JW Gaming Development, LLC v. James

Background

JW Gaming Development, LLC brought claims arising from a 2012 contract with the Pinoleville Pomo Nation and the negotiations and investments that preceded the contract. The case began in state court on March 1, 2018, and the defendants removed it to federal court on March 7, 2018.

The court had previously denied the defendants’ motions to dismiss and motion to strike. It also had granted JW Gaming’s motion for summary judgment and later denied a second summary-judgment motion by the Tribal Defendants concerning the fraud and RICO claims.

The motions addressed in this order were filed by Andrew Stevenson, Donald Williams, Veronica Timberlake, Cassandra Steele, Jason Steele, and Julian Maldonado. The opinion states that Stevenson, Williams, and Timberlake were members-at-large of the seven-member Tribal Council; Cassandra Steele and Jason Steele had served as the Council’s secretary and treasurer since 2011; and Maldonado was a Tribe employee and Angela James’s live-in partner.

Legal standard

A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) uses the same standard as a motion to dismiss for failure to state a claim under Rule 12(b)(6). The court accepts well-pleaded factual allegations as true and asks whether they plausibly entitle the plaintiff to a legal remedy. A claim cannot rest only on legal conclusions or unsupported inferences.

Fraud must be pleaded with particularity, meaning the complaint generally must identify the time, place, and content of the alleged false statements and each defendant’s role in the alleged fraudulent scheme.

To plead a RICO claim under 18 U.S.C. § 1962(c), the plaintiff must allege that the defendants participated in conducting the affairs of an enterprise through a pattern of racketeering activity or collection of unlawful debt. The court discussed the requirement that a defendant have some role in directing the enterprise’s affairs, while noting that liability is not limited to people with formal leadership positions.

Fraud claim

The four defendants associated with the Tribal Council argued that the fraud allegations did not identify conduct specifically attributable to them. The complaint did not name Stevenson, Williams, Timberlake, or the Steeles in the alleged “Financial Fixers” section, and it did not allege that they were responsible for particular actions involving the disputed 2008 and 2012 Canales Notes or the alleged falsified 2011 accounting.

JW Gaming responded that the Tribal Council had to approve the Tribe’s waiver of sovereign immunity for the 2012 contract and that the Council reviewed the Tribe’s financial reports at its meetings. JW Gaming argued that these allegations supported inferences that the defendants knew about or participated in the alleged fraudulent conduct.

The court concluded that the allegations were sufficient at the pleading stage. Although other individuals appeared more frequently in the complaint, the court found allegations permitting an inference that the Tribal Council reviewed and approved fraudulent acts central to the case.

RICO claim

The six defendants argued that the complaint did not plausibly allege that they conducted or participated in conducting the alleged enterprise’s affairs. They also argued that they could not be liable without specific factual allegations connecting them to the alleged wire-fraud and money-laundering acts.

The court rejected that challenge. It reasoned that the defendants did not necessarily need to have committed the specific acts that served as the alleged RICO predicate acts if the allegations otherwise plausibly showed that they had a role in the enterprise and its chain of command. The complaint alleged that the Tribal Council reviewed and approved the disputed Canales Notes and the Tribe’s finances, and that the Council directed an alleged government shell. It also alleged that Maldonado served as a conduit for more than a quarter-million dollars in laundered money.

The court held that these allegations were enough to state a RICO claim against the six defendants.

Disposition

The court acknowledged that the defendants identified legitimate weaknesses in the allegations against them. It nevertheless concluded that those weaknesses were not enough to grant judgment to the defendants based only on the pleadings. The motions for judgment on the pleadings were denied.