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Aluminum Bahrain B.S.C v. Alcoa Inc.

June 11, 2012

ALUMINUM BAHRAIN B.S.C., PLAINTIFF,
v.
ALCOA INC., ALCOA WORLD ALUMINA LLC, WILLIAM RICE AND
VICTOR DAHDALEH, DEFENDANTS.



The opinion of the court was delivered by: Ambrose, District Judge

OPINION and ORDER OF COURT

Defendants Alcoa Inc. ("Alcoa") and Alcoa World Alumina LLC ("AWA") (referred to collectively as "the Alcoa Defendants"), seek the dismissal of Plaintiff Aluminum Bahrain B.S.C.'s ("Alba's) Amended Complaint. (See ECF Docket No. [70]). The Amended Complaint contains four claims, all of which are asserted against the Alcoa Defendants: violation of RICO, 18 U.S.C. § 1962(c); conspiracy to violate RICO, 18 U.S.C. § 1962(d); fraud; and civil conspiracy to defraud. The Alcoa Defendants challenge the viability of each of these claims. After careful consideration, and for the reasons set forth below, the Motion is denied.

Standard of Review

"'In deciding a motion to dismiss, all well-pleaded allegations of the complaint must be taken as true and interpreted in the light most favorable to the plaintiffs, and all inferences must be drawn in favor of them.'" Robinson v. County of Allegheny, Civ. No. 9-4681, 404 Fed. Appx. 670, 2010 WL 5166321 at * 2 (3rd Cir. Dec. 21, 2010), quoting , McTernan v. City of York, 577 F.3d 521, 526 (3d Cir. 2009). "To withstand a Rule 12(b)(6) motion to dismiss, 'a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Robinson, 2010 WL 5166321 at * 2, quoting , Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "A claim is plausible if it 'pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct that is alleged.'" Holmes v.Gates, 403 Fed. Appx. 670, 2010 WL 5078004 at * 1 (3rd Cir. Dec. 14, 2010), quoting , Iqbal, 129 S. Ct. at 1949. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Holmes, 2010 WL 5078004 at * 1, quoting, Iqbal, 129 S. Ct. at 1949. "'A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Id.

(internal quotation marks and brackets omitted). "'Determining whether a complaint states a plausible claim for relief will . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. (citations omitted).

Analysis

I. Count I -- RICO

In Count I, Alba contends that the Alcoa Defendants, together with Victor Dahdaleh and William Rice, violated RICO, 18 U.S.C. § 1962(c). "To plead a claim under § 1962(c), 'the plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.'" In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300, 362 (3d Cir. 2010), quoting , Lum v. Bank of America, 361 F.3d 217, 223 (3d Cir. 2004) and Sedima, S.P.R. L. v. Imrex Co., 473 U.S. 479, 496, 105 S. Ct. 3292, 87 L.Ed.2d 346 (1988). The Alcoa Defendants challenge the sufficiency of Alba's claims with respect to the second and fourth elements.

(a) Domestic / Foreign Enterprise

The RICO statute defines an "enterprise" to include "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). Alba offers two alternative definitions of "enterprise."*fn1 The Alcoa Defendants contend that Alba's identification of the "enterprise" in the Amended Complaint and RICO Case Statement is foreign rather than domestic in nature. As such, they urge, applying RICO to the facts alleged here would be an extraterritorial application of the statute in violation of the Supreme Court's decision in Morrison v. National Australia Bank Ltd., __ U.S. __, 130 S. Ct. 2869 (2010).

In Morrison, the Supreme Court considered whether § 10(b) of the Securities and Exchange Act of 1934 had extraterritorial application. In finding that it did not, the Court confirmed the "longstanding principal of American law that ., unless there is the affirmative intention of Congress clearly expressed to give a statute extraterritorial effect, we must presume it is primarily concerned with domestic conditions." Morrison, 130 S. Ct. at 2877 (internal quotation marks and citations omitted). I have previously acknowledged that the Morrison decision has been understood to preclude extraterritorial application of RICO. See In re Le- Nature's, Inc., Civ. No. 9-mc-196, 2011 WL 2112533 at * 2 (W.D. Pa. May 26, 2011) (citations omitted). The Alcoa Defendants contend that the facts alleged here suggest an enterprise which is "essentially foreign." I disagree.*fn2

After careful review of the facts alleged both in the Amended Complaint and the RICO Case Statement,*fn3 I find that the 12(b)(6) challenge lacks merit. For instance, Alba describes a scheme to defraud which was conceived, orchestrated and directed by Alcoa, AWA and its senior executives. Alba identifies each of these members of the enterprise as domestically located. See Amended Complaint, ¶¶5-7. Alba clearly alleges that Alcoa controlled Alcoa of Australia, being that it was a 60% shareholder. See Amended Complaint, ¶ 12.*fn4 Further, it is unquestioned that all of the alumina involved in the alleged scheme was supplied by Alcoa of Australia. See Amended Complaint, ¶ 20. Alba also alleges that Alcoa, through Alcoa of Australia, entered into a series of "Agency Agreements" between 1990 -- 2004 with Dahdaleh through his company Alumet Limited. See Amended Complaint, ¶ 39. That contract was later extended.

Alba also alleges that Alcoa, through Alcoa of Australia, paid Dahdaleh and Alumet Limited, more than $13.5 million in "commissions." See Amended Complaint, ¶¶ 39-40. Alba alleges that these "commissions," paid by Alcoa through the subsidiary that it directed and controlled, were made to compensate Dahdaleh for facilitating the payment of bribes to senior officials of Alba and the Government of Bahrain, to distribute the proceeds of the fraudulent scheme to the Defendants and to camouflage the Defendants in the cloak of Dahdaleh's various corporate aliases. See Amended Complaint, ¶ 42. Again, all of these decisions and directions were happening in Pittsburgh, Pennsylvania.

Alba also alleges that executives with the Alcoa Defendants were directly involved in various contract negotiations for the 1990 Contract and the various extensions and assignments thereafter. For instance, Alba contends that Peter Burgess, Sales and Marketing Manager for Alcoa World Alumina in Pittsburgh, Pennsylvania, signed the 1996 Amendment on behalf of Alcoa of Australia. See Amended Complaint, ¶ 55. Alba contends that he did so at the direction of Alcoa and Alcoa World Alumina. Id. Again, the direction came from Pittsburgh. Burgess was also involved in the setting of the price for the "Market Tonnage" as part of that contract. See Amended Complaint, ¶ 56. Additionally, Burgess is alleged to have signed a 1996 Sales Agreement on behalf of Alcoa of Australia, while acting at the direction of Alcoa and Alcoa ...


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