Poorsina v. Tseng

Background

Ali R. Poorsina, proceeding without a lawyer, sued Tan Tseng, Terrenz Kukant Cam, Boi Anh Hong, and Kevin Tu Cam. The complaint alleged that, from about June 2011 through March 2019, the defendants and unnamed co-conspirators agreed not to compete against one another at public property auctions in San Francisco and San Mateo counties. Poorsina alleged that the scheme affected more than 47 properties, including a property that he previously owned and occupied and that was sold at a foreclosure auction.

The complaint also described a separate alleged scheme involving transfers of property titles, loans from Fannie Mae, and the use of the United States Postal Service and private carriers. Poorsina asserted two claims: a claim under Section 1 of the Sherman Act for bid rigging and a claim under 18 U.S.C. § 1341 for conspiracy to commit mail fraud.

Motion to dismiss standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court was required to accept well-pleaded factual allegations as true and interpret the complaint in Poorsina’s favor, while still requiring facts that made each claim plausible.

Sherman Act claim

The court held that the bid-rigging allegations did not state a Sherman Act claim. Although the claim did not generally have to meet the heightened fraud-pleading standard, Poorsina still had to allege facts supporting an agreement, an intended restraint of trade, and actual harm to competition. The court found that the complaint largely offered only the conclusion that a conspiracy existed. It did not identify the people with whom the defendants allegedly conspired or provide facts supporting the existence of an agreement or bid rigging. The allegation that the defendants acquired properties at public auctions was insufficient.

The court also held that Poorsina did not allege the required antitrust injury. The only injury the court could infer was the foreclosure of his property. The court found that this injury did not result from the alleged bid rigging and was not the type of injury the antitrust laws were intended to prevent. The court therefore concluded that Poorsina lacked antitrust standing, meaning he was not a proper party to bring this private antitrust claim.

The court dismissed the Sherman Act claim but granted leave to amend. It stated that, although the defects—particularly the lack of antitrust standing—were unlikely to be curable, it would allow an amendment out of caution.

Mail-fraud claim

The court dismissed the mail-fraud claim without leave to amend. It explained that 18 U.S.C. § 1341 is a criminal statute and does not provide a private right of action, meaning an individual cannot sue directly under that statute. The court also noted that the complaint’s allegations about property transfers and loans would not satisfy the rules requiring fraud to be pleaded with particularity, but it did not need to analyze that issue at length because the claim could not be brought under the statute.

Order

Judge Vince Chhabria granted the defendants’ motion to dismiss and dismissed the complaint. The first claim, under the Sherman Act, was dismissed with leave to amend. The second claim, for mail fraud, was dismissed without leave to amend. Poorsina was ordered to file a first amended complaint within 14 days. The court warned that failing to do so could result in dismissal of the action without further notice, and that claims dismissed with leave to amend would be treated as waived if they were not included in the amended complaint.