The opinion of the court was delivered by: ROVNER
ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE
Plaintiff, Midwest Grinding Company, Inc. ("Midwest"), alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, and asserts common law claims for breach of fiduciary duty, tortious interference and for accounting. Defendants, Joshua M. Spitz, Aron Grunfeld and U.S. Grinding & Fabricating, Inc. ("U.S. Grinding"), have moved to dismiss Midwest's Second Amended Complaint (the "complaint") in its entirety, arguing that Midwest's allegations fail to state a RICO claim and that federal jurisdiction is lacking for the common law claims. For the reasons stated herein, the Court finds plaintiff's RICO allegations sufficient to state a claim against defendant Spitz as to section 1962(c) and against Spitz and U.S. Grinding as to section 1962(d). The Court retains jurisdiction over the pendent common law claims and dismisses the RICO allegations based on section 1962(a) and (b).
II. FACTS AND PROCEDURAL BACKGROUND
In reviewing a motion to dismiss, the Court must construe all allegations as true and view them in the light most favorable to plaintiff. Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 733 (7th Cir. 1986), cert. denied. 482 U.S. 915, 107 S. Ct. 3188, 96 L. Ed. 2d 676 (1987). Hence the Court describes the facts as alleged by Midwest in its complaint.
Midwest is in the business of supplying metal grinding services. In July, 1984, Klein Tools, Inc. ("Klein Tools"), a Midwest customer, purchased two-thirds of the outstanding capital stock of Midwest. Spitz owned the other third. As president and a director of Midwest, Spitz was responsible for managing the company's day-to-day business operations. In November, 1984, he secretly became a twenty-five percent owner of Cardinal Metals, Inc. (Cardinal), a competitor and supplier of Midwest. Grunfeld also became a twenty-five percent owner of Cardinal at this time.
During 1985 and 1986, Spitz routinely undercharged Cardinal and overcharged Klein Tools for Midwest's services. In December 1985, Spitz and Grunfeld agreed to form U.S. Grinding, which would compete directly with Midwest. Spitz and Grunfeld participated in the incorporation process, purchased machinery and secured a factory lease for U.S. Grinding.
In February, 1986, Midwest began to experience a sharp decline in business. Spitz told Midwest that the decline was due to a depressed market for grinding services. In fact, it was due to Spitz' solicitation of Midwest's customers on behalf of U.S. Grinding. Between March and August, 1986, Spitz solicited the following former Midwest clients: Acme Tool & Specialties Company (17 invoices); Ultra Specialties (21 invoices); W.S. Holmes (35 invoices); Courtesy Mold & Tool Corporation (17 invoices); and Northwestern Tool & Die (2 invoices). U.S. Grinding used Midwest's truck to make deliveries. The number of employees at Midwest dropped from twenty-six to fourteen. Spitz fired three of the employees and then had them hired by U.S. Grinding. Other Midwest employees resigned their positions to be hired by U.S. Grinding.
In August 1986, Spitz resigned from Midwest and started working full time at U.S. Grinding. Spitz offered to sell his shares in Midwest to Klein Tools, without revealing his prior work on behalf of U.S. Grinding. Klein Tools refused to buy these shares. In their November, 1986 depositions in this case, both Spitz and Grunfeld denied that Spitz had been involved in U.S. Grinding prior to his resignation. In response to Midwest's requests to admit, defendants made similar denials.
Midwest's complaint asserts that defendants made certain material representations and omissions which constitute mail and wire fraud and which are included in RICO's definition of "racketeering activity." See 18 U.S.C. § 1961(1). Midwest claims that the defendants' fraudulent acts, viewed as a whole, constitute a "pattern of racketeering" for which defendants are liable under section 1962(a) through (d) of RICO. In addition, Midwest asserts common law claims based on breach of fiduciary duty, tortious interference and constructive trust and accounting.
Defendants' arguments, which will be elaborated below, are as follows:
(1) Midwest has failed to plead mail and wire fraud with particularity as required by Fed. R. Civ. P. 9(b);
(2) Midwest has failed to plead a pattern of racketeering activity as required for plaintiff's RICO claims based on section 1962(a)-(d);
(3) Midwest has failed to plead facts sufficient to establish any injury resulting from a violation of section 1962(a) and (b); and
(4) Midwest has failed to plead facts sufficient to establish a conspiracy pursuant to section 1962(d).