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Tymoshenko v. Firtash

United States District Court, S.D. New York

September 30, 2014

YULIA TYMOSHENKO, SCOTT SNIZEK, CHRISTY GREGORY RULLIS, and JOHN DOES 1 through 50, On Behalf of Themselves and All Those Similarly Situated, Plaintiffs,
v.
DMYTRO FIRTASH, et al., Defendants

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[Copyrighted Material Omitted]

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For Yulia Tymoshenko on behalf of themselves and all those similarly situated, John Does 1 through 50 on behalf of themselves and all of thoes similarly situated, Plaintiffs: Kenneth Foard McCallion, LEAD ATTORNEY, McCallion & Associates, LLP, New York, NY.

For Nadra Bank, Defendant: Robert Arnold de By, LEAD ATTORNEY, Connon Wood Scheidemantle LLP, Pasadena, CA; Constance Kim, PRO HAC VICE, Connon Wood Scheidemantle LLP, Pasadena, CA; Kathleen M. Wood, Connon Wood Scheidemantle LLP, CA, CA.

For Yulia Tymoshenko on behalf of themselves and all those similarly situated, Counter Defendant: Kenneth Foard McCallion, LEAD ATTORNEY, McCallion & Associates, LLP, New York, NY.

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OPINION AND ORDER

KIMBA M. WOOD, United States District Judge.

The Second Amended Complaint (" SAC" ) in this action alleges that several Ukrainian defendants, led by businessman Dmytro Firtash, financed a domestic racketeering enterprise (the " U.S. Enterprise" ) conducted primarily by defendant United States citizens and corporations. Plaintiff Yulia Tymoshenko is the former Prime Minister of Ukraine and a longstanding critic of Firtash's energy company, RosUkrEnergo (" RUE" ). Money laundered by the U.S. Enterprise was allegedly used to finance Tymoshenko's " persecution" in Ukraine, in retaliation for her hostility to RUE while in office. Plaintiffs Scott Snizek and Christy Gregory Rullis, meanwhile, are former employees of several defendant U.S. corporations that allegedly participated in the U.S. Enterprise. According to the SAC, those corporations failed to provide wages and other benefits promised to Snizek and Rullis. The SAC claims that the defendants' conduct violated the Racketeer Influenced and Corrupt Organizations Act (" RICO" ), 18 U.S.C. § § 1961-1968, and state fraud law.

Several defendant U.S. corporations and citizens -- CMZ Ventures, LLC (" CMZ" ); the Dynamic Group (" Dynamic" ); Barbara Ann Holdings, LLC; Vulcan Properties, Inc. (" Vulcan" ); Paul Manafort; and Brad Zackson (collectively, the " Moving Defendants" ) -- have moved to dismiss the SAC with prejudice pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).[1] For the reasons set forth below, the Court GRANTS the motions to dismiss the SAC, but with leave for Plaintiffs to amend.

I. BACKGROUND

A. The Amended Complaint

On December 19, 2011, Tymoshenko filed the Amended Complaint (" AC" ) in this action on behalf of herself, unnamed former members of her administration, and all those similarly situated. See [Dkt. No. 23]. The Court's opinion in Tymoshenko v. Firtash, No. 11-CV-2794, 2013 WL 1234821 (S.D.N.Y. Mar. 26, 2013) (Wood, J.) (" Tymoshenko I " ), describes the AC's in detail. To summarize briefly here, the AC claimed that Firtash and his associates directed Ukrainian officials to unlawfully persecute and arbitrarily detain the plaintiffs, in retaliation for the plaintiffs' political opposition to RUE. See AC ¶ ¶ 15, 93-94, 160-162, 279. The Ukrainian officials did Firtash's " bidding" because he had secured their loyalty through the payment of " illegal kickbacks." Id. ¶ 94, 279. Firtash financed those kickbacks, in turn, with money he laundered through transactions with a " labyrinth" of defendant U.S. corporations and citizens. Id. ¶ 105.

The AC brought federal claims under RICO and the Alien Tort Statute (" ATS" ), 28 U.S.C. § 1350, as well as state law claims for breach of fiduciary duty and malicious prosecution. See id. ¶ ¶ 261-294. The AC claimed that the defendants had violated RICO by laundering Firtash's money, and had violated the ATS by using some of that money to orchestrate and implement arbitrary detentions in Ukraine. See id. Several defendants

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moved to dismiss the AC in its entirety, arguing primarily that the AC failed to state any claim upon which relief could be granted. See [Dkt. Nos. 45, 50, 57].

On March 26, 2013, this Court dismissed the AC. See Tymoshenko I, 2013 WL 1234821, at *1. In keeping with this District's jurisprudence at the time, the Court dismissed the AC's RICO claim as impermissibly extraterritorial because the alleged enterprise and pattern of racketeering were both essentially foreign. See Id. at *11-13. The Court dismissed the ATS claim, in turn, because the AC failed to plead facts sufficient to establish that plaintiffs' detentions were arbitrary (or that the U.S. defendants aided and abetted those detentions). Id. at *7-11. Having dismissed all claims over which it had original jurisdiction, the Court ...


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