Home Orthopedics Corp. v. Rodriguez , 781 F.3d 521 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 12-2387
HOME ORTHOPEDICS CORP.,
Plaintiff, Appellant,
v.
RAÚL RODRÍGUEZ; JOSÉ A. LINARES; JULIO F. JULIÁ; PAUL PINO,
Defendants, Appellees,
UNIDENTIFIED DIRECTORS AB, BC, CD, DE, EF, FG, GH, HI, IJ, JK, KL
OF HUMANA HEALTH PLANS OF PUERTO RICO (D/B/A HUMANA); DIRECTORS
LM, MN, NO, OP, PQ, QR, RS, ST, TU, UV, VW, WX OF MEDICAL CARD
SYSTEM, INC. (MCS); A, B, C, D, E, F, G, H, I INSURANCE
COMPANIES; LUIS GORIS-GARCÍA; ARLENE MARRERO;
JAVIER MAGRIÑÁ-MELÉNDEZ,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Thompson, Baldock,* and Selya,
Circuit Judges.
Carlo Defendini-Díaz and Pagán, Ortega & Defendini Law
Offices, PSC, on brief for appellant.
Theresa M.B. Van Vliet, Patsy Zimmerman-Keenan, and Genovese
Joblove & Battista, P.A., on brief for appellees Raúl Rodríguez,
José A. Linares, and Paul Pino.
*
Of the Tenth Circuit, sitting by designation.
Roberto Santana Aparicio, Berenice B. Bellotti Sevilla, and
Del Toro & Santana, on brief for appellee Julio F. Juliá.
March 25, 2015
THOMPSON, Circuit Judge. Home Orthopedics Corp., a
medical equipment supplier based in Puerto Rico, sued the
defendants for their alleged involvement in a scheme to help one
guy collect a consulting fee Home Orthopedics agreed to pay him,
but based on a contract it later discovered was phony. Fueled by
Home Orthopedics' refusal to continue paying the fee, the
defendants purportedly wielded their influence over players in the
health insurance industry to jeopardize numerous contracts Home
Orthopedics had with other clients.
The Puerto Rico district court dismissed Home
Orthopedics' numerous federal and Commonwealth law causes of
action. Home Orthopedics now appeals the dismissal of its primary
claim, brought under the Racketeer Influenced and Corrupt
Organizations Act, or "RICO," disposed of for failure to state a
claim. Home Orthopedics also appeals the district court's denial
of its motions to conduct limited discovery and amend the
complaint.
For the reasons discussed below, we affirm the district
court.
BACKGROUND
Because we are reviewing a motion to dismiss for failure
to state a claim, we recite the facts as they are alleged in the
operative complaint and RICO case statement, in the light most
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favorable to Home Orthopedics.1 Ocasio-Hernández v. Fortuño-
Burset, 640 F.3d 1, 12-13 (1st Cir. 2011).
The Letter of Agreement
Since 2001, Home Orthopedics, a home medical equipment
supplier and the leading company in Puerto Rico for orthotics,
prosthetics, and diabetic shoes, supplied medical equipment to MMM
HealthCare, Inc., a Puerto Rican health maintenance organization
that we'll refer to as "the HMO." But in mid-2004, Defendant
Clinical Medical Services, Inc. ("Clinical Medical"), also a home
medical equipment supplier in Puerto Rico, struck a deal with the
HMO to be its exclusive provider of "durable medical equipment," a
specific category of long-lasting medical equipment used by
patients in the home, including, for instance, hospital beds,
canes, and crutches.
In late 2004, Clinical Medical's president, Raúl
Rodríguez ("Raúl"), met with Home Orthopedics' president, Jesús
1
A RICO case statement is a standard questionnaire that
district courts may order from plaintiffs in civil RICO cases to
"adduce the specifics that underlie general claims of RICO
misconduct." O'Ferral v. Trebol Motors Corp., 45 F.3d 561, 562
(1st Cir. 1995). Here, the district court ordered Home Orthopedics
to file one "in an effort to aid the Court in assessing RICO claims
at an early pleading stage." The district court allowed Home
Orthopedics' amended case statement to be considered part of the
pleadings, and so we have considered it in our review.
Even with the case statement (which ended up being largely a
regurgitation of the complaint), we had difficulty constructing a
sensible narrative from Home Orthopedics' papers. We did our best
with what we were given. See Foley v. Wells Fargo Bank, N.A., 772
F.3d 63, 79 (1st Cir. 2014) (warning that we will not "haphazardly
mine" complaints or the documents attached to them).
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Rodríguez ("Jesús"), claiming that in addition to the exclusivity
agreement for durable medical equipment, Clinical Medical had
entered into an additional agreement with the HMO to be its
exclusive provider of orthotic and prosthetic services. Raúl told
Jesús that Clinical Medical would need a subcontractor to actually
provide those services, however, because Clinical Medical "did not
know anything about orthotics and prosthetics."
The complaint doesn't say whether Jesús agreed in that
meeting to subcontract for Clinical Medical, but in February 2005,
Jesús received a faxed "Letter of Agreement" from Raúl. The
letter, a copy of which was attached to the complaint, was an
unsigned, draft agreement between Home Orthopedics and the HMO
(even though Raúl sent Jesús the contract and arranged for Jesús to
sign it, Clinical Medical was not actually a party to the
contract). The agreement would allow Home Orthopedics to continue
providing orthotic and prosthetic services to the HMO's
subscribers, but at a 20 percent lower profit, reducing Home
Orthopedics' sales reimbursement from 100 percent to 80 percent.
Specifically, the agreement provided:
[Home Orthopedics] indicates its intent to
enter into an agreement with [the HMO] to
render Orthotic and Prosthetic services to
patients enrolled in [the HMO]. By signing
this Agreement, [Home Orthopedics] agrees to
render professional healthcare services and to
accept [80 percent reimbursement] as full
payment for all Covered Services to patients
referred to [Home Orthopedics].
-5-
The agreement was drafted in English, of which Jesús
functionally knew little. When Jesús asked Raúl for an explanation
of the agreement, Raúl "threatened" that Home Orthopedics was
"being put out of business," and told Jesús to "take it or leave
it" because another prosthetics company was also interested in the
deal.
Jesús opted to take it. He signed the agreement, even
though (as we gather from facts pleaded later in the complaint) he
had not spoken with anyone from the HMO about it, and no one from
the HMO had signed it yet.
Jesús also agreed with Raúl that in exchange for choosing
Home Orthopedics as the subcontractor, Clinical Medical would earn
a 12.5 percent consultant's commission on Home Orthopedics' sales
to the HMO, to be paid directly to Raúl. Under the deal with
Clinical Medical, then, Home Orthopedics would start receiving only
67.5 percent of the sales it made to the HMO, as opposed to the 100
percent it had been making.
Raúl Gets Caught
With the new deal in place, business went on as usual,
and in August 2005, Home Orthopedics sent the HMO an invoice. The
HMO, though, sent Home Orthopedics a check accounting for 100
percent of the bill. Home Orthopedics thought the HMO made a
mistake, and, in "good faith," reminded the HMO that it should have
paid out only 80 percent under the terms of the Letter of
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Agreement. But the HMO responded that it had never seen that
agreement and would "investigate[] the matter."
It's not clear from the complaint what happened in the
meantime, but around October 2006, Jesús found out from the HMO
that Clinical Medical was not actually its exclusive provider of
orthotics and prosthetics; Clinical Medical and the HMO had
negotiated an agreement to that extent, but Clinical Medical
allowed the exclusivity option to expire. At that point, Home
Orthopedics stopped paying Raúl his consulting fee.2
Raúl was displeased. He demanded Jesús pay him for the
fees he earned in 2005 and 2006, and when Jesús wouldn't budge,
defendants José Linares and Paul Pino, also executives at Clinical
Medical, started calling and sending letters to Jesús to try to
"collect the money owed to Raúl."3 Raúl also "frequently called
[Jesús] requesting payments and threatened him with the 'loss of
his business.'"
Continued Collection Efforts
By mid- to late-2008, Raúl warned Jesús that he would
"see [him] bleed drop by drop until [he] remain[ed] without a
business." Eventually Jesús, "under duress," relented and paid
2
The complaint doesn't tell us why Home Orthopedics continued
paying Raúl a commission for the year after finding out that the
HMO had never seen the Letter of Agreement.
3
It is not clear why Raúl would need to seek his fees from
2005 and 2006 if Home Orthopedics did not stop paying him until
October 2006.
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Raúl $150,000 -- on top of the $600,000 he had already paid -- via
numerous payments made throughout 2008.4
Raúl wasn't satisfied, and, apparently undeterred by
Jesús's refusal to pay more money, Clinical Medical filed a lawsuit
against Home Orthopedics in Puerto Rico state court in April 2009.
Raúl tried to get Jesús to settle the case, warning that his
attorneys "have a great influence in the Puerto Rico courts." Jesús
didn't bite, and in fall 2009, started receiving collection calls
and emails from Pino. He also received a written settlement demand
(and follow-up correspondence regarding the settlement demand) from
Linares and Pino.
Other Terminated Contracts
In the meantime, other companies in the health insurance
field started terminating their contracts with Home Orthopedics,
which Raúl had warned Jesús would happen if he didn't "cooperate."
The first was in November 2006, shortly after Home Orthopedics
stopped paying Raúl, when Medical Card System, Inc. terminated its
contract with Home Orthopedics, supposedly for lack of proper
credentialing (Home Orthopedics asserts that it had the proper
credentials). After failed attempts to get Medical Card System to
change its mind, Home Orthopedics hired someone to help negotiate
a new services agreement with the managed care organization. During
4
The complaint does not specify for how much Raúl was asking,
but in a demand letter dated March 12, 2009, Raúl's lawyers claimed
that "the amount owed . . . exceeds [$1 million]."
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that negotiation meeting, defendant Julio F. Juliá, a friend of
Raúl's who had recently begun working at Medical Card System,
interrupted to falsely claim that Medical Card System could not
negotiate directly with Home Orthopedics because Home Orthopedics
had an exclusivity agreement with Clinical Medical.
In June 2007, First Medical, an insurance company,
terminated its contract with Home Orthopedics without explanation;
so did Humana Health Plans of Puerto Rico, a healthcare network, on
August 1, 2009.
In September 2009, Home Orthopedics made a deal to be the
"exclusive announced company of orthotics and prosthetics" at
Medical Card System's convention. Medical Card System, however,
cancelled the exclusivity deal and returned Home Orthopedics'
payment for exclusivity, instead deciding to allow other companies
to advertise along with Home Orthopedics.
Finally, in March 2010, Medical Card System terminated its
new services agreement with Home Orthopedics, but this time, without
giving any reason.
This Lawsuit
Convinced that the defendants -- some of whom worked with
Raúl, and others of whom worked for the companies that terminated
their contracts with Home Orthopedics -- were all in cahoots to help
Raúl strongarm more money, Home Orthopedics filed suit in June 2011
in the Puerto Rico federal district court. The amended complaint,
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which is now the operative one in this case, sought relief against
numerous defendants for violating numerous federal and Commonwealth
laws, including RICO (18 U.S.C. §§ 1962(b), (c), and (d)).5 Home
Orthopedics' theory of the case was that the defendants' above-
described conduct amounted to extortion, mail fraud, and wire fraud,
all actionable under RICO.
Several defendants moved to dismiss the amended complaint
for failure to state a claim.6 A magistrate judge issued a report
and recommendation to dismiss the complaint, which the district
court largely adopted, dismissing all the federal claims with
prejudice and the supplemental state law claims without prejudice.
Specifically, the district court held that Home Orthopedics failed
to adequately allege that Juliá was part of an enterprise. The
court also concluded that the complaint did not sufficiently allege
that Raúl, Linares, and Pino engaged in a "pattern of racketeering
activity," as all of their actionable racketeering acts "relate[d]
5
The complaint also brought causes of actions for violations
of: The Sherman Act (15 U.S.C. § 3); The Hobbs Act (18 U.S.C. §
1951); The Travel Act (18 U.S.C. § 1952); mail fraud (18 U.S.C. §
1341); wire fraud (18 U.S.C. § 1343); failure to conform with
Medicare credentialing (42 C.F.R. § 422.204); tortious interference
with contract (P.R. Laws Ann. tit. 31, § 5141); extortion (P.R.
Laws Ann. tit. 33, § 4828); and fraud (P.R. Laws Ann. tit. 33, §
4838).
6
Originally, Home Orthopedics appealed the dismissals of the
RICO claim against Raúl, Linares, Pino, and Juliá, as well as three
other defendants, Javier Magriñá-Meléndez, Arlene Marrero, and Luis
Goris-García. Home Orthopedics has since voluntarily dismissed the
latter three defendants from the appeal.
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to a single transaction" -- the signing of the 2005 Letter of
Agreement -- "aimed to extort" Home Orthopedics. The court also
denied Home Orthopedics' request to amend its complaint for a second
time in lieu of dismissal.
This timely appeal followed. Home Orthopedics only asks
us, however, to either revive its substantive RICO claim, brought
under 18 U.S.C. § 1962(c)7 (or allow it to amend its complaint to
add more allegations to support it).
DISCUSSION
Motion to Dismiss
Standard of Review
We review a district court's dismissal under Federal Rule
of Civil Procedure 12(b)(6) de novo. Woods v. Wells Fargo Bank,
N.A., 733 F.3d 349, 353 (1st Cir. 2013). That is, we accept the
facts pleaded in the complaint as true to determine whether the
plaintiff has stated a plausible claim for relief. Ocasio-
Hernández, 640 F.3d at 12-13; Méndez Internet Mgmt. Servs., Inc. v.
Banco Santander de Puerto Rico, 621 F.3d 10, 12 (1st Cir. 2010).
7
While the complaint seeks relief under various subsections
of RICO, including the conspiracy provision, subsection (d), the
district court only examined Home Orthopedics' RICO claim under 18
U.S.C. § 1962(c), dubbed "substantive" RICO. Because Home
Orthopedics does the same in its opening brief, and does not
otherwise dispute the district court's disregard of the claims
brought under 18 U.S.C. §§ 1962(b) and (d), we will follow suit and
analyze Home Orthopedics' claim under only subsection (c).
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The Elements of a RICO Claim
RICO, the Racketeer Influenced and Corrupt Organizations
Act, is a statute that Congress enacted as a tool in the federal
government's "war against organized crime," United States v.
Turkette, 452 U.S. 576, 587 (1981), to help combat "enduring
criminal conduct," Libertad v. Welch, 53 F.3d 428, 445 (1st Cir.
1995). In addition to allowing the criminal prosecution of RICO
violators, see 18 U.S.C. § 1962, the statute's expansive reach also
provides a generous private right of action -- successful plaintiffs
are entitled to triple damages if they can prove they were "injured
in [their] business or property by reason of a violation of section
1962." 18 U.S.C. § 1964(c).
Against that backdrop, we start our analysis by laying out
the building blocks of a civil RICO claim.
The RICO statute makes it:
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 or collection of unlawful
debt.
18 U.S.C. § 1962(c). To state a civil RICO claim, then, a plaintiff
must allege: "(1) conduct, (2) of an enterprise, (3) through
[either] a pattern . . . of racketeering activity," Kenda Corp. v.
Pot O'Gold Money Leagues, Inc., 329 F.3d 216, 233 (1st Cir. 2003)
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(quotations omitted), or "a single collection of an unlawful debt,"
United States v. Weiner, 3 F.3d 17, 24 (1st Cir. 1993).
We turn our attention to the third element --
specifically, whether Home Orthopedics has sufficiently alleged a
pattern of racketeering activity. As we explain below, we agree
with the district court that Home Orthopedics has not sufficiently
alleged a RICO pattern, and thus, its RICO claim fails.8
Pattern of Racketeering Under RICO
RICO specifically enumerates what kinds of illegal acts
count as "racketeering," and includes in that category of crimes
extortion and mail and wire fraud. See 18 U.S.C. § 1961(1). To
establish a "pattern," the statute requires a plaintiff to show that
at least two acts of racketeering occurred within ten years of each
other. 18 U.S.C. § 1961(5).
The Supreme Court has additionally required that "'the
racketeering predicates [be] related, and that they amount to or
pose a threat of continued criminal activity.'" Giuliano v. Fulton,
399 F.3d 381, 386-87 (1st Cir. 2005) (quoting H.J. Inc. v. Nw. Bell
Tel. Co., 492 U.S. 229, 239 (1989)). The latter requirement is
called the "continuity" requirement. Giuliano, 399 F.3d at 386-87
8
Home Orthopedics suggests in its opening brief that Linares
and Pino's attempts to collect the consulting fees constituted
"collection of an unlawful debt," making no pattern of racketeering
activity necessary to satisfy the third RICO element. This
suggestion is without merit, however, because RICO limits "unlawful
debt" to illegal gambling debt and "usurious" loans, see 18 U.S.C.
§ 1961(6), and no such debts are alleged here.
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(citing Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12, 15 (1st
Cir. 2000)).
As the language of H.J. Inc. indicates, the Supreme Court
held that a plaintiff can show continuity in one of two ways. Under
the "closed" approach, a plaintiff would have to prove a "closed
period of repeated conduct" that "amounted to . . . continued
criminal activity." 492 U.S. at 237, 241. Alternatively, under the
"open-ended" approach, a plaintiff could satisfy the continuity
requirement by showing "past conduct that by its nature projects
into the future with a threat of repetition." Id.
In the instant case, the appellant's opening brief does
not specify whether Home Orthopedics intended to show a pattern of
racketeering through closed continuity, open-ended continuity, or
both. The RICO case statement was also of no help in illuminating
which type of pattern Home Orthopedics intended to prove; the
district court specifically asked Home Orthopedics to "[d]escribe
in detail the pattern of racketeering activity . . . alleged for
each R.I.C.O. claim," but rather than actually describing the
pattern, Home Orthopedics directed the court to fifty-six paragraphs
of the complaint. We were no more enlightened after re-reading that
portion of the complaint.
As we have stated time and again, litigants must provide
meat on the bones of their arguments if they expect us to seriously
entertain them. See Rodríguez v. Municipality of San Juan, 659 F.3d
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168, 176 (1st Cir. 2011). In this situation, though, we will not
dwell on whether Home Orthopedics' terse treatment of the "pattern"
prong sufficed to preserve its appellate rights because in any case,
Home Orthopedics' pleaded allegations do not make the stuff of
either closed or open-ended continuity.
Closed Continuity
While Home Orthopedics does not address this argument, the
defendants assert that closed continuity cannot be established here
because Home Orthopedics has only alleged "a single narrow scheme
to defraud a single victim." We agree.
Because RICO was intended to attack "long-term criminal
conduct," "a closed-ended pattern sometimes can be established by
examining only the number of alleged predicate acts and the duration
of the alleged racketeering activity." Giuliano, 399 F.3d at 387;
see also Efron, 223 F.3d at 15-16 (citing H.J. Inc., 492 U.S. at
240-41) (noting that the Supreme Court has placed emphasis on "the
temporal focus of the 'continuity' requirement"). However, given
that Congress had a "fairly flexible concept of a pattern in mind"
when it drafted RICO, H.J. Inc., 492 U.S. at 239, both the Supreme
Court and this court have declined to spell out specifically how
many predicate acts, or how long the racketeering has to endure, for
a plaintiff to satisfactorily allege the pattern requirement.
But we have established some parameters. We know, from
the Supreme Court, that when a plaintiff has only alleged a few
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predicate acts (i.e., "sporadic activity"), H.J. Inc., 492 U.S. at
239, or when the acts span only a "few weeks or months," closed
continuity cannot be established, Efron, 223 F.3d at 17-18 (citing
H.J. Inc., 492 U.S. at 242). At the other end of the spectrum, we
have also said that "where the temporal duration of the alleged
activity and the alleged number of predicate acts are so extensive
that common sense compels a conclusion of continuity, closed-ended
continuity should be found." Giuliano, 399 F.3d at 387 (citation
and quotations omitted); see also, e.g., Fleet Credit Corp. v. Sion,
893 F.2d 441, 446-47 (1st Cir. 1990) (finding that ninety-five
racketeering acts over a 4.5-year period was sufficient for closed
continuity).
Other cases, though, fall somewhere in the middle because
the "duration and extensiveness of the alleged conduct does not
easily resolve the issue." Giuliano, 399 F.3d at 387. In those
squishier cases, we look to other "indicia of continuity," id.; for
instance, whether the defendants were involved in multiple schemes,
as opposed to "one scheme with a singular objective"; whether the
scheme affected many people, or only a "closed group of targeted
victims"; and whether the scheme had the potential to last
indefinitely, instead of having a "finite nature." Efron, 223 F.3d
at 18-19. While these specific factors are ones we have considered
in the past, at the end of the day, we just take a "natural and
commonsense approach to RICO's pattern element," id. at 18 (citing
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H.J. Inc., 492 U.S. at 237), to determine whether the specific fact
pattern of the case before us suggests the "kind of broad or ongoing
criminal behavior at which the RICO statute was aimed," Efron, 223
F.3d at 18.
We find that Home Orthopedics' allegations do not fit the
bill. Even assuming (without deciding) that the complaint alleges
more than sporadic activity, the predicate acts alleged are
certainly not "so extensive that common sense compels a conclusion
of continuity." Giuliano, 399 F.3d at 387; cf. H.J. Inc., 492 U.S.
at 250; Fleet Credit Corp., 893 F.2d at 446-47. We have
"consistently declined to find continuity where the RICO claim
concerns a single, narrow scheme targeting few victims." Giuliano,
399 F.3d at 390. And that is exactly what Home Orthopedics has
alleged. It contends that the defendants engaged in unlawful
conduct for the purpose of accomplishing a singular, narrow goal --
to help Raúl collect from Home Orthopedics the consulting fees he
believed he was owed from 2005 and 2006 under the terms of their
2005 agreement. Thus, even if the defendants committed numerous
crimes to try to collect this specific sum of money, all of these
unlawful acts "have their origin in," González-Morales v. Hernández-
Arencibia, 221 F.3d 45, 52 (1st Cir. 2000), a single "event," Efron,
223 F.3d at 19, or single "transaction," González-Morales, 221 F.3d
at 52 -- the signing of the 2005 agreement. See id. ("Courts have
consistently held that a single episode does not constitute a
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pattern, even if that single episode involves behavior that amounts
to several crimes (for example, several unlawful mailings).")
(quotations omitted). As we have said before in the context of
closed continuity, "[o]ur own precedent firmly rejects RICO
liability where the alleged racketeering acts . . ., taken together,
. . . comprise a single effort to facilitate a single financial
endeavor." Efron, 223 F.3d at 19 (quoting Schultz v. R.I. Hosp.
Trust Nat'l Bank, N.A., 94 F.3d 721, 732 (1st Cir. 1996))
(quotations omitted). Here, the defendants' "single financial
endeavor" was to help Raúl collect a specific amount of money under
the terms of a single contract.9 See also Apparel Art Int'l, Inc.
v. Jacobson, 967 F.2d 720, 723 (1st Cir. 1992) (holding that
"several instances of criminal behavior," including making bribes
and false statements, were "appropriately characterized as separate
parts of a single criminal episode" because they "comprise[d] a
single effort to obtain (and to keep) one . . . Defense Department
contract"). That the defendants in this case sought to accomplish
a specific, narrow mission -- which stemmed from a single,
discernible event -- clearly cuts against a conclusion that Home
Orthopedics has sufficiently alleged a closed pattern.
9
To the extent Home Orthopedics intended to assert that the
defendants were also scheming to take the HMO's business away from
Home Orthopedics, that point is not made clear in the complaint,
RICO case statement, or briefing. It is, therefore, waived. See
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
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Looking at some of the other factors, Home Orthopedics
was, moreover, the only "targeted victim" of the defendants'
actions.10 And the nature of the defendants' conduct is finite.
According to the complaint, Raúl sought only to collect the 2005-
2006 fees; the complaint makes no indication that once he received
those percentage fees, the allegedly extortionate conduct would
continue.
Thus, our common sense dictates that where, as here, "a
closed-ended series of predicate acts . . . constitute[s] a single
scheme to accomplish one discrete goal, directed at one individual
with no potential to extend to other persons or entities," Efron,
223 F.3d at 19 (quoting Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507,
1516 (10th Cir. 1990)) (quotations omitted), RICO liability cannot
attach under a theory of a closed pattern of racketeering.
Next, we explain why Home Orthopedics' complaint likewise
fails under a theory of open-ended continuity.
Open-Ended Continuity
As we noted above, even in the absence of closed
continuity, a plaintiff can still demonstrate a "pattern" by showing
a "threat of" future criminal activity -- that is, "a realistic
prospect of continuity over an open-ended period yet to come."
10
While Home Orthopedics contends in its brief (in a one-
sentence footnote) that Raúl used the lie about having an exclusive
deal with the HMO "to take out of business hundreds of service
providers of durable medical equipment," Home Orthopedics did not
allege such in the complaint.
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Feinstein v. Resolution Trust Corp., 942 F.2d 34, 45 (1st Cir.
1991). "This approach necessitates a showing that the racketeering
acts themselves include a specific threat of repetition extending
indefinitely into the future [or] . . . are part of an ongoing
entity's regular way of doing business." Id. (quotations omitted).
We find that an open-ended pattern would fail here for
largely the same reasons that a closed pattern would. Neither Home
Orthopedics' complaint nor briefing provide any indication that were
Raúl to receive his fees from Home Orthopedics, the "scheme" to
collect money would continue into the indefinite future. To the
extent Home Orthopedics intended to show that the ongoing Puerto
Rico lawsuit Raúl initiated against Home Orthopedics in 2009
constitutes indefiniteness, this argument easily fails. As we
stated in González-Morales, when the "filing of frivolous
[law]suits" has its origin in the execution of a single contract,
"the fact that . . . local court suits are still pending does not
constitute long-term conduct demonstrating a threat of future
activity." 221 F.3d at 51-52. Lawsuits, by their very nature, are
not indefinite, see Feinstein, 942 F.2d at 45 -- once one side
prevails (or the parties settle), the case is over. Nor has Home
Orthopedics attempted to show that the defendants' alleged
racketeering acts were part of their regular way of doing business.
For these reasons, we find that Home Orthopedics has not
sufficiently alleged a "pattern of racketeering activity" necessary
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to sustain its RICO claim. Here, "[a]t most, what has been alleged
is a business deal gone sour" -- and that alone does not equate to
a RICO violation. González-Morales, 221 F.3d at 52 (quoting
Sil–Flo, Inc., 917 F.2d at 1516) (quotations omitted).
Motions to Amend/Conduct Discovery
However perfunctorily, Home Orthopedics also argues that
the district court erred in denying its motion to conduct limited
discovery and then to amend its complaint for a second time. We
review a district court's denial of a motion to file an amended
complaint for abuse of discretion. Glassman v. Computervision
Corp., 90 F.3d 617, 622 (1st Cir. 1996). We "defer to the district
court's hands-on judgment so long as the record evinces an adequate
reason for the denial." Torres-Álamo v. Puerto Rico, 502 F.3d 20,
25 (1st Cir. 2007) (quotations omitted). Legitimate reasons for
denying a motion to amend include "undue delay, bad faith, futility
and the absence of due diligence on the movant's part." Id.
(citation and quotations omitted).
In denying the motion to amend, the district court adopted
the magistrate judge's reasoning that an additional amendment would
"do little more than further waste the time of the courts and
litigants." While neither the magistrate nor district court judges
used the term specifically, they essentially ruled that allowing
another amendment would be futile. See Glassman, 90 F.3d at 623
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("'Futility' means that the complaint, as amended, would fail to
state a claim upon which relief could be granted.").
The district court did not abuse its discretion in so
ruling. While Home Orthopedics asserts that "further details of
[the defendants'] associations, their illegalities, [and] their
scheme to illegally harm [Home Orthopedics][] are only in possession
of defendants themselves," we do not see -- and Home Orthopedics
does not attempt to explain -- what additional information from the
defendants would conceivably help nudge the facts of this case into
a "pattern of racketeering." To the extent Home Orthopedics relies
on Pruell v. Caritas Christi, 678 F.3d 10 (1st Cir. 2012), where we
remanded to give the plaintiffs an opportunity to amend their
complaint, we specifically noted in Pruell that "some latitude has
to be allowed where a claim looks plausible based on what is known."
678 F.3d at 15 (emphasis added). Such is not the case here.
Home Orthopedics also relies on New Eng. Data Servs., Inc.
v. Becher, 829 F.2d 286 (1st Cir. 1987), to argue that it should
have been permitted to conduct some discovery before its claims were
dismissed. But, as the district court noted, Becher is inapposite;
there, we simply held that the plaintiffs should have been permitted
discovery to flesh out their fraud allegations, which were subject
to a heightened pleading requirement under Rule 9(b). See 829 F.2d
at 292. Given that Home Orthopedics offers no other law (or
reasoning) as to why it should have been permitted discovery even
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though its complaint failed to state a claim, we find that its
generic argument is waived for lack of development. See Zannino,
895 F.2d at 17.
CONCLUSION
For the reasons discussed above, we affirm the district
court's judgment. Appellees are awarded costs.
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