Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 1 of 22

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CASE NO. 1:13-cv-22131-JLK SEGUROS UNIVERSALES, S.A., a Guatemalan anonymous society, FIANZAS UNIVERSALES, S.A. n/k/a ASEGURADORA FIDELIS, S.A., a Guatemalan anonymous society, and ORDENADORES, S.A., a Guatemalan anonymous society, v. Plaintiffs,

MICROSOFT CORPORATION, a Washington corporation, Defendant. _______________________________________/ MICROSOFT CORPORATIONS MOTION TO DISMISS COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendant, Microsoft Corporation (Microsoft), hereby moves for an Order dismissing the Complaint for Damages and Injunctive Relief filed by Plaintiffs, Seguros Universales, S.A. (Seguros), Fianzas Universales, S.A. n/k/a Aseguradora Fidelis, S.A. (Fianzas), and Ordenadores, S.A. (Ordenadores) (collectively, the Plaintiffs). In support of its Motion, Microsoft submits the following Memorandum of Law. MEMORANDUM OF LAW I. INTRODUCTION This is a textbook case of forum shopping by foreign litigants seeking damages and injunctive relief for injuries that occurred, if at all, on foreign soil. Plaintiffs action has nothing to do with the United States, or, much less, with the State of Florida, and everything to do with the Republic of Guatemala. Plaintiffs core allegations are that Microsoft initiated an action in Guatemala with the Fiscalia de Seccion de Delitos Contra La Propriedad Intelectual, 1 seeking a seizure order from a Guatemalan court (the Guatemalan Seizure Action), because Microsoft believed Plaintiffs were operating Microsofts proprietary software without licenses in
1

Hereinafter referred to as the Attorney Generals Office or the District Attorneys Office.

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 2 of 22 CASE NO. 1:13-cv-22131-JLK violation of Guatemalan law. Plaintiffs and Microsoft entered into a written settlement agreement to resolve that action (the Settlement Agreement), 2 and then Plaintiffs filed their Complaint in this case. In the Complaint, Plaintiffs desperately attempt to unwind Microsofts enforcement of intellectual property rights through the legal process of Guatemala and recast those proceedings as an illegal enterprise under the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. 1964, et seq. In addition to the RICO claim (Count I), the Complaint asserts claims for Constructive Fraud (Count II), Abuse of Process (Count III), and Unjust Enrichment (Count IV). Plaintiffs Complaint rests on implausible allegations that flatly contradict the factual record related to the Guatemalan Seizure Action. The Court should dismiss it with prejudice. First, by virtue of the clear terms of the Settlement Agreement, Plaintiffs released Microsoft from any and all claims arising out of or relating to the Guatemalan Seizure Action, including the claims asserted in this lawsuit. Although they conveniently fail to attach a copy of the Settlement Agreement to their pleading, Plaintiffs refer to the agreement in the Complaint. 3 Accordingly, the terms of the Settlement Agreement which are central to, and in direct conflict with, the allegations in the Complaint are incorporated by reference in Plaintiffs pleading and can properly be considered by this Court in resolving this Motion. Second, RICO does not apply extraterritorially to claims that involve a foreign RICO enterprise and foreign predicate acts of racketeering activity. The Complaint alleges, among other things, that: (i) Microsoft operated in Guatemala through a foreign corporate vehicle, i.e. Microsoft de Guatemala S.A. (Microsoft Guatemala); 4 (ii) the alleged RICO enterprise, i.e. the Guatemalan Seizure Action, is foreign; and (iii) the alleged predicate acts of racketeering, i.e. the filing of false sworn declarations in the Guatemalan Seizure Action to extort a payment of $70,000 (the Settlement Payment) from the Plaintiffs, occurred on foreign soil. The mere fact that Plaintiffs allege that Microsoft diverted the $70,000 Settlement Payment away from Microsoft Guatemala does not alter the undeniably foreign character of Plaintiffs RICO claim. The alleged fraudulent scheme remains overwhelmingly extraterritorial, and the fact that Microsoft may have received the Settlement Payment in the United States does not transform
2

A true and correct copy of the Settlement Agreement, along with a certified English translation, is attached hereto as Exhibit A. 3 See Complaint, 33 (alleging an on the spot agreement to pay Microsoft $70,000). 4 See Complaint, 26-27, 37 (alleging that Microsoft operates in Guatemala through Microsoft Guatemala).

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 3 of 22 CASE NO. 1:13-cv-22131-JLK Plaintiffs extraterritorial claim into a domestic claim, nor, much less, into an actionable claim under the RICO statute. Third, the Complaint, on its face, contradicts the factual foundation upon which Plaintiffs claims purport to be based, namely, that Microsoft had no legitimate or lawful basis to obtain the issuance of the seizure order by the court in Guatemala or to enforce that order against Plaintiffs. Specifically, Plaintiffs concede that to date more than fifteen (15) months after Microsoft obtained the issuance of the seizure order by the Guatemalan court they still cannot produce valid licenses for at least two (2) percent of the Microsoft software they operated on their computers. 5 In light of Plaintiffs concession that they cannot document valid licenses for all of the Microsoft software operated on their computers, they have no basis to allege that Microsofts enforcement of the seizure order constitutes a RICO enterprise (Count I) or is fraudulent (Count II) or an abuse of process (Count III). Accordingly, the Complaint should be dismissed with prejudice on that basis, as well. To the extent the Court is not inclined to dismiss the Complaint with prejudice on the foregoing bases, there are still other grounds for dismissal: The RICO claim (Count I) fails because Plaintiffs allegations concerning Microsofts predicate acts of racketeering activity lack the requisite particularity under the controlling case law and Rule 9(b) of the Federal Rules of Civil Procedure. The Constructive Fraud claim (Count II) fails as a matter of law, because Plaintiffs do not and cannot plead the existence of a confidential or fiduciary relationship between themselves and Microsoft. The Abuse of Process claim (Count III) should be dismissed based on principles of international comity. The Court should defer to the laws and paramount interests of Guatemala. Indeed, it was a Guatemalan court that issued the seizure order which Plaintiffs now contend was an illegal, improper and/or perverted use of the [Guatemalan] courts power. The Court should decline Plaintiffs invitation to inquire into matters properly within the jurisdiction of the Guatemalan courts. Finally, the Unjust Enrichment count (Count IV) should be dismissed, because an express written agreement between Plaintiffs and Microsoft, i.e. the Settlement Agreement, governs the same subject mater as Plaintiffs claim. Accordingly, to the extent they have any claim against Microsoft relating to the payment of those funds, Plaintiffs must bring an action at law under the Settlement Agreement. II. BACKGROUND

This case is about computer software infringement and the protection of intellectual
5

See Complaint, 41.

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 4 of 22 CASE NO. 1:13-cv-22131-JLK property rights in the country of Guatemala. 6 As alleged in the Complaint, Plaintiffs are anonymous societies organized and existing under the laws of Guatemala. 7 Specifically, Seguros is a Guatemalan insurance company; Fianzas is a surety company in Guatemala; and Ordenadores provides internal information and telecommunications services to Plaintiffs and is the title holder of Plaintiffs computer servers. 8 Fianzas is Seguros affiliate, and Ordenadores is both Seguros and Fianzas affiliate. 9 To aid in the conduct of their business, Plaintiffs allege, they installed and operated Microsoft software, such as Windows, Word, Excel, Power Point, Publisher, and Outlook, in their business offices in Guatemala. 10 As early as 2008 and through 2012, Seguros and Fianzas admit to receiving documentation about Microsoft software infringement violations. 11 One such document, titled Impact of Software Piracy in Guatemala and Benefits of Correctly Handling Software Assets at the Company (the Software Piracy Letter) and dated June 9, 2008, is attached to Plaintiffs Complaint. 12 The Software Piracy Letter states, among other things, that [f]or Guatemalan businesspeople, the use of pirated software presents an imminent risk in critical areas such as the following: Computer Security, Productivity, and Legal Environment. 13 With respect to the Legal Environment, the Software Piracy Letter states that [c]opying computer programs without the corresponding authorization infringes upon software ownership rights, which are expressly recognized by Guatemalan law and international treaties of which Guatemala is a party. 14 The Software Piracy Letter concluded: It is important to avoid legal risks and join efforts to fight for respect of software intellectual property. 15 While Plaintiffs allege that, in 2008, 2010, and 2012, Fianzas and other licensees received from Microsoft software licensing compliance reports and that the reports were complied with each year, Plaintiffs have not attached a single document to the Complaint that reflects any such compliance. 16 On or about March 7, 2012, a criminal complaint was filed with the Intellectual

6 7

See Complaint, 13, 16, 17, 24-25, 30, 39-43; Exhibits to Complaint. Complaint, 4-5. 8 Complaint, 8-10. 9 Complaint, 9-10. 10 Complaint, 11. 11 Complaint, 16. 12 See Complaint, ; [D.E. 1, p. 51]. 13 See [D.E. 1, p. 51]. 14 [D.E. 1, p. 51]. 15 [D.E. 1, p. 51]. 16 Complaint, 18-22.

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 5 of 22 CASE NO. 1:13-cv-22131-JLK Property Crimes division of the Attorney Generals Office of Guatemala (the Guatemalan Seizure Action), 17 in which it was alleged that Microsoft software without a license for use [was] being utilized at the following location 7-73 Fourth Street (Zone Nine) in Guatemala City (Department of Guatemala). 18 The Guatemalan Seizure Action requested an order from the Attorney General to search that location, that computer equipment and/or media . . . [that is] reproduced or stored illegally . . . and/or used without . . . authorization be seized and confiscated, and that the Attorney General be appointed as bailee to store all computer equipment confiscated. 19 On or about March 20, 2012, the complaint in the Guatemalan Seizure Action was modified by a Declaration to reflect that Seguros Universales, Sociedad Anonima, and Fianzas Universales, Sociedad Anonima operate[d] at the location referenced in the complaint. 20 The Declaration also attached the Software Piracy Letter 21 and noted as follows: I am also attaching a copy of a letter [i.e., the Software Piracy Letter] received from ELDER GUERRA, TECHNOLOGY MANAGER at those entities [i.e., Seguros and Fianzas], in which they were asked to reduce computer and legal risks of using software without a license. [The letter] gave notice that [such use] is a crime under our laws, with consequences of up to four years of jail and significant fines and indemnities for each illegal software [program] found. That assistance was offered for free. He was also requested to begin the process of correcting all existing irregularities. However, despite having provided sufficient time to make the corrections, no positive response was received from them [i.e., Seguros and Fianzas], and they continue to use software belonging to Microsoft Corporation without the respective use license. 22 On or about March 26, 2012, an additional filing pertaining to the Guatemalan Seizure Action was made with the Attorney Generals Office of Guatemala, to which two documents were attached: (a) a letter from an entity known as Business Software Alliance for Latin America, which noted that, after reviewing Microsoft purchase records, the records did not show volume purchases of the software that they [i.e., Seguros and Fianzas] are using; 23 and (b) a letter from Microsoft de Guatemala, S.A., offering the use of a certain expert who [was] adept at identifying and recognizing original computer programs . . . whose copyrights are owned by

17 18

Complaint, [D.E. 1, pp. 16-43]. Complaint, [D.E. 1, pp. 17]. 19 Complaint, [D.E. 1, pp. 23-24]. 20 Complaint, [D.E. 1, pp. 45-46]. 21 Complaint, [D.E. 1, pp. 45]. 22 Complaint, [D.E. 1, pp. 45]. 23 Complaint, , [D.E. 1, pp. 54, 56].

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 6 of 22 CASE NO. 1:13-cv-22131-JLK Microsoft. 24 On or about April 26, 2012, Plaintiffs allege, Ordenadores was added to the complaint in the Guatemalan Seizure Action as infringing Microsoft copyright. 25 Approximately one (1) day later, on April 27, 2012, Plaintiffs and Microsoft entered into the Settlement Agreement. 26 The Settlement Agreement notes that, on April 27, 2012, by court order, an audit was conducted on the computer hardware located at the facilities of the commercial entity known as SEGUROS . . . and related companies. 27 By executing the Settlement Agreement, the parties agreed that by means of mutual concessions, we have decided by common agreement to avoid any kind of litigation that to date may have arisen . . . acknowledging for this purpose that MICROSOFT CORPORATION is the holder of copyright to the computer software that this company produces . . . which the entity known as SEGUROS . . . and related companies recognize and accept as valid. 28 The Settlement Agreement continues: The entity known as SEGUROS . . . and related companies will pay THE HOLDERS [i.e., Microsoft] the total sum of . . . ($70000.00) as COMPENSATORY DAMAGES, EXPENSES AND COURT COSTS that might to date have resulted from the unlicensed use of the following software. 29 The $70,000.00 sum was to be payable in four (4) installments of $17,500.00. 30 The first installment was due on April 27, 2013, and each of the remaining three (3) installments was due over a three (3) month period thereafter: May 27, 2012, June 27, 2012, and July 27, 2012. 31 Seguros also agree[d] to pay any taxes generated as a result of this settlement. 32 In connection with these promises, Plaintiffs agreed to come into compliance with the Copyright laws and operate Microsoft software legally. Specifically, they agreed: 1) To ensure and verify that all the software used in its computers have been legalized and validated. 2) To only acquire and use original computer software in the future, with the consent of and licenses from the holder of the applicable copyright, and undertake[] to submit copies of the licenses and invoices for the
24 25

Complaint, , [D.E. 1, pp. 54, 57]. Complaint, 30. 26 See Exhibit A. 27 Settlement Agreement, p. 2, ONE.RECITALS. In their Complaint, Plaintiffs concede that Fianzas is Seguros affiliate and that Ordenadores are both Seguros and Fianzas affiliate. Complaint, 9-10. For instance, Plaintiffs admit that Ordenadores provides internal information and telecommunication services to Plaintiffs and is the title holder of Plaintiffs computer servers. Complaint, 10. 28 Settlement Agreement, p. 3, TWO.SETTLEMENT (emphasis in original). 29 Settlement Agreement, p. 3, TWO.SETTLEMENT. 30 Settlement Agreement, p. 3, TWO.SETTLEMENT. 31 See Settlement Agreement, p. 3, TWO.SETTLEMENT. 32 Settlement Agreement, p. 3, TWO.SETTLEMENT.

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 7 of 22 CASE NO. 1:13-cv-22131-JLK legalization of the software in use within a maximum term of three months reckoned from the date hereof, i.e., they are due on the twenty-seventh of July two-thousand and twelve. 33 The Settlement Agreement continues: For purposes of this agreement, the software shall be deemed to be legalized and validated when they satisfy all the requirements listed below: I) They must be original. II) They must have the relevant license or authorization in writing from the copyright holder. III) They must be covered by the pertinent sales invoice, and IV) They must be used with a license for each computer, hard disk or network terminal, while in accordance with the law it is considered unlawful to make use of a single license for several terminals through networks or other remote access systems, except in the case of MULTIPLE LICENSES, in which case the use made of the pertinent software must conform to the allowed number previously stipulated in the license. Consequently, the number of licenses in use must match the number of computers or network terminals on which they are installed or from which the software is accessed. 34 By virtue of Plaintiffs obligations, Microsoft agree[d] to discontinue the legal actions brought and to not bring others of a civil, criminal or any other nature resulting from the Proceedings filed against THE RESPONDENTS on the twenty-seventh of April of the current year, as the result of any other type of activity it may have carried out prior hereto. 35 In view of these and other provisions, including general releases of liability, the Settlement Agreement was signed and executed by the parties, following a complete reading of the text [therein], being duly acquainted with the content, purpose, validity and other legal effects thereof. 36 Notwithstanding the Settlement Agreement, Plaintiffs, on June 14, 2013, filed a Complaint for Damages and Injunctive Relief, alleging claims under RICO 37 and for constructive fraud, abuse of process, and unjust enrichment. 38 This motion now follows. III. FEDERAL RULES OF CIVIL PROCEDURE 12(b)(6) STANDARD In order to withstand a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to
33

Settlement Agreement, pp. 4-5, TWO.SETTLEMENT (emphasis added). Notably, July 27, 2012, as mentioned in this emphasized portion of these statements, is the same date on which Plaintiffs were to make the fourth and final installment of $17,500.00, per the earlier terms of the Settlement Agreement. 34 Settlement Agreement, p. 5, THREE. 35 Settlement Agreement, pp. 5-6, FIVE. 36 Settlement Agreement, p. 8, ELEVEN. 37 Racketeer Influenced and Corrupt Organizations Act (RICO). 38 Complaint, [D.E. 1, pp. 9-13].

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 8 of 22 CASE NO. 1:13-cv-22131-JLK draw the reasonable inference that the defendant is liable for the misconduct alleged. 39 A complaints allegations must be enough to raise a right to relief above the speculative level. 40 IV. A. ARGUMENT The Complaint Should Be Dismissed With Prejudice Because Plaintiffs Claims Are Barred by the Settlement Agreement. 1. The Court May Properly Consider the Settlement Agreement in Deciding the Sufficiency of the Complaint.

In deciding a motion to dismiss, this Courts review is limited to the four corners of the operative complaint and any documents referred to therein that are central to the claims at issue. 41 Stated differently, where a plaintiff refers to certain documents in the complaint, and those documents are central to the plaintiff's claim, . . . the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6) dismissal. 42 [T]he defendant's attaching such documents to the motion to dismiss will not require conversion of the motion into a motion for summary judgment. 43 Where there is a conflict between allegations in a pleading and the central documents, it is well settled that the contents of the documents control. 44 Although Plaintiffs refer to an on the spot agreement to pay Microsoft $70,000 45 thereby incorporating it by reference in the Complaint they opportunistically fail to attach a copy of the agreement to their pleading. The reason is obvious. The agreement in question, i.e., the Settlement Agreement, flatly contradicts the allegations in the Complaint and releases Microsoft from any and all claims asserted in this lawsuit. 46 There can be no question that the terms of the Settlement Agreement are central to Plaintiffs claims and may properly be considered by the Court in resolving this Motion. 47 2. The Settlement Agreement Releases Microsoft from All Claims Asserted by Plaintiffs in the Complaint.

The law is well-settled that Florida courts enforce general releases to further the policy

39 40

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). 41 In re Fontainebleau Las Vegas Contract Litig., 716 F.Supp.2d 1237, 1246 (S.D. Fla. 2010). 42 Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1368 (11th Cir. 1997). 43 Brooks, 116 F. 3d at 1368; see Venture Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir.1993). 44 In re Fontainebleau Las Vegas Contract Litig., 716 F.Supp.2d at 1246. 45 See Complaint, 33. 46 Complaint, 41. 47 See In re Fontainebleau Las Vegas Contract Litig., 716 F. Supp2d at 1246; Brooks, 116 F. 3d at 1368.

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 9 of 22 CASE NO. 1:13-cv-22131-JLK of encouraging settlements. 48 Numerous Florida cases uphold general releases, even when the releasing party was unaware of [a] defect at the time the agreement was executed, 49 including circumstances where a party discovered negligence after the executing a settlement agreement. 50 Even more important, other courts have recognized this principle even in the face of a fraudulent inducement claim. For example, in Kobatake v. E.I. DuPont De Nemours & Co., 51 the court held that the execution of such all-encompassing releases prohibits [plaintiffs] from suing defendants [for fraudulent inducement]. 52 Here, as set forth in more detail below, Plaintiffs released the claims asserted in this lawsuit against Microsoft. The Settlement Agreement provides that, by order of the Second District Court for Criminal, Narcotics and Environmental Crimes in and for the Municipal District of Guatemala City, Department of Guatemala, an audit was conducted on the computer hardware located at the facilities of the commercial entity known as SEGUROS and related companies. 53 Furthermore, paragraph seven (7) of the Settlement Agreement unambiguously provides that Plaintiffs have nothing to claim based on the CLAIM filed by THE HOLDERS [i.e., Microsoft] and, consequently, state that they hereby and henceforth waive all actions of any nature that may arise, whether past, present or future, on the basis of this claim and the Legal Proceeding that was conducted at its facilities on the twenty-seventh of April of the current year [i.e., 2012] or of any other event related to this proceeding. 54 Plaintiffs allege that on April 27, 2012, Microsoft appeared at their business offices with armed Guatemalan law enforcement officers and proceeded to extort Plaintiffs by demanding an on the spot agreement to pay $70,000[.] 55 Plaintiffs also allege that Microsoft improperly shift[ed] the financial burden of paying the taxes on the $70,000 payment to Plaintiffs in the alleged amount of $21,000. 56 These allegations indisputably serve as the foundation or central basis for all of Plaintiffs claims asserted in this lawsuit.57 As in Kobatake, 58 where the Eleventh Circuit
Mazzoni Farms, Inc. v. E.I. DuPont De Nemours and Co., 761 So. 2d 306, 314 (Fla. 2000). Mazzoni Farms, Inc., 761 So. 2d at 306; see also Braemer Isle Condominium Ass'n, Inc. v. Boca Hi, Inc., 632 So. 2d 707, 707-08 (Fla. 4th DCA 1994) (enforcing general release although party did not discover alleged defects until after executing the release). 50 Hardage Enters., Inc. v. Fidesys Corp., N.V., 570 So. 2d 436, 437-39 (Fla. 5th DCA 1990) (enforcing a general release even though the party discovered the negligence after executing the release). 51 162 F.3d 619, 625 (11th Cir. 1998). 52 Mazzoni Farms, Inc., 761 So. 2d at 306. 53 Settlement Agreement, p. 2, ONE.RECITALS. 54 Settlement Agreement, p. 6, SEVEN. 55 Complaint, 32-33. 56 See Complaint, 37-38. 57 See Complaint, 55-60, 62, 68, 72-75.
49 48

Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 10 of 22 CASE NO. 1:13-cv-22131-JLK affirmed that actions for fraud, civil conspiracy, spoliation of evidence, public nuisance, and racketeering were properly barred by a settlements release provision, 59 Plaintiffs claims here likewise are barred, because paragraph seven (7) releases Microsoft from and waives all actions that may be asserted by Plaintiffs based on the proceeding that occurred at Plaintiffs offices on April 27, 2012. 60 Accordingly, Plaintiffs claims must be dismissed with prejudice. B. The RICO Claim Should Be Dismissed with Prejudice Because RICO Does Not Apply Extraterritorially Where the Alleged Enterprise and Predicate Activity Are Foreign. This districts decision in Sorota v. Sosa 61 is dispositive of Plaintiffs RICO claim. There, the plaintiff, Sorota, was approached about owning a Peruvian telephone company (Sparq), which Sosa agreed to manage and split profits if Sorota provided the capital. 62 While in Florida, Sorota alleged, Sosa induced him to wire money on 18 separate occasions from a Florida bank account . . . for the ostensible purpose of operating the company. 63 However, Sosa misappropriated much of the money for his own personal use in both Florida and Peru. 64 Sosa also established two (2) additional Peruvian companies to take over Sparqs money and property and redirect Sparqs business contracts and profits. 65 Sorota filed a RICO claim, alleging that, by repeatedly inducing Sorota to wire money with fraudulent intent, Sosa engaged in a pattern of racketeering activity, and that Sparq, together with the other Peruvian companies, formed an enterprise which provided cover to defraud Sorota and served as the vehicle for receiving moneys from [him] induced by fraud.66 In response, Sosa moved to dismiss the RICO claim, contending that RICO does not apply

Kobatake v. E.I. DuPont De Nemours & Co., 162 F.3d 619, 625 (11th Cir. 1998). At issue in Kobatake was a settlement agreement based on damages alleged incurred by plaintiffs in the use of defendants product, Benlate 50DF. Kobatake, 162 F.3d at 623, 625. The settlement agreement released defendant from, among other things, any and all claims arising from or in any way related to [plaintiffs'] use of Benlate. Kobatake, 162 F.3d at 624-25. 60 The court in Cerniglia v. Cerniglia also held that the release in a marital settlement agreement barred subsequent attacks based on fraud. 679 So. 2d 1160, 1164-65 (Fla. 1996) (affirming summary judgment on claims for assault and battery, intentional infliction of emotional distress, common-law fraud, and breach of contract because of general release); see also Caballero v. Phoenix American Holdings, Inc., 79 So. 3d 106, 107 (Fla. 3d DCA 2012) (affirming summary judgment on retaliatory discharge, violations of Florida Private Sector Whistleblowers Act, breach of contract, fraudulent inducement, unjust enrichment, and promissory estoppel, because of general release). 61 842 F.Supp.2d 1345 (S.D. Fla. 2012). 62 Sorota, 842 F.Supp.2d at 1346. 63 Sorota, 842 F.Supp.2d at 1346-47. 64 Sorota, 842 F.Supp.2d at 1346-47. 65 Sorota, 842 F.Supp.2d at 1347. 66 Sorota, 842 F.Supp.2d at 1347.
59

58

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 11 of 22 CASE NO. 1:13-cv-22131-JLK extraterritorially and that Sorota alleged a foreign (rather than a domestic) RICO enterprise.67 In dismissing Sorotas RICO claim with prejudice, the court stated as follows: [S]everal courts have examined the RICO statute and determined that the focus of RICO is on the enterprise as the recipient of, or cover for, a pattern of criminal activity. While one court has asserted that [t]he focus of the statute is the racketeering activity, . . . other courts have persuasively explained that RICO does not punish the predicate acts of racketeeringindeed, each predicate act is, itself, a separate crimebut only racketeering activity in connection with an enterprise. Thus, regardless of where the predicate acts of racketeering occur, RICO does not apply where . . . the alleged enterprise and impact of the predicate activity upon it are entirely foreign. 68 The court concluded that Sorota alleged a foreign not a domestic RICO enterprise, because, among other things, the role of [the] alleged enterprise . . . was to act as the recipient of, and cover for, Sosas racketeering activity by receiving and holding the funds that he fraudulently induced Sorota to wire to Peru. 69 The court continued: [T]he enterprise operated entirely in Peru, with its only connection to the United States being that the funds it possessed originated from (and possibly returned to) a Florida bank account. Such a limited connection with the United States is insufficient. While aspects of Sosas racketeering activity (i.e., the wire fraud) allegedly took place in the United States, RICO does not apply where, as here, the alleged enterprise and the impact of the predicate activity upon it are entirely foreign. 70 Applying the Sorota courts rationale to this case, Plaintiffs RICO claim cannot withstand dismissal with prejudice. Plaintiffs, which are all Guatemalan business entities, 71 do not because they cannot allege any facts that would locate or identify a RICO enterprise in the United States, or that would substantiate any assertion that the impact of the alleged predicate acts of racketeering was domestic. 72 To be sure, the alleged Microsoft RICO Enterprise and predicate acts of racketeering activity all occurred in Guatemala. For instance, Plaintiffs allege, among other things, that: (a) Microsoft de Guatemala, S.A (Microsoft Guatemala) . . . . is the Guatemalan corporate vehicle through which Microsoft operates in Guatemala; 73
67 68

Sorota, 842 F.Supp.2d at 1347. Sorota, 842 F.Supp.2d at 1350. 69 Sorota, 842 F.Supp.2d at 1350. 70 Sorota, 842 F.Supp.2d at 1350-51. 71 See Complaint, 4-6. 72 See Sorota, 842 F.Supp.2d at 1350-51. 73 See Complaint, 26-27 (emphasis added); Sorota, 842 F. Supp. 2d at 1350.

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 12 of 22 CASE NO. 1:13-cv-22131-JLK (b) Microsoft fraudulently obtained a seizure order from the Guatemalan Court after filing with the Attorney Generals Office of Guatemala (i) a complaint requesting ex parte seizure order under Guatemalan law that alleged violation of Microsofts intellectual property rights, and (ii) fraudulent declarations that Plaintiffs were infringing Microsoft copyright [sic];74 (c) Microsoft appeared with armed Guatemalan law enforcement officers at Plaintiffs business offices in Guatemala, halted Plaintiffs business operations, extorted Plaintiffs by demanding an on the spot agreement to pay $70,000, and fraudulently transferred Microsofts tax liability for same payment to Plaintiffs; 75 (d) The operations of Microsoft in its international intellectual property enforcement programs and consequent dealings with Plaintiffs constitute a racketeering operation; 76 and (e) Microsofts fraudulent intellectual property enforcement operations [against Plaintiffs in Guatemala] constitute a RICO enterprise (the Microsoft Rico Enterprise) which conducted or participated . . . in . . . the pattern of racketeering activity described herein. 77 The only allegation connecting the alleged Microsoft RICO Enterprise to the United States is that Microsoft purportedly diverted the $70,000 allegedly extorted from Plaintiffs to itself in the United States and away from [Microsoft Guatemala]. 78 Importantly, as in Sorota, the mere allegation that the $70,000 payment may have been accepted by Microsoft in the United States does not establish a sufficient connection to the United States to permit the application of the RICO statute in this case. 79 Sorotas findings are noteworthy in this regard: [I]t is worth reiterating the Supreme Court's observation [in Morrison v. Morrison, 130 S.Ct. 2869, 2884 (2010)] that it is a rare case of prohibited extraterritorial application that lacks all contact with the territory of the United States, and that the presumption against extraterritorial application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic
See Complaint, 13, 15, 16, 24, 25, 30-31 (emphasis added). See Complaint, 32-33, 37-38, 42 (emphasis added). 76 Complaint, 51. 77 Complaint, 52, 58. 78 Complaint, 37. 79 See Sorota, 842 F. Supp. 2d at 1350; In re Mouttet, No. 1214490LMI , 2013 WL 2111283, at *8 (Bank. Ct. S.D. Fla. May 16, 2013) (recommending dismissal of RICO claim: even though mail and money went into or through Florida because a principal of the Plaintiffs was located in Florida, this is not enough to trigger application of Federal RICO); Cedeo v. Intech Group, Inc., 733 F.Supp.2d 471, 473 (S.D.N.Y. 2010) (dismissing a RICO claim as seeking extraterritorial application where the contacts with the United States . . . were limited to the movement of funds into and out of U.S.-based bank accounts); c.f. Borich v. BP Products N. Am., Inc., 2013 WL 2357528, at *3-5 (Ill. N.D. 2013) (Congress passed RICO to eradicate organized, long-term activity; where defendant acted in Texas by sending agreement to plaintiff in Illinois, which was sent back to Texas, plaintiffs RICO claim still failed to allege a domestic pattern of racketeering activity from which she was injured).
75 74

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 13 of 22 CASE NO. 1:13-cv-22131-JLK activity is involved in the case. 80 Accordingly, because Plaintiffs do not because they cannot allege a domestic RICO enterprise, and the alleged predicate acts of racketeering activity upon which Plaintiffs rely are entirely foreign, the RICO Claim (Count I) should be dismissed with prejudice. 81 Any further effort by Plaintiffs to amend their RICO claim would be futile and cause undue delay. 82 C. The Complaint Should Be Dismissed With Prejudice Because Plaintiffs Claims Are Undermined By Express Concessions in the Complaint and Settlement Agreement. The Complaint cannot withstand dismissal with prejudice based on Plaintiffs own concessions. Specifically, Plaintiffs concede, on the face of the Complaint, that they are unable to document valid licenses for at least two (2) percent of the Microsoft software they were operating on their computers at the time of the Guatemalan Seizure Action. 83 Accepting this allegation as true for purposes of this motion, Plaintiffs admission eliminates the foundational fact supporting each of their claims, namely, that there was no legitimate or lawful basis to request the issuance of a seizure order by the Guatemalan court and/or to enforce that order against Plaintiffs. 84 Stated differently, by conceding that they cannot produce valid licenses for at least two (2) percent of the Microsoft software utilized on their computers, Plaintiffs are admitting to have infringed on Microsofts intellectual property rights, or, that, at a minimum,
Sorota, 842 F.Supp.2d at 1351. The crux of Plaintiffs Complaint is Microsofts alleged misuse of the legal process in Guatemala by filing false or fraudulent declarations, and by consequence, obtaining a fraudulent seizure order from a Guatemalan court. The prohibited extraterritorial application of the RICO statute, particularly in this case, is sound, because the misuse of foreign jurisdictions legal process, i.e., by committing perjury or engaging in malicious prosecution, while possibly tortious or illegal under the foreign law of Guatemala, [is] not within reach of the [RICO] statute. See Sinapsis Trading USA, LLC v. Secure Wrap of Miami, Inc., 2013 WL 1455824, at *6 (S.D. Fla. 2013); see also Annulli v. Panikkar, 200 F.3d 189, 199200 (3d Cir.1999) (RICO does not cover gardenvariety state law crimes, torts, and contract breaches unless they constitute mail or wire fraud). 81 C.f. Tymoshenko v. Firtash, 2013 WL 1234821, at *11-13 (S.D.N.Y. 2013) (RICO claim dismissed, because the focus of Plaintiffs allegations [was] on a foreign enterprise and a pattern of racketeering activity that occurred abroad, even though various defendants were based in the U.S., and plaintiffs alleged that U.S. defendants laundered illegally obtained funds through the [U.S.] and elsewhere in order to conceal profits, including kickbacks to Ukrainian officials); Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, 3233 (2d Cir. 2010) (affirming dismissal where plaintiffs alleged numerous acts in the [U.S.] . . . including mail and wire fraud [and] Hobbs Act violations, because allegations insufficient to support extraterritorial application of RICO). 82 See Sorota, 842 F. Supp.2d at 1350-51, n.4 (leave to amend futile after finding RICO allegations impermissibly extraterritorial because the enterprise operated entirely [abroad], with its only connection to the United States being that the funds it possessed originated from . . . a Florida bank account); Burch v. Pioneer Credit Recovery Inc., 551 F.3d 122, 126 (2d Cir. 2008) (affirming denial of leave to amend as futile because motions to amend should generally be denied in instances of futility, undue delay, bad faith or dilatory motive) (citing Forman v. Davis, 371 U.S. 178, 182 (1962) ([P]leading is not an interactive game in which plaintiffs file a complaint, and then bat it back and forth with the Court over a rhetorical net until a viable complaint emerges. Rather, plaintiffs have the responsibility to plead their case adequately, without defendants or the Courts assistance.)). 83 Complaint, 41. 84 See Complaint 55, 60 (Count I); 62 (Count II); 65-69 (Count III).
80

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 14 of 22 CASE NO. 1:13-cv-22131-JLK the prospect of software infringement existed. The Settlement Agreement itself confirms that Plaintiffs were engaged in the unlicensed use of Microsoft software, 85 and consequently, any contradictory allegations in the Complaint must be rejected by this Court. 86 In light of Plaintiffs concessions, the Court is compelled to find that the enforcement of the seizure order against Plaintiffs in Guatemala does not constitute a RICO enterprise or racketeering activity (Count I), is not fraudulent (Count II), and does not represent an abuse of process (Count III). Plaintiffs conclusory allegations of illegal activity, fraud, and abuse of process simply fail to square with any plausible reading of Plaintiffs own factual allegations and the Settlement Agreement. 87 The Court should dismiss the Complaint with prejudice on this basis alone. 88 D. Even Assuming Plaintiffs Could Survive a Motion to Dismiss Based on the Foregoing Arguments, There are Still Other Grounds for Dismissal. 1. The RICO Claim Is Not Pled With the Requisite Particularity. Plaintiffs RICO claim fails to satisfy the pleading requirements set forth by Twombly, Iqbal, and Federal Rule of Civil Procedure 9(b). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. 89 Factual allegations must be enough to raise a right to relief above the speculative level. 90 Indeed, Rule 8 demands more than an

Exhibit A, p. 3, TWO. SETTLEMENT. See Weaver v. Opera Tower, No. 07-23332-CIV, 2008 WL 4145520, at *3-4 (S.D. Fla. Aug 1, 2008) (dismissing claims under Florida False Advertising Statute and the Interstate Land and Sales Full Disclosure Act, because agreements at issue contradict specific allegations of complaint); Hillcrest Pacific Corp v. Yamamura, 727 So. 2d 1053, 1056 (Fla. 4th DCA 1999) (affirming dismissal with prejudice because Agreement plainly contradicts the allegations of the complaint and is fatally inconsistent with Pacific's claim of fraud in the inducement); see also Lopez v. Ernie Haire Ford, Inc., 974 So. 2d 517, 519 (Fla. 2nd DCA 2008) (citing case law for the proposition that a party has a duty to learn and know the contents of a proposed contract before he signs and delivers it and is presumed to know and understand its contents, terms and conditions). 87 See Iqbal, 129 S.Ct. at 1949. A complaints allegations must be enough to raise a right to relief above the speculative level. Twombly, 550 U.S. at 555. 88 See Twelve Inches Around Corp. v. Cisco Systems, Inc., No. 08 Civ. 6896 (WHP), 2009 WL 928007, at *4 (S.D.N.Y. Mar. 12, 2009) (dismissing fraud claim where plaintiffs concession in complaint undermined plaintiffs conclusory claims of reliance); Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1095 (2d Cir. 1995) (dismissing complaint with prejudice; the Complaint's attenuated allegations of control are contradicted both by more specific allegations in the Complaint ); Delman v. Entertainment Partners Group, Inc., No. 2008 WL 3914465, at *3 (C.D. Cal. Aug. 21, 2008) (plaintiff contradicted his conspiracy allegations by stating that he was fired because he was unruly and disruptive on the set; plaintiff thus failed to state the basic elements of a civil conspiracy claim); see also Great American Fidelity Ins. Co. v. JWR Const. Svcs., Inc., 882 F.Supp.2d 1340, 1346 (S.D. Fla. 2012). 89 Twombly, 550 U.S. at 555 (citations and internal quotation marks omitted). 90 Id. ([T]he pleading must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action. (citation omitted)).
86

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 15 of 22 CASE NO. 1:13-cv-22131-JLK unadorned, the-defendant-unlawfully-harmed-me accusation. 91 In addition to the

aforementioned requirements, because RICO claims are essentially a certain breed of fraud claims, they are subject to the heightened pleading standards of [Rule 9(b).] 92 In that regard, each predicate act must be pleaded with particularity, 93 and thus, the complaint must set forth: (1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the [party who was defrauded], and (4) what the [party perpetrating the fraud] obtained as a consequence of the fraud. 94 Requiring a plaintiff to plead fraud with particularity serves an important purpose by alerting defendants to the precise misconduct with which they are charged and protecting defendants against spurious charges of immoral and fraudulent behavior. 95 Therefore, mere conclusory allegations of fraud clearly are insufficient. 96 Plaintiffs RICO claim woefully fails when held to these benchmarks. In order to state a claim for relief under Federal RICO section 1962(c) . . . the plaintiff must allege (1) conduct, (2) of an enterprise, (3) through a pattern, (4) of racketeering activity. 97 Plaintiffs allegations concerning the alleged RICO enterprise and pattern of racketeering activity merely parrot the elements of a RICO action under the statute. For example, Plaintiffs indiscriminately allege that the operations of Microsoft in its international intellectual property enforcement programs and consequent dealings with Plaintiffs constitute a racketeering operation, 98 and that such fraudulent intellectual property enforcement operations constitute[] a RICO enterprise (the Microsoft RICO Enterprise). 99 Plaintiffs further assert that the Microsoft RICO Enterprise

Iqbal, 129 S.Ct. 1937 at 1949 (2009) (citing Twombly, 550 U.S. at 555). Sinapsis Trading USA, LLC v. Secure Wrap of Miami, Inc., 2013 WL 1455824, at *3 (S.D. Fla. Apr. 9, 2013) (quoting Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 131617 (11th Cir. 2007)). 93 Sinapsis, 2013 WL 1455824, at *4 (citing Fla. Software Sys., Inc. v. Columbia/HCA Healthcare Corp., 46 F.Supp.2d 1276, 1282 (M.D. Fla. 1999)). 94 Brooks v. Blue Cross and Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997); see also Pirelli, 631 F.3d at 441-42 (In adding flesh to the bones of the word particularity . . . a plaintiff ordinarily must describe the who, what, when, where, and how of the fraud . . . .); see also D.H.G. Props., LLC v. Ginn Cos., LLC, No. 3:09cv-735-J-34JRK, 2010 WL 5584464, at *4 (M.D. Fla. Sept. 28, 2010). 95 (Order, Pg. 8 (quoting Durham v. Bus. Mgmt. Assocs., 847 F.2d 1505, 1511 (11th Cir. 1988)). 96 Talib v. Skyway Communications Holding Corp., 2005 WL 1610707, at *4 (M.D. Fla. July 7, 2005). 97 In re Mouttet, 2013 WL 2111283, at *10 (citing Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)). 98 Complaint, 51 (emphasis added). 99 Complaint, 52 (emphasis added).
92

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 16 of 22 CASE NO. 1:13-cv-22131-JLK engaged in a pattern of racketeering activity 100 and the following predicate acts of racketeering: mail fraud, wire fraud, acts interfering with commerce in violation of 18 U.S.C 1951, and fraud. 101 However, other than the conclusory assertions that Microsoft defrauded or extorted $70,000 and a $21,000 tax liability, the Complaint is devoid of any facts to substantiate Plaintiffs claims that Microsoft engaged in mail fraud, wire fraud, acts interfering with commerce in violation of 18 U.S.C. 1951, or any type of fraud. With respect to Plaintiffs threadbare allegations that Microsoft engaged in mail fraud, wire fraud, or fraud, 102 the case of Sinapsis Trading USA, LLC v. Secure Wrap of Miami, LLC 103 is instructive. In Sinapsis, the plaintiffs alleged that defendants and their agents constitute[d] an enterprise that has committed mail and wire fraud, extortion, perjury, and other unlawful acts by: (1) publishing false criminal claims . . .; (2) extorting Plaintiffs by making threats of personal injury and threatening to file false criminal charges; and (3) defrauding Plaintiffs by diverting sales and harming [plaintiffs] reputation. 104 The defendant moved to dismiss, contending that the complaint was not pled with sufficient particularity. 105 The court granted the motion to dismiss, noting that no single allegation [in the complaint] suffices to provide the who, what, where, when, and why of any aspect of the fraud, and that, at no point, is the hallmark of a fraud claim a false representation that was relied on by the [p]laintiffs even articulated. 106 The court found the mail fraud and wire fraud insufficient, because the complaint did not specify the dates of the communications; what precise statements were made to whom or by whom; where they were made; or whether that person spoke for any one of the [d]efendants. 107 Similarly, the court rejected as insufficient the allegations of false criminal affidavits and false statements, because plaintiffs did not allege what defamatory statements were made, how they were false, and who was misled." 108 Here, as in Sinapsis, Plaintiffs allegations of mail fraud, wire fraud, and fraud are
Complaint, 53 (emphasis added). Complaint, 54 (emphasis added). 102 See Complaint, 54. 103 No. 11-24309-CV, 2013 WL 1455824, at *4-7 (S.D. Fla. Apr. 9, 2013). 104 2013 WL 1455824, at *4. 105 Sinapsis Trading USA, LLC, 2013 WL 1455824, at *1. 106 Sinapsis Trading USA, LLC, 2013 WL 1455824, at *5; see also In re MasterCard Int'l, 313 F.3d 257, 263 (5th Cir. 2002). 107 Sinapsis Trading USA, LLC, 2013 WL 1455824, at *5; see also Leonard v. StuartJames Co., Inc., 742 F.Supp. 653, 659 (N.D.Ga.1990) (dismissing securities fraud claims where [n]o allegation describe[d] specifically when, where, by whom, or specifically what that misrepresentation was). 108 Sinapsis Trading USA, LLC, 2013 WL 1455824, at *5.
101 100

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 17 of 22 CASE NO. 1:13-cv-22131-JLK deficient, because they are unsubstantiated and lack any detail about what, when, where, and how they might have occurred (i.e., when, why, and how Microsoft used the mail for the purpose of executing [a fraudulent] scheme or artifice; 109 when, why, and how Microsoft use[d] . . . interstate wires in furtherance of [a fraudulent] scheme 110). Moreover, Plaintiffs conclusory assertions that Microsofts declarations in the Guatemalan Seizure Action made false or fraudulent statements do not salvage their RICO claim, because the Complaint does not identify any specific statements in Microsofts declarations, or, much less, explain how or why any such statements are false or fraudulent. Plaintiffs allegations that Microsoft engaged in acts interfering with commerce in violation of 18 U.S.C. 1951 are equally deficient. Section 1951 provides that Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. 111 As referenced in 1951, extortion is defined as obtaining property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 112 Plaintiffs allege that, on April 27, 2012, Microsoft appeared at Plaintiffs business offices with armed Guatemalan law enforcement officers, halted [their] business operations, and proceeded to extort Plaintiffs by demanding an on the spot agreement to pay $70,000 or Microsoft would remove all of Plaintiffs servers[.] 113Notably absent from the Complaint, however, is any allegation that Microsoft used or threatened to use force, violence, or fear against Plaintiffs to allegedly extort the $70,000 payment.
114

To the contrary,

Plaintiffs executed the Settlement Agreement which expressly states that (a) the parties freely exercised their rights and agreed to mutual concessions in entering into the Agreement; 115 and that (b) the $70,000 payment was made by Plaintiffs for their unlicensed use of software. 116
See Sinapsis Trading USA, LLC, 2013 WL 1455824, at *4 (citation and internal quotation marks omitted). See Sinapsis Trading USA, LLC, 2013 WL 1455824, at *4 (citation and internal quotation marks omitted). 111 Halpin v. David, 2009 WL 1753759, at *8 (N.D. Fla. June 22, 2009) (quoting 18 U.S.C. 1951). 112 Halpin, 2009 WL 1753759, at *8 n.4 (quoting 18 U.S.C. 1951(b)(2)). 113 Complaint, 32-33. 114 See Halprin, 2009 WL 1753759, at *2, 9 (accepting report and recommendation) (dismissing plaintiffs complaint because there were no allegations of force, violence, or fear to sustain a RICO claim based on 1951). 115 Settlement Agreement, p. 1, ONE.RECITALS; TWO SETTLEMENT. 116 Settlement Agreement, p. 3, TWO SETTLEMENT.
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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 18 of 22 CASE NO. 1:13-cv-22131-JLK In sum, the Complaint fails to plead any predicate act of racketeering activity based on fraud or extortion with the requisite particularity under the controlling case law and Rule 9(b). Accordingly, the Court should dismiss Plaintiffs RICO claim (Count I). 117 2. The Constructive Fraud Claim Fails as a Matter of Law and Should Be Dismissed. Constructive fraud arises when a confidential or fiduciary relationship has been used to take advantage of the party seeking affirmative relief. 118 The mere fact that one party places trust or confidence in another does not create the type of confidential or special relationship envisioned by traditional interpretations of fiduciary responsibility. 119 A confidential relationship must be shown by proof and that burden of proof rests on the party claiming such a relationship exists. 120 Business relationships are not ordinarily confidential relationships. 121 Here, Plaintiffs do not because they cannot allege any fiduciary or confidential relationship between themselves and Microsoft. At best, Plaintiffs have alleged a mere business relationship with Microsoft. Because that relationship is insufficient to plead a claim for constructive fraud, Count II of the Complaint must be dismissed. 122 3. The Court Should Dismiss the Abuse of Process Claim on the Basis of International Comity.

Principles of international comity limit a domestic courts jurisdiction to hear a claim like
To extent Plaintiffs attempt to allege a RICO conspiracy claim, that claim must be dismissed as well, because the Complaint fails to sufficiently allege a substantive RICO violation. See Rogers v. Nacchio, 241 Fed .Appx. 602, 609 (11th Cir. 2007) (To support a claim for a federal or state RICO conspiracy, a plaintiff must allege an illegal agreement to violate a substantive provision of the RICO statute. Thus, where a plaintiff fails to state a RICO claim and the conspiracy count does not contain additional allegations, the conspiracy claim necessarily fails.); In re Mouttet, No. 1214490LMI , 2013 WL 2111283, at *8 (Bank. Ct. S.D. Fla. May 16, 2013) (same). Any conspiracy claim would also be subject to dismissal, as Plaintiffs do not because they cannot allege any plausible factual basis for a finding of a conscious agreement [to commit predicate acts of racketeering] among the alleged co-conspirators, none of which are even defendants in this case. See Elsevier Inc. v. W.H.P.R., Inc., 692 F. Supp. 2d 297, 312-13 (S.D.N.Y. 2010). No factual allegations have been alleged and, indeed, none exist that Microsoft and its alleged co-conspirators kn[e]w of, and agree[d] to, the general criminal objective of a jointly undertaken scheme. United States v. Yannotti, 541 F.3d 112, 122 (2d Cir. 2008). 118 In re Trasylol Products Liability Litigation, No. 08MD1928, 2009 WL 577726, at *13 (S.D. Fla. Mar. 5, 2009); see also Razi v. Razavi, No. 5:12CV80Oc34PRL, 2012 WL 7801361, at *15 (M.D. Fla. Dec. 21, 2012). 119 In re Trasylol Products Liability Litig., 2009 WL 577726, at *13. 120 In re Trasylol Products Liability Litig., 2009 WL 577726, at *13. 121 Linville v. Ginn Real Estate Co., LLC, 697 F.Supp.2d 1302, 1309 (M.D. Fla. 2010) (dismissing complaint because of failure to include any allegations establishing a relationship of trust and confidence between Plaintiff and Defendant). 122 See Linville, 697 F.Supp.2d at 1309 (dismissing complaint because of failure to include any allegations establishing a relationship of trust and confidence between Plaintiff and Defendant); In re Trasylol Products Liability Litig., 2009 WL 577726, at *13 (dismissing constructive fraud claim; court could draw no inferences consistent with the facts stated in the . . . complaint to support the existence of a fiduciary duty, which is a material element of any claim for constructive fraud); see also Waithe v. Arrowhead Clinic, Inc., 491 Fed. Appx. 32, 36 (11th Cir. 2012) (affirming dismissal of constructive fraud claim; no breach of any duty identified).
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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 19 of 22 CASE NO. 1:13-cv-22131-JLK the Abuse of Process claim asserted by Plaintiffs in Count III of the Complaint. 123 Comity refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interest of other sovereign states. 124 The rationale for a dismissal based upon comity is deference to the foreign countrys legal, judicial, legislative, and administrative system of handling disputes over which it has jurisdiction, in a spirit of international cooperation. 125 Comity should be withheld only when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect. 126 The limits on a domestic courts jurisdiction to prescribe the law of a foreign dispute involve more than just a question of discretion. With respect to any dispute, a state should defer to the other state if that states interest is clearly greater. 127 A nation having some basis for jurisdiction, even over its own nationals, should refrain from exercising that jurisdiction with respect to a person or activity having connections with another state when the exercise of such jurisdiction would be unreasonable. 128 A court should weigh the relative significance of effects on the United States as compared with those elsewhere, and the relative importance to the violations charged of conduct within the United States as compared with conduct abroad. 129 Application of the foregoing principles all favor dismissal of Plaintiffs Abuse of Process claim by this Court. The crux of Plaintiffs claim is that Microsoft, by fil[ing] false declarations with the Guatemalan court, which, in turn, caused the Guatemalan court to issue a wrongful Guatemalan seizure order (the Seizure Order) against Plaintiffs, 130 made an illegal, improper, and/or perverted use of the [Guatemalan] courts power. 131 On balance, the interests of Guatemala in monitoring the conduct of litigants (like Microsoft) in proceedings, within the exclusive jurisdiction of the courts of Guatemala (like the Guatemalan Seizure Action), far outweigh any interest the United States may have in regulating the conduct of
See Philadelphia Gear Corp. v. Philadelphia Gear de Mexico, 44 F.3d 187, 191-92 (3d Cir. 1994) (holding district court abused its discretion for failing to properly consider issue of international comity); Sequihua v. Texaco, Inc., 847 F. Supp. 61 (S.D. Tex. 1994) (dismissing complaint on grounds of comity). 124 Societe Nationale Industrielle Aerospatiale v. United States District Court for S.D. Iowa, 482 U.S. 522, 542 n. 27 (1987). 125 Fleeger v. Clarkson Co. Ltd., 86 F.R.D. 388, 392 (N.D. Tex. 1980); see also Sequihua, 847 F. Supp. at 63. 126 Philadelphia Gear Corp., 447 F.3d at 191 (quoting Somportez Ltd.v. Philadelphia Chewing Gum Corp., 453 F.3d 435, 440 (3d Cir. 1971), cert. denied, 405 U.S. 1017 (1972)). 127 Restatement (Third) of Foreign Relations Law of the United States 403(3) (1987). 128 Id. at 403(1). 129 Timberlane Lumber Co. v. Bank of America Nat'l Trust and Say. Assn, 549 F.2d 597, 614 (9th Cir. 1976). 130 Complaint, 65. 131 Complaint, 67.
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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 20 of 22 CASE NO. 1:13-cv-22131-JLK litigants in those same proceedings. Put another way, Plaintiffs Abuse of Process claim concerns matters regulated by the Guatemalan Attorney General, and involves activity taken by Microsoft exclusively in Guatemala courts pursuant to Guatemalan law. Guatemala has a paramount interest in resolving matters arising within its borders, litigated in its courts, and/or requiring the application of its laws. Resolution of Plaintiffs Abuse of Process claim by this Court directly challenges Guatemalas sovereign interest in matters relating to the Guatemalan Seizure Action without interference from an American court. In short, resolution of the issues alleged by Plaintiffs in their Abuse of Process claim should occur in the nation that is best able to consider the policy, legislative, and judicial interests of Guatemala and that has the greatest connection to this matter. That nation is Guatemala. Accordingly, this Court should refrain from exercising jurisdiction and dismiss Plaintiffs Abuse of Process claim. 4. Plaintiffs Unjust Enrichment Claim Fails as a Matter of Law. The law is clear that [a] claim for the equitable remedy of unjust enrichment may not be brought if the parties have a valid contract covering the same subject matter as the unjust enrichment claim. 132 Here, Plaintiffs allege that as a result of Microsofts tax evasion, Seguros, on behalf of Plaintiffs, was forced to pay Microsofts tax liability to the Guatemalan government, which they allege to be $21,000 (i.e., 31% of $70,000) and conferred a benefit upon Microsoft who had knowledge thereof. 133 The Settlement Agreement covers, not only the payment of the $70,000 by Plaintiffs to Microsoft, but also, the payment of $21,000 by Plaintiffs to the Guatemalan tax authorities. In particular, the Settlement Agreement states that Seguros agrees to pay any taxes generated as a result of this settlement. 134 Because the subject matter of Plaintiffs Unjust Enrichment claim is addressed by a written contract between the parties, Plaintiffs claim must be dismissed. 135 V. CONCLUSION For all the foregoing reasons, the Court should grant Microsofts motion to dismiss.

Moran v. Crystal Beach Capital, LLC, 2011 WL 17637, at *6 (M.D. Fla. 2011). Complaint, 72-73, 75. 134 Settlement Agreement, p. 4, TWO.SETTLEMENT. 135 Moran, 2011 WL 17637, at *6 (dismissing claim for unjust enrichment claim because the subject matter of the claim rental income was addressed in the contract at issue).
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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 21 of 22 CASE NO. 1:13-cv-22131-JLK Dated: August 5, 2013 Respectfully submitted, GREENBERG TRAURIG, P.A. Attorneys for Defendant 333 Avenue of the Americas Miami, Florida 33131 Telephone: (305) 579-0500 Facsimile: (305) 579-0717 E-mail: gonzalezr@gtlaw.com E-mail: rodriguezjo@gtlaw.com By: /s/ Ricardo A. Gonzalez HILARIE BASS Florida Bar No. 334243 RICARDO A. GONZALEZ Florida Bar No. 0691577 JONATHAN J. RODRIGUEZ Florida Bar No. 70431

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Case 1:13-cv-22131-JLK Document 10 Entered on FLSD Docket 08/05/2013 Page 22 of 22 CASE NO. 1:13-cv-22131-JLK CERTIFICATE OF SERVICE I hereby certify that on August 5, 2013, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the attached Service List in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or via First Class U.S. Mail for those counsel or parties who are not authorized to receive electronically Notices of Electronic Filing. /s/ Ricardo A. Gonzalez

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