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					                 UNITED STATES COURT OF APPEALS
                        FOR THE NINTH CIRCUIT

                                 No. 98-56138


                           ALAN M. HOWARD,
                          R. BORIS GREENBERG,
                         KATHRYN PARAVENTI,
                           MERHDAD ETEMAD,
    on behalf of themselves, and on behalf of all others similarly situated,

                                        Plaintiffs-Appellants,

                                      vs.

                       AMERICA ONLINE, INC.,
                           JAMES V. KIMSEY,
                           STEPHEN M. CASE,
                         LENNERT J. LEADER,
          DOE individuals 1-50, and ROE entities 51-100, inclusive.

                                        Defendants-Appellees.


  APPEAL FROM THE ORDER GRANTING DEFENDANTS‟ MOTION TO
 DISMISS FIRST AMENDED COMPLAINT WITH PREJUDICE ENTERED BY
THE U.S. DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
                    IN CASE NO. CV 97-1642-AAH


                          BRIEF FOR APPELLANTS



                                        Bruce C. Fishelman, Esq. (SBN 117945)
                                        Alec B. Wisner, Esq. (SBN 63221)
                                        STANBURY & FISHELMAN, INC.
                                        9200 Sunset Boulevard, Penthouse 30
                                        Los Angeles, California 90069-3601
                                        Tel: (310) 278-1800
                                             TABLE OF CONTENTS



I.      SUBJECT MATTER AND APPELLATE JURISDICTION ............................. 1

     A.The Statutory Basis For Subject Matter Jurisdiction

     In The District Court. ................................................................................................ 1

     B.The Basis For Claiming That The Order Dismissing Plaintiffs’ First

     Amended Complaint Is Final And The Statutory Basis Of Jurisdiction Of

     The Ninth Circuit Court Of Appeals. ..................................................................... 2

     C.Timeliness Of Plaintiffs/Appellants’ Filing. ..................................................... 2

II. ISSUES PRESENTED FOR REVIEW .................................................................. 3

III. STATEMENT OF THE CASE ............................................................................... 4

     A.Procedural History. ................................................................................................. 4

     B.Summary Of Facts Alleged In The Complaint. ................................................. 4

IV. SUMMARY OF ARGUMENT .............................................................................. 6

V. STANDARD OF REVIEW................................................................................... 11

VI. RULE 12(B)(6) MOTIONS ARE VIEWED WITH DISFAVOR .................... 12

VII.             THE DISTRICT COURT ERRED AS A MATTER OF LAW IN

DISMISSING APPELLANTS’ TWO RICO CAUSES OF ACTION ON A RULE

12(B)(6) MOTION ......................................................................................................... 12

     A.Plaintiffs Have Properly Pleaded Two RICO Causes Of Action ................ 12

     B.The District Court Erroneously Held That Appellants Failed To Establish

     A "Pattern" Of Racketeering Activity Under RICO. .......................................... 13



                                                               i
     1.       The District Court Erroneously Held That Appellants Cannot Assert

     The Hagen Improprieties As Predicate Acts Under RICO ............................. 17

     2.       Acts Of Securities Fraud Are Still “Predicate Acts” Under RICO So

     Long As Damages Are Not Sought Where Securities Fraud Statutes Would

     Otherwise Provide Relief ..................................................................................... 20

     3.       Appellants Have Pleaded PTP Improprieties To Establish A

     “Pattern” Of Activity Under RICO, Not To Claim Damages Flowing From

     The PTP Transaction.............................................................................................. 23

     4.       The District Court Erroneously Held That “Flat-Fee” Advertising

     Fraud Alleged By Appellants Failed To Form A “Pattern” Of Racketeering

     Activity Under RICO ............................................................................................. 24

     5.       The Predicate Racketeering Acts. ............................................................. 26

  C.Requisite Specificity Under FED. R. CIV. P. 9(b) ............................................. 26

  D.The District Court Erred In Holding That Appellants Failed To Properly

  State An 18 U.S.C. § 1962(d) RICO Conspiracy. .................................................. 30

VIII.         THE DISTRICT COURT ERRONEOUSLY DISMISSED

APPELLANTS’ CAUSE OF ACTION FOR VIOLATIONS OF THE

COMMUNICATIONS ACT OF 1934 ....................................................................... 32

  A.The District Court Erroneously Held That AOL Is Not A Common Carrier

  Under The Communications Act Of 1934. ........................................................... 32

  B.The District Court Erroneously Deferred To The FCC.................................. 37

     1.       The FCC Has Exceeded Its Statutory Authority, And Deference By



                                                          ii
      The District Court To Ultra Vires Regulatory Activities (Or Lack Thereof)

      Is An Error As A Matter Of Law. ......................................................................... 37

      2.       Primary Jurisdiction is Inappropriate Under The Facts As Pleaded In

      The Instant Complaint. ......................................................................................... 40

      3.       The District Court Misapplied FCC Rulings And Decisional Law. . 41

   C.AOL Has Violated The Communications Act. ................................................ 44

   D.The District Court Erroneously Cited The Telecommunications

   Act of 1996 As Support For The Claim That The Activities Of Internet

   Service Providers Cannot Constitute Common Carriage Under The

   Communications Act of 1934. ................................................................................. 45

IX. PLAINTIFFS HAVE PROPERLY PLEADED A CAUSE OF ACTION FOR

DECLARATORY AND INJUNCTIVE RELIEF ...................................................... 46

   A.Federal Constitutional Issues. ............................................................................ 46

   B.Federal Copyright Laws. ...................................................................................... 48

X. CONCLUSION ...................................................................................................... 50




                                                          iii
                                        TABLE OF AUTHORITIES



FEDERAL CITATIONS

ACLU v. Reno, 929 F.Supp. 824 (E.D.Pa. 1996) ............................................................ 37

Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388 (9th Cir. 1988) ................. 29

Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1528-1529 (9th Cir. 1995) ..................... 15, 25, 26

Amalgamated Meat Cutter & Butcher Workmen v. Jewel Tea Co.,

  381 U.S. 676, 686 (1965)............................................................................................... 41

Ashland Oil, Inc. v. Arnett, 875 F.2d 1271, 1278 (7th Cir. 1989) ................................. 27

Badders v. United States, 240 U.S. 391, 394 (1916) ........................................................ 26

Baumer v. Pachl, 8 F.3d 1341 (9th Cir. 1993) ................................................................. 31

Bilbrey v. Brown, 738 F.2d 1462, 1470 (9th Cir. 1984) .................................................. 51

Bingham v. Zolt, 66 F.3d 553, 560 (2d Cir. 1995), cert.denied,

  517 U.S. 1134 (1996)..................................................................................................... 15

Cabo Distributing Co., Inc., v. Brady, 821 F.Supp. 601, 608 (N.D.Cal. 1992) .....passim

California Architectural Building Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d

  1466, 1469 (9th Cir. 1987), cert.denied, 484 U.S. 1006 (1988) ................................... 13

California Satellite Systems v. Seimon, 767 F.2d 1364 (9th Cir. 1985) .................... 36, 44

Center Cadillac, Inc. v. Leumi Trust Company of New York, 808 F.Supp. 213

  (S.D.N.Y. 1992), aff'd, 99 F.3d 401 (2d Cir. 1996) ..................................................... 28

Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) ................................... 19

CompuServe, Inc. v. Cyber Promotions, Inc., 962 F.Supp. 1015 (S.D.Ohio 1997) . 37, 45



                                                            iv
Computer and Communications Indus. Ass'n v. FCC, 693 F.2d 198

   (D.C.Cir. 1982) ................................................................................................ 39, 40, 53

County of Cook v. Midcon Corporation, 773 F.2d 892, 908 (7th Cir. 1985) .................. 17

Curran v. McKay Radio & Telephone Co., 123 F.Supp. 83, 87 (S.D.N.Y. 1954) ........... 47

Durning v. Citibank, International, 990 F.2d 1133 (9th Cir. 1993) ............................... 16

Farberware, Inc. v. Groben, 764 F.Supp. 296, 305 (S.D.N.Y. 1991) ........................ 22, 24

FCC v. Midwest Video Corporation, 440 U.S. 689, 701 (1979) ...................................... 33

FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 474 (1940) ................................. 44

FCC v. WNCN Listeners Guild, 450 U.S. 582 (1981) ..................................................... 44

Gott v. Simpson, 745 F.Supp. 765 (D.Me 1990) ............................................................. 32

Great N.R. Co. v. Merchants Elevator Co., 259 U.S. 285 (1922) .................................... 41

Griswold v. Connecticut, 381 U.S. 479 (1965)................................................................. 48

Gryger v. Burke, 334 U.S. 728, 732 (1948) ...................................................................... 20

Guiliano v. Everything Yogurt, Inc., 819 F. Supp. 240, 245 (E.D.N.Y. 1993) .............. 28

H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 240-43 (1989) ....... 13, 15, 22

Hagen v. America Online, Inc., San Francisco Superior Court

   Case No. 971047 .................................................................................................passim

Ikuno v. Yip, 912 F.2d 306, 309 (9th Cir. 1990) ............................................................. 14

In re: Gas Reclamation, Inc. Securities Litigation, 659 F.Supp. 493, 513

   (S.D.N.Y. 1987) ............................................................................................................. 28

In re: Glenfed, Inc. Securities Litigation 11 F.3d 843, 848 (9th Cir. 1993) ................... 30




                                                                v
In re: National Mortgage Equity Corporation, 636 F.Supp. 1138, 1164

   (C.D.Cal. 1986) ............................................................................................................ 28

Industrial Communications Systems Inc. v. Pacific Tel. & Tel. Co., 505 F.2d 152, 156

   (9th Cir. 1974)............................................................................................................... 41

ITSI T.V. Productions, Inc. v. California Authority of Racing Fairs,

   785 F.Supp. 854, 862 (E.D.Cal.1992).......................................................................... 50

Katz v. United States, 389 U.S. 347 (1967)...................................................................... 47

Krear v. Malek, 961 F.Supp. 1065 (E.D. Mich 1997) ..................................................... 21

Lancaster Community Hospital v. Antelope Valley Hospital District, 940 F.2d 397

   (9th Cir. 1991), cert.denied, 502 U.S. 1094 (1992) ..................................................... 29

Lewis v. Berry, 101 F.R.D. 706 (W.D.Wash. 1984) ........................................................ 29

Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806, 809 (7th Cir. 1987) .................. 18, 24

Matsuhisa Electric Industrial Co., Ltd. v. Epstein, 516 U.S. 347 (1996) ........................ 18

MCI v. AT&T, 462 F.Supp. 1072 (1978) ........................................................................ 45

MCI v. AT&T, 512 U.S. 218, 114 S.Ct. 2223, 2231 (1994) .......................... 38, 39, 40, 53

Medallion Television Enterprises, Inc. v. SelecTV of California, 833 F.2d 1360, 1365

   (9th Cir. 1987), cert.denied, 492 U.S. 917 (1989) ........................................................ 17

Moore v. Kayport Package Express, Inc., 885 F.2d 531 (9th Cir. 1989) ......................... 29

Mortel v. Mortel Co., 887 F.2d 1322 (7th Cir. 1989) ...................................................... 19

Nader v. Allegheny Airline, Inc., 426 U.S. 290, 305-6 (1976)......................................... 42

National Association of Regulatory Utility Commissioners v. FCC, 525 F.2d 630, 641

   (D.C.Cir. 1976), cert.denied, 425 U.S. 992 (1976) ........................................... 33, 43, 53



                                                                vi
National Association of Regulatory Utility Commissioners v. FCC, 533 F.2d 601, 609

  (D.C.Cir. 1976) ........................................................................................... 33, 34, 35, 46

New York State National Organization for Women v. Terry, 886 F.2d 1339

  (2d Cir. 1989), cert.denied, 495 U.S. 947 (1990) ......................................................... 48

Northwest Airlines v. County of Kent, 510 U.S. 355, 369 (1994) ................................... 41

Papagiannis v. Pontikis, 108 F.R.D. 177, 179 (N.D.Ill. 1985) .................................. 23, 24

Reading Wireless Cable Television Partnership v. Steingold, 1996 U.S. Dist. Lexis

  22152 (D.C.Nev. July 23, 1996) .................................................................................. 21

Rehkop v. Berwick, 95 F.3d 285 (3rd Cir. 1996) ............................................................. 32

Religious Technology Center v. Netcom Online Communications Services, Inc.,

  907 F.Supp. 1361 (N.D.Cal. 1995) ........................................................................ 36, 45

Religious Technology Center v. Wollersheim, 971 F.2d 364 (9th Cir. 1992) .................. 16

Reno v. ACLU, ____ U.S. ____, 117 S.Ct. 2329 (1997) .................................................. 37

Rosenberg Bros. & Company, Inc. v. Curtis Brown Company (1923) 260 U.S. 516 ........ 2

Rowe v. Marietta Corporation, 955 F.Supp. 836 (W.D.Tenn. 1997) ............................. 21

Salinas v. United States, ___ U.S.___, 118 S.Ct. 469 (1997) .......................................... 31

Schiffels v. Kemper Financial Services, Incorporated, 978 F.2d 344, 348-49

  (7th Cir. 1992)............................................................................................................... 31

Schmuck v. United States, 489 U.S. 705, 715 (1989) ...................................................... 29

Schreiber Distributing Co. v. Serv-well Furniture Company, Inc., 806 F.2d 1393

  (9th Cir. 1986)............................................................................................................... 17

Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985) .................................. 13, 17



                                                              vii
Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985) ................................................ 27

Semon v. Royal Indemnity Co., 279 F.2d 737, 739-40 (5th Cir. 1960) .......................... 32

Sever v. Alaska Pulp Corporation, 978 F.2d 1529 (9th Cir. 1992) ................................. 16

SJ Advanced Technology & Mfg. Corp. v. Junkunc, 627 F.Supp. 572, 577

  (N.D.Ill. 1986) ......................................................................................................... 14, 24

Southwestern Bell Corporation v. FCC, 43 F.3d 1515, 1519 (D.C.Cir. 1995)................ 46

Stephens v. United States, 41 F.2d 440, 447 (9th Cir. 1930), cert.denied,

  282 U.S. 880 (1930)................................................................................................. 23, 24

Sun Savings and Loan Association v. Dierdorff, 825 F.2d 187, 192-193

  (9th Cir. 1987)............................................................................................................... 14

T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964), cert.denied,

  381 U.S. 915 (1965)................................................................................................. 49, 50

Ticor Title Insurance Company v. Florida, 937 F.2d 447, 450

  (9th Cir. 1991)................................................................................................... 14, 23, 24

U.S. Concord Inc. v. Harris Graphics Corp., 757 F.Supp.1053 (N.D.Cal. 1991) .......... 29

United States of America v. Rudy Rios Sanchez, 988 F. 2d 1384, 1394-1397

  (5th Cir. 1993), cert.denied, 510 U.S. 878 (1993) ........................................................ 20

United States v. Brackenridge, 590 F.2d 810, 811 (9th Cir. 1979) ................................. 29

United States v. Brooklier, 685 F.2d 1208, 1216 (9th Cir. 1982), cert.denied,

  459 U.S. 1206 (1983)..................................................................................................... 30

United States v. Busacca, 936 F.2d 232, 238 (6th Cir. 1991) ......................................... 26

United States v. California, 297 U.S. 175 (1936) ............................................................. 33



                                                              viii
United States v. Freeman, 6 F.3d 586, 595-96 (9th Cir. 1993) ....................................... 14

United States v. Green, 745 F.2d 1205, 1208 (9th Cir. 1984), cert.denied,

  474 U.S. 925 (1985)....................................................................................................... 28

United States v. Lopez, 803 F.2d 969, 976 (9th Cir.1986) .............................................. 31

United States v. Lothian, 976 F.2d 1257, 1262 (9th Cir. 1992) ...................................... 24

United States v. Patten, 226 U.S. 525, 543 (1913) .......................................................... 30

United States v. Radio Corporation of America, 358 U.S. 334, 347-47 (1959) ............... 42

United States v. Simmons, 923 F.2d 934, 952 (2d Cir. 1991), cert.denied,

  500 U.S. 919 (1991)................................................................................................. 22, 24

United States v. Stein, 37 F.3d 1407, 1409 (9th Cir. 1994) ............................................ 28

United States v. Tille, 729 F.2d 615, 619 (9th Cir. 1984) ............................................... 31

United States v. Turkette, 452 U.S. 576, 580 (1981) ...................................................... 13

Virden v. Graphics One, 623 F.Supp. 1417, 1425 (C.D.Cal. 1985) ......................... 18, 23

Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir. 1973) ............................... 30

Washington ex rel. Stimson Lumber Co. v. Kuykendall,

  275 U.S. 207, 211-12 (1927) ......................................................................................... 32

Washington v. Baenziger, 673 F.Supp. 1478, 1482 (N.D.Cal. 1987)............................. 28

Wool v. Tandem Computers Incorporated, 818 F.2d 1443, 1439 (9th Cir. 1987)........... 27

Zatkin v. Primuth, 551 F.Supp. 39, 42 (S.D.Cal. 1982) ................................................. 27




                                                             ix
STATUTES

17 U.S.C. §§ 101 et seq. ..................................................................................................... 2

§ 1962(c) ................................................................................................................ 12, 22, 31

§ 1962(d) ...................................................................................................................passim

18 U.S.C. § 1341 ................................................................................................................. 1

18 U.S.C. § 1343 ................................................................................................................. 1

18 U.S.C. § 1964 ................................................................................................................. 1

18 U.S.C. §§ 1961-68 ................................................................................................passim

18 U.S.C. § 1962(c) ........................................................................................................... 12

28 U.S.C. § 1291 ................................................................................................................. 2

28 U.S.C. § 1331 ................................................................................................................. 2

28 U.S.C. § 1367(a) ............................................................................................................ 2

28 U.S.C. §§ 2201 and 2202 ........................................................................................ 2, 50

47 U.S.C. § 207 ............................................................................................................. 2, 46

47 U.S.C. § 223(e)(6) ........................................................................................................ 46

47 U.S.C. §§ 309-310 ........................................................................................................ 44



RULES

FED. R. APP. P. 3 ................................................................................................................. 3

FED. R. APP. P. 4 ................................................................................................................. 3

FED. R. CIV. P. 8 ................................................................................................................ 27

FED. RULES OF CIVIL PROC. 9(b) .............................................................................passim



                                                                 x
FRCP 12(b)(6)...........................................................................................................passim



TREATISES

K. Werbach, Digital Tornado: The Internet and Telecommunications Policy, March

   1997 ............................................................................................................................... 43

The Right to Privacy, 4 Harv. L. Rev. 193, 195 (1890) .................................................. 47



ADMINISTRATIVE DECISIONS

Re Access Charge Reform, 11 FCC Rcd. 21354, ¶ 287 (Dec. 24, 1996) ......................... 42

Re Federal-State Joint Board on Universal Service, 12 FCC Rcd. 87 .............................. 43

Re Graphnet Systems, Inc., 73 F.C.C.2d 283, 289 (1979) ............................................... 34

Re Implementation of Local Competition Provisions,

   11 FCC Rcd. 15499, 15517 (1996) ............................................................................... 35

Re Independent Data Communications, 10 FCC Rcd. 13717 (1995) .............................. 34

Re Industrial Radiolocation Service, 5 F.C.C. 2d 197, 202 (1966) .................................. 33

Re Matter of Implementation of the Non-Accounting Safeguards,

   11 FCC Rcd. 21905 ....................................................................................................... 43




                                                                   xi
                              APPELLANT’S BRIEF

        I.     SUBJECT MATTER AND APPELLATE JURISDICTION

      A. The Statutory Basis For Subject Matter Jurisdiction In The District
      Court.

      Appellants‟ action is brought, amongst other bases, under the Interstate

Commerce Clause of the United States Constitution, the First, Fourth, Ninth and

Fourteenth Amendments to the United States Constitution, and the Racketeering,

Mail Fraud, Wire Fraud, Communications Act, Copyright and Intellectual

Property laws of the United States. Further, this action is brought pursuant to

the Constitution, and other statutes and laws of the State of California.

      Jurisdiction is specifically conferred by various federal statutes including,

but not limited to, the following: § 1964 of the Racketeer Influenced and Corrupt

Organizations Act of the Organized Crime Control Act of 1970 as amended, 18

U.S.C. § 1964 (1998), based upon a pattern of racketeering activity in which

Defendants have been engaged in connection with their operation of AOL and

the AOL Enterprise, consisting of violations of (a) 18 U.S.C. § 1341 (1998), relating

to mail fraud (including: fraudulent advertising materials disseminated through

the United States Post Office; and, improper billing practices, with funds

collected by AOL through the United States Post Office), and (b) 18 U.S.C. § 1343

(1998), relating to wire fraud (including: fraudulent advertising disseminated,

through such sources as the Internet, via wire; and, improper billing practices,

with funds collected by AOL via wire from such sources as credit card accounts).




                                         1
The jurisdiction of this Court is further conferred by the need for declaratory and

injunctive relief involving the intellectual property laws of the United States,

including 17 U.S.C. §§ 101 et seq. (1998), and the privacy interests conferred

generally by the Bill of Rights contained within the United States Constitution.

       Original jurisdiction lies with the District Court as to the Federal questions

raised in Appellants‟ First Amended Class Action Complaint, pursuant to 28

U.S.C. § 1331 (1998), as to the Declaratory Relief requested herein, pursuant to 28

U.S.C. §§ 2201 and 2202 (1998), and as to the violations of the Communications

Act of 1934 (including failure on the part of Defendant AOL to file tariffs with the

FCC), pursuant to 47 U.S.C. § 207 (1998).

       Jurisdiction over the California State causes of action arises under the

doctrine of pendant jurisdiction, 28 U.S.C. § 1367(a) (1998).

       B. The Basis For Claiming That The Order Dismissing Plaintiffs’ First
       Amended Complaint Is Final And The Statutory Basis Of Jurisdiction
       Of The Ninth Circuit Court Of Appeals.

       This Court has jurisdiction over all final decisions of the District Courts in

the Ninth Circuit, pursuant to 28 U.S.C. § 1291 (1998). Here, the District Court

granted Defendants‟ Motion to Dismiss, which is a final decision for purposes of

§ 1291. Rosenberg Bros. & Company, Inc. v. Curtis Brown Company (1923) 260 U.S.

516.

       C. Timeliness Of Plaintiffs/Appellants’ Filing.

       The District Court‟s Order Granting Defendants‟ Motion To Dismiss First

Amended Complaint With Prejudice was entered by the Clerk of the District



                                          2
Court on May 19, 1998. Pursuant to Federal Rule of Appellate Procedure 3 (FED.

R. APP. P. 3.), Appellants‟ Notice Of Appeal was filed with the District Court on

June 16, 1998, in compliance with FED. R. APP. P. 4, requiring that the Notice Of

Appeal be filed no later than thirty days from the entry of the Order dismissing

Appellants‟ Complaint. By Order of the Ninth Circuit Court of Appeals,

Appellants' Brief is due on October 2, 1998. Based hereon, Appellants believe

that all papers are timely filed and all parties are timely notified.

                    II.   ISSUES PRESENTED FOR REVIEW

      Appellants bring several issues before this Court. These issues include,

but are not limited, to: (1) whether the District Court below applied the proper

legal standard in granting Defendants‟ 12(b)(6) Motion to Dismiss; (2) whether

the Plaintiffs have sufficiently pleaded facts constituting predicate acts under the

RICO Act; (3) whether the Plaintiffs have sufficiently pleaded a pattern of

racketeering activity under the RICO Act; (4) whether the Plaintiffs have

sufficiently pleaded a RICO conspiracy; (5) whether certain activities of America

Online, Inc. (hereinafter “AOL”) constitute common carrier activity as defined

pursuant to the Federal Communications Act of 1934 and applicable federal case

law; (6) whether the Federal Communications Act of 1934 applies to the common

carrier activities of AOL; (7) whether AOL‟s purported assignments to itself of

Plaintiffs‟ rights under the copyright laws of the United States, 17 U.S.C. § 101, et

seq. (1998), are valid assignments under those laws; and (8) whether Plaintiffs

may have certain privacy rights in materials and personal information controlled



                                           3
by AOL.

                        III.    STATEMENT OF THE CASE

      A. Procedural History.

      Plaintiffs filed a First Amended Complaint (hereinafter “Complaint”)

alleging violations of RICO, 18 U.S.C. §§ 1961-68 (1998); violations of the Federal

Communications Act of 1934, 47 U.S.C. § 151 et seq. (1998); Declaratory and

Injunctive Relief; and pendent common law and statutory violations, all related

to the operations of AOL, and the conduct of that corporation and 3 of its

officers. The District Court, Hon. A. Andrew Hauk presiding, dismissed the

entire Complaint with prejudice, upon defendants' Motion pursuant to FRCP

12(b)(6), 12(b)(1), and 9(b).

      B. Summary Of Facts Alleged In The Complaint.

      Plaintiffs are subscribers to and have utilized the services of AOL in both

their personal and professional capacities. They bring this Class Action on behalf

of millions of people who subscribed to AOL during the Class period (CR 21,

“Complaint” ¶¶ 11-14, 46).

      AOL is a publicly held corporation which provides a number of services to

its subscribers, including E-mail, public forums, and access to the Internet. These

services are provided both by AOL itself and by the "AOL Enterprise", which is

an association-in-fact comprising a number of entities, including AOL, which

contribute content and services to the AOL product offered to the public. (CR 21,

¶ 25.) AOL is also an owner and backbone provider of the Internet itself. (CR 21



                                         4
¶ 6.)

        Defendants Kimsey, Case and Leader (the "Individual Defendants"), while

having interests separate from those of AOL (CR 21, ¶ 19), have been and are the

persons responsible for the management and control of AOL and are the persons

responsible for the conduct complained of. (CR 21, ¶¶ 20, 56.)

        Since becoming a public stock company in 1992, AOL has pursued a

pattern of improper and illegal conduct (CR 21, ¶¶ 54-55), which is interrelated.

(CR 21, ¶ 157.) Defendants have falsely billed and over-billed their subscribers

(CR 21, ¶¶ 58-65, 100-105, inter alia); fraudulently prevented subscribers from

canceling their subscriptions (CR 21, ¶¶ 106-110); fraudulently withdrawn funds

from subscriber checking accounts (CR 21, ¶¶ 111-115); fraudulently

misrepresented the nature of "free trial" offers (CR 21, ¶¶ 115-121); defrauded

business suppliers (CR 21, ¶¶ 122-127); misrepresented AOL's capacity to

provide promised services (CR 21, ¶¶ 130-146, 150, inter alia); fraudulently

continued to solicit subscribers despite knowledge of its incapacity to service

them (CR 21, ¶¶ 152-153); and fraudulently inflated the value of AOL stock (CR

21, ¶¶ 74-88, 96-99), while the Individual Defendants have obtained illegal

profits (CR 21, ¶¶ 73, 89- 95.) This pattern is ongoing and continuing to date (CR

21, ¶¶ 54-55, 158-159).1 This conduct will continue unless stopped by this Court

(CR 21, ¶ 179.)


1For example, in May, 1997, the FTC entered into a consent decree which
enjoined a number of AOL's fraudulent representations and billing practices.


                                         5
       AOL contends that Federal regulatory issues are not "well-settled" as they

pertain to AOL (CR 21, ¶¶ 164, 165.), and asserts that it is not subject to specific

Federal regulations. (CR 21, ¶ 166.) Plaintiffs allege that AOL is a common

carrier (CR 21, ¶ 231) and is required to file tariffs with the FCC. 47 U.S.C. §§ 151

et seq. (1998).

       AOL has affirmatively misrepresented when subscribers use the Internet,

their privacy is protected. (CR 21, ¶ 168.) These representations are false (CR 21,

¶¶ 169, 170), and AOL has refused to mitigate the invasions of privacy resulting

from such misrepresentation. (CR 21, ¶ 170.) AOL claims that it owns subscriber

"screen names" and that it obtains commercial intellectual property rights any

time a subscriber posts creative material in a "public forum." (CR 21, ¶ 171.)

       Declaratory Relief is appropriate in light of AOL's claims and because of

AOL‟s "special relationship" involving the public trust. A declaration is

necessary to bring AOL within Federal and State regulatory control. (CR 21, ¶¶

256, 260.)

                         IV.    SUMMARY OF ARGUMENT

       The District Court erred, as a matter of law, in its dismissal of Appellants‟

Complaint on a Rule 12(b)(6) Motion on all grounds. The District Court failed to

accept as true the facts pleaded by Appellants and to draw all reasonable

inferences in Appellants‟ favor.

       1. The District Court erroneously dismissed Appellants‟ RICO claims.

              Appellants properly pleaded (1) the conduct, (2) of an enterprise, (3)



                                            6
   through a pattern (4) of racketeering.

 Appellants pleaded both open-ended and closed-ended continuity

   through a pattern of racketeering activity covering several years and

   demonstrated that the conduct complained of threatens to repeat.

   The closed-ended pattern began with allegations of improper time-

   keeping, improper credit card billing, and improper checking

   account debits raised in the Hagen litigation.

 The District Court erroneously held that settled matters could not be

   included as predicate acts. The law clearly contemplates the use of

   such settled matters as predicate acts if the RICO violation could not

   have been raised prior to settlement because the underlying pattern

   needed to raise RICO claims was not then complete.

 The District Court erroneously held that securities fraud may never

   be a predicate act. The Private Securities Litigation Reform Act only

   eliminated securities fraud as a RICO predicate act if it was

   otherwise actionable by the complainant under securities

   regulations. Since Appellants agree that they lack standing to assert

   securities fraud claims, they may not recover damages flowing from

   those violations; therefore, the danger of duplicative recovery is

   avoided.

 The District Court erroneously held that the PTP packaging fraud

   allegations could not form the basis for a predicate act because



                               7
   Appellants were not directly harmed by such conduct. There is no

   such requirement under RICO.

 The District Court erroneously interpreted the relatedness standard,

   which requires that the alleged criminal conduct have the same or

   similar purposes, results, participants, victims, or methods of

   commission, or otherwise are interrelated by distinguishing

   characteristics. The District Court held that each and every one of

   these requirements be met, reading the factors in the conjunctive,

   rather than the subjunctive as Congress intended when it used “or”.

 The District Court erred in its application of both closed-ended and

   open-ended continuity requirements to the allegations concerning

   the “flat-fee” pricing program. Appellants outlined a fraudulent

   scheme which, as a result of governmental intervention, temporarily

   abated after five months, but resumed soon thereafter, establishing

   both the threat of continuation into the future required for open-

   ended continuity and the duration necessary to establish closed-

   ended continuity.

 The District Court erroneously held that a RICO conspiracy cannot

   exist if the underlying RICO violations fail as pleaded. RICO

   conspiracy is a violation separate and apart from the RICO crimes of

   commission. A mere agreement to operate an enterprise through a

   pattern of racketeering predicates and overt conduct in furtherance



                               8
      of that agreement establishes the violation.

    The District Court erroneously held that Appellants‟ pleadings

      lacked the specificity required under FED. RULES OF CIVIL PROC. 9(b).

      The standard in the Ninth Circuit is that pleadings of fraud must

      apprise the Defendants of the nature of the claims against them and

      permit an adequate response. Appellants‟ Complaint did both. The

      conspicuous failure of the Defendants to claim that they did not

      understand the nature of the pleadings or that they could not

      adequately prepare an answer serves to underscore the exaltation by

      the District Court of form over substance. Further, the law does not

      require the complainant to allege facts that are uniquely within the

      purview of the Defendants.

   Appellants have properly pleaded Causes of Action alleging RICO

   violations, and their dismissal was an error as a matter of law.

2. The District Court erroneously dismissed Appellants‟ Third Cause of

   Action, claiming violations of the Communications Act of 1934.

    A common carrier is defined by what it does, not what it claims to

      be; further, an entity may be a common carrier with respect to only

      a portion of its proffered services. The District Court failed to apply

      these well established principles defining the character of common

      carriers.

    The FCC has consistently shirked its statutory mandate to tariff-



                                   9
     regulate all common carriers, as required by the Communications

     Act. In 1994, the Supreme Court took the agency to task for its

     efforts to escape the mandatory nature of tariff regulation under the

     Act. The D.C. Circuits‟ rationale for its limited sanction of the FCC‟s

     questionable decision to waive tariff filing requirements for

     “enhanced” services vanished years ago when the FCC failed to

     enforce the service separation requirement that was the basis for the

     court‟s sanction. The District Court erroneously ignored, amongst

     other precedent, the Supreme Court‟s strong statement that tariff

     regulation of common carriers is mandatory under the

     Communications Act.

   The District Court erroneously gave legal authority to Congressional

     inaction. It is a fundamental legal axiom that legislative failure to

     comment clearly on an issue has no bearing on the application of

     existing law. Had Congress intended to exempt all Internet Service

     Providers (and all of their various offerings) from the reach of

     common carrier regulation, it could easily have done so in the

     Telecommunications Act of 1996.

  Appellants have properly pleaded violations of the Communications

  Act of 1934, and the dismissal was error as a matter of law.

3. Appellants have properly pleaded Causes of Action requesting

  Declaratory and Injunctive Relief.



                                 10
          The District Court erroneously held that the law protects an

             individual‟s right of privacy only in cases involving state action.

             There is no per se requirement of state action for a claim of privacy to

             be raised. Private conspiracies to violate privacy rights have been

             held to be actionable.

          The District Court erroneously held that Appellants‟ copyright

             allegations did not raise a case or controversy. Appellants clearly

             pleaded federal subject matter jurisdiction on the questions of

             (1)who owns a copyright, and (2) whether federal copyright law

             permits the assignment or licensing of copyrights as claimed by

             Defendant AOL and complained of by Appellants.

         Appellants have properly pleaded Declaratory and Injunctive relief,

         and their dismissal was error as a matter of law.

      4. The District Court erroneously dismissed the pendant state law causes

         of action because the interrelated federal question claims were

         erroneously dismissed on a Rule 12(b)(6) Motion.

                         V.    STANDARD OF REVIEW

      All issues raised herein pertain to findings of law by the District Court

when it granted Defendants‟ 12(b)(6) Motion To Dismiss. Because all issues

raised in this appeal pertain to the interpretation and/or the application of law

(both statutory and decisional), judicial review is plenary (de novo review) with

respect to all issues. While Appellants will identify the specific nature of the



                                         11
dispute with each issue discussed, infra, the standard of review for all issues will

be plenary.

      VI.     RULE 12(b)(6) MOTIONS ARE VIEWED WITH DISFAVOR

      Under FED. R. CIV. P. 12(b)(6), the Court must determine whether the facts,

as alleged in the Complaint, entitle the Plaintiff to a legal remedy. The specific

principles used by the Ninth Circuit Court of Appeals in making this analysis

were well articulated in Cabo Distributing Co., Inc., v. Brady, 821 F.Supp. 601, 608

(N.D.Cal. 1992):

      [T]he question presented by a motion to dismiss is not whether the
      plaintiff will prevail in the action, but whether she is entitled to offer
      evidence in support of her claim. Scheuer v. Rhodes, 416 U.S. 232, 94
      S.Ct. 1683, 1686, 40 L.Ed. 2d 90 (1974). In answering this question,
      the Court must assume the plaintiff‟s allegations are true and must
      draw all reasonable inferences in plaintiff‟s favor. Usher v. City of Los
      Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of the
      pleadings indicates that the chance of recovery is remote, the Court
      must allow plaintiff to develop her case at this stage of the
      proceedings. United States v. City of Redwood City, 640 F.2d 963, 966
      (9th Cir. 1981).

        THE DISTRICT COURT ERRED AS A MATTER OF LAW IN
      VII.
DISMISSING APPELLANTS’ TWO RICO CAUSES OF ACTION ON A RULE
                      12(B)(6) MOTION

      A. Plaintiffs Have Properly Pleaded Two RICO Causes Of Action

      Four elements are needed to establish of a cause of action under 18 U.S.C. §

1962(c). Those elements are: (1) conduct (2) of an enterprise (3) through a pattern

(4) of racketeering activity. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496

(1985). The District Court found that Appellants‟ pleading of the “enterprise”

element was sufficient. The “conduct” element was not at issue.



                                          12
      In 1981, the Supreme Court held that RICO was designed to include both

legitimate and illegitimate enterprises within its scope. United States v. Turkette,

452 U.S. 576, 580 (1981). The broad scope of RICO was explained in Sedima, 473

U.S. at 499: “Congress wanted to reach both 'legitimate' and 'illegitimate'

enterprises. . . . The former enjoy neither an inherent incapacity for criminal

activity nor immunity from its consequences.”

      B. The District Court Erroneously Held That Appellants Failed To
      Establish A "Pattern" Of Racketeering Activity Under RICO.

      H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 240-43 (1989) sets

forth the Supreme Court's view of the RICO "pattern" requirement:

      [I]t is implausible to suppose that Congress thought continuity
      might be shown only by proof of multiple schemes. . . . 'Continuity'
      is both a closed- and open-ended concept, referring either to a closed
      period of repeated conduct, or to past conduct that by its nature
      projects into the future with a threat of repetition. . . . A party . . .
      may demonstrate continuity over a period. . . . A RICO pattern may
      surely be established if the related predicates themselves involve a
      distinct threat of long-term racketeering activity. . . . The continuity
      requirement is likewise satisfied where it is shown that the
      predicates are a regular way of conducting defendant's ongoing
      legitimate business (in the sense that it is not a business that exists
      for criminal purposes), or of conducting or participating in an
      ongoing and legitimate RICO 'enterprise.'

In 1987, the Ninth Circuit issued two landmark rulings articulating the "pattern"

requirement. California Architectural Building Products, Inc. v. Franciscan Ceramics,

Inc., 818 F.2d 1466, 1469 (9th Cir. 1987), cert.denied, 484 U.S. 1006 (1988) held that

RICO defines "pattern of racketeering activity" without mentioning "continuity".

The illegal acts need not be part of different criminal episodes. In Sun Savings




                                          13
and Loan Association v. Dierdorff, 825 F.2d 187, 192-193 (9th Cir. 1987), the court

announced that a single fraudulent scheme or criminal episode can constitute a

"pattern".2

      In 1990, the Ninth Circuit held that two predicate acts could meet the

"pattern" requirement. Ikuno v. Yip, 912 F.2d 306, 309 (9th Cir. 1990). Ticor Title

Insurance Company v. Florida, 937 F.2d 447, 450 (9th Cir. 1991) held that 3 episodes

of forgery were related, had similar purposes and identical methods of

commission, and, thus, posed a threat of continued criminal activity.3

      The Ninth Circuit emphasized the flexible nature of the "pattern" concept

in United States v. Freeman, 6 F.3d 586, 595-96 (9th Cir. 1993): “[R]acketeering

predicates are related if they 'have the same or similar purposes, results,

participants, victims, or methods of commission, or otherwise are interrelated by

distinguishing characteristics and are not isolated events.' . . ." [Citation omitted].

See also, Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1528-1529 (9th Cir. 1995) (precise

guidelines cannot be set to determine the existence of a pattern; four predicate

acts over a two month period satisfied the "continuity" requirement).


2Accord, Papagiannis v. Pontikis, 108 F.R.D. 177, 179 (N.D.Ill. 1985) ("Perpetration
of fraudulent activities on more than one victim, while following the same
modus operandi, is indeed a pattern for RICO purposes."); SJ Advanced
Technology & Mfg. Corp. v. Junkunc, 627 F.Supp. 572, 577 (N.D.Ill. 1986) (". . .
separate acts of fraud on various separate parties" can constitute a "pattern"
under RICO.)
3"If fraudulent in important and continuing branches of its activities, the
enterprise as a whole may properly be characterized as fraudulent. Stephens v.
United States, 41 F.2d 440, 447 (9th Cir. 1930), cert.denied, 282 U.S. 880 (1930).


                                          14
      Appellants have sufficiently alleged years of both closed-end and open-

ended patterns of activity. (For the "closed-end" pattern, see, inter alia, CR 21, ¶¶

54, 56-58, 67, 69-72, 74-87, 90-95, 97-99, 102-105, 108-109, 113-120, 123-127, 129-

153.) The fact that certain predicate acts occurred prior to the four-year RICO

statute of limitations only bars compensation for those older acts and does not

proscribe the use of those older acts to establish a RICO pattern. Bingham v. Zolt,

66 F.3d 553, 560 (2d Cir. 1995), cert.denied, 517 U.S. 1134 (1996). The District Court

failed to apply the legal principle that even if a claim is barred for various

reasons, the underlying conduct can still be used to substantiate a RICO pattern.

As will be detailed, infra, the fraudulent activities forming the basis of the class-

action suit, Hagen v. America Online, Inc., San Francisco Superior Court Case No.

971047, join with the later advertising and access frauds to establish a series of

activities more than sufficient to demonstrate a "closed-ended pattern."

      As for the "open-ended" conduct, Appellants have alleged a threat of

continuing illegal conduct (CR 21, ¶¶ 54-153, 179). This pattern of conduct began

before 1995 became the way Defendants conducted business. Fraudulent

conduct as a way of doing business is, ipso facto, open-ended continuity. H.J.,

492 U.S. at 242-243. The false advertising of Defendants has continued for well

over a year, is continuing (and threatens to repeat as Defendants prepare to roll

out AOL version 4.0 software), and permits Defendants to attract new

subscribers to their service. Unfortunately, the District Court accepted the




                                          15
misstatements of fact advanced by Defendants, erroneously concluding that

Appellants alleged no more than five months of fraudulent advertisements. 4 The

District Court failed to read the Complaint in the light most favorable for

Appellants. Cabo, 821 F.Supp. at 608.

      Other cases cited by the District Court involved facts totally distinct from

the instant case. Durning v. Citibank, International, 990 F.2d 1133 (9th Cir. 1993)

concerned one, single misleading document in conjunction with one, single act,

emphasized the isolated nature of the event, and did not hold that a pattern

requires more than a single scheme. Religious Technology Center v. Wollersheim,

971 F.2d 364 (9th Cir. 1992), involved a single lawsuit directed at a single

individual that did not threaten to repeat. Sever v. Alaska Pulp Corporation, 978

F.2d 1529 (9th Cir. 1992), involved a single case of witness tampering directed at

a single individual.

      The Ninth Circuit requirements for the finding of a "pattern" have been

consistent and unchanged. Rather than resurrect a rejected line of legal

reasoning, the District Court has cited cases in which essential facts differ

drastically from those pleaded here. For example, the District Court relies on


4Defendants falsely claimed that Plaintiffs pleaded that subscriber access
problems lasted only two months, and the District Court incorrectly reads
Appellants‟ allegations as defining a problem that lasted no longer than five
months. The First Amended Complaint, paragraph 158, in pertinent part, states
that "DEFENDANTS‟ improper activities continue even at present, in the form of
misleading advertisements for „unlimited‟ access." Appellants actually alleged
that Defendants temporarily curtailed their improper advertising after five
months, but resumed such misleading advertising soon thereafter.


                                          16
Medallion Television Enterprises, Inc. v. SelecTV of California, 833 F.2d 1360, 1365

(9th Cir. 1987), cert.denied, 492 U.S. 917 (1989), a case that supports Appellants‟

position: "If, however, an episode is taken to encompass a series of substantively

related transactions, the multiple episode requirement would 'unreasonably limit

the ambit of RICO and overlook the Supreme Court's admonition that RICO be

broadly read.' Id. (citing Sedima, 473 U.S. at 497)." The District Court also cites

Schreiber Distributing Co. v. Serv-well Furniture Company, Inc., 806 F.2d 1393 (9th

Cir. 1986), one of the earliest Ninth Circuit decisions endorsing the “broad

pattern” interpretation.

             1. The District Court Erroneously Held That Appellants Cannot
             Assert The Hagen Improprieties As Predicate Acts Under RICO

      AOL‟s settlement of the Hagen litigation does not preclude use of the

underlying allegations as RICO predicate acts.5 In fact, the settlement cannot

bind the entire Class herein. For example, individuals who opted out of Hagen,

as well as individuals subscribing to AOL after the Hagen settlement, were not

parties to that agreement. The Hagen settlement, at most, may preclude a claim

for certain damages by some Class members. There was no judicial finding in



5 The District Court ruled, erroneously, that a civil settlement of an earlier class
action complaint against AOL, before trial, estops the use of those improprieties
as predicate acts for RICO. This is a misstatement of applicable law: "Only in the
relatively unusual case...in which all significant aspects of an alleged scheme to
defraud were previously litigated thoroughly and found to be proper under state
law...will the prior state court determinations collaterally estop issues controlling
in a subsequent RICO suit." County of Cook v. Midcon Corporation, 773 F.2d 892,
908 (7th Cir. 1985). [Emphasis added.]


                                           17
Defendants' favor.6

      In connection with the Hagen matter referenced in the Complaint,

Appellants‟ specific damages or lack thereof do not impact standing herein:

      We do not believe that a plaintiff, in order to state a claim under
      section 1964(c), must allege an injury to its business or property
      either caused by at least two predicate acts, or caused by all the acts
      adding up to a pattern. Rather, we believe that a plaintiff must
      prove only: (1) a violation of section 1962 (for example, a person
      furthering an enterprise through a pattern of racketeering), and (2)
      an injury directly resulting from some or all of the activities
      comprising the violation.

Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806, 809 (7th Cir. 1987). Since the

existence of multiple victims is one indication of the continuity required to show

a pattern of racketeering, the pattern must be permitted to include acts injuring

persons other than plaintiff. RICO plaintiffs can recover for injury caused by

"any part of the acts that add up to a violation." Id., at 810.7 To hold otherwise

would require the dismissal of a RICO action alleging a pattern of extortion

against numerous victims if only one victim was brave enough to file suit.

      The District Court misapplies Mortel v. Mortel Co., 887 F.2d 1322 (7th Cir.

1989), in which a shareholder who brought a state court breach of contract action



6Matsuhisa Electric Industrial Co., Ltd. v. Epstein, 516 U.S. 347 (1996) applies to a
fully litigated judgment itself. It in no way addresses the use of such cases as
RICO predicates.
7Accord, Virden v. Graphics One, 623 F.Supp. 1417, 1425 (C.D.Cal. 1985) (To
establish a violation of § 1962, Appellants must eventually demonstrate, inter
alia, that defendants engaged in a pattern of racketeering activity composed of
predicate acts injuring or affecting someone, not necessarily Appellants.)


                                           18
was barred by res judicata from litigation in a subsequent RICO action, where

the alleged predicate acts concerned the same transaction or series of facts.

Mortel holds that underlying activities of a settled transaction cannot form the

basis of subsequent RICO litigation if the RICO claim could have been brought at

the time of the first litigation. RICO does not permit a second bite at the apple.

However, if the identified “closed-ended pattern” was not completed at the time

of the first settled litigation, Mortel does not hold that the facts underlying the

settled litigation cannot later form part of a RICO pattern.8 Logically, if the RICO

pattern was not yet established at the time of settlement of the initial litigation,

how could settling litigants even contemplate the discharge of a violation that

had not yet occurred. Here, the Hagen predicate acts antedate all other predicate

acts.

        On a yet more subtle level, the District Court misconstrues the very nature

of RICO violations in holding that allegations raised in Hagen cannot be used to

establish a pattern. A RICO violation arises, amongst other bases, from the

operation of an “enterprise” through a “pattern” of “racketeering” activities. It is

the “pattern” of such activity that forms the basis of the violation, not the



8 Under the same logic, the District Court‟s citation of Class Plaintiffs v. City of
Seattle, 955 F.2d 1268 (9th Cir. 1992) is inapposite to the instant action. That case
involved the possibility of parallel claims in a class action settlement that were
not alleged and might not have been maintainable in the class, but arose from the
same underlying facts. The instant case does not turn on an attempt to re-litigate
a prior transaction; Defendants have made fraud a regular part of their business
conduct, and, as such, they are subject to RICO which penalizes the repetition of


                                          19
underlying acts themselves. This is analogous to the claim that applying both

“career offender” and offense enhancement sentencing guidelines to the same

criminal activity in a federal criminal sentencing proceeding violates the double

jeopardy provision of the constitution because it punishes twice for the same

crime. This argument has been dismissed on the rationale that sentence

enhancements punish the repetition of certain criminal activities, not the criminal

activities themselves. United States of America v. Rudy Rios Sanchez, 988 F. 2d 1384,

1394-1397 (5th Cir. 1993), cert.denied, 510 U.S. 878 (1993). The Sanchez Court,

quoting Gryger v. Burke, 334 U.S. 728, 732 (1948), said “that „the sentence as a . . .

habitual criminal is not to be viewed as either a new jeopardy or additional

penalty for the earlier crimes. It is a stiffened penalty for the latest crime, which

is considered to be an aggravated offense because a repetitive one.” Sanchez, at

1396. Permitting Defendants to escape RICO liability on the theory that Hagen

precludes use of those facts as predicate acts would essentially permit

Defendants to engage in a perpetual series of fraudulent schemes without ever

fearing the repercussions of RICO, so long as each scheme were settled with

litigants.

             2. Acts Of Securities Fraud Are Still “Predicate Acts” Under RICO
             So Long As Damages Are Not Sought Where Securities Fraud
             Statutes Would Otherwise Provide Relief

       It is not essential to the adequacy of the Complaint that Appellants have

alleged securities fraud as a predicate racketeering act (CR 21, ¶¶ 89-95). The


certain behaviors in the operation of an “enterprise”.


                                          20
District Court held that Appellants do not have standing to litigate securities

fraud (CR 35, pages 10-12), but that is not what Appellants are doing. The

District Court also held that Congress has prohibited the use of securities fraud

allegations as a "predicate act" for RICO claims. (CR 35, pages 10-11.) However,

since the passage of the Private Securities Litigation Reform Act of 1995, courts

have interpreted that law's purpose to be the removal of the right to recover

RICO treble damages flowing from securities fraud predicate acts, to prevent a

duplicative recovery for securities fraud injuries. Even cases cited by the District

Court comport with that logic. For example, in 1997 a Tennessee District Court,

relying on Reading Wireless Cable Television Partnership v. Steingold, 1996 U.S. Dist.

Lexis 22152 (D.C.Nev. July 23, 1996), concluded that, where Plaintiffs are unable

to claim direct damages flowing from violations of § 10(b), courts will not apply

the 1995 act retrospectively. Rowe v. Marietta Corporation, 955 F.Supp. 836

(W.D.Tenn. 1997). The very fact that Appellants herein do lack standing to

litigate securities fraud entitles them to plead such securities fraud as RICO

predicate acts. The District Court citation of Krear v. Malek, 961 F.Supp. 1065

(E.D. Mich 1997) actually buttresses Appellants‟ position.

      The District Court erroneously applied the “relatedness” standard to the

securities fraud predicate acts pleaded by Appellants. 9 (CR 35, pages 11-12.)

Under the standard identified in H.J., Inc., supra, (citing Title X) the Supreme


9A RICO plaintiff pursuing a private cause of action under § 1962(c) need only
prove that the predicate acts are related to the affairs of the RICO enterprise.


                                          21
Court stated that:

      „[C]riminal conduct forms a pattern if it embraces criminal acts that
      have the same or similar purposes, results, participants, victims, or
      methods of commission, or otherwise are interrelated by
      distinguishing characteristics and are not isolated events.‟ § 3575(e).
      We have no reason to suppose that Congress had in mind for
      RICO‟s pattern of racketeering component any more constrained a
      notion of the relationships between predicates that would suffice.
      [Emphasis added.]

H.J., Inc., 492 U.S. at 240. It is critical to note that Congress utilized the

subjunctive “or” when drafting the RICO Act, demonstrating an unequivocal

intent to outline possible pattern-defining factors rather than a requirement that

all factors be met to establish a pattern. If it were necessary to show each and

every factor, then the language would have been “same or similar purposes,

results, participants, victims, and methods of commission.” Consistent with this

interpretation, Farberware, Inc. v. Groben, 764 F.Supp. 296, 305 (S.D.N.Y. 1991)

(citing United States v. Simmons, 923 F.2d 934, 952 (2d Cir. 1991), cert.denied, 500

U.S. 919 (1991)) held that the involvement of similar participants is sufficient to

demonstrate a relationship among the predicate acts. In the instant matter,

Appellants have pleaded securities fraud violations that are related to other

alleged predicate acts through similar purposes, participants, results, and

methods of commission. In every predicate act, Defendants improperly utilized

wire and the U.S. mail as tools in various schemes to wrongfully enrich AOL

(and, indirectly, themselves), either by directly collecting improper revenue or by


Virden v. Graphics One, 623 F.Supp. 1417, 1428-29 (C.D.Cal. 1985).


                                           22
disseminating fraudulent and misleading information intended to improperly

generate revenue. For purposes of a Rule 12(b)(6) Motion, these allegations must

be presumed to be true by the District Court. Cabo, 821 F.Supp. at 608 . A

substantial body of case law supports Appellants‟ interpretation of the

“relatedness” requirement in establishing a “pattern” of racketeering activity.

See, e.g., Stephens, supra; Ticor Title, supra; S.J. Advanced Technology, supra;

Papagiannis, supra.

         Appellants‟ primary purpose in pleading securities fraud as a predicate act

was to establish with painful clarity the fact that Defendants have operated their

enterprise, in part, as a corrupt organization moving from fraudulent scheme to

fraudulent scheme in an effort to squeeze profits from a precariously positioned

business endeavor. Appellants do not seek specific damages flowing from

securities violations; rather, Appellants seek both to compel Defendants to

operate their business in a lawful manner and to recover damages resulting from

unintentional interactions by Plaintiffs with a lawless organization.

               3. Appellants Have Pleaded PTP Improprieties To Establish A
               “Pattern” Of Activity Under RICO, Not To Claim Damages
               Flowing From The PTP Transaction.

         As with securities fraud, Appellants are not seeking damages flowing from

the PTP improprieties. Such acts are alleged as additional RICO predicates, in
                         10




10 TheDistrict Court erroneously held, without authority, that the lack of direct
impact on Appellants precludes the inclusion of PTP as a predicate RICO act.
There is no such standing requirement under RICO as to each and every
predicate act. See, e.g., Marshall & Ilsley Trust Co., 819 F.2d 806. The District


                                            23
order to demonstrate the ongoing pattern of racketeering activity. The PTP

allegations are sufficiently related to the other predicate acts to meet the RICO

standard of “relatedness.” See, e.g., Stephens, supra; Ticor Title, supra; S.J. Advanced

Technologies, supra; Papagiannis, supra.

      The involvement of similar participants is sufficient to demonstrate a

relationship among the predicate acts. Farberware, Inc. v. Groben, 764 F.Supp. 296,

305 (S.D.N.Y. 1991) (citing United States v. Simmons, 923 F.2d 934, 952 (2d Cir.

1991), cert.denied, 500 U.S. 919 (1991).) Here, the occurrences of mail and wire

fraud involve the same Defendants acting in concert.11

             4. The District Court Erroneously Held That “Flat-Fee”
             Advertising Fraud Alleged By Appellants Failed To Form A
             “Pattern” Of Racketeering Activity Under RICO

      In holding that Appellants failed to plead facts sufficient to establish a

“pattern” of racketeering activity under RICO with respect to the “flat-fee”

campaign, the District Court not only erred in applying the law pertaining to the

RICO Act, but failed to read the Appellants‟ Complaint properly. Appellants

have discussed in detail the requirements for establishing a “pattern” of


Court confuses the holding of Holmes v. SIPC, 503 U.S. 258 (1992), which concerns
the remoteness of a predicate act in relation to damages being sought, rather than
remoteness of the predicate act itself. The very existence of the specific ten-year
statutory period for predicate acts provided under RICO demonstrates the
erroneous reasoning of the District Court.
11"The defendant need not personally have mailed the letter or made the
telephone call; the offense may be established where one acts with knowledge
that the prohibited actions will follow in the ordinary course of business or
where the prohibited acts can reasonably be foreseen." United States v. Lothian,


                                           24
racketeering activity under RICO. However, it bears repeating that “open-ended

continuity” is demonstrated when past conduct projects into the future with a

threat of repetition. Appellants allege that the financial incentives remain in

place for Defendants to continue misrepresenting to the public the user capacity

of AOL for the purpose of fraudulently inducing subscriptions to the AOL

service. This allegation precludes dismissal on a 12(b)(6) Motion as a matter of

law. The District Court erroneously failed to read the Complaint in the light

most favorable to Appellants. Cabo, 821 F.Supp at 608.

      With respect to “closed-ended continuity,” the District Court incorrectly

read the Complaint as alleging that improper advertising continued no longer

than five months. Appellants actually pleaded that the misleading

advertisements began in October 1996, have persisted, with only temporary

abatement, to the present, and are continuing. (CR 21, para. 158.) And, as in

Allwaste, 65 F.3d at 1528, Appellants strenuously argued at the hearing on the

Rule 12(b)(6) Motion to Dismiss that they had alleged conduct which was

ongoing, exceeding one year in duration. (RT, pages 34-35.) Predicate acts

persisting over such a substantial period exceed widely recognized minimum

requirements for “closed-ended” pattern duration. Appellants have alleged

conduct of sufficient length to establish “closed-ended continuity,” with the

threat of future repetition sufficient to establish “open-ended continuity,” and

the District Court‟s holdings to the contrary are errors of law.


976 F.2d 1257, 1262 (9th Cir. 1992).


                                         25
      Finally, the District Court ignored United States v. Busacca, 936 F.2d 232, 238

(6th Cir. 1991) (cited, with approval, by the Ninth Circuit in Allwaste, 65 F.3d at

1528), which held that governmental intervention which stops an activity does

not prevent its use as a RICO predicate if the Court finds that this activity would

have continued, save for such intervention. The question of whether this series

of predicate acts meets the standard for closed-ended continuity, open-ended

continuity, or both, is properly determined by the trier of fact.

             5. The Predicate Racketeering Acts.

      Plaintiffs have pleaded numerous predicate acts.12 The propriety of these

pleadings (other than those elements associated with securities fraud) were left

without comment by the District Court.

      C. Requisite Specificity Under FED. R. CIV. P. 9(b)

      The Ninth Circuit has consistently read FED. R. CIV. P. 9(b) in conjunction

with FED. R. CIV. P. 8. In Zatkin v. Primuth, 551 F.Supp. 39, 42 (S.D.Cal. 1982), this

Court explained:

      '[I]t is inappropriate to focus exclusively on the fact that Rule 9(b)
      requires particularity in pleading fraud. This is too narrow an
      approach and fails to take account of the general simplicity and
      flexibility contemplated by the rules.' 5 Wright & Miller, Federal
      Practice and Procedure, § 1298. The Ninth Circuit has consistently
      taken the approach of reading the two rules in conjunction. Under
      Ninth Circuit law, a pleading is sufficient for purposes of Rule 9(b) if
      it identifies the circumstances constituting fraud so that the

12When AOL fraudulently billed millions, millions of predicate acts were
committed. Badders v. United States, 240 U.S. 391, 394 (1916). Each mailing or
interstate communication is a separate offense. Ashland Oil, Inc. v. Arnett, 875
F.2d 1271, 1278 (7th Cir. 1989) (citing Badders).


                                          26
      defendant can prepare an adequate answer.

See also, e.g., Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). In Wool v.

Tandem Computers Incorporated, 818 F.2d 1443, 1439 (9th Cir. 1987), this Court

applied this relaxed standard to allegations of corporate fraud:

      In cases of corporate fraud where the false or misleading
      information is conveyed in...'group-published information,' it is
      reasonable to presume that these are the collective actions of the
      officers.... Under such circumstances, a plaintiff fulfills the
      particularity requirements of Rule 9(b) by pleading the mis-
      representations with particularity and where possible the roles of
      the individual defendants in the mis-representations. [Citations
      omitted.]

Despite Wool, the District Court erroneously held that Appellants must attribute

the fraudulent activities to specific Defendants.

      Further, Appellants‟ Complaint pleads numerous "omissions" which

constitute misrepresentations (CR 21, ¶¶ 60, 83, 87, 94, 108, 110, 117-118, 130-133,

141-142, 152-153 "Omissions" do not "occur" in the same sense as do affirmations:

      Where the fraud consists of omissions on the part of the defendants,
      the plaintiff may find alternative ways to plead the particular
      circumstances of the fraud. For example, a plaintiff cannot plead
      either the specific time of the omission or the place, as he is not
      alleging an act, but a failure to act.

Washington v. Baenziger, 673 F.Supp. 1478, 1482 (N.D.Cal. 1987). See, e.g., In re:

National Mortgage Equity Corporation, 636 F.Supp. 1138, 1164 (C.D.Cal. 1986)

(providing an example of the relaxed standard).

      The degree of specificity required in cases of mail and wire fraud was

explained in Center Cadillac, Inc. v. Leumi Trust Company of New York, 808 F.Supp.




                                          27
213 (S.D.N.Y. 1992), aff'd, 99 F.3d 401 (2d Cir. 1996). The time, place and content

of each mail communication need not be specified where the mechanics of the

underlying scheme is sufficiently detailed. Only the general content is needed.

Id., at 229.13 See, e.g., Guiliano v. Everything Yogurt, Inc., 819 F. Supp. 240, 245

(E.D.N.Y. 1993).

      While it eventually must be proven that the mailing which forms the basis

for the fraud count was made for the purpose of executing the fraudulent

scheme, United States v. Green, 745 F.2d 1205, 1208 (9th Cir. 1984), cert.denied, 474

U.S. 925 (1985), direct proof of mailing is not required. United States v.

Brackenridge, 590 F.2d 810, 811 (9th Cir. 1979), cert.denied, 440 U.S. 985 (1979).

Even innocent mailings containing no false information may supply the mailing

element. Schmuck v. United States, 489 U.S. 705, 715 (1989).

      Lewis v. Berry, 101 F.R.D. 706 (W.D.Wash. 1984), concisely explained that

Rule 9(b) is not "a sword in the hands of a defendant that cuts off claims that may

be meritorious, especially when it is clear the party accused of fraud has

sufficient information to defend himself." Id., at 708-9.

      The District Court cites "specificity" cases without applying those cases to


13In fact, it is not necessary that the mailing actually contain fraudulent
statements; it suffices legally if the transmissions advance the execution of the
fraudulent scheme. In re: Gas Reclamation, Inc. Securities Litigation, 659 F.Supp.
493, 513 (S.D.N.Y. 1987). For example, mailings that are intended to "lull" a
victim into a false sense of security in order to prevent the investigation and
discovery of the fraud are actionable as mail fraud. United States v. Stein, 37 F.3d
1407, 1409 (9th Cir. 1994).



                                           28
these pleadings and these facts.14 Moore v. Kayport Package Express, Inc., 885 F.2d

531 (9th Cir. 1989) supports Plaintiffs' position, since it noted that a pleading is

sufficient under FED. R. CIV. P. 9(b) if it identifies the circumstances constituting

fraud sufficiently to permit a defendant to prepare an adequate answer from the

allegations.15 Defendants do not, and cannot, claim that they are unable to

prepare an answer from the allegations. Defendants have never denied that

sufficient elements of its vast advertising campaign have been set forth and that

its time period was recited, even when confronted with this fact at the District

Court hearing.16 (RT, pages 17-18.)




14The District Court cites such cases as Lancaster Community Hospital v. Antelope
Valley Hospital District, 940 F.2d 397 (9th Cir. 1991), cert.denied, 502 U.S. 1094
(1992), Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388 (9th Cir. 1988), and
U.S. Concord Inc. v. Harris Graphics Corp., 757 F.Supp.1053 (N.D.Cal. 1991) for the
conclusion that the Complaint is fatally insufficient. These cases stand for
general propositions about "time, place and manner" that do not make the
Complaint insufficient.
15 The Moore Court declared: "[T]he rule may be relaxed as to matters within the
opposing party's knowledge. For example, in cases of corporate fraud, plaintiffs
will not have personal knowledge of all of the underlying facts.... Instances of
corporate fraud may also make it difficult to attribute particular fraudulent
conduct to each defendant as an individual." (Moore, 885 F.2d at 540.)
16 FED. R. CIV. P. 9(b) does not require the pleading of detailed evidentiary matter.
Once the defendants have sufficient knowledge of the allegations to prepare an
adequate answer, the pleading rules are supplemented by procedures, including
summary judgment, which enable a party to seek early resolution in the absence
of a bona fide claim. Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir.
1973). Accord, In re: Glenfed, Inc. Securities Litigation 11 F.3d 843, 848 (9th Cir.
1993).



                                          29
      D. The District Court Erred In Holding That Appellants Failed To
      Properly State An 18 U.S.C. § 1962(d) RICO Conspiracy.

      In United States v. Patten, 226 U.S. 525, 543 (1913), the Supreme Court held,

“[C]onspirators must be held to have intended the necessary and direct

consequences of their acts. . . . [B]y purposely engaging in a conspiracy. . .they

are, in legal contemplation, chargeable with intending that result." [Citations

omitted.] The Ninth Circuit later applied conspiracy to RICO, when it said, “The

essence of a RICO conspiracy is not an agreement to commit racketeering acts,

but an agreement to conduct or participate in the affairs of an enterprise through

a pattern of racketeering." [Citations omitted.] United States v. Brooklier, 685 F.2d

1208, 1216 (9th Cir. 1982), cert.denied, 459 U.S. 1206 (1983). The District Court

erroneously required Appellants to allege that each Defendant “agreed to fulfill a

particular role within a RICO enterprise, agreed to commit RICO predicate acts,

or was aware of and intended to participate in a conspiracy.” Any agreement to

conduct the affairs of an enterprise through racketeering is a substantive

violation of RICO sufficient to establish a violation of § 1962(d). Only when

proof of such objective is lacking must the evidence establish the defendant's

participation or agreement to participate in two predicate acts. United States v.

Tille, 729 F.2d 615, 619 (9th Cir. 1984). In December 1997, the United States

Supreme Court rejected District Court‟s interpretation of Baumer v. Pachl, 8 F.3d

1341 (9th Cir. 1993). Citing Tille, the high Court held that, to be convicted of

conspiracy under § 1962(d), a defendant need not agree to any specific predicate




                                         30
acts, so long as that defendant intends to further an endeavor which, if

completed, would violate § 1962(c). Salinas v. United States, ___ U.S.___, 118 S.Ct.

469 (1997).

      The act causing a plaintiff's injury under § 1962(d) need not be a RICO

predicate act, but can be any overt act in furtherance of the RICO conspiracy.

Schiffels v. Kemper Financial Services, Incorporated, 978 F.2d 344, 348-49 (7th Cir.

1992). United States v. Tille, 729 F.2d 615, 619 (9th Cir.1984), held that a violation

of § 1962(d) is established by proof of an agreement, the objective of which is a

substantive violation of RICO. Once a conspiracy is established, evidence of only

a slight connection is necessary to convict a defendant of knowing participation

therein. United States v. Lopez, 803 F.2d 969, 976 (9th Cir.1986). Section 1962(d) is

a separate violation and, as in all conspiracy statutes, does not require the

consummation of the underlying activity. Gott v. Simpson, 745 F.Supp. 765 (D.Me

1990) (while an agreement to violate RICO is necessary to a RICO conspiracy

claim, the conspirators need not have accomplished their underlying criminal

goals to be liable for conspiracy). See also, Rehkop v. Berwick, 95 F.3d 285 (3rd Cir.

1996) (plaintiff has standing to sue under RICO conspiracy provision even

though unable to state a viable cause of action under other RICO provisions so

long as plaintiff was harmed by reason of the conspiracy).

      The District Court erroneously asserted that there is no separate factual

basis pleaded for violation of 18 U.S.C. § 1962(d). To the contrary, the factual

basis was clearly pleaded by Appellants (CR 21, ¶¶ 20, 56, 69, 72-73, 82, 95, 158,



                                           31
inter alia).

VIII. THE DISTRICT COURT ERRONEOUSLY DISMISSED APPELLANTS’
CAUSE OF ACTION FOR VIOLATIONS OF THE COMMUNICATIONS ACT
                          OF 1934

       A. The District Court Erroneously Held That AOL Is Not A Common
       Carrier Under The Communications Act Of 1934.

       The law of common carriage originated in the field of transportation, and

it was soon determined that an entity can become a common carrier by acting as

one. Washington ex rel. Stimson Lumber Co. v. Kuykendall, 275 U.S. 207, 211-12

(1927). When holding itself out as available to all takers in a particular

identifiable category, the carrier's reserved rights, secret or disclosed, or rights to

refuse service, do not defeat its common carrier status. Semon v. Royal Indemnity

Co., 279 F.2d 737, 739-40 (5th Cir. 1960). "A common carrier depends not upon its

corporate character or declared purposes, but upon what it does." United States

v. California, 297 U.S. 175 (1936).

       By 1966, the Federal Communications Commission (FCC) applied this

concept to the Communications Act of 1934, 47 U.S.C. §§ 151, et seq. Re Industrial

Radiolocation Service, 5 F.C.C. 2d 197, 202 (1966).

       The well-evolved definition of communications common carriage was

succinctly stated in National Association of Regulatory Utility Commissioners v. FCC,

525 F.2d 630, 641 (D.C.Cir. 1976), cert.denied, 425 U.S. 992 (1976) [hereinafter

known as NARUC I]:

       What appears to be essential to the quasi-public character implicit in
       the common carrier concept is that the carrier 'undertakes to carry



                                          32
      for all people indifferently'.

      One may be a common carrier though the nature of the service
      rendered is sufficiently specialized as to be of possible use to only a
      fraction of the total population. . . . It is not necessary that a carrier
      be required to serve all indiscriminately; it is enough that its practice
      is, in fact, to do so. [Citations omitted.]

The same year, the D.C. Circuit held: “A second prerequisite to common carrier

status . . . is the requirement formulated by the FCC and with peculiar

applicability to the communications field, that the system be such that customers

'transmit intelligence of their own design and choosing'." National Association of

Regulatory Utility Commissioners v. FCC, 533 F.2d 601, 609 (D.C.Cir. 1976)

[hereafter known as NARUC II]. These defining factors of communications

common carriage was later upheld and applied by the Supreme Court. FCC v.

Midwest Video Corporation, 440 U.S. 689, 701 (1979).

      AOL is a “common carrier” that has held itself out as a service available to

all comers. The E-mail system provided by AOL has users "transmit intelligence

of their own design and choosing." See NARUC II, 533 F.2d at 609. AOL makes

no alteration to the content of an E-mail message; it merely forwards the mail to

an address as a passive conduit (just as a telephone company routes a call to a

dialed number). This factual allegation made by Appellants must be presumed

true for purposes of a Rule 12(b)(6) Motion to Dismiss. Cabo, 821 F.Supp at 608.

      The ancestor of E-mail, Electronic Computer Originated Mail (ECOM), was

specifically declared a "common carrier" service by the FCC in 1979. “ECOM”

was a service offered by the Postal Service, through Western Union Telegraph



                                          33
Co. facilities, in which users would prepare a message in electronic format that

would subsequently be sent to the appropriate post office via wire, where it

would then be printed in hard copy. The FCC said, "...ECOM is a quasi-public

offering of a for-profit service which affords the public an opportunity to

transmit messages of its own design and choosing." Re Graphnet Systems, Inc., 73

F.C.C.2d 283, 289 (1979). This same conclusion readily applies to “E-mail.”

      A 1995 Memorandum Opinion and Order issued by the FCC, Re

Independent Data Communications, 10 FCC Rcd. 13717 (1995), supports the

contention that AOL offerings such as E-mail, online "chats," and "instant

messages" are "common carrier" services. There, the FCC concluded that AT&T's

"frame relay services" were common carriage activities.17 The FCC said that

"internetworking protocol conversions -- those conversions taking place solely

within the network that result in no net conversion between users -- should be

treated as basic services." [Emphasis added.] Id. at 13719. Here, AOL‟s

transmission of E-mail and user messages requires "internetworking protocol

conversions" without changing message form and content. Again, the most

reasonable inference is that these services are the logical equivalent to services

already deemed “common carrier” services. Cabo, 821 F.Supp at 608.

      An important holding from NARUC II, undisturbed to date, is that not all


17"Frame relay service" is a high-speed packet-switching technology used to
communicate digital data that serves as the intermediary format for data
traveling between different computer systems employing different
communications protocols.


                                         34
of an entity‟s service must fit the core definition of "common carrier" to trigger

coverage under the Communications Act. "[O]ne can be a common carrier with

regard to some activities but not others." NARUC II, 533 F.2d at 608. "If a

company provides both telecommunications services and information services, it

must be classified as a telecommunications carrier." Re Implementation of Local

Competition Provisions, 11 FCC Rcd. 15499, 15517 (1996). Under this holding,

AOL, as a “hybrid” entity must have its “common carrier” services regulated

under the Communications Act.

      The District Court misapplied Religious Technology Center v. Netcom Online

Communications Services, Inc., 907 F.Supp. 1361 (N.D.Cal. 1995), to defeat AOL's

status as a common carrier under the Communications Act. (CR 35, pages 22-23.)

Religious Technology Center v. Netcom addressed potential copyright infringement

liability when the company allegedly knew a subscriber was publishing

infringing material. That Court interpreted language in a copyright statute but

did not address the Communications Act.18 Moreover, Religious Technology

Center v. Netcom is poorly reasoned regarding common carrier issues, failing to

offer anything approaching the thorough analysis of common carrier law herein.

Reliance upon that case is stretched further by reference to the court finding in

Religious Technology Center v. Netcom that an entity is not a common carrier when


18The Ninth Circuit has specifically cautioned against the application of
copyright law interpretations to the Communications Act. California Satellite
Systems v. Seimon, 767 F.2d 1364 (9th Cir. 1985).



                                         35
it retains the power to suspend the accounts of subscribers. (CR 35, page 23.)

AT&T retains the power to suspend long distance service for callers that use its

service in an abusive manner, such as placing obscene phone calls, but its status

as a common carrier is unquestioned.19 The District Court is even further afield

in its reliance upon an Ohio District Court ruling in CompuServe, Inc. v. Cyber

Promotions, Inc., 962 F.Supp. 1015 (S.D.Ohio 1997), a case that addressed the law

of public utilities in Ohio. (CR 35, page 23.) There is only one sentence of dicta

about common carrier status made in the entire opinion.20

       Reno v. ACLU, ____ U.S. ____, 117 S.Ct. 2329 (1997) affirmed the holdings

of ACLU v. Reno, 929 F.Supp. 824 (E.D.Pa. 1996), which made a number of

important factual findings about modern communications services, including

AOL:

       [I]ndividuals on the Internet can engage in an immediate dialogue,

19 The District Court‟s citation to footnote 12 in Religious Technology Center v.
Netcom is unpersuasive and reveals why the case is not applicable to the claims
presented here. That footnote quotes from the Copyright Act, 17 U.S.C. § 111, a
reference to the statutory exemption from liability for mere transmission of
infringing copyright material. The language of the copyright exemption is
severely limited. It is wholly different in form and purpose from the definition
set forth in the Communications Act, 47 U.S.C. § 153(h) and the opinions of the
U.S. Supreme Court and the Ninth Circuit which determine "common carrier"
status under the Communications Act, 47 U.S.C. §§ 151, et seq. The Copyright
Act is not analogous to the Communications Act of 1934 for definitional
purposes.
20 The CompuServe court actually described E-mail as a service that fits within the
common carrier definition: "A great portion of the utility of CompuServe's e-
mail service is that it allows subscribers to receive messages from individuals
and entities located anywhere on the Internet." (CompuServe, 962 F.Supp. at p.
1023.)



                                         36
      in 'real time', with other people on the Internet. . . . [It] is analogous
      to a telephone party line, using a computer and keyboard rather
      than a telephone. . . . In addition, commercial online services such as
      America Online, CompuServe, the Microsoft Network, and Prodigy
      have their own 'chat' systems allowing their members to converse.

Id., at 835. The Supreme Court went on to say, “The developers of the [Internet]

focused on creating a medium designed for the rapid transmittal of the

information through overlapping and redundant connections, and without direct

human involvement. . . . Participation does not require, and has never required,

approval of a user's or network's content." Id., at 877.

      B. The District Court Erroneously Deferred To The FCC.

             1. The FCC Has Exceeded Its Statutory Authority, And Deference
             By The District Court To Ultra Vires Regulatory Activities (Or
             Lack Thereof) Is An Error As A Matter Of Law.

      “Since an agency‟s interpretation of a statute is not entitled to deference

when it goes beyond the meaning that the statute can bear,” it is error to defer to

an agency after that Court has been made aware of the extra-statutory scope of

an agency‟s statutory interpretation. MCI v. AT&T, 512 U.S. 218, 114 S.Ct. 2223,

2231 (1994). Here, Appellants have detailed the legal support for Appellants‟

contention that the FCC has exceeded the scope of its authority in failing to

enforce tariff filing requirements for common carriers such as AOL. The District

Court, in deferring to the FCC, has erred in its interpretation of a substantial and

logically compelling body of law. (CR 35, pages 23-25.)




                                          37
                   a) In 1994, The Supreme Court Admonished The FCC For
                   Attempting To Abandon Tariff Filing, The Core Regulatory
                   Element Of The Communications Act Of 1934.

      In 1994, the Supreme Court took up the issue of whether the FCC was

empowered to “modify” tariff filing requirements to such a degree as to

eliminate the filing requirement entirely for all long distance carriers except

AT&T. Justice Scalia, delivering the opinion of the Court, observed:

      [O]ur estimations, and the Commission's estimations, of desirable
      policy cannot alter the meaning of the Federal Communications Act
      of 1934. For better or worse, the Act establishes a rate-regulation,
      filed-tariff system for common-carrier communications. . . . [T]he
      Commission's desire 'to “increase competition” cannot provide [it]
      authority to alter the well established statutory filed requirements.'
      . . . '[S]uch considerations address themselves to Congress, not to
      the courts.'

MCI v. AT&T, 512 U.S. 218, 114 S.Ct. 2223, 2233 (1994). Justice Scalia concluded:

      Certainly the Commission can modify the form, contents, and
      location of required filings, and can defer filing or perhaps even
      waive it altogether in limited circumstances. But what we have here
      goes well beyond that. It is effectively the introduction of a whole
      new regime of regulation (or of free-market competition), which
      may well be a better regime but is not the one that Congress
      established.

Id. The Supreme Court‟s admonishment simply underscores how far from its

authorized scope the FCC has wandered. Tariff filing for common carriers, at

least in some form, is mandatory. Appellants have explained that certain

activities of AOL comport with the accepted definition of common carrier status

and that an entity need not be exclusively a common carrier to fall under the

jurisdiction of the Communications Act of 1934. The District Court, in rejecting




                                         38
these positions, has erred as a matter of law. (CR, pages 21-26.)

                   b) The Narrow Authorization Of The “Enhanced” Service
                   Regulatory Distinction Given To The FCC By The D.C.
                   Circuit Is No Longer Applicable.

      In Computer and Communications Indus. Ass'n v. FCC, 693 F.2d 198 (D.C.Cir.

1982) [hereinafter Computer II], the D.C. Circuit sanctioned the FCC‟s distinction

between “enhanced” services and “basic” services, and the decision, on the part

of the FCC, to forbear from further rate regulations on “enhanced” services.

However, in sanctioning this distinction, the D.C. Circuit said, “Our approval of

limited forbearance from Title II regulation of common carrier services by the

Commission does not give the Commission unfettered discretion to regulate or

not regulate common carrier services.” Computer II, 693 F.2d at 212. The D.C.

Circuit permitted the FCC‟s forbearance only because the FCC substituted an

alternative regulatory scheme in which AT&T was required to offer “enhanced”

services through a separate subsidiary. Id., at 211. The Court emphasized that its

sanction was narrow, saying:

      To the extent that certain enhanced services could lawfully be
      regulated under Title II once they were identified as common carrier
      services, we sanction the Commission‟s forbearance from Title II
      regulation. We emphasize, however, that our sanction is a very
      narrow one, given in light of the peculiar nature of the
      communications and data processing industries and the alternative
      regulatory scheme adopted by the Commission.

Id., at 210. Today, this sanction is no longer valid. First, the decision in MCI v.

AT&T, 512 U.S. 218 questions the very permissibility of a regulatory scheme

wherein AT&T is the only provider required to sell enhanced services to itself



                                         39
through a separate subsidiary. And second, even if the sanction in Computer II

were still valid on its face, the FCC is no longer enforcing this requirement,

removing the only basis upon which the FCC‟s abdication of regulatory

oversight was sanctioned by the D.C. Circuit.

             2. Primary Jurisdiction is Inappropriate Under The Facts As
             Pleaded In The Instant Complaint.

      The District Courts‟ citation of numerous federal court cases on the

common carrier issue proves that the definition of common carrier is not so

specialized that it must be referred to the FCC. The doctrine of primary

jurisdiction is specifically applicable to claims properly cognizable in court that

contain some issue within the special competence of an administrative agency.

Northwest Airlines v. County of Kent, 510 U.S. 355, 369 (1994). Administrative

decision-making is not required where the question is solely one of law, such as

the construction of a tariff, as distinguished from questions of fact and questions

calling for the exercise of administrative discretion. Great N.R. Co. v. Merchants

Elevator Co., 259 U.S. 285 (1922). As Chief Justice Warren later stated:

      [T]he doctrine of primary jurisdiction is not a doctrine of futility; it
      does not require resort to 'an expensive and merely delaying
      administrative proceeding when the case must eventually be
      decided on a controlling legal issue wholly unrelated to
      determinations for the ascertainment of which the proceeding was
      sent to the agency.'

Amalgamated Meat Cutter & Butcher Workmen v. Jewel Tea Co., 381 U.S. 676, 686

(1965).

      The Ninth Circuit has considered this issue with specific regard to the



                                          40
FCC. Industrial Communications Systems Inc. v. Pacific Tel. & Tel. Co., 505 F.2d 152,

156 (9th Cir. 1974) holds that actual regulation is a prerequisite for the

application of primary jurisdiction. Therefore, under the law of the Ninth

Circuit, had AOL submitted tariffs to the FCC, primary jurisdiction might

arguably apply. However, AOL has not done this, and, further, the FCC has,

apparently, declined to exercise jurisdiction that it admits to having. This makes

the threshold question in this case whether the FCC is required to exercise

regulatory control. On a distinctly parallel set of facts, the Supreme Court held

that it was well-equipped to determine damages for an airline's failure to

disclose its practice of overbooking, rather than the practice of overbooking itself.

Nader v. Allegheny Airline, Inc., 426 U.S. 290, 305-6 (1976). The Supreme Court

itself drew this distinction in United States v. Radio Corporation of America, 358 U.S.

334, 347-47 (1959), holding that primary jurisdiction did not apply when the issue

under consideration did not involve the reasonability of rates, but, rather, was

for the purpose of dissolving the conspiracy through which the allegedly invalid

rates were set, since such a finding would not interfere with rate structures or a

regulatory scheme.

             3. The District Court Misapplied FCC Rulings And Decisional
             Law.

      The District Court‟s citation to Re Access Charge Reform, 11 FCC Rcd. 21354,

¶ 287 (Dec. 24, 1996) refers to a self-serving communication made by Defendant

Steve Case himself! In paragraph 288, the FCC notes that its conclusions are




                                          41
tentative:

       Although our original decision in 1983 to treat ESP's as end users
      rather than carriers was explained as a temporary exemption, we
      tentatively conclude that the current pricing structure should not be
      changed so long as the existing access charge system remains in
      place...We seek comment on this tentative conclusion. [Emphasis
      provided.]

Id. The FCC expressly did not address questions about whether some Internet-

based services are "telecommunications" under the 1996 Act. Id., at ¶ 288, fn. 390.

Moreover, the District Court‟s citation to Re Federal-State Joint Board on Universal

Service, 12 FCC Rcd. 87, ¶ 782 (Nov. 8, 1996) is simply an exposition of litigant

arguments, not the FCC's position. Further, reference to the fact that the FCC has

traditionally defined Internet services as “enhanced services” is of no bearing, if,

as Appellants have shown, the holdings of various courts indicate that the FCC is

acting beyond its statutory authority.

      In citing Re Matter of Implementation of the Non-Accounting Safeguards, 11

FCC Rcd. 21905 (Dec. 24, 1996), a proceeding about accounting safeguards under

structural separation requirements, the District Court ignored significant points

that support Appellants‟ positions herein. That proceeding supports the views

that the “enhanced services” issue is separate from “common carriage,” (Id., at

¶¶ 99, 100, 101, 103.), that certain of these services might be subject to Title II

regulation (Id., at ¶¶ 105-107.), and notes the broad definition of common carrier

advanced in NARUC I (Id., at ¶ 265.).

      The District Court cites as authority, K. Werbach, Digital Tornado: The




                                           42
Internet and Telecommunications Policy, March 1997, which actually supports

Appellants:

       [N]othing in the [1996 Communications] Act expressly limits the
       FCC's authority to regulate services and facilities connected with the
       Internet, to the extent that they are covered by more general
       language in any section of the Act. Although some early versions of
       the bill that became the 1996 Act contained language prohibiting
       'economic regulation' or 'content or other regulation' of the Internet
       by the FCC, such language does not appear in the final version of
       the Act. . . . The Communications Act directs the FCC to regulate
       'interstate and foreign commerce in communication by wire and
       radio,' and the FCC and state public utility commissions
       indisputably regulate the rates under which ISPs purchase
       services and facilities from telephone companies. [Emphasis
       provided.]

Id., at p. 28.

       To what extent do Internet-based services meet the three-pronged
       definition of 'telecommunications?' For example, the sender of an
       email message selects the person to receive the information and
       chooses the information to be transmitted, with no alteration (other
       than protocol conversion and other administrative overheads of the
       network) of the information sent and received. Real-time 'Internet
       relay chat' and 'Internet telephony' are even easier to fit within the
       statutory definition.

Id., at pp. 30-31.

       The District Court erroneously cites FCC v. WNCN Listeners Guild, 450 U.S.

582 (1981) as holding that a statutory standard of "public interest" under 47

U.S.C. §§ 309-310 governs the instant matter. In fact, WNCN Listeners Guild

concerns the statutory standard for broadcasters under Title III, which is wholly

different from the burden of a common carrier to continue to provide service if

abandonment of that service would conflict with public convenience or necessity,




                                         43
the relevant standard under Title II. Id., at 596.21 An illustrative example of this

distinction is found in California Satellite Systems, 767 F.2d 1364, which applies

only to the public interest standard of Title III, rather than the Title II standard,

and goes on to specifically distinguish interpretations under copyright laws and

the Communications Act!22

      C. AOL Has Violated The Communications Act.

      Two decades ago, MCI filed suit against AT&T claiming violations of the

Communications Act of 1934. MCI v. AT&T, 462 F.Supp. 1072 (1978). MCI

complained that:

      AT&T caused the filing of 'mirror' and 'experimental' tariffs ...[that]
      offered lowered rates and greater services than those supplied by
      MCI, but at the time of filing, AT&T knew that it did not have the
      ability to provide the breadth of services or to charge the low rates
      established in the tariff. ...Nevertheless, AT&T publicized the tariff's
      terms to potential customers in the business community and
      represented that it would soon provide the services contained in the
      tariff.

Id., at 1078. In 1996, AOL did precisely what AT&T did two decades earlier.

Moreover, AOL has never even acknowledged the need to file a tariff with the


21By 1940, the Supreme Court recognized that communication by telephone and
(wire) was subject to common carrier regulation under the Communications Act,
and contrasted this with broadcasters, who were to be treated differently under
the Act. FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 474 (1940). The
District Court refers to the cases involving broadcasting and erroneously
attempts to apply them to common carrier law.
22This distinction fatally undermines the District Courts‟ citations of Religious
Technology Center v. Netcom, supra, and CompuServe Inc. v. Cyber Promotions, Inc.,
supra, which, as noted, apply only to the copyright laws.



                                          44
FCC prior to implementing its improper practice. AOL publicized a rate for

services which it knew would attract more business than it had the ability to

service (CR 21 ¶¶ 130-135, 141-151). Here, the subscriber Appellants, with

standing conferred by statute, seek redress for AOL's violations of the

Communications Act (CR 21 ¶¶ 232-234).23

      Congress has specifically designated the District Court to be a direct forum

for private claims of violations of the Communications Act of 1934. 47 U.S.C. §

207. The application of judicial authority in this area is mandatory:

      This case primarily turns on one fundamental notion: Congress
      enacted the Communications Act and the mandates of the Act are
      not open to change by the Commission or the courts. If the
      Commission believes those mandates inadequate to the task of
      regulating the telecommunications industry in light of changed
      circumstances, the Commission must take its case to Congress.

Southwestern Bell Corporation v. FCC, 43 F.3d 1515, 1519 (D.C.Cir. 1995).

      D. The District Court Erroneously Cited The Telecommunications Act of
      1996 As Support For The Claim That The Activities Of Internet Service
      Providers Cannot Constitute Common Carriage Under The
      Communications Act of 1934.

      The District Court erroneously interprets 47 U.S.C. § 223(e)(6) as indicating

that ISPs cannot engage in common carrier activity. Section 223(e)(6) is simply a

refusal to have all ISP services blanketed as common carriage. Obviously, a

case-by-case analysis was to be favored. If Congress wanted to exempt ISPs from


23"The language of [§151 of the Communications Act] indicates an intent to
regulate the business of the interstate and foreign transmission of messages, both
as to those engaged in the business, and also as to their customers' rights against
them." Curran v. McKay Radio & Telephone Co., 123 F.Supp. 83, 87 (S.D.N.Y. 1954).


                                         45
common carrier regulation, it could have. The District Court errs in doing what

Congress explicitly declined to do. And given the holding that "one can be a

common carrier with regard to some activities but not others," the correct

proposition remains that if any services offered by AOL fall within the definition

of common carriage, those services are regulated by the Communications Act of

1934. NARUC II, 533 F.2d at 608.

  IX.     PLAINTIFFS HAVE PROPERLY PLEADED A CAUSE OF ACTION
              FOR DECLARATORY AND INJUNCTIVE RELIEF

        In dismissing Appellants‟ Eighth and Ninth Causes of Action, the District

Court complains that Appellants “essentially present a laundry list of subjects on

which they request judicial determination. . . .” (CR 35, page 26.) Such criticism

exhalts style before substance, ignoring the requirement on a Rule 12(b)(6)

Motion to Dismiss that the Court assume all allegations to be true and draw all

reasonable inferences that favor the complaining party. Cabo, 821 F.Supp. at 608.

Appellants have pleaded their positions specifically. Further, Appellants have

alleged that controversies exist over the questions raised, and that Defendants

have taken an opposite position on each. At no time have Defendants denied the

existence of those controversies. On the basis of Cabo, the existence of conflicting

positions must be presumed true.

        A. Federal Constitutional Issues.

        The protection of privacy in our society is not new to federal law.

Beginning with the "right to be let alone", first articulated by Samuel Warren and




                                          46
Louis Brandeis more than 100 years ago, in The Right to Privacy, 4 Harv. L. Rev.

193, 195 (1890), and continuing with such sources as the Fourth Amendment

standard set in Katz v. United States, 389 U.S. 347 (1967), privacy protection has a

substantial federal history.

      Appellants rely upon the right to privacy protected under the First, Fourth,

Fifth and Ninth Amendments to the United States Constitution as well as the

Fourteenth Amendment. In dismissing Appellants‟ Cause of Action, the District

Court cited New York State National Organization for Women v. Terry, 886 F.2d 1339

(2d Cir. 1989), cert.denied, 495 U.S. 947 (1990), but ignored the portion which

holds that clearly Congress may constitutionally provide a cause of action

against private conspiracies, and, in fact, has done so. Id., at 1358. The District

Court erred as a matter of law in holding that state action is required to assert a

constitutional right to privacy. There is no per se requirement of state action for a

claim of privacy to be raised, specifically, under the Fourth, Fifth or Ninth

Amendments. Griswold v. Connecticut, 381 U.S. 479 (1965). The District Court

only addressed the First and Fourteenth Amendment claims raised by

Appellants, failing entirely to address the claims asserted under the Fourth, Fifth,

and Ninth Amendments.

      Among the four representative Plaintiffs bringing this class action are a

therapist and an international businessman. The potential for abuse by privacy

invasions of such sensitive enterprises is obvious. AOL has assumed an

affirmative duty in connection with the privacy expectations of its subscribers. It



                                         47
has affirmatively misrepresented facts in connection with their use of the Internet

(CR 21, ¶ 168). Actually, AOL is well aware that its subscribers are subject to

regular invasions of privacy when using the service. For example, electronic

"moles" are hidden in the hard drives of subscriber computers (CR 21, ¶¶ 169-

170). A Court involved in handling highly sensitive data and opinions can

recognize the significance of concerns about computers which can be invaded

without the user's knowledge or consent. 24

      Plaintiffs seek Declaratory and Injunctive Relief requiring reasonable

measures to protect anonymity and the integrity of the computers of AOL

subscribers. Plaintiffs also request mandatory Injunctive Relief requiring AOL to

take remedial action for invasions of privacy resulting from its prior negligence

and misrepresentations (CR 21, ¶¶ 260-262).

      B. Federal Copyright Laws.

      In dismissing this Cause of Action, the District Court misconstrues T.B.

Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964), cert.denied, 381 U.S. 915 (1965).

When the ownership of a copyright is a threshold issue, proper Federal issues

may thereafter be raised. T.B. Harms Co. explained that the complaint therein


24Contrary to years of AOL assurances that subscriber telephone numbers and
other personal information would not be released, the public discovered, in July,
1997, that AOL had agreed to provide lists of subscriber telephone numbers to
telemarketers. AOL obscurely disclosed this now-abandoned telemarketing
scheme in a Terms of Service electronic posting. At that time, AOL also was
preparing to track subscriber electronic purchases on-line, in order to create
profiles for marketing partners.




                                          48
failed to allege any act or threatened act of copyright infringement. However,

T.B. Harms Co. undermines the District Court‟s position in holding, “Simply as a

matter of language, the statutory phrasing would not compel the conclusion that

an action to determine who owns a copyright does not arise under the Copyright

Act, which creates the federal copyright with an implied right to license and an

explicit right to assign." Id., at 825.

       Even though the claim is created by state law, a case may 'arise
       under' a law of the United States if the complaint discloses a need
       for determining the meaning or application of such a law. . . .
       Having thus found that appropriate pleading of a pivotal question
       of federal law may suffice to give federal jurisdiction even for a
       'state-created' claim, we cannot halt at questions hinging only on the
       language of the Copyright Act. For a new and dynamic doctrine,
       taking its name from Clearfield Trust Co. v. United States, 318 U.S. 363,
       63 S.Ct. 573, 87 L.Ed. 838 (1943), instructs us that even in the absence
       of express statute, federal law may govern what might seem to be an
       issue of local law because the federal interest is dominant.

Id., at 827-28.

       In a case such as this one, in which the actual ownership of a copyright is a

threshold question, but not the principal issue, the federal courts have

jurisdiction. Here, the ownership of copyright is not the only or primary issue.

A central issue is whether federal copyright law permits the assignment or

licensing of copyright claimed by Defendant AOL, a legitimate issue for federal

subject matter jurisdiction. ITSI T.V. Productions, Inc. v. California Authority of

Racing Fairs, 785 F.Supp. 854, 862 (E.D.Cal.1992). And if the purported

assignment or licensing is invalid under federal copyright law, then Defendant

AOL is infringing upon Appellants‟ copyrights, which is one of the situations



                                          49
giving rise to federal subject matter jurisdiction contemplated by T.B. Harms Co.

See, e.g., Vestron, Inc. v. HBO, 839 F.2d 1380, 1382 (9th Cir.1988).

      Appellants have asserted important Federal questions in the Eighth Cause

of Action, providing another independent basis for this Court's jurisdiction. 28

U.S.C. §§ 2201 and 2202. Declaratory Relief is appropriate "(1) when the

judgment will serve a useful purpose in clarifying and settling the legal relations

in issue, and (2) when it will terminate and afford relief from the uncertainty,

insecurity, and controversy giving rise to the proceeding." Bilbrey v. Brown, 738

F.2d 1462, 1470 (9th Cir. 1984). In the Complaint, Appellants have set forth, in

great detail, specific federal questions of law and fact (CR 21, ¶ 51). Appellants

and Defendants have opposite contentions regarding these important federal

questions (CR 21, ¶¶ 164, 168, 171). Appellants properly present a justiciable

case and controversy to the District Court (CR 21, ¶ 260). Defendants have not

attacked the proper pleading of Appellants‟ request for Injunctive Relief (CR 21,

¶ 262).



                               X.     CONCLUSION

      Based upon the arguments presented herein, the excerpts of the Court

Record, and oral argument (if granted), Appellants request the following

holdings from the Ninth Circuit Court of Appeals:

      1. That the District Court erred when it failed to presume all of

Appellants‟ allegations to be true and draw all reasonable inferences in



                                          50
Appellants‟ favor therefrom;

      2. That the District Court erred in dismissing Appellants‟ First and Second

Causes of Action on a Rule 12(b)(6) Motion to Dismiss;

      3. That 18 U.S.C. § 1962(d), conspiracy to violate § 1962(a) – (c), is a

separate violation of RICO which survives even if no actionable claim under §

1962(a) – (c) exists for Appellants;

      4. That Appellants have properly pleaded an “open-ended” pattern of

racketeering activity in violation of RICO;

      5. That Appellants have properly pleaded a “closed-ended” pattern of

racketeering activity in violation of RICO;

      6. That predicate acts which were the subject of a previously settled action

may still serve as predicate acts for the purpose of establishing a pattern, so long

as the RICO claim could not properly have been brought as a claim in the settled

action;

      7. That securities fraud may serve as a predicate act so long as the

Appellants have no standing to assert the securities claims independently, thus

avoiding the possibility of cumulative damages;

      8. That there is no requirement that Appellants must be the victims of

each and every predicate act pleaded to establish a pattern under RICO;

      9. That the relatedness of the predicate acts does not require that the

alleged predicate acts must all have each of the same purposes, results,

participants, victims, and methods of commission;



                                         51
      10. That Appellants pleaded RICO allegations with sufficient particularity

to apprise Defendants of the claims against them, to permit evaluation of those

claims, and to permit an appropriate response;

      11. That the District Court erred in dismissing Appellants‟ Third Cause of

Action on a Rule 12(b)(6) Motion to Dismiss;

      12. That the definition of common carriage under the Communications Act

has developed both in the courts and the FCC, comprising those elements set

forth in NARUC I;

      13. That an entity which is not entirely a common carrier by nature of its

operation may be a common carrier with respect to those particular services that

are definitionally common carriage;

      14. That the Communications Act of 1934 requires some form of rate

regulation through tariff filing for all entities which provide common carrier

services, as specified by the Supreme Court in MCI v. AT&T;

      15. That the refusal of the FCC to enforce separation requirements

associated with the “basic” versus “enhanced” services scheme has eviscerated

the only possible legal authority for such a scheme, as set forth in Computer II.

      16. That statements by Congress, indicating an intent not to treat ISPs as

common carriers by default, is not the logical equivalent of an express exemption

from common carrier status for all Internet and Online Service Providers;

      17. That deference to the FCC in this case is improper because the FCC has

exceeded its statutory authority;



                                         52
      18. That the District Court erred when it dismissed Appellants‟ Eighth and

Ninth Causes of Action on a Rule 12(b)(6) Motion to Dismiss;

      19. That Appellants‟ Eighth and Ninth Causes of Action for Declaratory

and Injunctive Relief allege actionable controversies;

      20. That there is no per se requirement of state action for a claim of privacy

to be raised;

      21. That private conspiracies to violate privacy rights may be actionable;

      22. That federal subject matter jurisdiction is raised in the instant case on

the question of who owns a copyright;

      23. That federal subject matter jurisdiction is raised on the question of

whether federal copyright law permits the assignment or licensing of copyrights

as claimed by Defendant AOL and complained of by Appellants; and

      24. That because the federal causes of action pleaded in Appellants‟

Complaint are properly raised, the state causes of action in Appellants‟

Complaint fall within the ambit of pendant jurisdiction.

      Appellants request that this matter be remanded to the District Court with

instructions to deny the Motion to Dismiss, an order requiring Defendants to

Answer Appellants‟ Complaint, and instructions to proceed consistent with the

holdings requested by Appellants.

///




                                         53
      In the alternative, Appellants request the this matter be remanded to the

District Court with instructions to deny the Motion to Dismiss, an order

requiring Defendants to Answer Appellants‟ Complaint, and instructions to

proceed consistent with the opinion of this Court.

Dated this 2nd day of October 1998.               Respectfully submitted,

                                                  STANBURY & FISHELMAN, INC.


                                            By:
                                                  Bruce C. Fishelman, Esq.
                                                  Alec B. Wisner, Esq.
                                                  Attorneys for Appellants




                                       54
                      STATEMENT OF RELATED CASES



      To the best knowledge of Appellants, no related cases are presently before

the Ninth Circuit Court of Appeals.



Dated this 2nd day of October 1998.     By:
                                              Bruce C. Fishelman, Esq.
                                              Alec B. Wisner, Esq.
                                              Attorneys for Appellants




                                       55
                      CERTIFICATE OF COMPLIANCE



Line Spacing:     Appellants Brief was double spaced, except for headings,

                  quotes exceeding 50 words in length (A Uniform System of

                  Citation), and footnotes, which were all single spaced.

Font Spacing:     The font used in the preparation of this Brief is

                  proportionately spaced.

Typeface:         The typeface selected for this Brief is Book Antiqua, which is a

                  serif font of similar character to Times Roman.

Point Size:       The Book Antiqua font utilized in this Brief is the size

                  equivalent of 14 point Times Roman.

Word Count:       The word count for this Brief, excluding Table of Contents,

                  Table of Authorities, Proof of Service, and Statement of

                  Related Cases is 13,968 words. This count was calculated

                  utilizing the word count feature of Microsoft Word 97

                  (Version 8.0).




Dated this 2nd day of October 1998.      By:
                                               Bruce C. Fishelman, Esq.
                                               Alec B. Wisner, Esq.
                                               Attorneys for Appellants

				
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