The opinion of the court was delivered by: Trager, J
Plaintiff DNJ Logistic Group, Inc. ("DNJ") brings this action against DHL Express (USA), Inc. ("DHL") and Anthony N. Catapano, DHL's Director of Business Development, for claims surrounding a failed contract between the two shipping companies. In summer 2007, DHL and DNJ entered into an agreement under which DNJ -- previously a major subcontractor for FedEx -- agreed to operate an express shipment service from New York to Europe for DHL. DNJ claims that it was induced to enter the contract, to incur related expenses and to cancel its contract with FedEx by Catapano's promises of shipment volumes and start dates with DHL that never ultimately materialized. As a result, plaintiff believes that not only did DHL breach its contract with DNJ, but also that DHL's actions, and the actions of Catapano, amounted to violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and common law fraud and negligent misrepresentation. Federal jurisdiction is premised on the federal question presented by plaintiff's RICO allegations. See 18 U.S.C. § 1331.
Defendants have moved under Fed. Rule Civ. P. 12(b)(6) to dismiss all of plaintiff's claims except for its breach of contract claim; plaintiff has cross-moved for leave to file a third amended complaint. For the reasons explained below, defendant's motion to dismiss is granted with respect to plaintiff's RICO claims and plaintiff's cross-motion to amend is denied with respect to its RICO claims. Decision on plaintiff's remaining state law claims is reserved, pending resolution of lingering jurisdictional questions.
(1) Contract Negotiations between DNJ and DHL
The following facts are drawn from plaintiff's proposed third amended complaint and, for purposes of this motion, are presumed to be true.*fn1 Plaintiff DNJ is a subcontractor for major domestic and international delivery and logistics companies. Compl. ¶ 11. In November 2006, plaintiff began negotiations with defendant DHL -- a major delivery and shipping company based in Florida and doing business internationally -- for a subcontract under which plaintiff would handle part of a new DHL program making overnight express deliveries to Europe. Id. at ¶ 10-17, 30. DNJ representatives negotiated the contract primarily with Anthony Catapano, DHL's Director of Business Development. Id. at ¶ 9, 12-21. These negotiations culminated in a contract signed June 19, 2007, the details of which are not set forth in the complaint. Id. at ¶ 21.
Prior to beginning negotiations with DHL, DNJ operated primarily as a subcontractor for FedEx, earning approximately $40,000,000 from FedEx between the years 2002 and 2007. Id. at ¶ 34. However, DNJ's complaint alleges that it was compelled to give up this account by Catapano and DHL, through false promises of receiving four to five times more revenue with DHL than with FedEx. Id. at ¶ 35.
Specifically, plaintiff recites a series of verbal statements and emails from Catapano to DNJ that contained promises of certain shipment volumes and start dates that failed to materialize. A few verbal statements date from before the contract was signed on June 19, 2007. On May 31, Catapano said to plaintiff's representatives that plaintiff would be handling "a large volume; much larger than the volume of FedEx." Id. at ¶ 27. A few days later, on June 4, Catapano told plaintiff's representatives that "the start date will happen very soon." Id. at ¶ 28.
The complaint includes additional verbal promises made after the contract had been signed. On June 26, 2007, Catapano told DNJ employees that the new DHL international program would "blow FedEx out of the water," and that "all FedEx's international priority customers [would] eventually come over to DHL." Id. at ¶ 29. In an August 3, 2007 meeting with DNJ employees, Catapano is reported to have said, "in sum and substance," that "DNJ will be DHL's exclusive agent to handle the entire New York overnight express to Europe." Id. at ¶ 30. Plaintiff also points to a statement from Catapano to DNJ representatives on September 4, 2007, promising that operations would start the next day. Id. at ¶ 31.
The complaint further mentions a series of email promises. A July 27, 2007 email from Catapano to a DNJ employee included the statement, "I believe the 1500 per night will begin Monday..." Id. at ¶ 24e. On July 31, 2007, Catapano emailed plaintiff to explain that shipments would start August 7, 2007, and then stated: "This is for the 1500 pounds per day." Id. at ¶ 24f. Later, in an August 22, 2007 email, Catapano wrote to a DNJ employee: "Please advise Ralph we have a start date for CMS of Sept. 6.... 300 per day!!!" Id. at ¶ 24h. On that same day, Catapano sent plaintiff a copy of an internal DHL email confirming that "[t]he start date has been finalized for September 6, 2007. They will be giving us about 100 to 300 lbs per day." Id. at ¶ 24i. Then, in a September 13, 2007 email, Catapano explained: "We are moving forward so the volume will start to move up real quick." Id. at ¶ 24m.
Plaintiff explains that it was on the basis of these representations that it ended its relationship with FedEx. Although the complaint is not specific about the termination date of this relationship, it states that it occurred "at or about the same time DHL delivered the Agreement and made the written and oral promises...." Id. at ¶ 38. The complaint further points out that defendants now service many of plaintiff's former FedEx clients, having obtained their contact information from plaintiff. Id. at ¶ 37, 44. Also on the basis of Catapano's representations and reportedly at the insistence of DHL that its vendor be based in Florida, plaintiff's principal established a residence and set up a shipping location in Florida. Id. at ¶ 39.
Performance under the contract apparently began sometime in summer 2007. In August 2007, plaintiff contacted Catapano to express dissatisfaction with the volumes of shipments that had been achieved, and Catapano responded that he believed the volumes would substantially increase shortly. Id. at ¶ 40. Unfortunately, the volume of shipments anticipated under the contract between DNJ and DHL never materialized. Id. at ¶ 41. At some point, it seems the relationship between DNJ and DHL terminated, although the circumstances are not made clear.
(2) Incorrect Vendor Number and Personal Loan
DNJ's complaint also describes concerns with the way in which it received payment from DHL for its services. When DNJ entered into the contract with DHL, it was assigned a "vendor #." Id. at ¶ 42. However, in November 2007, DNJ discovered the number it had been assigned was duplicative of another DHL vendor's "vendor #." Id. DNJ believes, contrary to assertions by Catapano, that it never was properly entered into DHL's vendor database. Id. at ¶ 43. Instead, it believes that the checks it received for its services, which bore the improper vendor number "ZONETIME," id. at ¶ 47, came from an account controlled by Catapano. Id. at ¶ 48. Plaintiff explains that despite being assured by Catapano that DNJ was in DHL's system and that checks were coming from DHL's processing center in Costa Rica, id. at ¶ 24p, in December 2007 DHL headquarters advised plaintiff that DNJ was not in the DHL system and that DNJ needed to fill out proper paperwork to be entered. Id. at ¶ 49-51. Nevertheless, despite this confusion, it appears that payments were made from DHL to DNJ for goods shipped under the contract in January 2008, at DNJ's request. Id. at ¶ 53.
One final set of facts in plaintiff's complaint describes a June 2007 deal between Catapano and DNJ's principal, in which Catapano insisted plaintiff's principal lend him $50,000. Id. at ¶ 19. The loan was to be repaid through Catapano's enhanced commissions that he would receive from DHL's new priority program. Id. In January 2008, after the DHL/DNJ contract failed to perform as expected, DNJ demanded repayment from Catapano of the $50,000 loan. Id. at ¶ 54. At the end of March 2008, Catapano repaid $34,000 of the loan. Id. at ¶ 56. For several months after this, Catapano supplied plaintiff with various reasons why he could not afford to complete repayment of the loan. See id. at ¶ 54-60. Then, in May 2008, DNJ told Catapano that DHL would be informed of the loan and of the fact that Catapano had improperly borrowed DNJ's company car; Catapano responded that he "need[ed] to have that not happen." Id. at ¶ 62. Shortly thereafter, on May 27, 2008, Catapano repaid the remainder of the loan. Id.
Plaintiff first brought this action in New York Supreme Court on or about June 10, 2008. Defendants responded by removing the case to federal court in July 2008, on the ground that diversity jurisdiction would exist but for plaintiff's fraudulent joinder of Catapano as a defendant. See Docket for 08-cv-2789, Doc. No. 4. Although plaintiff originally filed a motion to remand, it later withdrew this motion and instead filed a second amended complaint on September 26, 2008, containing federal law RICO claims that made federal jurisdiction proper. This second amended complaint set forth claims of (1) racketeering and conspiracy, under RICO; (2) fraud and deceit; (3) breach of contract; (4) specific performance; (5) fraudulent inducement; (6) respondeat superior; (7) negligent supervision; (8) negligent hiring and retention of employee; (9) punitive damages; (10) interference with business relationship/economic advantage; (11) negligent misrepresentation and (12) individual liability for breach of contract on the part of Catapano. Id. at Doc. No. 12, p.7-15. Plaintiff has since filed a cross-motion for leave to file a third amended complaint, after receiving defendants' motion to dismiss. This third amended complaint removes three of plaintiff's twelve claims -- (4) specific performance; (10) interference with business relationship/economic advantage; and (12) Catapano's independent liability for breach -- and reinforces the remaining claims with additional facts. See Aff. Of Robert J. Spence in Supp. Of Cross-Mot. to Amend Compl. ¶ 4.
Defendants oppose plaintiff's cross-motion for leave to amend, arguing that it would cause unnecessary delay and expense. Defendants further argue that amendment would be futile because, even as amended, the majority of plaintiff's claims cannot survive a motion to dismiss. Specifically, defendant moves under Fed. Rule Civ. Procedure 12(b)(6) to dismiss plaintiff's claims of (1) RICO violations, (2) fraud, (3) fraudulent inducement, (4) tortious interference and (5) negligent misrepresentation against both defendants; (6) ...