ASI, Inc. v. Aquawood, LLC

Background

ASI, Inc., formerly known as Aviva Sports, Inc. (“Aviva”), sued to collect on an underlying judgment. Aviva alleged that the defendants operated a Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise and committed various torts to prevent collection. Three groups of defendants previously moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and for failure to state a claim under Rule 12(b)(6).

On October 6, 2020, the court denied those motions. It found personal jurisdiction over all defendants through specific personal jurisdiction, conspiracy-based jurisdiction, or RICO jurisdiction under 18 U.S.C. § 1965(b). It also found that Aviva’s claims were not time-barred and that Aviva had alleged enough facts to plausibly state claims for relief.

Motions for Immediate Appeal and Stay

The defendants asked the court to certify the October 6 order for an interlocutory appeal under 28 U.S.C. § 1292(b). An interlocutory appeal is an appeal before the case reaches a final judgment. They also asked the court to stay, or pause, the proceedings while seeking that appeal. The court addressed the motions together because they raised overlapping arguments.

Section 1292(b) requires a party seeking certification to show three things: a controlling question of law, substantial grounds for disagreement about that question, and that an immediate appeal may materially advance the end of the litigation. Certification is reserved for exceptional cases and is granted sparingly.

Court’s Analysis

The defendants identified three proposed appeal issues: the court’s interpretation of RICO jurisdiction under 18 U.S.C. § 1965; application of RICO’s four-year limitations period; and whether the alleged inability to collect an underlying judgment was a legally recognizable RICO injury.

As to RICO co-conspirator jurisdiction, the court found that the first two requirements for certification were satisfied. Personal-jurisdiction issues presented controlling legal questions, and the defendants identified a disagreement among courts about whether § 1965(b) or § 1965(d) governs jurisdiction over RICO co-conspirators. But the defendants could not show that an immediate appeal would materially advance the litigation. The court had relied on RICO co-conspirator jurisdiction for only MGS International. The other defendants were subject to specific personal jurisdiction or conspiracy-based jurisdiction, which were not being challenged as grounds for immediate appeal. The court stated that seventeen defendants would remain unaffected regardless of the appeal’s outcome, and the appeal would not avoid a trial or substantially shorten the case.

The court rejected the proposed appeal concerning the RICO limitations period. Whether the claim was time-barred depended on Aviva’s factual allegations about when it discovered, or should have discovered, its injury. At the motion-to-dismiss stage, a limitations defense ordinarily does not support dismissal unless the complaint itself shows that the limitations period had expired. Aviva alleged that its injuries occurred in 2015 to 2016, so the court had previously found that the RICO claims were not time-barred based on the complaint. Because those allegations would have to be treated as true during an immediate appeal, the limitations issue did not present the required controlling legal question or substantial disagreement.

The court also rejected the proposed appeal concerning RICO injury. The court had previously recognized a split among courts about whether inability to collect an underlying judgment constitutes a RICO injury and had adopted the majority view. It concluded that the defendants’ preference for the minority view was not enough to justify an immediate appeal. In addition, neither the injury issue nor the limitations issue could end the entire case because Aviva also asserted common-law claims that were not part of the motions.

Finally, the court said that case complexity, disagreement among courts, and a desire to avoid discovery did not make this an exceptional case for immediate review. The defendants had not identified a basis on which an appeal could terminate all claims against all defendants. The court concluded that the interests of justice and judicial efficiency were better served by allowing the parties to proceed to discovery.

Disposition

The court denied Defendants Aquawood, LLC, Brian Dubinksy, and Peter Magalhaes’s Motion to Certify Interlocutory Appeal and for Stay; that motion had been joined by Banzai International, Ltd., Chan Siu Lun, Liu Yi Man, Park Lane Solutions Ltd., Toy Quest Ltd., and Chan Ming Yiu. The court denied MGS International, LLC and Richard Toth’s separate Motion to Certify Interlocutory Appeal and for Stay. The court denied as moot Dollar Empire LLC, Wellmax Trading Ltd., and Michael Wu’s Motion for Joinder. The court also declined to stay the proceedings.