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OAK BEVERAGES v. TOMRA OF MASSACHUSETTS

May 18, 2000

OAK BEVERAGES, INC., PLAINTIFF,
V.
TOMRA OF MASSACHUSETTS, L.L.C. A/K/A TOMRA OF MASSACHUSETTS, L.L.P.; TOMRA OF NORTH AMERICA, INC.; TOMRA METRO; JACK WALSH; MIKE WELLMAN; R.T. TRADING; WILLIAM WALTERS; WE CAN; GUY POLHEMUS; JOHN DEMETRI; YONKERS WHOLESALE BEER DISTRIBUTORS, INC. A/K/A YONKERS WHOLESALE BEER A/K/A DISCOUNT BEVERAGE CENTER A/K/A YONKERS DISCOUNT BEVERAGE; RICHARD MCDINE; JOHN DOE SALEM; COLIN G. CRAIG; KELLY'S SOBER RIDE CORP. A/K/A SOBER RIDE REDEMPTION A/K/A KELLYS BEVERAGE A/K/A KELLYS SOBER RIDE CORPORATION; JOHN MOGLIA; WILLIAM WALTENBERGER; JOHN DOE LOOK-A-LIKE; JOHN DOE HELPER; WEAR SMITH A/K/A SMITH WEAR; 153-27 ROCKAWAY BEVERAGE, INC. A/K/A ROCKAWAY BEVERAGE; V & R BEER AND SODA DISTRIBUTORS, INC. A/K/A RICARDO'S WHOLESALE BEER; BURNSIDE BEVERAGE CENTER, INC. A/K/A BURNSIDE DISTRIBUTING; SECOND CHANCE RECYCLING; DAVID VAZQUEZ; JOHN DOE CHOPS; DRC GROUP, INC.; ALEKSANDR DOLZHANSKIY; ALEKSANDR RAPOPORT; BEVERAGETIME; WILLIAM MATHIS; HUDSON VALLEY BUS COMPANY, INC; ROBERT DERONDA; FOUR SEASONS TRUCKING, INC.; YOUR CHOICE TRUCKING, INC.; YOUR CHOICE EXPRESS, INC.; NEUMAN LOGISTICS, INC.; DAVID NEUMAN; WILLIAM FETZKE; MARCIA COHEN; JOHN ROBUCK; EDWIN SILVA; AND E.S. TRUCKING, DEFENDANTS.



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 DISMISS COUNTERCLAIMS

Plaintiff Oak Beverages, Inc. ("Oak") brings this action under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and various state law theories, alleging that Defendants engaged in a scheme to fraudulently present Oak with bottles and cans for redemption, despite Defendants' knowledge that those bottles and cans had already been redeemed. Oak has also brought various pendent state law claims. All Defendants have moved to dismiss under Fed.R.Civ.P. 12(b)(6) and 9(b). For the reasons that follow, their motions are granted.

FACTS

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.

(1) The Parties

(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 City area.

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

Kelly's, which is also a licensed malt beverage dealer, is based in the Bronx. The complaint further alleges that Kelly's also maintains a place of business at 837 McLean Avenue in Yonkers, the same address as the allegedly fictitious R.T. Trading. Defendants John Moglia and William Waltenberger are, respectively, the chief operating officer and owner of Kelly's.

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 Vazquez.

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.

(2) The Enterprise

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 Bill.

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.

(3) The Present Action

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 are granted.

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 date.


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