produce and distribute the line in Italy, that a sales agent
and showroom would be provided in New York, that plaintiff
would have three seasons to introduce the line, that the joint
venture company would be based in offices in Milan and that
defendants would fully support the joint venture. Franz-Peter
Falke also promised plaintiff a salary of at least $100,000 per
year for her involvement in the joint venture.
It was also a part of the understanding that plaintiff would
be responsible for developing, producing and marketing the
Daniela Passini collection in the United States while
defendants would hire agents for sales abroad, that the
collection would be imported into the United States by Falke
Fashion, Inc., that plaintiff was permitted to use facilities
at Falke Fashion and that defendants would provide accounting
services for the project.
Plaintiff left her position with Falke Fashion and moved to
Italy on October 31, 1988, to begin designing and producing the
Daniela Passini collection. Plaintiff found the Italian firm
hired by defendants uncooperative and unable to provide the
services as promised by Franz-Peter Falke. On her own,
plaintiff created a sample collection and seven duplicates for
sales agents which she presented to the press and buyers on
January 11, 1989. The Daniela Passini collection was received
Defendants notified plaintiff in January 1989 that they would
not abide by the terms agreed to in October 1988. Defendants
refused to hire sales agents for New York and Europe, refused
to establish the Milan office and rented a showroom in New York
for plaintiff for only three months. Falke Fashion refused to
provide facilities or support as promised.
On February 15, 1989, Franz-Peter Falke informed plaintiff
for the first time that defendants planned to terminate the
project unless the Daniela Passini line sold 6000 pieces in the
first season. He also told her that she could not order
materials, prepare patterns or secure production facilities for
the merchandise already sold.
In March 1989, Franz-Peter Falke informed plaintiff by
telephone that defendants planned to terminate the joint
venture and advised her to cancel all outstanding orders. On
April 24, 1989, Franz-Peter Falke formally terminated the joint
venture by mail and demanded reimbursement from plaintiff of
certain sums expended on her behalf. On May 8, 1989, he advised
plaintiff that defendants had begun to register her name as a
trademark in numerous foreign countries and that she could
repurchase those rights from defendants for approximately
350,000 Deutsche Marks. Defendants thereafter incorporated
numerous features of the Daniela Passini collection into its
own line of merchandise.
Based on these facts, plaintiff claims relief for (1) breach
of contract; (2) common law fraud; and (3) violation of RICO,
18 U.S.C. § 1961 et seq.
A fair summary of these allegations is that plaintiff was
deprived of the possible benefits of a potential business deal
and has suffered losses as a result of the defendants' conduct.
Based on the fact that many of the communications between the
parties constituted false representations to plaintiff
transmitted by mail or telefax, plaintiff claims these acts
constitute predicate acts of mail and wire fraud against her.
This is not a satisfactory pleading of a RICO claim.
A "pattern of racketeering activity" is established for RICO
purposes where the predicate acts "themselves amount to, or
. . . otherwise constitute a threat of, continuing racketeering
activity." H.J. Inc. v. Northwestern Bell Telephone Co., ___
U.S. ___, 109 S.Ct. 2893, 2901, 106 L.Ed.2d 195 (1989)
(emphasis in original). Factors including the number and
variety of predicate acts, the length of time during which they
were committed, the number of victims and the occurrence of
distinct injuries are considered in determining whether such
continuity exists. See Continental Realty Corp. v. J.C. Penney,
Inc., 729 F. Supp. 1452, 1454 (S.D.N.Y. 1990). The Supreme Court
in H.J. Inc. explained that predicate acts extending over a few
weeks or months and threatening no future criminal conduct
do not satisfy the pattern requirement. Id. at 2902.
Plaintiff alleges no facts from which a pattern of
racketeering activity which meets this standard may rationally
be inferred. The court in Airlines Reporting Corp. v. Aero
Voyagers, Inc., 721 F. Supp. 579 (S.D.N.Y. 1989), dismissed
plaintiff's RICO claim alleging nearly fifty mail fraud
violations on the grounds that:
The complaint alleges a closed-ended, single
scheme involving three perpetrators (a company and
two of its directors), one victim, and an
uncomplicated transaction (essentially relating to
a simple breach of contract).
Id. at 584. Similarly, plaintiff here alleges facts showing no
more than a straightforward breach of contract claim. The
complaint recites a single alleged scheme involving a single
perpetrator consisting of affiliated companies, a single victim
and a single transaction gone sour.
Plaintiff also fails to allege facts showing a threat of
continuing racketeering activity. See Continental Realty Corp.;
USA Network v. Jones Intercable, Inc., 729 F. Supp. 304, 318
(S.D.N.Y. 1990) (no threat of continuity where alleged purpose
of fraudulent scheme was "essentially accomplished"); Bingham
v. Zolt, 683 F. Supp. 965, 970 (S.D.N.Y. 1988) (improper to
"characteriz[e] the defendant's subsequent enjoyment of the
proceeds of the scheme as continuous criminal activity.").
Plaintiff alleges no facts tending to show that defendants make
a practice of defrauding designers in order to gain control of
potentially promising designs. See Azurite Corp. v. Amster &
Co., 730 F. Supp. 571, 581 (S.D.N.Y. 1990) (short-term,
closed-ended scheme did not show threat of continuity absent
allegations that defendants had committed the same or similar
acts before or that they had committed them again after the
period in question); Continental Realty, 729 F. Supp. at 1455
("[T]here is no reason to believe that Home Depot will continue
to provide dummy bids for the Defendants in other real estate
transactions."). Accordingly, plaintiff's RICO claim is
Plaintiff's RICO claim is the only asserted basis for federal
jurisdiction in this case. Complaint ¶ 11. Having found this
claim deficient, the Court declines to exercise pendent
jurisdiction over the state claims, counts one and two, and
these will be dismissed as well. See United Mine Workers v.
Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218
(1966); Chase Manhattan Bank, N.A. v. Fidata Corp., 700 F. Supp. 1252,
1261 (S.D.N.Y. 1988). In view of the foregoing it is
unnecessary for the Court to rule on the motion to dismiss the
case on the grounds of forum non conveniens.
© 1992-2003 VersusLaw Inc.