Law Firm Seeks Dismissal of Conservation Easement Suit

ANDREW LECHTER; SYLVIA THOMPSON; LAWSON F. THOMPSON; RUSSELL DALBA; and KATHRYN DALBA, on behalf of themselves and all other similarly situated,
Plaintiffs,
v.
APRIO, LLP f/k/a HABIF, AROGETI & WYNNE, LLP, ROBERT GREENBERGER, SIROTE & PERMUTT, P.C., BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C., SMITH, LEWIS & HALEY, LLP, DAVID C. SMITH, FOREVER FORESTS LLC, NANCY ZAK, JAMES JOWERS, LARGE & GILBERT, INC., CLOWER KIRSCH & ASSOCIATES, LLC, JIM R. CLOWER, SR., TENNILLE & ASSOCIATES, INC., ATLANTIC COAST CONSERVANCY, INC., ROBERT D. KELLER, and GEORGIA ALABAMA LAND TRUST, INC. f/k/a GEORGIA LAND TRUST, INC.,
Defendants.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

JURY DEMANDED

DEFENDANT BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.'S MOTION TO DISMISS

Defendant Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. (“Baker Donelson”) hereby moves this Honorable Court for an Order dismissing with prejudice all eight claims Plaintiffs asserts against it in the Original Class Action Complaint (“Complaint”): (1) violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”) (Count I); (2) conspiring to violate RICO (Count II); (3) violations of the Georgia RICO statute, O.C.G.A. § 16-4-1, et seq., (“Georgia RICO”) (Count III); (4) conspiracy to violate Georgia RICO (Count IV); (5) negligent misrepresentation (Count VI); (6) fraud (Count IX); (7) aiding and abetting other Defendants' alleged wrongdoing (Count X); and (8) civil conspiracy (Count XII). As grounds for this Motion, Baker Donelson states:

1. The Court lacks personal jurisdiction over Baker Donelson, a Tennessee professional corporation with its principal place of business in Memphis, Tennessee, and the Northern District of Georgia is not the proper venue, because Plaintiffs pled no facts whatsoever to invoke the Court's jurisdiction over Baker Donelson, establish this Court represents the proper venue, or apply Georgia law.

2. Plaintiffs' Complaint is an impermissible shotgun pleading that should be dismissed with prejudice as to Baker Donelson because any amendment would be futile.

3. Plaintiffs' fraud-based claims (violations of RICO and Georgia RICO, fraud, and negligent misrepresentation) should be dismissed because they are not pled with the requisite particularity and do not plausibly state a claim.

4. Plaintiffs' RICO claims should be dismissed because Plaintiffs fail to plausibly allege the following elements of a RICO claim: the existence of a RICO enterprise, a pattern of racketeering activity, and an injury arising from alleged RICO activity.

5. Plaintiffs' RICO conspiracy claim should be dismissed because the underlying alleged RICO violations are not viable and because Plaintiffs do not plausibly allege Baker Donelson agreed to the objective of the alleged conspiracy or agreed to commit any acts relating to the alleged conspiracy.

6. Plaintiffs' RICO claims are barred by the statute of limitations.

7. Plaintiffs' Georgia RICO claims and conspiracy to violate Georgia RICO should be dismissed because — as with their federal RICO claims — Plaintiffs fail to plausibly allege the required elements.

8. Plaintiffs' Georgia RICO claims are barred by the statute of limitations.

9. Plaintiffs' fraud claim should be dismissed because Plaintiffs fail to plead the basic elements of the claim.

10. Plaintiffs' fraud claim is barred by the statute of limitations.

11. Plaintiffs' claim for negligent misrepresentation should be dismissed because Plaintiffs failed to plead facts supporting the elements of the claim.

12. Plaintiffs' claim for negligent misrepresentation is barred by the statute of limitations.

13. Plaintiffs' claim for aiding and abetting should be dismissed because allegations that Baker Donelson aided and abetted violations of RICO or Georgia RICO — without more — are insufficient, the tort of aiding and abetting fraud does not exist as a basis for liability under Georgia law, and Georgia law does not recognize a cause of action for aiding and abetting a breach of fiduciary duties.

14. Plaintiffs' claim for civil conspiracy should be dismissed because Plaintiffs have failed to state a claim for any underlying tort and because Plaintiffs have failed to allege facts demonstrating Baker Donelson conspired with any other party for any purpose, lawful or unlawful.

15. Plaintiffs' derivative requests for punitive damages and attorneys' fees fail because Plaintiffs do not state a claim for relief against Baker Donelson.

Accordingly, Baker Donelson respectfully requests the Court grant this Motion and enter an Order dismissing with prejudice all claims against it. Further, there being no just reason for delay, Baker Donelson respectfully requests the Court direct entry of a final judgment as to Baker Donelson. Baker Donelson additionally requests all further relief, both general and special, as mandated by the premises, and as justice requires.

Respectfully submitted this 7th day of August, 2020.

BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.
165 Madison Avenue, Suite 2000
Memphis, TN 38103
901-577-2257

Sam Berry Blair
(admitted pro hac vice)
sblair@bakerdonelson.com
Ryan A. Strain
(admitted pro hac vice)
rstrain@bakerdonelson.com

Attorneys for Baker Donelson

BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.
Suite 1500, Monarch Plaza
3414 Peachtree St., N.E.
Atlanta, GA 30326-1164
404-577-6000

Steven G. Hall
Georgia Bar No. 319308
shall@bakerdonelson.com

Attorney for Baker Donelson

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DEFENDANT BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.'S BRIEF IN SUPPORT OF MOTION TO DISMISS

Defendant Baker Donelson, Bearman, Caldwell & Berkowitz, P.C. (“Baker Donelson”) states the following as its Brief in Support of its Motion to Dismiss:

I. INTRODUCTION

Despite failing to allege a single, particularized fact against Baker Donelson in the Original Class Action Complaint (“Complaint”), Plaintiffs assert eight claims against Baker Donelson arising out of a “tax savings strategy” involving three conservation easement transactions (the “Transactions”)¹: (1) violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”)(Count I); (2) conspiring to violate RICO (Count II); (3) violations of the Georgia RICO statute, O.C.G.A. § 16-4-1, et seq., (“Georgia RICO”) (Count III); (4) conspiracy to violate Georgia RICO (Count IV); (5) negligent misrepresentation (Count VI); (6) fraud (Count IX); (7) aiding and abetting other Defendants' alleged wrongdoing (Count X); and (8) civil conspiracy (Count XII).

Plaintiffs' claims against Baker Donelson should be dismissed with prejudice for a multitude of reasons:

1. The Court lacks personal jurisdiction over Baker Donelson, a Tennessee professional corporation with its principal place of business in Memphis, Tennessee, and the Northern District of Georgia is not the proper venue, because Plaintiffs pled no facts whatsoever to invoke the Court's jurisdiction over Baker Donelson, establish this Court represents the proper venue, or apply Georgia law.

2. Plaintiffs' Complaint is an impermissible shotgun pleading that should be dismissed with prejudice as to Baker Donelson because any amendment would be futile.

3. Plaintiffs' fraud-based claims (violations of RICO and Georgia RICO, fraud, and negligent misrepresentation) should be dismissed because they are not pled with the requisite particularity and do not plausibly state a claim.

4. Plaintiffs' RICO claims should be dismissed because Plaintiffs fail to plausibly allege the following elements of a RICO claim: the existence of a RICO enterprise, a pattern of racketeering activity, and an injury arising from alleged RICO activity.

5. Plaintiffs' RICO conspiracy claim should be dismissed because the underlying alleged RICO violations are not viable and because Plaintiffs do not plausibly allege Baker Donelson agreed to the objective of the alleged conspiracy or agreed to commit any acts relating to the alleged conspiracy.

6. Plaintiffs' RICO claims are barred by the statute of limitations.

7. Plaintiffs' Georgia RICO claims and conspiracy to violate Georgia RICO should be dismissed because — as with their federal RICO claims — Plaintiffs fail to plausibly allege the required elements.

8. Plaintiffs' Georgia RICO claims are barred by the statute of limitations.

9. Plaintiffs' fraud claim should be dismissed because Plaintiffs fail to plead the basic elements of the claim.

10. Plaintiffs' fraud claim is barred by the statute of limitations.

11. Plaintiffs' claim for negligent misrepresentation should be dismissed because Plaintiffs failed to plead facts supporting the elements of the claim.

12. Plaintiffs' claim for negligent misrepresentation is barred by the statute of limitations.

13. Plaintiffs' claim for aiding and abetting should be dismissed because allegations that Baker Donelson aided and abetted violations of RICO or Georgia RICO — without more — are insufficient, the tort of aiding and abetting fraud does not exist as a basis for liability under Georgia law, and Georgia law does not recognize a cause of action for aiding and abetting a breach of fiduciary duties.

14. Plaintiffs' claim for civil conspiracy should be dismissed because Plaintiffs have failed to state a claim for any underlying tort and because Plaintiffs have failed to allege facts demonstrating Baker Donelson conspired with any other party for any purpose, lawful or unlawful.

15. Plaintiffs' derivative requests for punitive damages and attorneys' fees fail because Plaintiffs do not state a claim for relief against Baker Donelson.

Accordingly, Baker Donelson respectfully requests the Court grant this Motion and enter an Order dismissing with prejudice all claims against it. Further, there being no just reason for delay, Baker Donelson respectfully requests the Court direct entry of a final judgment as to Baker Donelson.

II. ALLEGED FACTS

This Facts session is entitled “Alleged Facts” because Plaintiffs did not allege any specific facts against Baker Donelson. The reason is Baker Donelson did not represent Plaintiffs or Defendants in any of the Transactions at issue in the Complaint (the 2011 Maple, 2011 Mossy or 2010 Oakhill Transactions) (the “Transactions”) and did not work on these three Transactions.

A. The Transactions

Baker Donelson incorporates by reference the two paragraphs under the Section II. heading on p.3 of Defendant Large & Gilbert, Inc.'s Memorandum in Support of Motion to Dismiss Plaintiffs' Complaint (“L&G's Memorandum”) (D.E. 81-1), as well as Sections II.A., II.B., and II.C. of L&G's Memorandum.² As set forth in more detail therein, five Plaintiffs filed the Complaint asserting claims against 17 Defendants to recover damages allegedly sustained after Plaintiffs' wrote off on their personal tax returns the value of their voluntary participation in three allegedly defective conservation easements, each of which involved the use of an LLC.

B. Allegations regarding Baker Donelson

Though Plaintiffs' Complaint asserts in prolix style “the development and implementation of fraudulent scheme to sell a flawed and defective tax savings strategy,” which Plaintiffs call “a Syndicated Conservation Easement Strategy” or “SCE Strategy,” (Compl. ¶¶ 1-9, 37-69), the Complaint is limited to three specific transactions in which that strategy allegedly was used: (1) the 2011 Maple Transaction (id. ¶¶ 70-99); (2) the 2011 Mossy Transaction (id. ¶¶ 100-124); and (3) the 2010 Oakhill Transaction. (Id. ¶¶ 125-152.) Plaintiffs have not alleged Baker Donelson had anything to do with these Transactions.

In fact, the 175-page Complaint specifically mentions Baker Donelson in just two of approximately 600 paragraphs and sub-paragraphs. One of those paragraphs (Paragraph 23) simply identifies Baker Donelson as a party and a Tennessee professional corporation with its principal place of business in Memphis, Tennessee. (Dkt. 1, ¶ 23.) The other paragraph, in purely conclusory fashion, alleges without any detail the following:

The following team of key players also worked together with the Aprio Defendants[³] in implementing the SCE Strategy:

. . .

Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. (“Baker Donelson ”) and Large & Gilbert, Inc. (“Large & Gilbert”). Baker Donelson is a law firm, and Large & Gilbert is an accounting firm. These professional firms provided advice and services regarding the preparation of the [IRS] Appraisal Summary Form 8283 for each Syndicate.[⁴] As discussed below, each of these Appraisal Summary Forms 8283 were improperly prepared and resulted in the disallowance of the charitable contribution deductions.

(Dkt. 1, ¶ 58(d).)

Notably, this vague and conclusory allegation is unsupported, and is, in fact, refuted, by Plaintiffs' somewhat more specific allegations relating to the Transactions and the preparation and completion of each Appraisal Summary Form 8283. Specifically, Plaintiffs allege: (1) the Aprio Defendants — not Baker Donelson — prepared the Appraisal Summary Form 8283 for the Transactions (id. ¶¶ 89, 95, 116, 121, 141, 146, 168) and for Plaintiffs (id. ¶¶ 92, 118, 144)⁵; (2) David R. Roberts of Defendant Tennille & Associates, Inc. (“Tennille”) and representative(s) of Defendant Georgia Alabama Land Trust, Inc. f/k/a Georgia Land Trust, Inc. (“GLT”)— not Baker Donelson — verified and signed the Appraisal Summary Form 8283 for the Maple and Oakhill LLCs (id. ¶¶ 89, 141); and (3) Defendants Clower, Kirsch & Associates, LLC, and Jim R. Clower, Sr. (“the Clower Defendants”) and Robert D. Keller — not Baker Donelson — verified and signed the Appraisal Summary Form 8283 for the Mossy LLC. (Id. ¶ 116.) Indeed, there are no specific allegations that Baker Donelson was involved in preparing the Appraisal Summary Form 8283 for the LLCs. Additionally, there are no allegations that Plaintiffs, the Aprio Defendants, David R. Roberts, representative(s) of GLT, the Clower Defendants, Robert D. Keller, the Forever Forests Defendants, or any other party sought any “advice [or] services regarding the preparation of the Appraisal Summary Form 8283” from Baker Donelson specifically, nor are there any specific allegations that Baker Donelson provided such advice or services to those parties.⁶

Plaintiffs' Complaint summarily lumps Baker Donelson together with three other law firms (one of which has been voluntarily dismissed, see D.E. 46) and defines them collectively as the “Law Firm Defendants.” (Id. at p.36 n. 9.) According to the Complaint, and again stated in a purely conclusory fashion, the Law Firm Defendants, the Sponsors, and the Aprio Defendants “worked closely with the Appraiser Defendants to prepare the Appraisals, including determining the 'Highest and Best Use' of the property, the value of the donated property interests, the fair market value of the conservation easements, and the amount of the charitable contribution deduction.” (Id. ¶ 50.)⁷ Plaintiffs further assert conclusory and shotgun allegations — again without describing Baker Donelson's particular role with any specificity whatsoever — that:

Each of the Appraiser Defendants allowed the Aprio Defendants, the Law Firm Defendants and the Sponsors to control, direct, and/or affect the conclusions reached and the methodologies used in each of the Appraisals.

. . .

The Law Firm Defendants were a key component of the Co-Conspirators' Arrangement.[⁸] The Law Firm Defendants worked closely with the Aprio Defendants and the Sponsors on all aspects of the design and development of the SCE Strategy, the structuring of each [LLC] and transaction, tax compliance, and the purported due diligence. The Law Firm Defendants drafted and/or approved the SCE transaction documents beginning with the purchase of property from landowners, continuing with the Promotional Materials[⁹] provided to potential participants, and all the documents necessary to complete the SCE Strategy and execute the donations to the Land Trust Defendants,[¹⁰] including the Conservation Easement Deeds, Baseline Reports, Appraisals, and Legal Opinion (with respect to [Defendant Sirote & Permutt, P.C. (“Sirote”)]). The Law Firm Defendants also assisted in preparing and approving all Promotional Materials. They were involved as promoters of the SCE Strategy, identified potential targets, and made themselves available to speak to any potential participants or referral sources who had questions about the SCE Strategy.

. . .

The Law Firm Defendants provided legal advice and services in connection with the SCE Strategy to each of the [LLCs] and Sponsor Defendants, including inter alia providing consulting services regarding the Promotional Materials and the ultimate donation of the conservation easement, and drafting or participating in the drafting of all necessary documentation including the Legal Opinions (with respect to Sirote), Appraisals, Baseline Documentation Reports, and Conservation Easement Deeds. These Defendants also made themselves available for consultation directly with potential participants regarding the bona fides of the SCE Strategy.

(Id. ¶¶ 189, 192, 221(e).) These indefinite collective allegations, not surprisingly, conflict with Plaintiffs' allegations in Paragraph 58(d) describing more limited, albeit also unsupportable, alleged actions on part of Baker Donelson.

Plaintiffs also (a) lump together Baker Donelson with all 16 other named defendants as the “Defendants” and (b) lump together all “Defendants” with an unknown number of unidentified “Sponsors” and “Other Participants” as the “Co-Conspirators.” (Id. intro. ¶ and ¶ 185.) In doing so, Plaintiffs lump together an unknown number of parties in disparate industries with Baker Donelson in hundreds of non-specific, generalized, conclusory allegations reaching back over a decade in time. (See Compl. Generally; Dkt. 1.) However, when Plaintiffs are specific, they allege other Defendants — not Baker Donelson — prepared the tax returns, Appraisal Summary Forms 8283, K-1s, Promotional Materials, Opinions, correspondence, etc. (See, e.g., Dkt. 1, ¶¶ 56-58, 89-92, 95, 117-19, 121, 146, 148.)

III. STANDARD FOR DISMISSAL

To survive a Rule 12(b)(6) motion to dismiss, a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)(stating complaint that failed to “nudge[ ]. . . claims across the line from conceivable to plausible” must be dismissed). “Threadbare 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) (complaint should not survive dismissal if it “tenders [only] 'naked assertion[s]' devoid of 'further factual enhancement'”) (quoting Twombly, 550 U.S. at 557). The standards for dismissal under Federal Rule of Civil Procedure 12(b)(2) and (3) are set forth in Section IV.A. below.

IV. LAW AND ARGUMENT

A. Baker Donelson should be dismissed from this action because Plaintiffs failed to plead any facts supporting the Court's personal jurisdiction over Baker Donelson or that the Northern District of Georgia is the proper venue.

Plaintiffs have failed to allege any facts to connect Baker Donelson to the Transactions, Plaintiffs themselves, or Co-Defendants. Plaintiffs have also failed to allege any facts to confer general or specific personal jurisdiction over Baker Donelson or to establish the Northern District of Georgia is the proper venue as to Baker Donelson.

“Regarding a motion to dismiss for lack of personal jurisdiction where no evidentiary hearing is held, 'the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant.'” U.S. Sec. Assocs., Inc. v. Lumby, No. 1:18-CV-5331-TWT, 2019 WL 8277263, at *2 (N.D. Ga. Sept. 25, 2019) (quoting Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988)). “The plaintiff establishes a prima facie case by presenting 'enough evidence to withstand a motion for directed verdict.'” Id. (quoting Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990)). “A party presents enough evidence to withstand a motion for directed verdict by putting forth 'substantial evidence . . . of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions.'” Id. (quoting Walker v. NationsBank of Fla., 53 F.3d 1548, 1555 (11th Cir. 1995)).

“A defendant may move to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3).” Easoon USA, LLC v. Tesoro Woods, LLC, No. 1:17-CV-02129, 2019 WL 8266871, at *2 (N.D. Ga. Mar. 25, 2019) “When a defendant does so, the plaintiff must make a prima facie showing of venue.” Id. (citing Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988)). “The court must determine whether the case falls within one of the three categories set out in [28 U.S.C.] § 1391(b).” Id. (citing Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 56 (2013)). “If it does, venue is proper; but 'if it does not, . . . the case must be dismissed or transferred under [28 U.S.C.] § 1406(a).'” Id. (quoting Atl. Marine Const. Co., 571 U.S. at 56).

The federal venue statute, 28 U.S.C. § 1391, provides in pertinent part:

A civil action may be brought in —

28 U.S.C. § 1391(b)(1)-(3). “When determining whether a substantial part of the events or omissions that gave rise to a claim occurred in a judicial district [under § 1391(b)(2)], courts should consider 'only those acts and omissions that have a close nexus to the wrong.'” Easoon USA, 2019 WL 8266871, at *2 (quoting Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1372 (11th Cir. 2003)). “Courts focus on the 'relevant activities of the defendant, not of the plaintiff.'” Id. (quoting Jenkins Brick Co., 321 F.3d at 1371-72). “Only the events that directly give rise to a claim are relevant.” Id. (quoting Jenkins Brick Co., 321 F.3d at 1371-72). “And of the places where the events have taken place, only those locations hosting a 'substantial part' of the events are to be considered.” Id. (quoting Jenkins Brick Co., 321 F.3d at 1371-72).

In this case Baker Donelson is not confronted with any alleged specific facts related to the Transactions or minimum contact allegations; thus no allegations exist that need to be controverted. The full extent of the specific allegations are Baker Donelson is a Tennessee Professional Corporation with its principal place of business in Memphis, Tennessee. No allegation exists in the Complaint that anyone at Baker Donelson ever worked on the Transactions, much less anyone in Georgia. Thus, Baker Donelson raises the defenses of personal jurisdiction and improper venue.

“General jurisdiction requires a corporate defendant's contacts to be 'so continuous and systematic as to render them essentially at home in the forum State.'” Sanho Corp. v. Kaijet Tech. Int'l Ltd., Inc., No. 1:18-CV-05385-SDG, 2020 WL 4346881, at *7 (N.D. Ga. July 29, 2020) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). “The paradigm forums in which a corporate defendant is at home . . . are the corporation's place of incorporation and its principal place of business.” Id. (quoting BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017)). “In an 'exceptional case,' a corporate defendant may be said to be 'at home' in another forum if its operations are 'so substantial and of such a nature as to render the corporation at home in that State.'” Id. (quoting Daimler AG v. Bauman, 571 U.S. 117, 139 n.19 (2014)). “At bottom, simply conducting business in a forum is insufficient for general personal jurisdiction.” Id. (citing Tyrrell, 137 S. Ct. at 1558).

Further, “[t]o be an 'exceptional' case, the corporation's activities in the forum state should 'closely approximate the activities that ordinarily characterize a corporation's place of incorporation or principal place of business.'” Lumby, 2019 WL 8277263, at *6 (quoting Waite v. All Acquisition Corp., 901 F.3d 1307, 1318 (11th Cir. 2018)). “[S]olely having an office that is registered to do business in Georgia and maintaining a registered agent in Georgia is insufficient to satisfy this standard.” Id. (citing Waite, 901 F.3d at 1318). “Georgia courts have even recognized that '[j]ust because a company does some small amount of business in Georgia does not mean that due process will allow that company to be sued in Georgia for acts that occurred outside the State.'” Id. (quoting Orafol Ams., Inc. v. DBI Servs., LLC, No. 1:16-CV-3516-SCJ, 2017 WL 3473217, at *3 (N.D. Ga. July 20, 2017)). In fact, “[a] court in this district has held that registering to do business in Georgia, maintaining a registered agent in Georgia and engaging in business in Georgia are 'woefully insufficient [contacts] to render [a company] at home in Georgia.'” Id. (quoting Orafol Ams., 2017 WL 3473217, at *3). Plaintiffs' only jurisdictional factual allegations regarding Baker Donelson are that Baker Donelson is a Tennessee professional corporation with its principal place of business in Memphis, Tennessee. (Dkt. 1, ¶ 23.)¹¹ To be crystal clear, Baker Donelson has 22 offices across ten States, including an office in Atlanta, Georgia. As the cases cited above recognize, this is insufficient for general personal jurisdiction.

The Eleventh Circuit has articulated a three-part test for establishing the existence of minimum contacts for specific jurisdiction: “First, the contacts must be related to the plaintiff's cause of action or have given rise to it.” McGow v. McCurry, 412 F.3d 1207, 1214 (11th Cir. 2005), abrogated on other grounds by Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249 (11th Cir. 2010)). Plaintiffs fail on the first part because they pled no facts, much less sufficient minimum contacts, regarding Baker Donelson as it relates to Plaintiffs and the Transactions.

Baker Donelson acknowledges “[t]he Eleventh Circuit has held that RICO provides a potential statutory basis for personal jurisdiction because the RICO statute provides for nationwide service of process.” Delta Air Lines, Inc. v. Wunder, 1:13-CV-3388-MHC, 2015 WL 11236537, *2 (N.D. Ga. July 24, 2015) (citing Courboin v. Scott, 596 Fed. App'x 729, 732 (11th Cir. 2014)). However, in determining whether RICO provides a statutory basis for personal jurisdiction, the real inquiry is whether the plaintiff has alleged a “colorable” RICO claim. Courboin, 596 Fed. App'x at 732-34 (citing Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 941-42 (11th Cir. 1997)). As discussed herein, Plaintiffs have not alleged a colorable RICO claim against Baker Donelson, and thus RICO is not a proper basis for personal jurisdiction or venue over Baker Donelson in this case.

Accordingly, Plaintiffs have failed to allege sufficient facts against Baker Donelson to confer personal jurisdiction over Baker Donelson and failed to allege any facts related to Baker Donelson to establish venue is proper in this honorable Court as to Baker Donelson.

B. Plaintiffs' Complaint is an impermissible shotgun pleading that should be dismissed with prejudice as to Baker Donelson because any amendment would be futile.

Federal Rule of Civil Procedure 8(a)(2) requires a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Complaints that violate Rule 8 are “often disparagingly referred to as shotgun pleadings.” Amin v. Mercedes-Benz USA, LLC, 349 F. Supp. 3d 1338, 1349 (N.D. Ga. 2018) (citing Weiland v. Palm Beach County Sheriff's Office, 792 F.3d 1313, 1321-23 (11th Cir. 2015)). A shotgun pleading is one where “it is virtually impossible to know which allegations of fact are intended to support which claim(s) for relief.” Peavey v. Black, 476 F. App'x 697, 699 (11th Cir. 2012).

Plaintiffs have violated Rule 8 with their 175-page Complaint containing over 600. paragraphs and sub-paragraphs utilizing the terms “Defendants” and “Co-Conspirators” hundreds of times.

Shotgun pleadings include complaints where the plaintiff asserts “several counts, each one incorporating by reference the allegations of its predecessors, leading to a situation where most of the counts (i.e., all but the first) contain irrelevant factual allegations and legal conclusions” and those where the plaintiff asserts “multiple claims against multiple defendants without specifying which defendant is responsible for which acts or omissions.” Giscombe v. ABN Amro Mortg. Group, Inc., 680 F. Supp. 2d 1378, 1381 (N.D. Ga. 2010); Amin, 349 F. Supp.3d at 1349; Weiland, 792 F.3d at 1321, 1323; see also Brown v. Air Line Pilots Ass'n, — F. App'x —, 2020 WL 2175959 (11th Cir. May 6, 2020). “The unifying characteristic of all types of shotgun pleadings is that they fail to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.” Weiland, 792 F.3d at 1321, 1323. The Eleventh Circuit has often criticized shotgun pleadings as “resulting in a massive waste of judicial and private resources.” Peavey, 476 F. App'x at 699.

Plaintiffs' Complaint is a quintessential shotgun pleading. Five Plaintiffs assert 12 counts or claims against the 17 disparate “Defendants,” many incorporating by reference the allegations of the preceding claims, (see, e.g., Compl. ¶¶ 262, 271, 282, 291, 312, 328, 335, 349), resulting in claims containing irrelevant factual allegations and legal conclusions. Additionally, Plaintiffs' allegations of wrongdoing generally are asserted against defendants lumped into various groups (e.g., the Law Firm Defendants, the Defendants, and the Co-Conspirators) rather than specifying which particular defendant is allegedly responsible for which alleged acts or omissions. Also in the claims for relief, Plaintiffs incorporate the allegations referring to “the Defendants” as a group without specifying which particular Defendant allegedly is responsible for the acts or omissions in support of any particular claim for relief.

Plaintiffs' shotgun-style Complaint fails to provide Baker Donelson adequate notice of Plaintiffs' claims against it and the grounds upon which each claim rests. Baker Donelson is named specifically in just two of 600 paragraphs. (Compl. ¶¶ 23 and 58(d).) The “Law Firm Defendants” are referenced in four of 600 paragraphs. (Id. ¶¶ 50, 189, 192, 221(e).) However, Plaintiffs make assertions against "the Defendants” (which includes Baker Donelson) in hundreds of the Complaint's paragraphs and against the co-conspirators (which also includes Baker Donelson) in approximately 120 of 600 paragraphs and sub-paragraphs. The allegations regarding the Law Firm Defendants, the Defendants, and the co-conspirators simply do not specify Baker Donelson's alleged actions or omissions as opposed to the alleged actions or omissions of the three other law firms, 16 other named defendants, or the unknown number of alleged Co-Conspirators. Separated from such impermissible shotgun allegations, nothing forms the basis for a plausible claim against Baker Donelson under Iqbal, Twombly, and their progeny.

Additionally, Plaintiffs' allegations regarding Baker Donelson specifically and the “Law Firm Defendants,” “Defendants,” and “Co-Conspirators” more generally, are internally inconsistent. (Compare Compl. ¶ 58(d) (alleging Baker Donelson had a limited, though still non-specific role regarding “advice” relating to the Appraisal Summary Form 8283) with id. ¶¶ 189, 192, 221(e) (alleging the “Law Firm Defendants” worked closely with the Aprio Defendants and the Sponsors on all aspects of the design and development of the SCE Strategy, the structuring of each LLC and Transaction, tax compliance, and due diligence) and the hundreds of paragraphs alleging even more voluminous, though no more specific, actions on part of the “Defendants” and “Co-Conspirators.) Further, Plaintiffs' vague and 21 conclusory allegation against Baker Donelson in Paragraph 58(d) is unsupported — and is, in fact, refuted — by Plaintiffs' other allegations. (Id. ¶¶ 89, 92, 116, 118, 141, 144, 146, 148 (alleging parties other than Baker Donelson prepared, verified, and signed the Appraisal Summary Forms 8283).)

Violating Rule 8's “short and plain” statement requirement warrants dismissal of a Complaint. See Brown, 2020 WL 2175959, at *2-4. Further, a Court “need not allow for amendment” of a shotgun pleading “where amendment would be futile.” Id. at *2 (dismissing plaintiff's complaint without leave to amend finding that the complaint “failed to state a claim for which relief could be granted, so allowing for the amendment of the shotgun nature of his complaint would have been futile”).

Plaintiffs' shotgun Complaint is an egregious violation of Rule 8 and should be dismissed. Plaintiffs' Complaint violates Twombly and Iqbal and should be dismissed. Further, as explained below, any amendment as to Baker Donelson would be futile. Accordingly, all claims against Baker Donelson should be dismissed with prejudice.

C. Plaintiffs' fraud-based claims (violations of RICO and Georgia RICO, fraud, and negligent misrepresentation) should be dismissed because they are not pled with the requisite particularity.

Federal Rule of Civil Procedure 9(b) requires that in all averments of fraud, “the circumstances constituting fraud shall be stated with particularity.” Antilles Trading Co., S.A. v. Scientific-Atlanta, Inc., 117 F.R.D. 447 (N.D. Ga. 1986). For each of Plaintiffs' substantive claims against Baker Donelson — violations of RICO and Georgia RICO, fraud, and negligent misrepresentation — Plaintiffs are required to plead the claims with particularity. See Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007) (explaining that the specificity requirement of Rule 9(b) applies to claims of fraud and violations of RICO); Singleton v. Petland Mall of Georgia LLC, No. 1:19-CV-01477-ELR, 2020 WL 3400194, at *3 (N.D. Ga. Mar. 18, 2020)(“The common law claim of negligent misrepresentation is subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b).”); Wilson v. Nationstar Mortg., LLC, No. 1:14-cv-3540-CC-GGB, 2015 WL 11622466, at *3 (N.D. Ga. June 24, 2015), report and recommendation adopted, 2015 WL 11622467 (N.D. Ga. Sept. 2, 2015) (explaining the “heightened pleading requirements of Rule 9(b) also apply to fraud-based state RICO claims brought in federal court”); Watts v. JPMorgan Chase Bank, N.A., No. 1:13-CV-00866-RWS, 2013 WL 3779152 (N.D. Ga. July 17, 2013) (granting motion to dismiss constructive fraud and negligent misrepresentation claims because the plaintiff failed to plead the facts and circumstances surrounding the alleged instances of fraud and negligent misrepresentation with sufficient particularity to satisfy Rule 9(b) or O.C.G.A. § 9-11-9(b)).

Rule 9(b) is intended to “prevent the filing of fraud claims in which the facts are learned through discovery after the filing of the complaint” and to “protect potential defendants from incurring harm to their reputation and to provide them with sufficient notice so as to be able to prepare a defense to a charge of fraud.” Antilles Trading Co., 117 F.R.D. 447. See also Adams-Brown v. Caliber Home Loans, Inc., No. 1:17-CV-2326-AT, 2018 WL 1779425 (N.D. Ga. Jan. 5, 2018), report and recommendation adopted, 2018 WL 1794377 (N.D. Feb. 22, 2018) (explaining that the particularity requirement “protects defendants against spurious charges of [ ] fraudulent behavior”). This is particularly significant in the context of a RICO claim in which the allegation of fraud gives rise to a charge of “racketeering.” Antilles Trading Co., 117 F.R.D at 450 (explaining that “a vague allegation of fraud made with the hope of later discovery of the wrongdoing is even more troubling in the context of a RICO claim, in which the defendant stands accused of racketeering” and that “a complaint alleging fraud and racketeering should be a vehicle to right a wrong, not to find one”).

In order to satisfy the heightened pleading standard under Rule 9(b), “a plaintiff must allege: (1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the [plaintiff]; and (4) what the defendant[ ] gained by the alleged fraud.” Cline v. Advanced Neuromodulation Sys., Inc., 17 F. Supp. 3d 1275, 1287 (N.D. Ga. 2014) (citing Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283 (11th Cir. 2010)). “In other words, to avoid dismissal, a complaint alleging fraud must plead the who, what, when, where, and how of the alleged fraud.” Brown, 2018 WL 1779425, at *8. Additionally, in a case involving multiple defendants, “the complaint should inform each defendant of the nature of his alleged participation in the fraud.” Ambrosia, 482 F.3d at 1316-17. Otherwise, when plaintiffs “lump” together all the defendants in their allegations of fraud-based claims, including RICO, the complaint will not meet Rule 9(b)'s particularity standard and must be dismissed. See, e.g., Ambrosia, 482 F.3d at 1317 (affirming the district court's dismissal of plaintiff's federal RICO claim because plaintiffs failed to plead the claims against each defendant with the required level of specificity); Cigna Corp., 605 F.3d 1283 (same); McAdams v. Greenberg Traurig, LLP, No. 1:06-CV-1778-JTC, 2007 WL 2310112, at *6 (N.D. Ga. Aug. 9, 2007) (dismissing plaintiff's claim for fraud because plaintiffs failed to plead the claim against each defendant with the required level of specificity).

In this case, Plaintiffs have failed to satisfy even the most basic requirements of Rule 9(b). Plaintiffs' only allegations in the Complaint specific to Baker Donelson are that Baker Donelson “provided advice and services regarding the preparation of the Appraisal Summary Form 8283 for each [LLC]” and that the Appraisal Summary Forms 8283 “were improperly prepared.” (Compl. ¶ 58(d)). This allegation is not only conclusory but fails, among other things, to identify (1) who at Baker Donelson provided the “advice and services,” (2) any details relating to the “advice or services” Baker Donelson allegedly provided, (3) what actions Baker Donelson took in providing the “advice or services,” (4) when Baker Donelson provided the “advice or services,” (5) to whom the “advice or services” was provided, (6) who retained Baker Donelson to request any “advice or services,” (7) what “advice or services” Baker Donelson provided that were improper, false or misleading, (8) why such “advice or services” were improper, false, or misleading, (9) how the content of any statements misled Plaintiffs, or (10) what Baker Donelson gained by its alleged fraud. (See generally id.) Further, simply preparing a document “improperly” as a matter of law — is not fraud. At most, this amounts to an allegation of professional negligence — though, notably, Plaintiffs do not allege Baker Donelson prepared any document, much less improperly, do not allege Baker Donelson represented any party in the Transactions, and do not allege a claim for professional negligence against Baker Donelson.

Plaintiffs' other allegations simply lump together Baker Donelson with three other law firms as the “Law Firm Defendants,” with 16 other named defendants as “the Defendants,” and with an unknown number of parties as the “Co-Conspirators.” Such pleading does not satisfy the requirements of Rule 9(b). Ambrosia, 482 F.3d at 1316-17; Cigna Corp., 605 F.3d 1283; McAdams, 2007 WL 2310112, at *6.¹² Further, these collective allegations still fail to identify (1) the precise statements, documents, misrepresentations, or omissions made by Baker Donelson, (2) the time, place and person at Baker Donelson responsible for the statement or omission, (3) the content and manner in which the statements or omissions made by Baker Donelson misled Plaintiffs, and (4) what Baker Donelson gained in support of any of their fraud-based claims.

Because Plaintiffs have overtly violated Rule 9(b)'s pleading requirement, this Court should dismiss all of Plaintiffs' substantive, fraud-based claims, along with the derivative claims based on such substantive claims (attorney's fees and punitive damages). See McAdams, 2007 WL 2310112, at *5-6.

D. Plaintiffs' RICO claims should be dismissed.

Plaintiffs assert claims against “all Defendants” for alleged violations of (1) 18 U.S.C. § 1962(c) and (2) 18 U.S.C. § 1962(d) for conspiracy to violate 18 U.S.C. § 1962(c). (Compl. Counts I and II.) Plaintiffs' RICO claims against Baker Donelson fail because (1) Plaintiffs fail to plausibly allege the existence of an enterprise, a pattern of racketeering activity, or damages, and (2) the claims are barred by the statute of limitations.

1. Plaintiffs fail to plausibly allege the elements of a RICO claim.

To recover under 18 U.S.C. § 1962(c), “a civil plaintiff must establish that a defendant (1) operated or managed (2) an enterprise (3) through a pattern (4) of racketeering activity that included at least two racketeering acts.” Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1348 (11th Cir. 2016); Lehman v. Lucom, 727 F.3d 1326, 1330 (11^th Cir. 2013). “A civil plaintiff must also show (1) the requisite injury to business or property, and (2) that such injury was by reason of the substantive RICO violation.” Ray, 836 F.3d at 1348.

a. Plaintiffs fail to plead the existence of a RICO enterprise.

Plaintiffs allege a purported “Enterprise” consisting of “(1) the Defendants; (2) the Sponsors; (3) the Other Participants; and (4) all other persons and entities that associated to solicit persons to participate in the SCE Strategy for the purpose of generating and sharing fees and commissions generated from the SCE Strategy and alleged tax liability reduction it purported to provide.” (Compl. ¶ 211). Thus, Plaintiff's “enterprise” is alleged to be an association-in-fact enterprise, which is “a group of persons associated together for a common purpose of engaging in a course of conduct.” Flagg v. First Premier Bank, 257 F. Supp.3d 1351, 1356 (N.D. Ga. 2017). An association-in-fact enterprise “must have at least structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose.” Id.

Here again, while Plaintiffs group Baker Donelson together with the other Defendants and several categories of non-defendants into a so-called “Enterprise,” Plaintiffs have failed to plead any facts showing that Baker Donelson shared a common purpose with the other members of the enterprise. Plaintiffs allege the participants in the Enterprise “engaged in a common plan, transaction and course of conduct described herein in connection with the design, promotion, sale and implementation of the SCE Strategy,” (Compl. ¶ 214), but this is a purely conclusory allegation. A close review of all the allegations of the Complaint, reveals no specific facts are asserted to sufficiently provide a plausible inference that Baker Donelson was a part of any alleged Enterprise that acted with any “common plan.” Nowhere in the Complaint do Plaintiffs allege facts showing Baker Donelson was in any way involved in the Transactions or the alleged SCE Strategy relating to the LLCs.

In fact, Plaintiffs allege the opposite. (See Compl. ¶¶ 89, 92, 95, 116, 121, 141, 146, 168, 221(g) (alleging parties other than Baker Donelson prepared, verified, and signed the Appraisal Summary Forms for the LLCs and Plaintiffs); ¶¶ 73, 95, 102, 121, 127, 146, 221(a) (alleging other parties prepared, reviewed, and approved the Promotional Materials); ¶¶ 78, 131 (alleging Plaintiffs consulted with other parties regarding the SCE Strategy); ¶¶ 82, 95, 111, 121, 136, 146, 177, 178, 221(a) (alleging other parties prepared, provided, and verified the Baseline Documentation Reports); ¶¶ 85, 87, 95, 109, 121, 135, 146, 177, 178, 221(a) (alleging other parties prepared and approved the Conservation Easement Deeds); ¶¶ 58(c), 58(e), 303, 307, 322, 323 (alleging other parties provided legal and other advice and services in connection with the SCE Strategy).) Thus, setting aside the Complaint's wholly conclusory claims, Plaintiffs fail to allege any facts that Baker Donelson was part of an alleged enterprise to design, promote, sell, or implement the SCE Strategy involving the LLCs. See Ray, 836 F.3d at 1352; Danielson v. DBM, Inc., No. 1:05-CV-2091-WSD, 2006 WL 3246581, at *2 (N.D. Ga. July 31, 2006) (dismissing plaintiffs' RICO claim because plaintiffs' conclusory allegations are insufficient to plead a RICO violation).

Additionally, an “enterprise is not the 'pattern of racketeering activity.'” Parm v. Nat'l Bank of Cal., N.A., 242 F. Supp. 3d 1321, 1343 (N.D. Ga. 2017). Instead, “it is an entity separate and apart from the pattern of activity in which it engages.” Id. In other words, “[w]here businesses are alleged to be part of a RICO enterprise, a plaintiff must allege activity by the business that goes beyond the normal business activity, even if the plaintiff alleges that the business activity was itself fraudulent.” Cisneros v. Petland, Inc., 341 F. Supp. 3d 1365, 1372 (N.D. Ga. 2018). This is because the purpose of RICO is not to protect consumers from business fraud, it is to protect legitimate enterprises from becoming vehicles through which unlawful activities are committed.” Id. at 1372-73.

Even if it were accepted for purposes of argument that Baker Donelson represented some of the Plaintiffs or were involved in the Transactions (which it was not), Plaintiffs have failed to plead any action on Baker Donelson's part that differs from Baker Donelson's ordinary business of providing legal services, and have failed to allege an improper relationship between Baker Donelson and the other members of the alleged enterprise. Instead, Plaintiffs simply allege Baker Donelson “provided advice and services” regarding the preparation of a legal document (Compl. ¶ 58(d)) — something Baker Donelson properly and legally does every day in the ordinary course of business as a law firm. See Cisneros, 341 F. Supp. 3d at 1373 (dismissing plaintiff's RICO claims because plaintiffs' failed to plead any actions taken by defendants that looked any different from its ordinary operation of its pet store business); Kottler v. Deutsche Bank AG, 607 F. Supp. 2d 447 (S.D.N.Y. 2009) (dismissing the taxpayer plaintiffs' RICO claim because the failed to allege an enterprise that was separate and distinct from the fraudulent tax scheme). This is fatal to the RICO claims.

b. Plaintiffs fail to plead a pattern of racketeering activity.

“To successfully allege a pattern of racketeering activity, plaintiffs must charge that: (1) the defendants committed two or more predicate acts within a ten-year time span; (2) the predicate acts were related to one another; and (3) the predicate acts demonstrated criminal conduct of a continuing nature.” Chesapeake Employers' Ins. Co. v. Eades, 77 F. Supp. 3d 1241, 1254 (N.D. Ga. 2015). The “continuity element” is “crucial to a valid RICO claim.” Id. at 1255. “There are two ways to allege continuity of racketeering activity: closed-ended and open-ended continuity.” Id. A plaintiff may demonstrate a closed-ended continuity by “proving a series of related predicates extending over a substantial period of time.” Id. Alternatively, to show open-ended continuity, a plaintiff may “allege past conduct that by its nature projects into the future with a threat of repetition.” Id.

Plaintiffs have not pled a pattern of racketeering activity as it relates to Baker Donelson. As an initial matter, Plaintiffs have not pled predicate acts on Baker Donelson's part. Plaintiffs allege generally that Baker Donelson “provided advice and services regarding the preparation of the Appraisal Summary Form 8283 for each [LLC]” and that the Appraisal Summary Forms 8283 “were improperly prepared.” (Compl. ¶ 58(d)). However, Plaintiffs also specifically plead — contrary to their general allegations against Baker Donelson — that other parties actually prepared, verified, and signed the Appraisal Summary Forms for the LLCs. (Id. ¶¶ 89, 95, 116, 121, 141, 146, 168, 221(g).) Further, in their list of 37 vague and conclusory “representative examples of predicate acts,” (id. ¶ 234(a)-(kk)), Plaintiffs do not mention any act allegedly committed by Baker Donelson specifically. Plaintiffs also have failed to plead “continuity” of any Baker Donelson conduct. See Burchett v. Lagi, No. 1:11-CV-2379-TWT, 2012 WL 3042984 (N.D. Ga. July 25, 2012); J.G. Williams, Inc. v. Regency Props, Ltd., 672 F. Supp. 1436 (N.D. Ga. 1987) (dismissing plaintiff's RICO claim due to its failure to adequately allege a pattern of racketeering activity). This is also fatal.

c. Plaintiffs fail to plead an injury.

Baker Donelson incorporates by reference herein Section IV.C.1.c. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, Plaintiffs allegations that they have been “injured” as a result of the Defendants' acts “amount to little more than threadbare recital[s] of the elements of a cause of action, supported by mere conclusory statements, which [are] plainly insufficient to support a cause of action.” Ray, 836 F.3d at 1350. Plaintiffs also fail to allege any facts sufficient to show Baker Donelson committed any act, let alone a racketeering act, that was the but-for and proximate cause of Plaintiffs' alleged injuries. Plaintiffs do not allege any link between Baker Donelson's alleged acts and Plaintiffs' decision to invest in the LLCs and claim charitable contribution deductions on their individual tax returns.

d. Plaintiffs fail to plead a RICO conspiracy claim.

“Under 18 U.S.C. § 1962(d), it is unlawful to enter into a conspiracy with the intention of violating any other part of § 1962.” Fuller, LLC, 512 F. Supp.2d at 1295. To support a claim of RICO conspiracy, a plaintiff must “allege an illegal agreement to violate a substantive provision of the RICO statute.” Id. In other words, “[t]o sufficiently state a conspiracy claim, [ ] the complaint must allege the existence of an agreement to commit an act that is itself illegal.” Id. “[P]arties cannot be found guilty of conspiring to commit an act that is not itself against the law.” Id. Accordingly, “if the underlying allegations of RICO violations are not viable, a conspiracy claim based on those violations must also fail.” Id. (dismissing plaintiff's RICO conspiracy claim because the plaintiff failed to sufficiently state a substantive RICO claim against the defendant).

As explained above, Plaintiffs fail to state a RICO claim against Baker Donelson. Additionally, Plaintiffs do not allege any facts showing Baker Donelson agreed to the objective of the alleged conspiracy or agreed to commit any acts relating to the alleged conspiracy. Accordingly, Plaintiffs' RICO conspiracy claim — based on non-viable RICO violations — also fails. See Fuller, 512 F. Supp.2d 1295; see also Cigna Corp., 605 F.3d at 1294 (rejecting “formulaic recitations” of a RICO conspiracy claim).

2. Plaintiffs' RICO claims are barred by the statute of limitations.

Baker Donelson incorporates by reference herein Section IV.C.2. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, without any allegation of fact specific to L&G's (or Baker Donelson's) alleged involvement with the Enterprise, Plaintiffs' core allegations against the Defendants arise out of their alleged collective involvement in implementing and advertising the SCE Strategy. However, the Complaint makes clear that Plaintiffs had knowledge they had been injured due to alleged misrepresentations no later than December 2014 (the IRS had selected all the LLCs tax returns for an audit by that point), meaning Plaintiffs' RICO claims were barred by December 2018 — more than a year before Plaintiffs filed the Complaint.

E. Plaintiffs' claims for violation of Georgia RICO and conspiracy to violate Georgia RICO should be dismissed because — as with their federal RICO claims — Plaintiffs fail to plausibly allege the required elements and because Plaintiffs' Georgia RICO claims are barred by the applicable five-year statute of limitations.

Baker Donelson incorporates by reference herein Section IV.D. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, where a plaintiff fails to state a federal RICO claim under a particular predicate, the plaintiff's state-law RICO claim under that predicate will fail as well. Further, for the same reasons Plaintiffs' RICO claims became barred no later than December 2018 (see section above), Plaintiffs' Georgia RICO claims became barred no later than December 2019 — three months before Plaintiffs filed the Complaint — and were likely barred much earlier.

F. Plaintiffs' claim for fraud should be dismissed.

Baker Donelson incorporates by reference herein Section IV.E. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, in addition to Plaintiffs' failure to plausibly plead fraud with the requisite particularity required by Rule 9 (see supra), Plaintiffs' fraud claim against Baker Donelson also fails because Plaintiffs have not plausibly alleged the essential elements of a fraud claim and any fraud claim arising out of misrepresentations or omissions of material fact allegedly made by L&G (or Baker Donelson) to the Plaintiffs relating to the LLCs are barred by the four-year statute of limitations.

1. Plaintiffs fail to plead the basic elements of a fraud claim.

Baker Donelson incorporates by reference herein Section IV.E.1. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, Plaintiffs do not allege any facts in their Complaint suggesting a single representation made by L&G (or Baker Donelson) to Plaintiffs. Instead, Plaintiffs assert conclusory allegations of alleged misrepresentations and intentional omissions made by “the Defendants” without any direct allegations against Baker Donelson. Further, Plaintiffs have pled no facts that could support a finding that Baker Donelson had a contractual, statutory, or fiduciary relationship with Plaintiffs or that Baker Donelson had a duty to communicate with Plaintiffs.

2. Plaintiffs' fraud claim is barred by the statute of limitations.

Baker Donelson incorporates by reference herein Section IV.E.2. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, the Georgia statute of limitations on fraud is four years. The Complaint makes clear that Plaintiffs had knowledge they had been injured due to alleged misrepresentations no later than December 2014 (the IRS had selected all the LLCs tax returns for an audit by that point), meaning Plaintiffs' fraud claim was barred by December 2018 — more than a year before Plaintiffs filed the Complaint.

G. Plaintiffs' claim for negligent misrepresentation should be dismissed because Plaintiffs failed to plead facts supporting the elements of the claim and because it is barred by the statute of limitations.

Baker Donelson incorporates by reference herein Section IV.F. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, Plaintiffs' claim for negligent misrepresentation fails for the same reasons Plaintiffs' claim for fraud fails.

Further, because “[i]n Georgia, '[a] four-year statute of limitation governs actions for fraud and negligent misrepresentation,'” Metellus v. Bank of Am., N.A., No. 5:15-CV-183-LJA, 2016 WL 7985330, at *4 (M.D. Ga. Mar. 28, 2016) (emphasis added) (quoting Paul v. Destito, 250 Ga. App. 631, 636 (2001)), the statute of limitations argument asserted in Section IV.E.2. of L&G's Memorandum regarding Plaintiffs' fraud claim applies to Plaintiffs' claim for negligent misrepresentation, as well. Accordingly, Plaintiffs' claim for negligent misrepresentation is also time-barred.

H. Plaintiffs' claim for aiding and abetting should be dismissed because allegations that Baker Donelson aided and abetted violations of RICO or Georgia RICO — without more — are insufficient, the tort of aiding and abetting fraud does not exist as a basis for liability under Georgia law, and Georgia law does not recognize a cause of action for aiding and abetting a breach of fiduciary duties.

Baker Donelson incorporates by reference herein Section IV.G. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, since Plaintiffs' RICO, Georgia RICO, fraud, and negligent misrepresentation claims fail, any claim for aiding and abetting such alleged wrongdoing also fails.

I. Plaintiffs' claim for civil conspiracy should be dismissed because Plaintiffs have failed to state a claim for any underlying tort and because Plaintiffs have failed to allege facts plausibly demonstrating Baker Donelson conspired with any other party for an unlawful purpose.

Baker Donelson incorporates by reference herein Section IV.H. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, in the absence of an underlying tort, there is no liability for civil conspiracy under Georgia law. Additionally, the limited facts pled in support of the conspiracy claim are insufficient to survive a motion to dismiss.

J. Plaintiffs' derivative requests for punitive damages and attorneys' fees fail because Plaintiffs do not state a claim for relief against Baker Donelson.

Baker Donelson incorporates by reference herein Section IV.I. of L&G's Memorandum, with the substitution of “Baker Donelson” in place of all references to “L&G” and excluding any references to the Declaration of Nathan Worthey. As discussed in that section of L&G's Memorandum, because Plaintiffs fail to state a claim for relief, their claims for punitive damages and attorney's fees likewise fail as a matter of law.

K. The Court should direct entry of a final judgment as to Baker Donelson.

“[W]hen multiple parties are involved [in an action], the court may direct entry of a final judgment as to one or more, but fewer than all,. . . parties only if the court expressly determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b). In order to grant a request under Rule 54(b), “the court must find (1) that multiple claims or parties are fully resolved, (2) that there is no just cause for delay, and (3) that the judgment constitutes a final judgment.” Reid v. City of Atlanta, No. CIV. A 108CV01846JOF, 2010 WL 1138456, at *22 (N.D. Ga. Mar. 22, 2010) (citing Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (1956)). “District courts have substantial discretion in determining when there is no just cause for delay in entering judgment under Rule 54(b).” Id. (quoting Intergraph Corp. v. Intel Corp., 253 F.3d 695, 699 (Fed. Cir. 2001)).

By this Motion, Baker Donelson seeks dismissal of all claims against it with prejudice, i.e., an Order fully resolving the case against it. Such an Order would represent a final judgment as to Baker Donelson.

Further, there is no just reason to delay certifying that Order as final and immediately appealable. Plaintiffs have not alleged a single, particularized fact against Baker Donelson in their Complaint, nor have they alleged Baker Donelson had anything to do with the Transactions at issue in the Complaint. Accordingly, Plaintiffs' claims against the remaining Defendants do not require that Baker Donelson be kept in this litigation. See Reid, 2010 WL 1138456, at *22. Further, resolution of all Plaintiffs' claims against the remaining Defendants could take a substantial amount of time, meaning a delay of months or even years if the Court does not certify its Order dismissing Baker Donelson from this case as final. Based on all the foregoing, Baker Donelson respectfully requests the Court direct entry of a final judgment as to Baker Donelson and expressly determine there is no just reason for delay.

V. CONCLUSION

For the foregoing reasons, Baker Donelson respectfully requests the Court grant this Motion and enter an Order dismissing with prejudice all claims against it. Further, there being no just reason for delay, Baker Donelson respectfully requests the Court direct entry of a final judgment as to Baker Donelson. Baker Donelson additionally requests all further relief, both general and special, as mandated by the premises, and as justice requires.

Respectfully submitted this 7th day of August, 2020.

BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.
165 Madison Avenue, Suite 2000
Memphis, TN 38103
901-577-2257

Sam Berry Blair
(admitted pro hac vice)
sblair@bakerdonelson.com
Ryan A. Strain
(admitted pro hac vice)
rstrain@bakerdonelson.com

Attorneys for Baker Donelson

BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.
Suite 1500, Monarch Plaza
3414 Peachtree St., N.E.
Atlanta, GA 30326-1164
404-577-6000

Steven G. Hall
Georgia Bar No. 319308
shall@bakerdonelson.com

Attorney for Baker Donelson