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DOOLEY v. CRAB BOAT OWNERS ASSOCIATION

April 26, 2004.

JOHN DOOLEY, JOHN B. JONES III, DAVID GRATZER, NYLE GRIFFIN, DAN REYES and CAITLIN ANN, LLC, Plaintiffs,
v.
CRAB BOAT OWNERS ASSOCIATION, FISHERMEN'S MARKETING ASSOCIATION OF BODEGA BAY, HALF MOON BAY FISHERMEN'S MARKETING ASSOCIATION, JOHN MORGAN, MORGAN FISH COMPANY, INC., DUNCAN MACLEAN, TODD WAILEY, JIM SALTER, ROBERT N. MILLER, MICHAEL McHENRY, DAVID BETTENCOURT, LARRY COLLINS, WILLIAM WISE, JOHN T. TARANTINO, and GEORGE BOOS, Defendants



The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District

MEMORANDUM & ORDER Cross Motions for Summary Judgment
The Caitlin Ann fishing company, its managing director John Dooley, and several crew members bring this action against three fishing associations and their members, as well as a purveyor of fish, seeking relief for alleged interference with the Caitlin Ann's Dungeness crab harvesting off the coast of California. Now before the court are defendants' motions for summary judgment and plaintiffs' motion for summary judgment on defendant Half Moon Bay Fishermen's Marketing Association's counterclaims. After having considered the parties' arguments and submissions, and for the reasons set forth below, the court rules as follows. BACKGROUND*fn1

In its memorandum and order of July 14, 2003, the court set forth the background of this action. For context, the court will repeat some of this background here.

  The Caitlin Ann LLC, a Washington limited liability corporation, is the owner of a fishing boat also named the Caitlin Ann. Under the management of John Dooley, the company harvests Dungeness crab off the coast of California, Washington and Oregon. Plaintiffs and defendants agree that crabs are harvested commercially using steel and wire traps, or pots, that rest on the ocean floor. A buoy, attached to each pot, acts as a marker for the fishermen.

  The parties agree on little else. According to plaintiffs, the conflict between the parties began when the State of California opened the Northern California Dungeness crab season on December 1, 1999. Plaintiffs contend that two fishermen's marketing associations not named in this action refused to harvest crab, hoping that this refusal would help them negotiate a favorable fixed price with buyers.*fn2 In a show of solidarity, members of the three defendant associations-the Crab Boat Owners Association ("CBOA"), the Fishermen's Marketing Association Incorporated of Bodega Bay ("FMABB"), and the Half Moon Bay Fishermen's Marketing Association ("HMBFMA")-also allegedly refused to fish in order to set a price more favorable to the fishermen.

  Plaintiffs, however, did not join this "tie up."*fn3 Instead, Dooley prearranged to sell his catch to Three Captains, a local buyer in Half Moon Bay. Maclean, the President of the HMBFMA, came to the Three Captains facility and told the owners, Larry and Mary Fortado, that the HMBFMA would "blackball"*fn4 their company if they purchased Dooley's crab. When the Caitlin Ann boat returned to port, a group of angry HMBFMA members, including Maclean, confronted the crew and yelled obscenities. Dooley later discovered the word "scab" spray painted on the side of the vessel. During the next crab season, members of the associations refused to sell their crab to Three Captains. Three Captains suffered financial harm as a result of being "blackballed," and it refused to buy crab from Dooley during the 2000 crab season.

  When the Southern California Dungeness crab season opened on November 15, 2001, plaintiffs claim that the three defendant associations and their members once again refused to fish so as to fix a favorable price for crab. The Caitlin Ann company had already contracted with a buyer, Exclusive Fresh. On November 16, 2001, plaintiffs allege that association members told Dooley that there would be "trouble" and "heavy repercussions" if he harvested crab during the tie-up, and a group of members, including Maclean and Salter, came to the dock and threatened the Caitlin Ann's crew.

  Despite these threats, the Caitlin Ann departed on November 16, 2001, and set approximately 930 crab pots. The following day, the crew of the Caitlin Ann returned to the area where they had set the pots and found approximately 647 crab pot lines cut. Plaintiffs allege that defendant Todd Whaley*fn5 was involved in cutting the lines. Plaintiffs spotted a Crescent City style boat near plaintiffs'gear. Whaley's boat, the Dynamik, is a Crescent City style boat. Whaley does not dispute that his boat was near the lines. Rather, he claims that on the evening of November 17, 2001, he went out to pull plaintiffs' buoys to see if they were catching crab and that when he arrived the lines had already been cut. Prior to returning to Half Moon Bay, Dave Bracciotti, a fisherman, had warned John Dooley's brother, Robert Dooley, that someone intended to cut their crab pot lines.*fn6

  Defendants also allegedly interfered with plaintiffs' ability to deliver crab to Exclusive Fresh. Prior to Caitlin Ann's return to port, Dooley contacted Phil Bruno, the owner of Exclusive Fresh. Bruno informed Dooley that Michael McHenry had contacted him and urged him not to purchase Dooley's crab. Bruno also informed Dooley that he would be unable to purchase the crab because the transient dock at Half Moon Bay was blocked by another vessel owned by defendant Duncan Maclean. Dooley had previously made plans with the harbor master to use the transient dock, the only space that could accommodate a vessel the size of the Caitlin Ann. Plaintiffs contend that Maclean, encouraged by the associations, deliberately blocked the Caitlin Ann from docking in order to punish plaintiffs for harvesting crab during the strike. Maclean argues that he tied up at the transient dock to undertake maintenance of his vessel.*fn7

  Unable to access Half Moon Bay, plaintiffs sailed to San Francisco, where they had identified a new buyer for their crab, J&S Quality Seafood ("J&S"). Prior to plaintiffs' arrival, members of the associations allegedly threatened Jim Schach, the owner of J&S, with "blackballing" if he purchased Dooley's crab. John Morgan, the owner of Morgan Fish Company, Inc., a large purveyor of Dungeness crab, also contacted Schach, warning him not to buy Dooley's crab. One of Morgan's employees contacted Shach to convey a similar message. Following J&S' purchase of plaintiffs' crab, Morgan contacted customers of J&S to dissuade them from purchasing crab from J&S and allegedly told them they would be boycotted if they purchased the crab. Morgan, a distributor of Polar Ice, a company owned by John Tarantino, also refused to sell ice to J&S.*fn8

  On February 7, 2002, plaintiffs filed a complaint against three defendant fishermen associations located in the greater San Francisco. Bay Area, the CBOA, FMABB, and HMBFMA; individual members of the associations, Duncan Maclean, Jim Salter, Robert N. Miller, Michael McHenry, Larry Collins, William Wise, John T. Tarantino and George Boos; and other individuals that allegedly cooperated with the associations, John Morgan, Morgan Fish Company, Inc.,*fn9 Todd Whaley and David Bettencourt. In large measure, plaintiffs accuse defendants of violating sections 1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), sections 1 and 2 of the Sherman Act, and sections 16750 and 17200 of the California Business and Professions Code. 18 U.S.C. § 1962(c), (d); 15 U.S.C. § 1, 2; Cal. Bus. & Prof. Code §§ 16750, 17200. Plaintiffs also allege that defendants unlawfully interfered with contractual relations and with prospective economic advantage, and adding conversion and trespass to chattels claims as well. In turn, defendant HMBFMA brings three counterclaims against Caitlin Ann LLC and Dooley (collectively "counterdefendants"). HMBFMA alleges that counterdefendants sold crab below cost from 1999 to the present, used a boat that had a trawling net in violation of state permitting requirements, and, in 1999, fished in a wasteful and destructive manner. HMBFMA also alleges that counterdefendants threatened HMBFMA members and other fishermen with damage to their fishing gear, and did in fact damage gear by trawling through fishing areas already set with pots. Through this conduct, HMBFMA alleges that counterdefendants violated sections 17200 and 17043 of the California Business and Profession Code, and engaged in tortious interference with prospective economic advantage.

  On March 31, 2003, countedefendants filed a motion for summary judgment. On July 14, 2003, following a hearing on that motion, this court issued a memorandum and order finding that HMBMFA had not produced any evidence demonstrating that counterdefendants had (1) engaged in predatory pricing, (2) procured and renewed a permit for Dungeness crab with a vessel that was equipped with a trawling net, or (3) dragged a trawling net over fishing areas in order to deter HMBFMA members from placing their crab pots there. Accordingly, the court ordered HMBMFA to submit declarations explaining the reasonable basis for its claims. HMBFMA subsequently filed two declarations with the court. On August 12, 2003, the court granted HMBFMA's motion to dismiss its third counterclaim for tortious interference with prospective economic advantage. Now before the court are defendants' motions for summary judgment as to all of plaintiffs' claims and plaintiffs' motion for summary judgment as to HMBFMA's counterclaims.

  LEGAL STANDARD

  Summary judgment is proper when the pleadings, discovery and affidavits show that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Material facts are those which may affect the outcome of the case. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. The moving party for summary judgment bears the burden of identifying those portions of the pleadings, discovery and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Cattrett, 477 U.S. 317, 323 (1986). On an issue for which the opposing party will have the burden of proof at trial, the moving party need only point out "that there is an absence of evidence to support the nonmoving party's case." Id. at 325.

  Once the moving party meets its initial burden, the nonmoving party must go beyond the pleadings and, by its own affidavits or discovery, "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Mere allegations or denials do not defeat a moving party's allegations. Id.; see also Gasaway v. Northwestern Mut. Life Ins. Co., 26 F.3d 957, 959-60 (9th Cir. 1994). Nor is it sufficient for the opposing party simply to raise issues as to the credibility of the moving party's evidence. National Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 97 (9th Cir. 1983). If the nonmoving party fails to show that there is a genuine issue for trial, "the moving party is `entitled to judgment as a matter of law.'" Celotex Corp., 477 U.S. at 323 (quoting Fed. R. Civ. P. 56(c)). DISCUSSION

 I. Plaintiffs' Claims

  A. RICO Section 1962(c)

  Plaintiffs seek treble damages under the civil provisions of RICO for acts of extortion prohibited by the Hobbs Act. Specifically, plaintiffs contend that defendants violated RICO section 1962(c). Section 1962(c) prohibits persons whose actions affect interstate commerce from using an enterprise to engage in a "pattern of racketeering activity."*fn10 18 U.S.C. § 1962(c). To prove a violation of section 1962(c), plaintiffs must demonstrate that defendants engaged in conduct of an enterprise through a pattern of racketeering activity. Salinas v. United States. 522 U.S. 52, 62 (1997).

  1. Defendants' Enterprise

  Defendants contend that plaintiffs' RICO claim fails because plaintiffs have not put forward sufficient evidence to demonstrate the existence of an enterprise. Establishing the existence of an enterprise requires proof of an ongoing organization, formal or informal, with various associates functioning as a continuing unit. Chang v. Chen, 80 F.3d 1293, 1299 (9th Cir. 1996). An enterprise may include both legitimate and illegitimate entities, but it must exist separate and apart from the pattern of racketeering activity in which it engages. United States v. Turkette, 452 U.S. 576, 580-81, 583 (1981). At a minimum the entity:
must exhibit some sort of structure . . . for the making of decisions, whether it be hierarchical or consensual. The structure should provide some mechanism for controlling and directing the affairs of the group on an on-going, rather than an ad hoc, basis. The structure requirement, however, does not mean that every decision must be made by the same person, or that authority may not be delegated.
Chang, 80 F.3d at 1299 (citations and internal quotation marks omitted). In order to participate in the conduct of the enterprise, one must have participated in the "operation or management" of the enterprise. Reves v. Ernst & Young. 507 U.S. 170, 180 (1993). "The function of overseeing and coordinating the commission of several different predicate offenses and other activities on an on-going basis is adequate to satisfy the separate existence requirement." Chang, 80 F.3d at 1298. Furthermore, a plaintiff may name members of an association-in-fact enterprise as individual defendants. River City Markets. Inc. v. Fleming Foods West. Inc., 960 F.2d 1458, 1462 (9th Cir. 1992). Plaintiffs allege that defendants participated in an enterprise separate and apart from the pattern of racketeering activity. The three associations cooperated at the beginning of the crab season to determine an appropriate "ex-vessel" price for crab.*fn11 The associations abided by the decisions of each other as to the agreed upon price and voted by majority vote. Salter Dep. at 63, 117. Jim Salter stated in his deposition that, in 2001, the entire fleet of commercial crab fishermen in fishing in the Gulf of the Farollones agreed not to fish because two of the three associations were unwilling to accept a market price of $2.00 per pound. Salter Dep. at 117. John Tarantino regularly contacted association representatives and served as a central clearinghouse for information among the fishermen. McHenry Dep. at 142; Whaley Dep. at 57. Phone records also indicate that the associations and individual defendants contacted each other prior to the opening of the season. Sheer Decl., Exh. S. A reasonable factfinder could conclude that the three associations constitute an enterprise because they operate as an informal organization, separate and distinct from the alleged racketeering activity at issue in this case. Because Maclean, Salter, Wise, Miller, Collins, and Boos were all members of and served in executive positions in the associations, a reasonable factfinder could determine that they participated in the operation of the enterprise.

  Plaintiffs have also demonstrated that there exists a genuine question of material fact as to whether John Morgan and the Morgan Fish Company, Inc. participated in the enterprise. Morgan and the Morgan Fish Company, Inc. cooperated in the operation of an ice plant owned by Tarantino. Morgan abided by the associations' decision not to fish or sell crab at the start of the season by not purchasing crab and by picketing in front of J&S following their purchase of Dooley's crab. The Morgan Fish Company, Inc. also assessed a three-cent tax on each pound of Dungeness crab against the fisherman and remitted this tax to the association. As a result, a reasonable factfinder could conclude that Morgan and the Morgan Fish Company, Inc. participated in the operation of the enterprise.

  Finally, plaintiffs have demonstrated a genuine issue of material fact as to whether Whaley, McHenry and Bettencourt participated in the enterprise. Defendants' primary argument is that these individuals were not members of any association and thus could not have participated in the operation or management of the enterprise. As the Supreme Court noted in Reves, "[a]n enterprise is operated not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management." Reves, 507 U.S. at 178-79, 184 (internal quotation marks omitted). Moreover, on a motion for summary judgment, the court must construe the evidence in a light most favorable to the nonmoving party. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255 (1986). Defendant Whaley abided by the price schedule set by the associations and participated in the 2001 tie-up. While McHenry was not a member of an association, he also abided by the price schedule set by the associations and contacted Tarantino to determine whether he could fish based on the associations' decision as to the set price. ...


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