Polar Air Cargo Worldwide Wins Dismissal of Civil RICO and Other Claims

On August 30 2023, the U.S. District Court for the Southern District of New York dismissed all claims brought against Cravath client Polar Air Cargo Worldwide, Inc. (“Polar”) by Cargo on Demand, Inc. (“COD”) alleging violations of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) and other claims brought under New York state law.

Polar is an international cargo airline and joint venture between Atlas Air Worldwide Holdings, Inc. and DHL. COD alleged that from 2014 to 2021, there was an agreement between Polar’s former freight forwarder customer, COD, and several former members of Polar’s senior management, wherein COD paid what it called “consulting fees” to LLCs owned by the Polar executives as a condition of doing business with Polar. COD further alleged that after entering into a partnership with Polar, under which it shared commercially sensitive information, and ceasing payment of those fees, Polar took a series of actions which harmed COD’s business, including terminating the agreement between the companies.

COD brought claims against Polar under RICO and New York state common law. Cravath filed a motion to dismiss COD’s complaint in January 2023, arguing that COD’s substantive RICO claim did not allege a RICO enterprise because it did not allege Polar was distinct from the other members of the RICO enterprise, the former Polar executives and their LLCs. Cravath also contended that COD’s complaint failed to allege a pattern of racketeering activity, in part because COD failed to plead wire fraud with particularity. Cravath also argued that COD’s RICO conspiracy claim should be dismissed for those same reasons and the Court should decline to exercise supplemental jurisdiction over COD’s state law claims.

In his opinion, Judge Jesse M. Furman agreed with Cravath’s arguments that COD had not alleged a RICO enterprise or a pattern of racketeering activity. With respect to the RICO enterprise, Judge Furman ruled that COD’s alleged enterprise consisted of Polar associating with its own employees and companies controlled by Polar management, and that did not satisfy RICO’s distinctness requirement. As to the pattern of racketeering, the Court rejected each of COD’s alleged predicate acts and held that COD failed to satisfy Rule 9(b)’s heightened pleading standard as to its wire fraud claims.

The Cravath team was led by partners Wes Earnhardt and Benjamin Gruenstein and practice area attorney Lindsay J. Timlin. Mila Gauvin II also worked on this matter.

The case is Cargo on Demand, Inc. v. Polar Air Cargo Worldwide, Inc., No. 22‑cv‑10243 (S.D.N.Y.).