Antitrust Law Daily Wrap Up, RICO—10th Cir.: Court lacked jurisdiction over loosely-connected, out-of-state defendants, (Mar 10, 2015)

By Dan Selcke, J.D.

The U.S. Court of Appeals in Denver affirmed a decision of the federal district court in Salt Lake City, dismissing a voluminous federal and state RICO complaint against all but one of more than 30 defendants, since the plaintiff could not demonstrate that the district court had personal jurisdiction over them (Hart v. Salois, March 10, 2015, per curiam).

Background. William Michael Hart, the plaintiff, loaned money to defendant Sherry Salois. Salois had her loan debt to Hart discharged in a Chapter 7 bankruptcy. Hart, acting pro se, filed suit in the United District Court for the District of Utah against Salois and over 30 other defendants, alleging that they all had a hand in depriving him of his claim in Salois’ bankruptcy. He alleged, among other things, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sections 1961-1968, and state racketeering laws.

The district court held that it did not have personal jurisdictions over any of the defendants except Peggy Pendleton, who resided in Utah. Alternatively, it held that venue was improper in the District of Utah under 28 U.S.C. Section 1391, and that Hart’s complaint did not meet the pleading standard set by FRCP 8. It dismissed Hart’s complaint, and Hart appealed.

Personal jurisdiction. First, the appellate court affirmed the district court’s holding that it did not have personal jurisdiction over any of the defendants except Pendleton. Hart argued that the district had jurisdiction under RICO, 18 U.S.C. Sec. 1965, which provided, in part, that any civil action could be instituted against any person “in the district court of the United States for any district in which such person resides…” 18 U.S.C. Sec. 1965(a). This section conferred personal jurisdiction over Pendleton, who resided in Utah.

However, Sec. 18 U.S.C. 1965(b) authorized nationwide service on non-resident defendants only if “it is shown that the ends of justice require that other parties residing in any other district be brought before the court.” Instead of pointing to facts satisfying the ends-of-justice standard, Hart only asserted that the “ends of justice is a flexible concept,” and that the confluence of defendants in a single jurisdiction did not control the analysis.

Conspiracy theory. Hart also argued that the district court could have exercised personal jurisdiction over the defendants under the theory that they were all involved in the same conspiracy. In order to do that, however, he would have had to allege facts that supported a prima facie showing of a conspiracy. Instead, Hart just recited the elements of a conspiracy claim and concluded that one existed, which was not enough to satisfy this standard.

Even if Hart could have alleged enough facts to show that a conspiracy existed, he still would have had to show that the out-of-state defendants had minimum contacts with Utah. Hart failed to do this, as he did not allege that substantial steps in furtherance of the conspiracy took place in Utah.

Remaining claims. The appellate court found that venue was appropriate in Utah as to Pendleton, but did not consider the question as to the other defendants, who had already been dismissed for want of personal jurisdiction. Finally, the appellate court affirmed the district court’s dismissal of the complaint for failure to make “a short and plain statement of the claim[s] showing that the pleader is entitled to relief” as required by FRCP 8(a)(2). It noted that Hart failed to connect his 60 separate claims to the complaint’s hundreds of factual allegations, and declined to search through the voluminous pleading to make these connections for itself.

The case number is: 14-cv-04957

Attorneys: William Michael Hart, pro se. Stephen W. Geary (Kirton & McConkie) for Sherry A. Salois.

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