Us Airline Pilots Association v. Awappa, LLC

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 US AIRLINE PILOTS ASSOCIATION,
Plaintiff-Appellant,
v.
AWAPPA, LLC; JOHN MCILVENNA;
MITCH VASIN; PETER BLANDINO;
ERIC FERGUSON; JEFF KOONTZ; RUSS
PAYNE; KEITH KRUEGER; ERIC
AUXIER; CHRISTOPHER CUNDARI; No. 08-1858  JACK TOOKE; DAVID BRAID; ROBERT
J. NARLOCH; BRUCE A. HANNAH;
RON GABALDON; SHAWN METZKER;
JURIE MAREE; JOHN DOES 1-100;
AL CASBY; JEFF ABBOTT; MARK
DOYAL; LARRY DIEHL; STEVE
TRIMMER; CJ SZMAL; JOE HEIL;
KEVIN STEELE,
Defendants-Appellees. 
Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Martin K. Reidinger, District Judge.
(3:08-cv-00246-MR-CH)
Argued: March 23, 2010
Decided: July 30, 2010
Before MICHAEL, MOTZ, and KING, Circuit Judges.

-- 1 of 13 --

Affirmed by published opinion. Judge Motz wrote the opin-
ion, in which Judge Michael and Judge King joined.
COUNSEL
ARGUED: Lee R. A. Seham, SEHAM, SEHAM, MELTZ &
PETERSEN, LLP, White Plains, New York, for Appellant.
John Miller West, BREDHOFF & KAISER, PLLC, Washing-
ton, D.C., for Appellees. ON BRIEF: Nicholas Paul Granath,
SEHAM, SEHAM, MELTZ & PETERSEN, LLP, Minneapo-
lis, Minnesota, Stanley J. Silverstone, Lucas Middlebrook,
SEHAM, SEHAM, MELTZ & PETERSEN, LLP, White
Plains, New York, for Appellant. Lat J. Celmins, Patrick J.
Van Zanen, Michael L. Kitchen, MARGRAVE CELMINS,
P.C., Scottsdale, Arizona, for Appellees Keith Krueger, Eric
Auxier, Christopher Cundari, Jack Tooke, David Braid, Rob-
ert Narloch, Bruce Hannah, Ron Gabaldon, Shawn Metzker,
Al Casby, Larry Diehl, CJ Szmal, Joe Heil, and Kevin Steele;
Jeffrey R. Freund, BREDHOFF & KAISER, PLLC, Washing-
ton, D.C., for Appellees AWAPPA, LLC, John McIlvenna,
Mitch Vasin, Peter Blandino, Eric Ferguson, Jeff Koontz, and
Russ Payne.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
The US Airline Pilots Association ("USAPA") filed this
action against the America West Airlines Pilots Protective
Alliance, LLC ("AWAPPA") and several individual defen-
dants pursuant to the Racketeer Influenced and Corrupt Orga-
nizations Act ("RICO"), 18 U.S.C. §§ 1961-68 (2006). The
complaint, which seeks an injunction and damages, alleges
that the defendants engaged in extortionate acts that constitute
a pattern of racketeering activity. The district court granted
2 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 2 of 13 --

the defendants’ motion to dismiss the complaint for failure to
state a federal claim and thus lack of subject-matter jurisdic-
tion. USAPA appeals, and we affirm.
I.
The facts, as set forth in USAPA’s First (and repeated in
the proposed Second) Amended Complaints, are as follows:
On May 19, 2005, US Airways, Inc. and America West
Airlines ("AWA") merged to form US Airways, Inc. ("US
Airways"). In the airline industry, pilot compensation and
benefits depend in large part on seniority, and the newly
merged company sought to integrate the two constituent carri-
ers’ pilots on the basis of seniority. To that end, the Air Line
Pilots Association ("ALPA"), the union representing both
groups of pilots at the time of the merger, worked to prepare
an integration proposal for submission to US Airways.
Negotiations between the two pilot groups floundered
because, on average, pilots from the former US Airways, Inc.
("East pilots") had an earlier date of hire than pilots from the
former AWA ("West pilots"). Thus, East pilots lobbied for
seniority to be determined solely by date of hire, while West
pilots championed a system that would incorporate other vari-
ables, including the relative economic strength of the pre-
merger carriers.
When negotiations stalled, ALPA forced the two groups
into arbitration. On May 1, 2007, Arbitrator George Nicolau
issued an award ("the Nicolau Award") that rejected a pure
date-of-hire system (and therefore favored the West pilots).
The Nicolau Award could have no binding effect until the
merged carrier adopted it as its integration policy, so East
pilots lobbied against (and West pilots lobbied for) its submis-
sion to US Airways as ALPA’s official proposal. Although
3 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 3 of 13 --

the fight over the Nicolau Award raged without solution,
ALPA ultimately presented it to US Airways.1
Several East pilots, dissatisfied with ALPA’s representa-
tion, formed USAPA in order "to replace ALPA as the collec-
tive bargaining representative of the pilots at the combined
US Airways." The National Mediation Board called for an
election to allow the pilots to choose between USAPA and
ALPA. USAPA campaigned on a platform of date-of-hire-
based seniority. In response, several West pilots formed
AWAPPA to support ALPA’s candidacy, allegedly "to
oppose USAPA and its goal of date of hire seniority integra-
tion." USAPA defeated ALPA in the election, and on April
18, 2008, the National Mediation Board certified USAPA as
the new collective bargaining representative of US Airways’s
pilots. In re Representation of Employees of US Airways
Pilots, 35 N.M.B. 135 (2008).
USAPA alleges that, after the election, "the leaders of
AWAPPA issued a press release, stating that AWAPPA had
been formed to engage in an ‘aggressive strategy’ against
USAPA, and further stating that ‘USAPA’s demise is just a
matter of time.’" USAPA asserts that "[s]ince [its] certifica-
tion . . . , [AWAPPA and its] co-conspirators have subjected
USAPA, its officers, and individual US Airways pilots to a
concerted campaign of extortion and sabotage." According to
USAPA, in an effort to destroy it, AWAPPA has clogged
USAPA’s toll-free hotline with frivolous phone calls; used
"profane, indecent, vulgar and threatening language in tele-
phone voicemail messages to USAPA, its officers, and indi-
vidual US Airways pilots;" made other threatening and
harassing communications; conspired to "create a mass viola-
tion of the contractual dues obligation" to USAPA, in viola-
tion of the collective bargaining agreement; filed frivolous
grievances; increased USAPA’s mail costs; prevented East
1As of the filing of USAPA’s First Amended Complaint, US Airways
had not implemented the Nicolau Award’s recommended seniority list.
4 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 4 of 13 --

pilots from using the "jump seat[s]" on airplanes in order to
commute to work; and interfered with USAPA’s e-mail com-
munications through spamming. One person posted on the
AWAPPA online message board that "[w]e’ll be playing this
game for 10 years or until ALPA is back on property."
On May 30, 2008, USAPA brought this action against
AWAPPA and several of its members, asserting RICO viola-
tions and state-law claims including civil conspiracy and defa-
mation, and seeking injunctive relief and damages. The
complaint alleges that the
[d]efendants and their co-conspirators seek to
destroy USAPA in order to compel the implementa-
tion of the Nicolau Award and to deprive USAPA of
its statutory right . . . to negotiate terms and condi-
tions of employment, and otherwise provide repre-
sentation services, for the US Airways pilots. In so
doing, defendants and their co-conspirators seek,
inter alia, to obtain pecuniary benefits for America
West pilots that would otherwise be distributed to all
US Airways pilots on a date of hire seniority basis.
USAPA asserts that the defendants "also seek to deprive
USAPA of dues/agency fee revenue . . . and divert these
monies to AWAPPA."
The district court dismissed the complaint for failure to
state a federal claim, and therefore for lack of subject-matter
jurisdiction, pursuant to Federal Rule of Civil Procedure
12(b)(1) and (b)(6). US Airline Pilots Ass’n v. Awappa, LLC,
No. 3:08cv246, 2008 WL 2761388, at *14-15 (W.D.N.C. July
11, 2008). The court declined to exercise supplemental juris-
diction over USAPA’s state-law claims, denied as futile
USAPA’s motion to amend its complaint, and denied as moot
USAPA’s request for injunctive relief. Id. at *15-18.
USAPA timely filed this appeal.
5 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 5 of 13 --

II.
We review de novo a district court’s dismissal for failure
to state a claim. See Anderson v. Sara Lee Corp., 508 F.3d
181, 188 (4th Cir. 2007). In doing so, "we must accept as true
all of the factual allegations contained in the complaint." Id.
(internal quotation marks omitted). To survive a motion to
dismiss, a complaint need not provide "detailed factual allega-
tions," but it must "provide the grounds of [the plaintiff’s]
entitlement to relief" with "more than labels and conclusions"
and more than "a formulaic recitation of the elements of a
cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (internal quotation marks and alterations omitted).
Ultimately, "[f]actual allegations must . . . raise a right to
relief above the speculative level," and the complaint must
offer "enough fact to raise a reasonable expectation that dis-
covery will reveal evidence" of the alleged activity. Id. at 555,
556.
RICO, the federal claim at issue, "does not cover all
instances of wrongdoing. Rather, it is a unique cause of action
that is concerned with eradicating organized, long-term, habit-
ual criminal activity." Gamboa v. Velez, 457 F.3d 703, 705
(7th Cir. 2006). The Supreme Court has described the penal-
ties authorized by RICO as "drastic." H.J. Inc. v. Nw. Bell Tel.
Co., 492 U.S. 229, 233 (1989). Indeed, in a civil RICO action,
a successful plaintiff may recover not only costs and attor-
ney’s fees, but also treble damages. See 18 U.S.C. § 1964(c).
These penalties are primarily designed to provide society with
a powerful response to the dangers of organized crime. See
H.J. Inc., 492 U.S. at 245. Thus, although we read the terms
of the statute "liberally" in order to "effectuate its remedial
purposes," Boyle v. United States, 129 S. Ct. 2237, 2243
(2009) (internal quotation marks omitted), we must also exer-
cise caution
to ensure that RICO’s extraordinary remedy does not
threaten the ordinary run of commercial transactions;
6 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 6 of 13 --

that treble damage suits are not brought against iso-
lated offenders for their harassment and settlement
value; and that the multiple state and federal laws
bearing on transactions . . . are not eclipsed or pre-
empted.
Menasco, Inc. v. Wasserman, 886 F.2d 681, 683 (4th Cir.
1989).
To state a civil RICO claim, a plaintiff must allege that the
defendants engaged in, or conspired to engage in, a "pattern
of racketeering activity." 18 U.S.C. § 1962 (emphasis added).
"Racketeering activity" includes "extortion," defined as "the
obtaining of property from another, with his consent, induced
by wrongful use of actual or threatened force, violence, or
fear, or under color of official right." Id. §§ 1951(b)(2) (defin-
ing extortion), 1961(1) (defining "racketeering activity" to
include the offenses enumerated in § 1951). USAPA claims
that the defendants violated § 1962(c) and (d) by engaging in
(and conspiring to engage in) a pattern of extortion.
The district court dismissed USAPA’s complaint for failure
to state a claim on two alternative grounds. First, the court
held that the complaint did not allege extortion as a matter of
law, and therefore USAPA had failed to allege a predicate
offense necessary to show "racketeering activity." US Airline
Pilots Ass’n, 2008 WL 2761388, at *13-14. Alternatively, the
court held that the activities described in the complaint did not
establish a "pattern." Id. at *14-15. We need not address the
first ground because the law clearly dictates affirmance on the
second.
III.
A "‘pattern of racketeering activity’ requires at least two
acts of racketeering activity, one of which occurred after the
effective date of [the RICO statute] and the last of which
occurred within ten years . . . after the commission of a prior
7 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 7 of 13 --

act of racketeering activity." 18 U.S.C. § 1961(5). To demon-
strate a pattern of such activity, the plaintiff must show "con-
tinuity plus relationship," i.e., "that the racketeering
predicates are related, and that they amount to or pose a threat
of continued criminal activity." H.J. Inc., 492 U.S. at 239
(emphasis and internal quotation marks omitted). Although
USAPA does allege acts that relate to one another—sharing
the same purpose, participants, and victims—it fails to allege
the "continuing racketeering activity" necessary to state a
RICO claim. See id. at 240.
RICO’s continuity requirement—"centrally a temporal
concept"—arises from Congress’s concern with "long-term
criminal conduct." Id. at 242. As such, it demonstrates Con-
gress’s desire to limit RICO’s application to "ongoing unlaw-
ful activities whose scope and persistence pose a special
threat to social well-being." Al-Abood ex rel. Al-Abood v. El-
Shamari, 217 F.3d 225, 238 (4th Cir. 2000) (internal quota-
tion marks omitted); see also Vemco, Inc. v. Camardella, 23
F.3d 129, 133-34 (6th Cir. 1994).
The Supreme Court has explained that "‘[c]ontinuity’ is
both a closed- and open-ended concept, referring either to a
closed period of repeated conduct, or to past conduct that by
its nature projects into the future with a threat of repetition."
H.J. Inc., 492 U.S. at 241. Closed-ended continuity exists
when the "series of related predicates extend[s] over a sub-
stantial period of time." Id. at 242. USAPA does not contend
that the factual allegations in any of its complaints, describing
conduct spanning only a few weeks, satisfy the Supreme
Court’s standard for closed-ended continuity.
USAPA does maintain, however, that it has set forth facts
adequately alleging open-ended continuity. To allege open-
ended continuity, a plaintiff must plead facts that demonstrate
a "threat of continuity," i.e., facts that give rise to a reasonable
expectation that the racketeering activity will "extend[ ] indef-
initely into the future." Id. "Whether the predicates proved
8 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 8 of 13 --

establish a threat of continued racketeering activity depends
on the specific facts of each case." Id.
A plaintiff cannot demonstrate open-ended continuity if the
racketeering activity has a "built-in ending point, and the case
does not present the necessary threat of long-term, continued
criminal activity." GE Inv. Private Placement Partners II v.
Parker, 247 F.3d 543, 549 (4th Cir. 2001); see also Menasco,
886 F.2d at 684 (finding no continuity because "[d]efendants’
actions were narrowly directed towards a single fraudulent
goal"); Spool v. World Child Int’l Adoption Agency, 520 F.3d
178, 186 (2d Cir. 2008) (holding "a serious, but discrete and
relatively short-lived scheme . . . insufficient to establish
open-ended continuity" (internal quotation marks omitted));
Gamboa, 457 F.3d at 708 (holding that a "one-time endeavor
to wreak havoc upon all matters linked to a single murder
investigation" had a "built-in end point" and thus lacked con-
tinuity); Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12, 20
(1st Cir. 2000) ("Had Efron argued that the defendants
planned to operate the hotel indefinitely at a paper loss as a
means of perpetually defrauding him, rather than asserting the
specific objective of squeezing him out of the Partnership, he
would have a stronger argument for an open-ended RICO pat-
tern. His pleadings and argument, however, depict an under-
taking with a soon-to-be reached endpoint.").2
USAPA’s claim fails because it alleges that the defendants
have engaged in racketeering activity in order to achieve a
single goal: "to destroy USAPA and render it incapable of
2Many of these cases concern the predicate act of fraud. See, e.g., ePlus
Tech., Inc. v. Aboud, 313 F.3d 166, 181 & n.15 (4th Cir. 2002); GE Inv.
Partners, 247 F.3d at 549. Clearly, however, the general continuity princi-
ples apply to all RICO predicate acts, including extortion. See H.J. Inc.,
492 U.S. at 242 (using an example of extortion to illustrate open-ended
continuity); see also Edmondson & Gallagher v. Alban Towers Tenants
Ass’n, 48 F.3d 1260, 1264 (D.C. Cir. 1995) (finding no open-ended conti-
nuity in a scheme allegedly involving "bribery, extortion, wire and mail
fraud, and interstate travel in aid of racketeering activity").
9 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 9 of 13 --

discharging its legal duty to represent the US Airways pilots."
First and Second Amended Compls. ¶ 53; id. ¶ 147 (stating
that the purpose of the extortion campaign "was to destroy
USAPA and to obtain from USAPA the right to represent the
pilots of US Airways"); id. ¶ 148 (alleging that the defen-
dants’ racketeering acts aimed "to destroy USAPA and to
obtain property from USAPA"). This objective creates a fore-
seeable "built-in ending point" that is closely related to the
extortion and thus precludes open-ended continuity; once the
defendants replace USAPA, the scheme will end. See, e.g.,
GE Inv. Partners, 247 F.3d at 549 (finding no continuity in
a scheme "designed for the single goal" of fraudulently inflat-
ing the value of and then selling the defendants’ controlling
interest in a company); Giuliano v. Fulton, 399 F.3d 381, 391
(1st Cir. 2005) (holding that the complaint did not allege
open-ended continuity because "[o]nce achieved, the illegal
scheme . . . would end").
In its reply brief, USAPA argues that we should overlook
the limit inherent in these allegations and instead read the
complaint to allege that the defendants will continue their
extortionate activity until US Airways "implement[s]" the
Nicolau Award. Reply Br. at 26-27. USAPA contends that its
"allegations . . . logically require" continuity because
"[i]mplementing Nicolau is a goal that necessarily includes
bargaining for a new contract, ratification, execution, and
continuing exercise of union-representation rights necessary
to keep the demanded terms in succeeding contracts, in perpe-
tuity." Id. Even if the controlling union had the power to "im-
plement" the Nicolau Award, which of course it does not
given that the carrier must agree to employment terms, this
argument also fails.
An extortion campaign aimed at implementing the Nicolau
Award might last a long time, but it clearly has a "built-in
ending point" precluding open-ended continuity. That is, the
union’s endorsement of the Nicolau Award, and the carrier’s
subsequent implementation of it, would end the fight, and
10 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 10 of 13 --

therefore end the extortion. USAPA offers only speculation in
its appellate brief—not factual allegations in its complaint—
in support of its view that the defendants would indefinitely
extort the controlling union after US Airways entered into a
union contract of the sort the defendants seek, i.e., one incor-
porating the Nicolau Award. As courts have regularly held,
when . . . a complaint explicitly presents a distinct
and non-reoccurring scheme with a built-in termina-
tion point and provides no indication that the perpe-
trators have engaged or will engage in similar
misconduct, the complaint does not sufficiently
allege continuity for § 1962(c) purposes even if the
purported scheme takes several years to unfold,
involves a variety of criminal acts, and targets more
than one victim.
Gamboa, 457 F.3d at 709-10 (collecting cases).
The "built-in ending point" in this case distinguishes it
from the only concrete example of open-ended continuity the
Supreme Court has recognized: the "hoodlum" who appears
monthly to collect "insurance" payments that "cover [business
owners] against breakage of their windows." H.J. Inc., 492
U.S. at 242. In that situation, even if the business owner sub-
mitted to the extortionist’s demands and delivered payment,
the extortion would continue, month after month. Unlike the
allegations with respect to the "hoodlum," USAPA simply has
not alleged that the defendants’ extortion campaign threatens
indefinite repetition.3
3USAPA alleges in its proposed Second Amended Complaint that the
predicate acts constitute the defendants’ "regular way of doing business,"
one of the recognized approaches to showing open-ended continuity. See
H.J. Inc., 492 U.S. at 242. Because the "very nature of the [extortion is]
such that [the d]efendants could not continue the [extortion] beyond a lim-
ited period of time," this argument also fails. GE Inv., 247 F.3d at 550; see
also Howard v. Am. Online Inc., 208 F.3d 741, 750 (9th Cir. 2000) (hold-
ing that alleged acts did not constitute defendant’s "regular way of doing
business" because the "[p]laintiffs present[ed] no facts indicating that [the
fraud] would continue into the future").
11 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 11 of 13 --

It is no surprise, then, that the conduct USAPA alleges
closely resembles conduct we have found not to demonstrate
continuity after H.J. Inc. See, e.g., GE Inv. Partners, 247 F.3d
at 549 (finding no continuity where the defendants’ "single
goal" was to fraudulently inflate the value of and then sell
their controlling interest in a company); Menasco, 886 F.2d at
684 (finding no continuity where "[d]efendants’ actions were
narrowly directed towards a single . . . goal," "involved but
one set of victims," and took place over a relatively short
period of time).
Because the appropriate "commonsensical, fact-specific"
examination of the allegations in USAPA’s complaint fails to
yield a pattern of racketeering activity, USAPA has failed to
state a cognizable RICO claim. See Menasco, 886 F.2d at 684.
Accordingly, the district court did not err in granting the
defendants’ motion to dismiss the complaint.
IV.
We can quickly dispose of USAPA’s remaining
contentions—that the district court erred in denying it leave
to amend its complaint and in refusing to grant it injunctive
relief.
"We review the district court’s denial of leave to amend the
complaint for an abuse of discretion." GE Inv. Partners, 247
F.3d at 548. The district court does not abuse its discretion in
denying leave when "amendment would be futile." Id. Having
reviewed the proposed amendments, we conclude that they
would have no impact on the outcome of the motion to dis-
miss. Thus, the district court did not abuse its discretion.
We also review the grant or denial of injunctive relief for
an abuse of discretion. See Muffley ex rel. NLRB v. Spartan
Mining Co., 570 F.3d 534, 543 (4th Cir. 2009). Because
USAPA’s complaint failed to state a claim upon which relief
could be granted, the district court did not err in denying
12 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 12 of 13 --

USAPA’s request for a temporary restraining order and pre-
liminary injunction. See Gold v. Feinberg, 101 F.3d 796, 802
(2d Cir. 1996).
V.
The judgment of the district court is
AFFIRMED.
13 US AIRLINE PILOTS ASSOCIATION v. AWAPPA

-- 13 of 13 --