Winning Matters: Willenken Secures Dismissal of RICO Class Action at the Pleading Stage Before Judge Lucy Koh

April 5, 2019

A lawsuit with multiple household name defendants, each with its own set of attorneys collaborating on one motion, could have set itself up for disaster. However, with attorneys from Willenken Wilson Loh & Delgado LLP on the team, the defendants were bound for victory.

In Jane Doe et al. v. Walmart Inc. et al., the lead plaintiffs were individuals caught shoplifting at Walmart and given the opportunity to face prosecution or, instead, admit guilt and pay to participate in a program created by Corrective Education Company (CEC) that would teach them life skills. Unfortunately, in August 2017, the City Attorney of San Francisco had successfully prosecuted CEC, arguing that the option between prosecution or paying to participate in the program was extortion and false imprisonment by another name.

Seeking to ride the coattails of that prosecution, three “Doe” plaintiffs filed suit in the U.S. District Court for the Northern District of California against co-founders of CEC and several retailers which had offered the program including Walmart, Burlington Coat Factory, Bloomingdales, The Kroger Co. (“Kroger”), Sportsman’s Warehouse, 99 Cents Only, Save Mart, and Decathlon. Plaintiffs alleged that the defendants’ participation in the CEC program amounted to a violation of 18 U.S.C. §1962 et seq., the Racketeer Influenced and Corrupt Organizations Act (RICO).

The lawsuit was assigned to Judge Lucy Koh. The defendants were represented by a “Who’s Who” of BigLaw firms including Boies Schiller Flexner LLP, Davis Polk & Wardwell LLP, Steptoe & Johnson LLP, Munger, Tolles & Olson LLP, and Sidley Austin LLP. Kroger turned to Willenken Wilson Loh & Delgado LLP.

As required by Judge Koh, the defendants collaborated on an omnibus motion to dismiss based on various arguments. In helping to draft the motion, the Willenken team, comprised of partners William Delgado and Megan O’Neill and senior associates Justin Goodwin and Jean Mooney, focused on two of the main arguments: 1) a lack of standing argument pressed by defendants other than Walmart, and 2) failure to plead a RICO violation.

Judge Koh issued a ruling on the motion to dismiss, which she granted in large part. With respect to Kroger, the Court agreed that plaintiffs lacked standing to sue and failed to state a RICO claim. Because the lack of standing could not be cured, Judge Koh dismissed the plaintiffs’ RICO claim against Kroger with prejudice.