Borrego Community Health Foundation v. Hebets

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 BORREGO COMMUNITY HEALTH Case No.: 3:22-cv-01056-RBM-SBC FOUNDATION, a California Nonprofit 12 Public Benefit Corporation, ORDER GRANTING THE JIM 13 HEBETS DEFENDANTS’ MOTION Plaintiff, TO DISMISS PLAINTIFF’S SECOND 14 v. AMENDED COMPLAINT 15 KAREN HEBETS, et. al., [Doc. 222] 16 Defendants. 17 18 19 Plaintiff Borrego Community Health Foundation (“Plaintiff”) filed a Second 20 Amended Complaint (“SAC”) asserting 73 causes of actions against 39 defendants. (Doc. 21 217 [“SAC”].) In the SAC, Plaintiff alleges that it “was a California nonprofit public 22 benefit corporation operating a Federally Qualified Health Center [(‘FQHC’)]” that 23 provided “healthcare services to historically underserved areas of San Diego, Riverside, 24 and San Bernadino counties.” (SAC ¶ 1.1) Plaintiff then alleges that “individuals and 25 entities both inside and outside of [Plaintiff] siphoned off money from [Plaintiff.]” (Id. ¶ 26 27 1 The Court cites the paragraph numbers of the SAC and the CM/ECF electronic pagination 28 1 2.) These individuals and entities are the named defendants in this action. 2 Pending before the Court are seven motions to dismiss the SAC made by various 3 Defendants or groups thereof. This Order addresses the Motion to Dismiss Plaintiff’s 4 Second Amended Complaint filed by Defendants James (“Jim”) Hebets and The Hebets 5 Company (the “Jim Hebets MTD”). (Doc. 222.) 6 The Court finds this matter suitable for determination without oral argument 7 pursuant to Civil Local Rule 7.1(d)(1). For the reasons discussed below, the Jim Hebets 8 MTD is GRANTED, and Plaintiff’s claims against Defendants Jim Hebets and The Hebets 9 Company are DISMISSED from this action with leave to amend. 10 I. BACKGROUND2 11 A. Factual Background 12 As set forth in the Court’s Order (1) Granting Defendants Premier, Daryl Priest, 13 Nicholas Priest, Travis Lyon’s Motion to Dismiss [Doc. 231]; (2) Granting Defendant 14 Karen Hebets’ Motion to Dismiss and Denying as Moot Her Alternative Motions for a 15 More Definite Statement and to Strike Allegations [Doc. 239]; (3) Granting Defendant 16 Mikia Wallis’ Motion to Dismiss [Doc. 230]; and (4) Granting Defendants Harry Ilsley, 17 Dennis Nourse, Mike Hickok, And Chuck Kimball’s Motion To Dismiss [Doc. 226] (“Prior 18 Order”) (Doc. 299), Plaintiff alleges various fraudulent schemes perpetrated by the named 19 Defendants in this action. The Court summarizes the schemes relevant to Defendants Jim 20 Hebets and The Hebets Company (collectively, the “Jim Hebets Defendants”) here. 21 Defendant Jim Hebets is an individual with his place of residence in Scottsdale, 22 Arizona. (SAC ¶ 41.) Jim Hebets is the brother of Plaintiff’s former CEO—Bruce Hebets. 23 (Id.) “Defendant The Hebets Company is a Missouri Corporation with its principal place 24 of business in Phoenix, Arizona. [Defendant] Jim Hebets is the President and Founder of 25 The Hebets Company and has or had an ownership interest in The Hebets Company. The 26 27 2 The Court’s factual summary below reflects Plaintiff’s factual and legal allegations in its 28 1 Hebets Company provides accounting and consulting services and [holds itself out as an 2 expert] in executive compensation to healthcare providers, including other FQHCs, in 3 California and San Diego County.” (Id. ¶ 42.) The Hebets Company’s website “boasts of 4 specializing in FQHCs and creating ways to increase executive compensation/benefits 5 beyond what is specified in IRS code for qualified 403(b) or 457(b) plans.” (Id. ¶ 456; see 6 also id. ¶ 457.) 7 Plaintiff alleges that its former CEO—Bruce Hebets—and its former executives— 8 Defendants Karen Hebets, Diana Thompson, and Mikia Wallis—received high salaries, 9 bonuses, and/or allowances from Plaintiff. (SAC ¶¶ 407–10.) Plaintiff then alleges that 10 its former executives and Board members “used [the Jim Hebets Defendants] to create a 11 bogus evaluation of the compensation packages, concluding—unsurprisingly—that they 12 were appropriate.” (Id. ¶ 411; see also id. ¶ 454 (alleging that Defendants Karen Hebets, 13 Mikia Wallis, and Diana Thompson collaborated with the Jim Hebets Defendants to review 14 and approve sham, inflated salaries for Plaintiff’s executives).)3 When the sham fair 15 market value analyses were presented to Plaintiff’s Board of Executives (“Board”), 16 Defendant Jim Hebets removed his name from the masthead, drafted documents without 17 referencing himself, and did not mention his last name when introducing himself to conceal 18 the obvious conflict of interest as Bruce Hebets’ brother. (Id. ¶ 455.) 19 “On top of that, Bruce Hebets and [Defendant] Jim Hebets schemed to create a 162B 20 Executive Bonus Plan that would pay Bruce Hebets and others additional compensation (a 21 tax-free payment of $5,000 per month) while also siphoning millions to [Defendant] Jim 22 Hebets’ insurance company.” (Id. ¶ 419; see also id. ¶ 459 (alleging that Bruce Hebets, 23 and Defendants Diana Thompson and Mikia Wallis, “schemed with [Defendant] The 24 25 3 In 2019, Plaintiff retained Compensation Resources, Inc. (“CRI”) to review and analyze 26 the compensation for 15 of Plaintiff’s executives. (Id. ¶ 417.) On or about July 19, 2019, 27 the CRI report concluded that the “Total Compensation Package … for [11] of [Plaintiff’s] officers is currently above the high end of their respective Market Ranges of 28 1 Hebets Company to increase executive compensation through contributions through 2 automatic ‘bonuses’ that were paid to 162B plans”).) Bruce Hebets and Defendant Karen 3 Hebets then worked with Defendant The Hebets Company to “borrow” from their 162B 4 accounts and transfer the funds into their checking accounts. (Id. ¶ 460.) When Defendant 5 Jim Hebets praised the 162B plan to Plaintiff’s Board in the spring or the summer of 2019, 6 he only disclosed his last name when a non-defendant Board member asked. (Id. ¶ 450.) 7 In order to persuade Plaintiff to continue to use the 162B plans, Defendant Jim 8 Hebets falsely represented that the plans would not subject Plaintiff to tax penalties. (Id. 9 ¶ 463.) “As of July 2020, [Plaintiff] was paying $240,000 per month for the 162B plans[,]” 10 which is immensely disproportionate to the appropriate cost for such benefits.” (Id. ¶ 464.) 11 Plaintiff alleges that it “has only begun to scratch the surface of [Defendant] Jim 12 Hebets’ involvement in these [s]chemes.” (Id. ¶ 467.) Plaintiff alleges that Defendant Jim 13 Hebets met with Bruce Hebets and Daryl Priest “repeatedly,” including on March 18, 2016 14 and February 27, 2018. (Id.) 15 B. Procedural Background 16 Plaintiff asserts two civil RICO causes of action against the Jim Hebets Defendants 17 (see SAC at 211–12, 215) and seven state law causes of action against the Jim Hebets 18 Defendants for fraudulent concealment, conversion, violations of Business & Professions 19 Code § 17200, et seq., conspiracy, unjust enrichment/restitution, intentional 20 misrepresentation, and negligent misrepresentation. (Id. at 255–59, 265–66, 268–70.) 21 These are the first, fifth, 56th, 58th, 63rd, 64th, 67th, 68th, and 69th causes of action, 22 respectively. 23 On April 29, 2024, the Jim Hebets Defendants filed the Jim Hebets MTD. (Doc. 24 222). In their MTD, the Jim Hebets Defendants argue that Plaintiff’s claims against the 25 Jim Hebets Defendants based on conduct before July 9, 2018 are time barred (see id. at 19– 26 21), that Plaintiff does not (and cannot) allege the necessary elements for its RICO claims 27 (see id. at 22–30), that Plaintiff has not adequately pled its state law claims against the Jim 28 1 Hebets Defendants (see id. at 30–35), and that Plaintiff should not be given leave to amend 2 its SAC (see id. at 35–35). 3 The Court addresses the arguments pertinent to this Order below. 4 II. LEGAL STANDARD 5 A. Federal Rule of Civil Procedure 12(b)(6) 6 Pursuant to Rule 12(b)(6), an action may be dismissed for failure to allege “enough 7 facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 8 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual 9 content that allows the court to draw the reasonable inference that the defendant is liable 10 for the misconduct alleged. The plausibility standard is not akin to a probability 11 requirement, but it asks for more than a sheer possibility that a defendant acted unlawfully.” 12 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citations 13 omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual 14 allegations in the complaint as true and construe[s] the pleadings in the light most favorable 15 to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 16 1031 (9th Cir. 2008). 17 However, the Court is “not bound to accept as true a legal conclusion couched as a 18 factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Nor is the 19 Court “required to accept as true allegations that contradict exhibits attached to the 20 Complaint or matters properly subject to judicial notice, or allegations that are merely 21 conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels-Hall v. 22 Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to survive 23 a motion to dismiss, the non-conclusory factual content, and reasonable inferences from 24 that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss 25 v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotation marks omitted). 26 When a Rule 12(b)(6) motion is granted, “a district court should grant leave to amend 27 even if no request to amend the pleading was made, unless it determines that the pleading 28 could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe v. N. 1 Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted). 2 B. Federal Rule of Civil Procedure 9 3 As set forth in the Court’s Order Granting Motions to Dismiss Plaintiff’s First 4 Amended Complaint (“FAC Order”), Federal Rule of Civil Procedure Rule 9(b) applies to 5 claims based on fraud. (Doc. 215 [FAC Order] at 9.) A plaintiff must plead the elements 6 of fraud with the particularity demanded by Rule 9(b), outlining the who, what, when, and 7 where of the alleged fraudulent acts. Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 8 (9th Cir. 2004). “In some cases, the plaintiff may allege a unified course of fraudulent 9 conduct and rely entirely on that course of conduct as the basis of a claim. In that event, 10 the claim is said to be grounded in fraud or to sound in fraud, and the pleading of that claim 11 … must satisfy the particularity requirement of Rule 9(b).” Vess v. Ciba-Geigy Corp. USA, 12 317 F.3d 1097, 1103–04 (9th Cir. 2003). “Given the factual basis for all of Plaintiff’s 13 claims are the twelve fraudulent schemes, all must meet Rule 9(b)’s particularity 14 requirement.” (Doc. 215 [FAC Order] at 9.) 15 III. DISCUSSION 16 A. Civil RICO Standing 17 Pursuant to the Court’s Order Requesting Supplemental Briefing Regarding Civil 18 RICO Statutory Standing (Doc. 282), the parties filed supplemental briefs on February 20, 19 2025, February 21, 2025, and February 24, 2025. (See Docs. 284, 286–95.) 20 “Under RICO’s civil enforcement mechanism, ‘[a]ny person injured in his business 21 or property by reason of a violation of [18 U.S.C. § 1962] may sue therefor in any 22 appropriate United States district court and shall recover threefold the damages he sustains 23 and the cost of the suit, including a reasonable attorney’s fees … .’” Canyon Cnty. v. 24 Syngenta Seeds, Inc., 519 F.3d 969, 972 (9th Cir. 2008) (alterations in original) (quoting 25 18 U.S.C. § 1964(c)). Therefore, “[t]o have standing under § 1964(c), a civil RICO 26 plaintiff must show: (1) that his alleged harm qualifies as injury to his business or property; 27 and (2) that his harm was ‘by reason of’ the RICO violation, which requires the plaintiff to 28 establish proximate causation.” Id. (quoting 18 U.S.C. § 1964(c)) (citing Holmes v. Sec. 1 Investor Prot. Corp., 503 U.S. 258, 268 (1992) and Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 2 479, 496 (1985)). 3 “To determine whether a plaintiff has sufficiently alleged that he has been ‘injured 4 in his business or property,’ we must examine carefully the nature of the asserted harm.” 5 Canyon Cnty., 519 F.3d at 975. “[The Ninth Circuit] requires that a plaintiff asserting 6 injury to property allege ‘concrete financial loss.’” Id. (quoting Oscar v. Univ. Students 7 Coop. Ass’n, 965 F.2d 783, 785 (9th Cir. 1992) (en banc)). “Financial loss alone, however, 8 is insufficient. ‘Without a harm to a specific business or property interest—a categorical 9 inquiry typically determined by reference to state law—there is no injury to business or 10 property within the meaning of RICO.’” Id. (quoting Diaz v. Gates, 420 F.3d 897, 900 11 (9th Cir. 2005) (en banc)). 12 “The Supreme Court has interpreted the phrase ‘by reason of’ in 18 U.S.C. § 1964(c) 13 to require, as elements for a civil RICO recovery, both proximate and but-for causation.” 14 Painters & Allied Trades Dist. Council 82 Health Care Fund v. Takeda Pharms. Co., 943 15 F.3d 1243, 1248 (9th Cir. 2019) (footnote omitted) (citing Holmes, 503 U.S. at 268). “The 16 requirement of proximate cause seeks to ‘limit a person’s responsibility for the 17 consequences of that person’s own acts.’” Id. (quoting same). “Put another way, ‘the 18 proximate-cause requirement generally bars suits for alleged harm that is ‘too remote’ from 19 the defendant’s unlawful conduct.’” Id. (quoting Lexmark Int’l, Inc. v. Static Control 20 Components, Inc., 572 U.S. 118, 133 (2014)). “Thus, it ‘demand[s] ... some direct relation 21 between the injury asserted and the injurious conduct alleged.’” Id. (quoting Holmes, 503 22 U.S. at 268). In Holmes, the Supreme Court explained that the “direct relation” 23 requirement is based upon three practical factors: 24 First, the less direct an injury is, the more difficult it becomes to ascertain the amount of a plaintiff’s damages attributable to the violation, as distinct from 25 other, independent, factors. Second, quite apart from problems of proving 26 factual causation, recognizing claims of the indirectly injured would force courts to adopt complicated rules apportioning damages among plaintiffs 27 removed at different levels of injury from the violative acts, to obviate the risk 28 of multiple recoveries. And, finally, the need to grapple with these problems 1 is simply unjustified by the general interest in deterring injurious conduct, since directly injured victims can generally be counted on to vindicate the law 2 as private attorneys general, without any of the problems attendant upon suits 3 by plaintiffs injured more remotely.

4 Holmes, 503 U.S. at 269–70 (footnote and internal citations omitted). 5 In its Supplemental Briefing Regarding Civil RICO Statutory Standing, Plaintiff 6 asserts that “Defendants caused [Plaintiff] to pay high salaries and bonuses to Defendants 7 and concealed doing so with improper evaluations.” (Doc. 294 at 18.) Plaintiff also asserts 8 that “[the Jim Hebets Defendants] provided sham compensation evaluations to offer 9 excessive benefits [to] other Defendants [and] to funnel additional [Plaintiff] funds to 10 Defendants.” (Id. at 19.) The Court is persuaded that, at this stage, Plaintiff has sufficiently 11 alleged injury to its business or property “by reason of” of the Jim Hebets Defendants’ 12 purported schemes. See Canyon Cnty., 519 F.3d at 975. The Court now turns to Plaintiff’s 13 civil RICO claims. 14 B. Plaintiff’s Civil RICO Claims 15 Plaintiff alleges the Jim Hebets Defendants have violated two provisions of RICO. 16 First, it alleges violations of 18 U.S.C. § 1962(c), which provides that “[i]t shall be 17 unlawful for any person employed by or associated with any enterprise engaged in, or the 18 activities of which affect, interstate or foreign commerce, to conduct or participate, directly 19 or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering 20 activity or collection of unlawful debt.” Second, Plaintiff alleges violations of 18 U.S.C. 21 § 1962(d), which provides that “[i]t shall be unlawful for any person to conspire to violate 22 any of the provisions of subsection (a), (b), or (c) of this section.” 23 “[T]he survival of [Plaintiff’s] claim under § 1962(c) [ensures] the survival of [its] 24 claim under § 1962(d).” Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir. 2007) 25 (citing Howard v. Am. Online Inc., 208 F.3d 741, 751 (9th Cir. 2000)). As such, the Court 26 addresses 18 U.S.C. § 1962(c) first. 27 1. 18 U.S.C. § 1962(c)—Conducting the Affairs of a RICO Enterprise 28 “To state a claim under § 1962(c), a plaintiff must allege ‘(1) conduct (2) of an 1 enterprise (3) through a pattern (4) of racketeering activity.’” Id. at 547 (quoting Sedima, 2 S.P.R.L., 473 U.S. at 496). In their MTD, the Jim Hebets Defendants argue that Plaintiff 3 does not—and cannot—allege the necessary elements for its RICO claims. (Doc. 222 at 4 22.) 5 a) Conduct—Element 1 6 The Supreme Court has held that “‘to conduct or participate, directly or indirectly, 7 in the conduct of such enterprise’s affairs,’ … one must participate in the operation or 8 management of the enterprise itself.” Reves v. Ernst & Young, 507 U.S. 170, 185 (1993) 9 (quoting 18 U.S.C. § 1962(c)). In other words, “one must have some part in directing those 10 affairs.” Id. at 179. “Simply performing services for the enterprise does not rise to the 11 level of direction … .” Walter v. Drayson, 538 F.3d 1244, 1249 (9th Cir. 2008). “Whether 12 [a defendant] rendered his services well or poorly, properly or improperly, is irrelevant to 13 the Reves test.” Baumer v. Pachl, 8 F.3d 1341, 1344 (9th Cir. 1993). Likewise, “[i]t is not 14 enough that [a defendant] failed to stop illegal activity, for Reves requires ‘some degree of 15 direction.’” Walter, 538 F.3d at 1248 (quoting Reves, 507 U.S. at 179). “Allegations 16 showing that a defendant conducted its own affairs is insufficient to raise the inference that 17 the defendant conducted the affairs of an enterprise.” Pac. Recovery Sols. v. United Behav. 18 Health, 481 F. Supp. 3d 1011, 1027 (N.D. Cal. 2020). 19 In their MTD, the Jim Hebets Defendants argue that they did not engage in the 20 required “conduct” for a RICO claim because Plaintiff does not allege that they had some 21 part in directing the affairs of the enterprise. (Doc. 222 at 22–24.) Plaintiff responds that 22 “actively engaging in the enterprise to ensure its success is sufficient to establish the 23 ‘conduct’ element under RICO.” (Doc. 250 at 19 (case citation omitted).) Plaintiff further 24 responds that “[t]he SAC makes clear that the [Jim Hebets Defendants] took direction from 25 the Defendant executives, knowingly implemented those instructions, and were 26 indispensable to achieving the enterprises goals of siphoning funds out of [Plaintiff] to 27 inflate Defendant executives[’] compensation packages.” (Id. at 20.) Plaintiff concludes 28 that “the conduct element is met.” (Id.) 1 Here, the Court finds that Plaintiff has not alleged that the Jim Hebets Defendants 2 participated in the operation or management of the enterprise—Plaintiff. (See SAC ¶¶ 550, 3 554–55 (alleging that Plaintiff is both the victim and the enterprise).) In other words, 4 Plaintiff has not alleged that the Jim Hebets Defendants directed Plaintiff’s affairs. 5 Plaintiff merely alleges that it, through its former executives and Board members, engaged 6 the Jim Hebets Defendants to evaluate and create Plaintiff’s executive compensation and 7 benefits packages. (See SAC ¶¶ 407–420, 453–68.) In the SAC, Plaintiff explains that the 8 Jim Hebets Defendants specialize in “FQHCs and creating ways to increase executive 9 compensation/benefits beyond what is specified in IRS code for qualified 403(b) or 457(b) 10 plans.” (Id. ¶ 456.) In doing so, Plaintiff simply alleges that it hired the Jim Hebets 11 Defendants to provide the services they offer. As set forth above, “performing [these] 12 services for [Plaintiff] does not rise to the level of direction[,]” Walter, 538 F.3d at 1249, 13 and whether the Jim Hebets Defendants rendered their services “well or poorly, properly 14 or improperly, is irrelevant[,]” Baumer, 8 F.3d at 1344. See also In re WellPoint, Inc. Out- 15 of-Network UCR Rates Litig., 903 F. Supp. 2d 880, 910 (C.D. Cal. 2012) (“[M]ore is 16 required than ‘simply being involved,’ and ‘[s]imply performing services for the enterprise 17 does not rise to the level of direction.’”) (quoting Walter, 538 F.3d at 1249). Put another 18 way, as alleged, the Jim Hebets Defendants merely conducted their own affairs, which “is 19 insufficient to raise the inference that the defendant conducted the affairs of an enterprise.” 20 Pac. Recovery Sols., 481 F. Supp. 3d at 1027. 21 Additionally, Plaintiff’s vague and speculative allegation that it “has only begun to 22 scratch the surface of [Defendant] Jim Hebets’ involvement in these [s]chemes” because 23 Defendant Jim Hebets met with his brother Bruce Hebets and Defendant Daryl Priest on at 24 least two occasions (SAC ¶ 467), is not sufficient for the Court to infer that the Jim Hebets 25 Defendants directed Plaintiff’s affairs. See Comwest, Inc. v. Am. Operator Servs., Inc., 765 26 F. Supp. 1467, 1471 (C.D. Cal. 1991) (“It is well settled that fraud ‘[a]llegations based on 27 ‘information and belief’ do not satisfy the particularity requirement of Rule 9(b) unless the 28 complaint sets forth the facts on which the belief is founded.’”) (quoting In re Worlds of 1 Wonder Sec. Litig., 694 F.Supp. 1427, 1432–33 (N.D. Cal. 1988)). Because Plaintiff has 2 failed to plead the “conduct” element of its civil RICO claim against the Jim Hebets 3 Defendants, the Court need not discuss the remaining elements.4 4 2. 18 U.S.C. § 1962(d)—Conspiracy 5 Because Plaintiff has failed to plead a violation of 18 U.S.C. § 1962(c) against the 6 Jim Hebets Defendants, Plaintiff has also failed to plead a violation of 18 U.S.C. § 1962(d) 7 against the Jim Hebets Defendants. See Odom, 486 F.3d at 547 (citing Howard, 208 F.3d 8 at 751). Therefore, both of Plaintiff’s civil RICO claims against the Jim Hebets Defendants 9 are DISMISSED with leave to amend.5 10 C. Plaintiff’s State Law Claims 11 Because Plaintiff failed to state civil RICO claims against the Jim Hebets 12 Defendants, the Court declines to exercise supplemental jurisdiction over Plaintiff’s state 13 law claims against the Jim Hebets Defendants. See 28 U.S.C. § 1367(c)(3) (“The district 14 courts may decline to exercise supplemental jurisdiction over [a state law claim] if . . . the 15 district court has dismissed all claims over which it has original jurisdiction.”); United 16 Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (“Certainly, if the federal claims are 17 dismissed before trial, even though not insubstantial in a jurisdictional sense, the state 18 claims should be dismissed as well.”). Accordingly, Plaintiff’s state law claims are 19 DISMISSED. 20 Even if the Court were to exercise supplemental jurisdiction over Plaintiff’s state 21 law claims against the Jim Hebets Defendants, Plaintiff has failed to allege alter ego 22 liability against Defendant Jim Hebets. The Court finds that Plaintiff’s alter ego allegations 23 24 25 4 As set forth in this Court’s Prior Order, Plaintiff also failed to plead the existence of an enterprise—element 2—and predicate acts supporting a pattern of racketeering—elements 26 3 and 4. (See Doc. 299 at 40–42, 45–48, 50–53.) 27 5 Because Plaintiff has failed to plead any civil RICO claim against the Jim Hebets Defendants, the Court need not address the Jim Hebets Defendants’ statute of limitation 28 1 || are conclusory and insufficient to state a claim against Defendant Jim Hebets. (See SAC 2 9951-53.) See also Gerritsen vy. Warner Bros. Ent. Inc., 116 F. Supp. 3d 1104, 1136 (C.D. 3 || Cal. 2015) (“Conclusory allegations of ‘alter ego’ status are insufficient to state a claim. 4 || Rather, a plaintiff must allege specific facts supporting both of the necessary elements.”’); 5 || Katzir’s Floor & Home Design, Inc. v. M-MLS.com, 394 F.3d 1143, 1149 (9th Cir. 2004) 6 (“The mere fact of sole ownership and control does not eviscerate the separate corporate 7 identity that is the foundation of corporate law.”) (citing Dole Food Co. v. Patrickson, 538 8 ||U.S. 468, 475 (2003)). 9 IV. CONCLUSION 10 Based on the foregoing, Plaintiff's claims against the Jim Hebets Defendants— 11 ||Defendants Jim Hebets and The Hebets Company—are DISMISSED with leave to 12 |}amend. While the Court doubts Plaintiffs ability to state a civil RICO claim against the 13 || Jim Hebets Defendants, any amended complaint must be filed on or before April 11, 2025. 14 || Responses to any amended complaint must be filed on or before April 25, 2025. 15 IT IS SO ORDERED. 16 |}DATE: March 27, 2025 17 i get iol, Motaaggs D_ 19 HON. RUTH BERMUDEZ' MONTENEGRO UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 12