The opinion of the court was delivered by: MORAN
Plaintiff Joseph Williams (Williams), on behalf of a putative class of individuals similarly situated, brought this action against defendants Ford Motor Company (Ford) and Highland Park Ford, Inc. (Highland), claiming, inter alia, that Highland violated the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. § 1962(c), when it fraudulently sold plaintiff an extended service plan (ESP) in connection with the purchase of a used car without disclosing the existence of an inspection fee. In our July 29, 1997 Memorandum and Order (July 29 order), this court dismissed plaintiff's RICO claim against Highland (Count I). On December 31, 1997, Williams filed a second amended complaint, which includes additional allegations and again claims to state a RICO cause of action against Highland Highland, in turn, has moved to dismiss. For the reasons stated herein, Highland's motion to dismiss is granted.
As the relevant facts have already been set forth in our previous order we will only briefly summarize them here. The dispute centers on plaintiff's June 17, 1994, purchase of a used Ford automobile from Highland, an authorized Ford dealer. In connection with this purchase plaintiff paid an additional $ 1,195 for an ESP that provided coverage for repairs incurred after the expiration of the Ford's basic limited warranty. The only mention of costs beyond the initial purchase price of the ESP was the requirement of a $ 50 deductible per repair visit. The ESP specifically stated that "All you pay is the deductible." Under the ESP, plaintiff was entitled to receive covered repairs at all participating Ford dealers in the United States and Canada.
Plaintiff's car lost power on July 24, 1996, and he took it to Highland for service. Highland informed him that Ford required the payment of an inspection fee of $ 612.95 before it would decide whether the problems were covered by the ESP. On July 31, 1996, plaintiff paid the inspection fee and Highland inspected the vehicle. Highland removed the engine and concluded that it was defective and would cost approximately $ 6,000 to repair. Ford determined that $ 6,000 was too expensive, in light of the value of Williams' vehicle, and elected instead to pay Williams the NADA value of $ 1,575. Ford had yet to pay Williams the $ 1,575.
Williams brings his claim against Highland under § 1962(c) of RICO, which provides as follows:
It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity....
18 U.S.C. § 1962(c). To state a claim under § 1962(c) a RICO plaintiff must show the "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985).
In his first amended complaint Williams alleged that Ford was a RICO "enterprise" (1st am.cplt. P 33). In his response to defendants' motion to dismiss Williams argued that Highland was the RICO "person" who participated in the operation and management of the RICO enterprise (pl.joint resp. at 5-6). Williams explicitly argued in that response that this was not a case where the RICO enterprise was an "association in fact," consisting of Ford and Highland (pl.joint resp. at 4-5). He asserted that Highland, as an outsider to the RICO enterprise, exercised control over Ford by selling Ford's ESPs, informing consumers of the inspection fee, collecting the inspection fee on behalf of Ford, and preforming the repairs covered by the plan.
We dismissed Williams' RICO claim, finding that he had not sufficiently stated that Highland had "participated in the operation or management" of Ford in a way that would satisfy the "conduct" prong of the RICO test. See Reves v. Ernst & Young, 507 U.S. 170, 185, 122 L. Ed. 2d 525, 113 S. Ct. 1163 (1993). Specifically, we stated that the "fact that Highland was associated with Ford as a sales representative for Ford automobiles and ESPs does not invest it with the requisite degree of control to establish RICO liability." (July 29 order at 9). Rejecting Williams' claim that Highland's imposition of the inspection fee as a precondition of service under the ESP fulfilled the statutory requirements, we stated that "Highland's unilateral decision to charge plaintiff the fee does not constitute 'participation' in Ford's affairs" (July 29 order at 10).
Abandoning his original claim that Ford was the RICO enterprise and Highland the RICO person, Williams has now amended his complaint to allege that the relationship between Ford and Highland constituted an "association in fact" (2d am. cplt. at P 34). Specifically, Williams adds the following factual allegations:
35. The association in fact of Ford and its affiliated dealers and/or servicers is an "enterprise" as defined in 18 U.S.C. § 1961(4), the affairs of which affect interstate commerce. Ford manufactures cars in several states and sells them in all 50.
36. The enterprises have a definite structure with common decision-makers and purpose. Ford issues the service plans, while the affiliates (including Highland) sell ...