kandi technologies reply to motion to dismiss

8/7/2019 Kandi Technologies Reply to Motion to Dismiss

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REPLY TO OPPOSITION TO MOTION TO DISMISS

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Bin Li, Esq. SBN 223126

LAW OFFICES OF BIN LI

17800 Castleton Street, Suite 605City of Industry, CA 91748

telephone: 626-839-0277

facsimile: 626-839-0322email: [email protected]

Attorney for Defendants:

Kandi Technologies Corp.and Kandi, USA, Inc.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CONG WANG, an individual; SEASENG,INC., a/k/a KMD POWERSPORTS, a

California corporation,

Plaintiffs,

vs.

ZHEJIANG KANDI VEHICLES CO., LTD.

a/k/a KANDI TECHNOLOGIES CORP., aforeign corporation; KANDI

TECHNOLOGIES CORP., a DelawareCorporation f/k/a/ STONE MOUNTAIN

RESOURCES, INC., ZHEIJIANG YONGKANG TOP IMPORT AND EXPORT CO.,

LTD. a/k/a/DINGJI, a foreign corporation;

ZHEHJIANG MEDGELI ELECTRONI CO.LTD. a foreign corporation; XIAO MING

HU, an individual, WANG YUAN HU, an

individual; and KANDI USA, INC., aCalifornia corporation,

Defendants.

Case No.: CV09-7145 JFW (JEMx)

DEFENDANTS KANDI

TECHNOLOGIES CORP. AND KANDI

USA, INC.S REPLY TO OPPOSITION

TO MOTION TO DISMISS

FRCP Rules 12(b)(1) and (6)

The Honorable John F. Walter

DATE: January 25, 2010TIME: 1:30pm

COURTROOM: 16

Case 2:09-cv-07145-JFW-JEM Document 26 Filed 01/13/10 Page 1 of 7 Page ID #:275


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A. Summary of reply argument.Plaintiffs served their original complaint and Kandi Technologies Corp. moved to

dismiss for defective service. Even before the Court granted this motion, plaintiff filed its FAC,

joining Kandi USA, Inc., a California corporation, as a new party defendant, and thereby

destroying any putative "diversity" jurisdiction. Federal jurisdiction, if any, thus hinges on the

viability of the RICO claim.

Movants contend that the purported RICO claim is fatally flawed, a meritless attempt to

create federal jurisdiction where none exists, and to magnify a garden variety contract dispute

between businessmen into a species of "racketeering." In fact, the very issues present in this

federal action have been prosecuted for some time in the California Superior Court of San

Bernardino in the case styledZhejiang etc. et al. v. Cong Wang, etc.,where the claims and

controversies herein properly lie.

B. Plaintiffs opposition refers to and defends the original complaint, not the first amended

complaint.

In preparing their opposition papers, plaintiffs cite the factual allegations and

paragraphs as they appear in the original complaint, not as presented in the First Amended

Complaint. Only a tedious, painstaking line- by-line analysis can differentiate them.

As has been oft stated in the case authorities, when a complaint is amended, the original

is superseded and is of no further effect, 6 Charles Alan Wright, Arthur R. Miller & Mary Kay

Kane, FederalPractice & Procedure 1476 (2d ed. 1990) ("Once an amended pleading is

interposed, the original pleading no longer performs any function in the case."), see also,



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Carver v. Condie, 169 F.3d 469, 472 (7th Cir.1999) (holding that allegations not included in

amended complaint "fell by the wayside").

As it stands, the Opposition arguments do not correlate with the paragraphs and

allegations of the FAC, and for that reason alone, such Opposition should be disregarded as

devoid of (intelligible) content.

C. Defective diversity jurisdiction.

Plaintiffs concede that there is no diversity jurisdiction. During the meet and confer

process prior to the filing of this motion, Movants noted that plaintiffs, California residents, had

destroyed jurisdiction based on complete diversity of citizenship when Kandi USA, also a

California resident, was included as a new party defendants.Morris v. Princess Cruises, Inc.

236 F.3d 1061, 1067 (C.A.9 Cal. 2001). Although plaintiffs stated they were considering

removing this defective assertion, they declined. Plaintiffs' silence and/or failure to address this

issue in its Opposition should be deemed an admission that such diversity jurisdiction fails.

D. RICO defects.

What plaintiffs claim as predicate acts appear only in paragraph 76 of the FAC and

consist of an alleged misappropriation of trade secrets and two instances of vaguely alleged

threats.

1. Misappropriation of trade secrets.

Misappropriation of trade secrets, a federal criminal offense, 18 U.S.C. 1832,

is not among the list of federal crimes enumerated at 18 U.S.C. 1961 which are the only

RICO predicate acts. Since Congress did not include misappropriation or Section 1832 in the



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list, plain statutory interpretation means that this was not intended. Plaintiffs argument citing

state business law is irrelevant.

2. Threats.

Movants stand by their argument that Paragraph 76(b) does not allege facts

sufficient to rise to pleading standards clarified inBell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007):

"a plaintiff's obligation to provide the grounds of his

entitle[ment] to relief requires more than labels and conclusions,

and a formulaic recitation of the elements of a cause of action willnot do, see Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932,

92 L.Ed.2d 209 (1986) (on a motion to dismiss, courts are not

bound to accept as true a legal conclusion couched as a factualallegation). Factual allegations must be enough to raise a right to

relief above the speculative level, see 5 C. Wright & A. Miller,

Federal Practice and Procedure 1216, pp. 235-236 (3ded.2004) ... ([T]he pleading must contain something more ...

than ... a statement of facts that merely creates a suspicion [of] a

legally cognizable right of action), on the ASSUMPTION THATALL THE allegations in the complaint are true (even if doubtful in

fact),see, e.g., Swierkiewicz v. Sorema N. A.

, 534 U.S. 506, 508, n.1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). [footnote omitted]

[emphasis in original]

3. In all events, the FAC does not establish repeated conduct within a

closed period to show a pattern of racketeering.

A. Open continuity not applicable. The Supreme Court discussed

this concept inH.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989). Open

continuity refers to past conduct that by its nature projects into the future with a threat of

repetition.Id. at 241. Since the commercial transactions that are the subject of this lawsuit are



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closed, the alleged threats are not of the nature that they project into the future with a threat of

repetition.

B. Plaintiff does not establish closed continuity. To sufficiently

plead closed-ended continuity, Plaintiff must allege a "series of related predicates extending

over a substantial period of time. Predicate acts extending over a few weeks or months and

threatening no future criminal conduct do not satisfy this requirement."H.J., 492 U.S. at 242.

This requirement indicates that "Congress was concerned in [enacting] RICO with long-term

criminal conduct.H.J., 492 U.S. at 242.

There are three principal factors courts consider when analyzing whether closed-ended

continuity has been sufficiently pled: first, the number and duration of the alleged predicate

acts; second, the number of alleged victims; and third, the number of alleged schemes. See, e.g.,

Fototec Int'l Corp. v. Polaroid Corp., 889 F. Supp. 1518, 1523-25 (N.D. Ga. 1995) (quoting

H.J., 492 U. S. at 241-42).

Regarding the number and duration of the alleged predicate acts, the 11th Circuit Court

of Appeals has found that illegal activity occurring over approximately six months was "too

short a period of time ... in order to qualify as a pattern of racketeering activity."Aldridge v.

Lily-Tulip, Inc., 953 F.2d 587,593 (11th Cir. 1992). Similarly, three predicate acts allegedly

committed over a 15-month period of time has been held insufficient to establish closed-ended

continuity. Fototec, 889 F. Supp. at 1524; see also, e.g., Eastern Publishing and Advertising,

Inc. v. Chesapeake Publishing and Adver., 895 F.2d 971, 973 (4th Cir. 1990) (closed-ended

scheme to defraud lasting over period of only three months did not demonstrate requisite

continuity); Olive Can Co., Inc. v. Martin, 906 F.2d 1147, 1151 (7th Cir. 1990). The two



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threats alleged in the FAC apparently took place ten months apart, within the period of time

that theAldridge court found inadequate.

Regarding the number of the alleged victims of the alleged RICO predicate acts, closed-

ended continuity is not established where the alleged scheme had one victim or one "set" of

victims. See, e.g., Menasco, Inc. v. Wasserman, 886 F.2d 681, 684 (4th Cir. 1989) (continuity

not sufficiently alleged where one set of two victims was allegedly injured as the result of a

"single fraudulent goal"); Park v. Jack's Food Sys., Inc., 907 F. Supp. 914, 919-20 (D. Md.

1995) (continuity not sufficiently established where the predicate acts were directed to eighteen

victims that were allegedly injured as part of a single scheme). Where the plaintiff alleges one

"set" of victims who suffered similar injuries in a similar manner as the result of a single

alleged scheme, the "number of victims" factor does not weigh in favor of finding closed-ended

continuity. See Menasco, Inc., 886 F.2d at 683. Here, one of the plaintiffs and unidentified

relatives were threatened, essentially a single set of victims allegedly injured in the same

manner. Plaintiffs continuity is again inadequately pled.

The number of "schemes" alleged is also a relevant factor in determining whether

continuity has been adequately pled. Courts have generally found that where the alleged

predicate acts were committed as part of a single scheme, continuity is not established. See,

e.g., Fototec, 889 F. Supp. at 1524-25, and cases cited therein (observing that although not

dispositive, the existence of only one scheme generally will not be sufficient to satisfy the

continuity requirement);Edmondson & Gallagher v. Alban Tavers Tenants Ass'n, 48 F. 3d

1260, 1264-65 (D.C. Cir. 1995) (dismissing RICO claims based on a single scheme designed to

frustrate one project);Menasco, 886 F. 2d at 684;Jones v. Lampe, 845 F.2d 755, 759 (7th Cir.

1988) (continuity not established where 120 alleged predicate acts, injuring four victims,



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constituted one single scheme). In the instant case, there is only one scheme pled, that of the

alleged attempt to takeover plaintiffs business operations.

C. Section 1962(a) and (b). The FAC does not plead damages.

Plaintiffs only allege, in a skeletal and conclusory manner, insufficient under Twombly

standards, that Movants received "income" from racketeering activity. There are no facts to

support the bare conclusion.

D. Section 1962(d). The FAC does not adequately plead conspiracy

to violate RICO. Without predicate acts, there can be no conspiracy,Reddy v. Litton Indus.

Inc., (9th Cir. 1990) 912 F.2d 291, 295-296.

WHEREFORE, for the above stated reasons, Movants respectfully request that this

Court dismiss the First amended complaintagainst Movants, and each of them.

Respectfully submitted,

Dated: January 13, 2009

LAW OFFICES OF BIN LI & ASSOCIATES

By: ___/s/_______________________Bin Li, Esq.,

Attorney for Defendants and Movants

Kandi Technologies Corp. and Kandi, USA, Inc.


kandi technologies reply to motion to dismiss

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