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Exeed Industries, LLC v. Younis

United States District Court, N.D. Illinois, Eastern Division

November 8, 2016



          James B. Zagel, United States District Judge.

         Before the Court is Defendant Riyal's Motion to Dismiss For Failure to State a Claim Pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), 12(b)(5), and 12(b)(6), combined pursuant to Fed.R.Civ.P. 12(g). For the following reasons, Defendant's Motion is granted.

         I. BACKGROUND

         Plaintiff Exeed Industries is a limited liability company incorporated and based in the United Arab Emirates (“UAE”), where it specializes in industrial building materials, agriculture, and international industrial investments. Plaintiff Exeed Electrocab is Exeed Industries' subsidiary, likewise incorporated in the UAE.

         Defendant Mohamed Fayyad Al-Hassan Riyal is the father-in-law of Defendant Omar Younis, who, along with his brother, Defendant Mohammed Younis, are former employees of Exeed Electrocab. Plaintiffs have sued the brothers as well as Riyal and the Younis family's co-owned company Wabel International, which is based in Jordan (collectively “Defendants”). However only the first count-violation of the RICO statute-applies to Defendant Riyal.

         On January 2, 2015, Plaintiffs filed their complaint in this court, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by Riyal and the Younis brothers. Plaintiffs allege that Riyal's role was to act as a fraudulent “agent” during supplier agreements, to transfer the proceeds derived from an illegal kickback scheme in and out of the United States by use of his bank account, and to assist Defendants Mohammed and Omar Younis in purchasing real estate using these illegal proceeds.

         According to Plaintiffs, Defendants set up a secret illegal kickback scheme no later than July 2005 while the two brothers were employed by Exeed. In furtherance of the scheme, Defendants allegedly inflated contract prices and duped some of Plaintiff's suppliers into paying fraudulent invoices. In some cases, payments were made directly to the Younis brothers; in others, they were either made to their company Wabel International, with Defendant Riyal at times falsely acting as an “agent” of the company, or to a nonexistent company, “Mohamed Riyal Engineering and Marketing Consulting Co.” (“MREMC”). Plaintiffs allege that payments made to MREMC were actually made to Riyal's personal bank account, as were some of the payments supposedly made to Wabel. On several occasions, these payments were made via wire transfer from suppliers with offices in the U.S., and two of the transfers originated from banks in Chicago. Plaintiffs allege that the total amount of illegal proceeds deposited into Riyal's account exceeded 15 million dollars.

         Plaintiffs allege that in 2006, some of the illegal proceeds deposited in Defendant Riyal's account were moved via wire transfer into U.S. bank accounts that were ultimately used by Defendant Omar Younis to purchase land in California and Illinois. Although Defendants Omar Younis and Mohammed Younis are now alleged to live in the United States, Defendant Riyal is believed to reside in Jordan.

         On April 8, 2015, this Court authorized email service on Riyal pursuant to Federal Rule of Civil Procedure 4(f)(3). Plaintiffs attempted to provide Riyal with service of process via an email address obtained from Defendant Omar Younis; however, they received a response that the email could not be delivered to that address. After engaging in limited discovery, Plaintiffs obtained a different email address for Riyal from Defendant Omar Younis, which they used to successfully serve Riyal on September 24, 2015. Plaintiffs' Motion to Deem Service Effective was granted on June 1, 2016.

         Defendant Riyal filed a motion to dismiss Count I of Plaintiff's Amended Complaint on August 12, 2016 based on several theories. First Riyal argues that this Court lacks personal jurisdiction over Riyal because he lacks sufficient contacts with Illinois to establish either general or specific personal jurisdiction, and thus Count I must be dismissed under Rule 12(b)(2). Second, Riyal argues that service of process on Riyal was inadequate, and thus Count I must be dismissed under Rule 12(b)(5). Third, he argues that the Amended Complaint does not allege a domestic injury as required under RJR Nabisco, Inc. v. European Cmty., 136 S.Ct. 2090, 2111 (2016) and thus Count I must be dismissed under Rules 12(b)(1) and 12(b)(6). Because Defendant's third argument is dispositive, I will begin there.


         A. Legal Standard

         A motion under Federal Rule of Civil Procedure 12(b)(6) “challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded factual allegations in the complaint and draws all reasonable inferences in the non-movant's favor. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) asks the court to dismiss an action over which it allegedly lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). “The burden of proof on a 12(b)(1) issue is on the party asserting jurisdiction.” United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir.2003), overruled on other grounds by Minn-Chem, Inc. v. Agrium, Inc.,683 F.3d 845 (7th Cir.2012). All reasonable inferences are drawn in favor of the plaintiff, and all well-pleaded allegations are accepted as true. Long v. Shorebank Dev. Corp.,182 F.3d 548, 554 (7th Cir.1999). Finally, when considering a Rule 12(b)(1) motion to dismiss, the ...

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