kandi technologies reply to motion to dismiss
TRANSCRIPT
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REPLY TO OPPOSITION TO MOTION TO DISMISS
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Bin Li, Esq. SBN 223126
LAW OFFICES OF BIN LI
17800 Castleton Street, Suite 605City of Industry, CA 91748
telephone: 626-839-0277
facsimile: 626-839-0322email: [email protected]
Attorney for Defendants:
Kandi Technologies Corp.and Kandi, USA, Inc.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CONG WANG, an individual; SEASENG,INC., a/k/a KMD POWERSPORTS, a
California corporation,
Plaintiffs,
vs.
ZHEJIANG KANDI VEHICLES CO., LTD.
a/k/a KANDI TECHNOLOGIES CORP., aforeign corporation; KANDI
TECHNOLOGIES CORP., a DelawareCorporation f/k/a/ STONE MOUNTAIN
RESOURCES, INC., ZHEIJIANG YONGKANG TOP IMPORT AND EXPORT CO.,
LTD. a/k/a/DINGJI, a foreign corporation;
ZHEHJIANG MEDGELI ELECTRONI CO.LTD. a foreign corporation; XIAO MING
HU, an individual, WANG YUAN HU, an
individual; and KANDI USA, INC., aCalifornia corporation,
Defendants.
Case No.: CV09-7145 JFW (JEMx)
DEFENDANTS KANDI
TECHNOLOGIES CORP. AND KANDI
USA, INC.S REPLY TO OPPOSITION
TO MOTION TO DISMISS
FRCP Rules 12(b)(1) and (6)
The Honorable John F. Walter
DATE: January 25, 2010TIME: 1:30pm
COURTROOM: 16
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A. Summary of reply argument.Plaintiffs served their original complaint and Kandi Technologies Corp. moved to
dismiss for defective service. Even before the Court granted this motion, plaintiff filed its FAC,
joining Kandi USA, Inc., a California corporation, as a new party defendant, and thereby
destroying any putative "diversity" jurisdiction. Federal jurisdiction, if any, thus hinges on the
viability of the RICO claim.
Movants contend that the purported RICO claim is fatally flawed, a meritless attempt to
create federal jurisdiction where none exists, and to magnify a garden variety contract dispute
between businessmen into a species of "racketeering." In fact, the very issues present in this
federal action have been prosecuted for some time in the California Superior Court of San
Bernardino in the case styledZhejiang etc. et al. v. Cong Wang, etc.,where the claims and
controversies herein properly lie.
B. Plaintiffs opposition refers to and defends the original complaint, not the first amended
complaint.
In preparing their opposition papers, plaintiffs cite the factual allegations and
paragraphs as they appear in the original complaint, not as presented in the First Amended
Complaint. Only a tedious, painstaking line- by-line analysis can differentiate them.
As has been oft stated in the case authorities, when a complaint is amended, the original
is superseded and is of no further effect, 6 Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, FederalPractice & Procedure 1476 (2d ed. 1990) ("Once an amended pleading is
interposed, the original pleading no longer performs any function in the case."), see also,
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Carver v. Condie, 169 F.3d 469, 472 (7th Cir.1999) (holding that allegations not included in
amended complaint "fell by the wayside").
As it stands, the Opposition arguments do not correlate with the paragraphs and
allegations of the FAC, and for that reason alone, such Opposition should be disregarded as
devoid of (intelligible) content.
C. Defective diversity jurisdiction.
Plaintiffs concede that there is no diversity jurisdiction. During the meet and confer
process prior to the filing of this motion, Movants noted that plaintiffs, California residents, had
destroyed jurisdiction based on complete diversity of citizenship when Kandi USA, also a
California resident, was included as a new party defendants.Morris v. Princess Cruises, Inc.
236 F.3d 1061, 1067 (C.A.9 Cal. 2001). Although plaintiffs stated they were considering
removing this defective assertion, they declined. Plaintiffs' silence and/or failure to address this
issue in its Opposition should be deemed an admission that such diversity jurisdiction fails.
D. RICO defects.
What plaintiffs claim as predicate acts appear only in paragraph 76 of the FAC and
consist of an alleged misappropriation of trade secrets and two instances of vaguely alleged
threats.
1. Misappropriation of trade secrets.
Misappropriation of trade secrets, a federal criminal offense, 18 U.S.C. 1832,
is not among the list of federal crimes enumerated at 18 U.S.C. 1961 which are the only
RICO predicate acts. Since Congress did not include misappropriation or Section 1832 in the
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list, plain statutory interpretation means that this was not intended. Plaintiffs argument citing
state business law is irrelevant.
2. Threats.
Movants stand by their argument that Paragraph 76(b) does not allege facts
sufficient to rise to pleading standards clarified inBell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007):
"a plaintiff's obligation to provide the grounds of his
entitle[ment] to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action willnot do, see Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932,
92 L.Ed.2d 209 (1986) (on a motion to dismiss, courts are not
bound to accept as true a legal conclusion couched as a factualallegation). Factual allegations must be enough to raise a right to
relief above the speculative level, see 5 C. Wright & A. Miller,
Federal Practice and Procedure 1216, pp. 235-236 (3ded.2004) ... ([T]he pleading must contain something more ...
than ... a statement of facts that merely creates a suspicion [of] a
legally cognizable right of action), on the ASSUMPTION THATALL THE allegations in the complaint are true (even if doubtful in
fact),see, e.g., Swierkiewicz v. Sorema N. A.
, 534 U.S. 506, 508, n.1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). [footnote omitted]
[emphasis in original]
3. In all events, the FAC does not establish repeated conduct within a
closed period to show a pattern of racketeering.
A. Open continuity not applicable. The Supreme Court discussed
this concept inH.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989). Open
continuity refers to past conduct that by its nature projects into the future with a threat of
repetition.Id. at 241. Since the commercial transactions that are the subject of this lawsuit are
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closed, the alleged threats are not of the nature that they project into the future with a threat of
repetition.
B. Plaintiff does not establish closed continuity. To sufficiently
plead closed-ended continuity, Plaintiff must allege a "series of related predicates extending
over a substantial period of time. Predicate acts extending over a few weeks or months and
threatening no future criminal conduct do not satisfy this requirement."H.J., 492 U.S. at 242.
This requirement indicates that "Congress was concerned in [enacting] RICO with long-term
criminal conduct.H.J., 492 U.S. at 242.
There are three principal factors courts consider when analyzing whether closed-ended
continuity has been sufficiently pled: first, the number and duration of the alleged predicate
acts; second, the number of alleged victims; and third, the number of alleged schemes. See, e.g.,
Fototec Int'l Corp. v. Polaroid Corp., 889 F. Supp. 1518, 1523-25 (N.D. Ga. 1995) (quoting
H.J., 492 U. S. at 241-42).
Regarding the number and duration of the alleged predicate acts, the 11th Circuit Court
of Appeals has found that illegal activity occurring over approximately six months was "too
short a period of time ... in order to qualify as a pattern of racketeering activity."Aldridge v.
Lily-Tulip, Inc., 953 F.2d 587,593 (11th Cir. 1992). Similarly, three predicate acts allegedly
committed over a 15-month period of time has been held insufficient to establish closed-ended
continuity. Fototec, 889 F. Supp. at 1524; see also, e.g., Eastern Publishing and Advertising,
Inc. v. Chesapeake Publishing and Adver., 895 F.2d 971, 973 (4th Cir. 1990) (closed-ended
scheme to defraud lasting over period of only three months did not demonstrate requisite
continuity); Olive Can Co., Inc. v. Martin, 906 F.2d 1147, 1151 (7th Cir. 1990). The two
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threats alleged in the FAC apparently took place ten months apart, within the period of time
that theAldridge court found inadequate.
Regarding the number of the alleged victims of the alleged RICO predicate acts, closed-
ended continuity is not established where the alleged scheme had one victim or one "set" of
victims. See, e.g., Menasco, Inc. v. Wasserman, 886 F.2d 681, 684 (4th Cir. 1989) (continuity
not sufficiently alleged where one set of two victims was allegedly injured as the result of a
"single fraudulent goal"); Park v. Jack's Food Sys., Inc., 907 F. Supp. 914, 919-20 (D. Md.
1995) (continuity not sufficiently established where the predicate acts were directed to eighteen
victims that were allegedly injured as part of a single scheme). Where the plaintiff alleges one
"set" of victims who suffered similar injuries in a similar manner as the result of a single
alleged scheme, the "number of victims" factor does not weigh in favor of finding closed-ended
continuity. See Menasco, Inc., 886 F.2d at 683. Here, one of the plaintiffs and unidentified
relatives were threatened, essentially a single set of victims allegedly injured in the same
manner. Plaintiffs continuity is again inadequately pled.
The number of "schemes" alleged is also a relevant factor in determining whether
continuity has been adequately pled. Courts have generally found that where the alleged
predicate acts were committed as part of a single scheme, continuity is not established. See,
e.g., Fototec, 889 F. Supp. at 1524-25, and cases cited therein (observing that although not
dispositive, the existence of only one scheme generally will not be sufficient to satisfy the
continuity requirement);Edmondson & Gallagher v. Alban Tavers Tenants Ass'n, 48 F. 3d
1260, 1264-65 (D.C. Cir. 1995) (dismissing RICO claims based on a single scheme designed to
frustrate one project);Menasco, 886 F. 2d at 684;Jones v. Lampe, 845 F.2d 755, 759 (7th Cir.
1988) (continuity not established where 120 alleged predicate acts, injuring four victims,
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constituted one single scheme). In the instant case, there is only one scheme pled, that of the
alleged attempt to takeover plaintiffs business operations.
C. Section 1962(a) and (b). The FAC does not plead damages.
Plaintiffs only allege, in a skeletal and conclusory manner, insufficient under Twombly
standards, that Movants received "income" from racketeering activity. There are no facts to
support the bare conclusion.
D. Section 1962(d). The FAC does not adequately plead conspiracy
to violate RICO. Without predicate acts, there can be no conspiracy,Reddy v. Litton Indus.
Inc., (9th Cir. 1990) 912 F.2d 291, 295-296.
WHEREFORE, for the above stated reasons, Movants respectfully request that this
Court dismiss the First amended complaintagainst Movants, and each of them.
Respectfully submitted,
Dated: January 13, 2009
LAW OFFICES OF BIN LI & ASSOCIATES
By: ___/s/_______________________Bin Li, Esq.,
Attorney for Defendants and Movants
Kandi Technologies Corp. and Kandi, USA, Inc.
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