copy of the transcripts and notes of any deposition given by Oz, directing a hearing, if required, to determine the facts surrounding his deposition, to dismiss Plaintiffs' Amended Complaint, and to disqualify Dunnegan. Opposition and reply papers were filed and those motions were deemed fully submitted at oral argument on September 6, 1995. Post-argument affidavits and memoranda were filed by Daniel on September 7 and September 15, and by Plaintiffs on September 11.
I. Legal Standards
A. Rule 12(b)(6)
On a Rule 12(b)(6) motion to dismiss, the factual allegations of the complaint are presumed to be true and all factual inferences must be drawn in the plaintiffs' favor and against the defendants. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989); Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir. 1985). Accordingly, the factual allegations set forth and considered herein are taken from the Plaintiffs' Complaint and do not constitute findings of fact by the Court. They are presumed to be true only for the purpose of deciding the present motion to dismiss.
Rule 12(b)(6) imposes a substantial burden of proof upon the moving party. A court may not dismiss a complaint unless the movant demonstrates "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989); Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
In cases in which Rule 12(b)(6) has been applied to claim of a RICO pattern, plaintiffs have been required to allege multiple predicate acts which constitute a pattern of racketeering activity in that they satisfy the requirements of relationship and continuity. See H.J., 492 U.S. at 250. A civil RICO plaintiff must establish that defendants "conducted or participated . . . in the conduct of [an] enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. § 1962(c). Racketeering activity includes a variety of criminal acts, including mail and wire fraud. 18 U.S.C. § 1961(1). The elements of a "pattern of racketeering activity" are not well defined. At a minimum, plaintiffs must demonstrate "at least two acts of racketeering activity" within a ten year period. 18 U.S.C. § 1961(5); see McLaughlin v. Anderson, 962 F.2d 187, 190 (2d Cir. 1992).
In order to establish standing to undertake a civil action under RICO, it must be shown that Plaintiff's harm was proximately caused by the RICO predicate acts alleged, i.e. that there was a direct relationship between plaintiff's injury and the defendant's conduct. See First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 769 (2d Cir. 1994), cert. denied, 130 L. Ed. 2d 632, 115 S. Ct. 728 (quoting Standardbred Owners Ass'n v. Roosevelt Raceway Assocs., 985 F.2d 102, 104 (2d Cir. 1993)); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 25 (2d Cir. 1990). This requires a showing not only that the defendant's alleged RICO violation was the "but-for" or cause-in-fact of his injury, but also that the violation was the legal or proximate cause. Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 265-70, 117 L. Ed. 2d 532, 112 S. Ct. 1311 (1992); Standardbred Owners, 985 F.2d at 104; Hecht, 897 F.2d at 23.
Failure to adequately allege that defendant's RICO predicate acts proximately caused plaintiff's injury is a defect of pleading and is grounds for dismissal at the pleading stage. See First Nationwide, 27 F.3d at 769.
B. Rule 9(b)
Rule 9(b), Fed. R. Civ. P., requires that in all allegations of fraud, the circumstances constituting the fraud must be stated with particularity. See Shields v. Citytrust Bankcorp, Inc., 25 F.3d 1124, 1127 (2d Cir. 1994); In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 265 (2d Cir. 1993), cert. denied, 114 S. Ct. 1397; Shemtob v. Shearson, Hammill & Co., 448 F.2d 442, 444-45 (2d Cir. 1971). The pleading must be sufficiently particular to serve the three goals of Rule 9(b) which are (1) to provide a defendant with fair notice of the claims against him; (2) to protect a defendant from harm to his reputation or goodwill by unfounded allegations of fraud; and (3) to reduce the number of strike suits. See DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987); O'Brien v. Price Waterhouse, 740 F. Supp. 276, 279 (S.D.N.Y. 1990), aff'd, 936 F.2d 674 (2d Cir. 1991).
The Court of Appeals has required that allegations of fraud adequately specify the statements made that were false or misleading, give particulars as to the respect in which it is contended that the statements were fraudulent, and state the time and place the statements were made and the identity of the person who made them. See McLaughlin, 962 F.2d at 191; Cosmas, 886 F.2d at 11. Further, it is said that in the RICO context, allegations of fraud must indicate what the defendant obtained as a consequence of the fraud. See Conan Properties v. Mattel, Inc., 619 F. Supp. 1167, 1172 (S.D.N.Y. 1985); Todd v. Oppenheimer & Co., 78 F.R.D. 415, 420-21. Finally, the Court of Appeals has held that a complaint charging fraud must assert that defendant possessed an intent to defraud or, at minimum, allege circumstances from which an inference of such intent could be drawn. See Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46, 50 (2d Cir. 1987), cert. denied, 484 U.S. 1095 (1988), overruled on other grounds by United States v. Indelicato, 865 F.2d 1370 (2d Cir. 1989).
Conclusory allegations of wrongdoing do not satisfy the requirements imposed by Rule 9(b). Some courts have interpreted the Rule to require that the complaint set forth (i) precisely what statements were made in what documents or oral representations or what omissions were made, (ii) the time and place of each such statement or omission and the person responsible for making it, (iii) the content of such statements and the manner in which they misled, and (iv) that which the defendants obtained as a consequence of the fraud. Todd, 78 F.R.D. at 420-21; see also Savino v. E. F. Hutton & Co., 507 F. Supp. 1225, 1232 (S.D.N.Y. 1981); Troyer v. Karcagi, 476 F. Supp. 1142, 1149 (S.D.N.Y. 1979); Gross v. Diversified Mortgage Inv., 431 F. Supp. 1080, 1087 (S.D.N.Y. 1977), aff'd sub nom., Duban v. Diversified Mortgage Inv., 636 F.2d 1201 (2d Cir. 1980).
The plaintiff's complaint must give notice to each defendant of its alleged misconduct. To this end, the complaint may not rely upon blanket references to acts or omissions by all of the defendants, for each defendant named in the complaint is entitled to be appraised of the circumstances surrounding the fraudulent conduct with which he individually stands charged. Jacobson v. Peat, Marwick, Mitchell & Co., 445 F. Supp. 518, 522 n.7 (S.D.N.Y. 1977). This requirement facilitates the preparation of an adequate defense while protecting a defendant's reputation from groundless accusations. See de Atucha v. Hunt, 128 F.R.D. 187, 189 (S.D.N.Y. 1989), aff'd, 979 F.2d 846 (2d Cir. 1992); Posner v. Coopers & Lybrand, 92 F.R.D. 765, 768 (S.D.N.Y. 1981), aff'd, 697 F.2d 296 (2d Cir. 1982). It also serves to prevent the abuse of process and the disruption of the gratuitous defendant's normal business activity. See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 740-41, 44 L. Ed. 2d 539, 95 S. Ct. 1917 (1975).
There are five elements necessary to sustain a claim in fraud under New York law: (1) misrepresentation of a material fact; (2) the falsity of that misrepresentation; (3) scienter, or intent to defraud; (4) reasonable reliance on that representation; and (5) damage caused by such reliance. May Dep't Stores Co. v. International Leasing Corp., 1 F.3d 138, 141 (2d Cir. 1993); Katara v. D.E. Jones Commodities, Inc., 835 F.2d 966, 970-71 (2d Cir. 1987); Jo Ann Homes v. Dworetz, 25 N.Y.2d 112, 119, 302 N.Y.S.2d 799, 250 N.E.2d 214 (1969).
C. Rule 56
The Rule 56 motion for summary judgment is "an integral part" of the Federal Rules of Civil Procedure and facilitates the overall purpose of the Rules as stated in Rule 1, namely, "to secure the just, speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). A motion for summary judgment may be granted only when there is no genuine issue of material fact remaining for trial and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Silver v. City Univ. of New York, 947 F.2d 1021, 1022 (2d Cir. 1991).
The Second Circuit has repeatedly noted that "as a general rule, all ambiguities and inferences to be drawn from the underlying facts should be resolved in favor of the party opposing the motion, and all doubts as to the existence of a genuine issue for trial should be resolved against the moving party." Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988) (citing Celotex, 477 U.S. at 330 n.2 (Brennan, J., dissenting) and Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970)); see United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962); Cartier v. Lussier, 955 F.2d 841, 845 (2d Cir. 1992); Burtnieks v. City of New York, 716 F.2d 982, 983-84 (2d Cir. 1983). If, when "viewing the evidence produced in the light most favorable to the nonmovant . . . a rational trier could not find for the nonmovant, then there is no genuine issue of material fact and entry of summary judgment is appropriate." Binder v. Long Island Lighting Co., 933 F.2d 187, 191 (2d Cir. 1991).
Motions to disqualify are generally disfavored, because they are often made for tactical reasons. Board of Education v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979). The party seeking to disqualify another's attorney bears the burden of establishing the need for disqualification. Evans v. Artek Sys. Corp., 715 F.2d 788, 794 (2d Cir. 1983); Stratagem Dev. Corp. v. Heron Int'l N.V., 756 F. Supp. 789, 792 n.8 (S.D.N.Y. 1991) (Kram, J.); Rosman v. Shapiro, 653 F. Supp. 1441, 1444, n.5 (S.D.N.Y. 1987) (Sprizzo, J.).
However, any doubt as to the existence of a conflict of interest should be resolved in favor of disqualification. Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir. 1975); Bennett Silvershein Assocs. v. Furman, 776 F. Supp. 800, 802 (S.D.N.Y. 1991) (Mukasey J.). As a general rule, disqualification is necessary when an attorney's successive representation of adverse interests raises the possibility that in the present matter that attorney will improperly use confidences gained in the prior representation to the detriment of the former client. For instance, Disciplinary Rule 5-108 of the New York Code of Professional Responsibility provides:
Except with the consent of a former client after full disclosure a lawyer who has represented the former client in a matter shall not: