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Rosen v. Mystery Method

March 14, 2008

DONALD P. ROSEN, INDIVIDUALLY AND AS CLASS REPRESENTATIVE, PLAINTIFF,
v.
MYSTERY METHOD, INC., A CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Scott Donnely ("Donnely")'s motion to dismiss Plaintiff Donald Rosen ("Rosen")'s complaint (the "Complaint") pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). For the following reasons, Donnely's motion is granted.

BACKGROUND

On October 10, 2007, Rosen filed a two-count complaint including class claims alleging that Defendants Donnely, Mystery Method Corporation ("MMC"), Nicholas Benedict ("Benedict"), Jon Lee ("Lee"), Chris Hendricks ("Hendricks"), Peter Sergeant ("Sergeant"), and Robert Plyer ("Plyer") violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962 et seq. Count I alleged that Defendants violated RICO by participating in a RICO enterprise through a pattern of racketeering in violation of §§ 1962(a) and (b). Count II alleged that Defendants conspired to engage in a pattern of racketeering activity in violation of §§ 1962(c) and (d).

As we stated in Financial, Inc. v. South Chicago Dodge, Inc., 2001 WL 1002463 (N.D. Ill. August 31, 2001), * 1, on a motion to dismiss a RICO claim, we must accept as true the allegations contained in both the Complaint and RICO statement (hereinafter referred to as "the Complaint"). According to those documents, Erik Von Markovick (hereinafter referred to as "Mystery") developed a sophisticated system over several years to help men meet and attract women (the "Mystery Method"). In October 2001, Mystery began offering personal training of the Mystery Method to others and a year later founded an internet site, www.mysterymethod.com (the "Website"), where he offered personal training, publications, on-line advice via private internet-based forums, audio discs, and DVDs about the Mystery Method.

On August 25, 2004, Mystery entered into an agreement with Benedict to administer the business aspects of the Website. Per the agreement, Mystery continued to personally oversee and improve the products and services offered through the Website. In April 2005, Benedict incorporated MMC and thereafter became the sole shareholder, president, and chief operating officer. In October 2006, Mystery ended his employment and involvement with MMC and began a new website called venusianarts.com.

Rosen alleges that despite knowing that Mystery was no longer employed by MMC and no longer endorsing or approving the products sold on the Website, Defendants as well as Love Systems, Inc. ("Love Systems") and King Edward the First ("King Edward") continued to maintain that Mystery was involved with the products offered on the Website. According to Rosen, Benedict knowingly misrepresented that Mystery was involved with the products offered on the Website and used the proceeds from his misrepresentations to maintain control of MMC. Donnely allegedly participated in both the administrative activities of MMC and the training sessions offered on the Website. With regard to Lee, Hendricks, Sergeant, and Plyer, Rosen alleges that these individuals also participated in training sessions offered on the Website. The Complaint states that Defendants along with Love Systems and King Edward all formed a worldwide distribution network that advertised and distributed products and training fraudulently labeled so that they appeared to be from Mystery.

In October 2006, Rosen began receiving numerous email communications and advertisements from the Website, purporting that Mystery was actively involved with the materials offered. From November 2006 to October 2007, Rosen used his credit card to purchase an e-book and a few CDs from the Website on the mistaken belief that Mystery either created or endorsed the items he purchased and that they were the result of Mystery's most current techniques. After receiving these items via U.S. mail, Rosen spent considerable time and effort reviewing and practicing the techniques incorporated in the materials but did not receive the quality of information or benefits he expected. In July 2007, Rosen learned that Mystery was no longer associated with MMC and subsequently filed the instant Complaint in October 2007. On December 3, 2007, Donnely motioned to dismiss the Complaint pursuant to Rule 12(b)(6) and Rule 9(b).

LEGAL STANDARD

Rule 12(b)(6) evaluates the legal sufficiency of a plaintiff's complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In ruling on a motion to dismiss, a court must draw all reasonable inferences in favor of the plaintiff, construe all allegations of a complaint in the light most favorable to the plaintiff, and accept as true all well-pled facts and allegations in the complaint. Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). To be cognizable, the factual allegations contained within a complaint must raise a claim for relief "above the speculative level." Bell Atlantic Corp. v. Twombly, - U.S. -, 127 S.Ct. 1955, 1965 (2007). A pleading need only convey enough information to allow the defendant to understand the gravamen of the complaint. Payton v. Rush-Presbyterian-St. Luke's Med. Ctr., 184 F.3d 623, 627 (7th Cir. 1999).

However, allegations of fraud, such as those contained in a RICO action, subject a complaint to the heightened pleading standards set forth in Rule 9(b). Rule 9(b) requires a plaintiff to plead averments of fraud with particularity. Goren v. New Vision Int'l, Inc., 156 F.3d 721, 726 (7th Cir. 1998). For purposes of particularity, the plaintiff must describe "the who, what, where, and when of the alleged fraud." Ackerman v. Nw. Mutual Life Ins. Co., 172 F.3d 467, 469 (7th Cir. 1999). Thus, to properly state a RICO violation, it is necessary for the plaintiff to allege the particulars concerning a cognizable injury to its business or property resulting from (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima, S.P.R.L. v. Imrez Co., Inc., 473 U.S. 479, 496 (1985).

With these principles in mind, we will consider the instant motion.

DISCUSSION

Donnely suggests that even when the facts alleged in the Complaint are viewed in the light most favorable to Rosen, he and the class he purports to represent cannot recover. More specifically, Donnely contends that the Complaint fails to sufficiently allege particulars: (1) of a RICO enterprise, (2) that Defendants were involved in a RICO enterprise, (3) of the existence of any viable predicate acts, (4) of a pattern of racketeering, ...


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