Antitrust Law Daily Wrap Up, RICO—D.N.J.: Single predicate act dooms racketeering claim in imported foods case, (Apr 12, 2016)

By Michael Menzhuber, J.D., LL.M.

Upon a motion seeking reconsideration of a prior order, which granted in part and denied in part a defendant’s motion to dismiss, the federal district court in Newark dismissed a Racketeer Influenced and Corrupt Organizations Act (RICO) claim for failing to satisfy the “continuity” requirement (Cevdet Aksüt ve Oğullari Koll. Sti v. Cavusoglu, April 11, 2016, Martini, W.).

Hinkley Allen & Snyder (Hinkley Allen) filed a motion seeking reconsideration of the court’s prior order which granted in part and denied in part its motion to dismiss. Hinkley Allen’s primary contention was that the court made an error in law when it found that Cevdet Aksüt Ve Oğullari Koll. Sti had put forth a viable RICO claim. Hinkley Allen’s complaint alleged a close and conspiratorial relationship between Sunrise, a Delaware corporation doing business in New Jersey, and Huseyin Cavusoglu, in which imported foods were: (1) purchased by Cavusoglu from food suppliers on credit and were never intended to be paid for; (2) sold to Sunrise at a deep discount; and (3) sold by Sunrise resulting in tens of millions of dollars in illegal profits.

Hinkley Allen argued that, since the court limited the prior motion to dismiss to the Sunrise Settlement (which extinguished certain claims for unpaid balances on foods purchased on credit), this settlement would constitute one predicate act. Consequently, this fell short of the necessary pattern of racketeering activity necessary to establish a RICO violation.

The court agreed and found Cevdet’s attempts to find a second predicate act unavailing. It determined that Cevdet’s allegations of Hinkley Allen’s alleged participation in Cavusoglu’s business were conclusory and, therefore, insufficient to satisfy the “continuity” requirement for a RICO action.

The case is No: 14-3362 (WJM).

Attorneys: Steven A. Soulios (Ruta & Soulios LLP) for Cevdet Aksüt Ve Oğullari Koll. Sti. Nicholas Alexander Vytell (Carroll McNulty & Kull LLC) for Robin A. Cavusoglu.

Companies: Cevdet Aksüt Ve Oğullari Koll. Sti

Cases: RICO NewJerseyNews