Tommy Desoto v. Christopher Condon

MEMORANDUM

Tommy Desoto and others who are limited partners of Trago LP, shareholders of Trago International, or creditors of Trago LP (collectively, Desoto) appeal the district court’s order dismissing with prejudice their Racketeer Influenced and Corrupt Organizations Act (RICO) claims against Christopher Condon and others (collectively, Condon) for stealing the assets of Trago LP. We affirm.

I

We review a district court’s dismissal for failure to state a claim de novo. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir.2005). “We review the district court’s denial of leave to amend the complaint for abuse of discretion.” Gardner v. Martino, 563 F.3d 981, 990 (9th Cir.2009).

II

The district court properly concluded that Desoto lacks RICO standing. Shareholders and limited partners typically lack standing to assert RICO claims where their harm is derivative of their corporation or partnership’s harm. See Sparling v. Hoffman Constr. Co., 864 F.2d 635 , 640-41 (9th Cir.1988). Such plaintiffs can establish standing only by showing an injury “distinct from that to other shareholders” or a special duty between the shareholder and the defendant. Id. at 640-41. The gravamen of Desoto’s…