claims that Boone was ineffective for failing to call Flores or Scott Clement ("Clement") to testify at sentencing to refute information in the PSR that movant was present at the warehouse when guns were possessed there, information upon which the court relied to impose a two-level enhancement. The court at sentencing credited the case agent's summary of information he learned from Clement, who placed movant in the location where drugs and firearms were in plain sight. Movant offers nothing to show that Clement would have testified on his behalf or that he would have testified in contradiction to previous information he provided the government. Flores likewise testified for the prosecution at trial, making it unlikely he would have offered mitigating testimony for movant at sentencing. There is no reasonable probability that the testimony of Clement or Flores would have resulted in a lesser sentence.
Movant contends that Boone provided ineffective assistance because he failed to call Flores or Becker to refute Flores's hearsay statement in the PSR that movant was the supervisor of Becker, although Flores never testified to such at trial. Hearsay evidence is admissible at sentencing, and the court properly relied on Flores's statement. United States v. Solis, 299 F.3d 420, 455 (5th Cir. 2002). The Fifth Circuit agreed: in affirming movant's conviction and sentence, that court concluded that "Flores's omission of any mention of a runner in his trial testimony does not make that testimony contradictory or inconsistent with what he told the federal agents in the interview, as reported by the PSR." App. to Resp. in Opp'n to Mot. Under § 2255 at 4. Further, as noted above, Flores testified for the prosecution at trial and provided information to the government for use in the PSR, making it unlikely he would have switched sides and testified favorably for movant during sentencing. Boone in his affidavit stated that he was unable to locate Becker to obtain his testimony. Aside from the conclusory assertion that Flores's and Becker's testimony would have supported his objections, movant adduces nothing to show what the purported testimony of Flores or Becker would have been or how it would have supported his objections. There is no reasonable probability that the omitted testimony would have resulted in a lesser sentence.
Finally, movant contends that Mickelsen's legal services denied him effective assistance of appellate counsel because Mickelsen did not raise on appeal the trial court's refusal to allow defense witness Trimble, movant's one-time girlfriend, to testify that she had been raped by Flores, thus showing movant had no motive to work with Flores in any criminal undertaking. Given Flores's central role in the conspiracy, movant argues that undermining Flores's credibility was key to his defense.
Appellate counsel has no duty to bring frivolous claims on appeal; the opposite is true. See United States v. Burleson, 22 F.3d 93, 95 (5th Cir. 1994). There is no constitutional right for appellate counsel to pursue nonfrivolous points as requested by his client if counsel makes a professional judgment not to present those points. Jones v. Barnes, 463 U.S. 745, 751 (1983).
Here, Mickelsen's decision not to raise this issue on appeal was a strategic decision as, in his judgment as set forth in his affidavit, the testimony's relevance appeared weak. In any event, the court concludes that movant cannot establish prejudice by Mickelsen's failure to raise this argument on appeal. Given the number of witnesses and overwhelming evidence against movant adduced at trial, movant cannot show that there is a reasonable probability that, but for Mickelsen's decision, he would have prevailed on appeal. See Smith, 528 U.S. at 285.
Movant also objects to Mickelsen's failure to raise on appeal his claims of ineffective assistance of counsel at trial and sentencing. As movant concedes, such claims are more appropriately raised in a motion pursuant to § 2255. Massaro v. United States, 538 U.S. 500, 501 (2003); United States v. Gordon, 346 F.3d 135, 136 (5th Cir. 2003).
The court ORDERS that the motion of Anthony Aguilar to vacate, set aside, or correct sentence pursuant to 28 U.S.C. § 2255 be, and is hereby, denied.


text:
FindACase | Levesque v. Oktan Transport, Inc.
Levesque v. Oktan Transport, Inc.
This is a civil action filed by the Plaintiff, Audrey Levesque, against the Defendant, Oktan Transport, Inc. (“Oktan”). (Doc. 1). The Complaint sets out counts for: negligence (Count One); wantonness (Count Two); negligent and wanton entrustment (Count Three); and negligent hiring, training & supervision (Count Four). All counts arise out of an automobile accident between the Plaintiff and Ramunas Blazys, who was driving on behalf of Oktan.
The case comes before the Court on the Plaintiff's Motion for Summary Judgment against Oktan. (Doc. 35). As stated in the Motion, the Plaintiff moves for judgment on the negligence claim alone, and “[s]pecifically . . . requests this Court enter summary judgment in her favor as to the elements of duty, breach, causation, and the existence of damages (not the amount of damages).”) (Doc. 35 at 1). The Plaintiff “also requests summary judgment in her favor as to the affirmative defense of contributory negligence.” (Doc. 35 at 1).
Under Federal Rule of Civil Procedure 56, summary judgment is proper if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 2265 (1986) (“[S]ummary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”) (internal quotation marks omitted). The party requesting summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings or filings that it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. Once the moving party has met its burden, Rule 56(c) requires the non-moving party to go beyond the pleadings in answering the movant. Id. at 324, 106 S.Ct. at 2553. By its own affidavits - or by the depositions, answers to interrogatories, and admissions on file - it must designate specific facts showing that there is a genuine issue for trial. Id.
The underlying substantive law identifies which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d. 202 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000). Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. If the evidence presented by the non-movant to rebut the moving party's evidence is merely colorable, or is not significantly probative, summary judgment may still be granted. Id. at 249, 106 S.Ct. at 2511.
How the movant may satisfy its initial evidentiary burden depends on whether that party bears the burden of proof on the given legal issues at trial. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). If the movant bears the burden of proof on the given issue or issues at trial, then it can only meet its burden on summary judgment by presenting affirmative evidence showing the absence of a genuine issue of material fact - that is, facts that would entitle it to a directed verdict if not controverted at trial. Id. (citing United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991)). Once the moving party makes such an affirmative showing, the burden shifts to the non-moving party to produce “significant, probative evidence demonstrating the existence of a triable issue of fact.” Id. (emphasis added).
For issues on which the movant does not bear the burden of proof at trial, it can satisfy its initial burden on summary judgment in either of two ways. Id. at 1115-16. First, the movant may simply show that there is an absence of evidence to support the non-movant's case on the particular issue at hand. Id. at 1116. In such an instance, the non-movant must rebut by either (1) showing that the record in fact contains supporting evidence sufficient to withstand a directed verdict motion, or (2) proffering evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. Id. at 1116-17. When responding, the non-movant may no longer rest on mere allegations; instead, it must set forth evidence of specific facts. Lewis v. Casey, 518 U.S. 343, 358, 116 S.Ct. 2174, 2183, 135 L.Ed.2d 606 (1996). The second method a movant in this position may use to discharge its burden is to provide affirmative evidence demonstrating that the non-moving party will be unable to prove its case at trial. Fitzpatrick, 2 F.3d at 1116. When this occurs, the non-movant must rebut by offering evidence sufficient to withstand a directed verdict at trial on the material fact sought to be negated. Id.
Q. This truck that was involved in the accident with you, do you ever recall seeing that truck on the road prior to the accident?
Q. Tell me about that, please.
A. He was behind me driving [erratically]. And I felt -- I came around and I passed him and went on down the road. He was crossing the line like in and out.
Q. You were traveling faster than he was when you passed him?
A. Yes, sir. I had to pass him.
Q. But you couldn't have gone more than seventy to pass him, right?
Q. Why did you pass him?
A. Because he was going in and out of the lane, crossing the line, coming -- I felt unsafe.

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Trial By Jury: How Are The Members of A Jury Chosen?
Ever wonder how the seven people sitting in the jury box at a civil trial in Virginia get there? If you’ve been on a jury, you probably have some idea. But you still may wonder how you were chosen. The process involves a few steps and a lot of work that you don’t see. First, “jury commissioners” for each jurisdiction compile a “master jury list” of Virginia citizens who reside in the jurisdiction where the court is located and who are legally qualified to serve jurors. The qualifications include — but are not limited to — being over 18 years old, not having been convicted of a felony (or having been convicted but having had the right to vote restored and having resided in that jurisdiction for at least two years.
Then you will be taken into the courtroom, and the process of determining if you will actually hear the specific case will begin. The group that is taken to the courtroom for a particular case is called the “venire” for that case. In most civil cases, the venire is about 20 to 25 people. When they get to the courtroom, normally an initial 13 are chosen randomly to be questioned to determine the 7 that will sit on the jury for that case. That group is called the “jury panel”.
The next part of the process is called “voir dire”. Translated literally from the French, “voir dire” means, “to see to say.” It is the opportunity for the Court and attorneys to ask questions and learn about the prospective jurors in an effort to select an appropriate jury to decide each case. Before every jury trial in Circuit Court in the Commonwealth of Virginia, the potential jurors are sworn in by the Judge or clerk to tell the truth. Then the Judge and the lawyers ask a series of questions in an effort to select seven jurors for the civil trial. Virginia law provides that both the Judge and the lawyers have the right to ask potential jurors any relevant questions to determine whether that juror is related to either party in the trial, has any personal interest in the outcome of the trial, knows anything about the case, has expressed or formed any opinions about the case in advance of the trial, or is biased or prejudiced against any of the parties in the lawsuit.
Sometimes an attorney may request a member of the jury panel be “struck for cause” after the Judge’s questioning, or the attorney may make the request after the attorneys have finished their questioning, too. If a juror is “stricken for cause”, then another member of the original venire is added to the jury panel, so there are 13 when the attorneys begin making their strikes.
After any prospective jurors are struck “for cause”, then the remaining 13 are reduced to 7 by what are called “peremptory strikes.” Each side of the lawsuit’s attorney or attorneys is allowed to strike 3 potential jurors; after these 6 are removed, the remaining 7 are the jurors who will hear the case. The attorneys take turns using their 3 peremptory strikes, until side has used 3.
If you are called for jury duty are questioned by the Judge and the attorneys, you should understand that the attorneys are required to ask questions on behalf of their clients and do not mean to pry into your personal affairs. (Normally the questions are not terribly personal). You should also understand that there are no right or wrong answers to the questions asked in voir dire. It is not a contest. Voir dire is just the way the judicial system tries to get as close to a fair and unbiased jury as it can for each particular case, and to give the parties equal opportunities to present their cases.
(7) has any reason to believe he will not give a fair and impartial trial to the Commonwealth and the accused based solely on the law and the evidence. Thereafter, the court, and counsel, as of right may examine on oath any prospective juror and ask any question relevant to his qualifications as an impartial juror. A party objecting to a juror may introduce competent evidence in support of the objection.
There is no corresponding Rule like this for civil cases; however, these same concepts seem to be regularly applied in civil trials, too.
Although jury duty may seem like an inconvenience or a burden, it is the foundation of our system of justice in the United States. Judges, attorneys, parties to lawsuits, and all informed citizens appreciate the service jurors provide. Informed citizens welcome the opportunity to help make our system of justice as fair and just as they can.
 See Va. Code § 8.01-345 at http://198.246.135.1/cgi-bin/legp504.exe?000+cod+8.01-345.
 See Va. Code § 8.01-351 at http://198.246.135.1/cgi-bin/legp504.exe?000+cod+8.01-351.
 Some courts require the citizens to call the clerk each day during the term to see if they are needed for jury duty that day. The procedures vary slightly from court to court. If you are summoned for jury duty and have any questions, normally the contact information for the court is on the paper you receive and you should call or contact the court for more information. See also Va. Code § 801-353 at http://198.246.135.1/cgi-bin/legp504.exe?000+cod+8.01-353.
 See Va. Code § 8.01-357, at http://198.246.135.1/cgi-bin/legp504.exe?000+cod+8.01-357.
 The scope of “voir dire” is established by Virginia law. For civil case, see Va. Code Ann. § 8.01-358, and, for criminal cases, see Va. S. Ct. R. 3A:14 at http://leg1.state.va.us/cgi-bin/legp504.exe?000+scr+vscr-3AZ14.
 See Va. Code Ann. § 8.01-358, at http://198.246.135.1/cgi-bin/legp504.exe?000+cod+8.01-358. .
 Attorneys do not have to give a reason for who they strike, but are not allowed to strike jurors for impermissible reasons such as race, gender, age, religious affiliation, etc. If one attorney thinks the other attorney may have struck a juror for an impermissible reason, the attorney can ask (or make a motion for ) the judge to inquire further into the reasons for the strike. This is called a “Batson” motion.


On Friday the Supreme Court requested a response to the cert. petition in Sterling v. United States, No. 16-814 (CAAFlog case page).
Two cases tie for the #8 spot on this year’s list: United States v. Sterling, 75 M.J. 407 (C.A.A.F. Aug. 10, 2016), cert. pet. filed, __ S.Ct. __ (Dec. 23, 2016) (CAAFlog case page), and the continuing saga of the court-martial prosecution of Army Sergeant Robert “Bowe” Bergdahl (CAAFlog news page).
CAAF decided the Marine Corps case of United States v. Sterling, 75 M.J. 407, Nos. 15-0510/MC & 16-0223/MC (CAAFlog case page) (link to slip op.), on Wednesday, August 10, 2016. The court holds that Sterling’s disobedience of an order could qualify for protection under the Religious Freedom Restoration Act (RFRA), however the majority finds that Sterling failed to establish that the order she violated substantially burdened her exercise of religion. Accordingly, CAAF affirms the findings and sentence.
Judge Ryan writes for the court, joined by Chief Judge Erdmann, Judge Stucky, and Senior Judge Cox. Judge Ohlson dissents.
Contrary to her pleas of not guilty, Lance Corporal (E-3) Sterling was convicted by a special court-martial, composed of members with enlisted representation, of failure to go to her appointed place of duty, disrespect towards a superior commissioned officer, and four specifications of disobeying the lawful order of a noncommissioned officer, in violation of Article 86, 89, and 91. She was sentenced to reduction to E-1 and a bad-conduct discharge.
Sterling’s court-martial arose out of her contentious relationship with her superiors. She elected to represent herself at trial (though she had the assistance of detailed military defense counsel). She was convicted of offenses for her refusal to wear the service C uniform, her refusal to perform duty handing out vehicle passes, and her refusal to obey an order to remove three signs that she posted in her office workspace. The signs stated “no weapon formed against me shall prosper” and Sterling asserted at trial and on appeal that the signs represented the Christian trinity and were posted as an expression of her religious belief.
In yesterday’s decision CAAF concludes: that the order was lawful (answering the second granted issue in the affirmative); that Sterling’s failure to follow the procedures to seek an accommodation is relevant (answering the first certified issue in the affirmative); that Sterling did not waive or forfeit her claim under RFRA (answering the second certified issue in the negative), and; that Sterling failed to establish the facts necessary to prevail on a RFRA claim (answering the first granted issue in the negative).
Today CAAF decided the final argued case of the September 2015 Term: United States v. Sterling, No.s 15-0510/MC & 16-0223/MC (CAAFlog case page). The opinion is available here. Also available here (CAAFlog link).
We hold that the orders to remove the signs were lawful. Appellant’s claimed defense to violating those orders under RFRA was preserved, but Appellant has failed to establish a prima facie RFRA case. Moreover, we hold that her failure to either inform her command that the posting of the signs was religiously motivated or seek an accommodation are both relevant to Appellant’s failure to establish that the orders to remove the signs constituted a substantial burden on her exercise of religion. Consequently, while the NMCCA’s RFRA analysis was flawed, we affirm the decision on other grounds.
In my view, the Religious Freedom Restoration Act (RFRA), 42 U.S.C. §§ 2000bb–2000bb-4 (2012), provides the men and women of our nation’s armed forces with the presumptive right to fully, openly, and spontaneously engage in religious exercise. This right extends to sincere religious conduct that is not specifically required by, or deemed by judges to be important to, the tenets of a servicemember’s faith. Further, servicemembers who are court-martialed for sincere religious conduct may invoke the protections afforded by RFRA even if they did not obtain the permission of the Government before engaging in that conduct, and even if they did not contemporaneously inform their chain-of-command that their actions were religious in nature.
I conclude that the majority’s disposition of the instant case is not consistent with these rights under RFRA. Moreover, I conclude that the majority’s analysis of the underlying legal issue raises the prospect that other servicemembers in the future may be subjected to conviction at court-martial for merely engaging in religious exercise that is entitled to protection under the statute. Therefore, I must respectfully dissent.
Update: It is very difficult to hear Judge Ryan in CAAF’s recording of the oral argument in Sterling. I was able to enhance the recording to make her easier to hear. The enhanced audio is available here.
I noted the petition for review in the Marine Corps case United States v. Sterling, No. 15-0510/MC, in this post. The case asserts a violation of the Religious Freedom Restoration Act (RFRA) in the application of a military order.
Friend of CAAFlog Don Rehkoph forwards the Government’s answer to the petition for grant of review (available here), as well as an amicus brief he authored on behalf of the Military Religious Freedom Foundation and in support of neither party (available here). Both briefs argue that CAAF should deny review.
The Religious Freedom Restoration Act (RFRA), as modified by the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. § 2000bb – 2000bb-4, was the central theme in the Supreme Court’s recent decision in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. __, (2014). Attorney Paul Clement represented the private parties who sought an exemption from the contraception coverage requirements of the Affordable Care Act. Mr. Clement is now part of an effort to apply RFRA to military orders, appearing pro hac vice on behalf of a Marine Corps appellant who is seeking CAAF review of her court-martial conviction for an orders violation.
The case is United States v. Sterling, No. 15-0510/MC. The NMCCA’s decision is available here. The supplement to the petition for grant of review by CAAF is available here.


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The U.S. Supreme Court; It’s a Wrap!
On Monday, June 27, the U.S. Supreme Court issued decisions in Voisine et al. v. United States, No. 14-10154; Whole Woman’s Health v. Hellerstedt, No. 15-274; and McDonnell v. United States, No. 15-474. With these decisions, the oddest Term in this writer’s memory is a wrap!
I was in a meeting recently. Some legal topics came up. The people with whom I was meeting—non-attorneys—knew the subject, but we all knew there might be misunderstandings, as laws, or law and lore, get confused. Here are three examples.
Right-to-Work and At-Will Employment. People—even an attorney or two—confuse these concepts. How? Read on.
Family law was never my thing. Alas, we don’t often know how life will turn out. About 15 years ago my practice focus shifted much more heavily into probate and estate planning. And probate, it turns out, is family law without the divorces, mostly.
Most probate matters—no good stats, but far more than 90% is my best estimate—get processed easily, quickly, and for a few thousand dollars. Then there are the outliers, which almost always have in common: (a) a dysfunctional family; and (b) deceased or demented parents. Sometimes, there’s lots of money or complicated assets, but in plenty of cases an inverse relationship exists between value and the intensity of the battle.
Donald J. Trump has taken out after U.S. District Judge Gonzalo Curiel, who happens to be the judge in Low, et al. v. Trump University, LLC, et al. and Cohen v. Donald J. Trump. The basic facts, for anyone who hasn’t been following the situation, are laid out well in Why Is Donald Trump So Angry at Judge Gonzalo Curiel?, written for The Atlantic on June 3, 2015 by Matt Ford.
The 150th anniversary of the Civil War (five years ago), Memorial Day (which tracks back to Decoration Day, dedicated to honoring those who died in the Civil War) and the notion that Donald Trump might be our 45th President of the United States of America, brought to mind Abraham Lincoln. Before he went to work for the federal government in 1861, Mr. Lincoln was a very accomplished attorney. Notes for a Law Lecture, dated July 1, 1850, may or may not have been used in a lecture, but they have survived for more than 165 years.
The U.S. Supreme Court heard oral argument earlier today in United States v. Texas, No. 15-674. Texas and 25 other states sued the federal government to prevent the implementation of deferred-action regarding certain undocumented immigrants.
Lyle Denniston has an excellent overview of the case and the oral argument in Oral Argument: Search for a Fifth Vote on Immigration at SCOTUSblog. And, of course, Nina Totenberg is always worth reading and listening to; her piece, with a byline shared with Eyder Peralta for NPR, is On Obama’s Immigration Actions, Supreme Court Seems Sharply Divided.
I’m about to dis the U.S. Constitution. It’s a Constitution I swore to support on October 17, 1981 and implicitly, on each and every one of the following 12,602 days. To be clear, given that I live in Arizona, a state which seems hell bent on challenging Kansas for Most Effed Up State trophy, I support the U. S. Constitution so long as it remains in place.
Arizona faces a Constitutional amendment—Arizona Education Finance Amendment aka Proposition 123—which addresses school funding next month. And the entire nation finds itself in the midst of what might be called a democratic revolution, as “the people” have decided not to go along/get along, at least in the Republican Party. I have some thoughts.
Yesterday, in an 8-0 decision, the Court affirmed the decision of a three-judge panel, holding that Texas need not have state legislative redistricting maps based on voters, as opposed to people. Justice Ruth Bader Ginsburg wrote the opinion for the Court. Justices Clarence Thomas and Samuel Alito concurred in the judgment.
The decision represents good news for Democrats and those who believe many voices should be heard. But it’s not especially bad news for the other side.

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