In Re Mastercard International Inc. Internet Gambling Litigation UNITED STATES DISTRICT COURTEASTERN DISTRICT OF LOUISIANA IN RE: MASTERCARD INTERNATIONAL INC., INTERNET GAMBLINGLITIGATION, and VISA INTERNATIONAL SERVICE ASSOCIATION INTERNET GAMBLINGLITIGATION THIS DOCUMENT RELATES TO ALL ACTIONS CIVIL ACTIONMDL NOS. 1321 & 1322 SECTION (K) JUDGE DUVALMAG. JUDGE CHASEZ ORDER ANDREASONS This multidistrict litigation arises fromallegations that MasterCard International, Visa International and several banksthat issue MasterCard and Visa credit cards have interacted with a number ofInternet casinos in a manner that violates United States law. Numerous putativeclass actions were filed in district courts in the Northern District ofIllinois, the Middle District of Alabama, the Southern District of Alabama, theSouthern District of New York, and the Northern District of California. Thefederal actions were transferred to the Eastern District of Louisiana by orderof the Judicial Panel on Multidistrict Litigation on March 1, 2000, with thisCourt receiving the cases on March 20, 2000.1By minute entrydated June 14, 2000 (record document 12) this Court ordered that the parties intwo "test" cases, one from MDL-1321 and one from MDL-1322, file,respond and reply to motions pursuant to Federal Rule of Civil Procedure 12 andFederal Rule of Civil Procedure 19 with respect to federal law claims only. See Minute Entry, June 14, 2000. Inaccordance with that order, plaintiffs selected Larry Thompson v. MasterCard International, Inc., Fleet Bank (RhodeIsland), N.A. and Fleet Credit Card Services, L.P., C.A. No. 00-1986 as theMDL-1321 test case and Lawrence Bradleyv. Visa International Service Assoc. and Travelers Bank USA Corp., C.A.00-2002 as the MDL-1322 test case. Ali motions in all other cases that are partof this multidistrict litigation were ordered deferred until after the Courthas ruled on the two motions described above. See Minute Entry, June 14, 2000. Also deferred pending resolutionof the test case motions were plaintiffs' duties with respect to moving forclass certification under Local Civil Rule 23.1 and all discovery. Id. Presently before the Court are Rule 12(b)(6)motions to dismiss for failure to state a claim upon which relief can begranted and Rule 19 motions for joinder or dismissal for non-joinder filed byMasterCard International Inc. (record documents 19 & 20), Fleet Bank andFleet Credit Card Services (record document 21), Visa International ServicesAssociation (record documents 17 & 18), and Travelers Bank (record document16). These motions have been filed in accordance with the Court's multidistrictlitigation management order entered June 14, 2000 and are limited todefendants' liability under federal law, namely the Racketeer Influenced andCorrupt Organizations Act ("RICO"), found at 18 U.S.C. §1961 et seq. The Court heard oral argument onthe motions on September 13, 2000 and has considered the pleadings, memorandaand relevant law and finds that the motions to dismiss shall be granted for thereasons that follow. The Court will analyze the Rule 12 (b)(6) motionsas follows: I. Background II. Standard for Motion to Dismiss III. The Racketeer Influenced and CorruptOrganizations Act ("RICO"), GenerallyIV. Elements Common to All RICO claims A. The Existence of a RICO Person B. The Alleged Pattern of Racketeering Activity 1. Alleged Predicate Acts Under State Law a. New Hampshire Lawb. Kansas Law 2. The Wire Act, 18 U.S.C. §10843. Mail Fraud, 18 U.S.C. §1341 and WireFraud, 18 U.S.C. § 13434. Other Federal Laws 5. Collection of Unlawful Debt C. Enterprise 1. Generally 2. Existence Separate and Apart From thePattern of Racketeering Activity 3. An Ongoing Organization with a Hierarchal or ConsensualDecision Making Structure V. Additional Elements Discrete to 18 U.S.C. § 1962(c) A. Conduct B. Person/Enterprise Distinctness VI. Aiding and Abetting Liability under 18U.S.C. § 1962(e) VII. Standing to Assert a Civil RICO Claim under18 U.S.C. §1964 for Violations of 18 U.S.C. §1962 (c) The Rule12(b)(6) Motions I. Background The factual and legal allegations by plaintiffs ineach of the two actions before the Court are nearly identical; therefore, theCourt will set out the factual background in the form of a single narrative andindicate where the factual allegations or legal theories diverge. For purposesof this motion, the following are taken as true. Larry Thompson ("Thompson) and LawrenceBradley ("Bradley") (together referred to as "plaintiffs")filed class action complaints on behalf of themselves and others similarlysituated against certain credit card companies and issuing banks for thoseentities alleged illegal involvement with the internet gambling industry. Namedas defendants by Thompson are MasterCard International, Inc.("MasterCard"), Fleet Bank and Fleet Credit Card Services("Fleet"). Those named as defendants by Bradley are VisaInternational Service Association ("Visa") and Travelers Bank USACorp ("Travelers").2 Plaintiffs' class action complaints allege thatdefendants have violated several federal and state laws with respect todefendants' involvement with internet casinos. Plaintiffs argue thatdefendants' actions constitute a pattern of racketeering activity in violationof the Racketeer Influenced and Corrupt Organizations Act, found at 18 U.S.C.§§1961-1968. As the internet breaks down the geographic andtemporal walls that once restricted the flow of information and commerce,plaintiffs argue that several illegitimate businesses have used the medium tofurther their illegal industries. Plaintiffs allege that "numerous siteshave been created to offer the opportunity to engage in illegal gambling on theinternet" Bradley Complaint at ¶ 22, Thompson Complaint at ¶ 22."Many of these sites operate from outside the borders of the United States,but through use of the Internet and interstate telephone lines they can beaccessed easily from any computer in the United States with Internetaccess." Id. Those gamblingsites "allow persons with credit card accounts to gamble using theircredit cards." Bradley Complaint at ¶ 23, Thompson Complaint at ¶ 23. Thecredit cards are used to purchase credits which the bettor may then use, or notuse, as he pleases. According to the complaints, the process entails one of twomethods. An individual may "call and verbally authorize a deposit from hisor her credit card whereby chips or gambling credit are made available forgambling, or the individual may download his credit card information to thesite or may be required to access a web-site embedded in the gambling sitewhich allows the electronic deposit of credit card funds for "chips"or gambling credit." Id. It isthe plaintiffs' contention that "[w]hether the gambling is characterizedas chips, credits, points, or in other ways, the end result is the same: acharge for gambling losses is submitted on the credit card, and the player isgambling with real money electronically withdrawn from the credit card and paidto the casino to be billed later by the issuer of the credit card." Id. Each respective credit card company, Visa andMasterCard, "is responsible for the operation and upgrading of itscomputer payment system. This consumer financial transaction processing systemprovides authorization, transaction processing, and settlement services for approximately[millions] of merchants worldwide." SeeBradley Complaint at ¶ 41, Thompson Complaint at ¶ 37. Each credit cardcompany processes every charge submitted by the millions of" merchants,including Internet casinos, and is aware of the allegedly illegal nature of thegambling debt. Id. Bradley states that he "placed internetgambling wagers" on approximately nineteen different days using sevendifferent internet casino websites. Bradley Complaint at ¶¶ 24-31. Although hepleads that he wagered a total of $16,445, he was charged $7,048 by Visa andTravelers.3Bradley Complaint at ¶ 34. On the billingstatements, the various transactions were characterized as purchases as opposedto cash advances. Bradley Complaint at ¶ 31. As Bradley accessed each of the sevendifferent casino websites he was instructed to enter his billing information,including his street address, billing state and country and for each dollar hedeposited he received a "gambling credit" whose only purpose was toact as gambling tender. Bradley Complaint at ¶¶ 25-33. The Visa logo wasvisible on each website as a means of encouraging plaintiff to use his Visacard to place bets. Bradley Complaint at ¶ 25. Thompson "placed wagers" through twodifferent web sites on approximately 13 different days. Thompson Complaint at¶¶ 24-27. Thompson pleads that he wagered a total of $1520 and was charged$1510 by MasterCard and Fleet. Thompson Complaint at ¶ 30. As with Bradley, thevarious transactions were characterized as purchases rather than cash advanceson the billing statements. Thompson Complaint at ¶ 28. Thompson also statesthat as he accessed each website he was instructed to enter his billinginformation, including his billing state and country and that for each dollarhe deposited he received a "gambling credit" whose only purpose wasto act as gambling tender. Thompson Complaint at ¶¶ 25-29. In his case, theMasterCard logo was visible on each website as a means of encouraging plaintiffto use his MasterCard to place bets. Thompson Complaint at ¶ 25. Each plaintiff admits that all internet casinosaccept forms of payment other than credit cards. Bradley Complaint at ¶ 37,Thompson Complaint at ¶ 33. However, all other forms of payment required awaiting period for that particular form of payment to clear before a bettorcould place a wager. Id. Bradley andThompson each contend that the casinos' acceptance of their respective creditcards was the most immediate method by which plaintiffs could purchase creditsand that "but for" the casinos' acceptance of the plaintiffs creditcards, neither would have placed bets with the internet casinos. BradleyComplaint at ¶ 37, Thompson Complaint at ¶ 33. Plaintiffs allege that the Internet casinos and thedefendants have engaged in "a worldwide gambling enterprise" throughthe transmissions and facilitation of internet casino gambling, sports betting4andthe collection of gambling debt. Bradley Complaint at ¶ 88, Thompson Complaintat ¶ 77. Through an association with the internet casinos, plaintiffs claimthat the defendants "directed, guided, conducted, or participated,directly or indirectly, in the conduct of an enterprise through a pattern ofracketeering activity and/or collection of unlawful debt" as defined byRICO, 18 U.S.C. §1961 et seq. BradleyComplaint at ¶ 89, Thompson Complaint at ¶ 78. In support of these accusations, plaintiffs contendthat the defendants' services support "the internet casinos.., in foreigncountries where their presence may be legal" but that they also"actively directed, participated in and aided and abetted [the casinos]bookmaking activities in the United States where they are not legal."Bradley Complaint at ¶ 39, Thompson Complaint at ¶ 35. Thompson supports thisaccusation by alleging that employees of MasterCard attended an on-line gamingseminar and gave an impromptu presentation explaining MasterCard's role in theinternet gambling system. Thompson Complaint at ¶ 40. Bradley supports hisclaim by alleging that Visa had detailed procedures in place to handle internetgambling transactions.. Bradley Complaint at ¶¶ 45-49. It is plaintiffs'contention that the credit card companies know the exact nature of eachtransaction processed through their international payment system and continueto allow internet gamblers to use their credit cards when defendants knew thatinternet gambling debts were allegedly illegal. Bradley Complaint at ¶¶ 41.-42,Thompson Complaint at ¶¶ 36-37. Plaintiffs do not allege that the defendantsreceived or transmitted any bets or that they have an ownership interest in theonline casinos. Plaintiffs bring their suits under 18 U.S.C. § 1964(c) arguing that the defendants have violated 18 U.S.C. § 1962(c) as well asstate law. Plaintiffs support these causes of action with several claims thatdepend upon a finding that internet gambling is illegal under state and/orfederal law, as well as causes of action for mail fraud and wire fraud. Withthese facts in mind the Court turns to the relevant legal standards. II. Standardfor Motion to Dismiss "A motion to dismiss an action for failure tostate a claim 'admits the facts alleged in the complaint, but challengesplaintiff's right to relief based upon those facts.'" Crowe v. Henry, 43 F.3d 198, 203 (5th Cir. 1995)(quoting Wardv. Hednell, 366 F.2d 247, 249 (5th Cir.1966)). "The district court may not dismiss a complaint under rule12(b)(6) 'unless it appears beyond a doubt that the plaintiff can prove no setof facts in support of his claim which would entitle him to relief.'" Collins v. Morgan Stanley Dean Witter, 2000WL1159321 at *2 (5th Cir. 2000) (quotingConley v. Gibson,. 355 U.S. 41, 45-46 (1957)). "In order to avoiddismissal for failure to state a claim, however, a plaintiff must pleadspecific facts, not mere conclusory allegations." Id.; see also Kaiser Aluminum& Chemical Sales v. Avondale Shipyards, 677 F.2d 1045 (5th Cir. 1982).That being said, it is well established that courts do not have to accept everyallegation in the complaint as true in considering its sufficiency. Wright &Miller, Federal Practice & Procedure §1357, at 311; see also Associated Builders, Inc. v.Alabama Power Company. 505 F.2d 97, 100 (5th Cir. 1974) (conclusoryallegations and unwarranted deductions of fact are not admitted as true).Courts do not have to accept "legal conclusions, "unsupportedconclusions," "unwarranted references, "or "sweeping legalconclusions cast in the form of factual allegations." Wright & Millerat 315-18. Plaintiffs in RICO claims must "plead specificfacts, not mere conclusory allegations which establish the enterprise." Manax v. McNamara, 842 F.2d 808, 811 (5th Cir. 1988). Moreover, a RICO plaintiffmust plead the specified facts as to each defendant. It cannot avoid Rule12CO)(6) by "lumping together the defendants." Goren v. New Vision Int'l, Inc., 156 F.3d 721,730 (7th Cir. 1988). III. RICOGenerally "It is the purpose of [RICO] to seek theeradication of organized crime in the United States by strengthening the legaltools in the evidence-gathering process, by establishing new penalprohibitions, and by providing enhanced sanctions and new remedies to deal withthe unlawful activities of those engaged inorganized crime." Organized Crime Control Act of 1970, Pub. L. No.91-452, 84 Stat. 922, 923. "Congress enacted... RICO...for the purpose ofseek[ing] the eradication of organized crime in the United States." Beck v. Prupris, 529 U.S. 494, 496, 120S.Ct. 1608, 1611 (2000) (internal quotations and citations omitted). Tosimplify the statute as it applies to the case before this Court, RICO haseight sections, four of which apply directly to the action sub judice. The statuteprovides a definitional section found at 18 U.S.C. §1961. 18 U.S.C. §1962(a)-(d) sets forth the four activities prohibited by the statute."Subsections (a), Co), and (c) were designed to work together to deal withthe three different ways in which organized crime infiltrates and corruptslegitimate organizations." David B. Smith & Terrance G. Reed, CivilRICO, §5.02, p. 5-2 (Matthew Bender & Co. 2000). Subsection (d) is aninchoate offense, prohibiting conspiracy to violate sections (a), (b), or (c). Pertinent to this case is § 1962(c) which providesthat "it shall be unlawful for any person employed by or associated withany enterprise engaged in, or the activities of which effect, interstate orforeign commerce, to conduct or participate, directly or indirectly, in theconduct of such enterprise's, affairs through a pattern of racketeeringactivity or collection of unlawful debt." 18 U.S.C. §1962(c). The UnitedStates Court of Appeals for the Fifth Circuit has simplified section 1962(c) tomean that "a person who is employed by or associated with an enterprisecannot conduct the affairs of the enterprise through a pattern of racketeeringactivity." St. Paul MercuryInsurance Co. v. Williamson, 224 F.3d 425, 439 (5th Cir. 2000). Section 1963 imposes criminal penalties upon thosewho violate section 1962. A civil remedy is provided under section 1964, whichstates that "la]ny person injured in his business or property by reason ofa violation of section 1962 of this chapter may sue therefor in any appropriateUnited States district court and shall recover threefold the damages hesustains and the cost of the suit, including a reasonable attorney's fee "18 U.S.C. §1964(c). "Common elements are present in all four[RICO] subsections." Crowe v. Henry,43 F.3d 198, 204 (5th Cir. 1995)."These common elements teach that any RICO claim necessitates "(1) aperson who engages in (2) a pattern of racketeering activity, (3) connected tothe acquisition, establishment, conduct or control of an enterprise." Id. (citingDelta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241,242 (5thCir. 1988); see also Keith A. Langley & Mark Chevallier, Civil RICO, 21Tex. Tech. L. Rev. 185 (1990). Once those fundamental prerequisites aresatisfied, the court "may then continue to the substantive requirements ofeach respective subsection.'" St.Paul Mercury Insurance Co. v. Williamson, 224 F.3d 425, 439 (5thCir. 2000). In this case, plaintiffs allege an association in fact enterprisein violation of §1962(c) and as such, they must also plead that the associationin fact enterprise (1) has an existence separate and apart from the pattern ofracketeering, (2) is an ongoing organization and (3) functions as a continuingunit as shown by a hierarchal or consensual decision making structure. Crowe v. Henry, 43 F.3d 198,205 (5th Cir. 1995); Elliot v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989). The Court will resolve this dispute in a cartesianmanner. The Court's substantive RICO analysis will first address those elementscommon to all RICO claims: the existence of a RICO person, a pattern ofracketeering activity, and the existence of an enterprise. Next, the Court willaddress those requirements discrete to alleged violations of 18 U.S.C. § 1962(c), including whether that section encompasses aiding and abetting liability.Finally, the Court will discuss standing. Although standing is generally athreshold question, in this case it is more appropriately analyzed last becauseRICO standing is dependant upon first finding a violation of section 1962, andthen determining whether that violation caused plaintiffs' injuries. IV. ElementsCommon to All RICO Claims A. RICOPerson A RICO person is the defendant. Crowe v. Henry, 43 F.3d 198, 204 (5th Cir. 1995); In re Burzynski, 989 F.2d 733, 742 (5th Cir. 1993). 18 U.S.C.§1961(3) defines a RICO person as "any individual or entity capable ofholding a legal or beneficial interest in property." Recognizing that thestatute provides a very broad definition, the United States Court of Appealsfor the Fifth Circuit has added a gloss to that definition, requiring that"the RICO person must be one that either poses or has posed a continuousthreat of engaging in the acts of racketeering." Crowe v. Henry, 43 F.3d 198,204 (5thCir. 1995)(quoting DeltaTruck& Tractor, Inc. v. J.I. Case Co., 855 F.2d 241,242 (5th Cir.), cert. denied, 489 U.S. 1079 (1989)). The panel in Crowe expounded upon the requirement by statingthat "[t]he continuous threat requirement may not be satisfied if no moreis pled than that the person has engaged in a limited number of predicateracketeering acts." Id. Plaintiffs alleged that the defendants have engagedin the predicate acts for at least a year and that they continue to engage inthe same course of conduct. Taking those facts as true for the purposes ofthese motions, the Court finds that plaintiffs have adequately alleged theexistence of RICO persons. B. Patternof Racketeering Activity As stated above, a prerequisite to the RICO actionis that there be a pattern of racketeering activity. 18 U.S.C. §1961(5) definesa pattern of racketeering activity as "two acts of racketeering activity'" 18 U.S.C. § 1961(5). "Plaintiffs [in a RICO action] must identifyand prove a pattern of racketeering activity, defined as two "predicateacts" of racketeering activity within a 10 year period." Langford v. Rite Aid of Alabama, Inc., 231F.3d 1308, 1311-12 (11th Cir. 2000).Therefore, "[i]n order to make out a RICO claim, [plaintiffs] first mustshow that the [defendants] committed the predicate acts enumerated byRICO." Grant. Inc. v. Greate BayCasino Corp., 232 F.3d 173, 184 (3rd Cir. 2000). In other words, "la]pattern of racketeering activity requires two or more predicate acts and ademonstration that the racketeering predicates are related and amount to orpose a threat of continued criminal activity.” St. Paul Mercury Insurance Comp. v. Williamson, 224 F.3d 425, 441(5th Cir. 2000)(.citing Word of Faith World Outreach Ctr. Church,Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir.1996)). The RICO statuteproscribes categories that constitute racketeering activity. The first categoryconsists of certain generically enumerated state law offenses that are"chargeable under State law and punishable by imprisonment for more thanone year." 18 U.S.C. § 1961(1)(A). The second group of offenses includesspecific offenses indictable under the federal criminal code, found at Title 18of the United States Code. 18 U.S.C. §1961(1)(B). The third group entailscertain labor related acts indictable under the Title 29 of the United StatesCode. 18 U.S.C. §1961(1)(C). The final category consists of offenses involvingsecurities fraud and narcotics transactions. 18 U.S.C. §1961(1)(D). In this case, plaintiffs' allegations arise undersections 1961(1)(A) and 1961(1)(D). Plaintiffs' (1)(A) allegations are that thedefendants violated gambling laws that are chargeable under state law andpunishable by imprisonment of more than one year. In plaintiff Thompson's case,he alleges violations of Kan. Stat. Ann. §§60-1704, 21-4302, 21-4304 and21-3104. In plaintiff Bradley's case, he alleges violations of N.H. Rev. Stat.Ann. §§491:22, 338:1, 338:2 and 338:4. As to their claims under §1961(1)(B),plaintiffs claim violations of 18 U.S.C. §1084(a) ('The Wire Act"); 18U.S.C. 91952 ('The Travel Act"); 18 U.S.C. §1955 (Prohibition of IllegalGambling Business); 18 U.S.C. §1957 (Engaging in Monetary Transactions in PropertyDerived from Specified Unlawful Activity); and 18 U.S.C. §1960 (Prohibition ofIllegal Money Transmitting Business). There are currently no federal statutesaddressing Internet gambling. It is the defendants' argument that both plaintiffsfailed to sufficiently allege a violation of any predicate act listed in thecomplaint. As such they argue that plaintiffs cannot satisfy a RICOprerequisite and that plaintiffs' case should be dismissed accordingly.Plaintiffs' response is that internet gambling violates the several federal andstate statutes as alleged in the complaint. Thus, in order to establish thatplaintiffs' have established a crucial RICO prerequisite, the Court turns tothe alleged underlying offenses. 1. StateLaw Claims a. NewHampshire Claims Plaintiff Bradley alleges several violations of NewHampshire state law. However, all four statutes cited by plaintiff are civilstatutes. Logically, then, a violation of the civil statutes cited by plaintiffare not "chargeable under state law and punishable by imprisonment of morethan one year", and thus do not qualify as a predicate act to establish apattern of racketeering activity under 18 U.S.C. §1961(1)(A). b. KansasClaims Plaintiff Thompson has alleged violations of KansasStatutes Annotated 60-1704, 21-4302, 21-4304, and 21-3104. Of the fourstatutes, three are insufficient on their face to qualify as a predicate actunder RICO, which as stated above requires an act "chargeable under statelaw and punishable by imprisonment of more than one year." Section 21-3104is not a substantive criminal statute and merely sets forth the geographicreach of Kansas' substantive criminal law. Section 60-1704 is a proceduralstatute dealing with civil declaratory judgements. Gambling activity is thesubject matter of section 21-4303, but only imposes class B nonpersonmisdemeanor penalties. Kan. Stat. Ann. 21-4303(b). Under Kansas law, a class Bnonperson misdemeanor carries a penalty that "shall not exceed sixmonths." Kan. Stat. Ann. 21-4502 (l)(b). As the misdemeanor penalty fallsshort of the "more than one year" requirement under 18 U.S.C. §1961(I)(A), an alleged violation of Kan. Stat. Ann. 21-4502 cannot be apredicate act under RICO. However, the Kansas Criminal Code does establish afelony offense for commercial gambling under Kan. Stat. Ann. §21-4304. The lawestablishes four activities as felony offenses, namely (1) operating orreceiving all or part of the earnings of a gambling place, (2) receiving,recording or forwarding bets, (3) becoming a custodian of anything of value betor offered to be bet, (4) conducting a lottery, or (5) setting up for use orcollecting the proceeds of any gambling device. Kan. Stat. Ann. 21-4304. Although there are no cases applying the statute tointernet gambling, plaintiff cites an opinion issued by the Kansas AttorneyGeneral, purporting to deal with the factual scenario before this Court, tosupport his claims. Keeping in mind that the Kansas Supreme Court hasstated that "[a]n attorney general's opinion is neither conclusive norbinding on us", Unified School Dist.No. 501 v. Baker, 6 P.3d 848, 849 (Kan. 2000) and that such an opinion ismerely "persuasive authority", Id.,the Court addresses plaintiff's argument. The Kansas Attorney General addressedthe issue of “legality of gambling over the internet." Kan. Atty. Gen. Op. No. 96-31, 1996 WL156795 (3/25/96). The attorney general opined that "placing,receiving or forwarding a bet, or conducting a lottery, over the telephone orthe internet is illegal." Id. at*2. It also stated that "if a bet is placed or a lottery entered into viaa computer located in the state of Kansas... [then] the crime may be prosecutedin this state., Id. The Court mustconsider this opinion and the statutory language upon which it is based, rememberingthat "Kansas courts are required to strictly construe penal statutes infavor of the accused." State v.Hall, 14 P.3d 404, 405 (Kan. 2000). The relevant statute, Kan. Stat. Ann.21-4304, makes five commercial gambling activities felony offenses. The onlyactivity remotely applicable to the instant case is section (e), which makes ita felony to "set[] up for use or collect[] the proceeds of any gamblingdevice." Kan. Stat. Ann. 21-4304(e). As applied to the complaint,plaintiff makes no allegation that either the credit card company or issuingbank collected the proceeds of a gambling device. What plaintiff does state isthat he purchased credits using his credit card before he gambled. See Thompson Complaint at ¶¶ 23-29. Itis a temporal impossibility for the defendants to have completed theirtransaction with the plaintiff before he gambled and to then be prosecuted forcollecting the proceeds of a gambling device, which can only take place aftersome form of gambling is completed. This analysis is in accord with theAttorney General's opinion, which clearly does not address the conduct allegedagainst the credit card companies or banks in this case. Indeed, the activitiesencompassed by the opinion are those of the bettors, the plaintiff here, andthe internet casinos, who have not been made a party to this suit. Thus,Thompson has failed to allege that the defendants violated Kansas law. As the Court is satisfied that plaintiffs havefailed, as a matter of law, to state a cause of action against any defendantfor violation of state law, the Court turns to the applicable federal statutes. 2. TheWire Act When interpreting a statute, a court looks first tothe language of the statute. Richardsonv. United States, 526 U.S. 813,818, 119 S.Ct. 1707, 1710 (1999)."Courts in applying criminal laws generally must follow the plain andunambiguous meaning of the statutory language." Salinas v. United States, 522 U.S. 52, 57, 118 S.Ct. 469, 474(1997). "[O]nly the most extraordinaryshowing of contrary intentions in the legislative history will justify adeparture from that language." Id. TheWire Act, found at 18 U.S.C. §1084 provides in pertinent part as follows, (a)Whoever being engaged in the business of betting or wagering knowingly uses awire communication facility for the transmission in interstate or foreigncommerce of bets or wagers or information assisting in the placing of bets orwagers on any sporting event or contest, or for the transmission of a wirecommunication which entitles the recipient to receive money or credit as aresult of bets or wagers, or for information assisting in the placing of betsor wagers, shall be fined under his title or imprisoned .... 18U.S.C. §1084(a) (emphasis added). Section Co) of the statute carves out an exceptionto the rule, instructing that the Wire Act shall not "be construed toprevent the transmission in interstate or foreign commerce of information foruse in news reporting of sporting evens or contests" from a state orcountry where betting on the sporting event or contest is legal to anotherstate or country where such betting is legal." 18 U.S.C. §1084Co)(emphasis added). Thedefendants argue that plaintiffs' failure to allege sports gambling is a fataldefect with respect to their Wire Act claims, while plaintiffs strenuouslyargue that the Wire Act does not require sporting events or contests to be theobject of gambling. However, a plain reading of the statutory language clearlyrequires that the object of the gambling be a sporting event or contest. Boththe role and the exception to the role expressly qualify the nature of thegambling activity as that related to a "sporting event or contest." See. 18 U.S.C. §§1084 (a) & (b). Areading of the caselaw leads to the same conclusion. See United States v. Kaczowski, 114 F.Supp. 2d 143, 153 (W.D.N.Y.2000) (Wire Act "prohibits use of a wire communication facility for thetransmission in interstate or foreign commerce of bets or wagers or informationassisting in the placing of bets or wagers on any sporting event or contest"); United States v. Sellers, 483 F.2d 37,45 (5th Cir. 1973)(overruled on othergrounds in United States v. McKeever, 905F.2d 829 (5th Cir. 1990)) ("the statute deals with bookmakers)"; U.S. v. Marder, 474 F.2d 1192,1194 (5thCir. 1973 ) (first element of statute satisfied when government proves wageringinformation "relative to sporting events"). As the plain language of the statute and case lawinterpreting the statute are clear, there is no need to look to the legislativehistory of the Act as argued by plaintiffs. SeeIn re Abbott Laboratories, 51F.3d 524, 528 (5th Cir. 1995). However, even a summary glance at the recentlegislative history of internet gambling legislation reinforces the Court'sdetermination that internet gambling on a game of chance is not prohibitedconduct under 18 U.S.C. §1084. Recent legislative attempts have sought to amendthe Wire Act to encompass "contest[s] of chance or a future contingentevent not under the control or influence of [the bettor]" while exemptingfrom the reach of the statute data transmitted "for use in the newreporting of any activity, event or contest upon which bets or wagers arebased.'" See S.474, 105th Congress (1997). Similar legislation wasintroduced the 106th Congress in theform of the "Internet Gambling Prohibition Act of 1999." See, S. 692, 106th Congress (1999). That act sought to amend Title 18 to prohibitthe use of the internet to place a bet or wager upon "a contest of others,a sporting event, or a game of chance..."Id. ."Id. As to thelegislative intent at the time the Wire Act was enacted, the House JudiciaryCommitted Chairman explained that "'this particular bill involvesthe transmission of wagers or bets and layoffs on horse racing and othersporting events." See 107 Cong.Rec. 16533 (Aug. 21, 1961). Comparing the face of the Wire Act and the historysurrounding its enactment with the recently proposed legislation, it becomesmore certain that the Wire Act's prohibition of gambling activities is restricted to thetypes of events enumerated in the statute, sporting events or contests.Plaintiffs' argument flies in the face of the clear wording of the Wire Act andis more appropriately directed to the legislative branch than this Court. In the context of a Rule 12(b)(6) motion, then, theCourt must look to the allegations in the complaints to determine if “thecomplaint lacks an allegation regarding a required element necessary forrelief." Blackburn v. City ofMarshall, 42 F.3d 925, 931 (5th Cir.1995) citing 2A Moore's Federal Practice, ¶ 12.0712.-5] at 12-91; Cordey v. Gibson, 355 U.S. 41, 45-46, 78S.Ct. 99, 102 (I 957). The parties make several allegations that theyplaced bets at internet casino sites. Seee.g., Thompson complaint at ¶¶ 24, 25, 54, Bradley complaint at ¶¶ 24, 26.Plaintiffs fail to allege the identity of the games that they played, i.e.games of chance or sports related games. Pleading such matters is critical whentheir right to relief hinges upon the determination of whether Internet casinogambling is legal. That being said, the Court cannot simply assume thatplaintiffs bet on sporting events or contests when they make no such allegationin their otherwise extremely thorough complaints. The sole reference to "sports betting" isa conclusory allegation that the alleged enterprise engaged in sports betting.See Bradley petition at ¶ 88, Thompson petition at ¶ 77. However, nowhere doeseither plaintiff allege personal participation in sports gambling. Such anallegation is not enough to survive a motion to dismiss where there is no claimthat plaintiffs themselves, or the defendants they have sued, participated insports gambling. Since plaintiffs have failed to allegethat they engaged in sports gambling, and internet gambling in connection withactivities other than sports betting is not illegal under federal law,plaintiffs have no cause of action against the credit card companies or the banks under theWire Act.5 3. Mailand Wire Fraud Plaintiffs also allege violations of the federalmail and wire fraud statutes. As to mail fraud, plaintiffs alleged that thedefendants mailed billing statements, some of which were paid, both acts takingplace via the United States Postal Service. SeeThompson Complaint at ¶¶ 87-89, Bradley Complaint at ¶¶ 98- 100. Withrespect to wire fraud, plaintiffs allege that defendants opened and authorizedmerchant accounts and thereafter authorized, cleared, transmitted, approved,paid and collected electronic purchases of bets. See Thompson Complaint at ¶90, Bradley Complaint at ¶ 101. Although each allegation applies to differentdefendants, plaintiffs' mail fraud and wired fraud allegations can be analyzedtogether because "[t]he Supreme Court has said that because the mail andwire fraud statutes share the same language in relevant part, the same analysisapplies to each." United States v.Mills, 199 F.3d 184, 188(5th Cir. 1999) (citingCarpenter v. United States, 484 U.S. 19, 25 n.6 (1987)). "To provemail fraud pursuant to 18 U.S.C. §1341, the government must prove: (1) a schemeto defraud, (2) which involves the use of the mails, (3) for the purpose ofexecuting the scheme." United Statesv. Gray, 96 F.3d 769 (5th Cir. 1996). "To prove wire fraud pursuant to18 U.S.C. §1343, the government must prove, (I) a scheme to defraud, (2) theuse of, or causing the use of, wire communications in furtherance of thescheme." Id. As to scienter,"both RICO mail and wire fraud require evidence of intent to defraud,i.e., evidence of a scheme to defraud by false or fraudulent representations."St. Paul Mercury Insurance Co. v.Williamson, 224 F.3d 425, 441 (5th Cir. 2000). Since the Court finds that the Wire Act does notprohibit internet casino gambling or defendants' association therewith, therecan be no mail or wire fraud. Plaintiffs' fraud claims depend upon a findingthat the gambling activities and debts were in violation of U.S, and state lawand that the defendants therefore misrepresented the debts as legal, asexplained in the previous sections. However, plaintiffs' attempt to advancethis theory fails because the debts themselves are not illegal. Moreover, evenif the debts were illegal, defendants' representations with respect to thosedebts do not provide a basis for a mail or wire fraud claim because "[i]t isthe general rule that fraud cannot be cannot be predicated uponmisrepresentations of law." See Meachamv. Halley, 103 F.2d 967, 971 (5thCir. 1939); see also Alien v. Westpoint-Pepperel, Inc., 945 F.2d 40(2d Cir. 1991). A second fundamental detect with respect to claimsof mail fraud and wire fraud is that plaintiffs have failed to comply withFederal Rule of Civil Procedure 9(b), which requires that fraud be plead withparticularity, specifically alleging "the time, place and contents of thefalse representations." See Truchmanv. DSC Corp., 14 F.3d I061, 1068 (5th Cir.1994). Rule 9(b)'s particularity requirement applies to pleading fraud as apredicate act in a RICO claim. Tel-Phonic Servs., Inc: v. TBS Int'l, inc,, 975 F.2d 1134, 1138 (5th Cir.1992). Such specificity is critical considering that the content of the billingstatements in large part determines whether or not the representations arefraudulent. Plaintiffs' allegations lump together the defendants and do notspecifically allege what action was taken by each entity, a crucial errorconsidering the very representations absent from the complaint are those reliedupon by the plaintiffs to support their claims. Regardless, even if plaintiffs alleged facts withspecificity, the allegations that the issuing banks represented the creditcharges as legal debts is not a scheme to defraud. The billing statementsreceived by plaintiffs indicated that plaintiffs owed a certain sum for creditspurchased, the amount of which is not disputed by plaintiffs. As this Court hasdecided that the act of making those credits available is not a violation oflaw, the debts are legal and enforceable. Plaintiffs fraud claims also fail as the complaintsfail to allege any reliance upon the representations made by defendants, asrequired by Fifth Circuit law under SummitProperties, Inc. v. Hoechst Celanese Corp., 214 F.3d 556, 562 (5th Cir. 2000). According to Summit, the reliance requirement doesnot arise from the mail and wire fraud statutes themselves, but from cognatesof proximate causation that are necessary to invoke any civil action for §1962(c) violations. For that reason, the reliance requirement will be discussedmore in depth when the Court discusses whether defendants have standing toassert a civil cause of action. Regardless of where the analysis takes place,plaintiffs' failure to allege reliance is fatal to their fraud claims as amatter of law. 4. OtherFederal Laws As far as violations of other federal laws areconcerned, the finding that defendants' activities did not violate The Wire Actor other law moots any other federal cause of action. As defendants have notviolated the Wire Act, Mail Fraud, Wire Fraud or applicable state statutes,defendants can have no liability under other federal laws. Therefore, the Courtwill dispose of these claims in a summary fashion. Plaintiffs allegations with respect to 18 U.S.C.§1957, 18 U.S.C. §1952, and 18 U.S.C. § 1955 are quite ephemeral, there simplyis no cause of action for those crimes unless the defendants committed anunlawful activity in violation of some other state or federal law.6 As plaintiffs have failed to allege thatdefendants' activities are illegal, this case presents no other cause of actionunder Title 18 that can be a predicate act under RICO. 5. Collectionof Unlawful Debt A stated above, section 1962(c) also makes itunlawful "for any person through a pattern of racketeering activity orthrough a collection of unlawful debt to acquire or maintain, directly orindirectly, any interest in or control of any enterprise which is engaged in,or the activities of which affect, interstate or foreign commerce." 18U.S.C. §(c)(emphasis added). The language clearly indicates that in formulatingRICO, Congress created an alternative means to trigger the statute aside fromengaging in a pattern of racketeering activity that is, collection of aaunlawful debt. Therefore, in most cases, discussion of the alleged collectionof an unlawful debt would be most appropriately positioned as an alternative,separate section apart from the averments concerning the pattern ofracketeering activity. However, because the factual bases for each allegationis the same, the Court will discuss the allegation in this section of theopinion. Although "[r]elatively few RICO prosecutionsand even fewer civil RICO cases have charged collection of an unlawful debtinstead of a pattern of racketeering activity", David B. Smith &Terrance G. Reed, Civil RICO, §4.05, p. 4-765 (Matthew Bender & Co.2000), plaintiffs in this case havedone so. Section 1961 defines two categories of unlawful debt. The firstcategory of unlawful debt is debt incurred or contracted in a gambling activityillegal under state or federal law, or those debts unenforceable under federalor state usury law. 18 U.S.C. § 1961 (6)(A). The second category are thosedebts incurred in connection with the business of gambling in violation offederal or state law or the business of lending money or a thing of value atusurious rates, where those rates are at least double the enforceable rates. 18U.S.C. §1961(6)(B). Neitherplaintiff has alleged usury, and the Court has already decided that defendants'activities have not violated state or federal law. Accordingly, plaintiffs failto allege the collection of unlawful debt as defined in 18 U.S.C. §1961(6)(A)or (B). Inthe final analysis, plaintiffs are unable to allege that Visa, MasterCard,Travelers or. Fleet engaged in a pattern of racketeering activity as defined by18 U.S.C. §1961. As such, plaintiffs have failed to satisfy a necessaryprerequisite to the RICO action. Accordingly, their RICO claims must bedismissed. However, because the complaints fail in several other importantrespects as well, the Court will proceed to analyze the remaining elements ofthe RICO cause of action. C. Enterprise 1. Generally Thefinal element common to all RICO claims is the existence of an enterprise.Thus, "[a] plaintiff asserting a RICO claim must allege the existence ofan enterprise." Crowe v. Henry, 43F.3d 198, 204 (5th Cir. 1995) (citingMontesano v. Seafirst Commercial Corp., 818 F.2d 423, 427 (5th Cir. 1987)). A RICO enterpriseis "a group of persons associated together for a common purpose" and"is proved by evidence of an ongoing organization ... and by evidence thatthe various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528 (1981).The statute defines an enterprise as "any individual, partnership,corporation, association, or other legal entity, and any union or group ofindividuals associated in fact although not a legal entity." 18 U.S.C.§1961(4). Thus, a RICO enterprise can either be a legal entity or anassociation in fact. St. Paul MercuryInsurance Co. v. Williamson, 224 F.3d 425,439 (5th Cir. 2000); Manax v. McNamara, 842 F.2d 808, 811(5th Cir. 1988). As previously noted, plaintiffs have alleged anassociation in fact enterprise consisting of the on-line casinos, the creditcard companies and the issuing banks. See Bradley Complaint at ¶ 88 ("theInternet casino(s), VISA International and Travelers have formed a worldwidegambling" enterprise"), Thompson Complaint at ¶ 77 ("theInternet Casino(s), MasterCard and Fleet Bank have formed a worldwide gamblingenterprise''). It is permissible under the statute for a group of legalentities, such as corporations, to constitute an association in factenterprise, United States v. Blinder, 10F.3d 1468, 1473 (9th Cir. 1993).According to the complaints, the enterprises' purpose is to facilitateinternet casino gambling, sports betting and the collection of gambling debtthrough United States telephone lines and the United States mall. See BradleyComplaint at ¶ 88, Thompson Complaint at¶ 77. "While a RICO enterprise can be formal orinformal, some type of organizational structure is required.'" Stachon v. United Consumers Club. Inc., 229F.3d 673, 675 (7th Cir. 2000). The Fifth Circuit has determined that an"association in fact" enterprise (1) must have an existence separateand apart from the pattern of racketeering, (2) must be an ongoingorganization, and (3) its members must function as a continuing unit as shownby a hierarchal or consensual decision making structure." Crowe v. Henry, 43 F.3d 198, 205 (5thCir. 1995)(citations omitted). 2. ExistenceSeparate and Apart From the Pattern of Racketeering "The question of whether the enterprise has a"separate existence" from the pattern of activity through which it isconducted ought to be the focus of inquiry in every illegitimate enterprisecase." David B. Smith & Terrance G. Reed, Civil RICO, §3.06, p.3-50 (Matthew Bender & Co. 2000) The United States Supreme Court hasinstructed that "[t]he "enterprise" is not the "pattern ofracketeering activity"; it is an entity separate and apart from thepattern of activity in which it engages." United States v. Turkette, 452 U.S. 576,583, 101 S.Ct. 2524, 2529(1981); see also Elliot v. Foufas, 867F.2d 877, 881 (5th Cir. 1989).Therefore, proof of a pattern of racketeering does not necessarily prove theexistence of an enterprise, and vice versa. Id.Moreover, "the plaintiff must plead specific facts which establishthat the association exists for purposes other than simply to commit thepredicate acts." Elliot v. Foufas, 867F.2d 877, 881 (5th Cir. 1989). "If the association has as its raisond'etre a single, discrete goal toward which all its energies are directed,the association is not a RICO enterprise." Household Bank FSB V-Metro Associates, 1992 WL 350239 at *1 (E.D. La. 1992). Here, plaintiffs allege separateness between theenterprise and the pattern of racketeering activity. See Bradley Complaint at ¶ 92, Thompson Complaint at ¶ 81. Moreprecisely, plaintiffs plead that the defendants' activities with respect toactivities legal under United States law and their activities with respect toInternet gambling from jurisdictions outside the United States are activitiesthat are separate and apart from the alleged racketeering activities. Sec Bradley Complaint at ¶ 92(a) &Co), Thompson Complaint at ¶ 81 (a) & Co). Here, the enterprise consists ofthree parties: the Internet casino, the credit card company, and the issuingbank. What that alleged enterprise does is make casino gambling available onthe Internet and provide a means to obtain virtual cash to use at the casinos. The United States Court of Appeals for the EighthCircuit formulated a succinct test to determine whether or not the allegedenterprise is indeed distinct from the pattern of racketeering activity. Thatcourt stated "[i]n assessing whether an alleged enterprise has anascertainable structure distinct from that inherent in a pattern ofracketeering, it is our normal practice to determine if the enterprise wouldstill exist were the predicate acts removed from the equation.'" Handeen v. Lemarie, I12 F.3d 1339, 1352(8th Cir. 1997); see e.g., Bank v.Brooklyn Law School, 2000 WL 1692844 at *4 (S.D.N.Y. 2000)(plaintiff failedto allege that enterprise exited separate and apart from pattern ofracketeering when there was no allegation that the enterprise would exist werethe predicate acts removed from the equation). The Fifth Circuit adheres to asimilar analysis. See, e.g. Crowe v.Henry, 43 F.3d 198, 205 (5th Cir. 1995)(finding that alleged enterprise didexist separate and apart from the pattern of racketeering when the enterpriseextended beyond the alleged predicate acts of fraud and theft); Landry v. Airline Pilots Assoc., 901F.2d 404 (5th Cir. 1990) (when only purpose is to commit predicate acts,enterprise does not exist separate and apart from the pattern of racketeeringactivity); Ocean Energy II, Inc. v.Alexander & Alexander, Inc., 868 F.2d 740, 748 (5th Cir.1989)(association in fact enterprise must have an ongoing Organization or be acontinuing unit, such that the enterprise has an existence that can be definedapart from the commission of the predicate acts). Theanalysis then is, assuming that internet casinos' and the defendants' actionsqualified as a pattern of racketeering, which they do not, would the enterprisecontinue to exist if the acts of racketeering ceased. The answer is yes. In thecontext of a motion to dismiss, taking plaintiffs' allegations that theenterprise conducted worldwide gambling as true, the question is whetherworldwide gambling activity would cease were the alleged violations of the WireAct, fraud and other federal statutes terminated. If that were the case,Internet gambling would certainly be unavailable for United States citizensplacing bets from this country. However, the worldwide gambling enterprise, asalleged, would continue without interruption. To analyze the separatenessrequirement by activity, rather than by practical application would lead toabsurd results. For example, if one merely looked to the type of activity, drugdealers or smugglers who sell their products in violation of United States law,but also sell the identical products legally in other countries would be immunefrom RICO liability. The Court seeks to avoid such an absurd result. Althoughthe activity, internet gambling is the same wherever it is available, it isundisputed that were it declared illegal and banned in the United States, theactivity would continue in other parts of the world. Thus the enterprisecontinues, and the distinctness requirement is met. Asstated above, the remaining two requirements necessary to establish anassociation in fact enterprise are aa ongoing organization, and a hierarchal orconsensual decision making structure. Because the analysis of these two factorsis based on substantially the same overlapping facts, the Court will analyzethe remaining two elements together. 3. Ongoing Organizationand Hierarchal or Consensual Decision Making Structure Anassociation in fact must, inter alia, meeta continuity requirement demonstrating that "its members...function as acontinuing unit shown by hierarchal or consensual decision makingstructure." Landry v. Airline PilotsAssoc. International AFL-CIO, 901 F.2d 404, 433 (5th Cir. 1990). Indeed, "the hallmark of an enterprise is astructure." United States v.Korando, 219 F.3d 1114, 1117 (7th Cir.1994). The enterprise must also have "a common or shared purpose andcontinuity of structure and personnel." Succession of Wardlaw v. Whitney National Bank, 1994 WL 5774.42 at *3 (E.D. La. 1994) (quoting Shaffer v. Williams, 794 F.2d 1030, 1032 (5th Cir. 1986)).Where the alleged enterprise consists of multiple sub-groups, "what isnecessary is evidence of systematic linkage, such as overlapping leadership,structural or financial ties, or continuing coordination." United States v. Owens, 167 F.3d 739,751 (1st Cir 1999)(quoting Libertad v.Welch, 53 F.3d 428,433 (1st Cir.1995)). Takingthe complaints as true, the defendants "share[] the common purpose ofmonetary gain from Internet gambling." Bradley Complaint at ¶ 91, ThompsonComplaint at¶ 80. To carry out this purpose, the credit card companies contractwith millions of merchants worldwide to allow usage of their paymentsprocessing systems. The credit card companies also contract with the issuingbanks to permit the bank's customers to purchase goods from credit cardassociated merchants. The issuing banks then issue credit cards to theircustomers. Whether a customer uses a particular credit card issued by aparticular bank at a particular merchant is a fortuity. In other words, aconsumer is essentially free to use any credit card at any location worldwide.Although the issuing banks and credit card companies have standing agreementsto permit card usage at a particular location, there is no ongoing organization.The confluence of merchant, issuing bank and credit card company is in thehands of the consumer, not the defendants. It is the consumer who decides touse a particular card; it is the merchant who decides how to carry out hisbusiness and whether to abide by the applicable law. It is the issuing banksand credit cards who ensure that the system flows smoothly, their services maybe required several times a day, or not at all. Plaintiffs have alleged arandom intersection, not an ongoing organization. Plaintiffs' allegationshardly establish "an organizational pattern or system of authority thatprovides a mechanism for directing the groups affairs on a continuing, ratherthan ad hoc, basis." United Statesv. Tocco, 200 F.3d 401,425 (6th Cir. 2000)(citations omitted). Withrespect to the structure of the enterprise, plaintiffs make the bald assertionthat "[t]he Enterprise has and had an ascertainable structure, and acontinuity of structure and personnel." Bradley Complaint at ¶ 94,Thompson Complaint at ¶ 83. Without any further supporting facts, the Courtfinds that there is no hierarchal or decision making structure in the allegedenterprise. See Broyles v. Wilson, 812F.Supp. 651 (M.D. La. 1993) (motion to dismiss granted when plaintiff fails toallege any facts showing any structure whatsoever); Arnette v. Bankers Trust Company of Louisiana, 1987 WL 25135 at"1 (E.D. La. 1987) ("[p]laintiff's conclusory assertion that"[t]he enterprise had an ongoing organization, with associates functioningas a continuing unit; a consensual or hierarchal structure for group decisionmaking; a common or shared purpose, and continuity of structure andpersonnel" merely parrots the Shaffer criteria. [Therefore]Plaintiff has failed to plead facts to establish the existence of anenterprise"). In800537 Ontario, Inc. v. Auto Enterprises,Inc., 113 F.Supp. 2d 1116 (E.D. Mich. 2000), plaintiff instituted a RICO suit againstdefendants arising from the defendants' practice of obtaining tax refunds fromthe Canadian government for taxes that were never paid. Id. at 1118-19. Thefollowing were alleged to have occurred between two auto importers, WorldImports and Auto Enterprises. Auto Enterprises imported 98% of World Imports'vehicles; Auto Enterprises was given power of attorney by World Importers; AutoEnterprises facilitated the movement of World Imports vehicles through U.S.Customs, and ; Auto Enterprises provided all necessary customs paperwork. Id. at 1122. The court held that"[t]he mere fact that Defendant World Imports and Defendant AutoEnterprises have engaged in a business relationship is insufficient toestablish that Defendants functioned as a continuous unit for Ricopurposes." Id. at 1123 (internalquotations omitted). The court decided that "[n]one of the allegations inthe amended complaint support the conclusion that the World Import Defendantsand the Auto Enterprise Defendants participated in any type of hierarchy beyondtheir contractual relationship." Id.Therefore the court granted defendant's motion to dismiss. Plaintiffs in this case fall short of alleging thelevel of interaction seen in AutoEnterprises. Aside from the fact that the defendants' conducted a normalbusiness relationship, there has been no factually supported allegationregarding any type of hierarchy beyond the fundamental business relationship). In Jubelirerv. MasterCard International, Inc., 68 F.Supp. 2d 1049 (W.D. Wise. 1999),the court was presented with an identical factual scenario. The plaintiffasserted a civil RICO claim against MasterCard and an issuing bank claimingthat they formed an association in fact enterprise with an on-line casino. Id. In finding that plaintiff failed toallege an association in fact enterprise, the court reasoned that"[a]ccepting plaintiff's allegations as sufficient to allege a RICOenterprise would lead to the absurd conclusion that each of the many millioncombinations of merchant, [credit card company], and lender is a RICOenterprise." Id. at 1053. Thecourt held that an "enterprise must be more than a routine contractualcombination for the provision of financial services." Id. at IOS3. Thus, there can be no finding of a hierarchal orconsensual decision making structure, or an ongoing organization when"[e]ach party conducts its own affairs which include certain contracts forservices with others." Id. This case is no different than Jubelirer. To the extent that plaintiffs' pleadings differ from Jubelirer, it is in the form of legalconclusions, unwarranted deductions of fact, and mere recitations of theapplicable statutes. Therefore, this Court finds that the very nature of thebusiness alleged by plaintiffs requires a finding that there is no ongoingorganization or hierarchal or consensual decision making structure among theInternet casinos, the credit card companies and the issuing banks. See also Okaya v. Denne Industries, Inc., 2000WL 1727785 (N.D. Ill. 2000) (no enterprise when complaint fails to allege ahierarchal organization with differentiating roles and does not provide any explanationfor defendants actions other than their own self interest); See generally, Stachon v. United ConsumersClub, Inc., 1999 WL 971284 at *4 (N.D.Ill. 1997) (motion to dismiss grantedwhen plaintiff alleges that defendants entered into business agreements because"nothing within...ordinary business relationships mirrors a hierarchalorganization"). Plaintiffs' failure to plead an ongoing organizationevidenced by a hierarchal or consensual decision making structure is yetanother defect fatal to their RICO claim. Thus, of the three RICO prerequisites necessary toestablish any claim, plaintiffs' have failed to allege two, a pattern ofracketeering activity and an enterprise. The Court will now move on to analysisdiscrete to section 1962(c) claims. V. LiabilityUnique to §1962(c) A. Conduct "Section 1962(c), the most often charged RICOoffense, was intended to prevent the operation of a legitimate business orunion through racketeering." David B. Smith & Terrance G. Reed, CivilRICO, §5.01, p. 5-2 (Matthew Bender & Co. 2000). 18 U.S.C. §1962(c)imposes liability to a discrete group, i.e. those who "conduct orparticipate, directly or indirectly, in the conduct of such enterprise'saffairs through a pattern of racketeering activity." The Court has narrowlyinterpreted the term "conduct" to hold liable only those individualswho "participate in the operation or management of the enterpriseitself." Reves v. Ernst & Young.507 U.S. 170, 185, 113 S.Ct. 1163, 1173 (1993); See also Bachman v. Bear, Steams & Company. Inc., 178 F.3d 930,932 (7th Cir. 1999) (to conduct theaffairs of an enterprise, there must be at least some measure of control overthe enterprise). A defendant need not be upper level management to satisfy theoperation or management test, rather a defendant may participate in the conductof aa enterprise "by knowingly implementing decisions, as well as bymaking them." MCM Partners, Inc. v.Andrews-Bartlett & Associates, Inc., 62 F.3d 967, 978 (5th Cir. 1995) (citing United States v. Oreto, 37 F.3d739, 750 (1st Cir.1994)). Plaintiffs aver the following to demonstrate therelationship between the defendants and the Internet casinos. They allege that"the RICO enterprise includes [the credit card companies] and [the issuingbanks] who were and are associated with the aforementioned Internet casino(s)and directed, guided, conducted and/or participated directly or indirectly, inthe conduct of the enterprise …" Bradley Complaint at ¶ 89, ThompsonComplaint at ¶ 78. With respect to the credit card companies, plaintiffs statethat Visa and MasterCard "[have] allowed [their] name[s] and emblem[s] tobe used for Internet gambling in supporting the enterprise for more than a yearand halve] actively directed, supervised, guided, educated, financed, participatedin and funded this gambling enterprise." Bradley Complaint at ¶ 90,Thompson Complaint at ¶ 79. According to plaintiffs' "[the credit cardcompanies] and [the issuing banks] promote and facilitate the electronicbookmaking activities of the Internet casinos through opening and authorizingmerchant accounts, authorizing, clearing, transmitting, approving, paying andcollecting electronic purchases …" Bradley Complaint at ¶ 91, ThompsonComplaint at ¶ 80. In short, plaintiffs claim that the alleged enterprise had agoal to promote Internet gambling on a worldwide basis. The Court evaluates plaintiffs' allegations keepingin mind that it need not accept "legal conclusions masquerading as factualconclusions." Fernandez-Montes v.Allied Pilots Assoc., 987 F.2d 278, 284 (5thCir. 1993). Brushing aside plaintiffs' conclusory statements, which theCourt need not accept as true, the complaints allege that Visa and MasterCardjealously guard the use of their respective logos, making merchants apply touse their systems; permitted their logos to be used on the casino websites for more than a year; allowed the casino charges to be processed throughtheir system also used by millions of merchants. Additionally, a MasterCardemployee attended an Internet gambling seminar and conducted an impromptupresentation on how to most effectively use its system, while Visa required itsmember banks to follow certain procedures to govern Internet transactions.7 Nowhere is there an allegation that anydefendant exercised actual control over the enterprise. C.f., Bowdin Construction Corp. v. Rhode IslandHospital Trust National Bank, N.A., 869 F.Supp. I004, 1009 (D. Mass. 1994)(complaint satisfies operation or management test when plaintiff alleges actualcontrol). The question is whether these activities amount to "conductingor participating" under the statute and the Supreme Court's directives. As stated infra,in Reves v. Ernst & Young, 507U.S. 170, 113 S.Ct. 1163 (1993) the Court narrowly interpreted the meaning ofthe phrase "to conduct or participate, directly or indirectly, in theconduct of such enterprise's affairs.'" The Court found it was"clear that Congress did not intend to extend RICO liability under §1962(c) beyond those who participate in the operation or management of anenterprise through a pattern of racketeering activity" Id. at 184, 113 S.Ct. at 1172. Althoughthe Court explained that a defendant need not have primary responsibility fordirecting an enterprise, it must have some part in directing the enterprise'saffairs. Id. at 179, 113 S.Ct.at 1170. Outside those areas involving a single entity, the Court acknowledgedthat "[a]n enterprise might also be "operated" or"managed" by others "associated with" the enterprise whoexert control over it, for example, by bribery." Id. at 184, 113 S.Ct. at 1173. In application, courts have recognized that"[p]roviding important services to a racketeering enterprise is not thesame as directing the affairs of the enterprise." See e.g., Amsterdam Tobacco, Inc. v, Philip Morris, Inc., 107F.Supp.2d 210 (S.D.N.Y. 2000). In Amsterdam,plaintiffs alleged that retail stores were illegally selling vastquantities of cigarettes to smugglers. They plead that defendant Philip Morrisknew that its retailers were selling the cigarettes to smugglers butnevertheless continued to supply the retailers with a supply of cigarettes grossly out of proportion to the amountsold in the state of destination. Id.at 217. The district court accepted the facts as true, analyzing the claim asthough Philip Morris knew that its product was going to illegal smugglers butcontinued to provide its product regardless. In rejecting plaintiffs' claims,the court reasoned that, "Is]imply because one provides goods or servicesthat ultimately benefit the enterprise does not mean that one becomes liableunder RICO as a result." Id.(citations omitted). Courtsin this district have followed similar reasoning. For instance, in Succession of Wardlaw v. Whitney NationalBank, 1994 WL 5774.42 at *5 (E.D. La. 1994) the court dismissed RICOcharges that were brought against a commercial bank. The court found that thebank's involvement was limited to "process[ing] deposits andwithdrawals." Id. It wentfurther to state that, "[e]ven if it did so with the knowledge that thesedeposits and withdrawals were fraudulent, such guilty knowledge is not enoughto convert it into an active participant in the management of the criminalenterprise." Id. Moreover,another court in this district has held that RICO liability does not alwaysarise even when the defendant has influence in the enterprise. See In Re Taxable Municipal Bond SecuritiesLitigation, 1993 WL 534035 (E.D. La. 1993). In that case, the courtdeclined to hold an attorney liable, reasoning that "[.p]erformance oflegal services that facilitate operation of an enterprise does not representparticipation in the "operation or management" of the enterprise.This is so even when the defendant has substantial persuasive power to inducecertain actions by the enterprise, or as part of its professional servicesoffers consultation on important management decisions." Id. at *4 (citations omitted). See also Bowdin Construction Corp. v. Rhode Island Hospital Trust National Bank,N.A., 869 F.Supp. 1004, 1009 (D. Mass. 1994) (allegation that law firms, with fullknowledge of the fraud being perpetrated, counseled their clients to continueto participate in the fraudulent transactions is insufficient as a matter oflaw under Reves). See generally Wilson v.Arch-Air Freight, Inc., 1997 WL 35279 (E.D. La. 1997) (no enterprise whenallegations solely accuse defendant of conducting its own affairs, not those ofthe enterprise). In The Univ.of Maryland at Baltimore v. Peat, Marwick, Main & Company, 996 F.2d i$34 (3rd Cir. 1993), plaintiffs suedan auditor for violations of § 1962(c). The auditor performed deficient audits,attended meetings of the Board of Directors of the enterprise corporation,computerized the enterprise's accounting records and purchased an interest in abuilding occupied by the enterprise. Id.at 1539. The Third Circuit panel held that plaintiffs failed to allegeviolations meeting the Reves standard.It stated that the auditor's services, "were merely" financialservices provided for [the enterprise], just as lawyers or computer techniciansmay have provided valuable, indispensable services." Id. In reasoning that applies to the case before this Court, thepanel stated that "Is]imply because one provides goods or services thatultimately benefit the enterprise does not mean that one becomes liable underRICO as a result.'" Id Seealso Goren v. New Vision International Inc., 156 F.3d 721,728 (7th Cir. 1998). Jubelirerv. MasterCard International, Inc., 68 F.Supp. 2d 1049 (W.D. Wise. 1999) is preciselyon point with the issue before the Court. As stated above, the alleged conductin Jubelirer is indistinguishablefrom those before this Court. Applying the "operation or management"test, the court decided that, Assuming that Casino 21 and its fellow on-line casinosconstitute RICO "enterprises" the law is clear that merely having abusiness relationship with and performing services for such an enterprise,including financial, accounting and legal services, does not support RICOliability because performance of such services is not the equivalent ofparticipation in the operation and management of the enterprise. Goren, 156 F.3d 721, 728 (collectingcases at n. 7). This is true even though the service provider knows of theenterprise's illicit nature or performs improper acts itself. Id. In all such cases the servicesperformed facilitate the enterprise's activities, but that alone is not enoughto satisfy the requirement. This clearly established principle cannot becircumvented by attempting to characterize a routine contractual relationshipfor services as an independent enterprise. Jubelirer at I053. Overall, accepting plaintiffs' allegations as true,they have alleged no more than the existence of a business relationship.Allegations of a business relationship do not indicate that defendants tookpart in directing the enterprise's affairs. SeeGoren v. New Vision International Inc.,156 F.3d 721,728 (7th Cir. 1998). Sikes v.American Telephone & Telegraph, 179 F.R.D. 342 (S.D. Ga. 1998), cited by plaintiffs,provides a perfect contrast to the facts as alleged in this case anddemonstrates why plaintiffs cannot satisfy Revel.In Sikes, plaintiff sued, amongothers, AT&T for its part in operating a 900-number "Let's Make a DealGame." Id. at 345. Defendant claimedthat the RICO claims levied against it should be dismissed because it simplyprovided telecommunication, billing and collection services to the game'screator. Id. at 353. According to thephone company, merely rendering such services did not meet the requisite levelof participation under Reves. The Court denied defendant's motion for summaryjudgment finding issues of fact as to the defendant's illustrative actions,including "approv[ing] and edit[ing] the scripts and the advertising usedin the...game, review[ing] and alter[ing] the prize structure and rules of thegame, and exercis[ing] control over the length and price of calls tothe...game." Id. at 353. In Sikes, thedistrict court recognized that defendants can be held liable when they actuallyparticipate in the functions of the allegedly illegal activity, ha this case,there is no averment with respect to the defendants' involvement with Internetcasino advertising, the types or rules of the games offered, the odds or theweb site composition. Ali that is alleged is that the defendants' providedfinancial services in much the same manner they do to millions of others.Plaintiffs' allegations fall to meet the Reves threshold, another defectsufficient to dismiss their § 1962(c) claim. Despite this fatal finding, theCourt will continue to analyze the remaining element unique to section 1962(c),person/enterprise distinctness. B. RICOperson must be distinct from the RICO enterprise Based on the wording of 18 U.S.C. § 1962(c),proscribing conduct only for those "persons" employed by orassociated with any enterprise", the courts have decided that "theRICO person and the RICO enterprise must be distinct." Crowe v. Henry, 43 F.3d 198, 205-06 (5thCir. 1995)(citing Bishop v Corbitt MarineWays, Inc., 802 F.2d 122, 123 (8th Cir. 1986)). In this case, Bradley namesas defendants Visa International and Travelers Bank. He describes theenterprise as consisting of "the Internet casino(s), Visa andTravelers." Thompson names as defendants MasterCard and Fleet whiledescribing the enterprise as "the Internet casino(s), MasterCard andTravelers.” Insofar as plaintiffs have alleged the existence ofparticular casinos in the body of their respective complaints who are not namedas defendants, the Court concludes that for the purposes of these motions, theRICO enterprise and the RICO defendants arc distinct. In Crowe v.Henry. 43 F.3d 198 (5th Cir.1995), the Court of Appeals analyzed an analogous situation, except that thecase involved individuals as opposed to corporate entities. In Crowe, the plaintiff alleged anassociation in fact enterprise consisting of himself and the defendant Henry(Crowe-Henry). Id. The court heldthat the association in fact of Crowe=Henry was not distinct from thedefendant, Henry. Although the alleged enterprise consisted of two persons andthe defendant was only one of those persons (necessarily excluding the other),the court held that plaintiff failed to satisfy the distinctness requirementbecause "a RICO person cannot employ by or associate with himself underthis subsection." Id. at 206 (citing In re Burzynski, 989 F.2d 733-43 (5th Cir. 1993)).See also 5-Star Premium Finance, Inc. v.Wood, 2000 WL 533941 (E.D. La. 2000)(where defendant is part of theassociation in fact enterprise, § 1962(c) claim is dismissed because a RICOperson cannot associate with himself). Plaintiffs' reliance on a pre-Crowe case, American Millworks v. Mellon Bank Corp., 1991WL 112015 (E.D. La. 1991) is unavailing. In AmericanMillworks, Mellon Bank, N.A ("MBNA") was the RICO defendant, andthe alleged enterprise consisted of a group of other Mellon Bank corporations. Id. at "5. Plaintiffs alleged thatMBNA associated with those other corporations through a pattern of racketeeringactivity. The court held that plaintiffs properly plead RICO person --ICOenterprise distinctness under § 1962(c) because "a subsidiary corporationis certainly a legal entity distinct from its parent." Id. at "5. In other words, American Millworks is completelyconsistent with the reasoning in Croweand Williamson, discussed supra, in that the court reasoned thatan enterprise was properly plead when there was no commonality between thedefendant (MBNA) and the enterprise (a group of corporations not consisting ofMBNA or any legally synonymous entity). However, after briefs were submitted in this case,the Fifth Circuit decided St. Paul MercuryInsurance Co. v. Williamson,224F.3d 425 (5th Cir. Aug. 17, 2000). There, the Court analyzed the evolution ofthe Fifth Circuit decisions, including Bishop.Burzynski and Crowe, that discussthe RICO person-RICO enterprise distinctness requirement. Upon a review of thejurisprudence the panel concluded that, whenBishop, the decision to which the Burzynskicourt cited for support, held that to state a §§ 1962(c) claim, a plaintiffhad to distinguish between the RICO person and the RICO enterprise, it wasnot making the sweeping generalization that any congruence between a RICOperson and a member of an association-in-fact, which constituted a RICOenterprise, violated the person/enterprise distinction. Instead, Bishop merelyconcurred with the vast majority of the circuits that held that a § 1962(c)claim requires a distinction between the RICO person and the RICO enterprise.Those circuits were discussing the person/enterprise distinction where theplaintiffs were alleging a corporate entity as both a RICO defendant and a RICOenterprise. Id. at 446 (emphasis added). Inother words, the strict reading of the enterprise/person distinctnessrequirement originally contemplated cases where a single corporate entity wasthe defendant, and that same single corporate entity was alleged to be theenterprise. Under that paradigm, the corporate defendant was sued as a RICOperson in its own right or capacity, not as a cog in an association in factenterprise. The Fifth Circuit pointed out that the analysis with respect to anassociation in fact enterprise is somewhat different in that, Wherepersons associate "in fact" for criminal purposes, ... each personmay be held liable under RICO for his, her or its participation in conductingthe affairs of the association in fact through a pattern of racketeeringactivity. But the nebulous association in fact does not itself fall within theRICO definition of "person[ ]" .... In the association in factsituation, each participant in the enterprise may be a "person"liable under RICO, but the association itself cannot be. By contrast, acorporation obviously qualifies as a "person" under RICO and may be subjectto RICO liability. Id. at 401 (quoting Haroco, Inc. v.American National Bank & Trust Co., 747 F.2d 384, 399 (7th Cir. 1994). Applying those principles to the matter before iton appeal, the Court of Appeals reversed the district court's grant of summaryjudgrnent against 3 individual RICO persons who were also alleged to be theRICO enterprise. With respect to an association in fact enterprise, the Courtof Appeals reasoned that Indeed, " '[a] collective entity is somethingmore than the members of which it is comprised.'" United States v.Fairchild, 189 F.3d 769, 777 (8th Cir. 1999) (quoting Atlas Pile DrivingCo. v. DiCon Fin. Co., 886 F.2d 986, 995 (8th Cir. 1989))."Although a defendant may not be both a person and an enterprise, adefendant may be both a person and a part of an enterprise. In such a case, theindividual defendant is distinct from the organizational entity." Id. Otherwise,an individual member of a collective enterprise, such as aaassociation-in-fact, could not be prosecuted for violating §§ 1962(c) becausehe or she would not be considered distinct from the enterprise. Id. at 447. Of course Williamsonwas decided in the context of agroup of individuals named as both RICO persons and the RICO enterprise. In thecase before this Court, it is corporations who are named as RICO persons andpart of the RICO enterprise. However, each defendant corporation is sued forits actions as a "position player" in the "team"enterprise. The RICO persons are not identical in name or function to thealleged enterprise. The defendants are not the entire association in factenterprise and can be named as defendants under Williamson.8 See also David B. Smith & TerranceG. Reed, Civil RICO, §3.05, p. 3-43 (Matthew Bender & Co.2000)("[i]n particular, the rule that the enterprise may not be the sameentity as the defendant alleged to have committed a § 1962(c) violation may beundermined by simply pleading the enterprise as an association in factincluding the defendant entity but not limited to it."); See generally, River City Markets, Inc. v.Fleming Foods West, Inc., 960F.2d 1458 (9th Cir. 1992)(one can associate with a group of which he is amember, with the member and the group remaining distinct entities). VI. Aidingand Abetting a §1962(e) violation9 Plaintiffs also assert a cause of action premisedon aiding and abetting liability. They state that "[b]ecause Defendantshave formed an illegal Internet gambling enterprise, conducted and/orfacilitated Internet casino betting and collected unlawful debt, they haveparticipated as a principal within the meaning of 18 U.S.C. §2 and are liableas an aider and abettor to the violation of 18 U.S.C. § 1962(e)." BradleyComplaint at ¶ 113; see als9 Thompson Complaint at ¶35. This argument fails as plaintiffs' underlying§1962(c) claim is meritless. Without a violationof the underlying substantive offense, there can be no aiding and abettingliability. That being said, it is doubtful that an aiding and abettingliability cause of action exists under §1962(c). "Until1994, it was considered well established that civil RICO liability can also bepredicated on aiding and abetting the commission of the predicate acts by theprimary offender." David B. Smith & Torrance G. Reed, Civil RICO, §3.07,p. 3-86.10 (Matthew Bender & Co. 2000). In 1994, the Supreme Court handeddown its decision in Central Bank ofDenver v. First Interstate Bank ofDenver, 511 U.S. 164, 114 S.Ct. 1439 (1994). In Central Bank, the issue before the Court was"whether private civil liability under §10(b) [of the Securities ExchangeAct of 1934] extends as well to those who do not engage in the manipulative ordeceptive practice but who aid and abet the violation." Id. at 167,114 S.Ct. at 1443. The Court looked to several different statutes under the1934 Act as well as other acts, and found that "Congress knew how toimpose aiding and abetting liability when it chose to do so ... If ... Congressintended to impose aiding and abetting liability, we presume it would have usedthe words "aid" and "abet" in the statutory text." Id at 176-77, 114 S.Ct. at 1448. Inreaching its decision the Court stated that "Congress... 'has taken astatute by statute approach to civil aiding and abetting liability." Id. at 182, 114 S.Ct. at 1451. Asexamples in support of this proposition the Court cited several federalstatutes that provide civil aiding and abetting liability including, TheInternet Revenue Code, The Commodity Exchange Act, the National Bank Act, theFederal Reserve Act, the Packers and Stockyard Act, and other provisions of thesecurities laws. Id. at 183-84, 114S.Ct. at 1451. Although the list was merely illustrative, it is noticeable thatthe Court did not include the RICO statute as one that provides aiding and abetting liability. Three additional points addressed by the Central Bank Court seem to apply to thesituation before this Court. First, the term "directly or indirectly"does not include aiding and abetting liability because the latter course ofconduct encompasses a broader range of activities than the former. Id. at 176, 114 S.Ct. at 1448. Second,there is no presumption that aiding and abetting liability attaches to allfederal civil statutes. Id. at 183,114 S.Ct. at 1451. Finally, aiding and abetting liability cannot be imposedwhen to do so would relieve a plaintiff of proving a critical element of hiscause of action. In Central Bank, theCourt was concerned that to allow aiding and abetting would relieve a plaintiffof his burden of proving a critical element for recovery under 10b-5, reliance.Id. at 180, 114 S.Ct. at 1449-50. TheCourt reasoned that to allow aiding and abetting liability in the 10b-5 contextwould "allow[] plaintiffs to circumvent • reliance requirement [and] woulddisregard the careful limits on I 0b-5 recovery mandated by our earliercases." Id. at 180, 114 S.Ct. at1450. Applied to the case before this Court, § 1962(c)does not use the terms "aid" or "abet"; the statute doescontain the words "directly or indirectly", which is notsufficient to impose aiding and abetting liability, and ; to allow aiding andabetting liability would relive a plaintiff of proving reliance upon the mailfraud and wire fraud imposed by Summit. As a result the Court finds that thereis no cause of action for aiding and abetting a §1962(c) violation. Several courts have held that such liability can nolonger be imposed after the United States Supreme Court's decision in Central Bank. See, e.g. Pennsylvania Association of Edwards Heirs v.Rightenour, 235 F.3d 839 (3rd Cir2000) ("the text of RICO does not encompass a private cause of action foraiding and abetting a RICO violation); Jubelirerv. MasterCard International, Inc., 68 F.Supp. 2d 1049 (W.D. Wise. 1999); Department of Economic Development v. ArthurAnderson & Co., 924 F.Supp. 449 (S.D.N.Y. 1996); Touhy v. The Northern Trust Bank, 1999 WL 342700 (N.D. Ill. 1999).Although the circuit court has yet to address the issue, one district court inthis district has stated that aiding and abetting remains a viable theory ofrecovery under 1962(c), even after Central Bank.See Succession of Wardlaw v. Whitney National Bank, 1994 WL 577442 (E.D.La. 1994). Although the court recognized that "the Central Bank opinioncontains sweeping language which arguably could apply to RICO", itdeclined to apply Central Bank becausethat opinion "discusses many elements that are highly specific to theSecurities Exchange Act." Id. at6. In light of the recent trend in the jurisprudence, this Court feelscompelled to depart from Wardlaw's reasoning. The Courts of Appeals for theSecond and Third Circuits, whose opinions the Wardlaw court relied upon in conjunction with a pre- Central Bank Fifth Circuit case, havealtered their stances on aiding and abetting liability. See, e.g. Pennsylvania Association of Edwards Heirs v. Rightenour, 235F.3d 839 (3rd Cir 2000); Department ofEconomic Development v. Arthur Anderson & Co., 924F.Supp. 449 (S.D.N.Y.1996). Additionally, the plaintiff in Wardlaw plead aiding an abettingliability in the alternative to primary liability under sections (a), (b), and(c) of the statute. 18 U.S.C. 1962(a) actually incorporates aiding and abettingliability through reference to the general federal aiding and abetting statute,!8 U.S.C. §2, which may have contributed to Wardlaw's holding. This Court isconfronted solely with a claim under § 1962(c), which does not use the wordsaid or abet, and more importantly does not incorporate the general aiding andabetting statute by reference. Furthermore, the Court agrees with the commentatorswho point out that "[i]f Congress' restriction of 1962(c) liability tothose who operate or manage the enterprise can be avoided simply by allegingthat a defendant aided and abetted or conspired with someone who operated ormanaged the enterprise, then Reves would be rendered almost useless."David B. Smith & Terrance G. Reed, Civil RICO, §5.04, p. 5-45(Matthew Bender & Co. 2000). Thus, without further guidance from the highercourt, this Court finds that aiding and abetting liability under § 1962(c) waseliminated by the Court's holding in CentralBank. Although plaintiffs' RICO claims fail for thereasons stated herein, the Court will address standing under § 1964, tocompletely address all issues with respect to plaintiffs' cause of action. VII. Standingto sue under 18 U.S.C. §1964(e) Standing generally is a threshold consideration forany Court before moving on to the merits. However, RICO standing is unique inthat a civil plaintiff has standing to assert a civil • cause of action only ifa violation of § 1962 proximately caused his injuries. Therefore, to avoid theduplicative analysis, the Court sought to initially determine whether a section1962 violation occurred. Since plaintiffs' claims under § 1962(c) fail to statea cause of action, the Court need not address the standing issue but willdiscuss it nevertheless for the sake of completeness. Even if plaintiffs hadsuccessfully asserted a § 1962 violation, causation precepts imposed by theremedial portion of the RICO statute, section 1964, would preclude plaintiffsfrom continuing with their claims because they have no standing. "As a preliminary matter... a [18 U.S.C.§1964(c)] plaintiff must establish that he has standing to sue." Price v. Pinnacle Brands, Inc., 138 F.3d602, 606 (5th Cir. 1998); Ocean Energy II, Inc. v. Alexander &Alexander, 868 F.2d 740, 742 (5th Cir.1989). As recited infra, RICO's civil damages provision requires that aplaintiff be injured "by reason of" a RICO violation. Therefore,"a RICO plaintiff" only has standing if, and can only recover to theextent that, he has been injured in his business or property by [reason of] theconduct constituting the violation." Holmesv. Securities Investor Protection Corp., et al, 503 U.S. 258, 279, 112 S.Ct131 I, 1323 (1992)(O'Connor, J. concurring) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 495, 105S.Ct. 3275, 3284 (1985)). The United States Supreme Court has rejected theproposition that the "by reason of" limitation in 1964(c) requires asimple showing that the defendant's violation of § 1962 was a "butfor" cause of plaintiff's injury and has instead instructed thatdefendant's violation of § 1962 be the proximate cause of plaintiff's injury. Holmes v. Securities Investor ProtectionCorp., et al, 503 U.S. 258, 265-66, 112 S.Ct 1311, 1316 (1992); See also Whalen v. Carter, 954 F.2d1087, 1091 (5th Cir. 1992) ("a plaintiff has statutory standing to bring aclaim so long as the defendants' predicate acts constitute both factual andproximate cause of the plaintiff's alleged injury'3. "The pertinentinquiry in determining the existence of proximate, or "legal" cause,is "whether the conduct has been so significant and important a cause thatthe defendant should be held responsible." Chisolm v. Transsouth Financial Corp., 95 F.3d 331, 336 (4th Cir.1996)(citations omitted).10 The plaintiffs state that "[d]efendants send through interstate telephonelines and the United States Mail, invoices, collection notifications, and othercommunications intended to collect gambling debts and otherwise participate inthe Internet gambling enterprise.'" Bradley Complaint at ¶ 97, ThompsonComplaint at ¶ 86. Plaintiffs allege marl fraud based upon the defendants'monthly mailing of billing statements. Bradley Complaint at ¶ 99, Thompson Complaint at 1 88. They alleged wire fraud basedupon the "[d]efendants open[ing] and authoriz[ing] merchant accounts andthereafter author[izing], clear[ing[, tramsitt[ing], approv[ing], pay[ing] andcollect[ing] electronic purchases of bets..." ." Bradley Complaint at¶ 101, Thompson Complaint at 1 90. Plaintiffs claimed that "but for"the worldwide processing and payment systems "[i]nternet gambling would bedifficult, if not impossible." See BradleyComplaint at 1110, Thompson Complaint at 199. It is their position that thedefendants knew the nature of their activities and allowed U.S. citizens toengage in allegedly illegal behavior on the internet. By making their servicesavailable, defendants' activities have made "every [Visa or MasterCard]holder a potential customer of Internet gambling bookmakers." BradleyComplaint at 154, Thompson Complaint at ¶ 43. As such, "but for [thecredit card companies] willingness and knowing participation in the operationand financing of illegal gambling activities in the United States through theInternet, Internet gambling would be difficult, if not impossible toaccomplish." Bradley Complaint at 1110, Thompson Complaint at ¶ 99. Suchallegations plead factual causation but fall short of pleading legal causation. Asregards legal causation, this Court agrees with the observations of the UnitedState, s Court of Appeals for the Third Circuit also in response to aracketeering suit brought by frustrated gamblers: "[u]nlike an ordinaryRICO victim, in this case the allegedly injured plaintiffs, i.e., the players,can avoid any injury simply by walking away from the alleged wrongdoers, thecasinos, by not playing ... in the casinos." Doug Grant, Inc. v Greate Bay Casino Corp., 232 F.3d 173, 187-88 (3rd Cir. 2000). Employing traditionalproximate cause analysis, "plaintiffs received "exactly what theypaid for and they do not and cannot allege otherwise." See Price v. Pinnacle Brands, Inc., 138F.3d 602, 606 (5th Cir. 1998). Although plaintiffs cry out as victims in thiscase, they are in a precarious position because of their own voluntary acts ofinternet gambling. Plaintiffs' own acts of accessing the internet, locating thecasinos, entering their information, and playing electronic casino games, areall intervening causes that break the chain of causation with respect to thedefendants' alleged activities, even if they were illegal. See generally Laborers Local17 Health & Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 240 (2dCir. 1999). Additionally, plaintiffs failed to plead thereliance requirement imposed by Summit Properties, Inc. v. Hoechst Celanese Corp‑, 214 F.3d 556 (5th Cir. 2000). Thus, even if plaintiffsadequately plead a violation of the federal mail or wire fraud statutes, asRICO plaintiffs they are required to plead an additional element not necessaryunder the statutes as codified. Although reliance is not an clement ofstatutory mail fraud or statutory wire fraud, the court held that reliance onpredicate mail or wire fraud is necessary in order to establish proximatecausation. Id. at 562. Therefore,plaintiffs "face[@%] an additional hurdle" and must show that theyrelied upon the alleged fraudulent practices of the defendants. Id‑‑at559. As to the alleged wire fraud, plaintiffs do not even allege that they wereaware of such activities; therefore plaintiffs could not rely upon an activityof which they were not aware. The allegations of mall fraud suffer from thesame defect. Nowhere in the complaints is there an allegation that plaintiffsrelied upon a representation of any defendant in deciding to gamble. Clearly,plaintiffs cannot claim to rely upon a billing statement that arrives afterthey gambled. The Court finds that even if the defendants'actions in connection with internet casino gambling were illegal, which theyare not, plaintiffs' inability to plead proximate causation prevents them frompursuing civil remedies under § 1964(c). The Court finds this case quite different from thetypical RICO case, appropriately described by the United States Court ofAppeals for the Seventh Circuit as follows, [t]he prototypical RICO case is one in which aperson bent on criminal activity seizes control of a previously legitimate firmand uses the firm's resources, contacts, facilities, and appearance oflegitimacy to perpetrate more, and less easily discovered, criminal acts thanhe could do in his own person, that is without channeling his criminalactivities through the enterprise that he has taken over. Fitzgeraldv. Chrysler Corp., 116 F.3d 225, 227 (7th Cir.1997). Simply put, the Court finds that RICO, no matterhow liberally construed, is not intended to provide a remedy to this class ofplaintiff. The remedial portion of the statute was intended to provide a remedyfor victims of racketeering activity as described in section 1962. Plaintiffsin these cases are not victims, they are independent actors who made a knowingand voluntary choice to engage in a course of conduct. Litigation over theirown actions arose only when the result of those actions became a debt that theydid not wish to pay. At this point in time, Internet casino gambling is not aviolation of federal law. To the extent that plaintiffs' unsuccessful venturein a legal activity turned out to be less than profitable, they have no remedyat law. The Court is mindful that motions to dismiss shouldbe rarely granted. However, in this case, plaintiffs fail to plead severalelements necessary to sustain a RICO claim as a matter of law, includingfailure to allege any racketeering activity, the existence of an enterprise,the requisite level of conduct or control, and standing. The defects inplaintiffs' complaints appear insurmountable. With such a legally flawed causeof action, the Court must dismiss plaintiffs' RICO claims without leave toamend. See e.g., Hart v. Bayer Corp., 199F.3d 239, 248, note 6 (5th Cir. 2000) (court should not generally dismiss without leave to amend unless defect is simply incurable); Knevelbaard Dairies v. Kraft Foods. Inc., 232F.3d 979, 983 (9th Cir. 2000) (leaveto amend must be granted unless amendment would be futile); Confederate Memorial Association v. Hines, 995F.2d 295, 299 (D.C. Cir. 1993) (district court acted properly when it failed togrant leave to amend granting motion to dismiss when dismissed party does notindicate particular grounds and dismissed party previously brought same suit inanother court); Wright & Miller, FederalPractice & Procedure, § 1483, p. 588. Therefore, the court finds that the defendantsmotions shall be granted. The Rule 19Motions In light of this Court's rulings on the Rule12(b)(6) motions, the Rule 19 motions concerning failure to join indispensableparties are moot. Accordingly, IT IS ORDERED that the motions to dismiss of MasterCard, Visa,Travelers and Fleet are GRANTED. IT IS FURTHER ORDERED that the remainder ofthe cases that comprise MDL 1321 and MDL 1322, as referenced in footnote 1 ofthis order, are hereby STAYED and ordered statistically closedpending further action by this Court. IT IS FURTHER ORDERED that the Rule 19 motionsare dismissed as MOOT. New Orleans, Louisiana, this 23rd day inFebruary2001. /s/ STANWOOD R. DUVAL, JR. UNITED STATES DISTRICT DUDGE. Footnotes 1Initially 11 cases were transferred to this Court. MDL 1321 and MDL 1322 wereconsolidated for pre-trial purposes by order entered April 3, 2000.With the tagalong cases that subsequently followed, there are now 33. Those cases are: Brown v. MasterCard International, Inc. etal, C.A. 00-0657 (original docket no. 99-778, M.D. Ala.); Maple v. Capital One Bank, et al. C.A.00-0658 (original docket no., 99-665, M.D.Ala.); Eisele v. MasterCard Int., Inc. et al, C.A. 00-0659 (originaldocket no. 99-8746, M.D. Ala.); Eisele v.MasterCard Int., Inc. et al, C.A. 00-0660 (original docketno. 99-8784, S.D.N.Y.); Eisele v.MasterCard Int., Inc. et al, C.A. 00-0661 (original docket no. 99-8785,S.D.N.Y.); Cote v. MasterCard Int., Inc.et al, C.A. 00-1985 (original docket no. 00-3709, S.D.N.Y.); Thompson v. MasterCard Int., Inc. et al, C.A.00-1986 (original docket no. 00-3710, S.D.N.Y.); Bradley v. MasterCard Int., Inc. et al, C.A. 00-1987 (originaldocket no. 00--3712, S.D.N.Y); Siverliebv. MasterCard Int., Inc. et al, C.A. 00-1988 (original docket no. 00-3713,S.D.N.Y.); Keys v. MasterCard Int., Inc.et al, C.A. 00-1989 (original docket no. 00-3714, S.D.N.Y.); Silverlieb v. MasterCard Int., Inc. et al, C.A.00-1990 (original docket no. 00-3715, S.D.N.Y.); Erwin v. MasterCard Int., Inc. et al, C.A. 00-1991 (original docketno. 00-3716, S.D.N.Y.); Thompson v.MasterCard Int., Inc. et al, C.A. 00-1993; Bradley v. MasterCard, C.A. 00-1994 (original docket no. 00-3718,S.D.N.Y.); Freeman v. Providian NationalBank et al, C.A. 00-0662 (original docket no. 99-108, M.D. Ala.); Freeman v. Citibank Corp, et al, C.A. 00-0663 (original docket no. 98-3029, M.D.Ala.); Jones v. Visa International Svc.Assoc., et al. C.A. 00-0664 (original docket no. 99-785, N.D. Ala.); Eisele v. Visa Int. $vc. Assoc., et al, C.A.00-0665 (original docket no. 99--4669, N.D. Cal.); Eisele v. Visa Int. Svc. Assoc., et al, C.A. 00-0666 (originaldocket no.99-3829, N.D. Cal.); Eisele v.Visa Int. Svc. Assoc., et al, C.A. 00-0667 (original docket no. 99.-4833,N.D. Ill.); Eisele v. Visa Int. Svc.Assoc, et al, C.A. 00-1168 (original docket no. 99-5065, N.D. Cal.); Eisele v. Visa Int. Svc. Assoc., et al., C.A.00-1169 (original docket no. 99-5067, N.D. Cal.); Normand v. Visa Int. Svc. Assoc., et al, C.A. 00-1170 (originaldocket no. 99-5068, N.D. Cal.); Thompson v.Visa Int. Svc. Assoc., et al, C.A. 00-1171 (original docket no. 99-5069,N.D. Cal.); Thompson v. Visa Int. Svc.Assoc., et al, C.A. 00-1172 (original docket no. 99-5070, N.D. Cal.); Silverliebv. Visa Int. Svc. Assoc., et al, C.A. 00-1995 (original docket no. 00-1773, N.D. Cal.); Thompson v. Visa Int. Svc. Assoc., et al, C.A.00-1996 (original docket no. 00-1774, N.D. Cal.); Cote v. Visa Int. Svc. Assoc., et al, C.A. 00-1997 (original docketno. 00~I776, N.D. Cal.); Silverlieb v.Visa Int. Svc. Assoc., et al, C.A. 00-1998 (original docket no. 00-1778,N.D. Cal.); Silverlieb v. Visa Int. Svc.Assoc., et al, C.A. 00-1999 (original docket no. 00-1779, N.D. Cal.); Thompson v. Visa Int. Svc. Assoc., C.A.00-2000 (original docket no. 00-1780, N.D.Cal.); Erwin v. Visa Int. $vc. Assoc., et al, C.A. 00-2001 (originaldocket no. 00-1775, N.D. Cal.); and Bradleyv. Visa Int. Svc. Assoc., et al. C.A. 00-2002 (original docket no. 00-1777,N.D. Cal.). 2 Since the argumentsasserted by the various defendants arc substantially similar, for case ofreference the Court shall refer to MasterCard International, Inc., Fleet Bank,Fleet Credit Card Services, Visa International and Travelers Bank as"defendants.'" When referring solely to MasterCard International Inc.and Visa International Service Association the Court shall use the term"credit card companies." When referring to Fleet Bank, Fleet CreditCard Services and Travelers Bank, the Court shall designate those parties the"issuing banks." 3Plaintiff does not explain the discrepancy but presumably this indicates thatBradley was not always unsuccessful. 4The Court notes thatneither plaintiff" alleges that he placed wagers on sporting events. 5 Since plaintiffs havenot alleged a substantive violation of the Wire Act, the Court need notconsider the issue of whether the credit card companies or issuing banks are"engaged in the business of betting or wagering', a condition to Wire Actliability. The Court does note that according to the Fifth Circuit PatternCriminal Jury Instructions, the first finding necessary to impose liability isthat "the defendant was in the business of betting or wagering. By this Imean the defendants was prepared en a regular basis to accept bets placed byothers- that is, the defendant was a bookie." Pattern Jury Instructions(Criminal Cases)-- Fifth Circuit §2.50 (West 1990). 6 Plaintiffs also allege aviolation of 18 U.S.C. §1960. However, even if such a violation were alleged,it is not a RICO predicate act under 18 U.S.C. §1961(I). 7 There does not appear tobe any allegation that either Travelers or Fleet Bank directed or participatedin the enterprise's affairs. 8 The Court of Appealsrecognized the general dissatisfaction with the case by which a plaintiff canavoid the person/enterprise distinctness requirement when it stated that: the criticism pertaining to having corporationslisted as beinga part of theassociation-in-fact is due to the fact that a "§ 1962(c) enterprise mustbe more than an association of individuals or entities conducting the normalaffairs of a defendant corporation." Id.; see also Old Time Enters. v.International Coffee Corp., 862 F.2d 1213, 1215 (5th Cir.1989). Thecriticism is generally unwarranted where corporations are not involved. Id. at 446, note 16. ThisCourt recognizes the criticism, but finds that under the law as it exists,plaintiffs have properly alleged the distinctness requirement. However,concerns that corporations will be vilified formerly "conducting theirnormal affairs" is generally unwarranted as those corporations will beshielded by the "operation or management" prequisite to § 1962(c)liability. 9 Ina subheading of his complaint, plaintiff Bradley cites the applicable statuteas § 1964(a). However, in his factual allegations plaintiff clearly refers todefendants' as alders and abettors to a § 1962(c) violation. The Court willaccordingly analyze plaintiffs' claim as one for aiding and abetting a §1962(˘) violation. 10 These causationrequirements have prompted one court to find that "[c]ivil RICO is ofcourse a statutory tort remedy-- simply one with particularly drasticremedies." Serves v. Faulkner, 861F.2d 823, 834 (5th Cir. 1988). |
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