Antitrust Law Daily Wrap Up, RICO—E.D.N.Y.: Salon owner’s racketeering claims cut short, (May 5, 2015)

By Greg Hammond, J.D.

The former manager and part-owner of a Brooklyn salon and spa failed to allege Racketeer Influenced and Corrupt Organizations (RICO) Act claims against colleagues, New York City, the New York City Police Department, and others, stemming from an alleged agreement to damage the former manager’s interest in the salon. The federal district court in Brooklyn dismissed the complaint, finding that the manager failed to comply with Federal Rule of Civil Procedure 8(a)(2) and failed to allege a pattern of racketeering activity (Franzone v. City of New York, May 1, 2015, Gershon, N.).

Background. Plaintiff Georgette Franzone allegedly agreed to assist former colleagues Violette Tonuzi, Charles Elias, and Robert Cavalcante in launching a new salon and spa in 1999, offering a bridge loan on the condition Franzone would be a shareholder. Tonuzi and Elias purportedly began taking steps in 2002 or 2003 to damage Franzone’s interests in the salon. Franzone claimed that Tonuzi and Elias skimmed cash from the register; refused to pay promissory notes for money she lent to them; lied to the landlord to prevent a lease extension; and solicited the assistance of the New York Police Department to prevent Franzone from entering the salon. After a number of state court actions were filed, Franzone filed suit in federal district court, centering on a set of RICO claims. Various defendants moved to dismiss the second amended complaint.

Short and plain statement. The court first determined that the 85-page, 346-paragraph second amended complaint was anything but a “short and plain statement.” Specifically, the court noted Franzone’s failure to delineate the alleged predicate acts of each RICO defendant, despite specific instructions to do so, and found that the complaint lumps defendants together in a “sprawling narrative that gives individual defendants inadequate notice of the allegations.” Although dismissal solely for noncompliance with Rule 8(a)(2) would be warranted, according to the court, it nevertheless considered Franzone’s RICO claims.

RICO claims. Franzone’s RICO claims were similarly inadequately pleaded, the court determined, finding that there was no attempt to specify the commission of two predicate acts by any defendant. None of the actions complained of—including embezzlement, conversion, violating the shareholders and settlement agreements, and false arrest—amounted to a RICO predicate act. The complaint additionally failed to plead an “open-ended” pattern of racketeering activity. Instead, the scheme complained of was admittedly “singular in purpose,” with the sole objective of gaining control of the salon’s assets.

Because Franzone failed to allege the commission of two predicate acts by any defendant, or continuity, Franzone could not establish a pattern of racketeering. The RICO claims were consequently dismissed. Having dismissed all of the federal claims in this case, the court decided not to exercise supplemental jurisdiction over the remaining state claims. The complaint was therefore dismissed with prejudice.

The case number is 13-cv-5282 (NG).

Attorneys: Douglas Dollinger (The Law Offices of Douglas R. Dollinger, PC & Associates) for Georgette Franzone, George F. LLC, Cavale Tonuzi Inc., and G. Lifestyle Spa Inc. Uriel Benjamin Abt, New York City Law Department, for The City of New York, and The New York City Police Department.

Companies: George F. LLC; Cavale Tonuzi Inc.; G. Lifestyle Spa Inc.; The New York City Police Department

Cases: RICO NewYorkNews