Home Orthopedics Corp. v. Rodriguez, 1st Cir. (2015)

7/26/2019 Home Orthopedics Corp. v. Rodriguez, 1st Cir. (2015)

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United States Court of AppealsFor the First Circuit

No. 12- 2387

HOME ORTHOPEDI CS CORP. ,

Pl ai nt i f f , Appel l ant ,

v.

RAL RODR GUEZ; J OS A. LI NARES; J ULI O F. J ULI ; PAUL PI NO,

Def endant s, Appel l ees,

UNI DENTI FI ED DI RECTORS AB, BC, CD, DE, EF, FG, GH, HI , I J , J K, KLOF HUMANA HEALTH PLANS OF PUERTO RI CO ( D/ B/ A HUMANA) ; DI RECTORSLM, MN, NO, OP, PQ, QR, RS, ST, TU, UV, VW, WX OF MEDI CAL CARD

SYSTEM, I NC. ( MCS) ; A, B, C, D, E, F, G, H, I I NSURANCECOMPANI ES; LUI S GORI S- GARC A; ARLENE MARRERO;

J AVI ER MAGRI - MELNDEZ,

Def endants.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF PUERTO RI CO

[ Hon. Dani el R. Dom nguez, U. S. Di st r i ct J udge]

Bef or e

Thompson, Bal dock, * and Sel ya,Ci r cui t J udges.

Car l o Def endi ni - D az and Pagn, Or t ega & Def endi ni LawOf f i ces, PSC, on br i ef f or appel l ant .

Theresa M. B. Van Vl i et , Pat sy Zi mmer man- Keenan, and GenoveseJ obl ove & Bat t i st a, P. A. , on br i ef f or appel l ees Ral Rodr guez,J os A. Li nares, and Paul Pi no.

* Of t he Tent h Ci r cui t , si t t i ng by desi gnat i on.


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Rober t o Sant ana Apar i ci o, Ber eni ce B. Bel l ot t i Sevi l l a, andDel Tor o & Sant ana, on br i ef f or appel l ee J ul i o F. J ul i .

Mar ch 25, 2015


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THOMPSON, Circuit Judge. Home Or t hopedi cs Corp. , a

medi cal equi pment suppl i er based i n Puer t o Ri co, sued t he

def endant s f or t hei r al l eged i nvol vement i n a scheme t o hel p one

guy col l ect a consul t i ng f ee Home Or t hopedi cs agreed t o pay hi m,

but based on a cont r act i t l at er di scover ed was phony. Fuel ed by

Home Or t hopedi cs' r ef usal t o cont i nue payi ng t he f ee, t he

def endant s pur por t edl y wi el ded t hei r i nf l uence over pl ayer s i n t he

heal t h i nsurance i ndust r y t o j eopardi ze numer ous cont r act s Home

Or t hopedi cs had wi t h ot her cl i ent s.

The Puer t o Ri co di st r i ct cour t di smi ssed Home

Or t hopedi cs' numer ous f eder al and Commonweal t h l aw causes of

act i on. Home Or t hopedi cs now appeal s t he di smi ssal of i t s pr i mary

cl ai m, br ought under t he Racket eer I nf l uenced and Cor r upt

Or gani zat i ons Act , or "RI CO, " di sposed of f or f ai l ur e t o st at e a

cl ai m. Home Or t hopedi cs al so appeal s the di st r i ct cour t ' s deni al

of i t s mot i ons t o conduct l i mi t ed di scover y and amend t he

compl ai nt .

For t he r easons di scussed bel ow, we af f i r m t he di st r i ct

court.

BACKGROUND

Because we ar e r evi ewi ng a mot i on t o di smi ss f or f ai l ur e

t o st at e a cl ai m, we r eci t e t he f act s as t hey ar e al l eged i n t he

oper at i ve compl ai nt and RI CO case st atement , i n t he l i ght most

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f avorabl e t o Home Or t hopedi cs. 1 Ocasi o- Her nndez v. For t uo-

Bur set , 640 F. 3d 1, 12- 13 ( 1st Ci r . 2011) .

The Letter of Agreement

Si nce 2001, Home Or t hopedi cs, a home medi cal equi pment

suppl i er and t he l eadi ng company i n Puer t o Ri co f or or t hot i cs,

pr ost het i cs, and di abet i c shoes, suppl i ed medi cal equi pment t o MMM

Heal t hCar e, I nc. , a Puer t o Ri can heal t h mai nt enance or gani zat i on

t hat we' l l r ef er t o as "t he HMO. " But i n mi d- 2004, Def endant

Cl i ni cal Medi cal Ser vi ces, I nc. ( "Cl i ni cal Medi cal ") , al so a home

medi cal equi pment suppl i er i n Puer t o Ri co, st r uck a deal wi t h t he

HMO t o be i t s excl usi ve pr ovi der of "dur abl e medi cal equi pment , " a

speci f i c cat egory of l ong- l ast i ng medi cal equi pment used by

pat i ent s i n t he home, i ncl udi ng, f or i nst ance, hospi t al beds,

canes, and cr ut ches.

I n l at e 2004, Cl i ni cal Medi cal ' s pr esi dent , Ral

Rodr guez ( "Ral " ) , met wi t h Home Or t hopedi cs' pr esi dent , J ess

1 A RI CO case st atement i s a st andard quest i onnai r e thatdi st r i ct cour t s may or der f r om pl ai nt i f f s i n ci vi l RI CO cases to"adduce t he speci f i cs t hat under l i e gener al cl ai ms of RI COmi sconduct . " O' Fer r al v. Tr ebol Mot or s Cor p. , 45 F. 3d 561, 562( 1st Ci r . 1995) . Her e, t he di st r i ct cour t or der ed Home Or t hopedi cst o f i l e one "i n an ef f or t t o ai d t he Cour t i n assessi ng RI CO cl ai msat an ear l y pl eadi ng st age. " The di st r i ct cour t al l owed HomeOr t hopedi cs' amended case st at ement t o be consi dered par t of t he

pl eadi ngs, and so we have consi der ed i t i n our r evi ew.Even wi t h t he case st at ement ( whi ch ended up bei ng l argel y ar egur gi t at i on of t he compl ai nt ) , we had di f f i cul t y const r uct i ng asensi bl e nar r at i ve f r omHome Or t hopedi cs' paper s. We di d our bestwi t h what we were gi ven. See Fol ey v. Wel l s Far go Bank, N. A. , 772F. 3d 63, 79 ( 1st Ci r . 2014) ( war ni ng t hat we wi l l not "haphazar dl ymi ne" compl ai nt s or t he document s at t ached t o t hem) .

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Rodr guez ( "J ess") , cl ai mi ng t hat i n addi t i on t o t he excl usi vi t y

agr eement f or dur abl e medi cal equi pment , Cl i ni cal Medi cal had

ent er ed i nt o an addi t i onal agr eement wi t h the HMO t o be i t s

excl usi ve pr ovi der of or t hot i c and pr ost het i c ser vi ces. Ral t ol d

J ess t hat Cl i ni cal Medi cal woul d need a subcont r act or t o act ual l y

pr ovi de t hose ser vi ces, however , because Cl i ni cal Medi cal "di d not

know anyt hi ng about or t hot i cs and pr ost het i cs. "

The compl ai nt doesn' t say whether J ess agr eed i n t hat

meet i ng t o subcont r act f or Cl i ni cal Medi cal , but i n Febr uar y 2005,

J ess r ecei ved a f axed "Let t er of Agr eement " f r om Ral . The

l et t er , a copy of whi ch was at t ached t o t he compl ai nt , was an

unsi gned, dr af t agr eement bet ween Home Or t hopedi cs and t he HMO

( even t hough Ral sent J ess t he cont r act and ar r anged f or J ess t o

si gn i t , Cl i ni cal Medi cal was not act ual l y a par t y t o t he

cont r act ) . The agr eement woul d al l ow Home Or t hopedi cs t o cont i nue

pr ovi di ng or t hot i c and pr ost het i c ser vi ces t o t he HMO' s

subscr i ber s, but at a 20 per cent l ower pr of i t , r educi ng Home

Or t hopedi cs' sal es r ei mbur sement f r om 100 per cent t o 80 per cent .

Speci f i cal l y, t he agr eement pr ovi ded:

[ Home Or t hopedi cs] i ndi cat es i t s i nt ent t oent er i nto an agr eement wi t h [ t he HMO] t or ender Or t hot i c and Pr ost het i c ser vi ces t o

pat i ent s enr ol l ed i n [ t he HMO] . By si gni ngt hi s Agr eement , [ Home Or t hopedi cs] agr ees t or ender pr of essi onal heal t hcar e ser vi ces and t oaccept [ 80 per cent r ei mbur sement ] as f ul lpayment f or al l Cover ed Ser vi ces t o pat i ent sr ef er r ed t o [ Home Or t hopedi cs] .

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The agreement was dr af t ed i n Engl i sh, of whi ch J ess

f unct i onal l y knewl i t t l e. When J ess asked Ral f or an expl anat i on

of t he agr eement , Ral " t hreat ened" t hat Home Or t hopedi cs was

"bei ng put out of busi ness, " and t ol d J ess t o "t ake i t or l eave

i t " because anot her pr ost het i cs company was al so i nt er est ed i n t he

deal .

J ess opt ed t o t ake i t . He si gned t he agr eement , even

t hough (as we gat her f r om f act s pl eaded l at er i n t he compl ai nt ) he

had not spoken wi t h anyone f r om t he HMO about i t , and no one f r om

t he HMO had si gned i t yet .

J ess al so agreed wi t h Ral t hat i n exchange f or choosi ng

Home Or t hopedi cs as t he subcont r act or , Cl i ni cal Medi cal woul d ear n

a 12. 5 percent consul t ant ' s commi ssi on on Home Or t hopedi cs' sal es

t o t he HMO, t o be pai d di r ect l y t o Ral . Under t he deal wi t h

Cl i ni cal Medi cal , t hen, Home Or t hopedi cs woul d st ar t r ecei vi ng onl y

67. 5 percent of t he sal es i t made t o the HMO, as opposed t o t he 100

percent i t had been maki ng.

Ral Gets Caught

Wi t h the new deal i n pl ace, busi ness went on as usual ,

and i n August 2005, Home Or t hopedi cs sent t he HMO an i nvoi ce. The

HMO, t hough, sent Home Or t hopedi cs a check account i ng f or 100

per cent of t he bi l l . Home Or t hopedi cs t hought t he HMO made a

mi st ake, and, i n "good f ai t h, " r emi nded t he HMO t hat i t shoul d have

pai d out onl y 80 per cent under t he t er ms of t he Let t er of

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Agreement . But t he HMO r esponded t hat i t had never seen t hat

agr eement and woul d " i nvest i gate[ ] t he mat t er . "

I t ' s not cl ear f r om t he compl ai nt what happened i n t he

meant i me, but around Oct ober 2006, J ess f ound out f r om t he HMO

t hat Cl i ni cal Medi cal was not act ual l y i t s excl usi ve pr ovi der of

or t hot i cs and pr ost het i cs; Cl i ni cal Medi cal and the HMO had

negot i at ed an agr eement t o t hat extent , but Cl i ni cal Medi cal

al l owed t he excl usi vi t y opt i on t o expi r e. At t hat poi nt , Home

Or t hopedi cs st opped payi ng Ral hi s consul t i ng f ee. 2

Ral was di spl eased. He demanded J ess pay hi m f or t he

f ees he ear ned i n 2005 and 2006, and when J ess woul dn' t budge,

def endant s J os Li nar es and Paul Pi no, al so execut i ves at Cl i ni cal

Medi cal , st ar t ed cal l i ng and sendi ng l et t er s t o J ess t o t r y t o

"col l ect t he money owed to Ral . " 3 Ral al so "f r equent l y cal l ed

[ J ess] r equest i ng payment s and t hr eat ened hi m wi t h the ' l oss of

hi s busi ness. ' "

Continued Collection Efforts

By mi d- t o l at e- 2008, Ral warned J ess t hat he woul d

"see [ hi m] bl eed dr op by dr op unt i l [ he] r emai n[ ed] wi t hout a

busi ness. " Event ual l y J ess, "under dur ess, " r el ent ed and pai d

2 The compl ai nt doesn' t t el l us why Home Or t hopedi cs cont i nuedpayi ng Ral a commi ssi on f or t he year af t er f i ndi ng out t hat t heHMO had never seen t he Let t er of Agreement .

3 I t i s not cl ear why Ral woul d need t o seek hi s f ees f r om2005 and 2006 i f Home Or t hopedi cs di d not st op payi ng hi m unt i lOct ober 2006.

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Ral $150, 000 - - on t op of t he $600, 000 he had al r eady pai d - - vi a

numer ous payment s made t hr oughout 2008. 4

Ral wasn' t sat i sf i ed, and, appar ent l y undet er r ed by

J ess' s r ef usal t o pay mor e money, Cl i ni cal Medi cal f i l ed a l awsui t

agai nst Home Or t hopedi cs i n Puer t o Ri co st at e cour t i n Apr i l 2009.

Ral t r i ed t o get J ess t o set t l e t he case, war ni ng t hat hi s

at t or neys "have a gr eat i nf l uence i n t he Puer t o Ri co cour t s. " J ess

di dn' t bi t e, and i n f al l 2009, st ar t ed r ecei vi ng col l ecti on cal l s

and emai l s f r omPi no. He al so r ecei ved a wr i t t en set t l ement demand

( and f ol l ow- up cor r espondence regardi ng t he set t l ement demand) f r om

Li nar es and Pi no.

Other Terminated Contracts

I n t he meant i me, other compani es i n the heal t h i nsurance

f i el d st ar t ed t er mi nat i ng t hei r cont r act s wi t h Home Or t hopedi cs,

whi ch Ral had warned J ess woul d happen i f he di dn' t "cooper ate. "

The f i r st was i n November 2006, shor t l y af t er Home Or t hopedi cs

st opped payi ng Ral , when Medi cal Card Syst em, I nc. t er mi nated i t s

cont r act wi t h Home Or t hopedi cs, supposedl y f or l ack of pr oper

cr edent i al i ng ( Home Or t hopedi cs asser t s t hat i t had t he pr oper

cr edent i al s) . Af t er f ai l ed at t empt s t o get Medi cal Car d Syst em t o

change i t s mi nd, Home Or t hopedi cs hi r ed someone t o hel p negot i at e

a new ser vi ces agr eement wi t h t he managed car e organi zat i on. Dur i ng

4 The compl ai nt does not speci f y f or how much Ral was aski ng,but i n a demand l et t er dated March 12, 2009, Ral ' s l awyer s cl ai medt hat " t he amount owed . . . exceeds [ $1 mi l l i on] . "

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t hat negot i at i on meet i ng, def endant J ul i o F. J ul i , a f r i end of

Ral ' s who had r ecent l y begun wor ki ng at Medi cal Car d Syst em,

i nt er r upt ed t o f al sel y cl ai m t hat Medi cal Car d Syst em coul d not

negot i at e di r ect l y wi t h Home Or t hopedi cs because Home Or t hopedi cs

had an excl usi vi t y agr eement wi t h Cl i ni cal Medi cal .

I n J une 2007, Fi r st Medi cal , an i nsurance company,

t er mi nat ed i t s cont r act wi t h Home Or t hopedi cs wi t hout expl anat i on;

so di d Humana Heal t h Pl ans of Puer t o Ri co, a heal t hcare net work, on

August 1, 2009.

I n September 2009, Home Or t hopedi cs made a deal t o be the

"excl usi ve announced company of or t hot i cs and pr ost het i cs" at

Medi cal Card Syst em' s convent i on. Medi cal Card Syst em, however ,

cancel l ed t he excl usi vi t y deal and r et ur ned Home Or t hopedi cs'

payment f or excl usi vi t y, i nst ead deci di ng t o al l ow ot her compani es

t o adver t i se al ong wi t h Home Or t hopedi cs.

Fi nal l y, i n Mar ch 2010, Medi cal Car d Syst emt er mi nat ed i t s

new ser vi ces agr eement wi t h Home Or t hopedi cs, but t hi s t i me, wi t hout

gi vi ng any reason.

This Lawsuit

Convi nced t hat t he def endant s - - some of whomworked wi t h

Ral , and ot her s of whom worked f or t he compani es t hat t er mi nat ed

t hei r cont r act s wi t h Home Or t hopedi cs - - wer e al l i n cahoot s t o hel p

Ral st r ongarmmore money, Home Or t hopedi cs f i l ed sui t i n J une 2011

i n t he Puer t o Ri co f eder al di st r i ct cour t . The amended compl ai nt ,

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whi ch i s now t he oper at i ve one i n t hi s case, sought r el i ef agai nst

numerous def endant s f or vi ol at i ng numerous f ederal and Commonweal t h

l aws, i ncl udi ng RI CO ( 18 U. S. C. 1962( b) , ( c) , and ( d) ) . 5 Home

Or t hopedi cs' t heory of t he case was t hat t he def endant s' above-

descr i bed conduct amount ed t o extor t i on, mai l f r aud, and wi r e f r aud,

al l act i onabl e under RI CO.

Several def endant s moved t o di smi ss t he amended compl ai nt

f or f ai l ur e t o st at e a cl ai m. 6 A magi st r ate j udge i ssued a r epor t

and r ecommendat i on t o di smi ss t he compl ai nt , whi ch t he di st r i ct

cour t l ar gel y adopt ed, di smi ssi ng al l t he f eder al cl ai ms wi t h

pr ej udi ce and t he suppl ement al st at e l aw cl ai ms wi t hout pr ej udi ce.

Speci f i cal l y, t he di st r i ct cour t hel d t hat Home Or t hopedi cs f ai l ed

t o adequat el y al l ege t hat J ul i was par t of an ent er pr i se. The

cour t al so concl uded t hat t he compl ai nt di d not suf f i ci ent l y al l ege

t hat Ral , Li nar es, and Pi no engaged i n a "pat t er n of r acket eer i ng

acti vi t y, " as al l of t hei r acti onabl e r acket eer i ng acts "r el at e[ d]

5 The compl ai nt al so br ought causes of act i ons f or vi ol at i onsof : The Sher man Act ( 15 U. S. C. 3) ; The Hobbs Act ( 18 U. S. C. 1951) ; The Tr avel Act ( 18 U. S. C. 1952) ; mai l f r aud ( 18 U. S. C. 1341) ; wi r e f r aud ( 18 U. S. C. 1343) ; f ai l ur e t o conf or m wi t hMedi car e cr edent i al i ng ( 42 C. F. R. 422. 204) ; t or t i ous i nt er f er encewi t h cont r act ( P. R. Laws Ann. t i t . 31, 5141) ; ext or t i on ( P. R.Laws Ann. t i t . 33, 4828) ; and f r aud ( P. R. Laws Ann. t i t . 33,

4838) .6 Or i gi nal l y, Home Or t hopedi cs appeal ed t he di smi ssal s of t he

RI CO cl ai magai nst Ral , Li nar es, Pi no, and J ul i , as wel l as t hr eeot her def endant s, J avi er Magr i - Mel ndez, Ar l ene Mar r er o, and Lui sGor i s- Gar c a. Home Or t hopedi cs has si nce vol unt ar i l y di smi ssed t hel at t er t hr ee def endant s f r om t he appeal .

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t o a si ngl e t r ansact i on" - - t he si gni ng of t he 2005 Let t er of

Agr eement - - "ai med t o ext or t " Home Or t hopedi cs. The cour t al so

deni ed Home Or t hopedi cs' r equest t o amend i t s compl ai nt f or a second

t i me i n l i eu of di smi ssal .

Thi s t i mel y appeal f ol l owed. Home Or t hopedi cs onl y asks

us, however , t o ei t her r evi ve i t s subst ant i ve RI CO cl ai m, br ought

under 18 U. S. C. 1962( c) 7 ( or al l ow i t t o amend i t s compl ai nt t o

add mor e al l egat i ons t o suppor t i t ) .

DISCUSSION

Motion to Dismiss

St andard of Revi ew

We r evi ew a di st r i ct cour t ' s di smi ssal under Feder al Rul e

of Ci vi l Procedur e 12( b) ( 6) de novo. Woods v. Wel l s Fargo Bank,

N. A. , 733 F. 3d 349, 353 ( 1st Ci r . 2013) . That i s, we accept t he

f act s pl eaded i n the compl ai nt as t r ue to det er mi ne whet her t he

pl ai nt i f f has stat ed a pl ausi bl e cl ai m f or r el i ef . Ocasi o-

Her nndez, 640 F. 3d at 12- 13; Mndez I nt er net Mgmt . Ser vs. , I nc. v.

Banco Sant ander de Puer t o Ri co, 621 F. 3d 10, 12 ( 1st Ci r . 2010) .

7 Whi l e t he compl ai nt seeks r el i ef under var i ous subsect i ons

of RI CO, i ncl udi ng t he conspi r acy pr ovi si on, subsect i on ( d) , t hedi st r i ct cour t onl y exami ned Home Or t hopedi cs' RI CO cl ai munder 18U. S. C. 1962( c) , dubbed "subst ant i ve" RI CO. Because HomeOr t hopedi cs does t he same i n i t s openi ng br i ef , and does notot her wi se di sput e t he di st r i ct cour t ' s di sr egar d of t he cl ai msbr ought under 18 U. S. C. 1962( b) and ( d) , we wi l l f ol l ow sui t andanal yze Home Or t hopedi cs' cl ai m under onl y subsect i on ( c) .

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The El ement s of a RI CO Cl ai m

RI CO, t he Racket eer I nf l uenced and Cor r upt Or gani zat i ons

Act , i s a st at ut e t hat Congr ess enact ed as a t ool i n t he f eder al

gover nment ' s "war agai nst organi zed cr i me, " Uni t ed St ates v.

Turket t e, 452 U. S. 576, 587 ( 1981) , t o hel p combat "endur i ng

cr i mi nal conduct , " Li ber t ad v. Wel ch, 53 F. 3d 428, 445 ( 1st Ci r .

1995) . I n addi t i on t o al l owi ng t he cr i mi nal pr osecut i on of RI CO

vi ol at or s, see 18 U. S. C. 1962, t he st at ut e' s expansi ve r each al so

pr ovi des a gener ous pr i vat e r i ght of act i on - - successf ul pl ai nt i f f s

ar e ent i t l ed t o t r i pl e damages i f t hey can pr ove t hey wer e " i nj ur ed

i n [ t hei r ] busi ness or pr oper t y by r eason of a vi ol at i on of sect i on

1962. " 18 U. S. C. 1964( c) .

Agai nst t hat backdr op, we st ar t our anal ysi s by l ayi ng out

t he bui l di ng bl ocks of a ci vi l RI CO cl ai m.

The RI CO st at ut e makes i t :

unl awf ul f or any per son empl oyed by orassoci at ed wi t h any ent er pr i se engaged i n, ort he acti vi t i es of whi ch af f ect, i nt er st at e orf or ei gn commer ce, t o conduct or par t i ci pat e,di r ectl y or i ndi r ectl y, i n t he conduct of suchent er pr i se s af f ai r s t hr ough a pat t er n ofr acket eer i ng act i vi t y or col l ect i on of unl awf uldebt .

18 U. S. C. 1962( c) . To st at e a ci vi l RI CO cl ai m, t hen, a pl ai nt i f f

must al l ege: "( 1) conduct , ( 2) of an ent er pr i se, ( 3) t hr ough[ ei t her ] a pat t er n . . . of r acket eer i ng act i vi t y, " Kenda Cor p. v.

Pot O' Gol d Money Leagues, I nc. , 329 F. 3d 216, 233 ( 1st Ci r . 2003)

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( quot at i ons omi t t ed) , or "a si ngl e col l ect i on of an unl awf ul debt , "

Uni t ed St at es v. Wei ner , 3 F. 3d 17, 24 ( 1st Ci r . 1993) .

We t ur n our at t ent i on t o t he t hi r d el ement - -

speci f i cal l y, whet her Home Or t hopedi cs has suf f i ci ent l y al l eged a

pat t er n of r acket eer i ng act i vi t y. As we expl ai n bel ow, we agr ee

wi t h t he di st r i ct cour t t hat Home Or t hopedi cs has not suf f i ci ent l y

al l eged a RI CO pat t er n, and t hus, i t s RI CO cl ai m f ai l s. 8

Pat t er n of Racket eer i ng Under RI CO

RI CO speci f i cal l y enumer at es what ki nds of i l l egal act s

count as " r acket eer i ng, " and i ncl udes i n t hat cat egor y of cr i mes

extor t i on and mai l and wi r e f r aud. See 18 U. S. C. 1961( 1) . To

est abl i sh a "pat t er n, " t he st at ut e r equi r es a pl ai nt i f f t o show t hat

at l east t wo act s of r acket eer i ng occur r ed wi t hi n t en year s of each

ot her . 18 U. S. C. 1961( 5) .

The Supr eme Cour t has addi t i onal l y r equi r ed t hat " ' t he

r acket eer i ng pr edi cat es [ be] r el at ed, and t hat t hey amount t o or

pose a t hr eat of cont i nued cri mi nal act i vi t y. ' " Gi ul i ano v. Ful t on,

399 F. 3d 381, 386- 87 ( 1st Ci r . 2005) ( quot i ng H. J . I nc. v. Nw. Bel l

Tel . Co. , 492 U. S. 229, 239 ( 1989) ) . The l at t er r equi r ement i s

cal l ed t he "cont i nui t y" r equi r ement . Gi ul i ano, 399 F. 3d at 386- 87

8 Home Or t hopedi cs suggest s i n i t s openi ng br i ef t hat Li nar esand Pi no' s at t empt s t o col l ect t he consul t i ng f ees const i t ut ed"col l ect i on of an unl awf ul debt , " maki ng no pat t er n of r acket eer i ngact i vi t y necessar y t o sat i sf y t he t hi r d RI CO el ement . Thi ssuggest i on i s wi t hout mer i t , however , because RI CO l i mi t s " unl awf uldebt " t o i l l egal gambl i ng debt and "usur i ous" l oans, see 18 U. S. C. 1961( 6) , and no such debt s ar e al l eged her e.

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( ci t i ng Ef r on v. Embassy Sui t es ( P. R. ) , I nc. , 223 F. 3d 12, 15 ( 1st

Ci r . 2000) ) .

As t he l anguage of H. J . I nc. i ndi cat es, t he Supr eme Cour t

hel d t hat a pl ai nt i f f can show cont i nui t y i n one of t wo ways. Under

t he "cl osed" appr oach, a pl ai nt i f f woul d have t o pr ove a "cl osed

per i od of r epeat ed conduct " t hat "amount ed t o . . . cont i nued

cri mi nal act i vi t y. " 492 U. S. at 237, 241. Al t er nat i vel y, under t he

"open- ended" appr oach, a pl ai nt i f f coul d sat i sf y t he cont i nui t y

r equi r ement by showi ng "past conduct t hat by i t s nat ur e pr oj ect s

i nt o t he f ut ur e wi t h a t hr eat of r epet i t i on. " I d.

I n t he i nst ant case, t he appel l ant ' s openi ng br i ef does

not speci f y whether Home Or t hopedi cs i nt ended t o show a pat t ern of

r acket eer i ng t hr ough cl osed cont i nui t y, open- ended cont i nui t y, or

bot h. The RI CO case st at ement was al so of no hel p i n i l l umi nat i ng

whi ch t ype of pat t er n Home Or t hopedi cs i nt ended t o pr ove; t he

di st r i ct cour t speci f i cal l y asked Home Or t hopedi cs t o "[ d] escr i be

i n det ai l t he pat t er n of r acket eer i ng acti vi t y . . . al l eged f or

each R. I . C. O. cl ai m, " but r at her t han act ual l y descr i bi ng t he

pat t er n, Home Or t hopedi cs di r ect ed t he cour t t o f i f t y- si x par agr aphs

of t he compl ai nt . We wer e no more enl i ght ened af t er r e- r eadi ng t hat

por t i on of t he compl ai nt .

As we have st ated t i me and agai n, l i t i gant s must pr ovi de

meat on the bones of t hei r ar gument s i f t hey expect us t o ser i ousl y

ent er t ai n t hem. See Rodr guez v. Muni ci pal i t y of San J uan, 659 F. 3d

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168, 176 ( 1st Ci r . 2011) . I n t hi s si t uat i on, t hough, we wi l l not

dwel l on whet her Home Or t hopedi cs' t er se t r eatment of t he "pat t er n"

pr ong suf f i ced t o pr eser ve i t s appel l at e r i ght s because i n any case,

Home Or t hopedi cs' pl eaded al l egat i ons do not make t he st uf f of

ei t her cl osed or open- ended cont i nui t y.

Cl osed Cont i nui t y

Whi l e Home Or t hopedi cs does not addr ess t hi s argument , t he

def endant s asser t t hat cl osed cont i nui t y cannot be est abl i shed her e

because Home Or t hopedi cs has onl y al l eged "a si ngl e nar r ow scheme

t o def r aud a si ngl e vi ct i m. " We agr ee.

Because RI CO was i nt ended t o at t ack " l ong- t er m cr i mi nal

conduct , " "a cl osed- ended pat t er n somet i mes can be est abl i shed by

exami ni ng onl y t he number of al l eged pr edi cate act s and t he dur at i on

of t he al l eged r acket eer i ng act i vi t y. " Gi ul i ano, 399 F. 3d at 387;

see al so Ef r on, 223 F. 3d at 15- 16 ( ci t i ng H. J . I nc. , 492 U. S. at

240- 41) ( not i ng that t he Supreme Cour t has pl aced emphasi s on "t he

t empor al f ocus of t he ' cont i nui t y' r equi r ement " ) . However , gi ven

t hat Congr ess had a " f ai r l y f l exi bl e concept of a pat t er n i n mi nd"

when i t dr af t ed RI CO, H. J . I nc. , 492 U. S. at 239, bot h t he Supr eme

Cour t and t hi s cour t have decl i ned t o spel l out speci f i cal l y how

many pr edi cate act s, or how l ong t he r acket eer i ng has t o endur e, f or

a pl ai nt i f f t o sat i sf actor i l y al l ege t he pat t er n r equi r ement .

But we have est abl i shed some par amet ers. We know, f r om

t he Supr eme Cour t , t hat when a pl ai nt i f f has onl y al l eged a f ew

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pr edi cat e act s ( i . e. , "spor adi c act i vi t y") , H. J . I nc. , 492 U. S. at

239, or when t he act s span onl y a "f ew weeks or mont hs, " cl osed

cont i nui t y cannot be est abl i shed, Ef r on, 223 F. 3d at 17- 18 ( ci t i ng

H. J . I nc. , 492 U. S. at 242) . At t he ot her end of t he spect r um, we

have al so sai d t hat "wher e t he t empor al dur at i on of t he al l eged

act i vi t y and t he al l eged number of pr edi cat e act s are so extensi ve

t hat common sense compel s a concl usi on of cont i nui t y, cl osed- ended

cont i nui t y shoul d be f ound. " Gi ul i ano, 399 F. 3d at 387 ( ci t at i on

and quot at i ons omi t t ed) ; see al so, e. g. , Fl eet Cr edi t Cor p. v. Si on,

893 F. 2d 441, 446- 47 ( 1st Ci r . 1990) ( f i ndi ng t hat ni net y- f i ve

r acket eer i ng act s over a 4. 5- year per i od was suf f i ci ent f or cl osed

cont i nui t y) .

Ot her cases, t hough, f al l somewher e i n the mi ddl e because

t he "dur at i on and ext ensi veness of t he al l eged conduct does not

easi l y r esol ve t he i ssue. " Gi ul i ano, 399 F. 3d at 387. I n t hose

squi shi er cases, we l ook t o ot her "i ndi ci a of cont i nui t y, " i d. ; f or

i nst ance, whet her t he def endant s wer e i nvol ved i n mul t i pl e schemes,

as opposed t o "one scheme wi t h a si ngul ar obj ect i ve" ; whet her t he

scheme af f ect ed many peopl e, or onl y a "cl osed gr oup of t arget ed

vi ct i ms" ; and whet her t he scheme had t he potent i al t o l ast

i ndef i ni t el y, i nst ead of havi ng a "f i ni t e nat ur e. " Ef r on, 223 F. 3d

at 18- 19. Whi l e t hese speci f i c f act or s ar e ones we have consi der ed

i n t he past , at t he end of t he day, we j ust t ake a "nat ur al and

commonsense appr oach t o RI CO' s pat t er n el ement , " i d. at 18 ( ci t i ng

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H. J . I nc. , 492 U. S. at 237) , t o det er mi ne whet her t he speci f i c f act

pat t er n of t he case bef or e us suggest s t he "ki nd of br oad or ongoi ng

cr i mi nal behavi or at whi ch t he RI CO st at ut e was ai med, " Ef r on, 223

F. 3d at 18.

We f i nd t hat Home Or t hopedi cs' al l egat i ons do not f i t t he

bi l l . Even assumi ng ( wi t hout deci di ng) t hat t he compl ai nt al l eges

mor e t han spor adi c act i vi t y, t he pr edi cat e act s al l eged ar e

cer t ai nl y not "so ext ensi ve t hat common sense compel s a concl usi on

of cont i nui t y. " Gi ul i ano, 399 F. 3d at 387; cf . H. J . I nc. , 492 U. S.

at 250; Fl eet Cr edi t Corp. , 893 F. 2d at 446- 47. We have

"consi st ent l y decl i ned t o f i nd cont i nui t y wher e t he RI CO cl ai m

concer ns a si ngl e, nar r ow scheme t ar get i ng f ew vi ct i ms. " Gi ul i ano,

399 F. 3d at 390. And t hat i s exact l y what Home Or t hopedi cs has

al l eged. I t cont ends t hat t he def endant s engaged i n unl awf ul

conduct f or t he pur pose of accompl i shi ng a si ngul ar , nar r ow goal - -

t o hel p Ral col l ect f r om Home Or t hopedi cs t he consul t i ng f ees he

bel i eved he was owed f r om 2005 and 2006 under t he t er ms of t hei r

2005 agr eement . Thus, even i f t he def endant s commi t t ed numer ous

cri mes t o t r y t o col l ect t hi s speci f i c sum of money, al l of t hese

unl awf ul act s "have t hei r or i gi n i n, " Gonzl ez- Mor al es v. Her nndez-

Ar enci bi a, 221 F. 3d 45, 52 ( 1st Ci r . 2000) , a si ngl e "event , " Ef r on,

223 F. 3d at 19, or si ngl e " t r ansact i on, " Gonzl ez- Mor al es, 221 F. 3d

at 52 - - t he si gni ng of t he 2005 agr eement . See i d. ( "Cour t s have

consi st ent l y hel d t hat a si ngl e epi sode does not const i t ut e a

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pat t er n, even i f t hat si ngl e epi sode i nvol ves behavi or t hat amount s

t o sever al cr i mes ( f or exampl e, sever al unl awf ul mai l i ngs) . " )

( quotat i ons omi t t ed) . As we have sai d bef or e i n t he cont ext of

cl osed cont i nui t y, "[ o] ur own pr ecedent f i r ml y r ej ect s RI CO

l i abi l i t y wher e t he al l eged r acket eer i ng act s . . . , t aken t oget her ,

. . . compr i se a si ngl e ef f or t t o f aci l i t at e a si ngl e f i nanci al

endeavor . " Ef r on, 223 F. 3d at 19 ( quot i ng Schul t z v. R. I . Hosp.

Tr ust Nat ' l Bank, N. A. , 94 F. 3d 721, 732 ( 1st Ci r . 1996) )

( quot at i ons omi t t ed) . Her e, t he def endant s' "si ngl e f i nanci al

endeavor " was t o hel p Ral col l ect a speci f i c amount of money under

t he t er ms of a si ngl e cont r act . 9 See al so Appar el Ar t I nt ' l , I nc.

v. J acobson, 967 F. 2d 720, 723 ( 1st Ci r . 1992) ( hol di ng t hat

"sever al i nst ances of cr i mi nal behavi or , " i ncl udi ng maki ng br i bes

and f al se st at ement s, wer e "appr opr i at el y char act er i zed as separ at e

par t s of a si ngl e cr i mi nal epi sode" because t hey "compr i se[ d] a

si ngl e ef f or t t o obt ai n ( and t o keep) one . . . Def ense Depar t ment

cont r act " ) . That t he def endant s i n t hi s case sought t o accompl i sh

a speci f i c, nar r ow mi ssi on - - whi ch st emmed f r om a si ngl e,

di scer ni bl e event - - cl ear l y cut s agai nst a concl usi on t hat Home

Or t hopedi cs has suf f i ci ent l y al l eged a cl osed pat t er n.

9 To t he ext ent Home Or t hopedi cs i nt ended to asser t t hat t hedef endant s were al so schemi ng t o take t he HMO' s busi ness away f r omHome Or t hopedi cs, t hat poi nt i s not made cl ear i n t he compl ai nt ,RI CO case st at ement , or br i ef i ng. I t i s, t her ef or e, wai ved. SeeUni t ed St at es v. Zanni no, 895 F. 2d 1, 17 ( 1st Ci r . 1990) .

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Looki ng at some of t he ot her f act or s, Home Or t hopedi cs

was, mor eover , t he onl y "t ar get ed vi ct i m" of t he def endant s'

act i ons. 10 And t he nat ur e of t he def endant s' conduct i s f i ni t e.

Accor di ng t o t he compl ai nt , Ral sought onl y to col l ect t he 2005-

2006 f ees; t he compl ai nt makes no i ndi cat i on t hat once he recei ved

t hose per cent age f ees, t he al l egedl y ext or t i onat e conduct woul d

cont i nue.

Thus, our common sense di ct at es t hat where, as here, "a

cl osed- ended ser i es of pr edi cat e act s . . . const i t ut e[ s] a si ngl e

scheme to accompl i sh one di scr et e goal , di r ect ed at one i ndi vi dual

wi t h no pot ent i al t o ext end t o ot her per sons or ent i t i es, " Ef r on,

223 F. 3d at 19 ( quot i ng Si l - Fl o, I nc. v. SFHC, I nc. , 917 F. 2d 1507,

1516 ( 10t h Ci r . 1990) ) ( quot at i ons omi t t ed) , RI CO l i abi l i t y cannot

at t ach under a t heor y of a cl osed pat t er n of r acket eer i ng.

Next , we expl ai n why Home Or t hopedi cs' compl ai nt l i kewi se

f ai l s under a t heor y of open- ended cont i nui t y.

Open- Ended Cont i nui t y

As we not ed above, even i n t he absence of cl osed

cont i nui t y, a pl ai nt i f f can st i l l demonst r at e a "pat t er n" by showi ng

a "t hr eat of " f ut ur e cr i mi nal act i vi t y - - t hat i s , "a r eal i st i c

pr ospect of cont i nui t y over an open- ended per i od yet t o come. "

10 Whi l e Home Or t hopedi cs cont ends i n i t s br i ef ( i n a one-sent ence f oot not e) t hat Ral used t he l i e about havi ng an excl usi vedeal wi t h t he HMO " t o t ake out of busi ness hundr eds of ser vi cepr ovi ders of dur abl e medi cal equi pment , " Home Or t hopedi cs di d notal l ege such i n t he compl ai nt .

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Fei nst ei n v. Resol ut i on Tr ust Cor p. , 942 F. 2d 34, 45 ( 1st Ci r .

1991) . "Thi s appr oach necessi t at es a showi ng t hat t he r acket eer i ng

act s t hemsel ves i ncl ude a speci f i c t hr eat of r epet i t i on ext endi ng

i ndef i ni t el y i nt o t he f ut ur e [ or ] . . . ar e par t of an ongoi ng

ent i t y' s r egul ar way of doi ng busi ness. " I d. ( quot at i ons omi t t ed) .

We f i nd t hat an open- ended pat t er n woul d f ai l her e f or

l argel y t he same r easons t hat a cl osed pat t er n woul d. Nei t her Home

Or t hopedi cs' compl ai nt nor br i ef i ng pr ovi de any i ndi cat i on t hat wer e

Ral t o recei ve hi s f ees f r om Home Or t hopedi cs, t he "scheme" t o

col l ect money woul d cont i nue i nt o t he i ndef i ni t e f ut ur e. To t he

ext ent Home Or t hopedi cs i nt ended t o show t hat t he ongoi ng Puer t o

Ri co l awsui t Ral i ni t i at ed agai nst Home Or t hopedi cs i n 2009

const i t ut es i ndef i ni t eness, t hi s ar gument easi l y f ai l s. As we

st at ed i n Gonzl ez- Mor al es, when t he "f i l i ng of f r i vol ous

[ l aw] sui t s" has i t s or i gi n i n t he execut i on of a si ngl e cont r act ,

"t he f act t hat . . . l ocal cour t sui t s ar e st i l l pendi ng does not

const i t ut e l ong- t er m conduct demonst r at i ng a t hr eat of f ut ur e

act i vi t y. " 221 F. 3d at 51- 52. Lawsui t s, by t hei r ver y nat ur e, ar e

not i ndef i ni t e, see Fei nst ei n, 942 F. 2d at 45 - - once one si de

pr evai l s ( or t he par t i es set t l e) , t he case i s over . Nor has Home

Or t hopedi cs at t empt ed t o show t hat t he def endant s' al l eged

r acket eer i ng act s wer e par t of t hei r r egul ar way of doi ng busi ness.

For t hese reasons, we f i nd that Home Or t hopedi cs has not

suf f i ci ent l y al l eged a "pat t er n of r acket eer i ng act i vi t y" necessar y

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t o sust ai n i t s RI CO cl ai m. Her e, " [ a] t most , what has been al l eged

i s a busi ness deal gone sour " - - and t hat al one does not equat e t o

a RI CO vi ol at i on. Gonzl ez- Mor al es, 221 F. 3d at 52 ( quot i ng

Si l Fl o, I nc. , 917 F. 2d at 1516) ( quot at i ons omi t t ed) .

Motions to Amend/Conduct Discovery

However per f unct or i l y, Home Or t hopedi cs al so argues t hat

t he di st r i ct cour t er r ed i n denyi ng i t s mot i on t o conduct l i mi t ed

di scover y and t hen t o amend i t s compl ai nt f or a second t i me. We

r evi ew a di st r i ct cour t ' s deni al of a mot i on t o f i l e an amended

compl ai nt f or abuse of di scr et i on. Gl assman v. Comput er vi si on

Cor p. , 90 F. 3d 617, 622 ( 1st Ci r . 1996) . We "def er t o t he di st r i ct

cour t ' s hands- on j udgment so l ong as t he r ecord evi nces an adequate

r eason f or t he deni al . " Tor r es- l amo v. Puer t o Ri co, 502 F. 3d 20,

25 ( 1st Ci r . 2007) ( quot at i ons omi t t ed) . Legi t i mat e r easons f or

denyi ng a mot i on t o amend i ncl ude "undue del ay, bad f ai t h, f ut i l i t y

and t he absence of due di l i gence on t he movant ' s par t . " I d.

( ci t at i on and quot at i ons omi t t ed) .

I n denyi ng t he mot i on t o amend, t he di st r i ct cour t adopt ed

t he magi st r ate j udge' s r easoni ng t hat an addi t i onal amendment woul d

"do l i t t l e mor e t han f ur t her wast e t he t i me of t he cour t s and

l i t i gant s. " Whi l e nei t her t he magi st r at e nor di st r i ct cour t j udges

used t he t er m speci f i cal l y, t hey essent i al l y r ul ed t hat al l owi ng

anot her amendment woul d be f ut i l e. See Gl assman, 90 F. 3d at 623

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( " ' Fut i l i t y' means t hat t he compl ai nt , as amended, woul d f ai l t o

st at e a cl ai m upon whi ch r el i ef coul d be gr ant ed. ") .

The di st r i ct cour t di d not abuse i t s di scr et i on i n so

r ul i ng. Whi l e Home Or t hopedi cs asser t s t hat " f ur t her det ai l s of

[ t he def endant s' ] associ at i ons, t hei r i l l egal i t i es, [ and] t hei r

scheme t o i l l egal l y har m[ Home Or t hopedi cs] [ ] ar e onl y i n possessi on

of def endants t hemsel ves, " we do not see - - and Home Or t hopedi cs

does not at t empt t o expl ai n - - what addi t i onal i nf or mat i on f r omt he

def endant s woul d concei vabl y hel p nudge t he f act s of t hi s case i nt o

a "pat t er n of r acket eer i ng. " To t he extent Home Or t hopedi cs rel i es

on Pr uel l v. Car i t as Chr i st i , 678 F. 3d 10 ( 1st Ci r . 2012) , wher e we

r emanded t o gi ve t he pl ai nt i f f s an oppor t uni t y t o amend t hei r

compl ai nt , we speci f i cal l y not ed i n Pr uel l t hat "some l at i t ude has

t o be al l owed wher e a cl ai ml ooks pl ausi bl e based on what i s known. "

678 F. 3d at 15 ( emphasi s added) . Such i s not t he case here.

Home Or t hopedi cs al so r el i es on New Eng. Data Ser vs. , I nc.

v. Becher , 829 F. 2d 286 ( 1st Ci r . 1987) , t o ar gue t hat i t shoul d

have been permi t t ed t o conduct some di scover y bef ore i t s cl ai ms were

di smi ssed. But , as t he di st r i ct cour t not ed, Becher i s i napposi t e;

t her e, we si mpl y hel d t hat t he pl ai nt i f f s shoul d have been per mi t t ed

di scover y to f l esh out t hei r f r aud al l egat i ons, whi ch wer e subj ect

t o a hei ght ened pl eadi ng r equi r ement under Rul e 9( b) . See 829 F. 2d

at 292. Gi ven t hat Home Or t hopedi cs of f er s no other l aw ( or

r easoni ng) as t o why i t shoul d have been per mi t t ed di scovery even

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t hough i t s compl ai nt f ai l ed t o st at e a cl ai m, we f i nd t hat i t s

gener i c ar gument i s wai ved f or l ack of devel opment . See Zanni no,

895 F. 2d at 17.

CONCLUSION

For t he r easons di scussed above, we affirm t he di st r i ct

cour t ' s j udgment . Appel l ees ar e awar ded cost s.

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Home Orthopedics Corp. v. Rodriguez, 1st Cir. (2015)