Pemex Vs HP

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page1 of 34
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DANIEL J. BERGESON, SBN 105439, [email protected]

CAROLINE MCINTYRE, SBN 159005, [email protected]
JOHN D. PERNICK, SBN 155468, [email protected]
BERGESON, LLP
2033 Gateway Place, Suite 300
San Jose, California 95110
Telephone: (408) 291-6200
Facsimile: (408) 297-6000
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GEORGE T. CONWAY III, appearance pro hac vice

[email protected]
ADAM L. GOODMAN, appearance pro hac vice
[email protected]
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
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Attorneys for Defendants Hewlett-Packard Co.

and Hewlett-Packard Mexico, S. de R.L. de C.V.
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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PETRLEOS MEXICANOS, and PEMEX

EXPLORACIN Y PRODUCCIN,
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Plaintiffs,
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v.
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HEWLETT-PACKARD COMPANY,
and HEWLETT-PACKARD MEXICO,
S. DE R.L. DE C.V.,
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Defendants.
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DEFENDANTS MOT. TO DISMISS
COMPLAINT; SUPPORTING MEMO.
CASE NO.: CV1405292BLF
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Case No. CV1405292BLF

DEFENDANTS NOTICE OF
MOTION AND MOTION TO
DISMISS COMPLAINT;
SUPPORTING MEMORANDUM
Date:
Time:
Courtroom:
Judge:
May 21, 2015

9:00 a.m.
Courtroom 3, 5th Floor
Hon. Beth Labson Freeman
TABLE OF CONTENTS
Page
NOTICE OF MOTION AND MOTION TO DISMISS ................................................................. 1
STATEMENT OF ISSUES TO BE DECIDED ............................................................................. 1
MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 2
INTRODUCTION .......................................................................................................................... 2
STATEMENT OF FACTS ............................................................................................................. 4
ARGUMENT .................................................................................................................................. 6
I.
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PLAINTIFFS RICO CLAIMS ARE IMPERMISSIBLY EXTRATERRITORIAL. .............. 7

A.
There is a strong presumption that federal statutes do not apply

extraterritorially. ........................................................................................................... 7
B.
The Ninth Circuit has made clear that, under the presumption against
extraterritoriality, RICO can apply only to domestic patterns of racketeering. ............ 9
C.
The alleged pattern of racketeering activity here is extraterritorial and thus

beyond the scope of RICO. ......................................................................................... 13
D.
The alleged losses here are unquestionably extraterritorial and thus beyond the
scope of RICO. ........................................................................................................... 16
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II.
EVEN APART FROM EXTRATERRITORIALITY, PLAINTIFFS FAIL TO

ALLEGE A PATTERN OF RACKETEERING ACTIVITY. ............................................ 18
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III.
PLAINTIFFS RICO CLAIMS ARE TIME-BARRED. ..................................................... 21
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IV. PLAINTIFFS STATE LAW CLAIMS SHOULD BE DISMISSED. ................................ 24
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CONCLUSION ............................................................................................................................. 25
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TABLE OF AUTHORITIES
Page(s)
Cases
Adhikari v. Daoud & Partners,

No. 09cv1237, 2013 WL 4511354
(S.D. Tex. Aug. 23, 2013) .......................................................................................................... 12
5
6
Agency Holding Corp. v. Malley-Duff & Assocs.,

483 U.S. 143 (1987) ................................................................................................... 3, 10, 2122
7
8
Alda v. SBMC Mortg.,

No. 11cv00678LHK,
2012 WL 10589 (N.D. Cal. Jan. 3, 2012) .................................................................................. 24
9
10
Allegro Consultants, Inc. v. Wellington

Techs., Inc., No. 13cv02204BLF,
2014 WL 7204970 (N.D. Cal. Dec. 17, 2014) ............................................................................. 6
11
12
13
14
Asadi v. G.E. Energy (USA), LLC,

No. 4:12345, 2012 WL 2522599
(S.D. Tex. June 28, 2012), affd,
720 F.3d 620 (5th Cir. 2013)...................................................................................................... 12
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ..................................................................................................................... 6
15
16
17
Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007) ..................................................................................................................... 6
Beneficial Standard Life Ins. Co. v. Madariaga,
851 F.2d 271 (9th Cir. 1988)...................................................................................................... 22
18
19
Blankenship v. Medtronic, Inc.,

No. cv 127884 BRO, 2013 WL 3322031
(C.D. Cal. June 7, 2013)..................................................................................................... 25 n.16
20
21
22
Carnegie-Mellon Univ. v. Cohill,

484 U.S. 343 (1988) ................................................................................................................... 24
Castro v. Budget Rent-A-Car Sys., Inc.,
154 Cal. App. 4th 1162 (Cal. Ct. App. 2007) .................................................................... 25 n.16
23
24
25
26
Cedeo v. Castillo,
457 F. Appx 35 (2d Cir. 2012)............................................................................................ 10 n.3
Cement & Concrete Workers Dist. Council
Pension Fund v. Hewlett Packard Co.,
964 F. Supp. 2d 1128 (N.D. Cal. 2013) ..................................................................................... 23
27
28
ii
(continued)
2
3
Page(s)
CGC Holding Co. v. Broad and Cassel,
773 F.3d 1076 (10th Cir. 2014).................................................................................................. 10
4
5
6
Comm. to Defend U.S. Constitution v. Moon,

776 F. Supp. 568 (D.D.C. 1991) ........................................................................................ 20 n.13
Corrie v. Caterpillar, Inc.,
403 F. Supp. 2d 1019 (W.D. Wash. 2005) ......................................................................... 20 n.13
7
8
Doan v. Singh,
No. 13cv531LJO, 2013 WL 4648554
(E.D. Cal. Aug. 29, 2013) ............................................................................................................ 2
9
10
11
EEOC v. Arabian Am. Oil Co.,

499 U.S. 244 (1991) ....................................................................................................... 7, 8, 9, 17
European Cmty. v. RJR Nabisco, Inc.,
764 F.3d 129 (2d Cir. 2014) ..................................................................................... 10 n.3, 18 n.9
12
13
Goodwin v. Bruggeman-Hatch,
No. 13cv02973REB, 2014 WL 3882183
(D. Colo. Aug. 7, 2014) ............................................................................................................. 11
14
15
16
17
18
Grimmett v. Brown,
75 F.3d 506 (9th Cir. 1996)............................................................................................ 22 & n.15
Gustafson v. BAC Home Loans Servicing, LP,
No. CV 11915JST, 2012 WL 4761733
(C.D. Cal. Apr. 12, 2012) ........................................................................................................... 25
H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229 (1989) ............................................................................................................ passim
19
20
Hardisty v. Moore,
No. 11cv1591 AJB, 2012 WL 1564533
(S.D. Cal. May 2, 2012) ..................................................................................................... 21 n.14
21
22
23
Hourani v. Mirtchev,
943 F. Supp. 2d 159 (D.D.C. 2013) ................................................................... 10 n.4, 12, 15, 16
Howard v. Am. Online, Inc.,
208 F.3d 741 (9th Cir. 2000)...................................................................................................... 21
24
25
26
27
Howard v. Maximus, Inc.,

No. 3:13cv01111ST, 2014 WL 3859973 (D. Or. May 6, 2014),
report and recommendation adopted,
2014 WL 3866419 (D. Or. Aug. 6, 2014) ............................................................................ 13, 16
In re Am. Contl Corp./Lincoln Sav. & Loan Sec. Litig.,
794 F. Supp. 1424 (D. Ariz. 1992)............................................................................................. 23
28
COMPLAINT; SUPPORTING MEMO
iii
(continued)
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3
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Page(s)
Just Film, Inc. v. Merch. Servs., Inc.,
No. C 101993 CW, 2010 WL 4923146
(N.D. Cal. Nov. 29, 2010) .................................................................................................. 22 n.15
Kiobel v. Royal Dutch Petroleum Co.,
133 S. Ct. 1659 (2013) ................................................................................................... 2, 7, 8, 17
6
7
8
Klehr v. A.O. Smith Corp.,

521 U.S. 179 (1997) ................................................................................................................... 24
Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist.,
940 F.2d 397 (9th Cir. 1991)........................................................................................................ 7
9
10
11
Loginovskaya v. Batratchenko,
764 F.3d 266 (2d Cir. 2014) ................................................................................................. 17, 18
Microsoft Corp. v. AT&T Corp.,
550 U.S. 437 (2007) ................................................................................................................. 7, 8
12
13
14
15
16
Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.,

871 F. Supp. 2d 933 (N.D. Cal. 2012) ............................................................................. 3, 11, 15
Mohebbi v. Khazen,
No. 13cv03044BLF, 2014 WL 2861146
(N.D. Cal. June 23, 2014) ...................................................................................................... 7, 21
Montazer v. SM Stoller, Inc.,
363 F. Appx 460 (9th Cir. 2010) .............................................................................................. 24
17
18
19
Moore v. Phillips,
1 Cal. Rptr. 508 (Cal. Dist. Ct. App. 1959) ............................................................................... 22
Morrison v. Natl Austl. Bank Ltd.,
561 U.S. 247 (2010) ............................................................................................................ passim
20
21
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Norex Petroleum Ltd. v. Access Indus., Inc.,

631 F.3d 29 (2d Cir. 2010) .................................................................................................. 10 n.3
Ove v. Gwinn,
264 F.3d 817 (9th Cir. 2001).............................................................................................. 18 n.11
23
24
25
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Paracor Fin., Inc. v. Gen. Elec. Capital Corp.,

96 F.3d 1151 (9th Cir. 1996).............................................................................................. 25 n.16
Perkumpulan Investor Crisis Ctr. DresselWBG v. Wong,
No. C091786JCC, 2014 WL 1047946
(W.D. Wash. Mar. 14, 2014).......................................................................................... 11, 12, 15
27
28
iv
(continued)
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3
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Page(s)
Petrleos Mexicanos v. SK Engg & Constr. Co.,
No. 12 Civ. 9070 LLS, 2013 WL 3936191
(S.D.N.Y. July 30, 2013), affd,
572 F. Appx 60 (2d Cir. 2014)................................................................................ 12 n.5, 15, 16
5
6
7
8
9
Pincay v. Andrews,
238 F.3d 1106 (9th Cir. 2001).................................................................................... 3, 22, 23, 24
Quach v. Cross,
No. CV 039627 GAF, 2004 WL 2860346
(C.D. Cal. June 10, 2004)............................................................................................................. 2
Religious Tech. Ctr. v. Wollersheim,
971 F.2d 364 (9th Cir. 1992)...................................................................................................... 19
10
11
Republic of Iraq v. ABB AG,

920 F. Supp. 2d 517 (S.D.N.Y. 2013),
affd, 768 F.3d 145 (2d Cir. 2014) ............................................................. 12 n.5, 15, 16, 18 n.10
12
13
Rupert v. Bond,
No. 12cv05292BLF, 2014 WL 4775375
(N.D. Cal. Sept. 22, 2014)............................................................................................................ 7
14
15
Smith v. Cnty. of Santa Cruz,

No. 13cv00595LHK, 2013 WL 6185238
(N.D. Cal. Nov. 26, 2013) .......................................................................................................... 25
16
17
18
19
20
21
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Smith v. United States,

507 U.S. 197 (1993) ..................................................................................................................... 8
Stitt v. Citibank, N.A.,
No. 12cv03892YGR, 2015 WL 75237
(N.D. Cal. Jan. 6, 2015) ......................................................................................................... 7 n.2
Straightshot Commcns v. Telekenex, Inc.,
No. C10268Z, 2011 WL 1770935
(W.D. Wash. May 9, 2011) ................................................................................................ 21 n.14
Sullivan v. Oracle Corp.,
254 P.3d 237 (Cal. 2011) ........................................................................................................... 25
23
24
Tapang v. Wells Fargo Bank, N.A.,

No. cv1202183LHK, 2012 WL 3778965
(N.D. Cal. Aug. 30, 2012) ........................................................................................................ 67
25
26
27
Town of Poughkeepsie v. Espie,

402 F. Supp. 2d 443 (S.D.N.Y. 2005) ........................................................................................ 24
Turner v. Cook,
362 F.3d 1219 (9th Cir. 2004).................................................................................................... 20
28
(continued)
2
3
Page(s)
United States v. Chao Fan Xu,
706 F.3d 965 (9th Cir. 2013)............................................................................................... passim
4
5
United States v. Chao Fan Xu,

No. 2:02cr00674PMP, 2008 WL 1315632
(D. Nev. Apr. 10, 2008) ............................................................................................................. 13
6
7
8
United States v. Philip Morris USA, Inc.,

783 F. Supp. 2d 23 (D.D.C. 2011) ................................................................................. 11, 12, 15
USACM Liquidating Trust v. Deloitte & Touche LLP,
764 F. Supp. 2d 1210 (D. Nev. 2011) ........................................................................................ 23
9
10
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Vess v. Ciba-Geigy Corp. USA,

317 F.3d 1097 (9th Cir. 2003)................................................................................................ 7 n.2
Statutes and Rules
FED. R. CIV. P. 9(b) ................................................................................................................. passim
FED. R. CIV. P. 12(b)(6) ................................................................................................................ 1, 6
7 U.S.C. 6o .................................................................................................................................. 18
7 U.S.C. 25 .................................................................................................................................. 17
18 U.S.C. 1956(c) ....................................................................................................................... 13
18 U.S.C. 1956(h) ....................................................................................................................... 13
18 U.S.C. 1961(1) ......................................................................................................................... 9
18 U.S.C. 1961(5) ................................................................................................................... 9, 19
18 U.S.C. 1962(c) ................................................................................................................ passim
18 U.S.C. 1962(d) ........................................................................................................... 12, 16, 17
18 U.S.C. 1964(c) ................................................................................................................ passim
28 U.S.C. 1367(c)(3) ............................................................................................................... 3, 24
CAL. BUS. & PROF. CODE 17200 (West) ..................................................................................... 25
CAL. CIV. CODE 2332 (West) ...................................................................................................... 22
26
Other Authorities
27
28
3 BERNARD E. WITKIN, SUMMARY OF CALIFORNIA LAW

Agency 156(2) (10th ed. 2010) ................................................................................................ 23
vi
(continued)
2
3
Page(s)
Organized Crime Control Act of 1970, Statement of Findings

and Purpose, Pub. L. No. 91452, 84 Stat. 922 (1970),
reprinted in 1970 U.S. CODE CONG. & ADMIN. NEWS 1073 ................................................. 10 n.4
RESTATEMENT (SECOND) OF AGENCY 282 (1958)....................................................................... 23
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vii
NOTICE OF MOTION AND MOTION TO DISMISS
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that on May 21, 2015 at 9:00 a.m. or as soon thereafter as
counsel may be heard, in the courtroom of the Honorable Beth Labson Freeman, United States
District Judge for the Northern District of California, located at the United States Courthouse, 280
South 1st Street, San Jose, California 95113, defendants Hewlett-Packard Company and Hewlett-
Packard Mexico, S. de R.L. de C.V., will and hereby do move this Court for an order dismissing
this action with prejudice. Defendants bring this motion under Rule 12(b)(6) of the Federal Rules
of Civil Procedure on the ground that plaintiffs complaint fails to state a claim upon which relief
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may be granted. Defendants base their motion on this notice of motion and motion to dismiss this
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action; the supporting memorandum of points and authorities; the pleadings, records, and papers
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filed in this action; and such other arguments as defendants may present at oral argument.
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STATEMENT OF ISSUES TO BE DECIDED
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1. Do schemes perpetrated by foreign entities against foreign victims, where the alleged
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misconduct occurred virtually entirely outside the United States resulting in alleged injury outside
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the United States, plead extraterritorial RICO claims?
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2. Do RICO claims that allege predicate acts that occurred from December 2008 through
March 2009 plead a pattern of racketeering activity under 18 U.S.C. 1962(c)?
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3. Do RICO claims that allege three entirely separate schemes perpetrated by different
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entities against different victims in different countries, with no particularized allegation that these
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entities communicated with one another or knew of one anothers schemes, plead a pattern of
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racketeering activity under 18 U.S.C. 1962(c)?
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4. Are RICO claims time-barred under RICOs four-year statute of limitations where
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plaintiffs senior officers, and thus plaintiffs, were on notice of plaintiffs alleged injury in 2008
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and 2009, more than five years before the complaint was filed?
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5. Should the Court decline to exercise supplemental jurisdiction over plaintiffs state
law claims if the Court has dismissed all claims over which it has original jurisdiction?
6. Have plaintiffs alleged an illegal act within California under Californias Unfair ComDEFENDANTS MOT. TO DISMISS
petition Law?
MEMORANDUM OF POINTS AND AUTHORITIES
INTRODUCTION
With its promise of treble damages and attorneys fees, [c]ivil RICO is an unusually po-
tent weaponthe litigation equivalent of a thermonuclear device. Quach v. Cross, No. CV 03
9627 GAF, 2004 WL 2860346, at *4 (C.D. Cal. June 10, 2004) (internal quotation marks and ci-
tation omitted). Its powerful remedies tempt plaintiffs to plead racketeering where none oc-
curred. And [b]ecause the mere assertion of a RICO claim has an almost inevitable stigma-
tizing effect on those named as defendants, courts should strive to flush out frivolous RICO
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allegations at an early stage of the litigation. Doan v. Singh, No. 13cv531LJO, 2013 WL
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4648554, at *6 (E.D. Cal. Aug. 29, 2013) (citation omitted).
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This litigation is an example of a civil RICO case that should never have been brought.
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Indeed, it is a case that does not belong in any court of the United States at all. The RICO claims
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here assert that, some six years ago, Mexican employees of a Mexican company, HP Mexico,
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through the use of Mexican intermediaries, bribed Mexican officials of Pemex, Mexicos state oil
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company, in Mexico City to win Mexican contracts to deliver products and perform services in
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Mexico, with the award of the tainted contracts supposedly causing harm, in Mexico, to the Mex-
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ican oil company. The claims have little, if anything, to do with the United States.
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They thus run headlong into the presumption against extraterritoriality. The Supreme
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Court in recent years has repeatedly and emphatically enforced the age-old rule that [w]hen a
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statute gives no clear indication of an extraterritorial application, it has none. Kiobel v. Royal
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Dutch Petroleum Co., 133 S. Ct. 1659, 1664 (2013) (quoting Morrison v. Natl Austl. Bank Ltd.,
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561 U.S. 247, 255 (2010)). And because RICO is silent as to its extraterritorial application, and
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thus gives no clear indication of extraterritorial scope, courts have virtually uniformly held
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that RICO does not apply extraterritorially. United States v. Chao Fan Xu, 706 F.3d 965, 974
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(9th Cir. 2013) (quoting Morrison, 561 U.S. at 255). As a result, in the Ninth Circuit, RICO
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does not apply extraterritorially in a civil or criminal context. Id. at 97475.
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That holding is fatal to Pemexs claims here. The complaints tenuous allegations of ties
to the United States cannot overcome the presumption against extraterritoriality. The presump-
tion is not a timid and craven watchdog [that] retreat[s] to its kennel whenever some domestic
activity is involved in the case. Morrison, 561 U.S. at 266. As a result, [p]ost-Morrison courts
have had no difficulty concluding that far-flung foreign schemes conducted by foreign actors and
implicating only incidental conduct are fundamentally extraterritorial and thus beyond the reach
of RICO. Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc., 871 F. Supp. 2d 933, 938 (N.D.
Cal. 2012). That is the case here. See Argument, Point I.
But even if the extraterritoriality problem could be ignored, the RICO claims must still
fail. RICO is about racketeeringlong-term criminal conduct, not isolated misdeeds. H.J. Inc.
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v. Nw. Bell Tel. Co., 492 U.S. 229, 242 (1989). The statute thus requires the threat of continuing
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racketeering activity, which the Supreme Court has held to be either activity that extend[s] over
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a substantial period of time, or past conduct that by its nature projects into the future with a
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threat of repetition. Id. at 24142. Pemex has not even come close to pleading this element of
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RICO continuity: the events that matter here involved the award of a single group of closely
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related Pemex contracts, and all took place in a span of three months. The Supreme Court has
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held that racketeering acts extending over a few weeks or months do not satisfy RICOs
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continuity requirement, id. at 242, yet that is all that Pemex musters here. See Argument, Point II.
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In addition, the RICO claims fail because they are plainly time-barred. The statute of lim-
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itations is four years, Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156 (1987),
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and begins to run when a plaintiff knows or should know of the injury underlying the claims,
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Pincay v. Andrews, 238 F.3d 1106, 1109 (9th Cir. 2001) (citation omitted). The alleged wrongs
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here took place almost six years after the complaint was filed, and the complaint itself establishes
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that Pemex knew or should have known of them when they occurred. See Argument, Point III.
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For these and other reasons set out below, including that the Court should not exercise
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supplemental jurisdiction over the non-federal claims under 28 U.S.C. 1367(c)(3), and that the
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California-law claims are just as impermissibly extraterritorial as the federal RICO claims, see
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Argument, Point IV, the complaint should be dismissed in its entirety.
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STATEMENT OF FACTS
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This case is about a $6 million deal between two Mexican corporations for products to be
provided and services to be performed in Mexico. In 2008, defendant Hewlett-Packard Mexico
(the Mexico City-headquartered Mexican subsidiary of defendant Hewlett-Packard) agreed to
provide Petrleos Mexicanos (Mexicos state-owned oil company, headquartered in Mexico City)
and its subsidiary Pemex Exploracin y Produccin (together, Pemex) with business technology
optimization (BTO) software, hardware, services, and licenses. Compl. 912, 21. The parent
HPs internal policies prohibited corruption, self-dealing, and other misconduct by its subsidiar-
ies and specified rules governing the accurate preparation of books and records, contracts, and the
10
engagement of third parties. Id. Ex. 1, at A2. HP Mexico employees received mandatory annual
11
training on these policies. Id. The policies permitted legitimate commission payments to pre-
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approved third parties (channel partners) who were subjected to due diligence, and registered
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in HP Co.s partner system. Id. at A23. The complaint pleads that, despite these policies, HP
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Mexico circumvent[ed] HP Co.s internal accounting controls in connection with the BTO
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contracts, resulting in the falsification of HPs books and records. Compl. 112; id. Ex. 1, at
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A3. That circumvention forms the basis of plaintiffs claims.
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Virtually every relevant event pleaded in the complaint regarding the BTO deal occurred
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in Mexico and involved Mexican companies and their Mexican officers. In 2008, HP Mexico
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began presales activities and discussions with Pemex on the BTO contracts. Compl. Ex. 1, at
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A3; Compl. 2127. The complaint pleads that HP Mexico sales managers decided to retain
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Intellego, S.C., a Mexican information-technology consulting company that was experienced with
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Pemexs IT systems, and which had connections to senior Pemex officials, including Pemexs
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Chief Information Officer, Manuel Reynaud Aveleyra. Compl. 2829; id. Ex. 1, at A4. HP
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Mexico agreed to pay Intellego a deal commission equal to 25% of the licensing and support
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components of the BTO Deal. Compl. Ex. 1, at A4; Compl. 30.
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The complaint pleads that because Intellego was not a pre-approved channel partner under
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HPs internal policies, HP Mexico executives decided to circumvent those policies. Compl. 33.
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They arranged for another entitywhich the complaint calls the Pass-Through Partnerthat
had been previously approved as a channel partner to be recorded as the deal partner in HP Mexi-
cos tracking system. Id.; id. Ex. 1, at A4. The complaint pleads that HP Mexico executives
falsely recorded the Pass-Through Partner as the deal partner on the BTO contracts in HPs inter-
nal tracking system. Compl. 34. It also pleads that, because of HPs inadequate internal con-
trols from California, HP officials in California approved an increased deal commission
[w]ith little or no additional review. Id. 31, 37.
Intellegos chief executive met with Reynaud frequently throughout the fall and winter of
2008 in connection with the deal negotiations. Id. 29. On or about December 22, 2008, HP
Mexico and Pemex agreed on terms and signed the BTO contracts, with Reynaud, among others,
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signing for Pemex, and Luis Barazza, a software sales manager for HP Mexico, signing for HP
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Mexico. Id. 38. HP, the U.S. parent, was neither a signatory to the contracts nor involved in
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the negotiation or performance of the contacts. In late January and early February 2009, the Pass-
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Through Partner submitted two invoices to HP Mexico for the deal commission, in the combined
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amount of approximately $1.66 million. Id. 4243, 45; id. Ex. 1, at A5. HP Mexico paid these
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invoices in mid-February 2009. Compl. 4243; id. Ex. 1, at A5. The Pass-Through Partner
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then transferred approximately $1.41 million to Intellego. Compl. Ex. 1, at A6. Shortly thereaf-
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ter, in March 2009, Intellego made four cash payments to an entity controlled by Reynaud in the
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combined amount of approximately $125,000. Id. at A6. Reynaud resigned from Pemex in June
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2009, when it was publicly reported that he accepted bribes in exchange for awarding a software
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contract to SAP, a German multinational software company, in December 2008. 1
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On April 9, 2014, HP Mexico entered into a non-prosecution agreement with the U.S. De-
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partment of Justice relating to violations of the Foreign Corrupt Practices Act. See Compl. Ex. 1.
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On the same day, HP consented to a cease-and-desist order in which the SEC found that HP
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fail[ed] to devise and maintain sufficient accounting controls to detect and prevent the making of
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28
SAP Denies Wrongdoing in Pemex Officials Monte Carlo Trip, BNAMERICAS (June 8,
2009), http://goo.gl/ppA7qA; see also Delighted with the Monaco Grand Prix Formula One, But
Lost His Place in Pemex, TERRA (June 8, 2009) (Google Translate translation),
http://goo.gl/TkcWxG.
improper payments by three of its subsidiaries to foreign officials. Compl. Ex. 2, at 12. HP,
the U.S. parent company, is not a party to any criminal resolution, and neither the DOJ nor the
SEC allege that any HP employees engaged in misconduct or were aware of the isolated instances
of misconduct that occurred at the three foreign subsidiaries years ago.
Both the non-prosecution agreement and the SEC order contained factual recitations about
the HP Mexico-Pemex BTO contracts. The SEC order also addressed matters having nothing to
do with Pemex, HP Mexico, or the BTO contractsmatters that Pemex has nonetheless inserted
wholesale into the complaint. And so Pemex pleads that HP Russia used a German agent to bribe
Russian officials to secure a contract with the Prosecutor General of Russia. See Compl. 65
10
83. Pemex also pleads that HP Poland made improper payments to a Polish government official
11
to get contracts with the Polish national police agency. Id. 8795. But Pemex makes no non-
12
conclusory allegation of any connection between it, HP Mexico, and the BTO contracts, on the
13
one hand, and the events in Russia and Poland, other than that they involved subsidiaries of HP.
14
ARGUMENT
15
To survive a Rule 12(b)(6) motion, a complaint must allege sufficient factual matter, ac-
16
cepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S.
17
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). That requires
18
more than labels and conclusions, and more than a formulaic recitation of the elements of a
19
cause of action. Twombly, 550 U.S. at 555. Thus, the court must reject allegations that are
20
merely conclusory, unwarranted deductions of fact, or unreasonable inferences. Allegro Con-
21
sultants, Inc. v. Wellington Techs., Inc., No. 13cv02204BLF, 2014 WL 7204970, at *2 (N.D.
22
Cal. Dec. 17, 2014) (internal quotation marks and citation omitted).
23
Beyond that, plaintiffs here claim fraudthat [d]efendants devised and knowingly par-
24
ticipated in a scheme to defraud Plaintiffs, Compl. 138, 150and thus trigger the heightened
25
requirements of Rule 9(b). [T]he Ninth Circuit applies Rule 9(b) pleading standards to RICO
26
claims alleging a predicate of fraud, like those alleged here, as it does with other claims sound-
27
ing in fraud. Tapang v. Wells Fargo Bank, N.A., No. cv1202183LHK, 2012 WL 3778965, at
28
*3 (N.D. Cal. Aug. 30, 2012). 2 Plaintiffs are thus required to detail with particularity the time,
place, and manner of each act of fraud, plus the role of each defendant in each scheme. Mohebbi
v. Khazen, No. 13cv03044-BLF, 2014 WL 2861146, at *13 (N.D. Cal. June 23, 2014) (empha-
sis omitted) (quoting Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 405
(9th Cir. 1991)); see also Rupert v. Bond, No. 12cv05292BLF, 2014 WL 4775375, at *1112
(N.D. Cal. Sept. 22, 2014) (dismissing RICO claim in part for failure to satisfy Rule 9(b)).
I.
PLAINTIFFS RICO CLAIMS ARE IMPERMISSIBLY EXTRATERRITORIAL.
Plaintiffs RICO claims (Counts One through Four) are impermissibly extraterritorial for
two independent reasons: first, plaintiffs fail to plead a domestic pattern of racketeering activity
10
as required under governing precedent; and second, plaintiffs fail to plead a domestic injury.
11
A.
12
There is a strong presumption that federal

statutes do not apply extraterritorially.
It is a longstanding principle of American law that legislation of Congress, unless a con13

trary intent appears, is meant to apply only within the territorial jurisdiction of the United
14
States. Morrison v. Natl Austl. Bank Ltd., 561 U.S. 247, 255 (2010) (quoting EEOC v. Arabi15
an Am. Oil Co., 499 U.S. 244, 248 (1991) (Aramco) (internal quotation marks and citation
16
omitted)). [K]nown as the presumption against extraterritorial application, this fundamental
17
canon of statutory interpretation provides that [w]hen a statute gives no clear indication of an
18
extraterritorial application, it has none. Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659,
19
1664 (2013) (quoting Morrison, 561 U.S. at 255).
20
The extraterritoriality canon thus reflects the presumption that United States law gov21
erns domestically but does not rule the world. Id. (quoting Microsoft Corp. v. AT&T Corp., 550
22
U.S. 437, 454 (2007)). The rule serves to protect against unintended clashes between our laws
23
and those of other nations which could result in international discord. Id. (quoting Aramco, 499
24
25
26
27
28
Accord, e.g., Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 110304 (9th Cir. 2003)
(where plaintiffs allege a unified course of fraudulent conduct and rely entirely on that course of
conduct as the basis of a claim, complaint must satisfy Rule 9(b)); see also Stitt v. Citibank,
N.A., No. 12cv03892YGR, 2015 WL 75237, at *5 n.5 (N.D. Cal. Jan. 6, 2015) (Because the
[RICO claims] allege[] that the enterprise members associated for a common fraudulent purpose,
plaintiffs must meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b).).
U.S. at 248). But the rule also rests on the perception that Congress ordinarily legislates with
respect to domestic, not foreign matters. Morrison, 561 U.S. at 255. As a result, to preserv[e] a
stable background against which Congress can legislate with predictable effects, courts apply
the presumption in all cases, id. at 261 (emphasis added)regardless of whether there is a risk
of conflict between the American statute and a foreign law, id. at 255.
The presumption is a powerful one. It demands the affirmative intention of the Congress
clearly expressed to give a statute extraterritorial effect. Id. at 255 (quoting Aramco, 499 U.S. at
248) (internal quotation mark omitted). If a federal law reflects no such clearly expressed, af-
firmative intention, then courts must presume it is primarily concerned with domestic condi-
10
tions. Id. (quoting Aramco, 499 U.S. at 248). [T]o rebut the presumption, [statutes] need to
11
evince a clear indication of extraterritoriality, Kiobel, 133 S. Ct. at 1665 (quoting Morrison,
12
561 U.S. at 265); uncertain indications do not suffice, Morrison, 561 U.S. at 265.
13
So strong is the presumption that it controls even when a statute does contain some extra-
14
territorial reach. As the Supreme Court has repeatedly held, the presumption is not defeated
15
just because [a statute] specifically addresses [an] issue of extraterritorial application; it remains
16
instructive in determining the extent of the statutory exception. Microsoft, 550 U.S. at 45556
17
(quoting Smith v. United States, 507 U.S. 197, 204 (1993)). As a result, even [w]hen a statute
18
provides for some extraterritorial application, the presumption against extraterritoriality operates
19
to limit that provision to its terms. Kiobel, 133 S. Ct. at 1667 (quoting Morrison, 561 U.S. at
20
265; emphasis added).
21
So, too, the presumption applies even when there is domestic conduct at issue in a case.
22
For it is a rare case of prohibited extraterritorial application that lacks all contact with the territo-
23
ry of the United States. Morrison, 561 U.S. at 266. As a result, the presumption against extra-
24
territorial application would be a craven watchdog indeed if it retreated to its kennel whenever
25
some domestic activity is involved in the case. Id. The Supreme Courts cases do not counte-
26
nance such a timid sentinel. Id.
27
28
1
2
B.
The Ninth Circuit has made clear that, under the

presumption against extraterritoriality, RICO
can apply only to domestic patterns of racketeering.
Applying Morrison, the Ninth Circuitalong with virtually every other court to address
the issuehas squarely held that RICO has no extraterritorial application. In United States v.
Chao Fan Xu, 706 F.3d 965 (9th Cir. 2013), the Court of Appeals reaffirmed its pre-Morrison
holding that RICO is silent as to its extraterritorial application, and observed that [o]ther
courts that have addressed the issue have uniformly held that RICO does not apply extraterritori-
ally. Id. at 974. As a result, any analysis of a RICO complaint in this Circuit must assume that
RICO does not apply extraterritorially in a civil or criminal context. Id. at 97475.
10
The Ninth Circuit in Chao Fan Xu also addressed the question of how to determine
11
whether a particular application of RICO is domestic or extraterritorial under Morrison. After
12
observing that the extraterritoriality canon does not retreat[] to its kennel whenever some domes-
13
tic activity is involved in the case, Morrison, 561 U.S. at 266, the Morrison Court explained that
14
courts must look to the focus of congressional concern to determine whether a particular ap-
15
plication of a law is domestic, id. (quoting Aramco, 499 U.S. at 255). The Supreme Court con-
16
cluded that the focus of Section 10(b) of the Securities Exchange Act of 1934, the statute at is-
17
sue there, was purchases and sales of securities in the United Statesand that, as a result, Sec-
18
tion 10(b) applies only to such transactions. Id. at 266, 267.
19
The Ninth Circuit in Chao Fan Xu applied Morrisons focus analysis to RICO. It rec-
20
ognized that [t]he inquiry into RICOs focus is far from clear-cut. Chao Fan Xu, 706 F.3d at
21
975. The statutes multilayered structure shows why. RICO prohibits participat[ion] in the
22
conduct of [an] enterprises affairs through a pattern of racketeering activity.
23
1962(c) (emphasis added); see Chao Fan Xu, 706 F.3d at 97778. And it defines a pattern of
24
racketeering activity as requir[ing] at least two acts of racketeering activity committed within
25
a ten-year span, 18 U.S.C. 1961(5)acts that courts call predicate racketeering act[s], H.J.
26
Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 236 (1989), and that are in turn defined as any of a long
27
list of crimes (some potentially extraterritorial in scope, but most not) set forth in 18 U.S.C.
28
1961(1). These elements of a RICO violation apply equally to civil and criminal cases. See 18
18 U.S.C.
U.S.C. 1964(c) (creating private right for a violation of section 1962 of this chapter).
As Chao Fan Xu explains, the statutes references to both enterprise and pattern has
led to a division of authority over RICOs Morrison focus, with [c]ourts fall[ing] essential-
ly into two camps. 706 F.3d at 975. One camp asserts that RICOs focus is on the enterprise,
and [t]he other camp asserts that RICOs focus is on the pattern of racketeering activity. Id.
(citing cases); see also CGC Holding Co. v. Broad and Cassel, 773 F.3d 1076, 1097 (10th Cir.
2014) (describing decisional split). 3
Chao Fan Xu resolved the question for the Ninth Circuit by unreservedly joining the pat-
tern camp. It held that, for purposes of analyzing extraterritorial application of the statute,
10
RICOs focus is on the pattern of racketeering activityand that, as a result, to determine
11
whether [claims] are within RICOs ambit, courts must look at the pattern of Defendants rack-
12
eteering activity taken as a whole. Chao Fan Xu, 706 F.3d at 977, 978 (emphasis added). In
13
reaching this holding, the Ninth Circuit relied on the Supreme Courts repeated statements that
14
the heart of any RICO complaint is the allegation of a pattern of racketeering. Agency Holding
15
Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 154 (1987), quoted in Chao Fan Xu, 706 F.3d at
16
977. Equally importantly, the Court of Appeals invoked Congresss express legislative intent to
17
punish patterns of organized criminal activity in the United States. Chao Fan Xu, 706 F.3d at
18
978 (emphasis added). 4 That legislative history, the court explained, made it highly unlikely that
19
3
20
21
22
23
24
25
26
27
28
Adding to the confusion, one court of appeals has since rejected both approaches. Contradicting virtually every other decision on RICOs territorial scopeincluding its own prior decisionsthe Second Circuit recently held that RICO does apply extraterritorially, at least to the extent that the statutes individual predicate offenses apply extraterritorially. European Cmty. v.
RJR Nabisco, Inc., 764 F.3d 129, 136 (2d Cir. 2014); but see Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, 33 (2d Cir. 2010) (holding that Morrison similarly forecloses Norexs
argument that because a number of RICOs predicate acts possess an extraterritorial reach, RICO
itself possesses an extraterritorial reach); Cedeo v. Castillo, 457 F. Appx 35, 38 (2d Cir. 2012)
(holding that Norex declined to link the extraterritorial application of RICO to the scope of its
predicate offenses). Needless to say, the Second Circuits new approach cannot be squared with
Chao Fan Xu. A petition for rehearing en banc in European Community has been pending for
several months. See Petition for Rehearing En Banc, European Cmty. v. RJR Nabisco, Inc., No.
112475cv (2d Cir. Sept. 3, 2014), ECF No. 164.
4
RICOs legislative history shows that the statute was enacted to promote the eradication of
organized crime in the United States by providing enhanced sanctions and new remedies to
deal with the unlawful activities of those engaged in organized crime. Chao Fan Xu, 706 F.3d
at 978 (emphasis omitted) (quoting Organized Crime Control Act of 1970, Statement of Findings
10
Congress was unconcerned with the actions of foreign enterprises where those actions violated
the laws of this country while the defendants were in this country. Id. (emphasis added).
As a result, under Chao Fan Xu and similar pattern-camp cases, the dispositive question
becomes where the defendants engaged in the alleged racketeering activity. If, taken as a
whole, the defendants conduct violated the laws of this country while the defendants were in
this country, then the defendants have engaged in the sort of pattern[] of organized criminal ac-
tivity in the United States that may constitute a domestic application of RICO. Id. at 978. Con-
versely, if the defendants alleged racketeering activity, taken as a whole, occurred outside the
United States, then the application of RICO is extraterritorial and impermissible.
10
That is so even if the pattern allegedly includes domestic conduct. Given that the extrater-
11
ritoriality canon is not a timid sentinel, Morrison, 561 U.S. at 266, isolated domestic conduct
12
does not permit RICO to apply to what is essentially foreign activity. United States v. Philip
13
Morris USA, Inc., 783 F. Supp. 2d 23, 29 (D.D.C. 2011); accord, e.g., Goodwin v. Bruggeman-
14
Hatch, No. 13cv02973REB, 2014 WL 3882183, at *1 (D. Colo. Aug. 7, 2014). Post-
15
Morrison courts have [thus] had no difficulty concluding that far-flung foreign schemes conduct-
16
ed by foreign actors and implicating only incidental U.S. conduct are fundamentally extraterrito-
17
rial and thus beyond the reach of RICO. Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.,
18
871 F. Supp. 2d 933, 938 (N.D. Cal. 2012). And so the fact that foreign racketeering activity may
19
be linked to domestic financial transactions does not make a RICO claim domestic: a foreign
20
scheme remains beyond the reach of RICO even if the fraud resulted in some of the money
21
reaching the United States. Chao Fan Xu, 706 F.3d at 978; accord Perkumpulan Investor Crisis
22
Ctr. DresselWBG v. Wong, No. C091786JCC, 2014 WL 1047946, at *9 n.8 (W.D. Wash.
23
Mar. 14, 2014) (same, citing Chao Fan Xu). Likewise, [p]ost-extortion money laundering be-
24
tween U.S. and foreign bank accounts is not sufficient and too peripheral to support a do-
25
mestic RICO claim, as it cannot change the essentially foreign nature of the racketeering ac-
26
27
28
and Purpose, Pub. L. No. 91452, 84 Stat. 922 (1970), reprinted in 1970 U.S. CODE CONG. &
ADMIN. NEWS 1073); accord Hourani v. Mirtchev, 943 F. Supp. 2d 159, 165 (D.D.C. 2013).
11
tivity in this case. Hourani v. Mirtchev, 943 F. Supp. 2d 159, 165 n.9, 167 (D.D.C. 2013). 5
Correlatively, the fact that particular predicate acts may fall within the territorial scope of
an underlying predicate-act statutelike mail fraud, which has no extraterritorial reach, or money
laundering, which doesdoes not suffice to turn predominantly foreign activity into a domestic
RICO pattern. [I]n the RICO context, multiple courts have held that predicate acts in foreign
countries in violation of statutes with extraterritorial reach are insufficient to rebut the presump-
tion against extraterritoriality of the encompassing statute, RICO. Adhikari v. Daoud & Part-
ners, No. 09cv1237, 2013 WL 4511354, at *7 (S.D. Tex. Aug. 23, 2013) (quoting Asadi v.
G.E. Energy (USA), LLC, No. 4:12345, 2012 WL 2522599, at *5 (S.D. Tex. June 28, 2012),
10
affd, 720 F.3d 620 (5th Cir. 2013)). Put another way, analysis of the location of the pattern of
11
racketeering activity is in direct contrast to the analysis of whether the predicate acts them-
12
selves are extraterritorial in nature. Perkumpulan, 2014 WL 1047946, at *9 n.8. The reason is
13
plain: whether or not a criminal enterprise committed a predicate act with extraterritorial scope
14
, there is no evidence that Congress intended to criminalize foreign racketeering activities un-
15
der RICO. Philip Morris, 783 F. Supp. 2d at 29. And that is why the Ninth Circuit held that
16
courts must look at the pattern of Defendants racketeering activity taken as a whole. Chao
17
Fan Xu, 706 F.3d at 978 (emphasis added).
18
Chao Fan Xu illustrates these points. A jury convicted the defendants of RICO conspira-
19
cy under 18 U.S.C. 1962(d). 706 F.3d at 97374. The defendants scheme consisted of two
20
parts: One part consisted of racketeering activities conducted predominantly in China, and one
21
part consisted of racketeering activities in the United States. Id. at 978. The first part consisted
22
of a scheme to steal funds from the Bank of China. Id. at 972. The RICO predicate acts for
23
that part of the scheme included the laundering of stolen funds in the United States, for which the
24
25
26
27
28
See also, e.g., Petrleos Mexicanos v. SK Engg & Constr. Co., No. 12 Civ. 9070 LLS, 2013
WL 3936191, at *3 (S.D.N.Y. July 30, 2013) (fact that fraudulent payments were made from and
sent to banks in the United States fail[ed] to shift the weight of the fraudulent scheme away from
Mexico and was held insufficient to state domestic RICO claim), affd, 572 F. Appx 60 (2d Cir.
2014); Republic of Iraq v. ABB AG, 920 F. Supp. 2d 517, 543 (S.D.N.Y. 2013) ([P]eripheral
contacts with the United Statesup to and including the use of a domestic bank accountdo not
bring an otherwise foreign scheme within the reach of the RICO statutes.), affd, 768 F.3d 145
(2d Cir. 2014).
12
defendants were also convicted under 18 U.S.C. 1956(h), a money laundering conspiracy law
that covers money stolen from foreign banks, see id. 1956(c)(6)(B), (7)(B)(iii). Chao Fan Xu,
706 F.3d at 97374. The Court of Appeals held that only the schemes second part bound the
Defendants enterprise to the United States. Id. at 978. To escape Chinese law enforcement, the
defendants absconded to America using fraudulent visas and passports, thus engaging in rack-
eteering activities conducted within the United Statesnamely, immigration fraud. Id.
Though it upheld the convictions because the error was harmless beyond a reasonable
doubt, id. at 979 n.2, 6 the Ninth Circuit squarely held that the first, extraterritorial part of the
scheme should never have gone to the jury. It was constitutional error for the jury to be instruct-
10
ed on the first part of the indictment, to the extent that this part of the indictment was predicat-
11
ed on extraterritorial activity that is not a basis for RICO liability. Id. It made no difference that
12
this extraterritorial part of the scheme involved money laundering and transporting stolen money
13
in the United States, see United States v. Chao Fan Xu, No. 2:02cr00674PMP, 2008 WL
14
1315632, at *12 (D. Nev. Apr. 10, 2008), for which the defendants were separately convicted,
15
see 706 F.3d at 97982. For to the extent it was predicated on extraterritorial activity, the first
16
part of the casethe Bank of China fraudwas beyond the reach of RICO even if the bank
17
fraud resulted in some of the money reaching the United States. Chao Fan Xu, 706 F.3d at 978.
18
C.
19
Chao Fan Xu and the other pattern-camp cases make clear that Pemexs claims exceed
20
21
22
23
24
25
26
The alleged pattern of racketeering activity here is

extraterritorial and thus beyond the scope of RICO.
the territorial scope of civil RICO. Howard v. Maximus, Inc., No. 3:13cv01111ST, 2014 WL
3859973, at *5 (D. Or. May 6, 2014) (applying Chao Fan Xu to civil RICO), report and recommendation adopted, 2014 WL 3866419 (D. Or. Aug. 6, 2014). Here, in Counts One and Three of
their complaint, Mexican plaintiffs allege that a Mexican defendant, in Mexico, bribed the Mexican plaintiffs Mexican officers through the use of Mexican intermediaries, to win contracts executed and performed in Mexico, all supposedly injuring the Mexican plaintiffs in Mexico.
6
27
28
The court found that the evidence was overwhelming as to the second part of the indictment, the domestic immigration-fraud piece of the case, and held that the jury would have
convicted on the basis of that evidence alone. Id. (citation omitted).
13
Again and again, the complaint emphasizes how Mexicans bribed Mexicans through other
Mexicans in Mexico to get Mexican business: HP Mexico sales managers decided to make
payments to a Mexican information-technology consulting company [Intellego] in order to ob-
tain the BTO business. Compl. 28 (emphasis added). HP Mexico agreed to pay Intellego an
influencer fee. Id. 30 (emphasis added). Because Intellego was not a pre-approved channel
partner, HP Mexico executives also arranged for another entity , [one that] was already an ap-
proved Mexico channel partner, to join the enterprise. Id. 33 (emphasis added). HP Mexico
signed the contracts with Pemex . Id. 38 (emphasis added). HP Mexico received and paid
invoices from the Pass-Through Partner. Id. 3943. HP Mexico transferred these funds to the
10
Pass-Through Partner with the intent and knowledge that the Pass-Through Partner would, and
11
indeed, did, transfer funds to Intellego for the purpose of making payments to an entity controlled
12
by Reynaud Aveleyra, a [Mexican] public official, for his use and benefit in Mexico, all as a
13
quid pro quo for awarding HP Mexico the BTO contracts. Id. 134, 135 (emphasis added). In
14
short, HP Mexico implemented [the alleged] pattern of bribery, kickbacks, and corruption.
15
Id. 112 (emphasis added).
16
Even more extraterritorial are Counts Two and Four. Those claims toss in allegations
17
about alleged bribery in Russia and Poland, allegations that have nothing to do with Pemex, and
18
that couldnt possibly have caused Pemex, in Mexico, any harm at all. And so Pemex pleads that
19
HP Russia paid bribes to government officials in Russia to secure a government tender
20
[from] the Office of the Prosecutor General of Russia. Id. 65 (emphasis added). One interme-
21
diary was located in Germanyand aptly named the German Agent. Id. 76 (emphasis
22
added). Other go-betweens included a Swiss company and a shell compan[y] registered in
23
the United Kingdom. Id. 71, 74 (emphasis added). The German Agent wired euros to the
24
Latvian and Lithuanian accounts of other shell companies controlled by the Russians. Id. Ex. 2,
25
at 67 (emphasis added). The whirlwind European tour concludes with a separate set of allega-
26
tions about HP Poland, which is alleged to have made unlawful payments to a Polish gov-
27
ernment official in order to secure and maintain lucrative contacts with the Polish national po-
28
lice agency. Compl. 8788 (emphasis added).

14
In contrast to these far-reaching allegations of foreign misconduct, the alleged schemes
connections to the United States are plainly too isolated, Philip Morris, 783 F. Supp. 2d at 29,
too incidental, Mitsui O.S.K. Lines, 871 F. Supp. 2d at 938, and too peripheral, Hourani,
943 F. Supp. 2d at 167 (citation omitted), to support a RICO claim. The complaint alleges that
HP Mexico paid some invoices in dollars though a U.S. bank, Compl. 4244; but the law is
clear that a foreign scheme remains beyond the reach of RICO even if money reach[es] the
United States. Chao Fan Xu, 706 F.3d at 978; see, e.g., Perkumpulan, 2014 WL 1047946, at *9
n.8; Hourani, 943 F. Supp. 2d at 165 n.9, 167; Petrleos Mexicanos v. SK Engg & Constr. Co.,
No. 12 Civ. 9070 LLS, 2013 WL 3936191, at *3 (S.D.N.Y. July 30, 2013); Republic of Iraq, 920
10
F. Supp. 2d at 543. The complaint also alleges that the defendants invited Pemexs Reynaud to
11
attend various marketing events in the United States. Even if those alleged invitations could be
12
characterized as criminal, these allegations scrape the bottom of the small domestic barrel: the
13
complaint makes no suggestion that the invitations had any connection to HP Mexicos and
14
Pemexs entry into the BTO contracts; indeed, many of them were extended after the BTO con-
15
tracts were signed in late December 2008, and after the last payments were made by Intellego in
16
March 2009. Compl. 48-50, 54, 55. These minor, peripheral contact[s] with the territory of
17
the United States plainly do not suffice to cause extraterritorialitys watchdog [to] retreat[] to
18
its kennel. Morrison, 561 U.S. at 266.
19
Nor are plaintiffs RICO claims saved by their conclusory allegations that HP officials
20
located in California somehow approved the payment of an influencer fee to Intellego, and
21
otherwise directed the enterprise from the United States. Compl. 31, 161. Even if those
22
flimsy assertions could be credited under Twombly and Iqbal, the complaint itself diminishes their
23
importance: it repeatedly asserts that HP Mexico personnel pulled the wool over HPs eyes, cir-
24
cumventing HPs internal controls, and misleading the Americans about the nature of the pay-
25
ments being made. 7 Even leaving aside plaintiffs blatant self-contradiction, mere agreement
26
27
28
See, e.g., Compl. 112 (alleging circumvention of HPs internal controls); id. Ex. 2, at 11
(stating that HP Mexico evade[d] HPs policies requiring pre-approval of channel partners and
obtained authorization for the increased deal commission without describing the true reason for
the increase); id. Ex. 1, at A5 (stating that HP Mexico sent an email claiming that an increased
15
from the United States to commit racketeering abroad cannot paint over [a] foreign scheme
with a domestic brush, because, [a]s the Ninth Circuit stated in Chao Fan Xu, we look not
upon the place where the deception originated but instead upon the connection of the challenged
conduct to the proscription in the statute. Hourani, 943 F. Supp. 2d at 168 (quoting Chao Fan
Xu, 706 F.3d at 979 (quoting Morrison, 561 U.S. at 266)). The law in this circuit is clear: RICO
extends only to domestic perpetration of the racketeering activity, regardless of the location in
which the enterprise hatched, and so what matters is where the racketeering activity was exe-
cuted, not where it was conceived and planned. Howard, 2014 WL 3859973, at *5. Plaintiffs
unsupported, self-contradicted claims of control from California thus cannot rescue their case.
10
Given the pervasiveness of the foreign activity and the peripherality of the domestic con-
11
duct, Counts One through Four constitute an improper extraterritorial application of RICO.
12
Chao Fan Xu, 706 F.3d at 979. A look at the pattern of Defendants racketeering activity taken
13
as a whole makes clear that those claims plead racketeering activities conducted predominant-
14
ly abroad, and thus allege extraterritorial activity [that] is beyond the reach of RICOnot
15
patterns of organized criminal activity in the United States, or violations committed while the
16
defendants were in this country, as the presumption against extraterritoriality requires. Id. at
17
978. In short, as one district court observed in dismissing a similar RICO complaint brought by
18
Pemex involving another of its bribery scandals: The defendants [alleged] bribery of PEMEX
19
officials all occurred in Mexico. Thus, it is implausible to accept that the thrust of the pattern
20
of racketeering activity was directed at the United States. Petrleos Mexicanos, 2013 WL
21
3936191, at *3 (quoting Republic of Iraq, 920 F. Supp. 2d at 546).
22
23
24
25
26
27
28
D.
The alleged losses here are unquestionably extraterritorial

and thus beyond the scope of RICO.
That suffices to dispose of Pemexs RICO claims as impermissibly extraterritorial, but

there is a second, independent, and even simpler basis to reach that result as well. Pemex asserts
that defendants violated Sections 1962(c) and 1962(d), but those provisions are actually not the
commission was warranted because of extra work and the successful[] manage[ment] [of] discounts with Pemex).
16
provisions upon which its private right of action is based. Sections 1962(c) and 1962(d) define
the alleged violations of law; but it is Section 1964(c) that gives a right to sue: in pertinent part,
Section 1964(c) provides that [a]ny person injured in his business or property by reason of a vio-
lation of section 1962 may sue therefor and shall recover threefold the damages he sustains
. 18 U.S.C. 1964(c). Needless to say, that language gives no clear indication of an extra-
territorial application. Morrison, 561 U.S. at 255. Accordingly, it has none. Id.
As a result, the question arises: do plaintiffs here seek a domestic application of Section
1964(c), or an extraterritorial one? To answer that question, Morrison requires the Court to de-
termine what the focus of congressional concern was in the enactment of Section 1964(c).
10
Morrison, 561 U.S. at 266 (quoting Aramco, 499 U.S. at 255); see also Kiobel, 133 S. Ct. at 1670
11
(Alito, J., concurring). The Court must look for the objects of [Section 1964(c)s] solicitude.
12
Morrison, 561 U.S. at 267. And in contrast to the search for the focus of Section 1962, with its
13
references to enterprise and pattern and racketeering, the focus of Section 1964(c), the ob-
14
ject of its solicitude, is quite plain. Section 1964(c) focuses on just one thing: damages, in-
15
jur[y] [to] business or property. 18 U.S.C 1964(c). As a result, just as Title VII was held in
16
Aramco to apply only to domestic employment, and just as Section 10(b) was held in Morrison
17
to apply only to purchases and sales of securities in the United States, Section 1964(c) can only
18
be invoked to remedy injury and damage to property in the United States. Morrison, 561 U.S. at
19
266 (citing Aramco, 499 U.S. at 247, 255).
20
That is fatal to Pemexs RICO claims, because even Pemex does not contend that it suf-
21
fered injury anywhere but Mexico.8 And it would be fatal even if it were assumed that the far-
22
flung pattern of racketeering that Pemex alleges was somehow domestic, because the question of
23
the territorial reach of a remedy provision is independent of the question of the territorial reach of
24
an underlying statutory prohibition. Loginovskaya v. Batratchenko, 764 F.3d 266 (2d Cir. 2014),
25
was a Commodity Exchange Act case in which a Russian plaintiff sued under the laws private-
26
right provision, Section 22, 7 U.S.C. 25, seeking recovery of losses from the American defend-
27
28
See, e.g., Compl. 141 (alleging millions of dollars of harm from the acceptance of harmful contractual terms and the payment of significant cost overchargesin Mexico).
17
ants alleged violations of a substantive provision, Section 4o, 7 U.S.C. 6o. 764 F.3d at 268
69. Examining the text of Section 22, the court concluded that its focus was on transactions,
and that, as a result, given the absence of any indication of extraterritorial reach, a suit under Sec-
tion 22 must be based on transactions occurring in the territory of the United States. Id. at 272.
Affirming the dismissal of the complaint on this ground, the court saw no need to address the
plaintiffs claim that Section 4o reach[ed] more broadly because its focus was on domestic
commodities market participantslike the American defendantand not domestic transac-
tions. Id. at 275. That argument, the court acknowledged, was not without merit. Id. But
meritorious or not, the argument could not change the outcome: because the claim exceeded the
10
territorial scope of the remedy provision, the dismissal had to stand, and we do not have to de-
11
cide how the presumption against extraterritorial effect defines the reach of 4o. Id. 9
12
So it is here. The focus of Section 1964(c) is domestic injury to business or property.
13
Pemex has alleged none. And so regardless of whether it has alleged a domestic pattern of rack-
14
eteering under Chao Fan Xu (which it has not), Pemexs RICO claims must be dismissed. 10
15
II.
16
EVEN APART FROM EXTRATERRITORIALITY,

PLAINTIFFS FAIL TO ALLEGE A PATTERN OF
RACKETEERING ACTIVITY.
17
Even apart from being impermissibly extraterritorial, plaintiffs RICO claims also fail to
18
allege with the requisite particularity an essential element of a RICO claima pattern of racket-
19
eering activity. 18 U.S.C. 1962(c). 11 A pattern of racketeering activity requires the com-
20
21
22
23
24
25
It is true that, on panel rehearing in European Community v. RJR Nabisco, Inc., the Second
Circuit rejected the argument that Section 1964(c) imposes a domestic injury requirement. 764
F.3d 129, 151 (2d Cir. 2014) (per curiam). But that holding was based upon the panels earlier
holding that RICO may be applied extraterritorially to the extent that violations of extraterritorial
predicate-act statutes are at issue, id.a dubious holding that contradicts not only Chao Fan Xu,
but the Second Circuits prior precedents, see n.3, above. And quite obviously the holding on
panel rehearing in European Community also cannot be reconciled with the courts treatment of
the Commodity Exchange Act just two weeks later by the panel in Loginovskaya. As noted
above, a renewed petition for rehearing en banc remains pending in European Community. See
n.3, above.
10
26
27
28
The RICO conspiracy counts (Counts Three and Four) are subject to dismissal for the same
reasons as Counts One and Two. See, e.g., Republic of Iraq, 920 F. Supp. 2d at 529, 54346 (applying same analysis to RICO and RICO conspiracy claims, and dismissing on same grounds).
11
[P]laintiffs must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (5) causing injury to plaintiffs business or property. Ove v. Gwinn, 264 F.3d
18
mission of at least two instances of predicate acts within ten years of one another. See 18
U.S.C. 1961(5). To establish the requisite pattern of activity, a plaintiff must show that the
predicate acts amount to, or constitute a threat of, continuing racketeering activity. H.J. Inc. v.
Nw. Bell Tel. Co., 492 U.S. 229, 24142 (1989). That continuity requirement demands either a
series of related predicates extending over a substantial period of time [i.e., closed-ended continu-
ity], or past conduct that by its nature projects into the future with a threat of repetition [i.e.,
open-ended continuity]. Id. None of the RICO counts alleges conduct that presents a threat of
repetition in the future sufficient to establish open-ended continuity, or the substantial pattern of
related racketeering activity required to establish closed-ended continuity.
10
To begin with, as for open-ended continuity, the complaint itself describes each purported
11
enterprises activities in the past tense. 12 Understandably so. The last acts relating to alleged
12
schemes purportedly took place in 2006 (Russia), 2009 (Mexico), and 2010 (Poland). The com-
13
plaint alleges nothing beyond that, nothing suggesting any threat of repetition in the future. As
14
such, plaintiffs fail to plead open-ended continuity with respect to any of their RICO counts.
15
As for closed-ended continuity, Pemexs stand-alone claims about HP MexicoCounts
16
One and Threefail to establish it because the alleged racketeering activity did not occur over a
17
substantial period of time. Predicate acts extending over a few weeks or months and threatening
18
no future criminal conduct do not satisfy [the closed-ended continuity] requirement: Congress
19
was concerned in RICO with long-term criminal conduct. H.J., 492 U.S. at 242. Indeed, as the
20
Ninth Circuit has observed: We have found no case in which a court has held the requirement to
21
be satisfied by a pattern of activity lasting less than a year. Religious Tech. Ctr. v. Wollersheim,
22
971 F.2d 364, 36667 (9th Cir. 1992).

All that Pemex manages to plead here, however, is a mere three months. The complaint
23
24
25
26
27
28
817, 825 (9th Cir. 2001) (quoting 18 U.S.C. 1964(c)). Because the complaint pleads fraud,
Rule 9(b) applies to plaintiffs RICO claims. See pp. 67, above.
12
E.g., Compl. 130 (Defendants HP and HP Mexico along with Intellego and the Pass
Through Partner were an association-in-fact enterprise. (emphasis added)); id. 144 (Defendants HP and HP Mexico, along with HP Poland, HP Russia, and other partners who acted as intermediaries and agents, were an association-in-fact enterprise. (emphasis added)).
19
alleges predicate acts that started in December 2008, when HP Mexico signed the contracts with
Pemex, Compl. 38, and that continued until March 2009, when the final payments were alleged-
ly made by Intellego to Reynaud. Id. 138. Three months simply does not suffice.
And Pemexs artificial attempt to extend the alleged Mexican scheme back a few months
fails as a matter of law. Pemex asserts that [t]he enterprise functioned together from at least
January 2008 when members of the enterprise targeted Plaintiffs by beginning discussions with
Reynaud . Id. 130. But that is a naked conclusion, insufficient to survive Twombly and Iq-
bal, let alone Rule 9(b). And even if this raw conclusion could be credited, it merely alleges pre-
liminary discussions that are, at best, preparatory acts and not crimes, and thus cannot be consid-
10
ered part of a pattern of racketeering activity. 13 In Turner v. Cook, 362 F.3d 1219 (9th Cir.
11
2004), the Ninth Circuit rejected a similar attempt to expand the duration of racketeering activity
12
with allegations of sporadic[] communications that occurred a year before the two-month peri-
13
od in which almost all of the alleged predicate acts occurred. Id. at 1231. This Court should do
14
the same and dismiss Counts One and Three.
15
Equally unavailing is plaintiffs transparent effort in Counts Two and Four to create
16
closed-ended continuity by tacking on allegations about HP Russia and HP Poland. Those allega-
17
tions have absolutely nothing to do with Pemex and the HP Mexico BTO contracts. That proves
18
fatal to Counts Two and Four: there must be a real connection between predicate acts in order to
19
establish a pattern. [T]he term pattern itself requires the showing of a relationship between the
20
predicates, and [i]t is this factor of continuity plus relationship which combines to produce a
21
pattern. H.J., 492 U.S. at 239 (quoting legislative history; emphasis and internal quotation
22
marks omitted in part). As a result, a plaintiff must show that the racketeering predicates are re-
23
lated. Id. (emphasis added). Related conduct embraces criminal acts that have the same or
24
similar purposes, results, participants, victims, or methods of commission, or otherwise are inter-
25
26
27
28
13
See, e.g., Corrie v. Caterpillar, Inc., 403 F. Supp. 2d 1019, 102829 (W.D. Wash. 2005)
(preparatory acts that were not crimes could not be considered as part of the pattern of racketeering activity); Comm. to Defend U.S. Constitution v. Moon, 776 F. Supp. 568, 573 (D.D.C. 1991)
(where defendants allegedly performed a series of preparatory acts which culminated in a single
wrongful diversion of funds the requisite continuity is absent).
20
related by distinguishing characteristics and are not isolated events. Howard v. Am. Online,
Inc., 208 F.3d 741, 749 (9th Cir. 2000) (quoting H.J., 492 U.S. at 239).
Counts Two and Four thus fail because they are based on three entirely separate and unre-
3
4
lated schemes.
There are no factual allegations establishing any relationship between the
schemes or that the participants made any attempt to work in any coordinated fashion toward a
common goal. See, e.g., Mohebbi v. Khazen, No. 13cv03044BLF, 2014 WL 2861146, at *13
(N.D. Cal. June 23, 2014) (dismissing RICO claim where complaint g[ave] the Court no infor-
mation as to the form or structure of that enterprise, the ways in which decisions are made in the
enterprise, or even the hierarchy of the alleged actors in the enterprise). Rather, there is only
10
Pemexs conclusory allegation that HP directed the enterprise from its offices in the United
11
States and shared information and strategies between HP Russia, HP Poland, and HP Mexico.
12
Compl. 146. Pemex does not allege what actions HP took to direct the purported enterprise
13
or what information and strategies was shared. Nor could it: as the DOJ and SEC fact state-
14
ments incorporated into Pemexs complaint make clear, the U.S. parent HP did not know of the
15
isolated instances of misconduct at HP Russia, HP Poland, and HP Mexico. Id. Exs. 1, 2.
16
Courts routinely reject such attempts to transform disparate schemes into a RICO pattern.
17
For example, in Howard, plaintiffs alleged that defendants engaged in a scheme of improperly
18
billing subscribers for services and also induced a supplier to expand its operations through false
19
representations. See Howard, 208 F.3d at 746, 74849. The Ninth Circuit found that, even
20
though the same defendants were allegedly involved, the violations relating to the fraudulent in-
21
ducement of the supplier were not sufficiently related to the other alleged predicate acts to form a
22
RICO pattern. See id. at 749. 14 Counts Two and Four are equally flawed here.
23
III.
PLAINTIFFS RICO CLAIMS ARE TIME-BARRED.

Plaintiffs RICO claims are governed by a four-year statute of limitations. Agency Hold-
24
25
26
27
28
14
See also Straightshot Commcns v. Telekenex, Inc., No. C10268Z, 2011 WL 1770935, at
*5 (W.D. Wash. May 9, 2011) (schemes against third parties with different participants, different victims, different results, and different methods were unrelated to scheme that allegedly injured plaintiffs and did not establish RICO pattern); Hardisty v. Moore, No. 11cv1591
AJB, 2012 WL 1564533, at *45 (S.D. Cal. May 2, 2012) (allegations of separate scheme conducted by same participants against third parties were not sufficiently related to plead pattern).
21
ing Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156 (1987). And under the Ninth Circuits
injury discovery rule, the civil RICO limitations period begins to run when a plaintiff knows
or should know of the injury that underlies his cause of action. Pincay v. Andrews, 238 F.3d
1106, 1109 (quoting Grimmett v. Brown, 75 F.3d 506, 510 (9th Cir. 1996)). The plaintiff is
deemed to have had constructive knowledge [of its injury] if it had enough information to warrant
an investigation which, if reasonably diligent, would have led to discovery of the fraud. Id. at
1110 (quoting Beneficial Standard Life Ins. Co. v. Madariaga, 851 F.2d 271, 275 (9th Cir.
1988)). Here, plaintiffs filed their complaint on December 2, 2014. If Pemex was on actual or
constructive notice of its injury before December 2, 2010, its RICO claims are stale.
10
That is the case here. The essence of the RICO claims is that defendants bribed Pemex of-
11
ficials to induce Pemex into entering into contracts with HP Mexico in December 2008. Compl.
12
2164. Indeed, Pemex repeatedly articulates its injury as the acceptance of harmful contrac-
13
tual terms and the payment of significant cost overcharges. E.g., id. 3, 141. Fundamental to
14
plaintiffs theory is that their agentstheir Chief Operating Officer and Reynaudwere fully
15
aware of this supposed injury. As such, their knowledge is imputed to Pemex. See, e.g., CAL.
16
CIV. CODE 2332 (West) ([B]oth principal and agent are deemed to have notice of whatever ei-
17
ther has notice of .); Moore v. Phillips, 1 Cal. Rptr. 508, 512 (Cal. Dist. Ct. App. 1959) (That
18
a corporation can have knowledge only through its officers and agents is elementary. (citation
19
omitted)). Because the last event alleged in the complaint having anything to do with HP Mexico
20
and Pemex occurred in June 2009, Compl. 2, 55, 130, Pemexs RICO claims are time-barred. 15
21
Aware of this fatal defect, plaintiffs apparently invoke the narrow exception to imputation
22
known as the adverse agent doctrine. They plead that the Chief Operating Officer and Rey-
23
naud Aveleyra had abandoned their relationship with Pemex and were acting directly adverse
24
25
26
27
28
15
Plaintiffs plead that the HP Poland scheme at issue in Counts Two and Four continued
through 2010, Compl. 87, but that has no bearing on the statute-of-limitations analysis here.
Under the Ninth Circuits separate accrual rule, the four-year limitations period can only be reset if the new act inflict[s] new and accumulating injury on the plaintiff. Just Film, Inc. v.
Merch. Servs., Inc., No. C 101993 CW, 2010 WL 4923146, at *15 (N.D. Cal. Nov. 29, 2010)
(quoting Grimmett, 75 F.3d at 513). Because HP Polands conduct in Poland inflicted no new
and accumulating injury on Pemex, there can be no claim that the statute of limitations began to
run sometime in 2010.
22
to Pemexs interests. Id. 60. Although knowledge acquired by an agent acting adversely to his
principal is not imputed to the principal, California courts have drawn a distinction between situ-
ations in which the agent acts in an adverse capacity and those in which the agent acts for the
principal but has a personal adverse interest. 3 BERNARD E. WITKIN, SUMMARY OF CALIFORNIA
LAW Agency 156(2) (10th ed. 2010); see also Pincay, 238 F.3d at 1109 ([C]onstructive notice
begins to run the statute of limitations regardless of any fiduciary relationship between the injured
and the injurer.). And [t]he adverse interest exception is narrow and generally requires an
agent to completely abandon the principals interests and act entirely for his own purposes.
Cement & Concrete Workers Dist. Council Pension Fund v. Hewlett Packard Co., 964 F. Supp.
10
2d 1128, 1144 (N.D. Cal. 2013) (quoting USACM Liquidating Trust v. Deloitte & Touche
11
LLP, 764 F. Supp. 2d 1210, 1218 (D. Nev. 2011); emphasis added).
12
Plaintiffs allegations of their own officials involvement represent precisely the latter sit-
13
uation described by Witkin. The only Pemex official alleged to have any involvement in the ne-
14
gotiations regarding the BTO contracts is Reynaud. See Compl. 2229. Reynaud was a key
15
signatory on behalf of Pemex for the BTO Deal, id. Ex. 1, at A3, and had significant responsi-
16
bilities for the BTO contracts. Compl. 29. While plaintiffs offer the conclusory assertion that
17
the COO and Reynaud were acting solely for their own personal benefit and directly adverse
18
to Pemexs interests, id. 60, plaintiffs make no allegation that Pemex did not receive the full
19
value of the products and services that they contracted for or that the products and services pro-
20
vided by HP Mexico were in any way defective. Reynaud was plainly acting on behalf of Pemex
21
in his capacity as CIO; he negotiated the BTO contracts and signed them on behalf of Pemex.
22
The adverse agent doctrine does not apply where a corporation benefits from the agents con-
23
duct, even when the net result may be detrimental to the corporations interest. In re Am. Contl
24
Corp./Lincoln Sav. & Loan Sec. Litig., 794 F. Supp. 1424, 1463 (D. Ariz. 1992) (citing
25
RESTATEMENT (SECOND) OF AGENCY 282 (1958)). As such, it does not apply here.
26
But even if the COOs and Reynauds knowledge could not be imputed to Pemex, plain-
27
tiffs allegations reveal that they had more than enough information to warrant an investigation
28
which, if reasonably diligent, would have led to discovery of their alleged injury. Pincay, 238
23
F.3d at 1110. Pemexs COO was a former principal of Intellego and HP Mexico retained In-
tellego because of its connection to Pemexs Chief Operating Officer, Reynaud Aveleyra,
and other Pemex officials. Compl. 29. Reynaud allegedly met and spoke with Intellego both
before and after the signing of the BTO contracts, see id. 29, 53, and HP Mexico allegedly of-
fer[ed] him lavish trips, gifts, and entertainment, which continued through the performance of the
BTO contracts. Id. 130. The Supreme Court has deliberately emphasized that in the context
of a civil RICO case, the bar is raised in terms of a Plaintiffs obligation to act swiftly and with
diligence to ascertain and act on a RICO injury. Town of Poughkeepsie v. Espie, 402 F. Supp.
2d 443, 456 (S.D.N.Y. 2005); see Klehr v. A.O. Smith Corp., 521 U.S. 179, 195 (1997) (plaintiffs
10
cannot rely on the fraudulent concealment doctrine absent reasonable diligence). Here, plain-
11
tiffs do not plead that they undertook any acts to investigate any potential misconduct by their
12
officers, Intellego, or HP Mexico. Instead, they simply allege that they heard about the scheme
13
when it was publicly announced by the United States government. Compl. 120. That is not re-
14
motely sufficient. Plaintiffs had substantial information to warrant an investigation into the ne-
15
gotiation of the BTO contracts in 2008 and 2009. Pincay, 238 F.3d at 1110. Having sat idly by,
16
they cannot nowalmost six years latercomplain of an alleged injury.
17
IV.
PLAINTIFFS STATE LAW CLAIMS SHOULD BE DISMISSED.
18
A court may decline to exercise supplemental jurisdiction over a [state law] claim if
19
the district court has dismissed all claims over which it has original jurisdiction. 28 U.S.C.
20
1367(c)(3). While the statute confers discretion, [i]n the usual case in which all federal-law
21
claims are eliminated before trial, the balance of factors to be considered under the pendent juris-
22
diction doctrinejudicial economy, convenience, fairness, and comitywill point toward declin-
23
ing to exercise jurisdiction over the remaining state-law claims. Alda v. SBMC Mortg., No. 11
24
cv00678LHK, 2012 WL 10589, at *5 (N.D. Cal. Jan. 3, 2012) (quoting Carnegie-Mellon Univ.
25
v. Cohill, 484 U.S. 343, 350 n.7 (1988)); see also Montazer v. SM Stoller, Inc., 363 F. Appx 460,
26
462 (9th Cir. 2010) (After dismissal of federal claims on the merits, the preferable course of ac-
27
tion is dismissal of the remaining claims without prejudice.).
28
This case is no exception. It is at the pleading stage, no discovery has been taken, and
24
[j]udicial resources [would be] conserved by dismissing the case at this stage. Smith v. Cnty. of
Santa Cruz, No. 13cv00595LHK, 2013 WL 6185238, at *7 (N.D. Cal. Nov. 26, 2013) (de-
clining to exercise supplemental jurisdiction over state law claims after dismissing RICO claim,
among other federal claims). Moreover, dismissal promotes comity as it [would] enable[] Cali-
fornia courts to interpret the application of Section 17200 of the California Business and Profes-
sions Code, as called for by Counts Five and Six. Id. The exercise of supplemental jurisdiction
would be particularly inapt here, where Mexican plaintiffs accuse Mexican entities of banding
together to bribe Mexican officials, resulting in alleged injury to them in Mexico, and requiring
the application and interpretation of Mexican law. 16
10
Even if this Court were to reach the merits of plaintiffs claim under Californias Unfair
11
Competition Law (the UCL), that claim suffers from the same infirmity as plaintiffs RICO
12
claims. Like RICO, the UCL does not apply extraterritorially. See Sullivan v. Oracle Corp., 254
13
P.3d 237, 248 (Cal. 2011). To state a UCL claim, plaintiffs must allege an illegal act within Cali-
14
fornia. See id. But plaintiffs make only vague and conclusory allegations that HP directed the
15
affairs of the criminal enterprise from its offices in the United States, Compl. 175, and that HP
16
officials in California approved HP Mexicos requests for the deal commission. Id. Such conclu-
17
sory allegations are insufficient. See Gustafson v. BAC Home Loans Servicing, LP, No. CV 11
18
915JST, 2012 WL 4761733, at *5-6 (C.D. Cal. Apr. 12, 2012) (conclusory allegation that
19
scheme was directed from defendants offices in California was insufficient to apply UCL).
20
CONCLUSION
It is respectfully submitted that the complaint should be dismissed in its entirety.
21
22
23
24
25
26
27
28
16
When a federal court exercises supplemental jurisdiction over state law claims, it applies
the choice-of-law rules of the forum state. Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96
F.3d 1151, 1164 (9th Cir. 1996). Under Californias choice-of-law rules, [t]he state with the
predominant interest in controlling conduct normally is the state in which such conduct occurs
and is most likely to cause injury. Castro v. Budget Rent-A-Car Sys., Inc., 154 Cal. App. 4th
1162, 1180 (Cal. Ct. App. 2007) (internal quotations marks and citation omitted); Blankenship v.
Medtronic, Inc., No. cv 127884 BRO, 2013 WL 3322031, at *3 (C.D. Cal. June 7, 2013)
([G]iven that this case is brought by a Missouri resident and the conduct at the heart of the case
took place in Missouri, there is a strong possibility that Missouri law will apply . (citation
omitted)). Here, the conduct and injury occurred in Mexico and it is therefore highly likely that
Mexican law would apply to the common law claims.
25
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3
Dated: February 9, 2015
By:
George T. Conway III

Adam L. Goodman
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
BERGESON, LLP
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Daniel J. Bergeson
Caroline McIntyre
John D. Pernick
San Jose, California 95110
Telephone: (408) 291-6200
Facsimile: (408) 297-6000
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Case5:14-cv-05292-BLF Document30-1 Filed02/09/15 Page1 of 2
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DANIEL J. BERGESON, SBN 105439, [email protected]

CAROLINE MCINTYRE, SBN 159005, [email protected]
JOHN D. PERNICK, SBN 155468, [email protected]
BERGESON, LLP
San Jose, CA 95110
Telephone: (408) 291-6200
Facsimile: (408) 297-6000
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GEORGE T. CONWAY III, appearance pro hac vice

[email protected]
ADAM L. GOODMAN, appearance pro hac vice
[email protected]
51 West 52nd Street
New York, NY 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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PETRLEOS MEXICANOS, and PEMEX

EXPLORACIN Y PRODUCCIN,
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Plaintiffs,
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v.
HEWLETT-PACKARD COMPANY,
and HEWLETT-PACKARD MEXICO,
S. DE R.L. DE C.V.,
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Defendants.
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[PROPOSED] ORDER GRANTING
DEFENDANTS MOTION TO
DISMISS COMPLAINT
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Case No. CV1405292BLF

DISMISS COMPLAINT
Case5:14-cv-05292-BLF Document30-1 Filed02/09/15 Page2 of 2
This matter came before this Court on the Motion to Dismiss filed by defendants Hewlett-
Packard Company and Hewlett-Packard Mexico, S. de R.L. de C.V under Fed. R. Civ. P. 12(b)(6)
on May 21, 2015, the Honorable Beth Labson Freeman presiding. Having fully considered the
arguments of the parties, both oral and written, together with all papers filed in support of and in
opposition thereto, and being fully advised, the Court hereby GRANTS defendants motion and
DISMISSES plaintiffs Complaint with prejudice and without leave to amend.
IT IS SO ORDERED.
Dated this ____ day of _____________________, 201__.
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HONORABLE BETH LABSON FREEMAN

UNITED STATES DISTRICT JUDGE
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DISMISS COMPLAINT

Pemex Vs HP

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Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page1 of 34

DANIEL J. BERGESON, SBN 105439, [email protected]

GEORGE T. CONWAY III, appearance pro hac vice

Attorneys for Defendants Hewlett-Packard Co.

PETRLEOS MEXICANOS, and PEMEX

Case No. CV1405292BLF

May 21, 2015

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page2 of 34

NOTICE OF MOTION AND MOTION TO DISMISS ................................................................. 1

STATEMENT OF ISSUES TO BE DECIDED ............................................................................. 1

MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 2

STATEMENT OF FACTS ............................................................................................................. 4

PLAINTIFFS RICO CLAIMS ARE IMPERMISSIBLY EXTRATERRITORIAL. .............. 7

There is a strong presumption that federal statutes do not apply

The alleged pattern of racketeering activity here is extraterritorial and thus

EVEN APART FROM EXTRATERRITORIALITY, PLAINTIFFS FAIL TO

PLAINTIFFS RICO CLAIMS ARE TIME-BARRED. ..................................................... 21

IV. PLAINTIFFS STATE LAW CLAIMS SHOULD BE DISMISSED. ................................ 24

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page3 of 34

Adhikari v. Daoud & Partners,

Agency Holding Corp. v. Malley-Duff & Assocs.,

Alda v. SBMC Mortg.,

Allegro Consultants, Inc. v. Wellington

Asadi v. G.E. Energy (USA), LLC,

Bell Atl. Corp. v. Twombly,

Blankenship v. Medtronic, Inc.,

Carnegie-Mellon Univ. v. Cohill,

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page4 of 34

Comm. to Defend U.S. Constitution v. Moon,

EEOC v. Arabian Am. Oil Co.,

Howard v. Maximus, Inc.,

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page5 of 34

Klehr v. A.O. Smith Corp.,

Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.,

Norex Petroleum Ltd. v. Access Indus., Inc.,

Paracor Fin., Inc. v. Gen. Elec. Capital Corp.,

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page6 of 34

Republic of Iraq v. ABB AG,

Smith v. Cnty. of Santa Cruz,

Smith v. United States,

Tapang v. Wells Fargo Bank, N.A.,

Town of Poughkeepsie v. Espie,

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page7 of 34

United States v. Chao Fan Xu,

United States v. Philip Morris USA, Inc.,

Vess v. Ciba-Geigy Corp. USA,

3 BERNARD E. WITKIN, SUMMARY OF CALIFORNIA LAW

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page8 of 34

Organized Crime Control Act of 1970, Statement of Findings

RESTATEMENT (SECOND) OF AGENCY 282 (1958)....................................................................... 23

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page9 of 34

NOTICE OF MOTION AND MOTION TO DISMISS

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

STATEMENT OF ISSUES TO BE DECIDED

the United States, plead extraterritorial RICO claims?

racketeering activity under 18 U.S.C. 1962(c)?

Case5:14-cv-05292-BLF Document30 Filed02/09/15 Page10 of 34