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OSRECOVERY, INC. v. ONE GROUPE INTERNATIONAL

United States District Court, S.D. New York


February 7, 2005.

OSRECOVERY, INC., et al., Plaintiffs,
v.
ONE GROUPE INTERNATIONAL, INC., et al., Defendants.

The opinion of the court was delivered by: LEWIS KAPLAN, District Judge

ORDER

Defendant Latvian Economic Commercial Bank ("Lateko") moves for reconsideration of so much of this Court's recent decision as sustained subject matter jurisdiction over certain of the RICO claims asserted on behalf of domestic plaintiffs. OSRecovery, Inc. v. One Groupe Int'l, Inc., No. 02 Civ. 8993 (LAK), 2005 WL 121741 (S.D.N.Y. Jan. 21, 2005). It argues in substance that this Court based its decision on an inference that domestic plaintiffs would be able to satisfy the effects tests by inferring that Lateko issued debit cards that gave certain other defendants access to the accounts of domestic plaintiffs, thus resulting in the loss of their funds. It argues that this overlooked APWU v. Potter, 343 F.3d 619 (2d Cir. 2003), which, it contends, precludes the drawing of any such inference.

Lateko overreads Potter. No one, least of all the undersigned, questions that "[j]urisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Id. at 623. The statement, however, is meaningful only in the appropriate procedural context.

  On a motion to dismiss for lack of subject matter jurisdiction, the complaint "will be construed broadly and liberally." 5B CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE: CIVIL 3D § 1350, at 180 (2004). This, of course, does not mean that conclusory or argumentative assertions will be taken in the plaintiff's favor. Id. at 181-85. But the plaintiff is entitled to some latitude at the pleading stage, particularly where the alleged deficiency of the pleading could be cured readily by amendment.

  "In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule Page 2 12(b)(1), a district court may refer to evidence outside the pleadings, such as affidavits and other documents. While the plaintiff has the ultimate burden of establishing subject matter jurisdiction and generally must establish jurisdiction by a preponderance of the evidence when the defendant makes a `factual challenge' on a Rule 12(b)(1) motion, `where "[subject matter] jurisdiction is so intertwined with the merits that its resolution depends on the resolution of the merits, the trial court should employ the standard applicable to a motion for summary judgment."'" First Capital Asset Mgmt., Inc. v. Brickellbush, 218 F.Supp.2d 369, 378-79 (S.D.N.Y. 2002), aff'd, 385 F.3d 159 (2d Cir. 2004).

  That is what the Court did here. As the evidence permitted the inference that at least some domestic plaintiffs were injured by Lateko's alleged RICO violations, the matter could not be resolved on this motion. While the Court might have held an evidentiary hearing, it concluded that the question of which plaintiffs, if any, were injured and in what ways is intertwined with the merits. Accordingly, the matter will be deferred for trial, at least in the absence of a timely summary judgment motion permitting pretrial resolution. See 5B CHARLES ALAN WRIGHT ET AL. § 1350, at 243-45.

  Motion for reconsideration denied.

  SO ORDERED.

20050207

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