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Lopez v. Council on American-Islamic Relations Action Network

September 28, 2009

RENE ARTURO LOPEZ ET AL., PLAINTIFFS,
v.
COUNCIL ON AMERICAN-ISLAMIC RELATIONS ACTION NETWORK, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Re Document Nos. 11, 16, 24

MEMORANDUM OPINION

GRANTING THE PLAINTIFFS'MOTION TO FILE A SUR-REPLY; GRANTING THE CAIRDEFENDANTS'MOTION TO DISMISS; GRANTING DEFENDANT GORAYA'S MOTION TO DISMISS

I. INTRODUCTION

This matter is before the court on the defendants' motion to dismiss the plaintiffs' complaint. The plaintiffs brought this action against the Council on American-Islamic Relations Action Network, Inc. ("CAIR"); Zahara Investment Corporation ("Zahara"); Greater Washington LLC of Delaware ("GW LLC"); Khalid Iqbal, the Managing Director of CAIR Maryland/Virginia ("CAIR MD/VA"); Ibrahim Hooper, CAIR's Director of Communications; Amina Rubin, CAIR's Coordinator of Communications; Nihad Awad, CAIR's Executive Director and an authorized signatory of GW LLC; Parvez Ahmed, CAIR's Chairman of the Board; Khadijah Athman, the Manager of the Civil Rights Division at CAIR; Nadhira Al-Khalili, CAIR's in-house legal counsel;*fn1 Tahra Goraya, CAIR's National Director; and Morris Days, the Resident Attorney of CAIR MD/VA. The plaintiffs allege that the defendants conspired to violate the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d), violated the D.C. Consumer Protection Procedures Act ("DCCPPA"), D.C. Code § 28-3901 et seq., and violated the Virginia Consumer Protection Act ("VCPA"), Va. Code Ann. § 59.1-196 et seq. The plaintiffs also allege claims of common law fraud and aiding and abetting fraud, breach of fiduciary duty, intentional infliction of emotional distress, conversion and unjust enrichment. Because the court concludes that the plaintiffs do not have standing to bring a RICO claim, the court dismisses that claim with prejudice. The court accordingly dismisses the seven other state law claims without prejudice for want of jurisdiction. II. BACKGROUND

A. Factual History*fn2

CAIR operates as a public interest law firm with various regional and local offices around the country. Compl. ¶ 21. In or around December 2004, CAIR opened CAIR MD/VA, its local office in based Herndon, Virginia. Id. ¶ 2. In or around June 2006, CAIR MD/VA hired Days as its Resident Attorney and Manager of its Civil Rights Department. Id. Days's job was to provide legal representation to Muslims alleging of civil rights abuses. Id. Days, however, had never been to law school and was not licensed to practice law. Id. ¶ 25. The plaintiffs allege that Days, with the intent to defraud CAIR clients, represented that he was a competent attorney and charged over thirty clients for legal services despite the fact that he was not a lawyer and did not perform any legal services. Id. ¶¶ 25-27, 35.

By November 2007, Iqbal, the managing director of CAIR MD/VA, had allegedly learned that Days was collecting legal fees in violation of CAIR's policy of representing its clients pro bono. Id. ¶ 32. CAIR MD/VA had received numerous complaints about Days's handling of CAIR clients' legal matters and terminated Days's employment on February 10, 2008. Id. ¶¶ 34-35.

On or about February 8, 2008, Iqbal called and/or e-mailed Ahmed, Awad, Goraya and other unnamed officials at CAIR informing them about Days's actions. Id. ¶¶ 37, 82. Soon thereafter, Ahmed, Awad, Goraya and other unnamed officials of CAIR informed Athman and Khalili of Days's actions. Id.

In or around February 2008, Iqbal, Ahmed, Awad, Goraya, Athman and Khalili allegedly decided to take affirmative steps to conceal the scheme from the victims. Id. ¶ 38. These defendants allegedly agreed to inform the victims of the scheme only that Days was no longer at CAIR MD/VA and that any complainants must speak to Days directly to address their concerns. Id. ¶ 39. Over time, as complaints mounted, the defendants purportedly agreed that they would provide partial restitution to the most vocal victims. Id. ¶ 41. They also allegedly agreed that they would not disclose the fraud to any law enforcement or other government agency. Id.

Before any restitution was paid, the defendants required that every person receiving restitution sign a document entitled "Voluntary Agreement and Release of Claims." Id. ¶ 42. The document absolved CAIR of any civil liability arising out of its prior or future representation of former or current clients, and stipulated to a $25,000 penalty for any person who disclosed the events involving the scheme. Id. ¶¶ 42, 45, 48.

In response to a widely published report on the scheme, defendants Iqbal, Awad, Goraya, Athman, Khalili, Hooper and Rubin ("RICO Defendants")*fn3 published a press release on the CAIR website. Id. ¶ 106. The press release stated that Days was terminated immediately after the scheme was discovered and that the CAIR MD/VA offices reached out to defrauded CAIR clients by offering them compensation and referring them to outside attorneys. Id. ¶ 107.

B. Procedural History

The plaintiffs filed a complaint on November 11, 2008, alleging conspiracy to violate RICO, violation of the DCCPPA, violation of the VCPA, common law fraud and aiding and abetting fraud, breach of fiduciary duty, intentional infliction of emotional distress, conversion and unjust enrichment. See generally Compl. The CAIR Defendants filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on January 15, 2009, see generally Defs.' Mot. The plaintiffs filed an opposition on February 1, 2009, see generally Pls.' Opp'n, to which the defendant replied to on February 18, 2009, see generally Defs.' Reply. The plaintiffs filed a motion seeking leave to file a sur-reply on February 25, 2009, see generally Pls.' Mot. to File a Sur-Reply, which the defendants opposed on March 11, 2009, see generally Defs.' Opp'n to Pls.' Mot. to File a Sur-Reply. On June 25, 2009, defendant Goraya filed a motion to dismiss, joining in the arguments made by the CAIR Defendants in their motion. Def. Goraya's Mot. to Dismiss at 1. The plaintiffs, likewise, incorporated by reference their opposition to the CAIR Defendants' motion in opposition to defendant Goraya's motion. Pls.' Opp'n to Def. Goraya's Mot. to Dismiss at 1. The court now turns to the parties' arguments.

III. ANALYSIS

A. The Court Grants the Plaintiffs' Motion to File a Sur-Reply

The plaintiffs argue that they should be granted leave to file a sur-reply because, in their reply, the defendants brought up the novel legal argument that co-conspirators in a cover-up cannot be liable for damages arising ...


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