Wuxi City Keji XiaoE DaiKuan Co Ltd v. Xuewei Xu et al, No. 5:2013cv00944 - Document 19 (C.D. Cal. 2013)
Court Description: ORDER GRANTING DEFENDANTS MOTION TO DISMISS. The RICO claims are DISMISSED with prejudice. The Court declines to exercise supplemental jurisdiction over the remaining state law claims by Judge Dean D. Pregerson ( MD JS-6. Case Terminated ). (lc). Modified on 7/31/2013 (lc).
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Wuxi City Keji XiaoE DaiKuan Co Ltd v. Xuewei Xu et al Doc. 19 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 WUXI CITY RUNYUAN KEJI ZIAOE DAIKUAN CO. LTD. , 12 Plaintiff, 13 v. 14 15 XUEWEI XU, an individual; SHENG XU, an individual; HAIRONG CAO, et al. 16 Defendants. 17 ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. EDCV 13-00944 DDP (SPx) ORDER GRANTING MOTION TO DISMISS [Dkt. No. 12] 18 19 Presently before the court is Defendant’s Motion to Dismiss 20 Plaintiffs’ Complaint (“Motion”). 21 submissions, the Court grants the Motion and adopts the following 22 Order. 23 I. Facts 24 Having reviewed the parties’ Plaintiff Wuxi City Runyan Keji XiaoE Daikuan Co., Ltd. 25 (“Wuxi” or “Plaintiff”) is a Chinese business entity with its 26 principal place of business in the Jiangsu Province of the People’s 27 Republic of China. 28 the Government of the People’s Republic of China to lend small (Complaint at ¶ 7.) Plaintiff “is licensed by Dockets.Justia.com 1 amounts of money to qualified borrowers for approved and legitimate 2 use.” 3 Shubin Zhao, and Hairong Cao conspired to defraud Plaintiff of 4 funds and to divert the funds to Defendants Repet, Repet Group, and 5 America TBS. 6 and Zhao maintain an ownership interest in, are employees of, and 7 operate Repet, Repet Group, and America TBS. 8 Repet, Repet Group, and America TBS are all California companies 9 engaged in the business of processing post-consumer plastic used in Plaintiff alleges that Defendants Xuexi Xu, Sheng Xu, (Id.) (Id. at ¶ 22.) Defendants Xuewei Xu, Sheng Xu, Cao, (Id. at ¶¶ 17-20.) 10 making water bottles and polyethylene terephthalate flakes. 11 at ¶¶ 17-19, 21.) 12 (Id. at ¶ 21.) 13 incorporated in 2010, and Repet Group was incorporated on December 14 4, 2012. 15 (Id. The companies are alleged to be alter egos. Repet was incorporated in 2009, America TBS was (Id. at ¶¶ 17-10.) Plaintiff alleges that Defendants Xu and Cao arranged for a 16 series of ten commercial loans in the amount of RMB ¥ Five Million, 17 or approximately $806,452.00, on the following dates: August 1- 6, 18 2012 (loan 1), 19 5), September 10, 2012 (loans 6-8), October 19, 2012 (loans 9-10). 20 (Id. at ¶¶ 24-33.) 21 proceeds to an account over which Cao and Xu had access and 22 control. 23 for Jiangyin City XinRong HuaXian Co., Ltd. (owned by Cao) and 24 Jiangyin City ShengChang KeJi Co., Ltd. (owned by Xu), but they 25 were not used for that purpose. 26 (Id.) August 17, 2012 (loan 2), August 28, 2012 (loans 3- In each case, Plaintiff distributed the loan The loans were intended to provide working capital (Id. at ¶ 36.) Instead, the Defendants “diverted the proceeds of the above- 27 referenced loans out of the People’s Republic of China, and upon 28 information and belief, to bank accounts controlled by Repet, Repet 2 1 Group, and America TBS, as well as other accounts for Defendants’ 2 personal use.” 3 Plaintiff alleges that the Defendants were able to divert the 4 proceeds by using a complex scheme of transfers. 5 The Plaintiff alleges that from August 9, 2010, to April 28, 2012, 6 a group of Chinese nationals, including Jingxia Gu, Huixiang Xu, 7 Xuewei Xu, Pang Zhang, Xinjun Hu, Junhong Gu, and Feifan Chen 8 transferred ¥ 28,442,000 from Defendants’ bank accounts to bank 9 accounts controlled by Xiaoting Li and Yishong Chen. (Id. at ¶ 37)(capitalizations omitted). The (Id. at ¶ 102.) (Id.) Chen 10 and Li are alleged to regularly engage in illegal cross-border 11 transfers of money from the People’s Republic of China to Hong 12 Kong. 13 Kong, they transferred it to the Defendants’ U.S. bank accounts. 14 (Id.) 15 (Id.) Once the money was transferred to Chen and Li in Hong The funds were diverted for operating capital to Repet, Repet 16 Group, and America TBS, and for the individual Defendants’ personal 17 use. 18 November 21, 2012, and he now resides in California. 19 34.) 20 California. 21 contract, fraud in the inducement, fraud, conversion, unjust 22 enrichment, vicarious liability, and civil RICO. 23 (Id. at ¶ 37.) Xu left China for the United States on (Id. at ¶ Cao left China on an unknown date and now resides in (Id. at ¶ 35.) Plaintiff asserts claims for breach of Plaintiff has previously filed a complaint with the same 24 allegations against the Defendants. 25 SP.) 26 giving the Plaintiff leave to amend. 27 Plaintiff failed to file an amended complaint within the time (Case No. 5:12-cv-00274-DDP- The Court granted the Defendants’ motion to dismiss while 28 3 (Id. at Dkt. No. 38.) The 1 limits, and the Court dismissed the case without prejudice. 2 at Dkt. No. 40.) 3 (Id. Defendants move to dismiss because: (1) the doctrine of 4 collateral estoppel bars Plaintiff from reltiigating its RICO 5 claim, which is the basis of this Court’s subject matter 6 jurisdiction, (2)Plaintiff failed to state a claim for civil RICO 7 and, without that cause of action, the Court will lack jurisdiction 8 over the action, (3) Plaintiff lacks standing to bring a RICO 9 claim, and (4) a forum selection clause agreed to by the parties 10 requires any litigation to occur in China. 11 II. Legal Standard 12 A complaint will survive a motion to dismiss when it contains 13 “sufficient factual matter, accepted as true, to ‘state a claim to 14 relief that is plausible on its face.’” 15 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 16 544, 570 (2007)). 17 must “accept as true all allegations of material fact and must 18 construe those facts in the light most favorable to the plaintiff.” 19 Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 20 complaint need not include “detailed factual allegations,” it must 21 offer “more than an unadorned, the-defendant-unlawfully-harmed-me 22 accusation.” 23 allegations that are no more than a statement of a legal conclusion 24 “are not entitled to the assumption of truth.” 25 other words, a pleading that merely offers “labels and 26 conclusions,” a “formulaic recitation of the elements,” or “naked 27 assertions” will not be sufficient to state a claim upon which Ashcroft v. Iqbal, 556 When considering a Rule 12(b)(6) motion, a court Iqbal, 556 U.S. at 678. 28 4 Although a Conclusory allegations or Id. at 679. In 1 relief can be granted. 2 quotation marks omitted). 3 Id. at 678 (citations and internal “When there are well-pleaded factual allegations, a court 4 should assume their veracity and then determine whether they 5 plausibly give rise to an entitlement to relief.” 6 Plaintiffs must allege “plausible grounds to infer” that their 7 claims rise “above the speculative level.” 8 555, 556. 9 claim for relief” is a “context-specific task that requires the Id. at 679. Twombly, 550 U.S. at “Determining whether a complaint states a plausible 10 reviewing court to draw on its judicial experience and common 11 sense.” 12 III. Discussion 13 14 Iqbal, 556 U.S. at 679. Defendants move to dismiss due to issue preclusion, lack of subject matter jurisdiction, lack of standing, and improper forum. 15 A. Collateral Estoppel 16 Defendants argue that the Plaintiff’s claim ought to be barred 17 by the doctrine of collateral estoppel because the Plaintiff has 18 already litigated its claims. 19 (Mot. to Dismiss at p. 4.) Collateral Estoppel, or issue preclusion, is available as a 20 defense when “(1) the issue necessarily decided at the previous 21 proceeding is identical to the one which is sought to be 22 relitigated; (2) the first proceeding ended with a final judgment 23 on the merits; and (3) the party against whom [issue preclusion] is 24 asserted was a party or in privity with a party at the first 25 proceeding.” 26 (citing Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 27 2000)). Generally, dismissal without prejudice does not bar the 28 plaintiff from returning later, to the same court, with the same Paulo v. Holder, 669 F.3d 911, 917 (9th Cir. 2011) 5 1 underlying claim. 2 U.S. 497, 505 (2001). 3 prejudice Plaintiff’s last complaint against the Defendants for 4 failure to state a claim upon which relief could be granted, the 5 Defendants contend that collateral estoppel ought to apply because 6 the Court was fully briefed on the RICO claim in the previous 7 Motion to Dismiss. 8 9 Semtek Int'l Inc. v. Lockheed Martin Corp., 531 Although this Court dismissed without (Case No. 12-02274.) Defendants rely on In re Duncan to support their argument. In Duncan, petitioner appealed the denial of his petition for 10 naturalization on the grounds that the questions he failed to 11 answer were unconstitutional. 12 Cir. 1983). 13 constitutional challenges, determined that his challenges were 14 without merit and dismissed the case without prejudice. 15 appeal, plaintiff was barred from relitigating his constitutional 16 claims even though the case was dismissed without prejudice because 17 his constitutional claims had been substantively denied; the lower 18 court included the language “without prejudice” to describe the 19 status of his right to re-petition for naturalization. 20 In re Duncan, 713 F.2d 538, 540 (9th The court, after being fully briefed on the Id. On Id. at 544. Duncan is inapposite because the issue being precluded, his 21 constitutional challenges, had previously been “substantive[ly] 22 den[ied] on the merits”; dismissing the case without prejudice 23 meant only that he could re-file a petition for naturalization. 24 Id. 25 RICO claims were discussed and deemed faulty but not substantively 26 denied. 27 preclusion; the prior case was dismissed without prejudice to allow 28 an amended complaint to correct, if possible, the RICO pleading. In contrast, in Wuxi’s prior case, Case No. 12-02274, the Thus, the Plaintiff here is not barred by issue 6 1 B. RICO 2 The Racketeer Influenced and Corrupt Organizations (“RICO”) 3 Act, passed in 1970 as Title IX of the Organized Crime Control Act, 4 provides for both criminal and civil liability. 5 § 901, 84 Stat. 922 (1970) (codified at 18 U.S.C. §§ 1961-1968). To 6 state a claim under § 1962(c), a civil plaintiff must allege “(1) 7 conduct (2) of an enterprise (3) through a pattern (4) of 8 racketeering activity.” 9 479, 496 (1985). Pub.L. No. 91-452, Sedima, S.P.R.L. v. Imrex Co., 473 U.S. To bring a RICO claim, a plaintiff must prove two 10 or more acts of racketeering activity. 11 Racketeering activity is defined as any act chargeable under 12 several generically described state criminal laws, any act 13 indictable under numerous specific federal criminal provisions, 14 including mail and wire fraud, and any offense involving bankruptcy 15 or securities fraud or drug-related activities punishable under 16 federal law. 17 the Plaintiff alleges that the Defendants engaged in the following 18 predicate acts: (1) wire fraud, a racketeering activity defined 19 under 18 U.S.C. § 1343, and (2) money laundering, a racketeering 20 activity defined under 18 U.S.C. § 1957. 21 18 U.S.C. § 1961. Sedima, 473 U.S. at 481-82; 18 U.S.C. § 1961. Here, i. Wire Fraud as a Predicate Act 22 The elements of wire fraud are: (1) a scheme to defraud, (2) 23 the use of the wires in furtherance of the scheme, and (3) a 24 specific intent to deceive or defraud. United States v. Shipsey, 25 363 F.3d 962, 971 (9th Cir. 2004); 18 U.S.C. § 1343. 26 must take place in interstate or foreign commerce. 18 U.S.C. § 27 1343. The fraud All allegations of fraud under the RICO statute must be 28 7 1 pleaded with particularity. Moore v. Kayport Package Express, Inc., 2 885 F.2d 531, 541 (9th Cir. 1989). 3 a. Interstate/Foreign Commerce 4 In order for the use of wires to satisfy the wire fraud 5 statute, the wires must be used “in interstate or foreign 6 commerce.” 7 which means “commerce with a foreign country.” 18 U.S.C § 10. The 8 use of a wire to transfer money occurring between foreign countries 9 “without any territorial nexus to the United States” is not 18 U.S.C. § 1343. “Foreign commerce” is a term of art 10 criminalized by the wire fraud statute. United States v. 11 Weingarten, 632 F.3d 60, 71 (2d Cir. 2011). 12 Plaintiff does not specifically allege any wire transfers, but 13 there are two possible transfers that may have been made by wire: 14 (1) the transfers that occurred in China from various banks 15 including Jiangyin Rural Commercial Bank and China Industrial and 16 Commercial Bank to the Defendants’ Chinese bank accounts and (2) 17 the transfer of the money from China to the United States. 18 at ¶¶ 97; 102.) 19 wire fraud statute, 18 U.S.C. § 1343, and thus cannot be the 20 predicate act required under the RICO statute, 18 U.S.C. §§ 21 1961-1968. 22 Defendants (1) had a scheme to defraud, (2) that used the wire 23 transfers from China to the United States in furtherance of the 24 scheme, and (3)had a specific intent to deceive or defraud. 25 U.S.C. § 1343. 26 // 27 // 28 // (Compl. The intra-China transfers are not subject to the Therefore, the relevant inquiry is whether the 8 18 1 2 b. In Furtherance In their Motion to Dismiss, the Defendants challenge whether 3 the wires were used “in furtherance” of the alleged fraud. 4 at ¶ 8.) 5 mailing need not be an essential element of the scheme; rather, it 6 is sufficient if the mailing is “incident to an essential part of 7 the scheme.” 8 has been applied to the analogous case of wire fraud. 9 Circuit has ruled that, “to be in furtherance of a scheme [the use (Mot. The Supreme Court determined that for mail fraud, the Pereira v. United States, 347 U.S. 1, 8 (1954). This The Ninth 10 of wires] need not be an essential element of the scheme, ‘just a 11 step in the plot.’” 12 United States, 489 U.S. 705, 711 (1989)). 13 simply be part of an after-the-fact transaction that, although 14 foreseeable, was not in furtherance of the defendant's fraudulent 15 scheme. 16 471, 478 (9th Cir. 2000). 17 Shipsey, 363 F.3d at 971 (quoting Schmuck v. The use of wires may not Shipsey, 363 F.3d at 971; United States v. Lo, 231 F.3d The Ninth Circuit has held that the use of wires to transfer 18 funds that have already been embezzled is not a use of wires in 19 furtherance of a scheme to defraud. 20 Fed. App’x 48, 49-50 (9th Cir. 2007). 21 embezzled money from his employer by check and then used a wire to 22 send the embezzled funds to a third party for an unrelated business 23 venture, a golf course investment managed by a businessman not 24 otherwise involved. 25 stole from his employer by check, the Ninth Circuit held that wire 26 transfer was not in furtherance of his scheme to defraud. 27 Instead, the wire transfer at issue was in furtherance of the 28 investment opportunity with the businessman and was “unrelated [to Id. United States v. Wood, 259 In Wood, the defendant While there was no doubt the defendant 9 Id. 1 the employer-victim because the victim] could neither gain nor lose 2 from the [the investment in the golf course.]” 3 defraud was complete after the defendant embezzled the funds, and 4 the wire transfer, which occurred one day after the funds were 5 embezzled, could not be in furtherance of an already completed 6 scheme. 7 eventual spending of the theft proceeds by moving it to a different 8 country, it did not further the scheme to obtain Plaintiff’s money 9 in the first place. 10 Id. Id. The scheme to While the second transfer may have furthered the However, using wires after a fraud is completed is not an 11 absolute bar to liability under § 1343. 12 (“[S]ubsequent mailings can in some circumstances provide the basis 13 for an indictment under the mail fraud statutes[.]” (quoting United 14 States v. Sampson, 371 U.S. 75, 80, 83 (1962))). If the perpetrator 15 conceives his or her scheme with the use of wires in mind, then 16 using the wires after completion of the fraud makes the fraud 17 subject to § 1343. 18 estate broker, obtained loans for home purchases using fraudulent 19 information. 20 the loans were completed when the County Record Office mailed deeds 21 to the lenders and to the owners, real and sham, of the properties 22 at issue. 23 wires were used after the fraud was technically complete, the 24 mailings were still considered to be part of the fraud as they were 25 used to “lull” the victims to believing everything was normal. 26 at 479. 27 was made less likely because it assured the victims that the 28 conveyance of the property had gone forward in accordance with the Id. For example, in Lo, the Defendant, a real Id. at 474-75. Id. at 478. Lo, 231 F.3d at 478 The use of the mails occurred after The court in Lo held that although the Id. By lulling the victim, the apprehension of the defendants 10 1 usual procedures of the Recorder's office and provided the victims 2 with documentary proof of the conveyance. 3 Id. Here, the Defendants are accused of “conspir[ing] to defraud 4 and in fact defraud[ing] several financial institutions located in 5 the People’s Republic of China of monies through fraudulent loan 6 applications, and divert[ing] said proceeds to finance the 7 operations of Defendants Repet, Repet Group, and America TBS, and 8 for their personal use.” 9 the relevant action by the Defendants is the transfer of monies (Compl. at ¶ 22.) As discussed above, 10 from China to the United States. 11 transfers occurred after the loan proceeds had been issued. 12 relevant wire transfers from China to the United States did not 13 play any role in inducing the lenders to make the loans to the 14 Defendants. 15 false financial statements misrepresenting their liquid assets and 16 forged audit reports to obtain loans to complete their scheme. 17 (Id. at ¶¶ 94, 96.) 18 complete, 19 from the Defendants’ Chinese bank accounts to “U.S. bank accounts 20 controlled by [the] Defendants.” 21 Defendants’ actions are similar to Wood, in which the use of wires 22 occurred in a separate action after the completed fraud. 23 Like in Wood, the alleged wire The The Complaint details how the Defendants provided The Plaintiff admits that once the loans were wires were used to “divert the proceeds of the loans” (Id. at ¶ 102.) Thus, the While the Defendants allegedly used wires to transfer money 24 out of China, the issue is whether the fraud would have been 25 completed without their use. 26 Shipsey, in which the entire fraud scheme would have been 27 unsuccessful without the use of wires because the bank the 28 defendant was attempting to defraud would not have paid him without Shipsey, 363 F.3d at 971. 11 Unlike 1 the wired reimbursements from the third party, here the fraud took 2 place because of forged documents, not because of wire use. 3 the use of wires was not essential to the fraud and that the fraud 4 would have been completed as soon as the Defendants received the 5 money while in China. 6 after-the-fact transaction that, although foreseeable, was not in 7 furtherance of the defendant's fraudulent scheme. 8 9 10 11 12 Thus, Therefore, like Lo, this is an The Court finds that, although the Defendants may have used wires in foreign commerce, the use of wires was not in furtherance of any scheme to defraud the Plaintiff. ii. Money Laundering as a Predicate Act An individual is guilty of money laundering when he or she, 13 “in any of the circumstances set forth in subsection (d), knowingly 14 engages or attempts to engage in a monetary transaction in 15 criminally derived property of a value greater than $10,000 and is 16 derived from specified unlawful activity.” 17 The circumstances required by § 1957(d) are either “(1) that the 18 offense under this section takes place in the United States or in 19 the special maritime and territorial jurisdiction of the United 20 States; or (2) that the offense under this section takes place 21 outside the United States and such special jurisdiction, but the 22 defendant is a United States person[].” 23 the present case, the money laundering did not occur within the 24 territorial jurisdiction of the United States therefore, the 25 Defendants must be shown to fall under the second set of required 26 circumstances. 27 28 18 U.S.C. § 1957(a). 18 U.S.C. § 1957(d). In The Defendants do not contest that the present action involves a monetary transaction involving property worth more than $10,000. 12 1 The Defendants contest that the monetary transaction (1) occurred 2 in interstate or foreign commerce, and (2) was undertaken by a U.S. 3 person as required by § 1957.1 4 5 a. Interstate/Foreign Commerce For the purposes of § 1957, the term “monetary transaction” 6 means “the deposit, withdrawal, transfer, or exchange, in or 7 affecting interstate or foreign commerce, of funds or a monetary 8 instrument[] by, through, or to a financial institution[]including 9 any transaction that would be a financial transaction under section 10 1956(c)(4)(B) of this title, but such term does not include any 11 transaction necessary to preserve a person's right to 12 representation as guaranteed by the sixth amendment to the 13 Constitution.” 14 contest that the money laundering involved foreign commerce. 15 to Dismiss at ¶ 11.) 16 18 U.S.C. § 1957(f)(1). Here, the Defendants (Mot. As discussed above, “foreign commerce” is a term of art which 17 means “commerce with a foreign country.” 18 Defendants reiterate their argument that the Plaintiff failed to 19 allege the relevant RICO predicate with adequate particularity and 20 that the relevant transactions did not involve foreign commerce. 21 While RICO claims must be plead with adequate particularity, the 22 Plaintiff has satisfied that requirement. 18 U.S.C § 10. Moore, 885 F.2d at 541 23 24 25 26 27 28 1 It is not clear why Defendants limit § 1957's requirement that the monies involved be derived from a “specified unlawful activity” to RICO predicates outlined in § 1956(c)(7)(A). “[S]pecified unlawful activity” can also be any activity in § 1956(c)(7)(B) which includes: “fraud, or any scheme or attempt to defraud, by or against a foreign bank (as defined in paragraph 7 of section 1(b) of the International Banking Act of 1978)).” Thus, the money laundering predicate act is not reducible to wire fraud. 13 1 (explaining that RICO claims must be plead with the who, what, 2 when, where, and how). 3 specific details of how the money was methodically transferred from 4 banks on the Chinese mainland to banks in Hong Kong and then 5 finally to banks in the United States. 6 7 8 9 In the Plaintiff’s complaint, there are (Compl. at ¶ 102.) Therefore, the Defendants did engage in a transfer of money in foreign commerce. b. Undertaken by a U.S. Person Money laundering also requires the relevant action to be taken 10 by “a United States person.” 11 purposes of § 1957(d), person is defined pursuant 18 U.S.C. § 3077 12 as “(A) a national of the United States as defined in section 13 101(a)(22) of the Immigration and Nationality Act (8 U.S.C. 14 1101(a)(22)); (B) an alien lawfully admitted for permanent 15 residence in the United States as defined in section 101(a)(20) of 16 the Immigration and Nationality Act (8 U.S.C. 1101(a)(20)); (C) any 17 person within the United States; (D) any employee or contractor of 18 the United States Government, regardless of nationality, who is the 19 victim or intended victim of an act of terrorism by virtue of that 20 employment; (E) a sole proprietorship, partnership, company, or 21 association composed principally of nationals or permanent resident 22 aliens of the United States; and (F) a corporation organized under 23 the laws of the United States, any State, the District of Columbia, 24 or any territory or possession of the United States, and a foreign 25 subsidiary of such corporation.” 26 18 U.S.C. § 1957(d). For the 18 U.S.C. § 3077(2). Here, Defendants X.Xu, S.Xu, Cao, and Zhao were not United 27 States persons at the time of the alleged money laundering. 28 Although the money was funneled to corporations incorporated in the 14 1 United States, these corporations were not themselves engaged in 2 money laundering, nor does the Plaintiff argue so in its opposition 3 brief. 4 Cao are United States persons; the Complaint merely alleges that 5 their status is unknown. 6 X.Xu and Cao are currently lawful permanent residents but were not 7 between August 9, 2010, and April 28,2012, when the alleged money 8 laundering occurred. 9 Defendant Zhao is neither a legal resident or citizen of the United Plaintiff’s Complaint does not allege that either X.Xu or (Compl. at ¶ 4.) (Id. at ¶ 102.) Defendants admit that Plaintiff also admits that 10 States. 11 Defendants do not meet the required conditions of the money 12 laundering statute. (Id. at ¶ 5.) The Plaintiff does not contest that the 13 The Court finds that money laundering is insufficiently plead 14 to be a predicate act for the RICO claim because any alleged money 15 laundering occurred at the hands of non-US citizens. 16 17 iii. Conclusion on RICO Because Plaintiff’s complaint fails to state a claim upon 18 which relief can be granted due to the shortcomings in its RICO 19 claim, the Court does not have subject matter jurisdiction over 20 Plaintiff’s case through a federal question. 21 declines to decide (1) whether Repet, Repet Group, and America TBS 22 can be RICO Defendants, and (2) whether the Plaintiff has standing 23 to bring a RICO claim. The Court therefore 24 C. Diversity Jurisdiction 25 As this Court previously held, once the RICO cause of action 26 is dismissed this Court will lack subject matter jurisdiction over 27 the action because “[d]iversity jurisdiction does not encompass 28 foreign plaintiffs suing foreign defendants.” 15 Mutuelles Unies v. 1 Kroll & Linstrom, 957 F.2d 707, 711 (9th Cir. 1992). 2 Plaintiff is a Chinese business entity. 3 Defendants X.Xu, Sheng Xu, and Cao are domiciled in California, but 4 hail from China. 5 citizen. 6 TBS are all California companies. 7 the Order Granting Motion to Dismiss in case EDCV 12-02274, 8 Plaintiff Wuxi failed to show Defendants X.Xu, S.Xu, Zhao, and Cao 9 were citizens of the United States. (Id. at ¶ 4.) (Id. at ¶ 5.) Here, (Compl. at ¶ 7.) Defendant Zhao is a Chinese Defendants Repet, Repet Group, and America (Id. at ¶ 21.) As discussed in (Order Granting Motion to 10 Dismiss, No. 12-02774, Dkt. No. 38 ¶ 7 (C.D. Cal. May 1, 2013).) 11 Moreover, Defendants Xu and Cao provided evidence that they are 12 citizens of China. 13 both sides of the case, the Court did not have jurisdiction; this 14 remains the case in this action, and the Court, likewise, lacks 15 diversity jurisdiction. (Id.) Because there were foreign citizens on 16 D. Forum 17 Because this Court lacks subject matter jurisdiction, either 18 through federal question or diversity, it need not evaluate the 19 Defendants’ claim that the forum selection clause dictates China as 20 the exclusive forum for this lawsuit. 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 16 1 2 IV. Conclusion For the reasons stated above, the RICO claims are DISMISSED 3 with prejudice. The Court declines to exercise supplemental 4 jurisdiction over the remaining state law claims. 5 6 IT IS SO ORDERED. 7 8 9 Dated: July 30, 2013 DEAN D. PREGERSON United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17
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