US District Court
District of South Carolina
United States of America ) Plaintiff ) No. 05cv2734-hmh Vs. ) Robert Clarkson, individually ) And dba The Patriot Network ) Motion for Dismiss under Rule 9b Part II Defendants )
Pursuant to Federal Rule 9b,Defendant Robert Clarkson hereby files his Motion to Dismiss under Rule 9b(Part 2):
(1) the defendants organized or sold, or participated in the organization or sale of, and entity, plan, or arrangement;
(2) they made or caused to be made, false or fraudulent statements concerning the tax benefits to be derived from the entity, plan, or arrangement;
(3) they knew or had reason to know that the statements were false or fraudulent;
(4) the false or fraudulent statements pertained to a material matter, and
(5) an injunction is necessary to prevent recurrence of this conduct.
Clarkson would first point out that, since the statute requires allegations of “fraud”, the heightened “fraud” pleading requirements of Rule 9b would apply. See, e.g. In re Daou Systems Inc. Securities, 397 F.3d 704, 710 (9th Cir 2005) Rule 9(b) applies to federal statutory securities fraud claims; Edwards v. Marin Park, Inc., 356F.3d 1058, 1065-66 (9th Cir 2004) Rule 9(b) applies to federal statutory civil RICO fraud claims; Bly-Magee v, State, 236 F.3d 1014, 1018 (9th Cir 2001) statute, such as Fraud Claims Act, which uses as “false or fraudulent,” “conspires to defraud,” and “intending to defraud”, is subject to Rule 9(b) requirements. Averments of fraud must be accompanied by “the who, what, when, where, and how” of the misconduct charged, must set forth more than the neutral facts necessary to identify the transaction, and must set forth what is false or misleading about a statement, and why it is false. Vess v. Ciba-Geigy Corp,
The complaint in this case is fatally defective since, at a minimum, it fails to state any dates of any purported fraudulent acts when, and the location of the any such acts where. The complaint also fails or misleading about any particular statement it identifies, and why it might be false. Based on the failure to comply with Rule 9(b) also, the complaint must be dismissed.
“FRCivP Rule 12 (b) (6) allows a defendant to attack a complaint for failure to state a claim upon which relief can be granted. A motion to dismiss under Fed. R. Civ. P. 12 (b) (6) is disfavored and rarely granted: “(a) complaint should not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Van Buskirk v. CNN, Inc., 284 F. 3d 977, 980 (9th Cir. 2002) (citations omitted). In deciding whether to grant a motion to dismiss, the court “accept (s) all factual allegations of the complaint as true and draw(s) all reasonable inferences in favor of the nonmoving party.” TwoRivers v. Lewis, 174 F. 3d 987, 991 (9th Cir. 1999).
“The court need not, however, accept as true allegations that contradict matters properly subject to judicial notice or by exhibit. Nor is the court required to accept as true allegations that are merely conclusionory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266F.3d 979, 988 (9th Cir. 2001) (citations omitted). For example, matters of public record may be considered under Fed. R. Civ. P. 201, including pleadings, orders and other papers filed with the court or records of administrative bodies. See Lee v. City of
B. Pleading Fraud Under Federal Rule of Civil Procedure 9 (b).
Rule 9 (b) of the Federal Rules of Civil Procedure states that:
“In all averments of fraud or mistake , the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.”
A complaint alleging fraud meets the Rule 9 (b) standard if it alleges the time, place, and content of the fraudulent statements, including reasons why the statements are false. In re GlenFed., Inc., Securities Litig.,42 F. 3d 1541 , 1547-48 (9th Cir. 1994) (en banc) , rev’d on other grounds, 60 F. 3d 591 (9th Cir. 1995). Where fraud allegedly occurred over a period of time, however, Rule 9 (b)’s requirement that the circumstances of fraud to be stated with particularity are less stringently applied. See
One of the purposes behind Rule 9 (b)’s heightened pleading requirement is to put defendants on notice of the specific fraudulent conduct in order to enable them to adequately defend against such allegations. See In re Stac Elec. Litig., 89 F. 3d 1399, 1405 (9th Cir. 1996). Furthermore, Rule 9 (b) serves “to deter the filing of complaints as a pretext for the discovery of unknown wrongs, to protect (defendants) from the harm that comes from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis”.
Copies of the pertinent parts of that case are attached, on pages 1,7,8, and 9. This is a lengthy opinion and is available in full on PACER.
7. Since the complaint in the Free Enterprise Society case is the same as the complaint in instant case, then Judge Wanger’s opinion would apply in this case.
8. Even though the
9. However, Clarkson now does none of that in public and very little in the last ten years. Therefore, due to the facts of instant case, the holding in Hempfling, supra is more applicable.
10. However, the Government’s complaint is most unclear in Clarkson’s case because the PN activities differ greatly from the actual operations of the other Patriot groups. In other words, the DOJ complaint drafters used the same boiler-plate provisions from the other hundred or more cases in the complaint in this case. However, the facts differ greatly. Clarkson just does not do the things that the complaint alleges. The complaint differs so much from the facts that Defendant is unsure of that the Government really wants and thusly is unable to mount an effective defense.
11. After discovery and a pre-trial meeting, the parties should be able to limit these over-broad and nebulous allegations. A new complaint listing the actually fraud of Clarkson, if any, would be a step in the direction of clearing up the uncertainly and confusion brought about by a complaint that is far from the facts.
12. In conclusion, the Court should dismiss the complaint for violations of Rule 9b. And, should this court allow amended complaint, it should be required to list real facts, not just conclusionary allegations.
The Network has not been served, appears especially now and its appearance is subject to its previously filed Special Appearance.
Certificate of Service: I do hereby certify that on this date I mailed properly a copy of this pleading to opposing counsel by regular
_________________________ Date: Jan 6, 2006
Note: My correct address is listed above. Please correct your records. This is the only address I have furnished to the clerk’s office.