United States District Court, D. Utah
MEMORANDUM DECISION & ORDER
Waddoups United States District Judge.
the court is Plaintiff Adelaide Spence's “Motion
for Leave to File an Amended Complaint.” (Mtn. to
Amend, ECF No. 102.) The Motion follows the court's
dismissal of multiple counts from the First Amended Complaint
(FAC),  some with and some without prejudice.
(Order on Mtn. to Dismiss, ECF No. 99.) The proposed Second
Amended Complaint (SAC) drops the claims dismissed with
prejudice and attempts to cure the deficiencies in those
dismissed without prejudice. The court held a hearing on the
Motion on November 30, 2017. (ECF No. 108.) Having carefully
considered the arguments set forth in the briefs and oral
arguments, and for the reasons stated herein, the court now
DENIES Spence's Motion and DISMISSES this action with
facts as alleged in the FAC are set forth in the court's
May 31, 2017 order. (Order on Mtn. to Dismiss, ECF No. 99.)
After the court entered its order, in which it dismissed
Spence's claims, Spence timely sought leave to amend.
(Mtn. to Amend, ECF No. 102.) The Motion alleges that the SAC
cures the deficiencies “by adding factual allegations
that provide more specificity” regarding the allegedly
false and misleading advertisements that she relied upon in
purchasing Vysera-CLS. (Id. at 5.) She alleges the
impossibility of the advertisements' promises, the
ineffectiveness of P. Vulgaris, and the lack of supporting
science for Vysera-CLS. (Id. 5-6.) Defendants object
to amendment, claiming it would be futile. (Defendants'
Resp. Brief 3, ECF No. 103.)
Rule of Civil Procedure 15(a) permits amendment after service
of responsive pleadings only upon leave from the court.
Fed.R.Civ.P. 15(a). It instructs the court to “freely
give” leave “when justice so requires.”
Id. “‘Refusing leave to amend is
generally only justified upon a showing of undue delay, undue
prejudice to the opposing party, bad faith or dilatory
motive, failure to cure deficiencies by amendments previously
allowed, or futility of amendment.'” Bylin v.
Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting
Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th
Cir. 1993)). The lenient amendment standard exists “to
provide litigants ‘the maximum opportunity for each
claim to be decided on its merits rather than on procedural
niceties.'” Minter v. Prime Equip. Co.,
451 F.3d 1196, 1204 (10th Cir. 2006) (quoting Hardin v.
Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th
Cir.1982)). Nevertheless, “the grant of leave to amend
the pleadings pursuant to Rule 15(a) is within the discretion
of the trial court.” Zenith Radio Corp. v.
Hazeltine Research, Inc., 401 U.S. 321, 330 (1971).
Here, Defendants object to leave only on the basis of
futility, and it appears that there is no other basis for
denying leave to amend.
proposed amendment is futile if the complaint, as amended,
would be subject to dismissal. The futility question is
functionally equivalent to the question whether a complaint
may be dismissed for failure to state a claim . . . .”
Gohier v. Enright, 186 F.3d 1216, 1218 (10th Cir.
1999). Ordinarily “[t]o 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 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). It must identify a basis for
plaintiff's claim for relief, which “requires more
than labels and conclusions.” Twombly, 550 U.S. at 555.
“[A] formulaic recitation of the elements of a cause of
action will not do.” Id. Where the claims for
relief are based, however, on a theory of fraud, as is the
case in this action, “a party must state with
particularity the circumstances constituting fraud or
mistake.” Fed.R.Civ.P. 9(b).
considering a motion to dismiss, the court “must take
all of the factual allegations in the complaint as true,
” but it is “not bound to accept as true a legal
conclusion couched as a factual allegation.” Iqbal, 556
U.S. at 678. It must also “view all reasonable
inferences in favor of the plaintiff” and
“liberally construe” the pleadings. Ruiz v.
McDonnell, 299 F.3d 1173, 1182 (10th Cir. 2002) (quoting
Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.
1984)). Applying these standards, the court considers each
cause of action that Spence has alleged in the SAC.
alleges two fraud-based claims, which require a heightened
level of pleading. The court previously dismissed all of
Spence's fraud-based claims under Federal Rules of
Procedure 9(b) and 12(b)(6) because Spence failed to plead
with the particularity necessary to support fraud-based
claims. Pursuant to Federal Rule of Civil Procedure 9(b), a
party “alleging fraud or mistake . . . must state with
particularity the circumstances constituting fraud or
mistake.” This heightened pleading requirement exists
“‘to afford defendant fair notice of
plaintiff's claims and the factual ground upon which
[they] are based.'” Schwartz v. Celestial
Seasonings, Inc., 124 F.3d 1246, 1252 (10th Cir. 1997)
(alteration in original) (quoting Farlow v. Peat,
Marwick, Mitchell & Co., 956 F.2d 982, 987 (10th
Cir. 1992)). The particularity requirement is met where the
complaint “set[s] forth the time, place and contents of
the false representation, the identity of the party making
the false statements and the consequences thereof.”
Lawrence Nat'l Bank v. Edmonds (In re Edmonds),
924 F.2d 176, 180 (10th Cir. 1991).
alleges RICO violations under 18 U.S.C. §§ 1962(c)
and (d). Under § 1962(c), Spence must allege that
“person[s]” “(1) conducted the affairs (2)
of an enterprise (3) through a pattern (4) of racketeering
activity, ” George v. Urban Settlement Servs.,
833 F.3d 1242, 1248 (10th Cir. 2016). And § 1962(d)
requires proof of a conspiracy to commit the aforementioned.
RICO defines a “person” as “any individual
or entity capable of holding a legal or beneficial interest
in property.” 18 U.S.C. § 1961(3). Defendants
“conduct the affairs” of a RICO enterprise by
“participat[ing] in the operation or management of the
RICO enterprise.” Resolution Trust Corp. v.
Stone, 998 F.2d 1534, 1541 (10th Cir. 1993) (citing
Reves v. Ernst & Young, 507 U.S. 170 (1993)).
And an “enterprise” is “any individual,
partnership, corporation, association, or other legal entity,
and any union or group of individuals associated in fact
although not a legal entity.” 18 U.S.C. § 1961(4).
alleges that Defendants Basic Research, Bremenn, Gay,
Friedlander, and Strobel are all persons involved in an
association-in-fact enterprise comprised of the same
individuals and entities. (SAC, ¶¶ 89& 91, ECF
No. 102-1.) But “the ‘person' conducting the
enterprise's affairs [must] be distinct from the
‘enterprise.'” George, 833 F.3d at 1249
(citing Cedric Kushner Promotions, Ltd. v. King, 533
U.S. 158 (2001)). It is insufficient to identify
“simply the group of . . . defendants accused of
engaging in the racketeering” as the enterprise.
Switzer v. Coan,261 F.3d 985, 992 (10th Cir. 2011).
The Tenth Circuit Court of Appeals has said that the
distinction requirement means that the “person”
and “enterprise” must “be different
entities, ” Bd. of Cty. Comm'rs of San Juan
Cty. v. Liberty Grp.,965 F.2d 879, 885 (10th Cir.
1992), and that a plaintiff must plead “that the
defendant conducted the affairs of the enterprise rather than
simply conducting the defendant's own affairs, ”
George, 833 F.3d at 1249. While the United States Supreme
Court has held that a “corporate owner/employee, a
natural person, is” sufficiently “distinct from
the corporation itself, ” Cedric Kushner, 533 ...