Full opinion text
MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS’ MOTIONS TO DISMISS MARK W. BENNETT, District Judge. TABLE OF CONTENTS I. INTRODUCTION AND BACKGROUND .....................................834 A. Procedural Background................................................834 B. Factual Background...................................................835 1. Facts Drawn From First Amended Complaint........................835 2. Facts Related Solely To Personal Jurisdiction .......................843 II. LEGAL ANALYSIS........................................................844 A. U.S. Bank’s Rule 12(b)(1) Challenge to Jurisdiction......................844 1. General law regarding supplemental jurisdiction.....................844 2. Analysis..........................................................845 B. Motions To Dismiss For Lack Of Personal Jurisdiction...................848 1. Rule 12(b)(2) standards............................................848 2. Nationwide service of process.......................................849 C. Motions To Dismiss For Failure To State A Claim .......................851 1. Rule 12(b)(6) standards............................................851 2. Pleading fraud under Rule 9(b).....................................852 3. Analysis of civil RICO claims.......................................853 4. Analysis of securities claims........................................855 a. Section 10(b) and Rule 10b-5 claims.............................855 i. The Langley defendants ...................................857 ii. Defendant Morrison.......................................859 iii. Defendants Frost and the Nichols ..........................859 iv. The Bumgarners..........................................860 v. Defendant Gersten Savage.................................861 b. Section 11 claims..............................................862 /. The Langley defendants...................................863 ii. Defendant Morrison.......................................864 iii. Defendants Frost and the Nichols ..........................864 iv. The Bumgarners..........................................865 v.Defendant Gersten Savage.................................865 c. Section 12 claims..............................................865 i. Sellers of APL stock.......................................866 ii. Statute of limitations .....................................867 d. Section 18 claims..............................................868 e. Section 20 claims..............................................870 5. State law claims...................................................872 a. Conversion claims.............................................872 b. Breach of fiduciary duty claims.................................873 i. US. Bank................................................874 ii.The Langley defendants.................... 875 c. Fraudulent misrepresentation and omission claims 876 i. U.S. Bank................................. 876 ii. The Langley defendants.................... 877 iii. Morrison.................................. 877 iv. The Nichols ............................... 878 d. Negligent misrepresentation/nondisclosure claims . 878 i. The Langley defendants.................... 879 ii. Morrison.................................. 879 iii. The Nichols ............................... 880 e. Professional Negligence......................... 881 i. Morrison and Gersten Savage............... 881 ii. The Langley defendants.................... f. Punitive damages.............................. 882 D. Leave To Amend....................................... 882 III. CONCLUSION 882 The court is confronted in this case with a myriad of claims brought under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), both the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as several state law claims all arising from an alleged Ponzi scheme orchestrated around the selling of securities in the publically traded company, American Pallet Leasing, Inc. I. INTRODUCTION AND BACKGROUND A. Procedural Background On November 30, 2007, plaintiffs, all investors in the corporation American Pallet Leasing, Inc. (“APL”) filed their complaint in this case. On October 10, 2008, plaintiffs filed their First Amended Complaint against defendants, including defendants U.S. Bancorp, Inc. and U.S. Bancorp Investment Services, Inc. (collectively “U.S. Bank” unless otherwise indicated), Langley, Williams & Company, L.L.C. and Daphne B. Clark (collectively the “the Langley defendants” unless otherwise indicated), Jason Nichols, Jennifer Nichols, Gregory Frost, Margaret Bumgarner, Kevin Bumgarner, and Gersten Savage, L.L.P. (“Gersten Savage”). In their First Amended Complaint, plaintiffs set out the following fourteen causes of action against the named defendants: (1) violation of Racketeer Influenced and Corrupt Organizations Act § 1962(c), 18 U.S.C. § 1962(c) (Count 1); (2) violation of RICO § 1962(a), 18 U.S.C. § 1962(a) (Count 2); violation of RICO § 1962(d), 18 U.S.C. § 1962(d) (Count 3); (4) breach of fiduciary duty (Count 4); (5) conversion (Count 5); (6) negligent misrepresentations/nondisclosures (Count 6); (7) fraudulent misrepresentations and omissions (Count 7); (8) violation of § 10(b) and Rule 10(b — 5) of the Securities Exchange Act of 1934 (“the 1934 Act”), 15 U.S.C. § 78j(b) (Count 8); (9) violation of § 11 of the Securities Act of 1933 (“the 1933 Act”), 15 U.S.C. § 77k (Count 9); (10) violation of § 12 of the Securities Act of 1933, 15 U.S.C. § 77l (Count 10); (11) violation of § 18 of the Securities Exchange Act of 1934, 15 U.S.C. § 78r (Count 11); (12) controlling persons under § 20 of the Securities Exchange Act of 1934, 15 U.S.C. § 78t (Count 12); (13) professional negligence (Count 13); and, (14) punitive damages (Count 14). Defendants U.S. Rank, the Langley defendants, Jason Nichols, Jennifer Nichols, Gregory Frost, Margaret Bumgarner and Kevin Bumgarner (referred to jointly as the “Bumgarners”), and Gersten Savage have filed motions to dismiss which are presently before the court. In their respective motions to dismiss, Frost, the Langley defendants, and the Nichols assert that they have insufficient minimum contacts within the state of Iowa to establish personal jurisdiction and, therefore, the First Amended Complaint should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(2). Frost, the Langley defendants and the Nichols, alternatively, move to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The Langley defendants, Gersten Savage and the Bumgarners each move to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). U.S. Bank moves to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(1), on the ground that the court lacks subject matter jurisdiction over plaintiffs’ claims against U.S. Bank because all federal claims against U.S. Bank have been dismissed and the court lacks supplemental jurisdiction over plaintiffs’ remaining state law claims against it because those claims allegedly do not share a common nucleus of operative facts with the RICO and securities claims against the other defendants. U.S. Bank, alternatively, moves to dismiss the claims asserted against it for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs have filed timely responses to each defendant’s respective motion to dismiss. B. Factual Background 1. Facts Drawn From First Amended Complaint On a motion to dismiss, the court must assume all facts alleged in plaintiffs’ First Amended Complaint are true, and must liberally construe those allegations. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Therefore, the following factual background is drawn from plaintiffs’ First Amended Complaint in such a manner. Plaintiffs are 177 individuals and entities that purchased stock in defendant American Pallet Leasing, Inc. (“APL”) from 2003 through 2006. APL was originally incorporated under the laws of Iowa on June 13, 2003, and maintained its principal place of business in Cedar Rapids, Iowa. APL held itself out to be in the business of manufacturing both wooden and metal pallets in Rock Valley, Iowa, as well as in South Carolina. In September 2004, APL was reverse merged into the publicly traded corporation Literary Playpen, Inc. (“Literary Playpen”), a Delaware Corporation. Following the reverse merger, the name of Literary Playpen was changed to American Pallet Leasing, Inc. a Delaware Corporation (“APL” will refer to all variants of the company unless otherwise indicated). The corporate offices of APL remained in Cedar Rapids, Iowa. At some point between 2003 and 2006, defendants Timothy Bumgarner, Margaret Bumgarner, Kevin Bumgarner, James F. Crigler, Robert Vinson, Douglas H. Peterson, Keith Kerbaugh, Byron Hudson and Elgin McDaniel were officers, directors, and/or senior employees of APL. Keith Kerbaugh was APL’s Chief Executive Officer and Doug Peterson was APL’s Chief Financial Officer. Beginning in June 2003 and continuing through 2006, APL solicited investment funds from plaintiffs. To entice investors to purchase its stock, APL falsely reported growth in its sales and assets through misrepresentations in the company’s financial statements. As a result, at one point, the company’s stock rose in price from 60 cents a share to over $6.00 in less than thirty days. Within a year, however, APL’s stock price had fallen to less than 10 cents a share. Prior to APL’s incorporation, those individuals who would become its incorporators and original officers and directors drafted a document entitled “American Pallet Leasing, Inc. Executive Summary (“the Executive Summary”). The Executive Summary contained the following allegedly false statements: a. APL owned certain patents related to the production of wood pallets though said pallets were at all times held solely in the name of Timothy Bumgarner, personally. b. A purchase agreement for RY-JO-BE had been negotiated and that RY-JO-BE’s customers had agreed to make a contractual change to APL, including but not limited to the customer named TAMKO Roofing. c. TAMKO did enter into an agreement to purchase pallets from APL, but claimed its signor on the agreement, Mark Hicks, exceeded his authority when entering into the contract. d. APL received notice that TAMKO considered the contract invalid in January 2005, but APL never disclosed the information to Plaintiffs. e. APL identified its purported customer base, none of whom were ever customers of APL. f. Manufacturing and fabrication of the initial pallets would be performed by Iron Company Enterprises, located in Phoenix, Arizona, but Iron Company Enterprises never agreed to these terms. g. APL’s projected earnings were grossly and intentionally inflated, and were not based upon sound financial forecasting, accounting principles, or truthful assumptions. First Am. Compl. ¶¶ 21(a)-(h). Thirty-eight plaintiffs made investments totaling approximately $300,000 during the first investment offering (“the Group 1 Plaintiffs”). All of the Group 1 Plaintiffs were given a copy of the Executive Summary between June 2003 and April 2004 and relied upon it. In September 2003, as part of APL’s initial stock offering, defendant Hughes-Roth, one of APL’s broker-dealers, prepared, with the assistance of APL’s officers and directors, a document entitled “Funding Request Confidential Information Memorandum” (“the CIM”). The CIM purported to contain “information solely for use by potential investors.” First Am. Compl. ¶ 23. The CIM contained the following misrepresentations: a. APL had made considerable headway in its developmental plan and represented certain phases had been completed, even though no contracts with high volume pallet users had been secured as of October 2003. b. APL was managing and operating a facility in Oklahoma which had increased revenue by 400% even though it did not have an Oklahoma facility nor had it increased monthly revenues. c. APL entered into an agreement with TAMKO, as set forth in paragraph 21(c) herein but failed to notify investors that TAMKO considered that contract void. d. Projected net earnings for the Iowa APL to be $1,458,930 by September of 2004 and $9,252,134 by September 2005 and $23,223,583 by September of 2006 all of which were intentionally and grossly inflated. e. APL intended to enter into a reverse merger transaction with Literary Playpen, even though APL and Literary Playpen never intended to allow the plaintiff-investors to receive or realize any type of benefit under the reverse merger transaction. First Am. Compl. at ¶¶ 24(a)-(e). In October 2003, the Group 1 Plaintiffs were all given a copy of the CIM and relied upon it. APL made a second investment offering to potential investors. As part of this second investment offering, APL’s officers and directors helped prepare a Confidential Private Placement Memorandum (“PPM”) which was issued in June 2004 and finalized in August 2004. The PPM contained the following alleged misrepresentations: a. The estimated value of APL’s stock and the estimated book value, since APL’s net book value was near zero as of June 30, 2004. b. All investors who purchased would receive “piggy-back registration rights,” but the investors never received the benefit of these rights, nor were they included in any of the subsequent SB-2 filing or S-8 filings. c. Shares would only be sold to 35 Non-Accredited Investors, even though well over 35 Non-Accredited Investors invested pursuant to the PPM. d. A down payment had been made on the purchase of the G & G/Cherokee Wood, Inc. facility located in Blacks-burg, South Carolina (hereinafter “G & G”). e. Timothy Bumgarner personally invested substantial sums of money in APL, even though he had not. f. Ryan Financial Group issued a Financing Commitment Letter, which reasonably created the appearance that the G & G facility was completely funded, even though no such Letter was prepared, and APL had not secured appropriate financing, which resulted in APL defaulting on the purchase by failing to make four of five monthly payments of $30,000 and failing to make a balloon payment of $2,700,000. g. The PPM also indicated a copy of the purchase agreement between APL and the G & G facility had been attached, but said Purchase Agreement was never produced because it would have revealed the complete lack of funding. h. Plaintiffs were told by agents of APL that there was no problem with the financing and that the investors could rely on the PPM. i. The State and local governments of South Carolina agreed to give APL certain tax benefits, even though no such commitments had been made. j. G & G agreed to purchase timber from APL for the upcoming three years. k. Certain patents were owned by APL and that Nucor had offered a large sum of money to purchase the patents, but said patents remained in Bumgarner’s name at all relevant times, and Nucor never offered the amounts represented in the PPM for the steel pallet patents. l. The PPM further listed a number of corporate customers of APL, even though APL never sold a single galvanized or steel pallet to any of the claimed customers. m. The PPM listed the 2005 projected revenues, which were intentionally and grossly overstated and not based upon sound actuarial principles or truthful assumptions. n. The PPM indicated Defendant Mercedis USA Limited agreed to purchase APL stock at $7.85 per share, even though Mercedis never intended or agreed to buy APL stock, but was paid $50,000 in May or June 2004 to make the representations made in the PPM. o. Mercedis would function as APL’s investment bank and that a banking agreement had been signed, but no investment banking services ere [sic] performed. p. Mercedis USA Limited was to pay $0.50 each for 6 million warrants to purchase APL common shares, under the purported banking agreement, but no such stock purchases were made. q. The PPM indicated a facility was to be built in Burnsville, North Carolina and would be fully operational by September 1, 2004, but the facility never commenced nor materialized. r. The PPM represented that a wood and steel pallet facility was be constructed in Rock Valley, Iowa, but APL breached its contract with the City of Rock Valley and never intended to commence construction of such a facility. s. The PPM listed, specifically, the permissible uses of APL’s net proceeds, but APL used little, if any, of the funds raised from Plaintiffs’ Group 2 for the stated purposes. t. The PPM represented an equity valuation analysis was done stating that the “Estimated Value of APL Common Stock” as of December 31, 2005, should have an “effective price per share of $9.58,” but the analysis was based on false assumptions and unsound actuarial financial principles. u. A business entity known as “US Consults” had awarded APL a total of $15 million of USTC’s and that APL would receive a total of $1,233,600 in cash, but U.S. Consults was never aware of these representation [sic] and never authorized them. v. The PPM contained ten Pro Forma income statements and balance sheets and another twenty Pro For-ma financial statements and projections, none of which were ever realized. w. The PPM materially omitted the fact that Daniel Donahue was the General Partner of Templemore Partners, an original investor in a publicly traded company known as Literary Playpen, Inc., which would be reverse merged into APL in September 2004. First Am. Compl. at ¶¶ 27(a)-(w) (footnote omitted). Sixty-one plaintiffs made investments during the second investment offering (“the Group 2 Plaintiffs”). APL made a third investment offering in conjunction with a reverse merger, organized by APL’s officers and directors, with Literary Playpen in September 2004. Defendant Michael Morrison of Nevada Agency and Trust, as an escrow agent and attorney, gave a written opinion, concerning the reverse merger, that all the requirements and regulations of the Securities Exchange Commission (“SEC”) and state securities regulations had been met and that good and valuable consideration had been paid by all of the alleged purchasers of the Literary Playpen stock. In order to facilitate the reverse merger, the sellers and purchasers were divided into two groups, each managed by a different escrow account manager. One escrow account was managed by Michael Morrison. Morrison was to have received $350,000 from thirteen investors for the escrow account he was managing. Morrison, however, only received $245,000 from seven cash investors. The other six individuals who were listed as being contributors to Morrison’s escrow account did not contribute any money in exchange for the issuance of stock to them. These six individuals were Jesse Navarro, Jason Nichols, Jennifer Nichols, Gregory Frost, Christopher Curnutt and John Breda. Their receipt of free stock in the reverse merger was not disclosed to any of the Group 2 Plaintiffs even though such actions violated provisions of the PPM. According to the terms of the Shareholders Purchase Agreement, the plaintiff-investors were to have received approximately 97.5 percent of the restricted and free trading stock of Literary Playpen in exchange for their cash contributions. Instead, the majority of shares went to other individuals, including Timothy Bumgarner, Jason Nichols, Jennifer Nichols and Gregory Frost. These individuals, in turn, sold the stock they received on the market and made substantial profits. Thirty-six plaintiffs invested approximately $595,000 during the reverse merger offering (“the Group 3 Plaintiffs”). The Group 3 Plaintiffs lost 100 percent of their investment. From September 2004 through 2006, APL made a fourth investment offering to potential investors through the open market. In order to inflate APL’s stock price, numerous press releases were issued based on APL officers and directors’ representations. These press releases contained material misrepresentations. APL’s officers and directors also provided inaccurate information in filings with the SEC. APL made false representations on the following filings: its Form 8-K filed in September or October 2004; its Form 10-QSB filed on November 22, 2004; its Form S-8 Registration Statement filed on February 7, 2005; its Form 10-QSB filed on February 23, 2005; its Form 10-QSB filed on May 12, 2005; its Form SB-2 filed in June 2005 and amended on August 5, 2005; and, its Form 10-KSB filed on October 17, 2005. Defendant Gersten Savage is a limited liability partnership law firm. Gersten Savage acted as APL’s legal counsel from April 2005 through 2006. Gersten Savage represented that it had reviewed APL’s registration statement. Gersten Savage was responsible for reviewing and providing an opinion regarding APL’s Form 10-QSB filed on May 12, 2005, as well as APL’s Form SB-2 filed in June 2005 and amended on August 5, 2005, and the Form 10-KSB filed on October 17, 2005. Each of these documents, contained numerous misrepresentations. Specifically, the Form 10-QSB filed on May 12, 2005, which indicated that since February 23, 2005, the number of APL’s shares of common stock had increased from 11,946,090 to 19,825,-742, contained the following allegedly false representations: 2) The 10-QSB failed to mention that the increase in shares occurred pursuant to Timothy Bumgarner’s instructions to the transfer agent and that shareholder approval had not been obtained. 3) The 10-QSB further failed to mention that the transfer agent complied with all of the instructions from Timothy Bumgarner without legal opinion or auditor’s opinion, and in some cases, without Medallion guarantees. 4) The 10-QSB further failed to indicate that the transfer agent issued stock without the co-owner’s signatures or the required 144 documentation. 5) This transaction resulted in nearly doubling the number of free trading shares of APL without shareholder notice or approval, the majority of which were issued to Bumgarner and his family members. 6) The May 12, 2005, 10-QSB showed that APL’s cash or cash equivalent was down to $16,539 and that the inventories existed of $116,641 but none of the claimed assets actually existed. 7) The 10-QSB went on to state that sales from July 1, 2004 through March 31, 2005 were $2,418,256 and the company had assets valued at $3,402,697 even though sales did not rise to that level and APL was almost completely out of assets, cash and business. 8) Further, the May 12, 2005, 10-QSB went on to state that consultants had been paid $1,079,516 and that office expenses were $707,630 from July 1, 2004 through March 31, 2005, with no narrative explanation, even though most of the alleged “consultant fees” were paid to the officers and directors of APL and their respective friends and family or other business entities that performed no discernable service to APL. 9) The May 12, 2005, 10-QSB failed to mention that all of the monthly payments on the G & G contract were missing except the payment in September 2004. 10) The May 12, 2005, 10-QSB further indicated the purchase of the G & G facility was executed though an unsecured promissory note even though the purchase was not on an unsecured promissory note but on a Contract for Deed that could be foreclosed upon within 30 days notice. 11)The May 12, 2005, 10-QSB further indicated the time to pay the balance due on the G & G facility had been extended even though no such extension had been granted. First Am. Compl. at ¶¶ 58(e)(2)-(ll). APL’s Form SB-2 filed in June 2005 and amended on August 5, 2005, contained the following two allegedly false representations: 2) The SB-2 amendment filed on August 5, 2005 showed that the amount of shares of stock issued and outstanding were 26,881,720 shares, which equated to a more than 7 million share increase from the May 12, 2005 10-QSB filing and said increase had not been approved by the shareholders. 3) The SB-2 filing states that all of the assets were intact as of July 15, 2005, but APL was insolvent and had no revenues. First Am. Compl. at ¶¶ 58(f)(2)-(3). The Form 10-KSB filed on October 17, 2005, contained the following alleged misrepresentations: 2) The 10-KSB stated that the reverse merger had been done legally when in fact it had not. 3) The 10-KSB failed to mention that the monthly payments on the G & G facility, with the exception of the September 2004 payment, had never been made. 4) Further, there was no mention that the entire $2.7 million dollars had become due on the contract and had not been paid. 5) The 10-KSB stated that the APL had been sued for breach of contract by the sellers of the G & G facility but materially omitted counts for fraud and unfair trade practices. 6) The 10-KSB stated that it had received land in Rock Valley from the City of Rock Valley and that APL was going to be receiving numerous grants from Iowa, all of which was materially untrue. 7) The 10-KSB further listed the compensation of Timothy Bumgarner as $22,500 from July 1, 2004 through June 30, 2005 but he received hundreds of thousands of dollars of compensation. First Am. Compl. at ¶¶ 58(g)(2)-(7). The Langley defendants acted as APL’s auditors from August 30, 2004 through the middle of 2006. Defendant Langley Williams is a limited liability company and a provider of accounting, auditing and bookkeeping services, with its principal place of business in Lake Charles, Louisiana. Defendant Daphne Clark is a licensed Certified Public Accountant employed at Langley Williams. On September 8, 2004, in an email from Craig Medoff, the Langley defendants were “put on alert that the assets and representations made in the PPM were false ...” First Am. Comp, at ¶ 99. The Langley defendants never informed APL’s investors of this information. Instead, on September 27, 2004, Langley Williams issued an unconditional audit and verified the accuracy of APL’s representations regarding its financial condition and the reverse merger transaction. On November 17, 2004, the Langley defendants reviewed and approved the balance sheets and profits and loss statements that were filed by APL in its November 22, 2004, 10-QSB. Likewise, on February 17, 2005, the Langley defendants reviewed and approved the balance sheets and profits and loss statements that were filed by APL in its February 23, 2005, 10-QSB. Again, on May 12, 2005, the Langley defendants reviewed and approved the balance sheets and profits and loss statements that were filed by APL in its May 12, 2005, 10-QSB. The Langley defendants also filed an opinion letter approving APL’s Form SB-2 filed in June 2005. Defendant Michael J. Morrison is a licensed attorney who lives in Reno, Nevada. He acted as one of the escrow agents for the reverse merger between APL and Literary Playpen. Morrison agreed to act as an escrow agent for both the owners of Literary Playpen and the plaintiffs. On September 9, 2004, Morrison stated in an e-mail to Dan Donahue that he had reviewed the purchase agreement and it generally looked fine. In his capacity as an attorney and escrow agent, Morrison provided a written opinion in which he stated that all of the legal requirements and regulations had been met and that good and valuable consideration had been paid by all of the alleged purchasers of the Literary Playpen stock. Morrison never matched the cash payments received with the number of shares being issued. U.S. Bank was responsible for both APL’s banking transactions and Timothy Bumgarner’s personal banking transactions. U.S. Bank loaned money to some plaintiffs to purchase stock in APL. U.S. Bank’s employees in Cedar Rapids maintained a special relationship with Timothy and Kevin Bumgarner and permitted Timothy and Kevin Bumgarner to withdraw large sums of money from APL’s business account and deposit the funds directly into their personal checking accounts. Between August 2, 2004, and August 6, 2004, checks from plaintiffs totally $1,600,000 were deposited in APL’s corporate checking account at U.S. Bank. On August 6, 2004, Timothy Bumgarner withdrew approximately $1,200,000 from APL’s corporate checking account at U.S. Bank, deposited the money into his personal U.S. Bank account, and then withdrew some of the money and loaned it back to APL’s U.S. Bank checking account. Timothy Bumgarner also withdrew some money from his personal account at U.S. Bank and deposited it in his personal investment account at U.S. Bancorp Investment Services, Inc. U.S. Bank did not provide notice of these deposits to federal agencies. U.S. Bank also failed to follow standard procedures and monitor transactions according to its own internal standards. Starting in August 2004, U.S. Bank misrepresented and disguised Timothy Bumgarner’s personal bank statements as APL’s bank statements. Auditors relied on the disguised statements when filing a Form 8-K and audit for August 30, 2004 with the SEC. More than 50 percent of the plaintiffs relied on the Form 8-K to purchase APL stock. 2. Facts Related Solely To Personal Jurisdiction Defendants Morrison, Frost, Jason Nichols and Jennifer Nichols have supplied affidavits in support of their request to dismiss the complaint on the ground of lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). The court has extracted the following facts, all uncontroverted, from those affidavits which relate to defendants’ contacts with the State of Iowa. Michael Morrison has never lived in Iowa, or owned property in Iowa. He has never been to Iowa or driven through the state. Morrison does not conduct any business in Iowa. He is licensed to practice law in Nevada. He is not licensed to practice law in Iowa. He has never advertised in Iowa, or otherwise taken any action with the intention of soliciting business from a resident of Iowa. Morrison has never had a client from Iowa. Morrison was counsel and corporate secretary for Literary Playpen, Inc. Literary Playpen, Inc. was a Delaware Corporation with offices in Reno, Nevada. Morrison did not conduct any business in Iowa in his capacity as counsel and corporate secretary for Literary Playpen, Inc. Gregory Frost is a resident of the State of New York and resides in New York City, New York. He has never lived in Iowa or visited the state. He does not own any property in Iowa and does not conduct any business in Iowa. He is an attorney licensed to practice in New York. He is not licensed to practice in Iowa. Frost has never had a client from Iowa and has never advertised in Iowa with the intention of soliciting business from a resident of Iowa. Frost was involved in the execution of a subscription agreement to purchase shares of common stock in Literary Playpen, Inc. Frost executed the subscription agreement in New York. He had no dealings with Literary Playpen, Inc. which were conducted in Iowa. He had no communications with any person or entity in Iowa in any capacity involving Literary Playpen, Inc. Jason Nichols is a resident of the State of Texas, and currently resides in Dallas, Texas. He has never lived in Iowa or been to the state. He does not own any property in Iowa and has never maintained a bank account in Iowa. He does not conduct any business in Iowa and has not entered into any contracts in Iowa. He does not pay taxes in Iowa. Likewise, Jennifer Nichols is a resident of the State of Texas, and currently resides in Dallas. She has never lived in Iowa or visited Iowa. She does not own any property in Iowa and has never maintained a bank account in Iowa. She also does not conduct any business in Iowa and has not entered into any contracts in Iowa. She does not pay taxes in Iowa. II. LEGAL ANALYSIS A. U.S. Bank’s Rule 12(b)(1) Challenge to Jurisdiction Because all federal claims against it have been voluntarily dismissed by plaintiffs, defendant U.S. Bank seeks dismissal of the remaining state law claims against it on the basis of lack of supplemental jurisdiction. Defendant U.S. Bank contends that the court lacks subject matter jurisdiction over plaintiffs’ state law claims against it because the state law claims do not share a common nucleus of operative facts with the RICO and securities claims against the other defendants. To understand the arguments of defendant U.S. Bank in regard to dismissal of the state law claims against it, the court will briefly set out the context of each of the state law counts against U.S. Bank. In Count 4, plaintiffs assert a claim of breach of fiduciary duty against U.S. Bank based on U.S. Bank’s alleged failure to ensure that APL complied with the state and federal laws and regulations. In Count 6, plaintiffs assert a claim of negligent misrepresentation/nondisclosure against U.S. Bank for negligently failing to disclose material information regarding APL’s financial condition. In Count 7, plaintiffs assert a claim of fraudulent misrepresentation and omission against U.S. Bank for conspiring to omit disclosure of material information regarding APL’s financial condition. In Count 14, plaintiffs request punitive damages against U.S. Bank. 1. General law regarding supplemental jurisdiction Section 1367 of Title 28 of the United States Code governs a district court’s supplemental jurisdiction, and lack thereof, over state law claims: (a) Exception as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within the original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve joinder or intervention of additional parties. 28 U.S.C. § 1367(a) (emphasis added). Whether a court has supplemental jurisdiction is determined by the following test: “ ‘a federal court has jurisdiction over an entire action, including state-law claims, wherever the federal-law and state law claims in the case ‘derive from a common nucleus of operative fact’ and are ‘such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.’ ’ ” Kansas Public Employees Retirement Sys. v. Reimer & Koger, Assoc., Inc., 77 F.3d 1063, 1067 (8th Cir.1996) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988) (in turn quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725-26, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966))); see OnePoint Solutions, L.L.C. v. Borchert, 486 F.3d 342, 350 (8th Cir.2007) (“ ‘Claims within the action are part of the same case or controversy if they ‘derive from a common nucleus of operative fact.’ ’ A plaintiffs claims derive from a common nucleus of operative fact if the ‘claims are such that he would ordinarily be expected to try them all in one judicial proceeding.’ ”) (quoting Myers v. Richland County, 429 F.3d 740, 746 (8th Cir.2005) (quoting in turn Gibbs, 383 U.S. at 725, 86 S.Ct. 1130)); Cossette v. Minnesota Power & Light, 188 F.3d 964, 973 (8th Cir.1999) (“A district court may exercise supplemental jurisdiction over state law claims that arise from the same nucleus of operative fact as the plaintiffs federal claims and when the plaintiff would ordinarily be expected to try all the claims in one judicial proceeding”) (citing Kansas Public Employees Retirement Sys.); Meyers v. Trinity Med. Ctr., 983 F.2d 905, 907 (8th Cir.1993); see also Alumax Mill Prods., Inc. v. Congress Fin. Corp., 912 F.2d 996, 1005 (8th Cir. 1990); Appelbaum v. Ceres Land Co., 687 F.2d 261, 262-63 (8th Cir.1982); Wrist-Rocket Mfg. Co., Inc. v. Saunders Archery Co., 578 F.2d 727, 734-35 (8th Cir.1978). In sum, supplemental jurisdiction under subsection (a), is appropriate where the federal-law claims and the state-law claims in the case “derive from a common nucleus of operative fact” and are such that a plaintiff would ordinarily be expected to bring all of the claims in one suit. See Kansas Public Employees Retirement Sys., 77 F.3d at 1067. Once the court has determined supplemental jurisdiction is proper under subsection (a), subsection (c) provides the list of circumstances under which the court can decline to exercise such supplemental jurisdiction: (c) The district court may decline to exercise supplemental jurisdiction over a claim under subsection (a) if— (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction; (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(c); see International Ass’n of Firefighters of St. Louis, Franklin and Jefferson v. City of Ferguson, 283 F.3d 969, 976 (8th Cir.2002) (noting, without expressing an opinion as to what the district court should do on remand, that a district court “would always be free ... to proceed on the merits of the state claim, in its discretion, even if one of the conditions in 28 U.S.C. § 1367(c) for dismissal of the state claim had been satisfied.”); Southern Council of Industrial Workers v. Ford, 83 F.3d 966, 969 (8th Cir.1996) (“Where original jurisdiction exists, exercise of supplemental jurisdiction over all adequately related claims is mandatory absent certain exceptions.... ”); Tinius v. Carroll County Sheriff Dept., 255 F.Supp.2d 971, 977 (N.D.Iowa 2003) (“ ‘The statute plainly allows the district court to reject jurisdiction over supplemental claims only in the four instances described therein.’”) (quoting McLaurin v. Prater, 30 F.3d 982, 984 (8th Cir.1994)). 2. Analysis U.S. Bank asserts that plaintiffs’ Iowa state law claims do not derive from a common nucleus of operative facts as plaintiffs’ RICO and securities claims against the other defendants. U.S. Bank contends that plaintiffs’ federal claims are based on a series of securities schemes and securities violations to inflate the value of APL stock in order to induce plaintiffs to invest in APL while the state law claims against it are grounded on allegations that it failed to notify federal authorities of unusual deposits and Timothy Bumgarner’s disguised bank accounts. U.S. Bank argues that the lack of any discernable overlap between the state law claims asserted against it and the federal RICO and securities claims against the other defendants is best demonstrated by the fact that plaintiffs have voluntarily dismissed all of their federal claims against U.S. Bank. U.S. Bank contends that this demonstrates that plaintiffs do not believe the factual allegations underpinning their claims for RICO violations and federal securities law violations involve U.S. Bank. In contrast, plaintiffs respond that all of their claims, both federal and state, derive from a common nucleus of operative fact, namely the investment scheme and fraud allegedly perpetrated by APL and other defendants who participated in the investment scheme. Plaintiffs argue that while U.S. Bank’s actions do not rise to a level sufficient to create liability under RICO or security law, U.S. Bank’s actions nonetheless were used in facilitating the fraud that is alleged to have been perpetrated by other defendants on plaintiffs. In support of its position, U.S. Bank directs the court’s attention to this court’s decision in Schuster v. Anderson, 378 F.Supp.2d 1070 (N.D.Iowa 2005). Plaintiffs respond that the facts in Schuster are clearly distinguishable from those in this case and that the Schuster decision does not support U.S. Bank’s position here. A review of the Schuster decision bears out plaintiffs’ assertions. In Schuster, plaintiff investors brought suit against a bank, investment advisors, and accountants alleging that some of the defendants perpetrated a scheme to defraud them by inducing them to make certain investments in entities to which some of the defendants had an undisclosed interest. Id. at 1078-79. Plaintiffs alleged twenty causes of action, including RICO claims asserted by some, but not all, of the plaintiffs. Id. at 1076. In addition to the RICO claims, plaintiffs asserted a variety of state law claims, including three counts for professional negligence in the preparation of tax returns. The defendants named in the professional negligence claims moved for dismissal of those claims on the basis of lack of supplemental jurisdiction, arguing that the professional negligence claims were unrelated to the alleged fraudulent schemes which were at the center of the RICO claims. Id. at 1115. The court summarized plaintiffs’ argument in response as follows: The plaintiffs’ arguments as to why the court has supplemental jurisdiction over the Carl Anderson defendants can be described as a “trickle down” effect: the allegations against the Anderson defendants in Count I are loosely related to the RICO claims; Count II against both the Anderson defendants and the Carl Anderson defendants is related to Count I as Schuster’s individual tax returns (basis of Count I) and Schuster Co.’s tax returns (basis of Count II) overlap in some regard; therefore, Count II is loosely predicated on the RICO claims; and finally, Count III should be tried with Counts I and II under principles of economy and convenience. Id. at 1120. The court dismissed Counts II and III, but not Count I. Id. at 1120-22. In reaching this result, the court observed that “Counts II and III involve the preparation of tax returns by parties not part of the RICO claims forming this court’s original jurisdiction, and for parties that are also not a part of the RICO claims.” Id. at 1121. Moreover, the court rejected plaintiffs’ assertion that Count II was connected to the RICO claims due to its connection to Count I, which the plaintiffs alleged was connected to the RICO claims, finding such an assertion “far to nebulous to provide such a ‘discernable overlap’— especially in this instance where neither the Carl Anderson defendants, Schuster Co. or LTT are parties to the federal RICO claims forming this court’s jurisdiction.” Id. On the other hand, the court denied defendants’ motions to dismiss Count I, concluding: At first glance it is evident that Count I is unlike Counts II and III in that it encompasses more than the failure to properly prepare Schuster’s tax returns, but also includes negligence in failing to properly inform Schuster of the tax consequences of investments and loans the Anderson defendants recommended— the same investments and loans that comprise the circumstance constituting fraud in the RICO claims. Id. at 1122. Here, the claims against U.S. Bank more closely resemble Count I in Schuster, which the court did not dismiss, than Counts II and III, which the court dismissed. In reaching this conclusion, the court is mindful of the Third Circuit Court of Appeals’s observation that, “[i]n trying to set out standards for supplemental jurisdiction and to apply them consistently, we observe that, like unhappy families, no two cases of supplemental jurisdiction are exactly alike.” Lyon v. Whisman, 45 F.3d 758, 760 (3rd Cir.1995) (quoting Nanavati v. Burdette Tomlin Memorial Hosp., 857 F.2d 96, 105 (3d Cir.1988), cert. denied, 489 U.S. 1078, 109 S.Ct. 1528, 103 L.Ed.2d 834 (1989)). The allegations against U.S. Bank are broader than just the bank’s failure to follow federal reporting standards and include allegations that the bank “went so far as to misrepresent and disguise Timothy Bumgarner’s personal bank statements as being American Pallet Leasing Inc.’s bank statements, when they were not, commencing in August 2004.” First Am. Complaint at ¶ 132. These disguised bank statements, in turn, were incorporated into the reports filed with the SEC in August 30, 2004, and subsequently were relied upon by more than 50 percent of the plaintiffs in making the decision to purchase nearly $2,000,000 in APL stock. Thus, U.S. Bank’s actions are alleged to have facilitated Timothy Bumgarner’s scheme to defraud plaintiffs through misrepresentations in APL’s financial documents. Accordingly, the federal-law claims against APL, Timothy Bumgarner and other defendants and the state-law claims against U.S. Bank “derive from a common nucleus of operative fact” and are such that would ordinarily be expected to be brought in a single lawsuit. Consequently, the court has supplemental jurisdiction over all of plaintiffs’ claims against U.S. Bank raised in the First Amended Complaint. OnePoint Solutions, L.L.C. v. Borchert, 486 F.3d 342, 350 (8th Cir.2007). U.S. Bank, alternatively, argues that the state law claims against it should be dismissed pursuant to 28 U.S.C. § 1367(c)(3), which permits a federal district court to decline to exercise supplemental jurisdiction where all the claims over which the district court had original jurisdiction have been dismissed. Under 28 U.S.C. § 1367, a federal district court “may decline to exercise supplemental jurisdiction” if— (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(c). This subsection gives a court the discretion to reject jurisdiction over supplemental claims, “but only to a point.” McLaurin v. Prater, 30 F.3d 982, 985 (8th Cir.1994). “The statute plainly allows the district court to reject jurisdiction over supplemental claims only in the four instances described therein.” Id. Thus, where the case clearly fits within one of the subsections listed above, the court may decline to exercise supplemental jurisdiction. Innovative Home Health Care, Inc. v. P.T.-O.T. Assocs. of the Black Hills, 141 F.3d 1284, 1287 (8th Cir.1998); McLaurin, 30 F.3d at 985; Packett v. Stenberg, 969 F.2d 721, 726-27 (8th Cir.1992). Although U.S. Bank does not indicate which specific subsection it believes this case allegedly fits, since all claims over which this court has original jurisdiction have been dismissed, the court infers that U.S. Bank’s argument is grounded on the third category, 28 U.S.C. § 1367(c)(3). When determining whether a court should exercise supplemental jurisdiction, courts must balance the interests of judicial economy, convenience, fairness, and comity. See Quinn v. Ocwen Federal Bank FSB, 470 F.3d 1240, 1249 (8th Cir.2006); Barstad v. Murray County, 420 F.3d 880, 888 (8th Cir.2005); Grain Land Coop v. Kar Kim Farms, Inc., 199 F.3d 983, 993 (8th Cir.1999). “ ‘In the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine-judicial economy, convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the remaining state-law claims.’ ” Barstad, 420 F.3d at 888 (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988)). This, however, is an unusual case where jurisdiction should be retained. After considering “judicial economy, convenience, fairness and comity,” the court finds it appropriate to exercise supplemental jurisdiction over the state law claims against U.S. Bank. First, retaining the state law claims promotes judicial economy. U.S. Bank is not the only defendant named in each of the state law claim counts. Accordingly, the court’s retention of jurisdiction of the state law claims against U.S. Bank avoids the appreciable problem of parallel lawsuits in state and federal court and avoids duplication of work and the resulting dissipation of judicial resources. Additionally, it is far more convenient for the parties to have near identical claims resolved in a single forum. Finally, the court’s investment of judicial time and resources expended in the case weighs in favor of retaining supplemental jurisdiction over the state law claims against U.S. Bank. See Grain Land Coop., 199 F.3d at 993 (finding that when the district court has invested substantial resources in ruling on summary judgment, it is not an abuse of discretion for the court to exercise supplemental jurisdiction, even when all federal claims are disposed of before trial); Murray v. Wal-Mart, Inc., 874 F.2d 555, 558 (8th Cir.1989) (concluding that a substantial investment of judicial time and resources may justify a district court’s exercise of jurisdiction over state law claims even when all federal claims are dismissed). Therefore, the court will exercise supplemental jurisdiction over the remaining state law claims against U.S. Bank. Accordingly, this portion of U.S. Bank’s motion to dismiss is denied. B. Motions To Dismiss For Lack Of Personal Jurisdiction 1. Rule 12(b)(2) standards The court turns next to defendants Frost, the Langley defendants, and the Nichols’ respective motions to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Plaintiffs’ First Amended Complaint “must state sufficient facts ... to support a reasonable inference that [each defendant] may be subjected to jurisdiction in the forum state.” Steinbuch v. Cutler, 518 F.3d 580, 585 (8th Cir.2008). “ ‘Once jurisdiction ha[s] been controverted or denied, [plaintiffs] ha[ve] the burden of proving such facts.’ ” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.2004) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir.1974)). Plaintiffs need not, however, establish jurisdiction by a preponderance of the evidence until an evidentiary hearing is held, or until trial. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). For plaintiffs to survive defendants’ motions to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, plaintiffs “ ‘need only make a prima facie showing of jurisdiction,’ and may do so by affidavits, exhibits, or other evidence.” Romak USA, Inc. v. Rich, 384 F.3d 979, 983 (8th Cir.2004) (quoting Epps v. Stewart Information Services Corp., 327 F.3d 642, 647 (8th Cir.2003)). When examining plaintiffs’ prima facie showing, the court “must view the evidence in the light most favorable to [plaintiffs] and resolve factual conflicts in its favor.” Id. at 983-84. 2. Nationwide service of process With respect to Frost, the Langley defendants and the Nichols’ motions to dismiss, plaintiffs assert that RICO § 1965(b), as well as § 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa, creates nationwide service of process. The RICO statute provides, in pertinent part: (a) Any civil action or proceeding under this chapter against any person may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs. (b) In any action under section 1964 of this chapter in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof. 18 U.S.C. § 1965. Although the Eighth Circuit Court of Appeals has yet to weigh in on the issue, seven federal circuit courts of appeals have held, and another, the Third Circuit Court of Appeals, has implied, that RICO § 1965(b) authorizes nationwide service of process. See FC Inv. Group LC v. IFX Markets, Ltd., 529 F.3d 1087, 1099 (D.C.Cir.2008); Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1230-31 (10th Cir.2006); In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 333 F.3d 763, 768 (7th Cir.2003); PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 71-72 (2d Cir.1998); Brink’s Mat Ltd. v. Diamond, 906 F.2d 1519, 1521 (11th Cir.1990); Combs v. Bakker, 886 F.2d 673, 675 (4th Cir.1989); Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668, 671-72 (7th Cir.1987); Butcher’s Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 538-39 (9th Cir.1986); see also United States v. Contents of Accounts Nos. 3034504504 & 144-07143, 971 F.2d 974, 980 (3d Cir.1992) (dicta noting that “Congress has expressly provided for nationwide service of process in the civil Racketeer Influenced and Corrupt Organizations Act ... ”), cert. denied, 507 U.S. 985, 113 S.Ct. 1580, 123 L.Ed.2d 148 (1993). The right to nationwide service, however, is not unlimited. See Butcher’s Union Local No. 498, 788 F.2d at 539 (noting that “the right to nationwide service in RICO suits is not unlimited.”); see also PT United Can Co., 138 F.3d at 71 (finding “that § 1965 does not provide for nationwide personal jurisdiction over every defendant in every civil RICO case, no matter where the defendant is found.”). Rather, the majority of the federal circuit courts of appeals have concluded that all sections of § 1965 must be read “in a way to give that renders a coherent whole” and that a district court has jurisdiction to entertain a civil RICO claim only where personal jurisdiction, based on minimum contacts, is first established as to at least one defendant. See FC Inv. Group L.C., 529 F.3d at 1099 (quoting PT United Can Co., 138 F.3d at 71-72); Cory, 468 F.3d at 1229; Lisak, 834 F.2d at 671; Butcher’s Union Local No. 498, 788 F.2d at 538. Once the plaintiff has established personal jurisdiction over at least one defendant under § 1965(a), the nationwide service of process provision of § 1965(b) permits the plaintiff to bring other nonresident defendants before a single court. See FC Inv. Group L.C., 529 F.3d at 1099; Cory, 468 F.3d at 1229; PT United Can Co., 138 F.3d at 71-72; Lisak, 834 F.2d at 671; Butcher’s Union Local No. 498, 788 F.2d at 538. Here, it cannot be disputed that at least one RICO defendant is subject to personal jurisdiction in Iowa. Defendant APL was originally incorporated under the laws of the State of Iowa and maintained its principal place of business in Cedar Rapids. Following the reverse merger with Literary Playpen, Inc., APL’s corporate offices continued to be located in Cedar Rapids, Iowa. From there, APL solicited investment funds from plaintiffs. Accordingly, defendant APL is clearly subject to both general and specific personal jurisdiction in Iowa. Because the action against defendant APL is properly before this court, the court has jurisdiction over the other defendants, pursuant to § 1965(b), who are alleged to be part of the RICO enterprise, including the Langley defendants and defendants Frost and the Nichols. The Nichols argue that even if the RICO statute authorizes nationwide service of process, the court’s exercise of personal jurisdiction over them cannot be based on plaintiffs’ RICO allegations against them because the RICO claims all fail to state a claim upon which relief can be granted. A Rule 12(b)(2) motion to dismiss, however, is not a proper motion for such an attack on the RICO claims in this case. Rather, such an argument falls within the scope of Federal Rule of Civil Procedure 12(b)(6). Accordingly, those portions of Frost, the Langley defendants and the Nichols’ motions to dismiss which seek dismissal for lack of personal jurisdiction pursuant to Rule 12(b)(2) are denied. C. Motions To Dismiss For Failure To State A Claim Defendants U.S. Bank, the Langley defendants, the Nichols, Frost, the Bumgarners, and Gersten Savage each seek dismissal of the claims asserted against them for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). After reviewing the standards for a 12(b)(6) motion to dismiss, the court will address the specific issues raised by defendants’ motions. Because of the overlap in the issues raised in the parties’ motions, the court will proceed by addressing the issues seriatim. 1. Rule 12(b)(6) standards Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for a motion to dismiss on the basis of “failure to state a claim upon which relief can be granted.” In its decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court revisited the standards for determining whether factual allegations are sufficient to survive a Rule 12(b)(6) motion to dismiss: Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief,” in order to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests,” Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, ibid.; Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (C.A.7 1994), a plaintiffs obligation to provide the “grounds” of his “entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, see Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (on a motion to dismiss, courts “are not bound to accept as true a legal conclusion couched as a factual allegation”). Factual allegations must be enough to raise a right to relief above the speculative level, see 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed.2004) (hereinafter Wright & Miller) (“[T]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action”), on the ASSUMPTION THAT ALL THE allegations in the complaint are true (even if doubtful in fact), see, e.g., Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508, n. 1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002); Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) does not countenance ... dismissals based on a judge’s disbelief of a complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). Bell Atlantic, 550 U.S. at 555-56, 127 S.Ct. 1955 (footnote omitted); see Ashcroft v. Iqbal, — U.S.-, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (instructing that “short and plain statement” requirement “demands more than an unadorned, the-defendant-unlawfully-harmed me accusation.”). Thus, the Eighth Circuit Court of Appeals has recognized that, under Bell Atlantic, “To survive a motion to dismiss, a complaint must contain factual allegations sufficient ‘to raise a right to relief above the speculative level....”’ Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir.2009) (quoting Bell Atlantic, 550 U.S. at 555, 127 S.Ct. 1955). To put it another way, “the complaint must allege ‘only enough facts to state a claim to relief that is plausible on its face.’” B & B Hardware, Inc. v. Hargis Indus., Inc., 569 F.3d 383, 387 (8th Cir.2009) (quoting Bell Atlantic, 550 U.S. at 570, 127 S.Ct. 1955); accord Iqbal, 129 S.Ct. at 1949 (“Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ ”) (quoting Bell Atlantic, 550 U.S. at 557, 127 S.Ct. 1955). Nevertheless, the court must still “accept as true the plaintiffs well pleaded allegations.” Parkhurst, 569 F.3d at 865 (citing Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989)); B & B Hardware, Inc., 569 F.3d at 387 (“[W]e ‘assume[ ] as true all factual allegations of the complaint’ ” (quo