MCKINSEY & CO., INC.; MCKINSEY HOLDINGS, INC.; MCKINSEY ... Case No. 18-cv-04141 (JMF) Oral Argument

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Text of MCKINSEY & CO., INC.; MCKINSEY HOLDINGS, INC.; MCKINSEY ... Case No. 18-cv-04141 (JMF) Oral Argument

  • IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

    JAY ALIX,

    Plaintiff,

    v. MCKINSEY & CO., INC.; MCKINSEY HOLDINGS, INC.; MCKINSEY & COMPANY INC. UNITED STATES; MCKINSEY RECOVERY & TRANSFORMATION SERVICES U.S., LLC; DOMINIC BARTON; KEVIN CARMODY; JON GARCIA; SETH GOLDSTROM; ALISON PROSHAN; and ROBERT STERNFELS,

    Defendants.

    Case No. 18-cv-04141 (JMF) Oral Argument Requested

    DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS THE COMPLAINT

    Faith E. Gay Jennifer M. Selendy David S. Flugman SELENDY & GAY PLLC 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 390-9000

    Robert J. Cleary Mark D. Harris Brian S. Rosen Jordan B. Leader PROSKAUER ROSE LLP Eleven Times Square New York, New York 10036 Telephone: (212) 969-3000 Attorneys for All Defendants

    Case 1:18-cv-04141-JMF Document 63 Filed 07/30/18 Page 1 of 83

  • Catherine L. Redlich DRISCOLL & REDLICH 110 West 40th Street, Suite 1900 New York, New York 10018 Telephone: (212) 986-4030 Attorney for Defendant Dominic Barton

    Richard A. Sauber Ariel N. Lavinbuk Michael L. Waldman Lukman Azeez ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER, & SAUBER LLP 1801 K Street, NW, Suite 411L Washington, D.C. 20006 Telephone: (202) 775-4500 Attorneys for Defendants Kevin Carmody, Jon Garcia, Alison Proshan, and Robert Sternfels

    Reid M. Figel KELLOGG, HANSEN, TODD, FIGEL & FREDERICK P.L.L.C. 1615 M Street, NW, Suite 400 Washington, D.C. 20036 Telephone: (202) 326-7968 Attorney for Defendant Seth Goldstrom

    Case 1:18-cv-04141-JMF Document 63 Filed 07/30/18 Page 2 of 83

  • i

    TABLE OF CONTENTS Pages

    PRELIMINARY STATEMENT .....................................................................................................1

    FACTUAL BACKGROUND ..........................................................................................................7

    ARGUMENT .................................................................................................................................15

    I. ALIX FAILS TO PLEAD ANY RICO CLAIM (COUNTS 1-4)......................................16

    A. Alix Fails to Plead Proximate Causation. ..............................................................17

    B. Alix Fails to Plead Actual Causation. ....................................................................23

    C. Alix Fails to Plead Any RICO Predicate Acts Against the Corporate Defendants. ............................................................................................................25

    1. Alix’s Allegations of Fraudulent Misrepresentation and Omission, as Well as Scienter, are Affirmatively Precluded by the Disclosures That Form the Basis of All His Claims. .....................................................26 a. The Fraud Allegations are Insufficient. .........................................26

    b. The Scienter Allegations Are Insufficient. ....................................29

    2. Alix Fails to Allege Fraud or Any Fraud-Based Predicate Act with Particularity as Required by Rule 9(b).......................................................31 a. The Complaint Includes No Specific, Individualized

    Allegations as to the Corporate Defendants. ..................................32

    b. Alix Fails to Plead Mail Fraud or Wire Fraud. ..............................34

    c. Alix Fails to Plead Bankruptcy Fraud or Bribery. .........................35

    d. Alix Fails to Plead Inducement to Violate 18 U.S.C. § 2314.............................................................................................37

    3. Alix Fails to Plead Any Non-Fraud-Based Predicate Acts. .......................38 a. Alix Fails to Plead Obstruction of Justice or Witness

    Tampering. .....................................................................................38

    b. Alix Fails to Plead Money Laundering. .........................................40

    D. Alix Fails to Plead any Racketeering Acts Against Any Individual Defendant. ..............................................................................................................41

    1. Dominic Barton ..........................................................................................42

    Case 1:18-cv-04141-JMF Document 63 Filed 07/30/18 Page 3 of 83

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    2. Kevin Carmody ..........................................................................................43

    3. Jon Garcia ..................................................................................................45

    4. Seth Goldstrom ..........................................................................................45

    5. Alison Proshan ...........................................................................................48

    6. Robert Sternfels .........................................................................................49

    E. Alix Fails to Plead a Viable RICO Enterprise Against the Corporate Defendants. ............................................................................................................50

    F. Alix Fails to Plead that Any of the Individual Defendants Conducted or Participated in the Conduct of a RICO Enterprise. ................................................52

    G. Alix Fails to Plead a RICO Conspiracy Under Section 1962(d). ..........................58

    H. Alix’s RICO Claims Are Barred, In Substantial Part, By the Four-Year RICO Statute of Limitations. .................................................................................60

    II. THE STATE LAW CLAIMS FAIL (COUNTS 5-7). .......................................................63

    A. Alix’s Contract-Based Claims Fail (Counts 5 and 6). ...........................................63

    B. Alix’s Tortious Interference Claim Fails (Count 7). ..............................................65

    CONCLUSION ..............................................................................................................................68

    Case 1:18-cv-04141-JMF Document 63 Filed 07/30/18 Page 4 of 83

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    TABLE OF AUTHORITIES Pages

    Cases

    17th St. Assocs., LLP v. Markel Int’l Ins. Co., 373 F. Supp. 2d 584 (E.D. Va. 2005) ............................................................................... 66

    4 K & D Corp. v. Concierge Auctions, LLC, 2 F. Supp. 3d 525 (S.D.N.Y. 2014) ............................................................................. 21, 59

    Air Et Chaleur, S.A. v. Janeway, 757 F.2d 489 (2d Cir. 1985).............................................................................................. 65

    Amsterdam Tobacco Inc. v. Philip Morris Inc., 107 F. Supp. 2d 210 (S.D.N.Y. 2000) ............................................................................... 57

    Anatian v. Coutts Bank (Switz.) Ltd., 193 F.3d 85 (2d Cir. 1999)................................................................................................ 50

    Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) ................................................................................................... passim

    Aqua Master Enters., Inc. v. Anderson, No. 16-cv-6776 (LGS), 2018 WL 1009264 (S.D.N.Y. Jan. 30, 2018) ............................. 66

    Ashcroft v. Iqbal, 556 U.S. 662 (2009) ................................................................................................... passim

    Astor Holdings v. Roski, 325 F. Supp. 2d 251 (S.D.N.Y. 2003) ............................................................................... 66

    Banco Espirito Santo de Investimento, S.A. v. Citibank, N.A., No. 03-cv-1537 (MBM), 2003 WL 23018888 (S.D.N.Y. Dec. 22, 2003) ........................ 63

    Baron v. Complete Mgmt., Inc., 260 F. App’x 399 (2d Cir. 2006) ...................................................................................... 68

    Baron v. Rabinovici, No. 05-cv-110 (TCP), 2006 WL 1318426 (E.D.N.Y. May 12, 2006) .............................. 35

    Baumer v. Pachl, 8 F.3d 1341 (9th Cir. 1993) .............................................................................................. 54

    Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ................................................................................................... passim

    Bennett v. U.S. Tr. Co., 770 F.2d 308 (2d Cir. 1985).............................................................................................. 50

    Case 1:18-cv-04141-JMF Document 63 Filed 07/30/18 Page 5 of 83

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    Biofeedtrac, Inc. v. Kolinor Optical Enters. & Consultants, S.R.L., 832 F. Supp 585 (E.D.N.Y. 1993) .............................................................................. 54, 56

    Bridge v. Phx. Bond & Indem. Co., 553 U.S. 639 (2008) .......................................................................................................... 19

    Burke v. Dowling, 944 F. Supp. 1036 (E.D.N.Y. 1995) ................................................................................. 35

    Crab House of Douglaston Inc. v. Newsday, Inc., 418 F. Supp. 2d 193 (E.D.N.Y. 2006) ........................................................................ 53, 5