The opinion of the court was delivered by: McMAHON, District Judge.
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANTS' MOTIONS TO
DISMISS THE COMPLAINT AND GRANTING PLAINTIFF'S MOTION TO
Oak has brought the instant action against some 40 defendants,
including licensed beer dealers, licensed redemption centers,
trucking and warehousing companies, and glass brokers, as well as
various individuals who are owners, officers or employees of
each. In sum, Plaintiff's lengthy (210-page) complaint alleges
that the Defendants participated in a scheme whereby several
Defendants fraudulently presented already redeemed empty beverage
containers to Oak for redemption, and that the remaining
Defendants stored or transported those containers in furtherance
of the scheme.
(a) Oak, TOMRA, and R.T. Trading
Oak, located in Blauvelt, New York, is a distributor of Miller
Brands, Amstel, Heineken, and other beers in the greater New York
According to the complaint, Defendant TOMRA of Massachusetts
("TOMRA Mass") is located in Worcester, Massachusetts, and is
engaged in the business of collecting redeemable empty beverage
containers for dealers, redemption centers and distributors.
Defendant TOMRA of North America, Inc. ("TOMRA NA") is based in
Stamford, Connecticut, and is the parent corporation of TOMRA
Mass. Defendant TOMRA Metro is a Connecticut corporation based in
Stratford, Connecticut. TOMRA Mass. and TOMRA Metro allegedly
share management personnel with TOMRA NA. The individual TOMRA
Defendants include Jack Walsh, TOMRA's General Manager, and Mike
Wellman, the President of TOMRA Metro.
R.T. Trading is allegedly a New York shell company that has a
stated place of business at 837 McLean Avenue in Yonkers, New
York. The complaint asserts that R.T. Trading, while holding
itself out to the public as a glass brokerage company, is
actually a fictitious entity that exists for the sole purpose of
concealing the illegal double-redemption scheme. Defendant
William Walters is the owner of R.T. Trading.
(b) The Redemption Center Defendants
The redemption center Defendants include We Can, Kelly's Sober
Ride Corp. ("Kelly's"), Second Chance Recycling ("Second
Chance"), DRC Group, Inc. ("DRC"), and a number of officers and
employees of each. The complaint alleges that We Can and DRC have
presented empty beverage containers to Plaintiff for redemption.
We Can is a New York not-for-profit corporation with a
principal place of business at 630 9th Avenue, New York, New
York. The complaint states that until June 1998, We Can operated
a redemption center at 3875 9th Avenue, and continues to operate
a redemption center at 52nd Street and 11th Avenue, New York, New
York. Defendant Guy Polhemus is We Can's President.*fn1
Additionally, Defendants John Doe Look-a-Like and John Doe
Helper are alleged to have supervised the movement of previously
redeemed bottles and cans at Kelly's Bronx location on behalf of
Yonkers DB, Kelly's, and other Defendants.
Second Chance also maintains its principal place of business in
the Bronx. Defendant David Vazquez is Second Chance's chief
operating officer. Vazquez employs Defendant JD Chops, a driver
who is alleged to have transported containers in a truck owned by
DRC is located in Brooklyn, and operates a second redemption
center in the Bronx. Defendant Aleksandr Dolzhanskiy is the owner
or chief operating officer of both DRC sites. Defendant Aleksandr
Rapoport is a supervisor of DRC's Bronx site.
(c) The Beverage Dealer Defendants
The malt beverage dealer Defendants include: 153-27 Rockaway
Beverage, Inc. ("Rockaway"), based in Queens, New York; V & R
Beer and Soda Distributors, Inc., also known as Ricardo's
Wholesale Beer ("Ricardo's"), based in Manhattan; and Burnside
Beverage Center, Inc. ("Burnside"), located in the Bronx.
Pursuant to New York Environmental Conservation Law § 27-1001
et seq. ("the Bottle Bill") and its implementing regulations, 6
N YC.R.R. § 367.1 et seq., beverage distributors such as Oak
are obligated to accept empty bottles and cans and pay a refund
of 5 cents and a handling fee of 2 cents on each redeemed
container. The regulations further provide that, once the refund
value of an empty beverage container has been paid, "no person
may knowingly accept that empty beverage container from, or give
or sell it to, any person for the purpose of obtaining the refund
value from any person." 6 N.Y.C.R.R. § 367.5(a)(4). Oak alleges
that Defendants engaged in a scheme to present to Oak for
redemption bottles and cans that had already been redeemed in
Massachusetts and New York, in violation of the New York Bottle
According to the complaint, the double-redemption scheme
originated with Defendants TOMRA and TOMRA NA, who stored all or
some previously redeemed empty beverage containers ("PREBC") at
their facility in Worcester, Massachusetts. Instead of returning
the empty containers to the manufacturers or canceling their
redemption value by crushing them, TOMRA sold the PREBC to one or
more of the other Defendants. TOMRA then arranged for the PREBC
to be picked up by vehicles owned by the now-dismissed Defendants
Hudson, Four Seasons, and Your Choice Express or operated by
Defendant JT Beard and others.
The trucking Defendants transported the containers to various
"staging points" in New York and New Jersey, including Yonkers
DB, Kelly's, and a lot and warehouse in Carlstadt, New Jersey
operated by, among others, Defendants NL and Your Choice Express.
From these locations, the containers were taken to Burnside,
Ricardo's, We Can, and Yonkers DB, each of which then presented
the PREBC to Plaintiff for a second, illegal redemption.
Additionally, containers were transported from the New York and
New Jersey staging points to Kelly's, which in turn shipped the
containers to the DRC's Bronx site and Ricardo's, among others,
each of which then brought the PREBC to Oak for redemption.
Oak alleges that it spent more than three million dollars
between 1997 and 1999 on Defendants' redemption of PREBC.
Oak further alleges that on February 11, 1998, the TOMRA
Defendants prevented Oak from identifying the source of
non-redeemable and previously redeemed containers by informing
Oak that TOMRA sent Heineken containers received by them to an
overseas location through a business known as R.T. Trading.
Plaintiff discovered that the address of R.T. Trading, 837 McLean
Avenue in Yonkers, is in fact occupied by a travel agency and
stationery store, and is also the given address of Defendants
Beveragetime and Smith.
Oak goes on to allege that, on or about February 17, 1998, the
TOMRA Defendants fraudulently induced Plaintiff to initiate and
engage in a joint investigation with them, for the ostensible
purpose of uncovering the source of the PREBC, but with the
actual purposes of thwarting Oak's attempts to uncover
Defendants' role in the conspiracy and causing additional expense
to Oak. Based on unspecified "fraudulent information" that the
TOMRA Defendants provided to Oak, Plaintiff initiated a
surveillance of trucks entering and leaving TOMRA. On or about
February 20, Oak's investigators followed a tractor trailer from
Massachusetts to New Jersey. The TOMRA Defendants then contacted
Defendant Fetzke, who admitted ownership of the trailer, and who
(in an unidentified manner) prevented the investigators' vehicle
from leaving a rest area, allowing the trailer to leave the rest
area with no further surveillance. Certain unspecified Defendants
then complained to the New Jersey State Police about the
investigators' surveillance, causing a New Jersey State Police
Officer to respond to the rest area and detain the investigators.
Finally, the complaint alleges that all Defendants invested the
profits of the scheme by forming Kelly's, which existed solely
for the purpose of continuing the enterprise.
Oak asserts the following federal causes of action, all under
RICO: (1) substantive violation of RICO under 18 U.S.C. § 1962(c);
(2) investment in a RICO enterprise under § 1962(a); (3)
maintenance of an interest in a RICO enterprise under § 1962(b);
and (4) RICO conspiracy under § 1962(d). Oak also appends three
state law claims for (1) common law unjust enrichment; (2) common
law conversion; and (3) common law fraud. All Defendants have
moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6)
and 9(b). The arguments raised by Defendants are common to all,
except where noted. For the reasons that follow, their motions
Defendants Beveragetime, Craig, Mathis, R.T. Trading,
Ricardo's, Waltenberger, Walters, and Wear Smith have not
appeared in this action. On December 14, 1999, the TOMRA
Defendants, somehow under the misimpression that Oak had moved
for entry of default against the nonappearing Defendants pursuant
to Fed. R.Civ.P. 55(b), prematurely filed a memorandum in law in
opposition to entry of default. Oak has filed no such motion to