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MOSES v. MARTIN

United States District Court, S.D. New York


December 3, 2004.

SUSAN MOSES, Plaintiff,
v.
DEBORAH MARTIN & DEBORAH MARTIN AGENCY, INC., Defendants.

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

Susan Moses, a celebrity wardrobe stylist, brings this action against Deborah Martin Agency, Inc. ("DMA") and its principal Deborah Martin ("Martin") (collectively, "defendants"). Moses alleges that, after entering into an agreement (the "Agreement") with DMA, under which DMA would act as her manager, DMA failed to remit payments owed her that were collected by DMA from Moses's customers, and that on multiple occasions Martin lied about whether DMA was paid, and if so, how much. Moses alleges breach of contract, negligent misrepresentation, unjust enrichment, conversion, fraud and violations of the Racketeering Influenced and Corrupt Organizations Act ("RICO").*fn1 Defendants now move under Rules 12(b)(1), 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure to dismiss the breach of contract, conversion, fraud, negligent misrepresentation and unjust enrichment claims against Martin, the conversion and fraud claims against DMA and the RICO claims against both defendants.*fn2 For the reasons that follow, defendants' motion is granted in part and denied in part.

  II. FACTS

  A. The Agreement

  Susan Moses, a California resident, provides wardrobe styling services to celebrities.*fn3 In or about 1997, Moses entered into an agreement with DMA, a New York corporation owned and operated by Martin.*fn4 The Agreement provided that DMA would handle all of the logistical aspects of Moses's celebrity styling business, including directly communicating with plaintiff's celebrity clients in order to negotiate fees and other terms for services, billing and processing revenues received by DMA from plaintiff's clients, and arranging for plaintiff's transportation and accommodations.*fn5 In exchange for these services, DMA was to keep twenty percent of the revenue that DMA collected from Moses's clients as payment for each job, and was to remit the remaining eighty percent to Martin.*fn6

  DMA entered into "deal memos" with Moses's and other stylists' celebrity clients, via U.S. mail and facsimile, using interstate telephone wires, "establishing the fees (daily or per job rates) for the stylists (third party beneficiaries to these contracts), the dates and other terms of the services to be provided by the DMA stylists, wardrobe or other expenses, transportation and accommodation costs."*fn7 Moses did not participate in the deal making process, nor was she privy to the terms of the deal memos.*fn8 Moses was thus "entirely dependent on defendants" as her agent "to deal fairly and honestly by (1) reporting the true terms of the styling contracts they negotiate; (2) reporting the receipt of payments from the clients; and (3) remitting full and correct payments timely" to her.*fn9

  B. The Alleged Scheme

  Moses alleges, however, that Martin and DMA "failed to perform their obligations and breached the Agreement, took and stole plaintiff's money, lied and cheated plaintiff and engaged in a pattern of fraudulent behavior in furtherance of defendants' efforts to steal money from plaintiff."*fn10 Martin and DMA allegedly perpetrated the scheme in order to steal from Moses and other celebrity stylists.*fn11

  After Moses or another stylist completed a job, DMA would bill the client via U.S. mail or facsimile lines. The client would remit payment to DMA, at which point, pursuant to the Agreement, DMA was to retain twenty percent of the collected fee and to remit the remaining portion to the stylist. "Instead, defendants diverted the proceeds of plaintiff's and other stylists' jobs to defendant Martin's personal use and excessive lifestyle."*fn12 In other instances, DMA "would pay the stylists far less than the eighty percent portion the stylist was entitled to receive."*fn13 When the stylists spoke with Martin to inquire about the job, Martin "falsely claimed that DMA had not been paid by clients as an excuse for not paying plaintiff and other stylists. Instead, defendants claimed that they were `advancing' moneys to plaintiff and other stylists, deceitfully claiming that the stylist owed DMA money for ostensibly un-reimbursed `advances.'"*fn14 By offering the advance, "Martin would gain the confidence of the stylists so that she could continue to further swindle them."*fn15 The Amended Complaint also alleges that Martin routinely "invoiced clients for inflated and false charges for wardrobe and other related expenses beyond the proper fees" and "directed her employees to submit (via U.S. mail and facsimile, using interstate telephone wires) bogus receipts to the celebrity clients for items intended for Martin's own personal wardrobe. . . ."*fn16

  C. Moses Discovers the Scheme

  In late 2003, after Moses had not received payments for some time, Moses began contacting clients herself to inquire why they had not paid DMA for her work.*fn17 These clients informed Moses that they had in fact remitted payment to DMA shortly after having received DMA's invoices.*fn18 Then, on or about December 4, 2003, Moses visited the DMA office in Manhattan where she demanded copies of her invoices, and DMA employees Clarence Hall and Millicent Williams provided her with some of her outstanding invoices along with a list of invoices for which plaintiff was owed money.*fn19 Moses alleges that this list "corroborates that DMA had been paid for these jobs by clients" and "catalogues the deceit of defendant Martin, who continued, up until March, 2004 to assert that DMA had not been paid by these clients for these jobs and continued to deny she owed plaintiff any money."*fn20 Moses also alleges that "DMA employees further indicated that they did not know why defendant Martin was keeping plaintiff's money and are well aware that defendant Martin has been stealing in order to support her extravagant lifestyle."*fn21 D. Moses Files Suit

  Moses filed her Complaint on February 24, 2004 and an Amended Complaint on May 19, 2004. In her Amended Complaint and accompanying Amended RICO Statement ("ARS"),*fn22 plaintiff provides the dates and details of "dozens of separate acts of mail and wire fraud commencing in March, 2001 and extending to the present," perpetrated against Moses, other stylists and their celebrity clientele.*fn23 Moses asserts that these "acts collectively constitute a `pattern of racketeering activity'"*fn24

  III. LEGAL STANDARD

  "Given the Federal Rules' simplified standard for pleading, `[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'"*fn25 Thus, a plaintiff need only plead "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests."*fn26 Simply put, "Rule 8 pleading is extremely permissive."*fn27

  At the motion to dismiss stage, the issue "`is not whether a plaintiff is likely to prevail ultimately, but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleading that a recovery is very remote and unlikely but that is not the test.'"*fn28

  The task of the court in ruling on a Rule 12(b)(6) motion is "merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof."*fn29 When deciding a motion to dismiss pursuant to Rule 12(b)(6), courts must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiff's favor.*fn30

  Rule 9(b) sets forth additional pleading requirements with respect to allegations of fraud. Rule 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." But, under Rule 9(b), "[m]alice, intent, knowledge and other condition of mind of a person may be averred generally." Rule 9(b) "applies to civil RICO claims for which fraud is the predicate illegal act."*fn31

  IV. DISCUSSION

  A. Claims Against Martin

  Defendants seek to dismiss the breach of contract, fraud, conversion, negligent misrepresentation and unjust enrichment claims against Martin, arguing that the Court should not pierce the corporate veil. "To pierce the corporate veil under New York law, a plaintiff must prove that: (1) the owner exercised such control that the corporation has become a mere instrumentality of the owner, who is the real actor; (2) the owner used this control to commit a fraud or `other wrong'; and (3) the fraud or wrong results in an unjust loss or injury to the plaintiff."*fn32 Allegations of a lack of corporate formalities, commingling of funds, and self-dealing may be sufficient to support a claim seeking to pierce the corporate veil.*fn33

  The Amended Complaint alleges that DMA "acted as the alter-ego, business conduit and instrumentality of defendant Martin."*fn34 It also claims that "Martin used the proceeds from racketeering activity for personal purposed, [sic] including the purchase of luxury items, international travel, Swedish massage treatments for defendant Martin and her ex-boyfriend and other non-legitimate purposes."*fn35 Here, "it cannot be said that the complaint `is totally devoid of solid, nonconclusory allegations'" regarding Martin's use of DMA as her corporate alter-ego.*fn36 As a result, defendants' motion to dismiss the breach of contract, fraud, conversion, negligent misrepresentation and unjust enrichment claims against Martin is denied. B. Conversion

  "`Conversion is any unauthorized exercise of dominion or control over property by one who is not the owner of the property which interferes with and is in defiance of a superior possessory right of another in the property.'"*fn37 When the original possession is lawful, "`conversion does not occur until the defendant refuses to return property after demand or until he sooner disposes of the property.'"*fn38

  "To maintain a claim for conversion, a plaintiff must show: (1) the property subject to conversion is `a specific identifiable thing;' (2) plaintiff had `ownership, possession or control' over the property before its conversion; and (3) defendant `exercised an unauthorized dominion over the thing in question, to the alteration of its condition or to the exclusion of the plaintiff's rights.'"*fn39 However, an action for conversion cannot be validly maintained "where damages are merely being sought for breach of contract."*fn40 Rather, a plaintiff must show acts that were unlawful or wrongful as opposed to mere violations of contractual rights.*fn41

  The money at issue here is specifically identifiable as payments for the celebrity stylist services provided by Moses to her customers. Moses was the rightful owner of this money as the provider of the services to her customers. While DMA was authorized to collect payments from Moses's customers for whom it had entered into deal memos, it was obliged to transfer the payments, less the twenty percent commission, to Moses. Although Moses demanded that DMA remit the payments to her,*fn42 DMA retained control over the revenue and thus interfered with plaintiff's superior possessory right.

  DMA's continued retention of the payments collected from plaintiff's customers without authorization and in defiance of plaintiff's superior right of ownership is sufficient to establish conversion as an action distinct from any breach of contract claim.*fn43 Accordingly, the motion to dismiss the conversion claim is denied.

  C. Fraud

  To prove fraud under New York law, "`a plaintiff must show that (1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff thereby, (3) the plaintiff reasonably relied upon the representation, and (4) the plaintiff suffered damage as a result of such reliance.'"*fn44 "Rule 9(b) requires that allegations of fraud be pleaded with particularity. Thus we have explained that when a complaint charges fraud, it must (1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent."*fn45 Plaintiff has pled her allegations of fraud with the requisite particularity. The Amended Complaint specifies several occasions on which Martin made material false representations to Moses. For example, Moses alleges that on March 25, 2001, Martin told her that "defendants did not owe plaintiff money," "that [Martin] did not withhold any portion of the eighty percent owed plaintiff" and that Martin had not been paid by Moses's clients for her work.*fn46 Moses claims that these statements were false because Martin did in fact withhold a portion of the eighty percent owed plaintiff and that Martin had in fact been paid by Moses's clients for her work. Moses also identifies three other dates on which Martin falsely represented that DMA did not owe Moses any money when in fact DMA did owe money to Moses.*fn47 Finally, Moses describes three different occasions on which Martin misrepresented the amount that Moses's clients had budgeted for wardrobe expenses (thereby limiting the amount that Moses would be owed), and then invoiced the clients for greater amounts in order to pocket the difference.*fn48 These assertions sufficiently allege that defendants made material false representations. Moses has also sufficiently pled the intent,*fn49 reliance and damages elements of a fraud claim.*fn50

  Defendants assert, however, that plaintiff's fraud claim is merely a restatement of her breach of contract claim and that it must therefore be dismissed.*fn51 "Where the alleged fraud arises out of the same facts that form the basis for a plaintiff's cause of action for breach of contract, the plaintiff has failed to state a legally sufficient cause of action for fraud."*fn52 Thus, in order to support a claim for fraud where a contract exists, a party must either: "(i) demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract; or (iii) seek special damages that are caused by the misrepresentations and unrecoverable as contract damages."*fn53 Plaintiff argues that defendants owed her a fiduciary duty distinct from their obligation to perform under the Agreement.*fn54 I agree.

  "Broadly stated, a fiduciary relationship is one founded upon trust or confidence reposed by one person in the integrity and fidelity of another."*fn55 "A fiduciary relation exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation."*fn56 "While the `exact limits' of what constitutes a fiduciary relationship are `impossible of statement,' a fiduciary relationship may be found in any case `in which influence has been acquired and abused, in which confidence has been reposed and betrayed.'"*fn57 "An agent is a fiduciary with respect to the matters within the scope of the agency."*fn58

  In support of their assertion that no fiduciary duty existed, defendants rely on Bridgestone/Firestone, Inc. v. Recovery Credit Svcs., Inc.*fn59 In that case, a credit card company sued its collection agent, alleging that the collection agent had failed to remit monies collected on the credit card company's account. Finding that the collection agent "did not occupy a position of trust or confidence with regard to [the credit card company] that imposed obligations beyond the express agreements,"*fn60 the Second Circuit stated the following reasons for holding that the agent did not owe the credit card company a fiduciary duty: He had little discretion to exercise, his obligations under the contract being straightforward and fixed. Whatever trust and confidence was placed in him had solely to do with his carrying out his obligations under the contract. Nor was he relied upon for advice or the exercise of judgment based on superior information or professional expertise.*fn61

 DMA's relationship with Moses, by contrast, exhibits all of the elements found lacking in Bridgestone. DMA had unfettered discretion to negotiate with Moses's celebrity clients on Moses's behalf by setting prices and other terms of the deal memos. Moses relied upon DMA's advice in structuring the terms of the arrangements with her clients based on DMA's superior knowledge about the industry and professional expertise in managing celebrity stylist businesses. Accordingly, DMA owed Moses a fiduciary obligation beyond the terms established by the agreement. As a result, defendants' motion to dismiss plaintiff's fraud claim is denied.

  D. RICO Act Violations

  1. Section 1962(a)

  To state a RICO claim under section 1962(a), a plaintiff must allege (1) that "`the defendants used or invested racketeering income to acquire or maintain an interest in the alleged enterprise,'"*fn62 and (2) "`injury by reason of defendants' investment of racketeering income in an enterprise, as distinct from injury traceable simply to the predicate acts of racketeering alone or to the conduct of the business of the enterprise.'"*fn63 "Failure to satisfy this two part test will result in the dismissal of the plaintiffs' claims."*fn64

  Moses alleges that the proceeds from the racketeering activity were either used by Martin for personal purposes or used "in the continuing of the enterprise."*fn65 Using funds for personal purposes, however, is not "us[ing] or invest[ing] racketeering income to acquire or maintain an interest in the alleged enterprise."*fn66 Furthermore, to the extent that racketeering proceeds were used "in the continuing of the enterprise," courts have held that, "`[a]s a matter of law, reinvestment of racketeering income [in the enterprise] is insufficient to make out a cause of action under RICO.'"*fn67 In any event, plaintiff never alleges an injury caused by defendants' investment of racketeering funds into the enterprise; rather, plaintiff only alleges injuries that arose out of the predicate acts themselves.*fn68 Accordingly, plaintiff's section 1962(a) claim is dismissed.*fn69

  2. Section 1962(c)

  Section 1962(c) provides, in relevant part, that "[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in . . . interstate . . . commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. . . ."*fn70 Defendant argues that plaintiff's section 1962(c) should be dismissed because the Amended Complaint fails to allege an enterprise distinct from the controlling person or any predicate criminal acts sufficient to establish a pattern of racketeering activity.

  a. Distinct Enterprise

  To establish liability under section 1962(c), a plaintiff must allege (and eventually prove) "the existence of two distinct entities: (1) a `person'; and (2) an `enterprise' that is not simply the same `person' referred to by a different name."*fn71 In her Amended RICO Statement, plaintiff alleges that "[t]he Deborah Martin Agency, Inc. . . . constitutes the `enterprise,'" and that "Martin and other individuals as described herein, associated with the enterprise, which is engaged in activities that affect interstate commerce, have conducted, participated, directly and indirectly, in the conduct of the enterprise's affairs through a pattern of racketeering activity as fully described herein."*fn72 Thus, plaintiff has identified the "person" as "Martin and other individuals," and the "enterprise" as DMA.*fn73

  The issue, then, is whether a "person" comprising a corporation's owner and certain of her employees is sufficiently distinct from the corporation itself to fulfill section 1962(c)'s distinctness requirement. In Cedric Kushner Promotions, Ltd. v. King, the Supreme Court squarely addressed this issue, holding that the plaintiff had fulfilled the distinctness requirement by alleging that Don King the individual was the "person" who associated with or was employed by Don King Productions, the RICO "enterprise," an incorporated entity of which King was the president and sole shareholder.*fn74 The Court reasoned that "[t]he corporate owner/employee, a natural person, is distinct from the corporation itself, a legally different entity with different rights and responsibilities due to its different legal status," and "nothing in the statute . . . requires more `separateness' than that."*fn75 Here, plaintiff has met the distinctness requirement by charging Donna Martin as the "person" associated with or employed by DMA, the "enterprise," an incorporated entity of which Martin was the "exclusive Principal, Owner and President."*fn76

  Earlier in this Opinion I held that Moses may be able to pierce DMA's corporate veil and pursue her state law claims directly against Martin.*fn77 If Moses is successful in this effort then DMA would no longer be "a distinct legal entity" — despite its corporate form. Such a conclusion would bar a section 1962(c) claim. This conflict, however, does not preclude plaintiff from pleading both theories, even though they are mutually exclusive. "Under Rule 8(e)(2) of the Federal Rules of Civil Procedure, a plaintiff may plead two or more statements of a claim, even within the same count, regardless of consistency."*fn78 Accordingly, defendants' motion to dismiss the section 1962(c) claim against Martin and her coconspirators is denied. However, Moses must eventually opt for one of the two theories: either Martin is the alter-ego of DMA or Martin and DMA are legally distinct entities.*fn79

  b. Pattern of Racketeering Activity

  "A plaintiff seeking to demonstrate a pattern of racketeering activity under [section] 1962 must allege (1) at least two predicate acts of racketeering occurring within a ten-year period; (2) that the predicate acts are related to each other; and (3) that the predicate acts amount to or pose a threat of continued criminal activity."*fn80 Plaintiff asserts as predicate acts "dozens of separate acts of mail and wire fraud commencing in March, 2001 and extending to the present."*fn81 Defendants argue that the Amended Complaint fails to allege any predicate acts and therefore the section 1962(c) claim must be dismissed.*fn82 I disagree. "RICO defines racketeering activity to include mail fraud in violation of 18 U.S.C. § 1341 and wire fraud in violation of 18 U.S.C. § 1343."*fn83 A plaintiff claiming a violation of the mail and wire fraud statutes must allege the elements of the offense: "(i) a scheme to defraud (ii) to get money or property, (iii) furthered by the use of interstate mail or wires."*fn84

  First, as discussed above, Moses has successfully pled a claim of common law fraud. The mail and wire fraud statutes are broader than a claim of common law fraud.*fn85 It follows, a fortiori, that Moses has successfully pled acts of fraud under RICO. Second, Moses described with particularity multiple occasions on which Martin, using interstate wires, misrepresented material facts to Moses in order to steal Moses's money.*fn86 She also describes ten different invoices that DMA sent, using interstate mail and wires, to Moses's customers with the wrongful intent of keeping any money received for Martin's own use.*fn87 Many of those receipts were marked "paid," even though Moses alleges that she never received the proceeds.

  Defendants argue that "[p]laintiff is unable to explain how the sending of invoices stating that they were paid were fraudulent,"*fn88 and plaintiff concedes that "mailing receipts marked `paid,' . . . may not, in themselves constitute instances of mail fraud. . . ."*fn89 However, the communication need not contain a false statement for Moses to plead a RICO claim based on mail or wire fraud.*fn90 "Even mailings that are innocent on their face may be in furtherance of a fraudulent scheme in violation of mail or wire fraud statutes because it is clear that [t]he mailings themselves need not contain misrepresentations."*fn91 "Rather, plaintiff? must merely assert that the use of the mails or the wires was accomplished `in furtherance of' the scheme alleged, which was itself fraudulent. In other words, it is the fraudulence of the scheme itself, not any individual falsehood in any particular mail or wire communication, that must be alleged."*fn92

  As discussed earlier, Martin's alleged misrepresentations to Moses, during various telephone conversations, did contain falsehoods. However, even the facially benign invoices, when viewed in context, clearly served the overall scheme to defraud.*fn93 Quite simply, sending the invoices to plaintiff's clients enabled defendants to successfully steal plaintiff's money. Thus, defendants' alleged scheme was "furthered by the use of interstate mail."*fn94

  Finally, plaintiff alleges numerous occasions on which defendants defrauded third-parties, namely other stylists and their customers. Defendants state that "[t]he Plaintiff has no standing to recover for these other alleged breaches of contract because she was not a party to such contracts."*fn95 While it is true that plaintiff may not recover damages as a result of the misconduct directed toward third-parties, plaintiff may allege predicate acts involving others to establish a pattern of racketeering activity.*fn96

  Because plaintiff has alleged a distinct enterprise and predicate acts constituting a "pattern of racketeering activity," defendants' motion to dismiss the section 1962(c) claim against Martin is denied.

  3. RICO Claims Against DMA

  Moses alleges that DMA should also be held liable under section 1962(c). As discussed earlier, Moses names DMA as the RICO "enterprise."*fn97 "Neither the Second Circuit nor the Supreme Court have definitively settled the extent to which ordinary respondeat superior principles make a corporation legally liable under RICO for the criminal acts of its employees."*fn98 However, a survey of case law reveals a two-step inquiry to determine whether a corporation may be held vicariously liable under RICO for the acts of its employees.

  The threshold inquiry is whether holding a corporation vicariously liable would violate the distinctness requirement discussed earlier.*fn99 Thus, when the plaintiff names the corporation as both a defendant and the RICO enterprise, courts have generally refused to hold the corporation liable because doing so would eviscerate the distinctness requirement.*fn100 However, at least one court has held a corporation, which was also named as the enterprise, vicariously liable under RICO for the acts of its employee. In United States v. Knox,*fn101 the defendants in a criminal RICO prosecution included a doctor and the corporation through which the doctor operated his medical practice. The indictment alleged that the doctor was the "person," who conducted a pattern of racketeering activity though an "enterprise," his wholly-owned corporation.*fn102 The court first held that because such an "allegation was sufficient in King, . . . it is necessarily sufficient here."*fn103 Next, the court considered whether the corporation could be held criminally liable under RICO based on respondeat superior. Relying on United States v. Najjar,*fn104 the court held that "although the indictment describes [the corporation] as the enterprise, based on respondeat superior it properly may be a defendant as well."*fn105

  The holding in Knox is questionable on several grounds. First, its reliance on Najjar is misplaced. In Najjar, the government alleged an association in fact enterprise comprising several individuals and two corporations.*fn106 Thus, the corporation was only one piece of the enterprise, not the enterprise itself. Second, the cases from other circuits cited by Knox for the proposition that "normal agency principles apply" in the RICO context only involved circumstances in which the enterprise and the corporation were distinct.*fn107 Finally, the Knox court cites no authority for its holding that a corporation may be both an enterprise and a defendant. Rather, it cites inapposite cases and concludes that "[i]t follows that although the indictment describes [the corporation] as the enterprise, based on respondeat superior it properly may be a defendant as well."*fn108 For these reasons, I decline to follow the holding in Knox. Some courts in this Circuit have intimated that a corporation, identified as the enterprise, may be held vicariously liable under RICO, notwithstanding a violation of the distinctness requirement. In Amendolare v. Schenkers International Forwarders, Inc.,*fn109 for example, the court stated that "many courts have indicated that vicarious liability is at least potentially available to hold the `enterprise' liable so long as the enterprise is not the innocent `victim' or `conduit' of the criminal enterprise."*fn110 Similarly, in Volmar Distribs., Inc. v. New York Post Co., Inc.,*fn111 the court opined that a defendant, which was also named as the RICO enterprise, could have potentially been held vicariously liable under section 1962(c) for the wrongful acts of its employees because "the congressional policy of holding only culpable `persons' liable under RICO supplies the ultimate rationale for the non-identity rule and applies irrespective of an identity between the person and the enterprise."*fn112 Once again, I disagree with this reasoning. First, these statements are mere dicta because in neither case was the enterprise identical to the defendant sought to be held vicariously liable for the acts of its employee.*fn113 Second, the majority of courts have held, and I agree, that vicarious liability should not be used as an end-run around the distinctness requirement.*fn114 Accordingly, a corporation may not be held vicariously liable under section 1962(c) for the acts of its employees if that corporation is also named as the RICO enterprise.

  If the court has determined that the corporation and the enterprise are distinct, the second inquiry is whether the corporation benefitted from or played a role in the alleged misconduct.*fn115 However, if the distinctness requirement is not satisfied, then the court need not consider the second step.

  While DMA may have benefitted from and played a role in Martin's misconduct, holding DMA vicariously liable under RICO for Martin's acts would violate the distinctness requirement. Accordingly, defendants' motion to dismiss the RICO claims against DMA is granted.

  V. CONCLUSION

  For the foregoing reasons, defendants' motion to dismiss the section 1962(a) claim against both defendants and the section 1962(c) claim against DMA is granted. In all other respects, the motion is denied. A conference is scheduled for Thursday, December 16th at 4:30 p.m. The Clerk of the Court is directed to close this motion (#16 on the docket).

  SO ORDERED.


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