Overview
Today, Judge Castel dismissed RICO claims brought against Alibaba Group Holding by a group of luxury goods makers including Gucci and Yves Saint Laurent. The complaint accused Alibaba of providing services and a market platform to merchants that Alibaba should have known were selling counterfeit goods.
Judge Castel specifically considered the plaintiffs' claims that Alibaba's online marketplace and the merchants that used it constituted a criminal enterprise under RICO. Judge Castel rejected this argument, holding that lack the coordination necessary to create a RICO enterprise:
Plaintiffs have failed to plausibly allege that the Merchant Defendants engaged in anything but independent conduct, without coordination and for their own economic self-interest. Indeed, the Merchant Defendants’ relationships with one another are not alleged to be any different from their relationships with the millions of other merchants operating on the Alibaba Marketplaces. True, the [complaint] alleges that each Merchant Defendant—and not legitimate merchants—engaged in fraudulent conduct with the purpose of profiting from the sale of counterfeit products, but it does not allege that they “‘associated together for a common purpose of engaging in a course of conduct.’” Nor does the [complaint] plausibly allege that these competing Merchants “work[ed] together to achieve such purposes.” The fraud perpetrated by each Merchant Defendant could be accomplished without any assistance from any other Merchant Defendant. The Merchant Defendants all operate from China and happen to sell counterfeit goods bearing Plaintiffs’ Marks. But there is no indication that the Merchant Defendants, “located in different parts of the country, came to an agreement to act together—or even how they knew each other.” Plausibly read, the [complaint] alleges only that each Merchant Defendant engaged in a pattern of racketeering activity “independently and without coordination.”