United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION AND ORDER
K. KALLON UNITED STATES DISTRICT JUDGE
Southern Railway Company brings this action pursuant to the
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§§ 1961-68, against multiple corporate and
individual defendants. Norfolk Southern also asserts claims of
fraud and civil conspiracy against all defendants, and breach
of contract and negligence against the two corporate
defendants, Boatright Railroad Products, Inc. and Boatright
Railroad Products, LLC. The Defendants have now moved to
dismiss all claims, aside from the breach of contract claim
asserted against the corporate defendants, pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure, docs. 35
and 37. Those motions are fully briefed and ripe for review.
See Docs. 36; 38; 44; 45; 46; and 47. After careful
consideration of the complaint and the parties' excellent
briefs, the court has determined that the Defendants'
motions are due to be granted with respect to the RICO and
negligence claims and denied as to all other claims.
addressing the motion to dismiss, the court first turns to
the Defendants' motion to strike an exhibit Norfolk
Southern attached to its response to the motions to dismiss.
Doc. 48. The exhibit is a copy of a purported rail tie
inspection report completed for Gulf South Forest Products by
an outside consulting firm and is presented to show the
existence of a purported second victim.
Rule 12(f) of the Federal Rules of Civil Procedure,
"[o]nly material included in a 'pleading' may be
subject [to] a motion to strike." Lowery v.
Hoffman, 188 F.R.D. 651, 653 (M.D. Ala. 1999)
(quotations omitted). Accordingly, federal courts commonly
refuse to grant motions to strike evidence submitted in
support of motions to dismiss. See, e.g., Jeter v.
Montgomery Cty., 480 F.Supp.2d 1293, 1296 (M.D. Ala.
2007) (declining to strike exhibits because a response is not
a pleading). There are, however, differing views on the
propriety of entertaining motions to strike evidentiary
matters as "the Federal Rules provide no other means to
contest [evidentiary] sufficiency" pretrial.
Anderson v. Ga. Gulf Lake Charles, LLC, No.
2:07-CV-1378, 2008 WL 919716, *1 (W.D. La. Apr. 4, 2008).
Indeed, the Eleventh Circuit has routinely considered and
affirmed district court rulings on motions to strike
evidentiary attachments. See Reese v. Herbert, 527
F.3d 1253, 1262, 1265-66 (11th Cir. 2008) (affirming district
court's decision to strike affidavit while describing it
as a decision to exclude the affidavit).
court, however, does not have to decide whether this document
fits neatly into the rationale that allows courts to consider
motions to strike evidentiary matters outside the pleadings,
see Morris v. Precoat Metals, No. 2:ll-cv-0053-SLB,
2013 WL 830868, at *2 (N.D. Ala. Mar. 4, 2013) (explaining
"[u]nder this view, motions to strike evidence may be
granted where the evidence that is offered is inadmissible
under the Federal Rules of Evidence"), because it
"has discretion as to whether to accept material beyond
the pleading[s] . . . offered in conjunction with a 12(b)(6)
motion." Prop. Mgmt. & Invs., Inc. v.
Lewis, 752 F.2d 599, 604 (11th Cir. 1985). Courts
generally accept documents outside the pleadings at the
motion to dismiss stage when the "extrinsic document ...
is (1) central to the plaintiffs claim, and (2) its
authenticity is not challenged." SFM Holdings, Ltd.
v. Banc of Am. Sec, LLC, 600 F.3d 1334, 1337 (11th Cir.
2010). As evidenced by the motion to strike, Boatright is
challenging the authenticity of the attached document.
Consequently, Eleventh Circuit precedent precludes the court
from considering the document. See, e.g., Horsley v.
Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002) (explaining
that "undisputed" means "that the authenticity
of the document is not challenged"). While Norfolk
Southern maintains that the authenticity challenge is not
genuine, the court notes that Boatright is not obligated, at
the pleading stage, to investigate the authenticity of a
newly produced document purporting to represent internal
communications between two nonparties. Nor must Boatright
simply accept Norfolk Southern's assertion that this
document, neither referenced in the complaint nor
authenticated in the briefing, is what it purports to be,
particularly when the entity referenced in the document is
different from the one obliquely referred to in the
complaint. Typographical error or not, the difference in
identity certainly casts some doubt on the veracity of the
document. Relatedly, as to Norfolk Southern's offer to
authenticate the document, the motion to dismiss stage is not
the time for litigating evidentiary disputes of this nature.
See, e.g., Harris v. Procter & Gamble Cellulose
Co., 73 F.3d 321, 324 (11th Cir. 1996) (noting that a
'"12(b)(6) motion tests only the sufficiency of the
claim set out in the plaintiffs pleadings'")
(quoting Mann v. Adams Realty Co., 556 F.2d 288, 293
(5th Cir. 1977)).
the court cannot credibly say that the attached document is
central to Norfolk Southern's claims, see Brooks v.
Blue Cross & Blue Shield of Fla., Inc., 116 F.3d
1364, 1369 (11th Cir. 1997), given that the complaint does
not refer to the challenged document. The complaint contains
only a single reference to Gulf South Forest Products,
alleging that "upon information and belief Gulf South
was also "directly injured" by the Defendants'
conduct. Doc. 32 at 16. However, allegations founded on
"information and belief are not entitled to a
presumption of truth at the pleading stage. See Mann v.
Palmer, 713 F.3d 1306, 1315 (11th Cir. 2013) (noting
that the court does "not have to take as true . . .
allegations 'upon information and belief"); see
also Smith v. City o/Sumiton, 578 Fed.Appx. 933, 935 n.4
(11th Cir. 2014) ("for purposes of a Rule 12(b)(6)
motion to dismiss, we do not have to take as true allegations
based merely 'upon information and belief"). Put
simply, no basis exists to conclude that the third-party
consulting report provided by Norfolk Southern is
sufficiently intertwined with the complaint to constitute
part of the pleadings.
extent that Norfolk Southern wishes to rely, at the pleading
stage, on other entities' purported experiences with the
Defendants, Norfolk Southern has had two opportunities to
provide the court with well-pleaded factual allegations
bearing on that issue. The court declines to relieve Norfolk
Southern of Rule 8's pleading requirements by allowing it
to reference additional facts in its brief that it could have
included in the complaint. Therefore, the court will not
consider the document attached as Exhibit A to Norfolk
Southern's responsive pleadings as substantive evidence
at the pleading stage of this case. See Doc. 44 and
45. With this issue addressed, the court will now turn to the
motions to dismiss.
STANDARD OF REVIEW
Rule of Civil Procedure 8(a)(2) requires a pleading to
contain "a short and plain statement of the claim
showing that the pleader is entitled to relief."
"[T]he pleading standard Rule 8 announces does not
require 'detailed factual allegations, ' but it
demands more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007)). Mere '"labels and conclusions' or
'a formulaic recitation of the elements of a cause of
action'" are insufficient. Id. (quoting
Twombly, 550 U.S. at 555). "Nor does a
complaint suffice if it tenders 'naked assertion[s]'
devoid of 'further factual enhancement.'"
Id. (quoting Twombly, 550 U.S. at 557).
Rule of Civil Procedure 12(b)(6) permits dismissal when a
complaint fails to comply with Rule 8(a)(2) or does not
otherwise state a claim upon which relief can be granted.
When evaluating a motion brought under Rule 12(b)(6), the
court accepts "the allegations in the complaint as true
and constru[es] them in the light most favorable to the
plaintiff." Hunt v. Aimco Props., L.P., 814
F.3d 1213, 1221 (11th Cir. 2016). However, "[t]o survive
a motion to dismiss, a complaint must. . . 'state a claim
to relief that is plausible on its face.'"
Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). A complaint states a facially plausible
claim for relief "when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. In other words, the complaint
must establish "more than a sheer possibility that a
defendant has acted unlawfully." Id.; see also
Twombly, 550 U.S. at 555 (emphasizing that
"[f]actual allegations [included in the complaint] must
be enough to raise a right to relief above the speculative
level"). Ultimately, the line between possibility and
plausibility is a thin one and making this determination is a
"context-specific task that requires the reviewing court
to draw on its judicial experience and common sense."
Iqbal, 556 U.S. at 679.
Southern is a Virginia-based interstate rail carrier that
owns and operates an extensive interstate rail network. Doc.
32 at 1-2, 4. To maintain this network, Norfolk Southern
entered into a contract with Seaman Timber Company, Inc. to
purchase wooden railroad ties that met certain highly
specific quality standards. Id. at 4. Among other
things, Norfolk Southern required its railroad ties to
consist of "acceptable species of wood, " and to
meet certain "physical requirements, " "drying
standards, " and "methods and specifications for
the proper application of preservatives, including treatment
. . . with specified amounts of creosote." Id.
2009, Boatright purchased Seaman's railroad tie
production facility and executed a change order with Norfolk
Southern assuming Seaman's contractual obligations with
regard to the railroad ties. Id. at 4-5. Shortly
thereafter, Shane Boatright and John Bookout, the principal
officers of the Boatright entities, allegedly instructed
their employees to cease manufacturing the railroad ties
according to Norfolk Southern's specifications in order
to increase profit margins. Id. at 2, 5-7, 18. The
two men purportedly ordered their employees to simply
"make [the railroad ties] black" so that the ties
appeared to comply with contractual specifications.
Id. at 6. Pursuant to these instructions, Boatright
employees used a variety of substances, including motor oil,
anti-freeze, and paint, that uniformly lacked preservative
characteristics, but darkened the appearance of the railroad
ties to resemble properly treated wood. Id. at 6-7.
Shane Boatright and John Bookout also sought out oil-refining
companies to prepare a compound that mimicked the appearance
of properly treated wood at a greatly reduced cost compared
to the production methods specified in the contract.
Id. at 6. Allegedly, neither individual inquired
into whether the chemical would also have meaningful
preservative qualities. Id.
further this scheme, various Boatright employees, including
Shane Boatright and John Bookout, approached Jimmy Lee Watt,
a railroad tie inspector working as a consultant for Norfolk
Southern and tasked with ensuring that the railroad ties used
in Norfolk Southern's rail network met the company's
quality standards. Id. at 2, 7-8. In exchange for at
least $128, 000, Watt allowed the Defendants to provide him
with specially prepared railroad tie samples preselected to
pass quality testing. Id. at 8. Using these
pre-selected samples, Watt and the Boatright entities
allegedly prepared and sent false reports to Norfolk Southern
indicating that the ties met the requisite contractual
standards. Id. at 8-9. Watt also failed to conduct
proper inspections of the Boatright facility, and falsely
represented to Norfolk Southern that Boatright's
manufacturing process conformed to the parties'
agreement. Id. at 8-9, 13, 15.
scheme lasted for nearly five years, allegedly from 2009
until 2014. Id. at 19. In total, Norfolk Southern
ordered and installed nearly five million railroad ties
manufactured by Boatright that purportedly failed to meet
contractual standards. Id. at 9, 14, 17. During this
period, Shane Boatright and other Boatright employees
transmitted numerous billing requests to Norfolk Southern,
over interstate wire, indicating that the ties, in fact, met
Norfolk Southern's requirements. Id. at 9-14.
Shane Boatright also negotiated a price increase with Norfolk
Southern purportedly based on the increased cost to produce
conforming railroad ties. Id. at 10-11, 32. Lastly,
Boatright allegedly failed to include identifying plates or
Kerf marks on its railroad ties, making it more difficult for
Norfolk Southern to identify the noncompliant ties.
Id. at 9.
2016, approximately two years after Boatright sold its
manufacturing plant and its inventory of railroad ties to
another company, former Boatright employees informed Norfolk
Southern of the purported scheme. Id. at 14-15. A
subsequent investigation confirmed that the ties were
degrading more quickly than anticipated, and that the
railroad ties were not manufactured according to contractual
specifications. Id. at 16. As a result, Norfolk
Southern began removing and replacing the nonconforming ties
and commenced this action. Id. at 17.
Southern's complaint asserts both substantive RICO and
RICO conspiracy claims, in addition to state law claims for
breach of contract, negligence, fraud, and civil conspiracy.
The negligence and breach of contract claims are asserted
only against the corporate defendants. Id. at 27-28.
While the individual and corporate defendants respectively
filed motions to dismiss asserting that, with the exception
of the breach of contract claim, Norfolk Southern's
claims are uniformly subject to dismissal for failure to
state a claim pursuant to Rule 12(b)(6), each set of
Defendants has adopted by reference the arguments raised in
their co-Defendants' motions. See Docs. 35 at 1
nl; 38 at 2. Consequently, the court will address the motions