OPINION ON MOTION TO DISMISS AMENDED COMPLAINT
LEWIS A. KAPLAN, District Judge.
TABLE OF CONTENTS
The Complaint ..............................................................................236
Proceedings to Date ........................................................................237
I. Legal Standard for Rule 12(b)(6) Motion ...........................................238
II. RICO — Section 1962(c) ...........................................................238
A. Alleged Extraterritorial Application ..........................................239
1. Chevron's Allegations and the Norex Decision ..............................240
2. Answering the Extraterritoriality Question ................................241
a. Emphasis on the Enterprise ............................................241
b. Emphasis on the Alleged Racketeering Activity .........................243
3. Application to this Case ..................................................245
B. Sufficiency of Pattern Allegation — The Single Scheme Argument ...............246
C. Sufficiency of Predicate Act Allegations ......................................247
1. Extortion .................................................................247
2. Mail and Wire Fraud .......................................................249
3. Money Laundering ..........................................................251
4. Obstruction of Justice and Witness Tampering ..............................251
D. Causation .....................................................................252
III. RICO Conspiracy — Section 1962(d) ................................................254
IV. Common Law Fraud ..................................................................254
A. Chevron's Allegations .........................................................254
B. Reliance ......................................................................255
1. First-Party Reliance .....255
2. Third-Party Reliance .....256
V. Tortious Interference with Contract ...............................................257
VI. Trespass to Chattels ..............................................................258
VII. Unjust Enrichment .................................................................259
VIII. New York Judiciary Law § 487 ......................................................260
IX. Civil Conspiracy ..................................................................262
Last year, an Ecuadorian trial court entered a multibillion dollar judgment ("the Judgment")1 against Chevron Corporation ("Chevron") in an action brought by 47 individual Ecuadorian residents (the "Lago Agrio Plaintiffs" or "LAPs"). In anticipation of the Judgment, Chevron filed this action against (1) the LAPs, (2) their New York lawyer Steven Donziger, the Law Offices of Steven Donziger, Donziger & Associates, PLLC (collectively, the "Donziger Defendants"), (3) Stratus Consulting, Inc. and two of its personnel (collectively, the "Stratus Defendants"), and (4) a few other defendants.2 Two of the LAPs (the "LAP Representatives") and the Donziger and Stratus Defendants have appeared. The remainder have defaulted.3
The matter is now before the Court on the Donziger Defendants' motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted.4 The Court assumes familiarity with the extensive history of this controversy in this Court and the Court of Appeals, which is fully set out in numerous published decisions.5
The amended complaint in this case contains more than 432 paragraphs of allegations, supplemented by a 56-page, single-spaced appendix that sets forth specific details amplifying assertions in the body of the pleading. For purposes of this motion to dismiss, they all are assumed to be true, and the plaintiff is entitled to the benefit of all inferences reasonably drawn from them.
In most instances, a decision ruling on a motion to dismiss would begin with a summary of the allegations of the complaint. In this case, however, that is unnecessary to the disposition of this motion, as most of Chevron's factual allegations are set forth in the Court's findings with respect to an earlier motion for a preliminary injunction.6 Where more detailed consideration of specific allegations is required, it is reserved to those portions of this opinion as deal with the substantive issues to which those allegations are pertinent. The Court emphasizes, however, that it decides this Rule 12(b)(6) motion based strictly upon the allegations of the amended complaint and matters incorporated therein by reference and that it has not relied upon evidence that has been before it on other motions. For present purposes it suffices to summarize most briefly the fundamental core of its claims and to outline the causes of action included in the amended complaint.
Although there is more to the case, Chevron's claims include assertions that Steven Donziger, a New York lawyer, and others based in the United States, here conceived, substantially executed, largely funded, and significantly directed a scheme to extort and defraud Chevron, a U.S. company, by, among other things, (1) bringing a baseless lawsuit in Ecuador; (2) fabricating (principally in the United States) evidence for use in that lawsuit in order to obtain an unwarranted judgment there; (3) exerting pressure on Chevron to coerce it to pay money not only by means of the Ecuadorian litigation and Judgment, but also by subjecting Chevron to public attacks in the United States and elsewhere based on false and misleading statements, (4) inducing U.S. public officials to investigate Chevron on the basis of false claims, and (5) making false statements to U.S. courts and intimidating and tampering with witnesses in U.S. court proceedings to prevent Chevron from obtaining evidence of the fraud.
The amended complaint contains nine causes of action:
Counts 1 and 2 assert substantive and conspiracy claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The details of their allegations are described extensively below. Broadly speaking, however, they allege that the Donziger Defendants, the Stratus Defendants, some of the other defendants (but not the LAPs),7 and a number of non-parties conducted and conspired to conduct the affairs of an enterprise through a pattern of racketeering activity in order, among other things, "to coerce Chevron into paying billions of dollars" to "stop [an allegedly extortionate] campaign against it."8 The alleged predicate acts include extortion, mail and wire fraud, money laundering, witness tampering, and obstruction of justice.
Counts 3 through 5 assert claims against all defendants for fraud, tortious interference with contract, and trespass to chattels relating to the allegedly unlawful scheme described above.9
Count 6 asserts claims against all defendants for unjust enrichment on the ground that defendants have been and will be enriched as a result of the Judgment.10
Count 7 asserts a state law claim for civil conspiracy against all defendants, alleging that they conspired to commit the substantive state law violations.11
Count 8 asserts that the Donziger Defendants violated Section 487 of the New York Judiciary Law.12
Count 9 sought a declaration that the Judgment was unenforceable and unrecognizable "on, among others, grounds of fraud, failure [by Ecuador] to afford procedures compatible with due process, lack of impartial [Ecuadorian] tribunals, lack of personal jurisdiction, [and] contravention of public policy."13 As detailed below, Count 9 has been disposed of previously.
Proceedings to Date
In March 2011, this Court preliminarily enjoined the LAPs and others from, among other things, seeking enforcement or recognition of the Judgment outside Ecuador.14 That injunction rested on findings that (1) Chevron was threatened with immediate and irreparable injury, (2) it was likely to prevail on its claim the Judgment was not entitled to recognition or enforcement because Ecuador did not provide impartial tribunals and due process, (3) the record showed serious questions as to whether the Judgment had been procured by fraud, and (4) the balance of hardships weighed in favor of preliminary injunctive relief.15 The Court subsequently bifurcated, and later severed Count 9, which sought a declaration that the Judgment was not entitled to recognition or enforcement and a permanent injunction against enforcement efforts, set a trial date on that Count, and stayed proceedings on Counts 1 through 8 pending resolution of Count 9.16
In September 2011, the Second Circuit vacated the preliminary injunction and stated that an opinion would follow. The subsequent opinion did not pass, one way or the other, on this Court's findings with respect to the nature of the Ecuadorian tribunals or the evidence of fraud in the procurement of the Judgment. Rather, it explained that the panel had vacated the preliminary injunction on the ground that:
"the procedural device [Chevron] has chosen to present those claims is simply unavailable: The [New York Recognition of Foreign Country Money Judgments Act ("Recognition Act")] nowhere authorizes a court to declare a foreign judgment unenforceable on the preemptive suit of a putative judgment-debtor."17
The prayer for declaratory relief, the Circuit held, was of no avail because, in its view, a declaration of the enforceability or recognizability of the Judgment could not be had because the Recognition Act (1) "does not authorize a court to declare a foreign judgment null and void for all purposes in all countries,"18 and (2) could not justify a declaration with respect to recognizability and enforcement in New York alone because there was no indication that the LAPs ever would seek to enforce the Judgment here.19 The Circuit remanded Count 9 to this Court with instructions to dismiss it in its entirety.20
Accordingly, Counts 1 through 8 remain and were unaffected by the appellate decision. They are the only claims relevant to the Donziger Defendants' motion to dismiss.
I. Legal Standard for Rule 12(b)(6) Motion
In resolving a Rule 12(b)(6) motion, the Court accepts as true the factual allegations set forth in the complaint and draws all reasonable inferences in the plaintiff's favor.21 In order to understand such a motion, "the plaintiff must provide the grounds upon which [its] claim[s] rest through factual allegations sufficient `to raise a right to relief above the speculative level.'"22 Although a Rule 12(b)(6) motion is addressed to the face of the pleading, the court may consider documents attached to or incorporated by reference in the complaint.23 Moreover, as previously noted, the Court in deciding this Rule 12(b)(6) motion has confined itself to the allegations of the amended complaint and the handful of other documents properly considered on such a motion, most notably the Ecuadorian court decisions and other decisions of U.S. courts that are proper subjects of judicial notice.24
II. RICO — Section 1962(c)
Chevron brings its substantive RICO claim under 18 U.S.C. § 1962(c), which makes it unlawful "for any person employed by or associated with any enterprise engaged in ... 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."25 "The statute thus requires Chevron to allege (1) an enterprise, (2) the conduct of the affairs of the enterprise through (3) a pattern of racketeering activity, and (4) injury to [its] business or property ... caused by the violation of Section 1962."26
The Donziger Defendants assert that the RICO claim should be dismissed because (1) it would require an impermissible attempt to apply the statute extraterritorially, and Chevron (2) fails to allege a pattern of racketeering activity, (3) does not sufficiently plead predicate acts, and (4) fails to allege that its injuries were caused by the predicate acts.27
A. Alleged Extraterritorial Application
The extraterritoriality argument stems from Morrison v. National Australia Bank Ltd.,28 the so-called "foreign cubed" case, in which the Supreme Court considered whether foreign plaintiffs had a cause of action under Section 10(b) of the Securities and Exchange Act of 1934 (the "Exchange Act")29 for an alleged securities fraud perpetrated against foreign plaintiffs by both foreign and domestic defendants with respect to transactions in foreign securities that took place on a foreign stock exchange.30 It approached the question in two steps.
It first referred to the principle that U.S. legislation presumptively has no extraterritorial application in the absence of Congressional intent that it be so applied, and concluded that the presumption against extraterritorial effect had not been rebutted because the Exchange Act is silent as to extraterritorial effect.31
It then passed to the issue whether the plaintiffs' proposed application of the statute on the facts before it would have been extraterritorial. It reasoned that the "focus" of Section 10(b) was to afford a remedy for deceptive conduct "in connection with the sale of any security registered on a [U.S.] national securities exchange or any security not so registered" and ultimately held that "only transactions in securities listed on domestic exchanges, and domestic transactions in other securities" are actionable under the statute.32 As the transactions of which the foreign plaintiffs complained had occurred on an Australian exchange and involved shares of an Australian bank, it affirmed the dismissal of the complaint.
Morrison thus requires consideration of two questions: whether the presumption against extraterritorial application applies to RICO and, if it does, whether applying RICO to all or part of Chevron's claim in fact would be extraterritorial.
The first requires no extensive analysis. The Second Circuit has held that RICO, like the Exchange Act, is silent as to extraterritorial application and, in consequence, that the presumption against extraterritorial application governs in RICO cases.33 The more difficult question is whether all or part of Chevron's claims would involve extraterritorial application of the statute. As always, the starting point must be the facts — the allegations of the amended complaint, the truth of which must be assumed for purposes of this motion.
1. Chevron's Allegations and the Norex Decision
This of course is not a "foreign cubed" case. The RICO claims at issue here rest on allegations that Steven Donziger, a New York lawyer, and others based in the United States, here conceived, substantially executed, largely funded, and significantly directed34 a scheme to extort and defraud Chevron, a U.S. company, by, among other things, (1) bringing a lawsuit in Ecuador;35 (2) fabricating (principally in the United States) evidence for use in that lawsuit in order to obtain an unwarranted judgment there;36 (3) exerting pressure on Chevron to coerce it to pay money not only by means of the Ecuadorian litigation and judgment, but also by subjecting Chevron to public attacks in the United States and elsewhere based on false and misleading statements;37 (4) inducing U.S. public officials to investigate Chevron;38 and (5) making false statements to U.S. courts and intimidating and tampering with witnesses in U.S. court proceedings to cover up their improper activities.39 In other words, the RICO claims include the allegation that the RICO Defendants — a term defined in the amended complaint and consisting predominantly of Americans40 — formulated a scheme to extort and otherwise wrongfully to obtain money from Chevron, a U.S. company, by conducting and conspiring to conduct the affairs of an enterprise — which also consists predominantly of Americans41 — through a pattern of racketeering activity that included acts in the United States by Americans as well as acts in Ecuador by both Americans and Ecuadorians.
The Donziger Defendants contend that the extraterritorial question is answered, favorably to them, by Norex Petroleum Ltd. v. Access Industries, Inc.42 But they are mistaken.
In Norex, a Canadian plaintiff alleged that the defendants had engaged in a racketeering scheme, using Russian companies, to take over control of another Russian company in which the plaintiff was a minority shareholder, leaving the Canadian plaintiff as "a powerless minority shareholder."43 The district court dismissed the complaint under the pre-Morrison conduct-and-effects test. The Second Circuit affirmed. Insofar as the brief opinion addressed the question now before this Court, it said only that "simply alleging that some domestic conduct occurred cannot support a claim of domestic application. `[I]t is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States.' [Morrison, 130 S.Ct.] at 2884 (emphasis in original). The slim contacts with the United States alleged by Norex are insufficient to support extraterritorial application of the RICO statute."44
The allegations of the amended complaint here are entirely different. Unlike the Norex complaint, the scheme alleged here was conceived and orchestrated in the United States to injure a U.S. plaintiff, involved a predominately U.S. enterprise, and was carried out in material respects, though by no means entirely, here. Norex therefore does not control. Indeed, as the Circuit in Norex found it unnecessary to articulate an approach to deciding whether application of RICO in a given situation is extraterritorial, beyond drawing a conclusion with respect to the particular complaint before it, that case sheds no light on the pivotal question before this Court.45
2. Answering the Extraterritoriality Question
The few other cases that, since Morrison, have addressed the question whether given applications of RICO would be extraterritorial have taken different approaches.
a. Emphasis on the Enterprise
Cedeño46 was a RICO claim by a Venezuelan plaintiff against defendants, most of whom allegedly were associated with the Venezuelan government. The alleged racketeering scheme included unjustified imprisonment of the plaintiff in Venezuela and damage to his British Virgin Islands company. The district court dismissed, in part on the ground that "RICO evidences no concern with foreign enterprises, [and]... does not apply where ... the alleged enterprise and the impact of the predicate activity upon it are entirely foreign."47 Quite apart from the fact that neither the alleged enterprise nor the impact of the alleged predicate activity in this case is "entirely" or even substantially foreign, this Court, respectively, does not find Cedeño's emphasis on the domestic or foreign character of the alleged RICO enterprise persuasive or helpful.48
As an initial matter, the suggestion that "RICO evidences no concern with foreign enterprises" seems overly broad, whether viewed in analytical or practical terms. Viewed from an analytical perspective, the RICO statute prohibits various activities in relation to an "enterprise" — (1) investment or use of income derived from a pattern of racketeering activity in an enterprise, (2) acquisition or maintenance of an interest in or control of an enterprise through a pattern of racketeering activity, or (3) conduct of the affairs of an enterprise through a pattern of racketeering activity.49 One may assume, without deciding, that Congress was not concerned about investment or use of racketeering proceeds in or the acquisition or maintenance of control of foreign enterprises through patterns of racketeering activity. But it is very unlikely that Congress had "no concern" with the conduct of the affairs of foreign enterprises through patterns of racketeering activity, at least if the prohibited activities injured Americans in this country and occurred here, either entirely or in significant part.50
From a practical perspective, it is well to bear in mind that foreign enterprises have been at the heart of precisely the sort of activities — committed in the United States — that were exactly what Congress enacted RICO to eradicate. Many will recall, for example, that a RICO count in perhaps the largest criminal conspiracy case ever tried in this district, the so-called "Pizza Connection" case, rested on a decision by members of the Sicilian Mafia to begin shipping narcotics to the United States and their development of a distribution network in this country.51 The RICO enterprise in that case "consisted of `made members' ... and associates of such members, of a secret criminal organization, which operated in Sicily, the United States and elsewhere, known as `La Cosa Nostra,' or `the Mafia.'"52 No enterprise could have been closer to the core of the Congressional concerns that resulted in the enactment of RICO. To say that Congress did not intend RICO to apply unless the enterprise in question was purely domestic would be unsupportable. So courts should be cautious before construing the statute in civil cases in ways that would be most undesirable, not to mention inconsistent with Congressional intent, if applied in criminal cases.
Second, the emphasis on whether the RICO enterprise is domestic or foreign simply begs the question of how to determine the enterprise's character. Citizenship or legal status is not a viable approach, as it would produce absurd results. The term "enterprise" is defined to include, among other things, any individual, corporation or other legal entity.53 If the citizenship or legal auspices under which an enterprise exists were controlling or entitled to substantial weight, the applicability of the statute in a given case would depend upon a factor unrelated to the statutory purpose. For example, suppose that officials of two corporations — one incorporated in Delaware and the other in Bermuda, but both doing substantial business in the United States — conducted the respective affairs of those entities, each entity independent of the other, through patterns of mail and wire fraud or other predicate acts in the United States to the great injury of members of the American public. The idea that the officials of the Delaware corporation could be prosecuted criminally and sued civilly under RICO because their enterprise was a domestic corporation while their counterparts with the Bermudan corporation would be immune solely because the Bermudan corporation was foreign would be risible. Moreover, citizenship or legal characteristics would afford no reliable or principled basis for characterizing association-in-fact enterprises consisting of citizens or entities organized under the laws of different countries.
To be sure, the domestic or foreign character of an enterprise might be determined differently, as for example by focusing on where the enterprise operates, where it makes decisions, where its assets (if it has any) are located and so on. Indeed, one court that focused on the RICO enterprise in determining whether application of RICO in the case before it would have been extraterritorial employed a "nerve center" test, considering "where [its] decisions [we]re made."54 That is a perfectly sensible and well-established approach to determining where a company has its principal place of business for jurisdictional purposes.55 Its relevance in this context, however, is questionable. One must bear in mind that the RICO enterprise in a Section 1962(c) case, like this one, is not and may not be a defendant56 and need not be charged with wrongdoing. "This requirement [of distinctness as between enterprise and defendant] `focuses the section on the culpable party and recognizes that the enterprise itself is often a passive instrument or victim of the racketeering activity.'"57 Thus, there is no necessary or, in many cases, even probable connection between where the RICO enterprise makes its decisions and whether the application of RICO to the racketeering activity at issue in a given case was the sort of activity with which Congress would have been concerned.
All of this is not to say that the location of the enterprise never might be relevant to the question whether the application of the statute, given the allegations of a given complaint, would be extraterritorial in whole or in part. But its relevance, if any, would depend upon the facts.
b. Emphasis on the Alleged Racketeering Activity
Another court that has dealt with the question of whether a proposed application of RICO was extraterritorial has concentrated on the alleged pattern of racketeering activity — in other words, on the conduct that the statute is intended to eradicate. In CGC Holding Co. v. Hutchens,58 the plaintiffs alleged a RICO claim based on their having been induced to advance substantial loan processing fees to the defendants in consequence of a racketeering conspiracy. Two foreign defendants moved to dismiss the RICO claim under Morrison, Norex, Cedeño, and United States v. Philip Morris USA, Inc.,59 arguing that the application of the statute in CGC would be extraterritorial and that the enterprise allegedly included some foreign persons. But the district court denied the motion, writing:
"These cases do not indicate that RICO is inapplicable merely because some of the participants in the enterprise reside outside the United States. As relevant to the allegations in the present case, RICO makes it unlawful for `any person' associated with `any enterprise' engaged in interstate commerce to participate in the conduct of the enterprise's affairs through pattern of racketeering activity. See 18 U.S.C. § 1962(c). The focus of the statute is the racketeering activity, i.e., to render unlawful a pattern of domestic racketeering activity perpetrated by an enterprise. See U.S. v. Philip Morris, 783 F.Supp.2d at 29."
"In the present case most of the participants in the activities that are the subject of the RICO claim, including the Meisels defendants, reside in Canada. However, the racketeering activity of the enterprise with which the Meisels defendants allegedly were associated, was directed at and largely occurred within the United States. The goal of the enterprise, according to plaintiffs' allegations, was to extract money from CGC and the other plaintiffs through a phony loan scheme. Defendants, including the Meisels defendants, allegedly used telephone, mail, and email communications directed to potential borrowers in the United States. An agent of the Hutchens and participant in the alleged scheme, Mr. Luistermans, was dispatched to Colorado to inspect property that was to be used as collateral for the loans. A Colorado lawyer was engaged to assist with the loan process. Similar conduct was directed at plaintiffs in Florida and Illinois."
"These facts are a far cry from those of Norex and Cedeño, where the actors, victims and conduct were foreign, and the connection to the United States was essentially incidental. Philip Morris is a closer case, but again, the court found that the English company's conduct in the U.S. was not the basis for the alleged RICO liability. In the present case, the conduct of the enterprise within the United States was a key to its success."
"Accordingly, while I agree that RICO does not apply extraterritorially, I do not agree that this case, as alleged, involves an extraterritorial application of the statute."60
This approach has much appeal, as it would afford a remedy to a U.S. plaintiff who claims injury caused by domestic acts of racketeering activity without regard to the nationality or foreign character of the defendants or the enterprise whose affairs the defendants wrongfully conducted. It would be consistent with the Supreme Court's and our Circuit's repeated recognition that "the heart of any RICO complaint is the allegation of a pattern of racketeering."61 And it almost certainly would be consistent with Congressional intent, which included protecting American victims at least against injury caused by the conduct of the affairs of enterprises through patterns of racketeering activity that occur in this country.62 Accordingly, this Court finds the general approach taken in CGC63 to be persuasive and an appropriate means for determining when a proposed application Section 1962(c) of RICO is domestic or foreign — the focus properly is on the pattern of racketeering activity and its consequences. If there is a domestic pattern of racketeering activity aimed at or causing injury to a domestic plaintiff, the application of Section 1962(c) to afford a remedy would not an extraterritorial application of the statute.
3. Application to this Case
As noted previously, the RICO violation alleged in this case consisted of the conduct of the affairs of the enterprise through a pattern of racketeering activity. The scheme (1) allegedly was conceived and orchestrated in and from the United States (2) in order wrongfully to obtain money from a company organized under the laws of and headquartered in the United States, and to cover up unlawful and improper activities, and (3) acts in its furtherance were committed here by Americans and in Ecuador by both Americans and Ecuadorians. Assuming that the amended complaint alleges a domestic pattern of racketeering activity,64 applying the statute to that pattern would not be extraterritorial. Moreover, even if the nationality, citizenship, or location of the enterprise were pertinent in such circumstances, the enterprise alleged in this case, an association in fact including both Americans and Ecuadorians, with the Americans predominant in number65 and charged with conceiving and supervising the scheme, would cut in favor of application of the RICO statute here.
This conclusion is entirely consistent with Morrison, Norex, and the statute itself. Accordingly, insofar as the Donziger Defendants' motion seeks dismissal of the RICO claims under Morrison, their motion must be denied.66
B. Sufficiency of Pattern Allegation — The Single Scheme Argument
Among the elements of a legally sufficient RICO claim is that the defendant have (1) committed two or more acts, (2) constituting a "pattern" (3) of "racketeering activity."67 The Donziger Defendants challenge the sufficiency of the RICO claim on the single, narrow ground, viz. that "[m]ultiple acts in furtherance of a single extortion episode constitute only a single predicate act of attempted extortion, not a pattern of two or more predicate acts,"68 and that "all of the wrongful acts [alleged by Chevron] ... relate to — and were in furtherance of — a single, even if wide-ranging, effort to extort Chevron into paying a sizeable settlement."69 There are at least two flaws fatal to this argument.
First, the amended complaint alleges far more than extortion. It alleges (1) multiple acts of mail and wire fraud for the purpose of deceiving "Chevron, various courts of law, and the greater public" with respect to Chevron's liability and responsibility for the alleged degradation of the environment in Ecuador,70 (2) money laundering for the purpose of promoting unlawful activity including the alleged mail and wire fraud violations,71 and (3) obstruction of justice and witness tampering in an effort to cover up wrongful activities.72 Hence, even if the Donziger Defendants were correct that all alleged acts in furtherance of a single extortion or extortion attempt are a single act of racketeering activity for RICO purposes, an issue that need not be decided here, their argument would fail. Unlike the cases upon which they rely, this is not a complaint that seeks to take repeated threats in service of a single extortionate demand, call each threat an attempted extortion, and thus proliferate the number of predicate acts for RICO purposes — all in the absence of other predicate acts. Indeed, the case principally relied upon by the movants, while treating repeated threats in a single extortion attempt as a single predicate act, ultimately dismissed the RICO claim in light of its failure to allege other predicate acts sufficient to make out a pattern.73
Second, our Circuit long has "interpreted [pattern of racketeering activity] to mean `multiple racketeering predicates — which can be part of a single `scheme' — that are related and that amount to, or threaten the likelihood of continued criminal activity.'"74 Indeed, in an en banc decision later adopted in this respect by the Supreme Court,75 it has emphasized that it sees no
"basis in RICO or its legislative history for the proposition that a RICO violation cannot be established without proof of more than one scheme, episode, or transaction ... The statute defines racketeering activity in terms of criminal `acts,' see §§ 1961(1)(A), (B), (C), and (E), or `offenses,' see § 1961(1)(D); it similarly defines pattern in terms of `acts' of racketeering activity, see § 1961(5). There is no mention of schemes, episodes, or transactions. We doubt that Congress meant to exclude from the reach of RICO multiple acts of racketeering simply because they ... further but a single scheme."76
The Donziger Defendants effort to sweep the myriad alleged offenses in violation of several federal statutes into nothing more than attempts in the service of a single extortion and thus to amalgamate what the RICO statute quite plainly treats as separate acts of racketeering activity is without merit.77
C. Sufficiency of Predicate Act Allegations
Chevron alleges that the Donziger Defendants and others have committed acts of extortion in violation of the Hobbs Act.78 It asserts that "the RICO defendants have engineered a wide-ranging campaign of public attacks based on false and misleading statements, trumped up criminal charges, a threatened and actual fraudulent civil judgment, investigations by government agencies, and ongoing harassment and disruptions of business operations, and have demanded the payment of billions of dollars before these activities will cease, all with the intent and effect of causing a reasonable fear of economic loss on the part of Chevron."79 Chevron alleges also that the Donziger Defendants, among other things, made false statements to the U.S. House of Representatives and drafted public attacks distributed by Amazon Watch in added efforts to induce Chevron to pay them off.80
The Donziger Defendants contend that these allegations are insufficient because: (1) "Chevron has failed to allege that the RICO Defendants have actually obtained any money or property from Chevron,"81 (2) Chevron fails to allege that the RICO defendants "ever actually threatened Chevron or demanded a payment of money or property to `stop the campaign against it,'"82 and (3) claims of vexatious litigation and defamation cannot constitute extortion.83 These arguments lack merit.
First, as previously noted, the Hobbs Act proscribes attempted extortion. The amended complaint adequately alleges that the Donziger Defendants have attempted to extort money from Chevron by seeking to instill fear of consequences more unpalatable than making the desired payments. The fact that the RICO Defendants have not succeeded in obtaining the desired payoff is immaterial to the question whether Chevron sufficiently has alleged Hobbs Act extortion as a RICO predicate act.84
The second argument also is unpersuasive. The Second Circuit has stated that the Hobbs Act "does not limit the definition of extortion to those circumstances in which property is obtained through the wrongful use of fear created by implicit or explicit threats, but instead leaves open the cause of the fear."85 Therefore, as long as Chevron has alleged that the RICO Defendants "knowingly and willfully create[d] or instill[ed] fear [of economic harm], or use[d] or exploit[ed] existing fear [of economic harm] with the specific purpose of inducing [Chevron to] part with [its] property," then it adequately has alleged the wrongful use of fear.86 Chevron has satisfied that standard. Among other things, Chevron alleges that "[t]he RICO Defendants have sought to inflict maximum `damage to [Chevron's] reputation, to put `personal psychological pressure [on] their [sic] top executives,' to disrupt Chevron's relations with its shareholders and investors, to provoke U.S. federal and state governmental investigations, and thereby force the company into making a payoff."87 It further asserts that Donziger stated specifically that the defendants' strategy was to "increase the cost to Chevron" including the "cost of their [sic] sullied reputation ... in the media .... to get the price up."88
The Donziger Defendants' third argument fares no better.89 The cases the Donziger Defendants rely upon hold only that frivolous litigation and defamatory statements are not alone sufficient to constitute extortion.90 But Chevron's amended complaint goes far beyond that.
Chevron does not allege a scheme that consisted of the allegedly baseless Lago Agrio litigation, either in and of itself or in combination with allegedly false and defamatory statements. Rather, it alleges that the RICO Defendants are executing a multi-faceted, extortionate scheme that has included not only bringing the Lago Agrio litigation, but also intimidating of Ecuadorian judges, fabricating evidence, making false statements to U.S. courts, Congress, the SEC, and the media, and bringing false criminal charges, all for the purpose of coercing Chevron "into paying to stop the campaign against it."91 Chevron's extortion allegations are more than sufficient.92 Accordingly, Chevron adequately has alleged at least one predicate act of extortion even assuming that multiple threats in pursuit of a single payoff always are but a single predicate act.
2. Mail and Wire Fraud
The elements of mail and wire fraud are three: (1) the formation of a scheme to defraud victims (2) of money or other property (as the object of the scheme), and (3) the use of the mails or interstate or foreign wire communications in furtherance of the scheme.93 "Scheme to defraud" has been construed liberally to include "any plan consummated by the use of the mails, in which artifice or deceit is employed to obtain something of value with the intention of depriving the owner of his property."94 The scheme need not have succeeded to complete the offense.95 It need not otherwise be prohibited by state or federal law, nor need it fit traditional common law concepts of fraud.96 There is no requirement that the defendant him — or herself use the mails. It suffices if the defendant caused them to be used by an agent, or set in motion events which foreseeably would involve their use.97 For the prohibited use of the mails to be "in furtherance" of the scheme, it is not necessary that fraudulent representations be transmitted by mail, nor need the mails be essential to the conduct of the scheme. It is enough that the use be "for the purpose of executing" the scheme.98 Each prohibited use of the mails, moreover, is a separate indictable offense even if all are made pursuant to a single corrupt scheme.99
The amended complaint asserts that the RICO Defendants engaged in a scheme or artifice to defraud Chevron and others "by manufacturing evidence, colluding with ... Cabrera to submit ... manufactured evidence, and then holding out the Cabrera Report as independent and neutral when it decidedly was not," all for the purpose of coercing Chevron to make a multi-billion dollar payment.100 In furtherance of that scheme, it asserts also that the RICO Defendants "transmitted, or caused to be transmitted" such false and misleading statements through the mails and wires to U.S. and Ecuadorian courts, U.S. state and federal agencies, and the general public.101
The Donziger Defendants argue that the alleged mail and wire fraud predicate acts are insufficient because Chevron fails to allege that: (1) anyone relied on them to Chevron detriment,102 or (2) they proximately caused Chevron's alleged injury.103
The first of these arguments is patently incorrect as a matter of law. Although our Circuit and others previously had held that reliance was a necessary element of mail or wire fraud, the Supreme Court more recently has held in Bridge v. Phoenix Bond & Indemnity Co.104 that "no showing of reliance is required to establish that a person has violated § 1962(c) by conducting affairs of an enterprise through a pattern of racketeering activity consisting of acts of mail [or wire] fraud."105
The Donziger Defendants' second argument — viz. that Chevron has not adequately pleaded injury as a proximate consequence of the alleged acts of mail and wire fraud — is not pertinent to the question whether Chevron has sufficiently alleged acts of mail and wire fraud or a pattern of racketeering activity. The argument conflates two quite different questions — whether the amended complaint adequately alleges a pattern of racketeering activity and, if it does, whether it adequately alleges a claim for damages caused by that pattern. While the issue of causation, which is dealt with below, is pertinent on the latter question, it does not bear on whether Chevron has sufficiently pled predicate mail and wire fraud acts.
3. Money Laundering
Section 1956(a)(2)(A) of the Criminal Code,106 one of the money laundering statutes, defines another category of racketeering activity.107 It makes unlawful the "transport, transmitt[al], or transfer, or attempt to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States... with the intent to promote the carrying on of specified unlawful activity."108 Broadly speaking, "specified unlawful activity" includes, among others, any offense listed in the definition of "racketeering activity" in the RICO statute,109 which includes Hobbs Act and state law extortion, mail and wire fraud, money laundering, witness tampering, and obstruction of justice.
Chevron alleges that the RICO Defendants "knowingly caused the transportation, transmission, and/or transfer of funds to and from the United States ... with the intent that those funds be used to promote the carrying on of unlawful activity" including acts of extortion and mail and wire fraud.110 The Donziger Defendants contend only that the money laundering predicate acts cannot be sustained because they are based on inadequately pleaded acts of extortion and mail and wire fraud.111
As the Court has concluded that the extortion and mail and wire fraud predicate acts are pleaded sufficiently, the Donziger Defendants' argument is without merit.
4. Obstruction of Justice and Witness Tampering
The last two categories of alleged predicate acts are obstruction of justice and witness tampering. Chevron alleges that the RICO Defendants obstructed justice in violation of Section 1503 of the Criminal Code112 by filing or causing to be filed before U.S. courts in Section 1782 proceedings113 allegedly false documents that misrepresented Cabrera's status as an independent expert.114 It asserts also that the they violated Section 1512 of the Criminal Code115 by tampering with (1) the testimony of Dr. Charles Calmbacher in a deposition taken in the Northern District of Georgia, (2) a declaration submitted by Mark Quarles to this Court in 2007, and (3) the potential testimony of several Stratus employees.116 All of this, it contends, was designed to conceal the RICO Defendants' fraud in Ecuador and the falsity of its misrepresentations in this country concerning Chevron.117
The Donziger Defendants argue that these predicate acts are pleaded insufficiently because they allege no more than efforts to cover up the alleged conspiracy to extort money from Chevron.118 In other words, they assert that a RICO claim cannot be based on acts that "[a]ttempt to hide one's involvement in a [RICO] scheme after it has been exposed in order to limit liability...."119
But Chevron does not allege that the RICO Defendants' submissions to U.S. courts regarding the independence and bona fides of the Cabrera Report or their alleged witness tampering were designed only to "hide [their] involvement in a [RICO] scheme." Rather, it alleges that the instances of obstruction of justice and of witness tampering were designed to (1) dissuade U.S. courts from ordering Section 1782 disclosure in connection with the Ecuadorian litigation, (2) persuade Dr. Charles Calmbacher to decline to testify at a U.S. deposition, and (3) suborn a false affidavit by Mark Quarles120 concerning the RICO Defendants' involvement with Cabrera, all for the purpose of "impeding the due administration of justice."121 The amended complaint thus sufficiently alleges that the purposes of the alleged obstruction and witness tampering were to keep evidence of the RICO Defendants' misconduct from being brought to the attention of the Ecuadorian courts and other tribunals in service of the alleged overall goal of obtaining a baseless Ecuadorian judgment for use in obtaining money from Chevron.
The amended complaint alleges essentially two types of injuries in consequence of the alleged RICO violations.
First, it asserts that "Chevron [has been] injured in its business and property by reason of" those violations and that the injuries include,
"but are not limited to damage to Chevron's reputation and goodwill; the impairment of Chevron's interest in executed contracts ...; and the attorneys' fees and costs to defend itself [a] in objectively baseless, improperly motivated sham litigation in Ecuador and [b] in related litigation in the U.S., including the attorneys' fees and costs associated with exposing the RICO Defendants' pervasive fraud in the Section 1782 proceedings."122
It therefore seeks to recover treble "damages according to proof at trial."123
Second it alleges that "these injuries ... will continue" and that "Chevron ... is entitled to ... a preliminary and permanent injunction that enjoins Defendants [and others] acting in concert with them... from commencing, prosecuting, or advancing in any way ... any attempt to recognize or enforce the [Judgment] ... in the United States or abroad...."124
The Donziger Defendants seek dismissal of the RICO claims because, they argue, (1) Chevron has not adequately alleged reliance by anyone on misrepresentations and omissions of defendants or Cabrera that are alleged as part of the mail and wire fraud predicate acts,125 (2) "any theory of proximate cause that Chevron may seek to advance with respect to Donziger's alleged fraudulent statements would be so attenuated as to be nonexistent for purposes of RICO,"126 (3) the Lago Agrio court's decision said that it did not rely on the Calmbacher or Cabrera reports and the defendants' alleged whitewashing of the latter,127 and (4) any informed decision by the Lago Agrio court to rely on fraudulent evidence would have been an independent intervening factor breaking any causal link between Donziger's actions and the Judgment.128 These arguments are insufficient to warrant dismissal of the RICO claims either to the extent that they seek damages or an injunction.
As an initial matter, the suggestion that the damages claim is wanting because Chevron supposedly has not adequately alleged reliance by anyone on any misrepresentations or omissions that have been part of the fraudulent scheme that underlies the mail and wire fraud predicate acts is misguided. A RICO damages plaintiff need allege only that it has suffered "an injury directly resulting from some or all of the activities comprising the violation."129 As the Donziger Defendants do not challenge the sufficiency of Chevron's allegations of injury consequent to any predicate acts except those of mail and wire fraud, this argument necessarily would fail even if the Donziger Defendants were correct as to the mail and wire fraud predicates. And they are not. Chevron more than sufficiently has alleged at least that it has sustained substantial attorneys' fees and professional costs in responding to defendants' allegedly fraudulent statements to U.S. courts of Section 1782 proceedings, the Lago Agrio court, and various government agencies.130 Accordingly, the complaint adequately alleges causation of damages in consequence of the alleged RICO violations without regard to the Lago Agrio court's purported disclaimer of reliance on the allegedly fraudulent Cabrera report. The amended complaint alleges that the court relied upon the RICO Defendants' "whitewashing" expert reports, which in turn relied upon Cabrera.131 Thus, it adequately alleges a direct causal link between the Donziger Defendants' alleged predicate acts and the Judgment, not to mention the ocean of legal fees and professional costs incurred in seeking to prove Chevron's allegations that the Judgment is fraudulent. Whether it will be able to prove its allegations at trial, of course, is another matter.132 But the amended complaint is sufficient in this respect to warrant going forward with the damages claim.
The injunction claim is an even easier question. The Court of course is aware that the question whether a private plaintiff may obtain injunctive relief under RICO remains open in this and most other circuits.133 But the Donziger Defendants have not argued that point on this motion and, indeed, have not address the question whether, assuming injunctive relief is available in an appropriate case, this amended complaint adequately alleges a basis for it. Accordingly, there is no basis for dismissing the injunction claim on the ground that it does not adequately plead causation.
For these reasons, Chevron's allegations satisfy civil RICO's causation requirement. Chevron therefore adequately alleges its substantive RICO claim.
III. RICO Conspiracy — Section 1962(d)
The Donziger Defendants argue only that the RICO conspiracy claim brought under 18 U.S.C. § 1962(d) should be dismissed because Chevron failed sufficiently to allege its substantive RICO claim.134 As the Court holds that Chevron adequately has alleged its substantive claim, this argument is without merit.135 The RICO conspiracy claim thus survives the motion to dismiss.
IV. Common Law Fraud
A. Chevron's Allegations
Chevron alleges that the Donziger Defendants and others "knowingly misrepresented, omitted, and/or concealed material facts ... in their representations" to it, U.S. courts, the Lago Agrio court, federal and state agencies and officials in the United States, Chevron's stockholders, investors, analysts, and the media, to obtain favorable rulings from U.S. and the Lago Agrio courts, pressure U.S. officials to investigate Chevron, and propagate false information to harm Chevron.136 These alleged false representations include the "Calmbacher reports, the true authorship of the Cabrera Report, the denial of any improper contact [on behalf of the LAPs] with Cabrera, the supposed independence and neutrality of Cabrera and his liability and damages assessment, the submission of new `expert' reports on the fraudulent Cabrera Report, and the fraudulent endorsements of the Cabrera Report."137 Chevron alleges further that Chevron, U.S. courts, the Lago Agrio court, federal and state agencies and officials in the United States, Chevron's stockholders, investors, analysts, and members of the media reasonably relied on these false representations and that Chevron suffered pecuniary and reputational harm as a direct, proximate, and foreseeable result of defendants' fraud.138
The elements of a common law fraud claim are "`a material, false representation, an intent to defraud thereby, and reasonable reliance on the representation, causing damage to the plaintiff.'"139 The Donziger Defendants assert that Chevron's fraud claim, to the extent it rests on alleged reliance by third parties on defendants' misrepresentations, is legally insufficient because reliance by the plaintiff is an essential element of the tort. Moreover, it contends that the claim is insufficient also to the extent that it is based on first-party reliance by Chevron because Chevron has not alleged that the alleged false representations were made to deceive Chevron, that it reasonably relied on them, or that its reliance caused its injuries.140
1. First-Party Reliance
Chevron asserts that its fraud claim is valid on the basis of first-party reliance because it relied on the defendants' alleged false representations to its detriment.141 Its argument, however, is not persuasive.
The amended complaint, to be sure, contains a single, conclusory allegation that Chevron relied on the alleged misrepresentations and material omissions.142 Several other allegations, however, contradict that general assertion and demonstrate that Chevron did not rely on these representations or omissions.143 Moreover, any pecuniary harm caused by the Judgment and any reputational harm caused by the alleged false statements required the reliance of third parties, such as the Ecuadorian courts, investors, and the media. The only plausible injuries based on first-party reliance are the attorneys' fees and costs Chevron spent to defend itself against the allegedly false statements and material omissions. But those injuries do not support Chevron's position because it would have incurred those costs regardless of whether it had believed the allegedly false statements. Simply put, Chevron incurred no attorneys' fees or costs because it relied on any misrepresentations by the defendants. Chevron, to the extent its claim rests on its own alleged reliance on defendants' misstatements therefore fails to state a legally sufficient claim for common law fraud.
2. Third-Party Reliance
The Donziger Defendants do not argue that Chevron fails sufficiently to allege that third-parties relied on the allegedly false representations or that such reliance injured Chevron.144 Rather, they contend only that fraud claims may not be predicated on reliance by third parties.145 They rely principally on two Second Circuit decisions to that effect, Smokes-Spirits.com and Cement & Concrete Workers District Council.146 But it is important to bear in mind also the Circuit's instruction that this Court's obligation in any case resting on New York State law is to adhere to decisions of the New York Court of Appeals as the "final authority on state law"147 and, in the absence of such authority, decisions by the Appellate Divisions unless there is "persuasive evidence that the New York Court of Appeals ... would reach a different conclusion."148 The Court therefore begins by examining Smokes-Spirits.com and Cement & Concrete and then turns to the New York authorities.
Both Smokes-Spirits.com and Cement & Concrete held that injury as a result of reliance by third parties is not actionable in New York. As Smokes-Spirits.com merely relied upon Cement & Concrete for that proposition,149 it is the latter case that is of principal significance. And while Cement & Concrete accurately cited two Appellate Division decisions to that effect,150 the two decisions upon which it relied are inconsistent with a series of New York Court of Appeals decisions that appear still to be authoritative as well as a significant number of Appellate Division decisions both before an after those relied upon in Cement & Concrete. It therefore is appropriate to examine the New York authorities in considerably more detail.
As an initial matter, as another judge of this Court has pointed out, the New York Court of Appeals has held not once, but three times, that a claim for common law fraud may rest on third-party reliance.151 While these cases were decided in the last century, they have not been overruled, and this Court is bound to "defer to the voice of th[e] state's highest court — however antiquated its view of the law may seem."152
It is true, of course, that some "lower New York state courts [later] began to hold that common law fraud was not cognizable when based on the reliance of a third-party."153 But Appellate Division decisions in which the issue has arisen are have split on the issue even in some cases within the same department and without citing contrary decisions.154 But the Circuit in Cement & Concrete neither cited nor discussed any of the Appellate Division holdings contrary to its holding. Moreover, the Second and Fourth Departments both have allowed common law fraud claims based on third-party reliance since the Circuit's decision in Cement & Concrete,155 thus casting its view of New York law in further doubt.
We thus are faced with old but square holdings by the New York Court of Appeals supporting fraud claims based on third-party reliance and a division of more modern authority at the intermediate appellate level albeit with the balance favoring the same position. In addition, New York unquestionably permits recovery based on reliance by third parties on false and deceptive statements in areas including tortious interference with contract.156
There is little doubt that this Court is in the undesirable position "of choosing between dueling pronouncements of New York law made by two Courts to whom [it is] obliged to defer."157 Nor, unlike the Circuit, may this Court certify this issue of state law to the New York Court of Appeals. It therefore must decide the issue as best it can. With the greatest respect for my Circuit brethren, this Court concludes that the New York Court of Appeals' previous decisions allowing recovery for common law fraud based on third party reliance remain authoritative and, in any case, that that Court, were it faced with the question anew, would adhere to that position. Accordingly, Chevron's fraud claim cannot properly be entirely dismissed on the present motion for want of sufficient allegations of first-party reliance.
V. Tortious Interference with Contract
The elements of a claim for tortious interference with contract are: "(1) the existence of a valid contract between the plaintiff and a third party, (2) the defendant's knowledge of that contract, (3) the defendant's intentional procurement of the third party's breach of that contract, and (4) damages."158 The statute of limitations for tortious interference claims is three years, and it "begins to run when the defendant performs ... the alleged interference."159
The contracts at issue are the 1995 Settlement Agreement and the 1998 Final Release, which "released TexPet, Texaco, and their employees, successors, principals and subsidiaries from liability relating to environmental damage in Ecuador."160 Chevron alleges that the Donziger Defendants and others "improper[ly] influence[d] and ... persuaded the Republic of Ecuador to refuse to defend Chevron's rights, causing Ecuador to renege on its alleged release of TexPet from all liability associated with the company's Ecuadorian operations."161
The Donziger Defendants argue that this claim is time-barred because any alleged interference began in 1999 (when Ecuador enacted the Environmental Management Act of 1999 ("EMA"), which allowed a private right of action to sue for environmental damages)162 or in 2003 (when the LAPs, relying on the EMA, commenced the Lago Agrio litigation in Ecuador).163 Chevron does not dispute that the statute of limitations began to run at one of these junctures. Rather, it describes the tortious conduct as persisting and characterizes the Judgment and the Cabrera Report as a new breaches of the contracts.164
Chevron's attempt to avoid the bar of the statute of limitations by asserting that any tortious interference is ongoing fails because "tortious interference with contract is not a continuing tort."165 Moreover, the Court is persuaded that the alleged tortious interference began no later than 2003 when the Lago Agrio litigation was filed and, as alleged in the amended complaint, the Donziger Defendants and others "persuaded the Republic of Ecuador to refuse to defend Chevron's rights."166 As more than three years have elapsed since the start of the Lago Agrio litigation, the claim is untimely and must be dismissed as to the Donziger Defendants.167
VI. Trespass to Chattels
In substance, Chevron alleges that the Donziger Defendants' "fraudulent litigation" and the corresponding "misleading media campaign"168 has interfered with, disturbed, and damaged its "funds and goodwill"169 and that they therefore have committed trespass to chattels.
The essential elements of trespass to chattels are "(1) intent, (2) physical interference with (3) possession (4) resulting in harm."170 Chevron's claim is without merit for two reasons.
First, Chevron does not allege that the Donziger Defendants interfered with a chattel. The only interference alleged involved Chevron's funds and goodwill. "Chattel" is defined as "[m]ovable or transferable property [such as] personal property."171 Money is fungible and not properly characterized as a "chattel."172 The same is true of goodwill.173
Second, Chevron does not allege that the Donziger Defendants physically interfered with possession of its property.174 Chevron's claim is essen