The opinion of the court was delivered by: Sand, J.
Defendants Johnson Juanda, Howard Lederer, Chris Ferguson, Jennifer HarmanTraniello ("Traniello"), Erick Lindgren, Erik Seidel, Andrew Bloch, Mike Matusow, Allen Cunningham, and Phillip Ivey, Jr. ("Ivey") (collectively, the "Individual Defendants"), and Tiltware, LLC ("Tiltware"), Vantage, Ltd. ("Vantage"), Filco, Ltd ("Filco"), Pocket Kings Ltd. ("Pocket Kings"), and Pocket Kings Consulting Ltd. ("Pocket Kings Consulting") (collectively. the "Corporate Defendants") have moved to dismiss the claims against them brought by Steve Segal ("Segal"), Nick Hammer, Robin Hougdahl, and Todd Terry, on behalf of themselves and a purported nation-wide class of plaintiffs.
Plaintiffs accuse the Corporate Defendants, as well as other non-moving defendants, of violating two provisions of the Racketeer Influence and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1961--1968, by engaging in, and conspiring to engage in, an ongoing pattern of bank fraud, wire fraud, and money laundering. Plaintiffs accuse all Defendants of conversion.
For the reasons provided below, the motions to dismiss are granted in part and denied in part.
This case is one of a number of civil lawsuits brought by and on behalf of online poker players who lost access to money in player accounts they maintained on the online gambling website, fulltiltpoker.com, on April 15, 2011. On that date-also known as "Black Friday" in the online gambling world-the United States Attorney for the Southern District of New York shut down the websites of the three largest online poker companies then operating in the United States, Full Tilt Poker, Absolute Poker and PokerStars. Compl. ¶2. Arrest warrants were also issued for the owners of, and other individuals associated with, the three companies. Id. In the criminal indictment, the United States accused those individuals of violating, and conspiring to violate, the Unlawful Internet Gambling Enforcement Act ("UIGEA"), 31 U.S.C. §§ 5361--5367, which prohibits those "engaged in the business of betting or wagering" from knowingly accepting most forms of payment "in connection with the participation of another person in unlawful Internet gambling," 31 U.S.C. § 5361. The indictment also accused individuals associated with Full Tilt Poker and the other poker companies of conspiring to commit bank fraud, wire fraud and money laundering. Superseding Indictment, United States v. Scheinberg, 10 Cr. 336 (LAK) (Apr. 14, 2011) ("Criminal Indictment").
Soon after the indictment was unsealed, the Department of Justice instituted a civil suit against individuals and entities associated with the three poker companies, seeking forfeiture of all assets and proceeds they derived from their allegedly illegal activities. Verified Complaint, United States v. Pokerstars, 11 Civ. 2564 (Apr. 15, 2011) ("DOJ Civil Complaint"). In connection with the civil and criminal cases, various properties believed to have been involved in, or to derive from, the illegal activity described in the complaints were seized. Id. ¶ 97. A restraining order was also issued against various bank accounts believed to have been utilized by the defendants in the civil and criminal cases. Id. Ex. C. At no point, however, were the funds in the Full Tilt Poker player accounts seized. Id. ¶ 105. Nonetheless, since April 15, 2011, Full Tilt customers have been unable to access their player accounts, or to withdraw the money deposited in them. Id. ¶ 104.
On June 30, 2011, Plaintiffs filed suit on behalf of themselves and a putative class of Full Tilt Poker account holders, seeking recovery of the approximately $150 million they claimed was locked up in the online player accounts they no longer could access. Id. ¶ 42. In response, many of the defendants named in their complaint moved, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), to dismiss the claims against them for lack of jurisdiction and failure to state a claim.
On a motion to dismiss, a court reviewing a complaint will consider all material factual allegations as true and draw all reasonable inferences in favor of the plaintiff. Lee v. Bankers Trust Co., 166 F.3d 540, 543 (2d Cir. 1999). "To survive dismissal, the plaintiff must provide the grounds upon which his claim rests through 'factual allegations sufficient to raise a right to relief above the speculative level.'" ATSI Commc'ns Inc. v. The Shaar Fund, Ltd., 493 F.3d 87, 93 (2d Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 ( 2009). Rather, the plaintiff's complaint must include "enough facts to state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1940 (citing Twombly, 550 U.S. at 570).
Plaintiffs also bear the burden of showing that the court has jurisdiction over the defendants. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566-567 (2d Cir. 1996). Prior to discovery, a plaintiff can satisfy this burden by "pleading in good faith . . . legally sufficient allegations of jurisdiction. At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). In determining whether a plaintiff has met this burden, courts may not "draw 'argumentative inferences' in the plaintiff's favor." They may, however, "construe jurisdictional allegations liberally and take as true uncontroverted factual allegations." Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (quoting Atlantic Mut. Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)).
In reviewing a complaint, a court is not limited to the four corners of the complaint; a court may also consider "documents attached to the complaint as an exhibit or incorporated in it by reference, . . . matters of which judicial notice may be taken, or . . . documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. American Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).
Defendants argue that, because they are not New York residents and do not conduct any business in New York, this Court lacks personal jurisdiction over them. In their complaint, Plaintiffs identify two possible bases for this Court's exercise of personal jurisdiction over the defendants: first, 18 U.S.C. § 1965(b), which allows the nationwide service of process with respect to actions brought under 18 U.S.C. § 1964, the federal civil RICO statute; second, Federal Rule of Civil Procedure 4(k)(I)(A), which grants this Court jurisdiction over defendants reached by New York's long-arm statute, N.Y. C.P.L.R. § 302(a).
18 U.S.C. § 1965(b) allows for the nationwide service of process for claims brought under the civil RICO statute, 18 U.S.C. § 1964, when "the ends of justice require that other parties residing in any other district be brought before the court." 18 U.S.C. § 1965(b). In order for § 1965(b) to apply, however, the Second Circuit has found that at least one defendant must satisfy the test for personal jurisdiction set forth in 18 U.S.C. § 1965(a).*fn2 PT United Can Co. Ltd. v. Crown Cork & Seal Co., Inc., 138 F.3d 65, 71 (2d Cir. 1998). Therefore, only in cases where at least one RICO defendant "resides, is found, has an agent, or transacts his affairs" in the district in which the court is located, 18 U.S.C. § 1965(a), can nationwide service of process be effected with respect to the other RICO defendants-and then only if the "ends of justice" require it.
In this case, Plaintiffs have identified no defendants who reside in the Southern District of New York or who employed an agent in the district. Nor do they allege that any of the defendants can be "found" in the district. Instead, they assert that the various Defendants identified in the Complaint conducted "significant and continuous business in the State of New York" through their operation or facilitation of the Full Tilt Poker web portal. Compl. § 15. They make no specific allegations, however, that any of the defendants conducted "significant and continuous business" in the Southern District specifically, via the Full Tilt Poker web portal.
See Burt Decl. (identifying New Yorkers who used the Full Tilt Poker web portal but providing no indication of their district of residency or location of play). Nor have they alleged sufficient facts to establish any of the other bases of jurisdiction under § 1965(a). For this reason, we find that Plaintiffs have not met their ...