A Sidley team secured a victory for firm client Canyon Partners, LLC in the Eastern District of Michigan. Packard Square, LLC, a property developer, brought claims in the Southern District of New York for alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), and various state law claims, after it defaulted on a loan it had received from one of Canyon’s affiliates. Both prior to and following the filing of the litigation in New York, Canyon’s affiliate engaged in extensive litigation in the State of Michigan with Packard and its sole member, Craig Schubiner, prevailing on claims against Packard and Schubiner in multiple Michigan courts. Recognizing that the Michigan courts would have more familiarity with Packard’s extensive litigation history, the Sidley team moved to transfer the RICO action to the Eastern District of Michigan. The motion to transfer was granted in January 2019.
After the transfer, the Sidley team moved to dismiss the complaint on the basis of, among other things, res judicata and collateral estoppel — arguing that Packard could have, and should have, brought its RICO and related state law claims in the Michigan lawsuits, and that Packard’s loss in those lawsuits precluded the action against Canyon Partners.
The district court agreed, finding that Packard was “doing nothing more in the present case than placing a new label on old allegations and claims” that prior courts had already considered and found “to be baseless and without merit.” The court therefore dismissed the RICO claims and declined to exercise jurisdiction over the remaining state law claims, terminating the action.
The team consisted of Rollin A. Ransom in Los Angeles and Elizabeth Gates, Francesca E. Brody and Deborah Sands in New York, along with now-retired New York partner John G. Hutchinson and local counsel in Michigan.