Manookian's Motion to Dismiss Diamond Doctor Lawsuit
Content
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
DIAMOND CONSORTIUM, INC.,
D/B/A THE DIAMOND DOCTOR,
Plaintiff,
v.
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC,
Defendants.
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CIVIL ACTION NO. 4:16-cv-00094-ALM
DEFENDANTS’ MOTION TO DISMISS
April 22, 2016
Christopher J. Schwegmann
Texas State Bar No. 24051315
[email protected]
Andres Correa
Texas State Bar No. 24076330
[email protected]
Christina Mullen
Texas State Bar No. 24092868
[email protected]
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
(214) 981-3800 - Telephone
(214) 981-3839 - Facsimile
ATTORNEYS FOR DEFENDANTS
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC
TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................. i
I.
INTRODUCTION .............................................................................................................. 1
II.
ALLEGATIONS IN PLAINTIFF’S COMPLAINT........................................................... 3
III.
IV.
A.
The Parties .............................................................................................................. 3
B.
The Advertising ...................................................................................................... 4
C.
The Lawsuit ............................................................................................................ 6
ARGUMENT AND AUTHORITIES ................................................................................. 7
A.
Legal Standard ........................................................................................................ 7
B.
The Court Should Dismiss Plaintiff’s Business Disparagement Claim. ................. 7
C.
The Court Should Dismiss Plaintiff’s Defamation Claim .................................... 10
D.
The Court Should Dismiss Plaintiff’s RICO Claim Based On An
Association-In-Fact. .............................................................................................. 10
CONCLUSION ................................................................................................................. 13
CERTIFICATE OF SERVICE ..................................................................................................... 13
i
TABLE OF AUTHORITIES
Cases
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ..................................................................................................................... 7
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007) ..................................................................................................................... 7
Beta Health Alliance MD PA v. Kelley Witherspoons LLP,
2009 WL 2222630 (N.D. Tex. Jul. 22, 2009) .................................................................... 8, 9, 10
Bishop v. Corbitt Marine Ways, Inc.,
802 F.2d 122 (5th Cir. 1986) ................................................................................................ 11, 12
Crowe v. Henry,
43 F.3d 198 (5th Cir. 1995) .................................................................................................. 11, 12
Hurlbut v. Gulf Atlantic Life Ins. Co.,
749 S.W.2d 762 (Tex. 1987) .................................................................................................... 7, 8
In re Perry,
423 B.R. 215 (S.D. Tex. 2010)................................................................................................... 10
Jenevein v. Friedman,
114 S.W.3d 743 (Tex. App.—Dallas 2003) ................................................................................. 9
Katrina Canal Breaches Litig.,
495 F.3d 191 (5th Cir. 2007) ........................................................................................................ 7
Randall’s Food Markets, Inc. v. Johnson,
891 S.W.2d 650 (Tex. 1995) ...................................................................................................... 10
Russell v. Clark,
620 S.W.2d 865 (Tex. App.—Dallas 1981, writ ref’d n.r.e.)................................................... 8, 9
Teel v. Deloitte & Touche LLP,
2015 WL 9478187 (N.D. Tex. Dec. 29, 2015)....................................................................... 7, 10
Thomas v. Bracey,
940 S.W.2d 340 (Tex. App.—San Antonio 1997) ....................................................................... 9
Whelan v. Winchester Prod. Co.,
319 F.3d 225 (5th Cir. 2003) ................................................................................................ 11, 12
ii
Statutes
15 U.S.C. § 1125(a) ........................................................................................................................ 6
18 U.S.C. § 1961(4) ...................................................................................................................... 11
18 U.S.C. § 1962(c) ........................................................................................................................ 6
§1961(3) and 1962(c) .................................................................................................................... 12
Rules
Rule 12(b)(6) of the Federal Rules of Civil Procedure ................................................................... 1
Texas Disciplinary Rule of Professional Conduct 4.04(b)(1) ......................................................... 2
iii
TO THE HONORABLE COURT:
Defendants Brian Manookian (“Manookian”) and Cummings Manookian, PLC (“the
Firm”) file this brief in support of their Motion to Dismiss Plaintiff’s First Amended Complaint
(“Motion”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
I.
INTRODUCTION
This case is merely the latest round in The Diamond Doctor’s ongoing campaign to
intimidate Brian Manookian and his law firm, Cummings Manookian, for their efforts to expose
The Diamond Doctor’s fraudulent business practices. At its root, this is a controversy over
diamond grading and a long running scam by certain retailers – like The Diamond Doctor – to
inflate the inventory grades (and the prices) of their diamonds. After interviewing industry
sources, ex-employees, and scores of customers, Manookian concluded that The Diamond
Doctor had been, and continues to be, one of the worst offenders in this long running scam.
Having confirmed these fraudulent business practices, Manookian began soliciting on various
web pages and on Facebook consumers victimized by this fraud.
Unhappy about this exposure, The Diamond Doctor began to attack, intimidate, and sue
Manookian and the Firm from the very moment these advertisements went live. Indeed, this is
not even the first lawsuit The Diamond Doctor initiated in Texas. On October 26, 2015, The
Diamond Doctor filed a 78 page lawsuit against Manookian in the 193rd Judicial District Court
in Dallas County, Texas, seeking $5 million in damages and an emergency order to enjoin this
advertising. Judge Ginsberg denied The Diamond Doctor’s ex parte request for injunctive the
very same afternoon. See Ex. A.
Instead, Judge Ginsberg ordered counsel to appear and show cause “to determine whether
[counsel for The Diamond Doctor] should be referred to the Office of the General Counsel of the
DEFENDANTS’ MOTION TO DISMISS
Page 1
State Bar of Texas for a violation of Texas Disciplinary Rule of Professional Conduct
4.04(b)(1).” Id. In addition, Judge Ginsberg ordered The Diamond Doctor (and its counsel) “to
present a copy of [his] Order to any other judicial officer from whom they seek similar injunctive
relief.” Id. On November 3, 2015, The Diamond Doctor dismissed that frivolous lawsuit, opting
instead, apparently, for another bite at the apple with a different judge and new counsel.
The Diamond Doctor filed this lawsuit on February 3, 2016. This lawsuit includes a new
and entirely baseless attack: that Manookian, through the Firm, tried to “extort” David Blank
(“Blank”), the owner of The Diamond Doctor. This false narrative by Blank and his lawyers will
fall apart next to the documented, recorded, and undeniable facts. See Ex. B. Suffice it to say
here, however, that Blank reached out to Manookian to retain him, not the other way around.
Defendants never offered their services, suggested any such thing, or even spoke to Blank before
Blank’s attorneys implored him to do so.
Manookian initially rejected Blank’s proposal. But Blank implored Manookian to
reconsider, repeatedly calling him, emailing him, and leaving him voicemails. And although
Manookian ultimately agreed to discuss engagement terms with Blank, Manookian advised
Blank to retain his own independent counsel to review the terms of engagement, which he did.
Blank’s counsel and Manookian’s counsel could not reach an agreement, at which time Blank
began calling Manookian “an extortionist,” stated that he intended to report Manookian to the
Tennessee Board of Professional Conduct (which he did), and stated that he had now conflicted
Manookian out of any future cases against him, which was likely Blank’s intention from the
start. The Diamond Doctor’s RICO case is a fantasy, just another claim brought solely to harass
and intimidate Defendants from pursuing legal action against The Diamond Doctor.
DEFENDANTS’ MOTION TO DISMISS
Page 2
Defendants respectfully ask this Court to dismiss Plaintiff’s Amended Complaint for the
following reasons: First, the Court should dismiss Plaintiff’s claim for business disparagement
for failure to allege lack of privilege. In particular, Plaintiff pleads no facts to overcome
Defendants’ absolute privilege to make statements preliminary and related to a judicial
proceeding, as they have done so here. Accordingly, the Court should dismiss this claim with
prejudice.
Similarly, the Court should dismiss with prejudice Plaintiff’s defamation claim—
both per quod and per se—because Plaintiff failed to plead facts that overcome Defendants’
absolute privilege to make statements concerning pending and proposed litigation.
Second, Plaintiff alleges the existence of two types of enterprises for purposes of its
RICO claim, but one of those must be dismissed as a matter of law, a result which would
meaningfully narrow the issues for discovery and trial in this case. As explained above and in
the attached Ex. B, Defendants strongly dispute all of the entirely baseless allegations supporting
this claim, and will seek relief for the same at the appropriate time. For the purposes of this First
Amended Motion, however, it is clear that Plaintiff failed to plead an association-in-fact
enterprise distinct from the RICO person and from the pattern of racketeering activity as part of
its RICO claim. The Court should dismiss with prejudice that portion of Plaintiff’s RICO claim.
II.
A.
ALLEGATIONS IN PLAINTIFF’S COMPLAINT
THE PARTIES
Plaintiff is a Dallas-based retailer of diamonds, gemstones, and other jewelry. Am.
Compl. ¶ 19. Manookian is a lawyer based in Nashville, Tennessee. Id. ¶ 20. Along with Brian
Cummings, Mr. Manookian is a member of the Nashville-based Cummings Manookian law firm,
id. at ¶ 21, the purpose of which is to represent clients in civil lawsuits. Mr. Manookian has
represented clients in civil lawsuits against diamond sellers over their practice of diamond
overgrading, which is explained below. See Doc. 13-1 at 47-60, 61-76,
DEFENDANTS’ MOTION TO DISMISS
Page 3
B.
THE ADVERTISING
In
or
around
October
2015,
Manookian
created
two
websites,
www.diamonddoctorlawsuit.com and www.diamonddoctorclassaction.com. Am. Compl. ¶ 35.
Both websites ask, “Was I sold an overgraded diamond?” Doc. 13-1 (App. 137, 141). Both
websites inform visitors, “You can fight back, and you’ve found the right place for Diamond
Doctor Class Action.” Id. The main menu summarizes the contents, which, listed under the
heading of “Diamond Doctor Lawsuit,” include “What is Overgrading,” “Determine If You’re a
Victim,” “Report to the Authorities,” and “Start Your Civil Claim.” Id.
The websites explain that “intentional diamond overgrading is the deliberate
misrepresentation of a diamond’s characteristics by a retailer to a consumer,” and that “[m]ost
commonly, a jewelry store claims that one or more of a diamond’s Four C’s (carats, color,
clarity, and cut) is better than its true grade.” Id. This matters because “the difference in a single
grade in a single one of the Four C’s can affect the value of a diamond by thousands of dollars,”
and thus “[w]hen multiple characteristics are misrepresented by multiple grades, your diamond
just went from jewelry to junk.” Id.
Although there are a number of laboratories that grade diamonds, Am. Compl. ¶ 28, the
websites explain that “[c]ertain jewelers saw an opportunity to pass off inferior diamonds as far
more valuable than they actually were by having them ‘certified’ or ‘graded’ by fraudulent
grading houses.” Doc. 13-1 (App. 137, 141). The websites warn that “[i]f you purchased a
diamond that was accompanied by a certificate other than one issued by the [Gemological
Institute of America, or GIA], you may have been the victim of fraud.” Doc. 13-1 (App. 138,
142). The websites also include a video presentation by Martin Rapaport, an industry expert. Id.
(App. 138).
DEFENDANTS’ MOTION TO DISMISS
Page 4
The websites encourage potential victims to seek the opinion of a jeweler, and if “the
independent jeweler reports color and clarity grades that are more than two grades below what
you were told by the seller, you’ve likely been duped and it’s time to proceed with a class action
against Diamond Doctor.” Id. The websites add that “[i]f you received an intentionally
overgraded diamond from Diamond Doctor you have a right to be compensated and made
whole.” Doc. 13-1 (App. 139, 43). The websites specifically fault David Blank, as owner of
Diamond Doctor, for claiming to purchase diamonds “directly from the source,” when in reality
“David Blank buys known inventories of inferior quality EGL-International diamonds from
regular wholesalers that he then dumps on unsuspecting Texas.” Id. (App. 150). The websites
conclude by offering visitors a link to “start your civil claim today” and “request your free case
evaluation.” Id.
In addition to launching these two websites, Manookian has asked on social media sites,
“Is Diamond Doctor a scam?” Doc. 13-1 (App. 156), “Diamond Doctor May Sell Fraudulent
Diamonds,” Id. (App. 158), and “Ask David Blank if you could be personally liable for the
fraudulent [sale of diamonds],”
id. (App. 157).
The Diamond Doctor also alleges that
Manookian posted videos on YouTube with harassing and false statements about The Diamond
Doctor, and that he also distributed fliers via mail and electronic mail. Am. Compl. ¶ 37.
During March 2016, Plaintiff has received four demand letters sent pursuant to the Texas
Deceptive Practices Act. Am. Compl. at 8 n.1. These letters have come from attorney Mark
Hammervold, who Plaintiff alleges is a close associate of Mr. Manookian. Am. Compl. ¶ 25.
(Manookian and Hammervold have jointly represented clients against diamond sellers in
connection with fraudulent overgrading claims. See Doc. 13-1 at 77-94.)
DEFENDANTS’ MOTION TO DISMISS
Page 5
C.
THE LAWSUIT
On February 3, 2016, The Diamond Doctor sued Manookian, alleging claims for: (1)
violations of RICO (18 U.S.C. § 1962(c)); (2) violation of the Lanham Act (15 U.S.C. §
1125(a)); (3) and various state law claims, including common law trademark infringement, injury
to its business reputation, and business disparagement. Following Manookian’s original Motion
to Dismiss, Plaintiff has since filed a First Amended Complaint, dismissing some claims but
adding the Firm as a defendant and some additional claims. Plaintiff now alleges (1) business
disparagement, (2) defamation, (3) tortious interference with prospective contract, (4) RICO, and
(5) civil conspiracy.
With respect to its business disparagement claims, The Diamond Doctor alleges that
Manookian’s false, misleading, and harassing negative publicity on the internet, social media,
and in fliers contains disparaging words concerning The Diamond Doctor’s economic interests.
Compl. ¶ 92. The Diamond Doctor alleges that Manookian’s websites “launch broadsides that
The Diamond Doctor has ‘cheated’ and ‘ripped off’ its customers,” and that Manookian posted
messages on Facebook “calling The Diamond Doctor a ‘scam’ and making accusations about
cheating customers.” Am. Compl. ¶¶ 35, 37. The Diamond Doctor further makes conclusory
allegations—without any factual support—that the websites and fliers “are false and published
with malice.” Am. Compl. ¶ 92. The Diamond Doctor does not plead any facts supporting its
allegation of malice, nor does it specify how Plaintiff can overcome the absolute privilege to
make statements relating to proposed and pending litigation.
With respect to its defamation claim, Plaintiff alleges that Defendants made false
statements accusing Plaintiff of trying to bribe a lawyer. Compl. ¶ 95. As with business
disparagement, however, Plaintiff fails to plead facts to overcome the absolute privilege to make
statements relating to proposed and pending litigation.
DEFENDANTS’ MOTION TO DISMISS
Page 6
With respect to its RICO allegations, The Diamond Doctor alleges that Manookian,
through the Firm, used its extensive online and flier campaigns not to solicit clients but to extort
$3 million from The Diamond Doctor. Compl. ¶¶ 71-78, 80-90. Defendants highly dispute all of
the RICO allegations. Suffice it to say here, however, that The Diamond Doctor does not allege
having actually paid any money to Defendants. Further, and as explained in greater detail below,
Plaintiff has not plausibly pled, as it must, an enterprise separate and distinct from the RICO
person (Manookian) or from the alleged pattern of racketeering activity. Defendants respectfully
request that this Court grant their Motion to Dismiss for the reasons stated below.
III.
A.
ARGUMENT AND AUTHORITIES
LEGAL STANDARD
In resolving a Rule 12(b)(6) motion, the Court must follow a two-pronged approach.
First, the Court must accept all well-pleaded factual allegations as true, see In re Katrina Canal
Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007), but “[t]hread-bare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice,” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Nor must the Court “accept as true a legal conclusion couched as a
factual allegation.” Id. at 1949-50; see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). Second, assuming the veracity of well-pleaded factual allegations, the Court must
“determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 669.
B.
THE COURT SHOULD DISMISS PLAINTIFF’S BUSINESS DISPARAGEMENT CLAIM.
The Court should dismiss Plaintiff’s business disparagement claim. To state a claim for
business disparagement, a plaintiff must allege: (1) that the defendant published a disparaging
statement (2) that was false, (3) with malice, (4) without privilege, (5) resulting in special
damages. Teel v. Deloitte & Touche LLP, No. 3:15-CV-2593-G, 2015 WL 9478187, at *3 (N.D.
Tex. Dec. 29, 2015); Hurlbut v. Gulf Atlantic Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987). A
DEFENDANTS’ MOTION TO DISMISS
Page 7
claim for business disparagement is similar to a claim for defamation, except that the former
protects a party’s economic interests against pecuniary loss and requires more stringent
pleadings—falsity, fault of the defendant, and proof of damage. Teel, 2015 WL 947 8187, at *34 (citing Hurlbut, 749 S.W.2d at 766-67).
The judicial privilege bars Plaintiff’s disparagement claim. The judicial privilege – which
is absolute – protects lawyers who make communications preliminary, or in relation, to a judicial
proceeding. Russell v. Clark, 620 S.W.2d 865, 868-69 (Tex. App.—Dallas 1981, writ ref’d
n.r.e.) (affirming summary judgment finding lawyer’s communication absolutely privileged).
The Dallas Court of Appeals explained:
[The privilege] protects the attorney from liability in an action for
defamation irrespective of his purpose in publishing the
defamatory matter, his belief in its truth, or even his knowledge of
its falsity. […] The publication of defamatory matter by an
attorney is protected not only when made in the institution of the
proceedings or in the conduct of litigation before a judicial
tribunal, but in conferences and other communications
preliminary to the proceeding.
Id. at 869 (emphasis added). The Court went even further, opining that “[t]o grant immunity
short of absolute privilege to communications relating to pending or proposed litigation, and
thus subject an attorney to liability for defamation, might tend to lessen an attorney’s efforts on
behalf of his client.” Id. at 868 (emphasis added). See also Beta Health Alliance MD PA v.
Kelley Witherspoons LLP, No. 3:09-CV-0399-BF, 2009 WL 2222630, at *3 (N.D. Tex. Jul. 22,
2009) (“Under Texas law, it is well settled that any communication . . . uttered or published in
the due course of a judicial proceeding is absolutely privileged and cannot continues the basis for
a civil action in damages for slander or libel. This is true regardless of the negligence or malice
with which the communication is made . . .”) (citations omitted).
DEFENDANTS’ MOTION TO DISMISS
Page 8
For the judicial privilege to protect it, the allegedly defamatory statement must be related
to a proposed legal proceeding in which the lawyer is employed and be made in furtherance of
that representation. Russell, 620 S.W.2d at 868. “Related to” does not mean the statement must
be material to the proceeding; in only need to be “so pertinent” that it may become a “subject of
inquiry” in the proceeding. Jenevein v. Friedman, 114 S.W.3d 743, 747 (Tex. App.—Dallas
2003) (affirming trial court’s grant of summary judgment based on lawyer’s absolute privilege).
Neither must the statement “meet technical relevance, materiality, or admissibility standards.”
Id. at 748. See also Kelley Witherspoons LLP, 2009 WL 2222630, at *3 (“The privilege . . .
attaches to all aspects fo the proceedings . . .”). Whether a statement is related to a proceeding is
a question of law for the court. Russell, 620 S.W.2d at 868. Importantly, “[a]ll doubt should be
resolved in favor of the communication’s relation to the proceeding.” Thomas v. Bracey, 940
S.W.2d 340, 343 (Tex. App.—San Antonio 1997).
Here, Manookian made statements in his capacity as an attorney in connection with
proposed proceedings against jewelers who sell non-GIA/EGL overgraded diamonds.
Manookian’s client solicitation makes reference to the core allegations Manookian’s clients will
make when suing The Diamond Doctor. The statements on the websites – that The Diamond
Doctor may be engaged in diamond overgrading, that diamond overgrading can result in
thousands of dollars of harm to The Diamond Doctor’s consumers – are pertinent to informing
clients and the public about potential claims against The Diamond Doctor, and the website’s
statements are so pertinent as to become a topic of inquiry in any proceeding brought by
Manookian’s clients against The Diamond Doctor. In short, Manookian is an attorney soliciting
clients, and he is making statements about a proposed legal proceeding that pertain to that legal
DEFENDANTS’ MOTION TO DISMISS
Page 9
proceeding. As such, Manookian’s (and Cummings Manookian’s) statements are absolutely
privileged as a matter of law.
C.
THE COURT SHOULD DISMISS PLAINTIFF’S DEFAMATION CLAIM
The Court should also dismiss Plaintiff’s defamation claim because it is likewise barred
by the absolute judicial privilege. Under Texas law, a plaintiff asserting a claim for defamation
per quod must demonstrate that “(1) the defendant published a statement; (2) that was
defamatory concerning the plaintiff; (3) while acting with malice, if the plaintiff was a public
figure, or negligence, if the plaintiff was a private individual, regarding the truth of the
statement.” Teel v. Deloitte & Touche LLP, No. 3:15-CV-2593-G, 2015 WL 9478187, at *4
(N.D. Tex. Dec. 29, 2015) (citing Randall’s Food Markets, Inc. v. Johnson, 891 S.W.2d 650, 656
(Tex. 1995)). Defamation per se injures a plaintiff in his office, profession, or occupation. In re
Perry, 423 B.R. 215, 274 (S.D. Tex. 2010).
As with business disparagement, the judicial privilege precludes a claim for defamation
per quod and defamation per se. See Beta Health Alliance MD PA v. Kelley Witherspoons LLP,
No. 3:09-CV-0399-BF, 2009 WL 2222630, at *3 (N.D. Tex. Jul. 22, 2009) (dismissing
defamation claim due to absolute privilege). For the reasons set forth above, namely that the
alleged defamatory statements were made in connection with Defendants’ solicitation and
education of clients, those statements at issue are absolutely privileged, barring a claim for
defamation. Therefore, this Court should dismiss with prejudice Plaintiff’s defamation claim.
D.
THE COURT SHOULD DISMISS PLAINTIFF’S RICO CLAIM BASED ON AN ASSOCIATIONIN-FACT.
The Court should dismiss Plaintiff’s RICO claim that is based on an alleged association-
in-fact between Cummings Manookian, Cummings, Manookian, and Ramon. Plaintiff pleads a
RICO claim under section 1962(c), which prohibits a person “employed by or associated with an
DEFENDANTS’ MOTION TO DISMISS
Page 10
enterprise” from “conduct[ing] the affairs of the enterprise through a pattern of racketeering
activity.” See Crowe v. Henry, 43 F.3d 198, 203 (5th Cir. 1995). Thus, to state a claim under
section 1962(c), a plaintiff must allege: (1) a person (2) engaged in a pattern of racketeering
activity (3) “connected to the acquisition, establishment, conduct, or control of an enterprise.” Id.
at 204. Plaintiff fails to properly allege an enterprise.
“An enterprise is a group of persons or entities associating together for the common
purpose of engaging in a course of conduct.” Whelan v. Winchester Prod. Co., 319 F.3d 225,
229 (5th Cir. 2003). “The enterprise may be a legal entity or ‘any union or group of individuals
associated in fact although not a legal entity.’” Id. (quoting 18 U.S.C. § 1961(4)). Plaintiff
properly alleges a legal entity by referring to Cummings Manookian. See Am. Compl. ¶ 71. But
Plaintiff also alleges the existence of an association-in-fact among Cummings Manookian,
Cummings, Manookian, and Ramon. This pleading fails as a matter of law, and the Court should
dismiss it so as to streamline the issues to be tried in this case.
First, when a party pleads an association-in-fact, the enterprise must exist separately and
apart from the alleged pattern of racketeering activity. Whelan, 319 F.3d at 229 (“The enterprise
is not a pattern of racketeering activity, but must exist separate and apart from the pattern of
racketeering activity in which it engages.”). In other words, a plaintiff must demonstrate that
“the enterprise is distinct from the series of predicate acts constituting racketeering activity.” Id.
Second, “[f]or purposes of § 1962(c), . . . the plaintiff must demonstrate not only that the
enterprise is distinct from the series of predicate acts constituting racketeering activity, but also
that the RICO ‘person’ who commits the predicate acts is distinct from the enterprise.” Whelan,
319 F.3d at 229; Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122, 123 (5th Cir. 1986) (“where
subsection (c) violations are concerned, the “person” and the “enterprise” must be distinct”).
DEFENDANTS’ MOTION TO DISMISS
Page 11
In other words, “[i]t is not enough to establish that a defendant corporation through its
agents committed the predicate acts in the conduct of its own business.” Id. As a result, “[t]hat
officers or employees of a corporation, in the course of their employment, associate to commit
predicate acts does not establish an association-in-fact enterprise distinct from the corporation.”
Id. Relatedly, because a RICO person cannot associate with himself, he may not also be a
member of an association-in-fact enterprise. See Crowe v. Henry, 43 F.3d 198, 205-06 (5th Cir.
1995).
Here, Plaintiff failed to plead the existence of an enterprise (a) separate and distinct from
the RICO person and (b) separate from the alleged pattern of racketeering activity. Plaintiff
pleads that Manookian is the RICO person. Am. Compl. ¶ 70.1 Plaintiff goes on to plead
Cummings Manookian, Ramon, Cummings, and Manookian as an association-in-fact.
But
Manookian, as the RICO person, cannot be a member of the association-in-fact because he
cannot associate with himself. See Crowe, 43 F.3d at 205-06. Manookian and Cummings are
both agents acting on behalf of the Firm, such that their associating to commit the alleged
predicate acts does not create an association-in-fact enterprise. See Whelan, 319 F.3d at 229.
Plaintiff’s second defect is that Plaintiff has alleged only that Ramon is engaged with Manookian
and Cummings in furtherance of the scheme. Am. Compl. ¶¶ 24, 76. In other words, the
association of the Firm, Manookian, Cummings, and Ramon does not exist separate and apart
from the pattern of racketeering as required.
The RICO claim should be dismissed with
prejudice for failure to plausibly plead an association-in-fact enterprise.
1
Plaintiff also pleads that The Diamond Doctor is a person within the meaning of §1961(3) and 1962(c),
which does not make much sense given that “[t]he RICO person in a civil or criminal RICO action is the defendant.”
Crowe v. Henry, 43 F.3d 198, 204 (5th Cir. 1995).
DEFENDANTS’ MOTION TO DISMISS
Page 12
IV.
CONCLUSION
For the reasons discussed above, Brian Manookian and Cummings Manookian, PLC
respectfully asks the Court to dismiss Plaintiff’s First Amended Complaint and for any other
relief, whether at law or in equity, to which the Court may find them to be justly entitled.
Date: April 22, 2016.
Respectfully submitted,
/s/Christopher J. Schwegmann
Christopher J. Schwegmann
Texas State Bar No. 24051315
[email protected]
Andres Correa
Texas State Bar No. 24076330
[email protected]
Christina Mullen
Texas State Bar No. 24092868
[email protected]
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
(214) 981-3800 - Telephone
(214) 981-3839 - Facsimile
ATTORNEYS FOR DEFENDANTS
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served via the Court’s ECF system on the 22nd day of April, 2016:
/s/Christopher J. Schwegmann
Christopher J. Schwegmann
4840-4630-7632, v. 4
DEFENDANTS’ MOTION TO DISMISS
Page 13
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
DIAMOND CONSORTIUM, INC.,
D/B/A THE DIAMOND DOCTOR,
Plaintiff,
v.
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC,
Defendants.
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CIVIL ACTION NO. 4:16-cv-00094-ALM
DEFENDANTS’ MOTION TO DISMISS
April 22, 2016
Christopher J. Schwegmann
Texas State Bar No. 24051315
[email protected]
Andres Correa
Texas State Bar No. 24076330
[email protected]
Christina Mullen
Texas State Bar No. 24092868
[email protected]
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
(214) 981-3800 - Telephone
(214) 981-3839 - Facsimile
ATTORNEYS FOR DEFENDANTS
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC
TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................. i
I.
INTRODUCTION .............................................................................................................. 1
II.
ALLEGATIONS IN PLAINTIFF’S COMPLAINT........................................................... 3
III.
IV.
A.
The Parties .............................................................................................................. 3
B.
The Advertising ...................................................................................................... 4
C.
The Lawsuit ............................................................................................................ 6
ARGUMENT AND AUTHORITIES ................................................................................. 7
A.
Legal Standard ........................................................................................................ 7
B.
The Court Should Dismiss Plaintiff’s Business Disparagement Claim. ................. 7
C.
The Court Should Dismiss Plaintiff’s Defamation Claim .................................... 10
D.
The Court Should Dismiss Plaintiff’s RICO Claim Based On An
Association-In-Fact. .............................................................................................. 10
CONCLUSION ................................................................................................................. 13
CERTIFICATE OF SERVICE ..................................................................................................... 13
i
TABLE OF AUTHORITIES
Cases
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ..................................................................................................................... 7
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007) ..................................................................................................................... 7
Beta Health Alliance MD PA v. Kelley Witherspoons LLP,
2009 WL 2222630 (N.D. Tex. Jul. 22, 2009) .................................................................... 8, 9, 10
Bishop v. Corbitt Marine Ways, Inc.,
802 F.2d 122 (5th Cir. 1986) ................................................................................................ 11, 12
Crowe v. Henry,
43 F.3d 198 (5th Cir. 1995) .................................................................................................. 11, 12
Hurlbut v. Gulf Atlantic Life Ins. Co.,
749 S.W.2d 762 (Tex. 1987) .................................................................................................... 7, 8
In re Perry,
423 B.R. 215 (S.D. Tex. 2010)................................................................................................... 10
Jenevein v. Friedman,
114 S.W.3d 743 (Tex. App.—Dallas 2003) ................................................................................. 9
Katrina Canal Breaches Litig.,
495 F.3d 191 (5th Cir. 2007) ........................................................................................................ 7
Randall’s Food Markets, Inc. v. Johnson,
891 S.W.2d 650 (Tex. 1995) ...................................................................................................... 10
Russell v. Clark,
620 S.W.2d 865 (Tex. App.—Dallas 1981, writ ref’d n.r.e.)................................................... 8, 9
Teel v. Deloitte & Touche LLP,
2015 WL 9478187 (N.D. Tex. Dec. 29, 2015)....................................................................... 7, 10
Thomas v. Bracey,
940 S.W.2d 340 (Tex. App.—San Antonio 1997) ....................................................................... 9
Whelan v. Winchester Prod. Co.,
319 F.3d 225 (5th Cir. 2003) ................................................................................................ 11, 12
ii
Statutes
15 U.S.C. § 1125(a) ........................................................................................................................ 6
18 U.S.C. § 1961(4) ...................................................................................................................... 11
18 U.S.C. § 1962(c) ........................................................................................................................ 6
§1961(3) and 1962(c) .................................................................................................................... 12
Rules
Rule 12(b)(6) of the Federal Rules of Civil Procedure ................................................................... 1
Texas Disciplinary Rule of Professional Conduct 4.04(b)(1) ......................................................... 2
iii
TO THE HONORABLE COURT:
Defendants Brian Manookian (“Manookian”) and Cummings Manookian, PLC (“the
Firm”) file this brief in support of their Motion to Dismiss Plaintiff’s First Amended Complaint
(“Motion”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
I.
INTRODUCTION
This case is merely the latest round in The Diamond Doctor’s ongoing campaign to
intimidate Brian Manookian and his law firm, Cummings Manookian, for their efforts to expose
The Diamond Doctor’s fraudulent business practices. At its root, this is a controversy over
diamond grading and a long running scam by certain retailers – like The Diamond Doctor – to
inflate the inventory grades (and the prices) of their diamonds. After interviewing industry
sources, ex-employees, and scores of customers, Manookian concluded that The Diamond
Doctor had been, and continues to be, one of the worst offenders in this long running scam.
Having confirmed these fraudulent business practices, Manookian began soliciting on various
web pages and on Facebook consumers victimized by this fraud.
Unhappy about this exposure, The Diamond Doctor began to attack, intimidate, and sue
Manookian and the Firm from the very moment these advertisements went live. Indeed, this is
not even the first lawsuit The Diamond Doctor initiated in Texas. On October 26, 2015, The
Diamond Doctor filed a 78 page lawsuit against Manookian in the 193rd Judicial District Court
in Dallas County, Texas, seeking $5 million in damages and an emergency order to enjoin this
advertising. Judge Ginsberg denied The Diamond Doctor’s ex parte request for injunctive the
very same afternoon. See Ex. A.
Instead, Judge Ginsberg ordered counsel to appear and show cause “to determine whether
[counsel for The Diamond Doctor] should be referred to the Office of the General Counsel of the
DEFENDANTS’ MOTION TO DISMISS
Page 1
State Bar of Texas for a violation of Texas Disciplinary Rule of Professional Conduct
4.04(b)(1).” Id. In addition, Judge Ginsberg ordered The Diamond Doctor (and its counsel) “to
present a copy of [his] Order to any other judicial officer from whom they seek similar injunctive
relief.” Id. On November 3, 2015, The Diamond Doctor dismissed that frivolous lawsuit, opting
instead, apparently, for another bite at the apple with a different judge and new counsel.
The Diamond Doctor filed this lawsuit on February 3, 2016. This lawsuit includes a new
and entirely baseless attack: that Manookian, through the Firm, tried to “extort” David Blank
(“Blank”), the owner of The Diamond Doctor. This false narrative by Blank and his lawyers will
fall apart next to the documented, recorded, and undeniable facts. See Ex. B. Suffice it to say
here, however, that Blank reached out to Manookian to retain him, not the other way around.
Defendants never offered their services, suggested any such thing, or even spoke to Blank before
Blank’s attorneys implored him to do so.
Manookian initially rejected Blank’s proposal. But Blank implored Manookian to
reconsider, repeatedly calling him, emailing him, and leaving him voicemails. And although
Manookian ultimately agreed to discuss engagement terms with Blank, Manookian advised
Blank to retain his own independent counsel to review the terms of engagement, which he did.
Blank’s counsel and Manookian’s counsel could not reach an agreement, at which time Blank
began calling Manookian “an extortionist,” stated that he intended to report Manookian to the
Tennessee Board of Professional Conduct (which he did), and stated that he had now conflicted
Manookian out of any future cases against him, which was likely Blank’s intention from the
start. The Diamond Doctor’s RICO case is a fantasy, just another claim brought solely to harass
and intimidate Defendants from pursuing legal action against The Diamond Doctor.
DEFENDANTS’ MOTION TO DISMISS
Page 2
Defendants respectfully ask this Court to dismiss Plaintiff’s Amended Complaint for the
following reasons: First, the Court should dismiss Plaintiff’s claim for business disparagement
for failure to allege lack of privilege. In particular, Plaintiff pleads no facts to overcome
Defendants’ absolute privilege to make statements preliminary and related to a judicial
proceeding, as they have done so here. Accordingly, the Court should dismiss this claim with
prejudice.
Similarly, the Court should dismiss with prejudice Plaintiff’s defamation claim—
both per quod and per se—because Plaintiff failed to plead facts that overcome Defendants’
absolute privilege to make statements concerning pending and proposed litigation.
Second, Plaintiff alleges the existence of two types of enterprises for purposes of its
RICO claim, but one of those must be dismissed as a matter of law, a result which would
meaningfully narrow the issues for discovery and trial in this case. As explained above and in
the attached Ex. B, Defendants strongly dispute all of the entirely baseless allegations supporting
this claim, and will seek relief for the same at the appropriate time. For the purposes of this First
Amended Motion, however, it is clear that Plaintiff failed to plead an association-in-fact
enterprise distinct from the RICO person and from the pattern of racketeering activity as part of
its RICO claim. The Court should dismiss with prejudice that portion of Plaintiff’s RICO claim.
II.
A.
ALLEGATIONS IN PLAINTIFF’S COMPLAINT
THE PARTIES
Plaintiff is a Dallas-based retailer of diamonds, gemstones, and other jewelry. Am.
Compl. ¶ 19. Manookian is a lawyer based in Nashville, Tennessee. Id. ¶ 20. Along with Brian
Cummings, Mr. Manookian is a member of the Nashville-based Cummings Manookian law firm,
id. at ¶ 21, the purpose of which is to represent clients in civil lawsuits. Mr. Manookian has
represented clients in civil lawsuits against diamond sellers over their practice of diamond
overgrading, which is explained below. See Doc. 13-1 at 47-60, 61-76,
DEFENDANTS’ MOTION TO DISMISS
Page 3
B.
THE ADVERTISING
In
or
around
October
2015,
Manookian
created
two
websites,
www.diamonddoctorlawsuit.com and www.diamonddoctorclassaction.com. Am. Compl. ¶ 35.
Both websites ask, “Was I sold an overgraded diamond?” Doc. 13-1 (App. 137, 141). Both
websites inform visitors, “You can fight back, and you’ve found the right place for Diamond
Doctor Class Action.” Id. The main menu summarizes the contents, which, listed under the
heading of “Diamond Doctor Lawsuit,” include “What is Overgrading,” “Determine If You’re a
Victim,” “Report to the Authorities,” and “Start Your Civil Claim.” Id.
The websites explain that “intentional diamond overgrading is the deliberate
misrepresentation of a diamond’s characteristics by a retailer to a consumer,” and that “[m]ost
commonly, a jewelry store claims that one or more of a diamond’s Four C’s (carats, color,
clarity, and cut) is better than its true grade.” Id. This matters because “the difference in a single
grade in a single one of the Four C’s can affect the value of a diamond by thousands of dollars,”
and thus “[w]hen multiple characteristics are misrepresented by multiple grades, your diamond
just went from jewelry to junk.” Id.
Although there are a number of laboratories that grade diamonds, Am. Compl. ¶ 28, the
websites explain that “[c]ertain jewelers saw an opportunity to pass off inferior diamonds as far
more valuable than they actually were by having them ‘certified’ or ‘graded’ by fraudulent
grading houses.” Doc. 13-1 (App. 137, 141). The websites warn that “[i]f you purchased a
diamond that was accompanied by a certificate other than one issued by the [Gemological
Institute of America, or GIA], you may have been the victim of fraud.” Doc. 13-1 (App. 138,
142). The websites also include a video presentation by Martin Rapaport, an industry expert. Id.
(App. 138).
DEFENDANTS’ MOTION TO DISMISS
Page 4
The websites encourage potential victims to seek the opinion of a jeweler, and if “the
independent jeweler reports color and clarity grades that are more than two grades below what
you were told by the seller, you’ve likely been duped and it’s time to proceed with a class action
against Diamond Doctor.” Id. The websites add that “[i]f you received an intentionally
overgraded diamond from Diamond Doctor you have a right to be compensated and made
whole.” Doc. 13-1 (App. 139, 43). The websites specifically fault David Blank, as owner of
Diamond Doctor, for claiming to purchase diamonds “directly from the source,” when in reality
“David Blank buys known inventories of inferior quality EGL-International diamonds from
regular wholesalers that he then dumps on unsuspecting Texas.” Id. (App. 150). The websites
conclude by offering visitors a link to “start your civil claim today” and “request your free case
evaluation.” Id.
In addition to launching these two websites, Manookian has asked on social media sites,
“Is Diamond Doctor a scam?” Doc. 13-1 (App. 156), “Diamond Doctor May Sell Fraudulent
Diamonds,” Id. (App. 158), and “Ask David Blank if you could be personally liable for the
fraudulent [sale of diamonds],”
id. (App. 157).
The Diamond Doctor also alleges that
Manookian posted videos on YouTube with harassing and false statements about The Diamond
Doctor, and that he also distributed fliers via mail and electronic mail. Am. Compl. ¶ 37.
During March 2016, Plaintiff has received four demand letters sent pursuant to the Texas
Deceptive Practices Act. Am. Compl. at 8 n.1. These letters have come from attorney Mark
Hammervold, who Plaintiff alleges is a close associate of Mr. Manookian. Am. Compl. ¶ 25.
(Manookian and Hammervold have jointly represented clients against diamond sellers in
connection with fraudulent overgrading claims. See Doc. 13-1 at 77-94.)
DEFENDANTS’ MOTION TO DISMISS
Page 5
C.
THE LAWSUIT
On February 3, 2016, The Diamond Doctor sued Manookian, alleging claims for: (1)
violations of RICO (18 U.S.C. § 1962(c)); (2) violation of the Lanham Act (15 U.S.C. §
1125(a)); (3) and various state law claims, including common law trademark infringement, injury
to its business reputation, and business disparagement. Following Manookian’s original Motion
to Dismiss, Plaintiff has since filed a First Amended Complaint, dismissing some claims but
adding the Firm as a defendant and some additional claims. Plaintiff now alleges (1) business
disparagement, (2) defamation, (3) tortious interference with prospective contract, (4) RICO, and
(5) civil conspiracy.
With respect to its business disparagement claims, The Diamond Doctor alleges that
Manookian’s false, misleading, and harassing negative publicity on the internet, social media,
and in fliers contains disparaging words concerning The Diamond Doctor’s economic interests.
Compl. ¶ 92. The Diamond Doctor alleges that Manookian’s websites “launch broadsides that
The Diamond Doctor has ‘cheated’ and ‘ripped off’ its customers,” and that Manookian posted
messages on Facebook “calling The Diamond Doctor a ‘scam’ and making accusations about
cheating customers.” Am. Compl. ¶¶ 35, 37. The Diamond Doctor further makes conclusory
allegations—without any factual support—that the websites and fliers “are false and published
with malice.” Am. Compl. ¶ 92. The Diamond Doctor does not plead any facts supporting its
allegation of malice, nor does it specify how Plaintiff can overcome the absolute privilege to
make statements relating to proposed and pending litigation.
With respect to its defamation claim, Plaintiff alleges that Defendants made false
statements accusing Plaintiff of trying to bribe a lawyer. Compl. ¶ 95. As with business
disparagement, however, Plaintiff fails to plead facts to overcome the absolute privilege to make
statements relating to proposed and pending litigation.
DEFENDANTS’ MOTION TO DISMISS
Page 6
With respect to its RICO allegations, The Diamond Doctor alleges that Manookian,
through the Firm, used its extensive online and flier campaigns not to solicit clients but to extort
$3 million from The Diamond Doctor. Compl. ¶¶ 71-78, 80-90. Defendants highly dispute all of
the RICO allegations. Suffice it to say here, however, that The Diamond Doctor does not allege
having actually paid any money to Defendants. Further, and as explained in greater detail below,
Plaintiff has not plausibly pled, as it must, an enterprise separate and distinct from the RICO
person (Manookian) or from the alleged pattern of racketeering activity. Defendants respectfully
request that this Court grant their Motion to Dismiss for the reasons stated below.
III.
A.
ARGUMENT AND AUTHORITIES
LEGAL STANDARD
In resolving a Rule 12(b)(6) motion, the Court must follow a two-pronged approach.
First, the Court must accept all well-pleaded factual allegations as true, see In re Katrina Canal
Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007), but “[t]hread-bare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice,” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Nor must the Court “accept as true a legal conclusion couched as a
factual allegation.” Id. at 1949-50; see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). Second, assuming the veracity of well-pleaded factual allegations, the Court must
“determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 669.
B.
THE COURT SHOULD DISMISS PLAINTIFF’S BUSINESS DISPARAGEMENT CLAIM.
The Court should dismiss Plaintiff’s business disparagement claim. To state a claim for
business disparagement, a plaintiff must allege: (1) that the defendant published a disparaging
statement (2) that was false, (3) with malice, (4) without privilege, (5) resulting in special
damages. Teel v. Deloitte & Touche LLP, No. 3:15-CV-2593-G, 2015 WL 9478187, at *3 (N.D.
Tex. Dec. 29, 2015); Hurlbut v. Gulf Atlantic Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987). A
DEFENDANTS’ MOTION TO DISMISS
Page 7
claim for business disparagement is similar to a claim for defamation, except that the former
protects a party’s economic interests against pecuniary loss and requires more stringent
pleadings—falsity, fault of the defendant, and proof of damage. Teel, 2015 WL 947 8187, at *34 (citing Hurlbut, 749 S.W.2d at 766-67).
The judicial privilege bars Plaintiff’s disparagement claim. The judicial privilege – which
is absolute – protects lawyers who make communications preliminary, or in relation, to a judicial
proceeding. Russell v. Clark, 620 S.W.2d 865, 868-69 (Tex. App.—Dallas 1981, writ ref’d
n.r.e.) (affirming summary judgment finding lawyer’s communication absolutely privileged).
The Dallas Court of Appeals explained:
[The privilege] protects the attorney from liability in an action for
defamation irrespective of his purpose in publishing the
defamatory matter, his belief in its truth, or even his knowledge of
its falsity. […] The publication of defamatory matter by an
attorney is protected not only when made in the institution of the
proceedings or in the conduct of litigation before a judicial
tribunal, but in conferences and other communications
preliminary to the proceeding.
Id. at 869 (emphasis added). The Court went even further, opining that “[t]o grant immunity
short of absolute privilege to communications relating to pending or proposed litigation, and
thus subject an attorney to liability for defamation, might tend to lessen an attorney’s efforts on
behalf of his client.” Id. at 868 (emphasis added). See also Beta Health Alliance MD PA v.
Kelley Witherspoons LLP, No. 3:09-CV-0399-BF, 2009 WL 2222630, at *3 (N.D. Tex. Jul. 22,
2009) (“Under Texas law, it is well settled that any communication . . . uttered or published in
the due course of a judicial proceeding is absolutely privileged and cannot continues the basis for
a civil action in damages for slander or libel. This is true regardless of the negligence or malice
with which the communication is made . . .”) (citations omitted).
DEFENDANTS’ MOTION TO DISMISS
Page 8
For the judicial privilege to protect it, the allegedly defamatory statement must be related
to a proposed legal proceeding in which the lawyer is employed and be made in furtherance of
that representation. Russell, 620 S.W.2d at 868. “Related to” does not mean the statement must
be material to the proceeding; in only need to be “so pertinent” that it may become a “subject of
inquiry” in the proceeding. Jenevein v. Friedman, 114 S.W.3d 743, 747 (Tex. App.—Dallas
2003) (affirming trial court’s grant of summary judgment based on lawyer’s absolute privilege).
Neither must the statement “meet technical relevance, materiality, or admissibility standards.”
Id. at 748. See also Kelley Witherspoons LLP, 2009 WL 2222630, at *3 (“The privilege . . .
attaches to all aspects fo the proceedings . . .”). Whether a statement is related to a proceeding is
a question of law for the court. Russell, 620 S.W.2d at 868. Importantly, “[a]ll doubt should be
resolved in favor of the communication’s relation to the proceeding.” Thomas v. Bracey, 940
S.W.2d 340, 343 (Tex. App.—San Antonio 1997).
Here, Manookian made statements in his capacity as an attorney in connection with
proposed proceedings against jewelers who sell non-GIA/EGL overgraded diamonds.
Manookian’s client solicitation makes reference to the core allegations Manookian’s clients will
make when suing The Diamond Doctor. The statements on the websites – that The Diamond
Doctor may be engaged in diamond overgrading, that diamond overgrading can result in
thousands of dollars of harm to The Diamond Doctor’s consumers – are pertinent to informing
clients and the public about potential claims against The Diamond Doctor, and the website’s
statements are so pertinent as to become a topic of inquiry in any proceeding brought by
Manookian’s clients against The Diamond Doctor. In short, Manookian is an attorney soliciting
clients, and he is making statements about a proposed legal proceeding that pertain to that legal
DEFENDANTS’ MOTION TO DISMISS
Page 9
proceeding. As such, Manookian’s (and Cummings Manookian’s) statements are absolutely
privileged as a matter of law.
C.
THE COURT SHOULD DISMISS PLAINTIFF’S DEFAMATION CLAIM
The Court should also dismiss Plaintiff’s defamation claim because it is likewise barred
by the absolute judicial privilege. Under Texas law, a plaintiff asserting a claim for defamation
per quod must demonstrate that “(1) the defendant published a statement; (2) that was
defamatory concerning the plaintiff; (3) while acting with malice, if the plaintiff was a public
figure, or negligence, if the plaintiff was a private individual, regarding the truth of the
statement.” Teel v. Deloitte & Touche LLP, No. 3:15-CV-2593-G, 2015 WL 9478187, at *4
(N.D. Tex. Dec. 29, 2015) (citing Randall’s Food Markets, Inc. v. Johnson, 891 S.W.2d 650, 656
(Tex. 1995)). Defamation per se injures a plaintiff in his office, profession, or occupation. In re
Perry, 423 B.R. 215, 274 (S.D. Tex. 2010).
As with business disparagement, the judicial privilege precludes a claim for defamation
per quod and defamation per se. See Beta Health Alliance MD PA v. Kelley Witherspoons LLP,
No. 3:09-CV-0399-BF, 2009 WL 2222630, at *3 (N.D. Tex. Jul. 22, 2009) (dismissing
defamation claim due to absolute privilege). For the reasons set forth above, namely that the
alleged defamatory statements were made in connection with Defendants’ solicitation and
education of clients, those statements at issue are absolutely privileged, barring a claim for
defamation. Therefore, this Court should dismiss with prejudice Plaintiff’s defamation claim.
D.
THE COURT SHOULD DISMISS PLAINTIFF’S RICO CLAIM BASED ON AN ASSOCIATIONIN-FACT.
The Court should dismiss Plaintiff’s RICO claim that is based on an alleged association-
in-fact between Cummings Manookian, Cummings, Manookian, and Ramon. Plaintiff pleads a
RICO claim under section 1962(c), which prohibits a person “employed by or associated with an
DEFENDANTS’ MOTION TO DISMISS
Page 10
enterprise” from “conduct[ing] the affairs of the enterprise through a pattern of racketeering
activity.” See Crowe v. Henry, 43 F.3d 198, 203 (5th Cir. 1995). Thus, to state a claim under
section 1962(c), a plaintiff must allege: (1) a person (2) engaged in a pattern of racketeering
activity (3) “connected to the acquisition, establishment, conduct, or control of an enterprise.” Id.
at 204. Plaintiff fails to properly allege an enterprise.
“An enterprise is a group of persons or entities associating together for the common
purpose of engaging in a course of conduct.” Whelan v. Winchester Prod. Co., 319 F.3d 225,
229 (5th Cir. 2003). “The enterprise may be a legal entity or ‘any union or group of individuals
associated in fact although not a legal entity.’” Id. (quoting 18 U.S.C. § 1961(4)). Plaintiff
properly alleges a legal entity by referring to Cummings Manookian. See Am. Compl. ¶ 71. But
Plaintiff also alleges the existence of an association-in-fact among Cummings Manookian,
Cummings, Manookian, and Ramon. This pleading fails as a matter of law, and the Court should
dismiss it so as to streamline the issues to be tried in this case.
First, when a party pleads an association-in-fact, the enterprise must exist separately and
apart from the alleged pattern of racketeering activity. Whelan, 319 F.3d at 229 (“The enterprise
is not a pattern of racketeering activity, but must exist separate and apart from the pattern of
racketeering activity in which it engages.”). In other words, a plaintiff must demonstrate that
“the enterprise is distinct from the series of predicate acts constituting racketeering activity.” Id.
Second, “[f]or purposes of § 1962(c), . . . the plaintiff must demonstrate not only that the
enterprise is distinct from the series of predicate acts constituting racketeering activity, but also
that the RICO ‘person’ who commits the predicate acts is distinct from the enterprise.” Whelan,
319 F.3d at 229; Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122, 123 (5th Cir. 1986) (“where
subsection (c) violations are concerned, the “person” and the “enterprise” must be distinct”).
DEFENDANTS’ MOTION TO DISMISS
Page 11
In other words, “[i]t is not enough to establish that a defendant corporation through its
agents committed the predicate acts in the conduct of its own business.” Id. As a result, “[t]hat
officers or employees of a corporation, in the course of their employment, associate to commit
predicate acts does not establish an association-in-fact enterprise distinct from the corporation.”
Id. Relatedly, because a RICO person cannot associate with himself, he may not also be a
member of an association-in-fact enterprise. See Crowe v. Henry, 43 F.3d 198, 205-06 (5th Cir.
1995).
Here, Plaintiff failed to plead the existence of an enterprise (a) separate and distinct from
the RICO person and (b) separate from the alleged pattern of racketeering activity. Plaintiff
pleads that Manookian is the RICO person. Am. Compl. ¶ 70.1 Plaintiff goes on to plead
Cummings Manookian, Ramon, Cummings, and Manookian as an association-in-fact.
But
Manookian, as the RICO person, cannot be a member of the association-in-fact because he
cannot associate with himself. See Crowe, 43 F.3d at 205-06. Manookian and Cummings are
both agents acting on behalf of the Firm, such that their associating to commit the alleged
predicate acts does not create an association-in-fact enterprise. See Whelan, 319 F.3d at 229.
Plaintiff’s second defect is that Plaintiff has alleged only that Ramon is engaged with Manookian
and Cummings in furtherance of the scheme. Am. Compl. ¶¶ 24, 76. In other words, the
association of the Firm, Manookian, Cummings, and Ramon does not exist separate and apart
from the pattern of racketeering as required.
The RICO claim should be dismissed with
prejudice for failure to plausibly plead an association-in-fact enterprise.
1
Plaintiff also pleads that The Diamond Doctor is a person within the meaning of §1961(3) and 1962(c),
which does not make much sense given that “[t]he RICO person in a civil or criminal RICO action is the defendant.”
Crowe v. Henry, 43 F.3d 198, 204 (5th Cir. 1995).
DEFENDANTS’ MOTION TO DISMISS
Page 12
IV.
CONCLUSION
For the reasons discussed above, Brian Manookian and Cummings Manookian, PLC
respectfully asks the Court to dismiss Plaintiff’s First Amended Complaint and for any other
relief, whether at law or in equity, to which the Court may find them to be justly entitled.
Date: April 22, 2016.
Respectfully submitted,
/s/Christopher J. Schwegmann
Christopher J. Schwegmann
Texas State Bar No. 24051315
[email protected]
Andres Correa
Texas State Bar No. 24076330
[email protected]
Christina Mullen
Texas State Bar No. 24092868
[email protected]
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
(214) 981-3800 - Telephone
(214) 981-3839 - Facsimile
ATTORNEYS FOR DEFENDANTS
BRIAN MANOOKIAN and CUMMINGS
MANOOKIAN, PLC
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and foregoing
document has been served via the Court’s ECF system on the 22nd day of April, 2016:
/s/Christopher J. Schwegmann
Christopher J. Schwegmann
4840-4630-7632, v. 4
DEFENDANTS’ MOTION TO DISMISS
Page 13
