Judge tosses $300M RICO suit against 2 major firms, saying it would be 'futile' for plaintiffs to amend complaint
Dentons and Boies Schiller Flexner have won dismissal of a $300 million racketeering lawsuit claiming that the law firms ran up legal fees by ignoring red flags suggesting that its former clients signed an invalid contract to build a power plant in West Africa.
The suit by former clients Frank Corsini and his companies may not be amended, according to the Sept. 30 decision by Chief U.S. District Judge Laura Taylor Swain of the Southern District of New York.
The suit, filed under the Racketeer Influenced and Corrupt Organizations Act, alleged that the firms violated the law by seeking to present false testimony in an international arbitration, by intimidating Corsini as witness and by gaining economic advantage through a litigation funding arrangement.
Swain said the plaintiffs’ “laundry list” of alleged criminal law violations failed to include details.
“While plaintiffs allege a multitude of criminal violations, their claims suffer from an equally large number of flaws,” she wrote.
Allegations of fraudulent or baseless litigation activities against the firms and related defendants, without anything more, can’t support a RICO claim, the judge said.
“Conclusory assertions of deceit” about the contract and “frivolous” and “facially implausible” allegations are insufficient, she wrote.
Corsini, a Massachusetts businessman, claimed that the firms ignored issues with the contract in a “scheme to generate millions of dollars in fees and seize controlling interests” in his two companies.
The contract was negotiated with Senelec, the state-owned power supply company for Senegal, a country in West Africa. The agreement was never approved by the power company’s board of directors. The plaintiffs claimed that Dentons, which was representing them at the time, failed to advise them that they needed board approval, even though the contract contained a notation about the need for such approval.
Dentons ended its representation in November 2013 because of the companies’ failure to pay $1.9 million in fees, Swain said.
Boies Schiller began to represent the plaintiffs in September 2015 to prepare for a future international arbitration against Senegal. Dentons was to be paid its fees in exchange for its cooperation, with most of the money to be paid from awards. Boies Schiller was to be paid under a contingency contract that gave it at least 40% of awards obtained, with funding to be provided by a third-party litigation funder.
The International Court of Arbitration ruled against Corsini’s companies in May 2020, holding that the purchase agreement was not a binding contract. The court awarded $1.22 million in costs.
Swain noted that under the contingency agreement, the defendants “stood to gain nothing from their purported deceit” about the legitimacy of the contract. They would be paid only if the litigation was successful. In addition, claims against Dentons before the cooperation agreement were barred under a release in the cooperation agreement, the judge said.
The plaintiffs can’t file an amended suit, Swain said, because there is no indication that they could or would supply additional allegations that would save it from dismissal.
In their opposition to defense motions, “the entirety of plaintiffs’ legal argument totals five pages,” Swain said, “and consists of nothing more than conclusory recitations of the most basic elements of each claim, long string citations to similarly conclusory paragraphs of the complaint, and references to case law without any further discussion or elaboration.”
The factual background section of the plaintiffs’ opposition brief “is no better,” Swain said in a footnote, “as it is almost entirely a carbon copy of plaintiffs’ complaint—even down to the paragraph formatting.”
“In light of the foregoing, there is no indication that an amendment of plaintiffs’ complaint would be anything but futile, and plaintiffs’ complaint is dismissed with prejudice,” Swain wrote.
A lawyer for the plaintiffs told Reuters that an appeal is planned.
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