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SCHWARZ v. NATIONAL VAN LINES

July 1, 2004.

SOFIA SCHWARZ, Plaintiff,
v.
NATIONAL VAN LINES, INC., DWAYNE SCHIESSER, and APEX RELOCATION SPECIALISTS, INC., Defendants.



The opinion of the court was delivered by: AMY J. ST. EVE, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff, Sofia Schwarz, filed an eight-count amended complaint against Defendants National Van Lines, Inc. ("National"), Dwayne Schiesser, and Apex Relocation Specialists, Inc. ("Apex") alleging breach of contract by National under 49 U.S.C. § 14706 (the "Carmack Amendments") (Count I), conversion by National (Count II), intentional infliction of emotional distress by National (Count III), negligent infliction of emotional distress by National (Count IV), breach of the implied covenant of good faith and fair dealing by National (Count V), constructive fraud based on breach of fiduciary duty by National (Count VI), and claims against Schiesser and Apex under Section 1961 of the Racketeer Influenced and Corrupt Organizations Act ("RICO") (Counts VII and VIII). Defendant National moved to dismiss all eight counts of Plaintiff's amended complaint pursuant to Fed.R.Civ.P. 12(b)(6). Defendant National's 12(b)(6) motion to dismiss was denied in part and granted in part, dismissing Counts II, V, and VI of Plaintiff's amended complaint. This Court also dismissed Counts VII and VIII of Plaintiff's complaint without prejudice because Plaintiff failed to allege that National engaged or participated in a pattern of racketeering, as mandated by § 1962(c) of the RICO statute. Plaintiff subsequently filed a motion to reconsider or clarify portions of the Court's May 20, 2004 Order. The Court granted Plaintiff's motion in part, reinstating Counts VII and VIII against Defendants Schiesser and Apex. The Court also decided to assess the original arguments made by Defendant National that Plaintiff may not rely on the doctrine of vicarious liability to properly state a RICO claim against National. For the reasons stated below, Plaintiff's RICO claim cannot reach Defendant National through vicarious liability. Thus, Counts VII and VIII of Plaintiff's first amended complaint against National are dismissed.

BACKGROUND

  The allegations in this case are set forth in detail in the Court's prior opinion. See Schwarz v. National Van Lines, Inc., No. 03 C 7096, 2004 WL 1166632 (N.D. Ill. May 21, 2004). The Court assumes the readers' familiarity with them and will not repeat them here.

  In early December, 2000, Plaintiff Sofia Schwarz hired National Van Lines, Inc., to transport her household goods from Scottsdale, Arizona to Salem. (Id. at ¶ 11.) National hired its agents Dwayne Schiesser and Apex Relocation Services to ship Plaintiff's goods interstate. (Id. at ¶ 20.) On January 10, the scheduled delivery date, Schiesser failed to appear in Oregon with Plaintiff's goods and subsequently disappeared. (Id. at ¶ 39.)

  On March 18, 2001, a third party contacted Plaintiff's sister and informed her that Plaintiff's goods appeared to be stored in a garage in Texas. (Id. at ¶ 61.) On April 6, 2001, Plaintiff traveled to Texas to retrieve her stolen property. (Id. at ¶ 73.) Upon inspection of her goods, Plaintiff noted damages to electronic equipment, discovered many of her items missing, and also found items belonging to other shippers. (Id. at ¶ 74.) On April 22, 2001, National finally delivered Plaintiff's household goods to her home in Salem. (Id. at ¶ 77.)

  LEGAL STANDARDS

  A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of a complaint, not the merits of the case. Triad Assoc., Inc. v. Chicago Hous. Auth., 892 F.2d 583, 586 (7th Cir. 1989). When considering a motion to dismiss, a court must accept all factual allegations as true and draw all reasonable inferences in the plaintiff's favor. Schuer v. Rhodes, 416 U.S. 232, 236, 40 L.Ed.2d 90, 94 S.Ct. (1983). A motion to dismiss should not be granted unless it appears beyond doubt that no set of facts would entitle the plaintiff to relief. Hernandez v. City of Goshen, 324 F.3d 656, 658 (7th Cir. 2002).

  ANALYSIS

  Plaintiff has admitted that she only seeks to impose liability on National for her § 1962(c) RICO claims under the doctrine of vicarious liability. National makes three arguments in support of its motion to dismiss the RICO claims. First, National argues that Plaintiff failed to state a RICO claim against Defendants Apex and Schiesser because she did not allege that they engaged in a pattern of racketeering as required under the RICO statute. Accordingly, National asserts that to hold a corporation vicariously liable for only one predicate act committed by an agent is contrary to RICO requirements. Second, National contends that 49 U.S.C. § 13907 does not provide a basis to attribute RICO liability to a principal carrier. Lastly, National argues that vicarious liability is inapplicable under § 1962(c) of the RICO statute and that Plaintiff also fails to state a claim under § 1962(a) and (b) because National did not benefit from the corrupt acts of Defendants Schiesser and Apex.

  Plaintiff's argument is twofold. First Plaintiff asserts that because National is vicariously liable for all acts of its agents pursuant to the Carmack Amendment, it necessarily follows that National is liable for Defendant Schiesser's and Apex's RICO violations. Second, Plaintiff argues that vicarious liability is "the rule, not the exception, under RICO." Specifically, Plaintiff contends that her claim survives § 1962(c) because National and the alleged RICO enterprise are distinct entities. Although Plaintiff fails to allege liability against National pursuant to 1962(a) and (b) of the RICO statute, she uses the standards of these subsections to argue that National is vicariously liable because National derived a benefit from the racketeering acts if its agents and because vicarious liability is consistent with congressional intent. See Liquid Air v. Rogers, 834 F.2d 1297, 1306 (7th Cir. 1987).

  I. Apex and Schiesser Engaged in a Pattern of Racketeering

  Defendant National argues in support of its motion to dismiss that Plaintiff failed to state a RICO claim against Defendants Apex and Schiesser because she did not allege that they committed two predicate acts of racketeering as mandated under the RICO statute. Defendant's argument, however, fails.

  A plaintiff alleging a RICO violation must prove that the defendant's allegedly corrupt actions constitute a pattern of racketeering. See Ashland Oil v. Arnett, 875 F.2d 1271, 1276 (7th Cir. 1989). A pattern of racketeering requires two predicate acts committed by a defendant within a 10-year period. Liquid Air, 834 F.2d at 1304. Further, there must be some continuity and relationship between the acts to establish a "pattern." See id. Criminal acts that have similar schemes, purposes, and victims constitute a "pattern" for purposes of the statute. See id. According to Ashland Oil, "neither the presence of a single scheme or a single victim has precluded the finding of a pattern of racketeering." 875 F.2d at 1277. Plaintiff's complaint notes that while retrieving her property in Texas, she discovered stolen goods belonging to a number of other shippers who also entrusted Defendants Apex and Schiesser to transport their household goods interstate. Thus, because Plaintiff states that Defendants Apex and Schiesser engaged in a pattern of similar thefts of interstate commerce and transportation of stolen goods with respect to numerous other shippers, she properly alleged that Defendants Apex and Schiesser committed at least ...


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