Hill v. Opus Corp. (841 F. Supp. 2d 1070, 2011)

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ STATE LAW CLAIMS AND RICO CLAIMS

MARGARET M. MORROW, District Judge.

On June 29, 2010, Randy Ackerman, Jeffrey Dickerson, James Fritcher, Sara Gordon, John Greer, Daniel Haug, Jefferson Hill, Claire Janssen, Don Little, Jr., Paul Marshall, Matthew Montgomery, Jeff Roberts, Tom Roberts, Thomas Schaal, Jr., Charles Vogel, and Greg Wattson filed this action against Keith Bednarowski, Luz Campa, Mark Rauenhorst, Gerald Rauenhorst 1982 Irrevocable Trust F/B/O Children (“the Children Trust”), Gerald Rauenhorst 1982 Irrevocable Trust F/B/O Grandchildren (“the Grandchildren Trust”), and Opus Corporation. Plaintiffs allege that they are owed compensation and deferred compensation by their former employer, Opus West Corporation (“Opus West”). They assert that defendants caused Opus West to transfer monies to its parent company, Opus Corporation, which led Opus West to fail and seek Chapter 11 bankruptcy protection. On July 11, 2011, plaintiffs filed a first amended complaint. On August 5, 2011, defendants filed a motion to dismiss plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (“RICO”) claim, as well as their state law claims to the extent they are based on ERISA-covered benefit plans. Defendants also filed a request for judicial notice in support of their motion. On September 12, 2011, plaintiffs opposed the motion on September 12, 2011, and defendants filed a reply on October 7, 2011.

I. FACTUAL BACKGROUND

Plaintiffs are former employees of Opus West, a real estate development corporation headquartered in Phoenix, Arizona. Hill, Marshall, Schaal, Montgomery, Little, Wattson, Dickerson, and Ackerman (the “California plaintiffs”) are California residents, while T. Roberts, J. Roberts, Vogel, Greer, Janssen, Haug, Fritcher, and Gordon (“the Arizona plaintiffs”) are Arizona residents. The California plaintiffs worked for Opus West for an unspecified period of time. They allege that they entered into an employment relationship with the company in California and worked for it in the state. The Arizona plaintiffs were employed in Opus West’s Arizona office and worked in Arizona.

Plaintiffs’ claims concern a series of multimillion dollar cash and asset transfers that Opus West made to its parent corporation, Opus Corporation (“Opus Corp.”). Plaintiffs contend that Opus West began transferring funds to Opus Corp. on December 21, 2006, and that the transfers continued over the next several years. In December 2006, Opus West transferred approximately $63,169,000 in assets to Opus Corp. Commencing on March 15, 2007, and continuing through 2008, Opus West transferred $83,128,000 in cash to Opus Corp., allegedly without receiving any consideration in return. Plaintiffs assert, on information and belief, that between 2003 and 2008, Opus transferred in excess of $193,814,000 to the two trust defendants, which plaintiffs denominate the Grandchildren Trust and the Children Trust. In 2006 and 2007, Opus West transferred funds to Opus Corp. for contributions to organizations such as Catholic charities. All of these transfers were purportedly made at the direction of defendant Mark Rauenhorst, Opus West’s President and CEO, who sat on Opus Corp.’s board of directors, as well as at the direction of defendants Keith Bednarowski and Luz Campa. The latter two defendants are trustees of the Grandchildren Trust and the Children Trust.

Plaintiffs assert that the transfers continued until July 6, 2009, when Opus West filed a Chapter 11 bankruptcy petition. As of that date, Opus West purportedly owed plaintiffs a total of $26,638,236.57 in compensation and deferred compensation. Plaintiffs contend they learned shortly after the bankruptcy filing that Opus West would not pay the compensation and deferred compensation it allegedly owed.

From 2005 through March 31, 2009, plaintiffs had written incentive compensátion agreements with Opus West, which they allege were drafted and approved by defendants. In 2006, before any of the acts pled in the complaint took place, Mark Rauenhorst and Gerald Rauenhorst, Opus West’s founding chairman, stated in a code of conduct provided to all employees that Opus West

“will transact our business fairly, honestly, and in a manner that meets the highest ethical and legal standards. It is the policy of Opus to comply with all federal, state and local laws, rules, and regulations. Opus will respect the rights, and safeguard the well being, of its employees, customers, and business associates. And, finally, Opus will not knowingly enter into a business relationship with any party who conveys the impression that they may violate any aspect of this Code of Conduct.... Each of us will exercise the highest level of integrity, ethics, and objectivity when representing, or negotiating on behalf of Opus, or when participating in activities that may affect the reputation of the company. We will not misuse the authority or influence of our positions in these relationships, nor become involved in situations that create a conflict of interest between Opus and us, such as employment by, financial interest in, or financial gain from a competitor, supplier, agent or customer.”

In 2004, defendants selected KMPG, LLC as Opus West’s auditor. The firm prepared audited financial statements for Opus Corp. and Opus West from 2004 to 2007. In 2005, defendants purportedly violated the covenants in various loans Opus West had obtained from lenders, the majority of which were federal banks. In 2008, KMPG notified defendants that Opus West’s financial statements contained accounting errors, and that the company’s 2007 financial statement needed to be corrected and reissued. Defendants allegedly hid this information from Opus West’s lenders, as well as its secured and unsecured creditors.

In 2008, KMPG notified defendants that some of Opus West’s quarterly financial statements were also erroneous. It advised that defendants had recorded the sale of the Shoppes at Chino Hills, a retail project located in Chino Hills, California, incorrectly. KMPG allegedly told defendants that had they recorded the Shoppes transaction as required by generally accepted accounting principles (“GAAP”), Opus West would have been in violation of the loan covenants for the quarters ending June 30 and September 30, 2008. Plaintiffs assert that defendants “kept quiet” about this error and did not disclose the violations to Opus West’s lenders; rather, they allege, defendants “kept their mouths shut even though they had a legal and contractual duty to disclose the fraud, and went about their business as if nothing wrong had happened.”

Defendants requested and obtained an extension of their loan covenants in 2006, but “intentionally forgot” to tell Opus West’s lenders and creditors that the company’s financial statements were inaccurate. Plaintiffs assert, in fact, that Opus West received an emergency loan from defendants so that it would appear that it was in compliance with the loan covenants on the date the lenders intended to check debt to equity ratios. The covenants required that Opus West maintain a four-to-one debt to equity ratio. Once the compliance inspections were complete, Opus West allegedly returned the emergency loan to defendants. Plaintiffs assert that defendants conducted these transactions by “intentionally shipping (‘wiring’), or transferring money over the telephone lines” from Opus Corp.’s headquarters in Minneapolis, Minnesota and related Opus entities to Opus West in Phoenix, Arizona. Plaintiffs assert that such transfers were made on at least six occasions between April 13, 2007, and September 30, 2008. They contend the transfers were timed so that Opus West would appear to be in compliance with the loan covenants at the end of each quarter of years 2005 to 2008. and that after quarter’s end, Opus West returned the money to defendants. Plaintiffs contend that classifying an emergency loan from a parent corporation as equity on the subsidiary’s books, rather than as a liability, violates basic accounting rules.

Plaintiffs assert that if Opus West’s financial statements had been properly recorded in accordance with GAAP and Financial Accounting Standards Board (“FASB”) standards, it would have been out of compliance with the loan covenants in each of years 2005 through 2008. Under the terms of the loan agreements, Opus West was required to be in compliance with the covenants on each day the loans were outstanding, not just when the banks were due to perform an inspection or audit.

Plaintiffs allege that defendants knew that their conduct was “wrong, unethical and plainly illegal” at all times, and that it could result in “substantial” civil and criminal penalties. They assert that Opus Corp., in particular, had a number of individuals on its board of directors who had legal and accounting experience, and who could have advised defendants regarding proper accounting and financial reporting practices, as well as the consequences of their purported bank fraud and embezzlement. Plaintiffs assert that Opus Corp. has “exclusive[ ]” control of Opus West’s accounting and computer systems, and the exclusive right to make basic entries on Opus West’s financial statements. Plaintiffs allege that Opus West did not have the right to make such entries, as Opus Corp. was the “sole ‘cook’ in the kitchen.” They also assert that at all relevant times, Gerald Rauenhorst told defendants’ lenders and also stated at the annual vendor party that the Rauenhorst family “had always paid its debts and never defaulted on a loan in [the] company[’]s history.” During conference calls with plaintiffs and Opus West officers, Gerald Rauenhorst and defendant Rauenhorst “assured [plaintiffs] that the Rauenhorst family would honor their obligations and do the right thing for the Opus West employees and that the Rauenhorsts could always be trusted.”

Plaintiffs contend, on information and belief, that on April 7, 2010, defendants’ counsel admitted to a Wall Street Journal reporter that from 2005 until the time of the bankruptcy filing, Opus West transferred $150 million to Opus Corp.; the attorney purportedly said that of this amount, $120 million was distributed to the Grandchildren Trust and the Children Trust. Plaintiffs contend that this constitutes a violation of the Employee Retirement Income Security Act of 1974 (“ERISA”) and a violation of 18 U.S.C. § 664. They assert that a portion of the pension funds that were allegedly embezzled were used to bankroll one of Gerald Rauenhorst’s new ventures.

The complaint alleges seven causes of action: (1) intentional interference with contract; (2) inducing breach of contract; (3) violation of California Business & Professions Code § 17200 et seq. (Unfair Competition Law or “UCL”); (4) RICO violations under 18 U.S.C. § 1962(c)-(d) based on predicate acts of bank fraud, mail and wire fraud, and embezzlement; (5) unjust enrichment; (6) violation of ERISA, 29 U.S.C. § 1132 et. seq.; and (7) declaratory relief.

II. DISCUSSION

A. Legal Standard Governing Motions to Dismiss Under 12(b)(6)

A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in the complaint. A Rule 12(b)(6) dismissal is proper only where there is either a "lack of a cognizable legal theory," or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). The court must accept all factual allegations pleaded in the complaint as true, and construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996); Mier v. Owens, 57 F.3d 747, 750 (9th Cir.1995).

The court need not, however, accept as true unreasonable inferences or legal conclusions cast in the form of factual allegations. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 553-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ("While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s 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"). Thus, a plaintiff’s complaint must "contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.’ ... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ash croft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009); see also Twombly, 550 U.S. at 545, 127 S.Ct. 1955 ("Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)" (citations omitted)); Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir.2009) ("[F]or a complaint to survive a motion to dismiss, the non-conclusory `factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief," citing Iqbal and Twombly). The Ninth Circuit recently summarized the standard as follows:

“First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.2011).

B. Defendants’ Request for Judicial Notice

With their motions to dismiss, defendants filed requests asking that the court take judicial notice of documents related to plaintiffs’ claims, namely, the deferred compensation plans referenced in the complaint. In deciding a Rule 12(b)(6) motion, the court generally looks only to the face of the complaint and documents attached thereto. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). It may, however, consider documents that are incorporated by reference but not physically attached to the complaint if they are central to plaintiffs’ claims and no party questions their authenticity. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (in ruling on a motion to dismiss for failure to state a claim, "[a] court may consider evidence on which the complaint `necessarily relies’ if: (1) the complaint refers to the document; (2) the document is central to the plaintiff’s claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion," citing Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir.1994), overruled on other grounds, Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir.2002); Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1141 n. 5 (9th Cir.2003); and Chambers v. Time Warner, Inc., 282 F.3d 147, 153 n. 3 (2d Cir.2002)); see also Sanders v. Brown, 504 F.3d 903, 910 (9th Cir.2007) ("Review is generally limited to the contents of the complaint, but a court can consider a document on which the complaint relies if the document is central to the plaintiff’s claim, and no party questions the authenticity of the document," citing Warren, 328 F.3d at 1141 n. 5); Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001) ("If the documents are not physically attached to the complaint, they may be considered if the documents’ `authenticity ... is not contested’ and `the plaintiff’s complaint necessarily relies’ on them," citing Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir.1998)); In re Silicon Graphics Inc. Securities Litigation, 183 F.3d 970, 986 (9th Cir.1999) ("[The incorporation by reference doctrine] permits a district court to consider documents `whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading,’" quoting Branch, 14 F.3d at 454).

The documents defendants seek to have the court consider are deferred compensation plans for Opus West employees. These plans are specifically referenced in the complaint and form the basis of plaintiffs’ claims. Plaintiffs do not object to defendants’ request, and in fact rely on the documents appended to the request for judicial notice to support their arguments. Consequently, the court will consider the documents in ruling on the motion.

C. Whether ERISA Preempts Plaintiffs’ State Law Causes of Action 1. Legal Standard Governing ERISA Preemption

“Congress enacted ERISA to ‘protect ... the interests of participants in employee benefit plans and their beneficiaries’ by setting out substantive regulatory requirements for employee benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.’ ” Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting 29 U.S.C. § 1001(b)). “There are two strands of ERISA preemption: (1) ‘express’ preemption under ERISA § 514(a), 29 U.S.C. § 1144(a); and (2) preemption due to a ‘conflict’ with ERISA’s exclusive remedial scheme set forth in 29 U.S.C. § 1132(a), notwithstanding the lack of express preemption.” Paulsen v. CNF Inc., 559 F.3d 1061, 1081 (9th Cir.2009).

ERISA’s express preemption provisions "are intended to ensure that employee benefit plan regulation [is] `exclusively a federal concern.’" Davila, 542 U.S. at 208, 124 S.Ct. 2488 (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981), and citing ERISA § 514, 29 U.S.C. § 1144). Except for state laws regulating insurance, banking, or securities, ERISA "supersede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). "State laws" include "all laws, decisions, rules, regulations, or other State action having the effect of law...." Id., § 1144(c)(1).

ERISA conflict preemption is based on Section 502(a) of ERISA, codified at 29 U.S.C. § 1132(a). That statute prescribes "a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). "A state cause of action that would fall within the scope of this scheme of remedies is preempted as conflicting with the intended exclusivity of the ERISA remedial scheme, even if those causes of action would not necessarily be preempted by [ERISA’s express preemption provisions]." Cleghorn v. Blue Shield of California, 408 F.3d 1222, 1225 (9th Cir.2005); see also Pilot Life Ins. Co., 481 U.S. at 54, 107 S.Ct. 1549 (noting that "policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA").

Plaintiffs’ deferred compensation plans are allegedly “top hat” plans subject to ERISA. The parties agree that plaintiffs seek compensation under two sets of plans—the top hat plans, and Opus West’s bonus and incentive benefit programs (“benefit programs”), which are not governed by ERISA. To the extent plaintiffs’ claims are based on the top hat plans, however, they may be subject to ERISA preemption.

2. Plaintiffs’ Arguments Regarding ERISA Preemption

Plaintiffs plead five state law causes of action: (1) intentional interference with contract; (2) inducing breach of contract; (3) violations of California’s UCL; (4) unjust enrichment; and (5) declaratory relief. Defendants assert that both strands of ERISA preemption apply to these claims “to the extent ... [plaintiffs] seek to recover benefits allegedly due under the top hat plans.... ” They concede that the claims are not preempted by ERISA to the extent they seek compensation under the benefit programs. For the most part, plaintiffs do not dispute the substance of defendants’ ERISA preemption arguments. Rather, they offer two responses in an attempt to avoid ERISA preemption. First, they assert that a motion seeking dismissal of “only a part of a claim” is procedurally flawed; second, they contend that their unfair competition and unjust enrichment claims are based, in part, on federal common law, and thus survive preemption. The court addresses each argument in turn.

Plaintiffs first argue that since Rule 12(b)(6) tests the legal sufficiency of “claims,” a motion that seeks to dismiss only part of a claim is defective. Other courts confronted with claims that are only partially preempted have dismissed the claims to the extent they seek compensation under ERISA-covered plans, but permitted them to proceed as to non-ERISA plans. See In re SmithKline Beecham Clinical Laboratories, Inc. Laboratory Test Billing Practices Litig., 108 F.Supp.2d 84, 111 n. 64 (D.Conn.1999) (having dismissed portions of claims as preempted by ERISA, the court stated:

“It is not clear from the second amended complaint whether the plaintiff insurers’ state law causes of action for fraud and unjust enrichment seek relief from payments the insurers made to SBCL on behalf of benefit plans not governed by ERISA; to the extent they do, those claims are not preempted by ERISA"); Center for Special Procedures v. Connecticut General Life Ins. Co., Civil Action No. 09-6566(MLC), 2010 WL 5068164, *3 (D.N.J. Dec. 6, 2010) ("We find that Count 1 through Count 9 of the Second Amended Complaint, insofar as they are asserted as to the ERISA plans, are expressly preempted by ERISA because they `relate to’ Defendants’ administration of the ERISA plans"); Stephens v. American Republic Ins. Co., No. 304CV0969, 2005 WL 1875055, *4 (M.D.Tenn. Aug. 5, 2005) ("Because the language in Count IV itself is not clear on that point, however, the Court holds that to the extent Count IV states a breach-of-contract claim that relates to ERISA, it is preempted, but insofar as Count IV relates to breach of any alleged contract pertaining to incentive based compensation, it will not be preempted").

The lone authority plaintiffs cite in support of their procedural argument is Thompson v. Paul, 657 F.Supp.2d 1113 (D.Ariz.2009). Thompson, however, is clearly inapposite. The court there stated that a Rule 12(b)(6) motion to dismiss' could not “be used to strike certain allegations in support of a claim, where the underlying claim itself is not challenged.” Id. at 1129. It was reviewing a case that had been remanded after the Ninth Circuit had reversed the dismissal of a claim and directed that plaintiffs be given leave to amend. Id. Plaintiffs included two additional factual allegations in their first amended complaint; defendants challenged these under Rule 12(b)(6). Id. The district court found that Rule 12(b)(6) was not an appropriate vehicle to employ in seeking to have the allegations struck, and construed defendants’ motion as a motion to strike under Rule 12(f). Id.

Here, defendants challenge the legal sufficiency of plaintiffs’ allegations to the extent they are based on ERISA-covered compensation plans; they do not suggest that any of the allegations are “redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.Proc. 12(f). As plaintiffs’ argument is not supported by case law and is contrary to district court decisions examining the issue, the court concludes that plaintiffs’ state law claims seeking compensation under ERISA-covered plans are separable from their claims seeking compensation under non-covered plans.

Plaintiffs further argue that their unjust enrichment and unfair competition claims withstand ERISA preemption because they are based on a "trust fund" theory, which "views corporate assets as held in trust for the benefit of the corporation’s creditors." As a result, they assert, the claims arise in part under "federal common law," as to which there is neither express or conflict ERISA preemption. As noted above, the complaint’s third cause of action pleads a violation of the UCL, California Business & Professions Code § 17200 et seq., a state law that prohibits unlawful, unfair, or fraudulent business acts or practices. Federal courts have interpreted UCL claims under state law rather than federal common law. See, e.g., Argueta v. J.P. Morgan Chase, 787 F.Supp.2d 1099, 1104-05 (E.D.Cal.2011) (citing California cases while interpreting a UCL claim); Fortale za v. PNC Financial Services Group, Inc., 642 F.Supp.2d 1012, 1019 (N.D.Cal. 2009) (applying California law to interpret a UCL claim); Meta-Film Associates, Inc. v. MCA, Inc., 586 F.Supp. 1346, 1360 (C.D.Cal.1984) ("Although the second of these actions does state an unfair competition claim, plaintiff’s remedy for such a claim, under California law, is limited to injunctive relief."). Courts have also deemed claims under the UCL subject to preemption by federal statutes. Cleghorn, 408 F.3d at 1227 (dismissing state law claims, including those arising under the UCL, as ERISA-preempted); see also In re Pharmaceutical Industry Average Wholesale Price Litig., 309 F.Supp.2d 165, 177 (D.Mass.2004) ("Accordingly, I conclude that the California UCL is preempted under ERISA to the extent it seeks to give private attorneys general the right to stand in the shoes of ERISA fiduciaries in protecting or administering plan assets"); cf. Sprewell v. Golden State Warriors, 231 F.3d 520, 529-30 (9th Cir.2000) (deeming claims arising under § 17200 preempted by FLSA); Scala v. Citicorp, Inc., No. C 10-03859 CRB, 2011 WL 900297, *7 n. 7 (N.D.Cal. Mar. 15, 2011) (holding that federal Securities Litigation Uniform Standards Act of 1998’s "preemptive effect applies equally to Plaintiffs’ claim based on §§ 17200 and 17203 of the California Business and Professional Code.").

Plaintiffs’ assertion that their unjust enrichment claim arises under federal law is equally unpersuasive. In Lea v. Republic Airlines, Inc., 903 F.2d 624 (9th Cir.1990), the Ninth Circuit considered an argument that it had permitted "state-law claims [to be] recharacterized as federal claims if federal law `provides both a superseding remedy replacing the state law cause of action and preempts that state law cause of action,’" that the Supreme Court had "authorize[d] the federal courts to develop a `federal common law of rights and obligations under ERISA-regulated plans,’" and that therefore, the Supreme Court had "intended to authorize a `federal common law for ERISA’ by permitting ordinary common law claims." Id. at 632. In a later case, the court explained that "the Supreme Court’s approval of the development of a federal common law under ERISA does not authorize the creation of federal common law causes of action." Pacificare Inc. v. Martin, 34 F.3d 834, 836 (9th Cir.1994). Because a claim for unjust enrichment does not invoke one of the "specific remedies" that ERISA provides, it is not cognizable under federal common law. Id. ("Since Pacificare’s federal common law cause of action for reimbursement, based on [unjust enrichment under] Provident Life [and Accident Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.), cert. denied, 498 U.S. 982, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990),] does not invoke one of the specific remedies listed in section 1132, Pacificare has failed to state a cause of action permissible under ERISA"); Board of Trustees for the Laborers Health and Welfare Trust Fund for Northern California v. Hill, No. C 07-05849 CW, 2008 WL 239184, *6 (N.D.Cal. Jan. 28, 2008) (holding that ERISA "does not permit a plaintiff to assert an independent federal common law cause of action, such as unjust enrichment, to enforce the terms of an ERISA plan. Thus, to the extent Plaintiff’s third cause of action for unjust enrichment is brought pursuant to a federal common law right, it must be dismissed").

Plaintiffs, moreover, fail to identify the source of the court’s power to fashion the federal common law cause of action they posit, instead citing two Illinois district court cases that concern a federal court’s equitable power to impose a constructive trust under ERISA, and the fact that a fraudulent conveyance claim is not preempted by ERISA. See Central States, Southeast and Southwest Areas Pension Fund v. LaCasse, 254 F.Supp.2d 1069, 1072 (N.D.Ill.2003) ("Whether it is viewed as a state or a federal common law claim, then, the plaintiffs’ fraudulent conveyance claim is not preempted by ERISA"); Central States, Southeast and Southwest Areas Pension Fund v. Minneapolis Van & Warehouse Co., 764 F.Supp. 1289, 1295-96 (N.D.Ill.1991) ("This Court accordingly exercises its equitable powers under ERISA to impose a constructive trust on the distributed assets (or on the sale price of any assets distributed and then sold) for the benefit of Pension Fund" (citations omitted)). As the LaCasse court noted, the reason that state law fraudulent conveyance claims are not preempted is that "ERISA provides no mechanism for the enforcement of judgments, [and thus] `state-law methods for collecting money judgments must, as a general matter, remain undisturbed by ERISA.’" LaCasse, 254 F.Supp.2d at 1071 (quoting Mackey v. Lanier Collection Agency, & Service, Inc., 486 U.S. 825, 843, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988)). Plaintiffs’ unfair competition claim alleges that the transfers were wrongful. They must first prove this before they can pursue any collection mechanism, be it an action alleging fraudulent conveyance or imposition of a constructive trust. Additionally, the transfer itself is the unfair or unlawful act on which the claim is premised; contrary to plaintiffs’ assertion, the claim is not premised on a theory that the monies that were transferred are being held in trust for creditors of the corporation. As respects Minneapolis Van & Warehouse Co., the corporate entity that owed withdrawal liability to an ERISA fund in that case had been dissolved and its assets distributed to the shareholders. See Minneapolis Van & Warehouse Co., 764 F.Supp. at 1294. Here, the entity that allegedly owes compensation under the plans to plaintiffs, although in bankruptcy proceedings, remains in existence. Consequently, the court concludes that the decisions are not apposite, and provide no support for the proposition that either plaintiffs’ state law unfair competition or unjust enrichment claim arises, even in part, under federal common law. Consequently, plaintiffs’ effort to avoid ERISA preemption fails. See Board of Trustees, Sheet Metal Workers’ Nat. Pension Fund v. Illinois Range, Inc., 71 F.Supp.2d 864, 869 (N.D.Ill.1999) (rejecting a claim that plaintiff could pursue a federal common law unjust enrichment claim to recover assets transferred by an employer to its sole shareholder, which in turn transferred the monies to its individual owners, where the transfers rendered the employer unable to pay its withdrawal liability to the pension fund, because such a claim was not necessary to fill a gap in ERISA). See generally Pacificare Inc. v. Martin, 34 F.3d 834 (9th Cir.1994) ("In Lea v. Republic Airlines, Inc., 903 F.2d 624, 632 (9th Cir.1990), we rejected the argument that `the Supreme Court intended to authorize a federal common law for ERISA by permitting ordinary common law claims’ when it `authoriz[ed] the federal courts to develop a federal common law of rights and obligations under ERISA regulated plans.’ ... We explained that the Supreme Court’s approval of the development of a federal common law under ERISA does not authorize the creation of federal common law causes of action. `The federal common law that the Court envisioned relates to rights and obligations under the ERISA plan and not to causes of action....’ `Claims relating to ERISA plans must therefore invoke the specific remedies of ERISA § 502, 29 U.S.C. § 1132 ...’").

3. Whether Plaintiffs’ State Law Claims Are Subject to ERISA Conflict Preemption

The court thus turns to the merits of defendants’ claim that ERISA preempts plaintiffs’ state law causes of action. As noted, any state law claim that “would fall within the scope of [ERISA’s] scheme of remedies is preempted as conflicting with the intended exclusivity of the ERISA remedial scheme.” Paulsen, 559 F.3d at 1084. ERISA’s exclusive enforcement provision “outlines a participant’s possible claims, which include’ (1) an action to recover benefits due under the plan, ERISA § 502(a)(1)(B); (2) an action for breach of fiduciary duties, ERISA § 502(a)(2); and (3) a suit to enjoin violations of ERISA or the Plan, or to obtain other equitable relief.’ ” Id. (quoting Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1008 (9th Cir.1998)). As the Supreme Court has explained,

“[T]he detailed provisions of § 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. `The six carefully integrated civil enforcement provisions found in § 502(a) of the statute as finally enacted ... provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.’ Pilot Life Ins. Co., 481 U.S. at 54, 107 S.Ct. 1549 (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)).

See also Davila, 542 U.S. at 209, 124 S.Ct. 2488 ("[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted"). Consequently, if an employee’s claim can be characterized as a claim "to recover benefits due ... under the terms of the plan" as allowed by ERISA § 502(a)(t)(B)), "the claim [is] likely... conflict preempted because ERISA would provide both a cause of action and an enforcement remedy." Paulsen, 559 F.3d at 1084; Cleghorn, 408 F.3d at 1226 (holding that claims were preempted where "the factual basis of the complaint... was the denial of reimbursement of plan benefits"); see also id. at 1225 (characterizing ERISA’s preemptive force as "powerful").

ERISA’s preemptive scope extends to all of plaintiffs’ state law claims, since all unequivocally seek the return of benefits plaintiffs claim are due under the plans. Plaintiffs’ UCL claim, for example, seeks “the return of the deferred compensation and pension funds that were fraudulently transferred from Opus West to Defendant Opus and to Defendant Grandchildren Trust and Defendant Children Trust.” Similarly, the unjust enrichment claim seeks the return of “funds taken from Plaintiffs by Defendants,” namely “Plaintiffs’ pension funds, salary, bonuses, and deferred compensation .. The claims, therefore, constitute “actionfs] to recover benefits due under the plan.” Bast, 150 F.3d at 1008; see also Cleghom, 408 F.3d at 1226 (“The relief sought on the claims most strongly argued to survive preemption included restitutionary relief, disgorgement of profits, injunctive and other equitable relief, and attorneys’ fees”). The declaratory relief claim is based on plaintiffs’ allegedly “valid and enforceable contracts with Defendants for deferred compensation plans and pension plans,” and seeks “a judicial determination of [plaintiffs’] rights and duties, and a declaration as to who is the responsible party for the compensation obligations.” Insofar as the declaratory relief claim seeks to recover benefits due under the compensation plans, and is premised on an interpretation of those plans, it is preempted by ERISA.

A closer examination of plaintiffs’ intentional interference with contract and inducing breach of contract claims (Counts I and II) further supports this analysis. Although they did not raise this argument in their briefs, plaintiffs asserted at oral argument that while the recovery they seek on these claims is coterminous with the benefits they are due under the plans, in actuality they seek damages stemming from defendants’ interference with and inducement of the breach of the ERISA benefits contracts.

While plaintiffs’ argument is not without merit, it is ultimately unpersuasive. Plaintiffs cite Paulsen as support for their position. There, the Ninth Circuit considered a negligence action against an actuarial service provider that, in connection with the spin-off of a portion of a corporation and defined benefit plan to a new company, valued the benefits liabilities being transferred and the assets being transferred to cover the liabilities. 559 F.3d at 1065. In holding that this claim survived conflict preemption, the Ninth Circuit observed that the negligence claim “did not seek damages based on a breach of fiduciary duty and [did] not seek to enjoin [defendant] in any way....” It continued: “[T]he Employees are not suing for benefits based on plan language—they are suing for state law negligence damages.” Id. at 1084. This result was sensible since the actuary was not responsible for paying plaintiffs benefits under the plans, and the calculation of damages on the negligence claim was based entirely on a “duty owed ... under state law ...” that was separate from any benefits recoverable under the plans. Id. (noting that “[o]ne could ... analogize the Employees’ claim as one ‘to recover benefits due ... under the terms of the plan.’ 29 U.S.C. § 1132(a)(1)(B). If so, then the claim would likely be conflict preempted because ERISA would provide both a cause of action and an enforcement remedy. However, the Employees are not suing for benefits based on plan language—they are suing for state law negligence damages”).

Here, plaintiffs arguably allege claims similar to those in Paulsen in that they contend defendants violated general state law duties not to interfere with, or induce the breach of, valid enforceable contracts. The relief they seek on the claims, however, is couched almost entirely in terms of recovering benefits allegedly owed under the benefit plans. The complaint requests that any funds transfers from Opus West to defendants "be set aside and declared void as to the Plaintiffs herein to the extent necessary to satisfy Plaintiffs’ claims" under the benefit plans. Additionally, it seeks, inter alia, attachment of the property in which plaintiffs allegedly have an interest, a restraining order preventing defendants from transferring, selling, or otherwise disposing of the property, an order "declaring that [defendants] hold the property... in trust for Plaintiffs," and an accounting of all profits and proceeds earned from the property. This relief is almost entirely coterminous with the relief plaintiffs seek under ERISA, which includes payment of contributions allegedly owed under the plans, imposition of a constructive trust, and an accounting of profits. In contrast to Paulsen, plaintiffs here seek the direct payment of benefits that they claim they are owed under the plans, and that defendants allegedly have in their possession. Consequently, their claims for tortious interference with contract and inducing breach of contract seek to "duplicate, supplement, or supplant" the remedies provided by ERISA. See Dishman v. UNUM Life Ins. Co. of America, 269 F.3d 974, 983 (9th Cir.2001) ("Claimants simply cannot obtain relief by dressing up an ERISA benefits claim in the garb of a state law tort").

Consequently, all of plaintiffs’ state law causes of action are preempted to the extent they seek to recover compensation owed under the top hat plans. See Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 375, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002) (recognizing that ERISA’s preemption regime is driven by the “overpowering federal policy” in favor of federal regulation).

D. Whether Plaintiff’s Complaint States a RICO Claim 1. Substantive Elements of a RICO Claim

Defendants also move to dismiss plaintiffs’ RICO claims, which are brought under 18 U.S.C. § 1962(c)-(d). § 1962(c) states that

“It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.”

§ 1962(d) punishes a party’s conspiracy to violate any of other subsections of the statute, including § 1962(c). See United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981) ("In order to [prevail] under RICO, [a party] must prove both the existence of an `enterprise’ and the connected `pattern of racketeering activity.’ The enterprise is an entity.... The pattern of racketeering activity is, on the other hand, a series of criminal acts as defined by the statute"); Forsyth v. Humana, Inc., 114 F.3d 1467, 1481 (9th Cir.1997) (plaintiff must allege "(1) the conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity"). Racketeering activity is any act indictable under the provisions of 18 U.S.C. § 1961. Forsyth, 114 F.3d at 1481. Section 1961(1) contains an exhaustive list of violations that can be used as "predicate acts" forming the basis for a RICO violation under § 1962. A "pattern" requires the commission of at least two acts of "racketeering activity" within a ten-year period. 18 U.S.C. § 1961(5). An "enterprise" includes "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4).

In addition to these elements, a plaintiff must plead that defendants’ violation was both the "but for" and proximate cause of a concrete financial injury. Resolution Trust Corp. v. Keating, 186 F.3d 1110, 1117 (9th Cir.1999); Forsyth, 114 F.3d at 1481 (citing Imagineering, Inc. v. Kiewit Pacific Co., 976 F.2d 1303, 1311 (9th Cir.1992), cert. denied, 507 U.S. 1004, 113 S.Ct. 1644, 123 L.Ed.2d 266 (1993)).

2. The Heightened Pleading Requirements of Rule 9(b) Apply to RICO Fraud Allegations

The complaint alleges that defendants violated RICO through “bank fraud, mail and wire fraud and embezzlement.” All RICO claims involving fraud must be alleged with particularity under Rule 9(b). Fed.R.Civ.Proc. 9(b); Lancaster Community Hospital v. Antelope Valley Hospital District, 940 F.2d 397, 405 (9th Cir.1991), cert. denied, 502 U.S. 1094, 112 S.Ct. 1168, 117 L.Ed.2d 414 (1992); U.S. Concord, Inc. v. Harris Graphics Corp., 757 F.Supp. 1053, 1061 (N.D.Cal.1991) (“The Ninth Circuit has held that allegations of predicate acts under RICO must comply with Rule 9(b)’s specificity requirements,” citing Schreiber Distributing Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400-01 (9th Cir.1986)).

Rule 9(b) requires that a plaintiff allege the time, place, and manner of each predicate act, the nature of the scheme involved, and the role of each defendant in the scheme. Lancaster Community Hos pital, 940 F.2d at 405 (stating that a RICO plaintiff must allege the time, place and manner of each act of fraud, and the role of each defendant in the fraud); see also Advocacy Organization for Patients and Providers v. Auto Club Ins. Ass’n., 176 F.3d 315, 322 (6th Cir.1999) (holding that a RICO plaintiff must allege, “at a minimum, the time, place and content of the alleged misrepresentations on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud”); see generally Gotham, Print, Inc. v. American Speedy Printing Centers, Inc., 863 F.Supp. 447, 457 (E.D.Mich.1994) (“Courts have been particularly sensitive to Fed. R. Civ. Pro. 9(b)’s pleading requirements in RICO cases in which the ‘predicate acts’ are mail fraud and wire fraud, and have further required specific allegations as to which defendant caused what to be mailed (or made which telephone calls), and when and how each mailing (or telephone call) furthered the fraudulent scheme”).

Rule 9(b) requires that the facts constituting the fraud be pled with specificity. Conclusory allegations are insufficient. Fed.R.Civ.Proc. 9(b); Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir.1989) (“A pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer to the allegations. While statements of the time, place and nature of the alleged fraudulent activities are sufficient, mere conclusory allegations of fraud are insufficient”). See also Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir.1973) (concluding that allegations stating the time, place, and nature of allegedly fraudulent activities meet Rule 9(b)’s particularity requirement).

Rule 9(b) “does not require nor make legitimate the pleading of detailed evidentiary matter,” however. All that is necessary is “identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations.” Walling, 476 F.2d at 397 (alleging in conclusory fashion that defendant’s conduct was fraudulent was not sufficient under Rule 9(b)). See also Miscellaneous Serv. Workers Local #427 v. Philco-Ford Corp., 661 F.2d 776, 782 (9th Cir.1981) (holding that Rule 9(b) requires a pleader to set forth the “time, place and specific content of the false representations as well as the identities of the parties to the misrepresentation”).

3. Whether Plaintiffs Lack Standing Under RICO Because They Have Not Sufficiently Alleged Injury and Proximate Cause

a. Plaintiffs’ Allegations of Injury

Defendants contend that plaintiffs lack standing to sue under RICO because (1) they did not suffer a concrete financial loss to their business or property, and (2) because they cannot establish that defendants’ alleged misconduct proximately caused their injuries. To prevail, plaintiffs must adduce proof of both elements. Fireman’s Fund Ins. Co. v. Stites, 258 F.3d 1016, 1021 (9th Cir.2001) (citation omitted). To state a RICO claim, plaintiffs must allege that defendants’ violation of § 1962 caused injury to their business or property. See 18 U.S.C. § 1964(c) ("Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee ..." (emphasis added)). See also Stites, 258 F.3d at 1021 (to prevail on a civil RICO claim, a plaintiff must establish "that the defendant engaged in: 1) conduct 2) of an enterprise 3) through a pattern 4) of racketeering activity ... and, in addition, show that the defendant caused injury to his business or property" (citations omitted)). Only a plaintiff that has suffered such injury has standing to sue under RICO. See Chaset v. Fleer/Skybox Int’l, 300 F.3d 1083, 1087 (9th Cir.2002) ("`[A] RICO plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by [reason of] the conduct constituting the violation,’" quoting Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 279, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (internal citation and quotation omitted)); Guerrero v. Gates, 110 F.Supp.2d 1287, 1292 (C.D.Cal.2000) ("A plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation," citing Sedima S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)); Walker v. Gates, No. CV 01-10904 GAF (PJWx), 2002 WL 1065618, *7-8 (C.D.Cal. May 28, 2002) (noting that the injury to business or property requirement is a question of standing).

"Financial losses, in and of themselves, are insufficient to confer standing under RICO." Living Designs, Inc. v. E.I. Dupont de Nemours and Co., 431 F.3d 353, 364 (9th Cir.2005). "RICO does not provide a cause of action for all types of injury to property interests, but only for injuries resulting in `concrete financial loss.’" Diaz v. Gates, 420 F.3d 897, 898 (9th Cir. 2005) (en banc) (quoting Oscar v. University Students Co-operative Ass’n, 965 F.2d 783, 785 (9th Cir.1992) (en banc)). "Without a harm to a specific business or property interest — a categorical inquiry typically determined by reference to state law — there is no injury to business or property within the meaning of RICO." Diaz, 420 F.3d at 900.

Defendants contend that because the benefit plans in question were unfunded, plaintiffs’ interest in them “was a mere expectancy interest, not a guaranteed, concrete sum.” Defendants characterize the plans as constituting a “chance to obtain deferred compensation—a chance that would materialize only if Opus West had sufficient general assets to pay such compensation.” As any payout from the benefit plans would only have occurred if Opus West continued to remain solvent, they assert, that contingency defeats any allegation that plaintiffs suffered a “concrete financial loss.”

Examining whether plaintiffs suffered “concrete financial injury” begins with the principle enunciated in Diaz that RICO standing must be based on “a harm to a specific business or property interest.” 420 F.3d at 900. By agreeing to receive deferred compensation through Opus West’s top hat plans, plaintiffs made their right to receive the compensation dependent on the company’s ongoing success. The parties agree that the top hat plans provide only for the payment of deferred compensation only from the company’s general assets. Under the plans, plaintiffs assume the risk that if Opus West suffered financial setbacks or became insolvent, their deferred compensation would be significantly reduced or eliminated. Plaintiffs identify no cognizable property interest in the company’s general assets that would confer RICO standing. While under the terms of the deferred compensation agreements, plaintiffs are unsecured creditors of Opus West to the extent of the deferred compensation benefits they claim, this does not give them a property interest in the company’s general assets. The most it does is convey a general interest in the company’s estate. See In re The Colonial BancGroup, Inc., 436 B.R. 695, 707 n. 17 (Bankr.M.D.Ala.2010) (holding that executives participating in an unfunded top hat plan “ha[d] no ownership interest in the[ ] funds that could be forfeited.... The funds remain part of the general assets of the corporation subject to the claims of its general creditors”). See also In re Downey Regional Medical Center-Hosp., Inc., 441 B.R. 120, 130 (9th Cir.BAP2010) (holding that funds deposited with ING were property of the bankruptcy estate because “[t]he ING account was held in [the debtor hospital’s] name and the plan documents plainly provided that compensation deferred under the plan would remain part of [the hospital’s] unrestricted assets and would not be held in trust. The plan was unfunded and [the hospital’s] obligations were purely contractual in nature. The participation agreement that [the doctor] executed similarly acknowledged that any contributions to the ING account remained the sole property of [the company]. Based on these undisputed facts, the bankruptcy court correctly determined that [the doctor] held no interest in the ING account funds”).

As a consequence, courts in other contexts have held that such an interest is insufficient to confer standing. Cf. United States v. Reckmeyer, 836 F.2d 200, 205 (4th Cir.1987) (stating in a forfeiture action, that "[u]nlike secured creditors, general creditors cannot point to any one specific asset and claim that they are entitled to payment of the value of that specific asset. General creditors instead enjoy a legal interest in the entire estate of the debtor," and concluding as a result that the creditors lacked standing to challenge the forfeiture of a defendant’s assets); United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 772 F.Supp.2d 191, 199 (D.D.C.2011) ("While a variety of types of property interests in defendant assets thus may confer standing upon a claimant, `[t]he federal courts have consistently held that unsecured creditors do not have standing to challenge the civil forfeiture of their debtors’ property,’" quoting United States v. One-Sixth Share, 326 F.3d 36, 41 (1st Cir.2003) (citing in turn United States v. $20,193.39, 16 F.3d 344, 346 (9th Cir.1994))); United States v. Jaynes, No. 5:06-CR-54-BR, 2009 WL 129969, *3 (W.D.N.C. Jan. 20, 2009) ("An unsecured creditor normally can only show that its interest lies in the debtor’s estate, rather than in the specific property covered by the forfeiture order"); United States v. BCCI Holdings (Luxembourg), S.A., No. CRIM. 91-0655(JHG), 1994 WL 914459, *3 (D.D.C. Oct. 28, 1994) (noting, in discussing standing under the penalty provisions of the criminal RICO statute, 18 U.S.C. §§ 1963(1)-(2), that "[a]s recognized by this Court and most, if not all, other courts addressing the issue, an unsecured creditor does not possess an interest in any specific asset of a debtor and merely has a general interest in the debtor’s entire estate"). These cases are persuasively applied to the RICO standing inquiry, especially given the Diaz court’s mandate that a RICO plaintiff identify a "specific business or property interest." Diaz, 420 F.3d at 900 ("Without a harm to a specific business or property interest ... there is no injury to business or property within the meaning of RICO").

This conclusion is reinforced when one considers that if an unsecured, inchoate interest in the “entire estate” of a debtor conferred RICO standing, the court would be placed in the position of determining what property of the debtor plaintiffs are entitled to recover. In their Prayer for Relief, plaintiffs seek “all monies converted by the Defendants with interest thereon,” as well as an injunction preventing defendants from transferring, conveying, or otherwise disposing of “any of the property embezzled.” Because plaintiffs can recover only property in which they have a cognizable legal interest, and because they are admittedly unsecured creditors, they cannot to identify any specific asset or property to which they could lay a claim. Consequently, it would be difficult for plaintiffs to claim that any of their property was actually converted or embezzled, since they had no entitlement to, and no ownership rights in, the property in question. Cf. In re Downey Regional Medical Center-Hosp., Inc., 441 B.R. at 131 (noting that “structure and purpose of unfunded top hat plans (income tax deferral) which depend on the deferred compensation remaining subject to the claims of unsecured creditors” and that plan before the court “specifically provided that the participants had no ownership interest in the funds. As a result, removing the plan funds from the estate would not establish ownership in the participants”).

In Chaset, the Ninth Circuit held that a “mere expectancy interest” was insufficient to confer RICO standing. 300 F.3d at 1087. Chaset addressed whether purchasers of trading cards had suffered a RICO injury because they allegedly purchased packs of trading cards with the hope that the packs would contain more valuable “insert” cards in addition to the “base” cards that typically were included in each pack. Id. at 1085-86. The trading card packs usually stated the odds that a particular insert card would be included in the pack, and also typically contained disclaimers that insert cards were not guaranteed with each pack. Id. The Ninth Circuit followed the Fifth Circuit and a New York district court in holding that plaintiffs had failed to state a RICO injury. It said:

“At the time the plaintiffs purchased the package of cards, which is the time the value of the package should be determined, they received value—eight or ten cards, one of which might be an insert card—for what they paid as a purchase price. Their disappointment upon not finding an insert card in the package is not an injury to property.” Id. at 1087.

Although plaintiffs’ claim is different, there is one striking parallel between this case and Chaset. There, the outcome was driven by the fact that, in purchasing a set of trading cards, plaintiffs gambled that when they opened their pack, it would contain the cards they desired. The fact that the pack might not include such a card, and that they would be disappointed, was a feature of the bargain they struck.

Similarly, in entering into the executive incentive compensation agreements, plaintiffs assumed the risk that they might eventually not be paid. They received a clear benefit from having the agreements structured in this way; money paid into the plans was not subject to tax liability and was not drawn directly from their income. See Carr v. First Nationwide Bank, 816 F.Supp. 1476 (N.D.Cal.1993) ("Like the Savings and Loan’s Plan, the plan in Barrowclough allowed certain executives to reduce their tax liability by deferring income which would be credited to them in an account, would accumulate interest, and would eventually be repaid to them by the plan sponsor at retirement, termination or otherwise"); In re IT Group, Inc., 305 B.R. 402, 409 (Bankr. D.Del.2004) ("The lack of compensation in the given period is precisely what provides the tax benefit for the participant. By deferring payment of compensation, the tax liability for that deferred amount is also deferred. This benefit is not without risk, however, because to qualify for such treatment, the deferred amount must be subject to general unsecured creditors’ claims"); see also Resolution Trust Corp. v. MacKenzie, 60 F.3d 972, 977 (2d Cir. 1995) ("Therefore, we hold that, at all times relevant to this case the Plan assets remained the property of Columbia, subject to the claims of its creditors. MacKenzie and Timms are merely two such creditors"); cf. Minor v. United States, 772 F.2d 1472, 1475 (9th Cir.1985) ("Unfunded plans do not confer a present taxable economic benefit"). The disadvantage of participating in such a plan is precisely that which plaintiffs have experienced — because they have no secured interest in any of the monies in the plan, and because they have no control over or cognizable property interest in them, when the company became insolvent they were restricted to the amount they could recover as unsecured creditors from the bankruptcy estate. Cf. Summerfield v. Strategic Lending Corp., No. C09-02609 HRL, 2010 WL 3743897, *4 (N.D.Cal. Sept. 20, 2010) ("[U]nder basic principles of trust law, since the trust is revocable, Ed’s interest in it is, at least up to this point in time, ... "`merely potential’ and could `evaporate in a moment at the whim of the [trustor],’"" quoting Steinhart v. County of Los Angeles, 47 Cal.4th 1298, 1319-20, 104 Cal.Rptr.3d 195, 223 P.3d 57 (2010) (in turn quoting Johnson v. Kotyck, 76 Cal.App.4th 83, 88, 90, 90 Cal.Rptr.2d 99 (1999))); id. ("With no present interest in the fu