Burgess Et Al v. Narconon: NN Int/ABLE Appeal Brief

Appeal No.
14-11214-FF
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
BENJAMIN BURGESS, RHONDA BURGESS, HEIDI HOWARD, JOYCE
MARTIN, BETH KARAMPELAS, TERRI DACY, and MICHAEL DACY
Plaintiffs Appellants
v.
RELIGIOUS TECHNOLOGY CENTER, INC., ASSOCIATION FOR
BETTER LIVING AND EDUCATION INTERNATIONAL, NARCONON
INTERNATIONAL, and NARCONON OF GEORGIA, INC.
Defendants Appellees
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA,
CASE NO. 1:13-CV-02217-SCJ
___________________________________
BRIEF OF APPELLEES ASSOCIATION FOR BETTER LIVING AND
EDUCATION INTERNATIONAL AND NARCONON INTERNATIONAL
___________________________________
Matthew S. Coles
Georgia Bar No. 178020
Thomas M. Barton
Aaron P.M. Tady
COLES BARTON LLP
150 South Perry Street, Suite 100
Lawrenceville, GA 30046
Telephone: (770) 995-5552
Cari K. Dawson
Daniel F. Diffley
David B. Carpenter
ALSTON & BIRD LLP
1201 W. Peachtree Street
Atlanta, GA 30309
Telephone: (404) 881-7000
Attorneys for Appellees Association for Better Living and Education
International and Narconon International
Case: 14-11214 Date Filed: 06/16/2014 Page: 1 of 49
Appeal No. 14-11214-FF, Benjamin Burgess, et al. v. Religious Tech. Ctr., et al.
C-1 of 3
Certificate of Interested Persons and Corporate Disclosure Statement
In accordance with Federal Rule of Appellate Procedure 26.1 and Eleventh
Circuit Rule 26.1-1, counsel for Appellees Association for Better Living and
Education International and Narconon International hereby certifies that, to the
best of counsels knowledge, the following individuals, firms, governmental
entities, and corporations have an interest in the above-captioned appeal:
Alston & Bird LLP
Association for Better Living and Education International
Barton, Thomas M.
Burgess, Benjamin
Burgess, Rhonda
Carpenter, David B.
Chilivis, Cochran, Larkins & Bever LLP
Coles Barton LLP
Coles, Matthew S.
Dacy, Michael
Dacy, Terri
Dalbey, John D.
Dawson, Cari K.
Diffley, Daniel F.
C-2 of 3
Fleming, John Howard
Franklin Law, LLC
Franklin, Rebecca C.
Godfrey, Yvonne
Goodman McGuffey Lindsey & Johnson, LLP
Hankins, James
Harris, Jeffrey R.
Harris Penn Lowry LLP
Howard, Heidi
Jones, The Honorable Steve C., Trial Judge
Karempelas, Beth
Larkins, John K.
Lindsey, Ed
Lowry, Stephen G.
Manton, Jed D.
Martin, Joyce
McNeill, W. Taylor
Mohr, Stacey McGavin
Narconon International
Narconon of Georgia, Inc.
C-3 of 3
Penn, Darren W.
Religious Technology Center
Sanders, Valerie S.
Sutherland, Asbill & Brennan LLP
Tady, Aaron P. M.
i
Statement Regarding Oral Argument
The dispositive issues in this appeal have been authoritatively decided.
Further, given the posture of the case at the time of the District Courts dismissal
and the limited number of issues raised on appeal, oral argument would not
significantly aid the Court in its decision.
ii
Table of Contents
Table of Citations ................................................................................................. iv
Statement Regarding the Adoption of the Brief of Appellee Narconon of Georgia,
Inc............................................................................................................... ix
Statement of Issues Presented for Review.............................................................. 1
Statement of the Case............................................................................................. 2
Summary of the Argument..................................................................................... 7
Argument and Citations of Authority..................................................................... 8
A. The District Court Properly Dismissed Plaintiffs Claims for Breach
of Contract, Quasi-Contract, and Negligence Per Se. ................................... 8
1. Standard of Review............................................................................ 8
2. Plaintiffs Failed to Allege Even the Most Basic Elements of a
Breach of Contract Claim................................................................... 9
3. Plaintiffs Have No Claim for Unjust Enrichment Because
Plaintiffs did not Confer Any Benefit on ABLE or Narconon
International......................................................................................16
4. There is no Claim for Detrimental Reliance under Georgia Law,
and Plaintiffs Cannot Re-Plead that Claim in a Response Brief. .......17
5. Plaintiffs Fail to Even Mention Narconon International or
ABLE in their Negligence Per Se Claim. ..........................................18
iii
B. The District Court Properly Dismissed Plaintiffs Claims Sounding in
Common Law Fraud and Under Georgias RICO Statute............................19
1. Fraudulent Misrepresentation............................................................20
2. Plaintiffs Georgia RICO Claims Suffer the Same Defects as
the Fraudulent Misrepresentation Claims. .........................................23
a. Theft by Deception and Mail and Wire Fraud. ........................24
b. Credit Card Fraud and Identity Fraud......................................25
c. False Statements to a Government Agency. ............................26
C. The District Court Properly Acted Within Its Discretion When It
Denied Plaintiffs Unsupported Request for Leave to Amend Their
Complaint. ..................................................................................................28
Conclusion............................................................................................................33
iv
Table of Citations
CASES PAGES
Ambrosia Coal & Constr. Co. v. Pages Morales,
482 F.3d 1309 (11th Cir. 2007).................................................................. 19, 24
American Casual Dining, L.P. v. Moe's Southwest Grill, L.L.C.,
426 F. Supp. 2d 1356 (N.D. Ga. 2006).............................................................11
American Teleconferencing Servs., Ltd. v. Network Billing Sys., LLC,
293 Ga. App. 772, 668 S.E.2d 259 (2008)........................................................16
Ameris Bank v. Alliance Inv. & Mgmt. Co.,
321 Ga. App. 228, 739 S.E.2d 481 (2013)........................................................15
Anderson v. Deutsche Bank Natl Trust Co.,
No. 1:11-CV-4091-TWT-ECS, 2012 WL 3756512 (N.D. Ga. Aug. 6,
2012) ...............................................................................................................10
Anza v. Ideal Steel Supply Corp.,
547 U.S. 451 (2006).........................................................................................28
Ashcroft v. Iqbal,
556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ....................... 6, 7, 9, 10
Bank v. Pitt,
928 F.2d 1108 (11th Cir. 1991)........................................................................32
v
Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ....................... 6, 7, 8, 10
Brooks v. Blue Cross & Blue Shield of Fla., Inc.,
116 F.3d 1364 (11th Cir. 1997)............................................................ 20, 21, 24
Brown v. Cooper,
237 Ga. App. 348, 514 S.E.2d 857 (1999)........................................................16
Bryant v. Dupree,
252 F.3d 1161 (11th Cir. 2001).................................................................. 32, 33
Castro v. Secretary of Homeland Security,
472 F.3d 1334 (11th Cir. 2006)..........................................................................8
Corsello v. Lincare, Inc.,
428 F.3d 1008 (11th Cir. 2005)........................................................................33
DaimlerChrysler Motors v. Clemente,
294 Ga. App. 38, 668 S.E.2d 737 (2008) .........................................................21
Davis v. Coca-Cola Bottling Co.,
516 F.3d 955 (11th Cir. 2008)..........................................................................21
Detris v. Coats,
523 Fed. Appx 612 (11th Cir. 2013) ...............................................................30
Fisher v. Toombs County Nursing Home,
223 Ga. App. 842, 479 S.E.2d 180 (1996)............................................. 12,13, 14
vi
Foman v. Davis,
371 U.S. 178 (1962).........................................................................................33
G & G TIC, LLC v. Ala. Controls, Inc.,
No. 4:07-CV-162, 2008 WL 4457876 (M.D. Ga. Sept. 29, 2008) affd
324 F. Appx 795 (11th Cir. 2009)...................................................................28
Horsley v. Feldt,
304 F.3d 1125 (11th Cir. 2002)........................................................................10
Johnson v. University Health Servs., Inc.,
161 F.3d 1334 (11th Cir. 1998)........................................................................18
Kaesemeyer v. Angiogenix, Inc.,
278 Ga. App. 434, 629 S.E.2d 22 (2006) ...........................................................9
Liquidation Commn of Banco Intercontinental, S.A. v. Renta,
530 F.3d 1339 (11th Cir. 2008)........................................................................26
Long v. Satz,
181 F.3d 1275 (11th Cir. 1999)....................................................................6, 29
Maddox v. Southern Engineering Co.,
231 Ga. App. 802, 500 S.E.2d 591 (1998)........................................................23
Martin v. Pierce,
140 Ga. App. 897, 232 S.E.2d 170 (1977)..........................................................9
vii
Mills v. Foremost Ins. Co.,
511 F.3d 1300, 1303 (11th Cir. 2008). ...............................................................6
Morrell v. Wellstar Health Sys., Inc.,
280 Ga. App. 1, 633 S.E.2d 68 (2006) ....................................................... 15, 16
Parrish v. Jackson W. Jones, P.C.,
278 Ga. App. 645, 629 S.E.2d 468 (2006)........................................................11
Plaza Props., Ltd. v. Prime Bus. Invs., Inc.,
240 Ga. App. 639, 524 S.E.2d 306 (1999)..........................................................9
PradoSteiman ex rel. Prado v. Bush,
221 F.3d 1266 (11th Cir. 2000)........................................................................30
Regional Pacesetters, Inc. v. Eckerd Drugs of Georgia, Inc.,
183 Ga. App. 196, 358 S.E.2d 481 (1987)............................................. 12, 13 14
Reindel v. Mobile Content Network Co.,
652 F. Supp. 2d 1278 (N.D. Ga. 2009).............................................................18
Schlotzskys, Inc. v. Hyde,
245 Ga. App. 888, 538 S.E.2d 561 (2000)........................................................21
Stires v. Carnival Corp.,
243 F. Supp. 2d 1313 (M.D. Fla. 2002)............................................................23
U.S. ex rel. Atkins v. McInteer,
470 F.3d 1350 (11th Cir. 2006).................................................................. 29, 32
viii
U.S. v. Ward,
486 F.3d 1212 (11th Cir. 2007)........................................................................25
United States ex rel. Yannacopolous v. General Dynamics,
315 F. Supp. 2d 939 (N.D. Ill. 2004)................................................................22
Vicom, Inc. v. Harbridge Merchant Servs., Inc.,
20 F.3d 771 (7th Cir. 1994)..............................................................................20
Wagner v. Daewoo Heavy Indus. Am. Corp.,
314 F.3d 541 (11th Cir. 2002) (en banc) .................................................... 30, 32
Watts v. Florida Intl Univ.,
495 F.3d 1289 (11th Cir. 2007)......................................................................8, 9
RULES
Fed. R. App. P. 28............................................................................................ix, 18
FED. R. CIV. P. 12.......................................................................................... 6, 8, 31
FED. R. CIV. P. 9.............................................................................................passim
FED. R. CIV. P. 15..................................................................................................31
ix
Statement Regarding the Adoption of the Brief of
Appellee Narconon of Georgia, Inc.
In accordance with Fed. R. App. P. 28(i) and 11th Cir. R. 28-1(f), Appellees
Association for Better Living and Education International and Narconon
International adopt by reference Section IV of Appellee Narconon of Georgia,
Inc.s Brief addressing Plaintiffs negligence per se claim.
1
Statement of Issues Presented for Review
A. Whether the District Court properly held that Plaintiffs failed to adequately
plead their claims against Appellees for breach of contract, unjust enrichment,
detrimental reliance or promissory estoppel, and negligence per se.
B. Whether the District Court properly held that Plaintiffs failed to plead with
requisite particularity their claims against Appellees sounding in fraud under the
common law and under Georgias RICO statute.
C. Plaintiffs Issue C is applicable only to Appellee Religious Technology
Center, Inc. and has no relevance to the alleged claims against Appellees Narconon
International and Association for Better Living and Education International.
D. Whether the District Court abused its discretion in dismissing Plaintiffs
Complaint with prejudice when Plaintiffs neither requested leave to amend their
Complaint via a properly-supported motion nor articulated the allegations they
would include in an amended pleading.
2
Statement of the Case
Plaintiffs
1
filed an action purporting to assert various contract and fraud
claims against Association for Better Living and Education International
(ABLE), Narconon International, Appellee Narconon of Georgia, Inc.
(NNGA), and Appellee Religious Technology Center, Inc. (RTC). But the
claims manifestly failed to satisfy the pleading requirements contained in the
Federal Rules of Civil Procedure and applicable case law. Accordingly, all of the
Defendants, including ABLE and Narconon International filed motions to dismiss.
(App. Vol. 1, Doc. Nos. 4, 5). The District Court granted each of those Motions,
(App. Vol. 2, Doc. No. 40), and Plaintiffs filed this appeal. (App. Vol. 2, Doc. No.
42).
Plaintiffs allege that they paid NNGA for drug and alcohol rehabilitation
services, either for themselves or for a family member. (App. Vol. 1, Doc. No. 1,
Compl. 2, 6, 10, 14, 17). Plaintiffs allege that NNGA -- and only NNGA -- was
paid for those services. (Id. 4, 8, 12, 15, 19). Plaintiffs do not allege that they
paid either Narconon International or ABLE for any services.
Tellingly absent from Plaintiffs Complaint is any specific allegation that
either Narconon International or ABLE directly interacted in any way with
1
Appellants/Plaintiffs designate themselves in their briefing as Class
Representatives. Although their complaint was filed as a putative class action,
Plaintiffs were never certified as representatives of any class, nor could they have
been given the predominance of highly-individualized issues in this case.
3
Plaintiffs or their family members. The simple reason for that omission is that it
did not occur. Neither Narconon International nor ABLE had any direct
involvement with Plaintiffs or their family members. ABLE merely licenses to
Narconon International the Narconon name and trademarks, and Narconon
International, in turn, merely grants a similar license to NNGA. (App. Vol. 1, Doc.
No. 4, at 6).
Plaintiffs claim that they relied on certain representations when they agreed
to purchase drug and alcohol rehabilitation services from NNGA. (App. Vol. 1,
Doc. No. 1, Compl. 3, 7, 11, 14, 18). Plaintiffs vaguely allege that these
representations were made by NNGA and/or Narconon International. But they
fail to allege which individual representatives of NNGA or Narconon International
made the supposed representations, when they were made, or how they were
communicated to Plaintiffs. (Id. 3, 7, 11, 14, 18). Later in their Complaint,
Plaintiffs allege an expanded list of misrepresentations, but likewise fail to allege
which individual representatives of which of the several Defendants made the
purported misrepresentations, much less how or when those alleged
misrepresentations were communicated to Plaintiffs. (Id. 111).
In support of their claim for breach of contract, Plaintiffs allege in similarly
vague fashion that each of them entered into a written contract with all of the
Defendants. (Id. 115). Plaintiffs then claim that all of the Defendants breached
4
that purported written contract merely by making the same vaguely-described
misrepresentations that Plaintiffs listed in their claim for fraud. (Id. 117).
Plaintiffs do not refer to or quote from a single written provision in the alleged
written contract. (Id.).
In support of their motions to dismiss, ABLE and Narconon International
attached written contracts to which Plaintiffs referred in their Complaint. (App.
Vol. 1, Doc. Nos. 4 & 5, Ex. A). Plaintiffs, as the persons financially
responsible for payment to NNGA for the services provided, executed a Financial
Policy and Agreement and related documents that identified and described the
program services that NNGA was to provide. Notably, neither Narconon
International nor ABLE executed or is otherwise a party to any of those
documents. (App. Vol. 1, Doc. Nos. 4 & 5, Ex. A).
Plaintiffs further fail to explain how the list of alleged misrepresentations
resulted in a breach of any of the express terms of the contract between them and
NNGA. In response to the Defendants motions below, Plaintiffs insisted that the
contract contained implied terms that were breached by the alleged
misrepresentations, but Plaintiffs did not dispute that the documents attached to
Appellees District Court briefs were in fact written contracts referenced in the
Complaint. (App. Vol. 1, Doc. No. 14, at 10-12; App. Vol. 2, Doc. No. 15, at 10-
12).
5
Narconon International and ABLE moved to dismiss the claims against them
because Plaintiffs allegations failed to state a claim upon which relief could be
granted. Plaintiffs responded by insisting that the allegations in their Complaint
were sufficient. In the concluding paragraph of their response brief in the District
Court, Plaintiffs casually, and without elaboration, requested an opportunity to
amend their claims should the District Court find their allegations to be
insufficient. (App. Vol. 1, Doc. No. 14, at 24-25; App. Vol. 2, Doc. No. 15, at 25).
But Appellees failed to attach to their response brief or describe in any way the
proposed amendment, and they did not describe how it would cure the defects in
their pleadings. Plaintiffs never filed a motion requesting leave to amend with the
proposed amendment attached. Even now the substance and nature of the
proposed amendment remains a mystery.
In a well-reasoned opinion, the District Court granted Appellees motion to
dismiss, holding that Plaintiffs had not pleaded the existence of a contract with
Narconon International and ABLE and failed to identify any specific contract
provisions that Appellees had breached. (App. Vol. 2, Doc. No. 40, at 19-21). The
District Court also held that Plaintiffs had failed to plead their fraud-based claims
with sufficient particularity given, among other reasons, that they had merely
lumped together all of their fraud allegations against all of the Defendants. (Id. at
13-18). The District Court then dismissed the Plaintiffs case with prejudice
6
without leave to file an amended complaint, noting that Plaintiffs had not properly
requested leave to do so. (Id. at 24-25).
The Court reviews de novo the District Courts grant of a motion to dismiss
under Rules 9(b) and 12(b)(6) for failure to state a claim, accepting the allegations
in the Complaint as true and construing them in the light most favorable to
Plaintiffs. Mills v. Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008).
Further, the legal standard applicable to consideration of a motion to dismiss
is the Iqbal-Twombly standard. To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1940
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955
(2007)). The complaint must include sufficient factual allegations to raise a right
to relief above the speculative level. Twombly, 550 U.S. at 555, 127 S. Ct. at
1965. [A] formulaic recitation of the elements of a cause of action will not do[.]
Id. [W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged but it has not
show[n] that the pleader is entitled to relief. Iqbal, 556 U.S. at 679, 129 S. Ct.
at 1950 (internal punctuation and citation omitted). The Court reviews the District
Courts decision to deny Plaintiffs leave to amend their Complaint for abuse of
discretion. Long v. Satz, 181 F.3d 1275, 1278 (11th Cir. 1999).
7
Summary of the Argument
The District Court properly determined that Plaintiffs Complaint failed to
state a claim upon which relief could be granted and did not satisfy the pleading
standards set forth in the Federal Rules of Civil Procedure, and as set forth by the
Supreme Court in Iqbal and Twombly. In a classic shotgun complaint, Plaintiffs
simply lumped all of the Defendants together, failing to specify how Narconon
International and ABLE breached any agreements with these Plaintiffs and even
failing to identify the agreements they contend exist. Further, Plaintiffs made no
effort whatsoever to identify the basics of their fraud-based claims, never
identifying a single misrepresentation by either of these Appellees or to whom and
when such misrepresentations were made. The District Court, in a well-reasoned,
thorough order, properly dismissed all counts in the Complaint.
The District Court also properly denied Plaintiffs request for leave to amend
their Complaint. Rather than filing an amended complaint following the
Defendants motions to dismiss, Plaintiffs chose to respond to the motions. And
in responding, Plaintiffs casually sought leave to amend their Complaint in the
closing pages of their response brief, without anything more, contrary to the
precedent of this Court.
For these reasons, the Court should affirm the decision of the District Court.
8
Argument and Citations of Authority
A. The District Court Properly Dismissed Plaintiffs Claims for Breach of
Contract, Quasi-Contract, and Negligence Per Se.
The District Court properly dismissed Plaintiffs claims because the
Complaint failed to allege the necessary elements of those claims. Plaintiffs failed
to identify a contract with Narconon International or ABLE, let alone a specific
provision that was breached. Accordingly, Plaintiffs have no claim for breach of
an express or implied contractual provision and the District Court properly
dismissed their claim.
1. Standard of Review.
This Court conducts a de novo review of a District Courts decision on a
motion to dismiss under Rule 12(b)(6), affirming the District Courts decision
when the District Court has properly dismissed the plaintiffs claims. See Castro v.
Secretary of Homeland Security, 472 F.3d 1334, 1336 (11th Cir. 2006). While the
pleadings are construed broadly in the context of a Rule 12(b)(6) motion to
dismiss, a formulaic recitation of the elements of a cause of action will not do
and the [f]actual allegations must be enough to raise a right to relief above the
speculative level. Watts v. Florida Intl Univ., 495 F.3d 1289, 1295 (11th Cir.
2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955,
1965, 167 L.Ed.2d 929 (2007)). Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice. Ashcroft v.
9
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To plead a
cause of action that will survive a motion to dismiss, the plaintiff must allege its
case with enough factual matter (taken as true) to suggest the required element
and identify facts that are suggestive enough to render the element plausible.
Watts, 495 F.3d at 1295-96 (internal citations and quotation marks omitted).
2. Plaintiffs Failed to Allege Even the Most Basic Elements of a
Breach of Contract Claim.
As an initial matter, Plaintiffs failed to allege the existence of an agreement
with Narconon International or ABLE. It is axiomatic that a person who is not a
party to a contract is not bound by its terms. Kaesemeyer v. Angiogenix, Inc., 278
Ga. App. 434, 437, 629 S.E.2d 22, 25 (2006); accord Plaza Props., Ltd. v. Prime
Bus. Invs., Inc., 240 Ga. App. 639, 642, 524 S.E.2d 306, 309 (1999) (It is also
fundamental that [a] person who is not a party to a contract (i.e., is not named in
the contract and has not executed it) is not bound by its terms.) (quoting Martin
v. Pierce, 140 Ga. App. 897, 899, 232 S.E.2d 170, 172 (1977)). A defendant that
is not named as a party to the contract should be dismissed from a breach of
contract claim. Martin, 140 Ga. App. at 899, 232 S.E.2d at 172.
Plaintiffs neither attached any contracts to the Complaint nor quoted from or
cited to any specific contract provision. (See generally App. Vol. 1, Doc. No. 1,
Compl. 115-18). But in support of their Motions to Dismiss, Appellees attached
10
written contracts between Plaintiffs (or their family members) and NNGA.
2
(App.
Vol. 1, Doc. No. 4, Ex. A; App. Vol. 1, Doc. No. 5, Ex. A). Neither Narconon
International nor ABLE are identified as parties to any of those contracts.
Plaintiffs have failed to identify any contract with either Narconon International or
ABLE and have therefore failed to state a breach of contract claim.
Although not entirely clear in their Brief, Plaintiffs appear to suggest that the
bare allegation in their Complaint that they had a contract satisfies their pleading
burden under Iqbal and Twombly. A motion to dismiss should be granted if the
plaintiff does not plead enough facts to state a claim to relief that is plausible on
its face. Twombly, 550 U.S. at 570. But much more than that is required to put
these Appellees on sufficient notice of the claims against them and allege a proper
breach of contract claim. [A] plaintiff asserting a breach of contract claim must
allege a particular contract provision that the defendants violated to survive a
motion to dismiss. Anderson v. Deutsche Bank Natl Trust Co., No. 1:11-CV-
4091-TWT-ECS, 2012 WL 3756512, at *5 (N.D. Ga. Aug. 6, 2012); accord
2
A document attached to a motion to dismiss may be considered by the court
without converting the motion into one for summary judgment if the attached
document is central to the plaintiffs claim and undisputed; that is, that the
authenticity of the document is not challenged. Horsley v. Feldt, 304 F.3d 1125,
1134 (11th Cir. 2002). In their responses to the motions to dismiss in the District
Court, Plaintiffs did not dispute the documents attached to Appellees briefs.
Indeed, Plaintiffs relied upon and quoted from those documents in their response.
(App. Vol. 1, Doc No. 14, at 10-12; App. Vol. 2, Doc. No. 15, at 10-12).
Accordingly, there is no dispute regarding the authenticity of those documents and
the District Court properly relied upon them in dismissing the Complaint.
11
American Casual Dining, L.P. v. Moe's Southwest Grill, L.L.C., 426 F. Supp. 2d
1356, 1369 (N.D. Ga. 2006) (Because [the plaintiff] cannot point to any
contractual provision that [the defendant] breached by failing to act in the manner
set forth above, [the plaintiff] cannot state a claim for breach of contract based on
these allegations.).
In their Complaint, Plaintiffs do not deny that they (or their family members)
in fact received services from NNGA for which they paid NNGA. They loosely
claim, however, that all of the Defendants/Appellees made allegedly-false
representations to them about the program. But the contract documents do not
contain any of the alleged false representations identified in Plaintiffs Complaint,
and Plaintiffs failed to point to any other documents containing the alleged
representations. (App. Vol. 2, Doc. No. 40, at 22). Accordingly, the District Court
properly held that Plaintiffs breach of contract claim failed on its face. Parrish v.
Jackson W. Jones, P.C., 278 Ga. App. 645, 647, 629 S.E.2d 468, 471 (2006)
(affirming summary judgment to the defendant on the plaintiffs breach of contract
claim because the documents that the plaintiff claimed formed the parties
agreement did not contain terms the plaintiff sought to enforce in his breach of
contract claim, and because parol evidence could not be used to vary the terms of
those written documents).
12
The only specific provision that Plaintiffs discuss in their Brief is a Rule of
Conduct that required the students who were receiving services from NNGA to
refrain from bringing drugs or alcohol to the facility and from consuming drugs or
alcohol during the program. (See App. Vol. 1, Doc. No. 4, Ex. A, at 7). Without
articulating how, Plaintiffs insist that this provision contractually required
Narconon International and ABLE, who were not even parties to the agreement, to
provide a drug free environment. Plaintiffs fail to identify any allegation in their
Complaint articulating this particular theory, which they only raised in their
response brief opposing the motions to dismiss filed below. (App. Vol. 1, Doc.
No. 14, at 10-12; App. Vol. 2, Doc. No. 15, at 11-12). On its face, the provision
does not guarantee that NNGA will ensure a drug-free environment but instead
places an obligation solely on the student. Plaintiffs expressly agreed in the
Financial Policy and Agreement Form that there [was] no warranty express or
implied with regard to the housing arrangement that the students were responsible
for making. (See App. Vol. 1, Doc. No. 4, Ex. A, at 3). Thus, the only specific
provision that Plaintiffs have identified fails to support their breach of contract
claim.
Plaintiffs misconstrue the Georgia Court of Appeals decisions in Fisher v.
Toombs County Nursing Home, 223 Ga. App. 842, 479 S.E.2d 180 (1996), and
Regional Pacesetters, Inc. v. Eckerd Drugs of Georgia, Inc., 183 Ga. App. 196,
13
358 S.E.2d 481 (1987) in insisting that they are not obligated to allege the breach
of an actual contractual provision so long as they have alleged that Appellees
breached the spirit of the parties agreement. In both of those cases, however,
there was a written contract between the parties. Moreover, in both cases, the
courts held that, in order for a court to imply a term not actually contained in the
parties written agreement, the implied term must be absolutely necessary . . . to
effectuate the intention of the parties. Fisher, 223 Ga. App. at 845, 479 S.E.2d at
184; accord Regional Pacesetters, 183 Ga. App. at 197, 358 S.E.2d at 483. Courts
should be generally reluctant to imply terms into a written contract. 223 Ga.
App. at 845, 479 S.E.2d at 184.
In Regional Pacesetters, the Georgia Court of Appeals refused to imply a
term to allow the plaintiffs contract claim to survive dismissal because the parties
written contract did not require the term to discern the parties intent. Id. at 197-
98, 358 S.E.2d at 483. Although the parties agreement generally discussed the
contractual rights and obligations at issue, there was nothing in the agreement
specifically indicating that an extension of those rights and obligations was
necessary. Ignoring the fact that neither Narconon International nor ABLE was a
party to the contracts at issue, Plaintiffs have failed to articulate how their
agreements with NNGA required all of the Defendants to guaranty a completely
drug and alcohol free environment, particularly when the only provision in the
14
documents relating to drug use places the obligation squarely on the student.
Under the rule of Regional Pacesetters, the District Courts dismissal of Plaintiffs
breach of contract claim was appropriate.
Although the Fisher Court overcame its general[] reluctan[ce] and allowed
the plaintiff to recover on a term that was implied into the parties agreement, the
holding is easily distinguished from the case at bar. 223 Ga. App. at 845, 479
S.E.2d at 184. In Fisher, the plaintiff contractually agreed to be financially
responsible for payment to a nursing home that was caring for her husband. After
the nursing home discharged the plaintiffs husband to the husbands son from a
prior marriage without providing any notice to the plaintiff, the plaintiff sued for
breach of contract. The nursing home contended on summary judgment that there
was no express provision in the parties agreement requiring the nursing home to
give the plaintiff notice. The court held that, because the plaintiff was paying for
the care of her husband, she should have been notified when her husband was
discharged since she would no longer be responsible for paying for his care. In
other words, an implied notice provision was reasonable and necessary to effect
the full purpose of the contract and [was] so clearly within the contemplation of the
parties that they deemed it unnecessary to state the implied term expressly in their
contract. Id. at 845, 479 S.E.2d at 184.
15
In the instant case, Plaintiffs have not alleged a contract with Narconon
International or ABLE. Thus, there is no contract into which the Court could even
imply terms. Additionally, Plaintiffs have not explained how the terms that they
allege should be implied into the non-existent contract are absolutely necessary . .
. to effectuate the intention of the parties. Id., 479 S.E.2d at 184. In fact,
Plaintiffs have not even articulated with any clarity what precise terms should be
implied. They have only listed representations that they allege all of the
Defendants/Appellees made. (App. Vol. 1, Doc. No. 1, Compl. 3, 7, 11, 14, 18,
111). To imply those non-existent representations into the agreement would run
directly counter to Plaintiffs express agreement that there [was] no warranty
express or implied with regard to the housing arrangement that the students were
responsible for making. (See App. Vol. 1, Doc. No. 4, Ex. A, at 3).
In a final desperate attempt to save their deficient breach of contract claim,
Plaintiffs insist that ABLE and Narconon International breached an implied
covenant of good faith. Under Georgia law, there is no independent cause of
action for violation of the [implied covenant of good faith] apart from breach of an
express term of the contract. Morrell v. Wellstar Health Sys., Inc., 280 Ga. App.
1, 5-6, 633 S.E.2d 68, 72 (2006); accord Ameris Bank v. Alliance Inv. & Mgmt.
Co., 321 Ga. App. 228, 233, 739 S.E.2d 481, 486 (2013) (The implied covenant
modifies and becomes a part of the provisions of the contract, but the covenant
16
cannot be breached apart from the contract provisions it modifies and therefore
cannot provide an independent basis for liability.). Given the lack of a breach of
contract, the District Court properly rejected that claim as well.
3. Plaintiffs Have No Claim for Unjust Enrichment Because
Plaintiffs did not Confer Any Benefit on ABLE or Narconon
International.
The District Court properly dismissed Plaintiffs claim for unjust
enrichment. Unjust enrichment is an equitable concept and applies when as a
matter of fact there is no legal contract. Morrell, 280 Ga. App. at 6-7, 633 S.E.2d
at 73; accord American Teleconferencing Servs., Ltd. v. Network Billing Sys., LLC,
293 Ga. App. 772, 777-78, 668 S.E.2d 259, 263 (2008) ([A]n unjust enrichment
theory does not lie where there is an express contract.). Additionally, an unjust
enrichment claim can only be brought by a plaintiff who directly conferred a
benefit on the defendant for which the plaintiff has not been compensated. See
Brown v. Cooper, 237 Ga. App. 348, 350-51, 514 S.E.2d 857, 860 (1999).
Plaintiffs have not alleged that they conferred a benefit directly upon either
ABLE or Narconon International, nor could they. Instead, Plaintiffs allege only
that they paid NNGA for services they received. The absence of any allegation
that any benefit was conferred directly upon ABLE or Narconon International is
fatal. (App. Vol. 1, Doc. No. 1, Compl. 4, 8, 12, 15, 19). Thus, for that
additional reason Plaintiffs unjust enrichment claim was properly dismissed.
17
4. There is no Claim for Detrimental Reliance under Georgia Law,
and Plaintiffs Cannot Re-Plead that Claim in a Response Brief.
Count Four of the Complaint contained a claim for Detrimental Reliance.
(Id. at 122-25). In response to the motion to dismiss, Plaintiffs conceded that no
such claim exists and then purported to re-characterize the claim as one for
promissory estoppel. (App. Vol. 1, Doc. No. 14, at 15-16; App. Vol. 2, Doc. No.
15, at 15-16). In that response brief, Plaintiffs asked the District Court to grant
them an opportunity to amend their Complaint to re-plead that count without filing
a motion for leave to do so and without even explaining what allegations they
would add in an amended pleading to address the admitted flaws in the claim.
(Id.). As explained in Section C of this Brief, below, the District Court properly
denied Plaintiffs unsupported request for leave to amend.
Plaintiffs re-characterized claim also fails for the same reasons that its
breach of contract claim fails: Plaintiffs have failed to identify any specific
promise allegedly made by Narconon International or ABLE upon which they
relied to their detriment. The requisite elements of a claim for promissory estoppel
under Georgia law are:
(1) the defendant made a certain promise or promises; (2) the
defendant should have reasonably expected the plaintiff to rely on
such promise or promises; (3) plaintiff did, in fact, rely on such
promise or promises to his detriment; and (4) an injustice can be
avoided only by the enforcement of the promise, because the plaintiff
surrendered, forgoes, or rendered a valuable right.
18
Reindel v. Mobile Content Network Co., 652 F. Supp. 2d 1278, 1290 (N.D. Ga.
2009) (citations and quotation marks omitted). Additionally, under Georgia law, it
usually is unreasonable to rely on a substantial promise that has not been reduced
to writing. Id. at 1291 (quoting Johnson v. University Health Servs., Inc., 161
F.3d 1334, 1340 (11th Cir. 1998)).
Plaintiffs failed first in their Complaint, then in their District Court brief
opposing the motions to dismiss, and now in their Brief filed with this Court to
articulate the facts supporting the elements of their purported claim for promissory
estoppel. For that reason alone the Court should affirm the District Courts ruling.
Additionally, because Plaintiffs have failed to point to a specific contract provision
or any other writing containing the unspecified promises they claim were breached,
the District Court correctly held that this claim fails as a matter of law.
5. Plaintiffs Fail to Even Mention Narconon International or ABLE
in their Negligence Per Se Claim.
Count Five of the Complaint for negligence per se does not even mention
Narconon International or ABLE and was properly dismissed. Even now,
Plaintiffs Brief submitted to this Court fails to articulate how their negligence per
se claim even applies to Narconon International and ABLE. Given that Plaintiffs
have not alleged, in either the District Court or this Court, any basis for how this
claim applies to Narconon International and ABLE, the District Courts ruling
should be affirmed. In accordance with Fed. R. App. P. 28(i), Narconon
19
International and ABLE adopt by reference Section IV of Appellee Narconon of
Georgia, Inc.s Brief addressing any remaining issues surrounding Plaintiffs
negligence per se claim.
B. The District Court Properly Dismissed Plaintiffs Claims Sounding in
Common Law Fraud and Under Georgias RICO Statute.
Plaintiffs have failed to allege who made which alleged representation, how
each alleged representation was made, when it was made, and how each of them
relied upon it. Plaintiffs reliance upon scattershot fraud allegations involving five
separate plaintiffs aimed at four separate Defendants plainly fails to meet the
particularity requirements of Rule 9(b), and the District Court properly dismissed
the fraud based claims.
In order to satisfy the particularity requirement of Federal Rule of Civil
Procedure 9(b), Plaintiffs concede they must identify: (1) the precise statements or
misrepresentations made, (2) the time, place, and person responsible for the
statement, (3) the content and manner in which the statements misled Plaintiffs,
and (4) what Appellees gained by the alleged fraud. (See Pls. Br. at 16 [citing
Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th
Cir. 2007)]). Because Plaintiffs failed to plead their claims with sufficient detail to
satisfy that heightened pleading requirement, the District Court properly dismissed
the RICO claim.
20
1. Fraudulent Misrepresentation.
Nowhere in their Complaint do Plaintiffs allege a single specific
misrepresentation made by either Narconon International or ABLE. Instead,
Plaintiffs simply assert that all of the Defendants made all of the alleged
misrepresentations and that all of the Plaintiffs relied upon all of those alleged
misrepresentations. (App. Vol. 1, Doc. No. 1, Compl. 3, 7, 11, 15, 18, 111).
This Court has consistently and repeatedly held that a plaintiff may not casually
lump together its fraud allegations against multiple defendants in such a manner.
E.g., Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1381 (11th
Cir. 1997) ([I]n a case involving multiple defendants . . . the complaint should
inform each defendant of the nature of his alleged participation in the fraud.)
(quoting Vicom, Inc. v. Harbridge Merchant Servs., Inc., 20 F.3d 771, 777-78 (7th
Cir. 1994)). Plaintiffs blanket allegations that Defendants regularly claim
success rates of over 70%, (App. Vol. 1, Doc. No. 1, Compl. 75), Defendants
fraudulent [sic] mislead patients and their families, (id. 89), and Defendants
knowingly and willfully made false representations of material facts to Plaintiffs,
(id. 111), all lack the requisite level of specificity required as to each Defendant.
Plaintiffs attempt to excuse their scattershot fraud allegations by contending
that RTC, ABLE, and Narconon International controlled the time, manner, and
method of NNGAs operations. (Pls. Br. at 17-18). But those allegations are not
21
contained in Plaintiffs count for fraud, and these allegations are not sufficient to
allege a claim sounding in fraud.
3
Appellees should not be required to respond to
shotgun allegations and be forced to guess which asserted facts attend which of
Plaintiffs numerous claims. See Davis v. Coca-Cola Bottling Co., 516 F.3d 955,
979-80, n.54 (11th Cir. 2008).
Pretermitting the issue of whether Plaintiffs have sufficiently alleged an
alter ego or agency theory against these Appellees, Plaintiffs have still failed to
allege which Defendants made which allegedly-fraudulent statements. Narconon
International and ABLE are entitled to fair notice regarding their alleged role in
the claimed fraud. Brooks, 116 F.3d at 1381 (Because fair notice is [p]erhaps the
most basic consideration underlying Rule 9(b) . . . , the plaintiff who pleads fraud
3
Under Georgia law, a licensor or franchisor is allowed to control the time,
manner, and method of its franchisees daily operations without the franchisee
becoming the franchisors agent. DaimlerChrysler Motors Co., LLC v. Clemente,
294 Ga. App. 38, 44-45, 668 S.E.2d 737, 745-46 (2008) ([A] franchisor may
protect its franchise and its trade name by setting standards governing its
franchisees operations, and these standards may be quite detailed, specific, and
strict. . . . Moreover, the fact that a franchise agreement authorizes periodic
inspections of the franchise and gives the franchisor the right to terminate the
agreement for noncompliance is not enough to prove an agency relationship.)
(quoting Schlotzskys, Inc. v. Hyde, 245 Ga. App. 888, 890, 538 S.E.2d 561, 563
(2000)) (citations omitted). ABLE licenses the Narconon name and marks to
Narconon International which in turn licenses the name and marks to independent
local operations such as NNGA. (App. Vol. 1, Doc. No. 4, at 6). Thus, ABLE and
Narconon International can permissibly control the time, manner, and method of
NNGAs operations to protect the integrity of the Narconon marks without that
control giving rise to a valid claim of an agency relationship or of an alter ego
theory.
22
must reasonably notify the defendants of their purported role in the scheme.)
(citations omitted). A mere assertion that all of the Defendants made all of the
alleged misrepresentations tells ABLE and Narconon International nothing about
their purported role in the alleged fraud.
Moreover, almost without exception, Plaintiffs have failed to allege
specifically how the alleged misrepresentations were communicated and how each
of them specifically relied on those alleged misrepresentations. The only specific
example that Plaintiffs provide is the alleged representation in an e-mail attached
to their Complaint that the program had a 70% success rate. But that e-mail, on its
face, was not delivered to any of the Plaintiffs, and Plaintiffs have failed to allege
how they relied on any statements in that e-mail to their detriment. (App. Vol. 1,
Doc. No. 1, Compl. Ex. B at 1-2). Thus, regardless of the source of the alleged
misrepresentation, the District Courts dismissal of Plaintiffs fraud claims was
proper.
The cases Plaintiffs cite in their Brief demonstrate their failure to satisfy
Rule 9(b)s particularity standard. For example, in United States ex rel.
Yannacopolous v. General Dynamics, 315 F. Supp. 2d 939 (N.D. Ill. 2004), the
district court found sufficient the plaintiffs fraud allegations that contained
specific dates regarding contract submissions and modifications, as well as
specific timeframes during which defendants submitted allegedly fraudulent
23
communications. Id. at 945. In the present case, Plaintiffs have failed to provide
any dates for any of the alleged misrepresentations. Instead, Plaintiffs merely
insist that their allegations regarding the dates on which they each entered into
their contracts with NNGA satisfy the requirements of Rule 9(b). Reciting the date
on which Plaintiffs entered into an agreement with NNGA reveals nothing about
when and how the alleged misrepresentations were made or about who made those
alleged misrepresentations.
In Stires v. Carnival Corp., 243 F. Supp. 2d 1313, 1320 (M.D. Fla. 2002),
another case on which Plaintiffs rely, the district court explained that, because the
plaintiff had allege[d] specific misrepresentations and had also alleged where
the misrepresentations occurred, the plaintiff had sufficiently stated a fraud claim.
Plaintiffs fail to do either in their Complaint in this matter.
2. Plaintiffs Georgia RICO Claims Suffer the Same Defects as the
Fraudulent Misrepresentation Claims.
The District Court properly concluded that Plaintiffs Georgia RICO claims
failed for the same reasons as their fraudulent misrepresentation claims. To
establish a Georgia RICO claim, a plaintiff must demonstrate, among other things,
that their injuries flowed directly from one or more predicate acts. Maddox v.
Southern Engineering Co., 231 Ga. App. 802, 806, 500 S.E.2d 591, 594 (1998).
Plaintiffs assert five separate Georgia RICO counts based on the predicate acts of
Theft by Deception (Count Six), Mail and Wire Fraud (Count Seven), False
24
Statements to a Government Agency (Count Eight), Credit Card Fraud (Count
Nine), and Identity Fraud (Count Ten). As explained further below, each of
those claims is subject to the heightened pleading standard of Rule 9(b), and the
District Court correctly held that Plaintiffs failed to satisfy that standard. See
Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1317 (11th Cir.
2007) (holding that RICO claims must allege (1) the precise statements,
documents or misrepresentations made; (2) the time and place of and [the] person
responsible for the statement; (3) the content and manner in which the statements
misled the Plaintiffs; and (4) what the Defendants gained by the alleged fraud)
(emphasis added).
a. Theft by Deception and Mail and Wire Fraud.
Plaintiffs concede that their Georgia RICO claims based on the predicate
acts of theft by deception and mail and wire fraud are subject to the heightened
pleading requirements of Rule 9(b). (Pls. Br. at 19-20). Plaintiffs allegations in
support of those claims suffer from the very same deficiencies as the allegations
made in support of their fraudulent misrepresentation claim. Plaintiffs improperly
lump all of the Appellees together, asserting that all Defendants made all of the
misrepresentations underlying their theft by deception and mail and wire fraud
predicate acts. (App. Vol. 1, Doc. No. 1, Compl. 133-34, 141-42). See Brooks,
116 F.3d at 1381 ([I]n a case involving multiple defendants . . . the complaint
25
should inform each defendant of the nature of his alleged participation in the
fraud.).
Additionally, Plaintiffs have failed to allege specifically how either
Narconon International or ABLE used the mail or wires to defraud Plaintiffs; the
Complaint is devoid of any detail regarding a single mailed or wired
communication that was allegedly misleading. See U.S. v. Ward, 486 F.3d 1212,
1221-22 (11th Cir. 2007) (explaining that the essential elements of both mail and
wire fraud are that a person (1) intentionally participate in a scheme or artifice to
defraud another of money or property and (2) uses or causes the use of the
mails or wires for the purpose of executing the scheme or artifice). These claims
fail on their face.
b. Credit Card Fraud and Identity Fraud.
Similarly, Plaintiffs do not dispute that their credit card fraud and identity
fraud-based RICO claims are subject to the particularity requirements of Rule
9(b).
4
(Pls. Br. at 20). Once again, the allegations supporting those claims suffer
from the same defects as the allegations underlying Plaintiffs other fraud-based
claims. In support of their credit card fraud predicate act, Plaintiffs allege that
all Defendants, by and through their agents . . . opened several high interest credit
4
Although they did not make this clarification in their Complaint, Plaintiffs
Georgia RICO claims based on credit card fraud and identity fraud are applicable
only to some, but not all of the Plaintiffs. (See App. Vol. 1, Doc. No. 1, Compl.
4, 19; Pls. Br. at 21).
26
cards in the name of [Narconon Georgias] patients and/or patients family
members, without their permission, and used those credit cards to pay for
[Narconon Georgias] fees but provide no further detail. (App. Vol. 1, Doc. No.
1, Compl. 159). The allegations supporting their count based on the predicate act
of identity fraud are identical, and thus, no more detailed. (Id. 167).
Accordingly, the District Court properly dismissed Plaintiffs claims based on
credit card and identity fraud.
c. False Statements to a Government Agency.
Plaintiffs incorrectly contend that their Georgia RICO claims based on the
predicate act of False Statements to a Government Agency are not subject to the
heightened pleading requirements of Rule 9(b). This Court has held that RICO
claims based on non-fraud predicate acts do not have to be pled with particularity
only when the same misrepresentations do not form the basis of both the fraud and
non-fraud claims. Liquidation Commn of Banco Intercontinental, S.A. v. Renta,
530 F.3d 1339, 1355-56 (11th Cir. 2008).
In their allegations supporting their count for fraudulent misrepresentation,
Plaintiffs allege that all Defendants manipulated the law and provided false
information to regulators in order to avoid meaningful oversight, while continuing
to represent to potential patients that [Narconon Georgia] was fully compliant with
all applicable laws and regulations. (App. Vol. 1, Doc. No. 1, Compl. 111.b.).
27
In the count of their Complaint asserting a violation of Georgia RICO based on
false statements to a government agency, Plaintiffs claim that all Defendants
knowingly and willfully falsified or concealed alleged facts regarding Narconon
Georgias operations and drug treatment program. (Id. 150). Because both
Plaintiffs fraud claims and RICO claims are based on the same alleged
misrepresentations, the same heightened pleading standard applies to both claims.
Plaintiffs cannot avoid the heightened pleading standards for fraud claims by
simply dressing up their fraud allegations as some other cause of action. Thus, for
all of the reasons described above, the District Court properly dismissed Plaintiffs
Georgia RICO claim based on alleged false statements to a government agency.
Moreover, even a cursory review of Plaintiffs allegations reveals that this
portion of the RICO claim sounds in fraud. Plaintiffs allege that all of the
Defendants knowingly and willfully falsified or concealed material allegations
from the State of Georgia. (Id. 150). Plaintiffs also allege that Georgia
regulatory agencies relied on Defendants false statements when licensing
[Narconon Georgias] program. (Id. 151). Given the false statements that are
clearly the foundation of this claim, it sounds in fraud.
Finally, as it relates to this component of the RICO claim, Plaintiffs failed to
plead how their purported injury was directly caused by ABLE or Narconon
International. Proximate or direct harm is a necessary element of a Georgia RICO
28
claim based on false statements to a government agency. Federal courts should
scrutinize proximate causation at the pleading stage and carefully evaluate whether
the injury alleged was proximately caused by the claimed predicate act. See G &
G TIC, LLC v. Ala. Controls, Inc., No. 4:07-CV-162, 2008 WL 4457876, at *6
(M.D. Ga. Sept. 29, 2008) affd 324 F. Appx 795 (11th Cir. 2009). In evaluating
proximate cause, the courts must ask whether the alleged violation led directly to
the plaintiffs injuries. Id. at *6 (quoting Anza v. Ideal Steel Supply Corp., 547
U.S. 451, 461 (2006)).
Plaintiffs alleged injury in this matter is that almost none of the patients
who complete Narconons unscientific and dangerous program will have achieved
sobriety or sufficient tools for managing their addictions. (App. Vol. 1, Doc. No.
1, Compl. 106). Plaintiffs have completely failed to explain how allegedly false
statements to government entities have any connection to the efficacy of NNGAs
treatment program. (See id. 150). Accordingly, for this additional reason,
Plaintiffs Georgia RICO claim based on alleged false statements to government
agencies was properly dismissed.
C. The District Court Properly Acted Within Its Discretion When It
Denied Plaintiffs Unsupported Request for Leave to Amend Their
Complaint.
Plaintiffs complain that the District Court erroneously failed to permit an
amended pleading. Because Plaintiffs never properly requested leave to amend,
29
the District Court was permitted to reject Plaintiffs informal request on procedural
grounds alone. But even more telling is that Plaintiffs cannot demonstrate, even on
appeal, how a second bite at the apple would have cured their defective pleadings.
This Court applies an abuse of discretion standard to a district courts
decision to deny leave to amend. See Long v. Satz, 181 F.3d 1275, 1278 (11th Cir.
1999). In the present case, the District Court did not abuse its discretion when it
properly denied Plaintiffs request for leave to amend their complaint, made for the
first and only time in their brief in response to Appellees motions to dismiss, for
the simple reason that Plaintiffs neither submitted a proposed amended pleading
nor did they properly seek leave to amend.
Filing a motion is the proper method to request leave to amend a complaint.
. . . A motion for leave to amend should either set forth the substance of the
proposed amendment or attach a copy of the proposed amendment. Long, 181
F.3d at 1279. Accordingly, when a plaintiff submits nothing more than a bare
request in a response brief for permission to amend its complaint in an unspecified
manner, the district courts denial of that request is proper. U.S. ex rel. Atkins v.
McInteer, 470 F.3d 1350, 1362 (11th Cir. 2006) (affirming district courts
dismissal of the plaintiffs complaint with prejudice, even though the plaintiff had
requested leave to amend in its brief opposing a motion to dismiss, because the
plaintiff had not submitted a proposed amended complaint or set forth the
30
allegations that such an amendment would contain); see also Detris v. Coats, 523
Fed. Appx 612, 618 (11th Cir. 2013) (the district court properly denied the
plaintiffs request, made in response to a motion to dismiss, that any dismissal be
without prejudice).
Plaintiffs requested the opportunity to amend their complaint in their
response briefs below, but they did not attach to their briefs a proposed amendment
or otherwise set forth the allegations that a proposed amended complaint would
contain. (See, e.g., App. Vol. 1, Doc. No. 14, at 24-25; App. Vol. 2, Doc. No. 15,
at 25). Without knowing what a proposed amended complaint would allege, the
District Court was left to speculate whether the proposed amendment would have
cured the pleading deficiencies contained in Plaintiffs original complaint.
Moreover, allowing Plaintiffs to amend their complaint now would, in
effect, provide them a second bite at the appellate apple, allowing them to seek
review by this Court again if, after remand, they are permitted to file an amended
complaint that is also subject to dismissal. This Court actively seeks to avoid
appellate review in such a piecemeal fashion. See Wagner v. Daewoo Heavy
Indus. Am. Corp., 314 F.3d 541, 543-44 (11th Cir. 2002) (en banc) (quoting
PradoSteiman ex rel. Prado v. Bush, 221 F.3d 1266, 1276 (11th Cir. 2000)
(Piecemeal appellate review has a deleterious effect on judicial administration. It
increases the workload of the appellate courts, to the detriment of litigants and
31
judges. . . . [I]t creates opportunities for abuse by litigants seeking to delay
resolution of a case by raising with the appellate court objections to the scope of an
order that should have been raised first with the district court itself.))
Plaintiffs incorrectly assert that merely because this action was removed
from state court they were somehow deprived of the opportunity to amend their
complaint. Plaintiffs had ample opportunity, without having to seek leave of court,
to amend their complaint had they deemed it appropriate to do so. Federal Rule of
Civil Procedure 15 afforded Plaintiffs the right to amend their complaint as a
matter of course within twenty-one days after service of Appellees motions under
Rule 12(b). See FED. R. CIV. P. 15(a)(1)(B). Plaintiffs elected, for their own
strategic reasons, to rely upon their original complaint, even though Appellees had
articulated the various pleading defects contained therein.
Plaintiffs cannot now fairly complain about the strategic decision they made
to stand on their original pleading in the face of Appellees motions. Appellees
carefully explained the deficiencies in Plaintiffs pleading. Plaintiffs were fully
informed, in advance of the deadline to amend, about the pleading defects that the
District Court ultimately cited in its order dismissing the Complaint. Given
Plaintiffs election to stand on their original pleading, the District Court was
entitled to assume that the flaws in the Complaint could not be corrected.
32
Accordingly, the District Court acted well within its discretion when it dismissed
the complaint with prejudice.
Plaintiffs misplace their reliance upon Bryant v. Dupree, 252 F.3d 1161
(11th Cir. 2001). In Bryant, a panel of this Court cited Bank v. Pitt, 928 F.2d 1108
(11th Cir. 1991), in finding that the district court erred when it refused to grant the
plaintiffs request for leave to amend made in their response to a motion to dismiss.
252 F.3d at 1163. In a later en banc opinion, however, this Court expressly held:
[W]e overrule Bank and substitute the following rule: A district court
is not required to grant a plaintiff leave to amend his complaint sua
sponte when the plaintiff, who is represented by counsel, never filed a
motion to amend nor requested leave to amend before the district
court.
See Wagner, 314 F.3d at 542.
5
Because the authority cited in Bryant has been
overruled, the panels decision in Bryant has been effectively overruled by the en
banc decision in Wagner.
Bryant is also factually distinguishable from the case at bar. The plaintiffs
in Bryant did not have prior notice of the grounds upon which the district court
ultimately dismissed their complaint. Indeed, the district court had previously
entered an order stating that the Plaintiffs complaint satisfied the heightened
5
As explained above, in order to properly request leave to amend, Plaintiffs were
required to file a motion seeking leave and to provide the District Court with a
copy of the proposed amendment or set forth the allegations that such an
amendment would contain. Atkins, 470 F.3d at 1362. Plaintiffs did neither.
33
pleading requirements at issue in that case. Bryant, 252 F.3d at 1164. In contrast,
the briefs submitted by Appellees in support of their motions to dismiss carefully
identified and explained the pleading defects attendant to each of Plaintiffs claims.
Thus, unlike the plaintiffs in Bryant, Plaintiffs were informed of the defects in their
Complaint but decided to stand by their pleadings anyway. Bryant simply does not
support Plaintiffs argument.
6
In summary, Plaintiffs could have amended their Complaint as a matter of
course, but they elected not to do so. The District Court acted well within its
discretion, and consistent with the direction of this Court, when it refused to permit
Plaintiffs to file an unspecified amendment for which leave was never properly
sought.
Conclusion
For the foregoing reasons, the Court should affirm the District Courts
dismissal of all of Plaintiffs claims against Narconon International and ABLE.
The Court should also affirm the District Courts denial of Plaintiffs unsupported
request for leave to amend their deficient Complaint.
6
In the two other cases Plaintiffs cite in support of their argument, the plaintiffs
had actually filed a separate motion seeking leave to amend. See Foman v. Davis,
371 U.S. 178, 179 (1962); Corsello v. Lincare, Inc., 428 F.3d 1008, 1011 (11th
Cir. 2005). Those cases are, therefore, also easily distinguishable.
34
This 16th day of June, 2014.
By: /s/Daniel F. Diffley
Cari K. Dawson
Daniel F. Diffley
David B. Carpenter
Alston &Bird LLP
1201 W. Peachtree Street
Atlanta, GA 30309-3424
Telephone: 404-881-7000
Facsimile: 404-253-8567
cari.dawson@alston.com
dan.diffley@alston.com
david.carpenter@alston.com
Attorneys for Appellees Narconon
International and Association for
Better Living and Education
International
Matthew S. Coles
Thomas M. Barton
Aaron P.M. Tady
Coles Barton LLP
150 South Perry Street, Suite 100
Lawrenceville, Georgia 30046
Telephone: 770-995-5552
Facsimile: 770-995-5582
mcoles@colesBarton.com
tbarton@colesBarton.com
atady@colesbarton.com
35
Certificate of Compliance
1. This brief complies with the type-volume limitation of Federal Rule of
Appellate Procedure 32(a)(7)(B) because it contains 8,054 words, excluding the
portions of the brief exempted by Federal Rule of Appellate Procedure
32(a)(7)(B)(iii) and 11th Circuit Rule 32-4.
2. This brief complies with the type-face and style requirements of
Federal Rule of Appellate Procedure 32(a)(5) and (6) because it has been prepared
in a proportionally-spaced type-face using Word 2013 in 14-point Times New
Roman font.
This 16th day of June, 2014.
/s/Daniel F. Diffley
Attorney for Appellees Narconon
International
36
Certificate of Service
This is to certify that on June 16, 2014, the foregoing brief was served upon
all parties to this matter via the CM/ECF system. I further certify that I have
served seven (7) paper copies of the foregoing brief to the Clerk of Court for filing
in accordance with the Courts local rules.
/s/Daniel F. Diffley
Attorney for Appellees Narconon
International

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Burgess Et Al v. Narconon: NN Int/ABLE Appeal Brief

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Appeal No.

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