When Beef Goes Thermonuclear

Some would say it’s not really a beef until the lawyers get involved. And these days, it’s not really a lawsuit unless someone claims a RICO violation.

At least that seems to be the view of one Aubrey Drake Graham, doing business as Drake, one of the top-selling musicians of all time and at the moment one of the most prominent plaintiffs in the country. On November 25, 2024, Drake’s company Frozen Moments filed a petition for pre-action disclosure in New York state court, seeking evidence to support a RICO lawsuit Drake plans to file against Universal Music Group, Spotify, and other unidentified defendants.

The subject of the planned lawsuit: Universal’s alleged scheming to inflate the reported popularity of Not Like Us, a “diss” track by rival rapper Kendrick Lamar that accuses Drake of pedophilia, among other things. The case has garnered massive attention online, which may be much of the point. It could also inspire copycat cases, and perhaps interest the FTC. But Drake may find that RICO litigation is not Child’s Play.

What is Drake alleging?

The RICO statute was enacted in 1970 to help take down the Italian mafia. It lists various types of state and federal crimes that count as “racketeering” offenses, and creates a new type of crime for operating an “enterprise” that engaged in a “pattern” of such racketeering. The sentence for a criminal RICO violation can be up to 20 years in prison. Separately, anyone whose “business or property” is harmed through a RICO violation can file a civil lawsuit against the members of the enterprise; if successful, the plaintiff can recover treble (triple) damages, plus attorney fees and costs.

Over the years since RICO took effect, it has been used as a “thermonuclear device” (in the words of one court) in business disputes, usually where one side is accusing the other of fraud. For example, in recent years, RICO claims have appeared in lawsuits by Elon Musk against OpenAI and its founders, by several artists against Chinese e-commerce giant Shein, and by Allstate insurance company against various New York-based pharmacies.

In Drake’s case, his company alleges that Universal, Spotify, and others engaged in a scheme to promote Not Like Us through several actions:

1.     License discount:  Drake claims that Universal has discounted its licensing fees to Spotify for the rights to Not Like Us by 30% from its standard rate, which he says amounts to paying Spotify to play the track.

2.     Bots:  Drake claims that Universal has used bots—software programs used to take actions online that imitate human behavior—to artificially increase the number of requests to stream Not Like Us on Spotify, thus artificially increasing its reported performance.

3.     Siri manipulation:  Drake claims that Universal paid Apple to cause the Siri digital assistant program on Apple devices to play Not Like Us when the user actually requested a different song (such as one of Drake’s).

4.     Radio station payola:  Drake claims that Universal secretly paid radio stations to play Not Like Us more frequently, an arrangement known as “payola.”

5.     Undisclosed influencer payments:  Drake claims that Universal secretly paid social media influencers and podcasters to promote Not Like Us.

How is that criminal racketeering? 

A RICO violation requires a pattern of committing not just any crime, but one of a specified list of felonies under federal or state law, found at 18 U.S.C. § 1961(1). For example, payola—undisclosed payments to a broadcaster in return for playing particular music—is illegal under Section 507 of the Communications Act. But the crime is only a misdemeanor, and it is not listed as one of the types of “racketeering” crimes in the RICO statute. Thus, Drake could not bring a RICO lawsuit just by alleging violated that law.

Instead, as in most civil RICO lawsuits, Drake’s petition alleges that Universal and others committed federal mail or wire fraud under 18 U.S.C. §§ 1341 and 1343. To violate those statutes, one must engage in a “scheme or artifice” to defraud someone through deception—false statements or material omissions—in order to deprive them of money or property. In some jurisdictions, such as the Ninth Circuit, a mail or wire fraud claim cannot be based on a mere omission—a failure to provide information—unless the defendant had a special "relationship of trust" with the victim that required the defendant to disclose the information.

So what are the false or misleading statements here? One may be the claim that Universal’s alleged use of bots to request Not Like Us amounted to a false representation to Spotify that the requests were from actual, human users, thus causing Spotify to pay extra licensing fees. But if Drake is suing Spotify as well, it would be odd to describe Spotify as a victim of the scheme.

More likely, Drake would argue that the various actions misled consumers into believing the track was more popular than it is. The other potential claims mentioned in his petition are deceptive business practices and false advertising, and the petition discusses federal and state policies against payola as causing harm to consumers.

But there is a problem with this theory. As the Supreme Court has made clear in several recent decisions, to commit mail or wire fraud, one must have as the “primary object” of one’s fraud scheme the deprivation of property from the relevant victim (Kelly v. United States). Also, the thing to be taken must entail traditionally-recognized property rights (Ciminelli v. United States). Simply depriving someone of economically-valuable information is not enough.

It isn’t clear whose property Drake thinks Universal and Spotify have taken through fraud. Again, if Spotify were the victim rather than an alleged co-schemer, the theory might make sense, because Spotify has paid Universal money to stream the track. But claiming that Spotify users have been deprived of money or other recognized property rights seems like a stretch. The idea that Spotify users’ subscription decisions would be based on how much of the popularity of Not Like Us was organic seems hard to believe, and in any case may not qualify as a recognized property right under Ciminelli. The same would be true of any theory that Apple users were tricked into paying for their own devices or subscriptions.

The petition also alleges that Drake’s company lost money as a result of the scheme, because Spotify users who would otherwise have streamed his song instead chose to use their limited free time on Not Like Us. But Drake does not claim that he or his company were misled, or that the misleading communications were directed to them. Thus, a mail or wire fraud theory with Drake or his company as the “victim” would not work.

What about bribery?

Drake’s petition also says that the racketeering activity involved “bribery.” Commercial bribery under state law is a type of racketeering under RICO, and usually involves paying or promising to pay an agent or employee, without the consent of the principal or employer, and with the intent to influence the agent/employee’s actions relating to their employment. Drake likely plans to argue that Universal’s alleged payments to Spotify, or to Apple, or to bot suppliers, radio stations, or influencers amount to commercial bribery.

But if so, it is not clear which “principals” or “employers” have been cheated. Consumers, the alleged victims in the scheme, have no employment or fiduciary relationship with any of the companies involved.

Does Drake have standing to sue?

Another problem for Drake is standing. Only a plaintiff that has suffered harm to its “business or property” as a result of the illegal racketeering can sue under RICO. The harm must involve a “concrete financial loss.” Again, Drake claims that his company lost money because the increase in streaming of Not Like Us meant less streaming of Drake’s tracks, and thus fewer licensing fees.

But a court may have trouble with Drake’s “zero sum” theory—one might find it equally plausible that the increased attention created by the diss track would drive more listeners to Drake’s songs, just as boxing promoters often seek to stir up interest in fights by playing up personal drama between the fighters.

A different goal

Even if everything Drake alleges is true, it is not clear that he has a viable RICO claim, or a viable petition for pre-suit discovery. But that may not be the main point. The publicly-filed petition, which has been widely-publicized, lays out in detail Drake’s theory that the popularity of Lamar and his diss track are not what they seem to be. Directing attention to this theory could be part of a broader public relations strategy, aimed at undercutting the popular narrative that Lamar “won” the face-off with Drake by outselling him. Or it may be an attempt to influence future negotiations with Universal, which is the record label of both Drake and Lamar. Or it could just be a way to keep Drake in the headlines, as free marketing.

Whether such a strategy pans out, or instead backfires and undermines Drake’s image and credibility, remains to be seen. The RICO claims, on the other hand, are likely to face a rough road ahead.

Bad Boys and Tough Talk

Litigation can be an ugly business. Some of the darkest corners often involve the opening stages of a dispute, when the plaintiffs or their counsel first make their accusations and warn the defendant of the potential consequences if satisfactory accommodations cannot be made. The conversations sometimes carry the faint whiff of the underworld, as if the plaintiff’s demand letter were scented with cigar smoke and opened with the phrase “It’d be a real shame if . . .”

Sometimes the whiff is not so faint.

The latest celebrity sexual assault scandal, this time a federal criminal case against Sean Combs, has brought on a cottage industry of follow-on civil litigation, much of it led by a single plaintiff’s lawyer with a taste for publicity and an aggressive approach to negotiation.

It has also inspired one putative defendant to preemptively strike back with a lawsuit for extortion, which provides another opportunity to explore the outer boundaries of what is permitted in a litigation demand letter.

Diddy, Buzbee, and Doe

As anyone with a passing awareness of pop culture since the mid-1990s knows, Combs (aka Diddy, née Puffy, née Puff Daddy, née P. Diddy) is a rapper / producer / executive / menswear designer with an impressive record of hits and a rotating collection of names. He is also an inmate at the Metropolitan Detention Center in New York, detained without bail on federal RICO and human-trafficking charges, based on allegations involving sex trafficking, forced labor, kidnapping, arson, bribery, obstruction of justice, and something called "freak offs" (if you don't know, don't ask).

Tony Buzbee is a Texan plaintiff's lawyer who has specialized in suing celebrities for sexual assault, and has filed more than a dozen such cases against Combs, to much media fanfare. He has also publicly promised to sue an array of other unnamed, high-profile figures who allegedly participated in Combs's criminal exploits.

According to the new lawsuit, filed in Los Angeles state court, plaintiff John Doe is a self-described “celebrity and public figure,” and the recipient of a demand letter from Buzbee, which Doe alleges crossed the line into illegal extortion. Specifically, Doe claims that after making various public pronouncements about his intentions to sue a long list of Diddy's alleged accomplices and to refer them to the FBI for criminal investigation, Buzbee contacted Doe and demanded a settlement payment—or else . . .

We thus enter the murky and nefarious realm of California extortion law, as applied to plaintiff demand letters.

Extortion in the Golden State

Under California Penal Code §§ 518(a) and 519, extortion is "obtaining of property . . . from another by a wrongful use of force or fear." Wrongful use of force or fear includes a threat to accuse someone of a crime, to "expose, or to impute . . . a deformity, disgrace or crime," or to "expose a secret affecting" the victim. It is a felony punishable by up to four years in prison, and can be the basis of a private lawsuit for damages.

This would seem to present an obstacle to plaintiff lawyers, whose business largely consists of accusing others of, if not crime, then at least "disgrace," often exposing secrets in the process. Before filing the lawsuits that contain these allegations, the lawyers typically send letters demanding that the prospective defendant enter into a confidential monetary settlement in order to avoid the litigation and the ignominy it may bring.

So why are plaintiff lawyers not all behind bars? (Yes, yes, hilarious.) And why are they not getting sued into oblivion? Largely because of the litigation privilege.

Under Civil Code § 47, statements made in or directly connected to a judicial proceeding are privileged, and a person generally cannot be sued or prosecuted for making them. The privilege extends to plaintiffs’ demand letters.

But there is a limited exception to the privilege, named after the famous case—Flatley v. Mauro—in which it was established. In a nutshell, Flatley was a famous dancer, and Mauro was a lawyer who sent Flatley a letter accusing Flatley of raping Mauro’s client. Mauro warned that if Flatley did not pay a seven-figure settlement, then Mauro would publicize the allegations in the media and “expose” information about Flatley’s supposed, unrelated tax and immigration issues. Flatley sued Mauro for extortion, and Mauro invoked the litigation privilege.

The California Supreme Court held that the litigation privilege did not apply because Mauro’s conduct amounted to extortion under California law. The first part of the court’s analysis focused on Mauro’s threats to disclose “criminal activity entirely unrelated to any alleged injury suffered by Mauro’s client”—the tax and immigration issues—which “exceeded the limitations of [Mauro’s] representation of his client.”

In later cases, courts have distinguished the Flatley demand letter from others that threatened only to publicize allegations that were part of legal claims to be filed by the plaintiff. For example, in Malin v. Singer, the court held that an aggressive demand letter threatening to publicly sue the recipient for embezzlement was not extortion, and thus was protected by the litigation privilege, because the allegation was “inextricably tied to” the plaintiff’s proposed legal complaint.

So how is Buzbee looking?

Mr. Doe’s complaint against Buzbee attaches several exhibits, but Buzbee’s demand letters are not among them. Thus, we are left to rely on the complaint’s partial description of the letters (at paragraphs 51-63), at least unless Buzbee attaches the letters to his response.

 The complaint does not assert that the demand letters threaten to refer Doe to law enforcement authorities. Nor does it say that the letters threaten to publicize any misconduct other than what would be the basis for the complaint itself—that is, Doe’s alleged sexual assault. Per the complaint, the letters specifically threaten to “immediately file” a “public lawsuit” alleging sexual assault, and to seek other victims to bring similar lawsuits against Doe.

Under Malin and other cases applying the Flatley test, Buzbee’s demand letters don’t appear to qualify as extortionate. Their only clear threats involve taking actions that are “inextricably tied” to the potential legal case Buzbee would bring, alleging claims for sexual assault, similar to others he has filed. While the complaint discusses at length the elaborate media campaign Buzbee has launched to publicize his various Diddy-based lawsuits, that conduct does not support an extortion claim under existing authority.  

At one point, the complaint states that the demand letters threatened to “take a different course” if Doe did not agree to discuss settlement. The complaint alleges “on information and belief” that this was “a reference to the threats [Buzbee] made in statements to the media, including that he would report [Doe] to the FBI,” among other things. Perhaps a court extend the Flatley doctrine to consider plaintiff counsel’s outside conduct and statements as part of the implied threats in the demand letter. But I’m not aware of any precedent for that. 

If Not the Battle, then the War?

Expect Buzbee to file an anti-SLAPP motion to strike the complaint, arguing that the demand letters are “protected conduct” under California Code of Civil Procedure § 425.16, and Doe cannot prevail because of the litigation privilege. If that motion succeeds, Doe would have to pay Buzbee’s attorney fees incurred in filing the motion.

But Doe and his counsel may have a broader strategy in mind with their complaint. Buzbee’s leverage over high-profile targets like Doe depends largely on the court of public opinion—the negative publicity the allegations themselves would bring, even if the lawsuits never succeed. One responsive tactic is to strike first, immunizing the media landscape against the reputational harm of the assault claims by preemptively casting them as illegitimate and abusive, and posing Doe as the true victim. Separately, Doe may want to signal that if Buzbee does file such a suit without a proper investigation or good-faith basis, he and his client could face sanctions, or even a retaliatory lawsuit for malicious prosecution. The benefit to Doe may be worth the risk of an anti-SLPP motion.

Doe may also be seeking to undermine Buzbee’s own reputation and ability to target other prominent figures in the future. Most of the complaint focuses on Buzbee’s own background of allegedly extortionate conduct, as well as his purportedly dubious relationship with disgraced former federal judge Samuel Kent. On their face, many of those allegations have nothing to do with Doe’s own case, but they may well be fodder the same audiences that are currently gawking at Diddy’s predicament.

I Knew This Case Was Trouble

In any legal analysis piece—really, any non-fiction writing in any genre— involving Taylor Swift more than tangentially, one is statutorily obligated to include a pun using the title of one of her roughly 2,000 hits. As I am no more familiar with her catalogue than 21st century sentience requires, the above title will have to do.

Swift is at the center of the latest celebrity-inspired RICO lawsuit, this time brought against Live Nation Entertainment, its subsidiary Ticketmaster, and an unspecified assortment of Does. To call it a RICO suit is a bit misleading, as the heart of the case involves antitrust claims under California’s Cartwright Act, part of a series of actions against Live Nation that have followed its 2010 merger with Ticketmaster and its gaining supremacy in the world of top-tier concert promotion.

Cendajas v. Live Nation, filed in Los Angeles state court by a group of nearly 400 Swift fans, generally alleges that the defendants used illegal means to obtain and exploit a monopoly in sales of tickets to major concerts and sporting events. But at the tail end of the 55-page complaint is a federal RICO claim, based on a theory that the defendants were part of an enterprise that engaged in a pattern of federal wire fraud targeting thousands of Swifties.

More precisely, the complaint alleges that Ticketmaster issued special codes to certain fans, including those who had been “verified” by buying a certain amount of Swift merchandise, and promised that only those who received the codes would be able to buy Swift concert tickets at a “presale,” but then arbitrarily denied codes to qualified fans, provided more codes to others than there were tickets available, and allowed millions of buyers (including scalpers) without codes to join the presale. As a result, the complaint says, those who had spent money to obtain codes in reliance on the Ticketmaster representations were unable to buy tickets. The complaint alleges that similar misrepresentations were made through a promotion to Capitol One account-holders.

Whatever the merits of the antitrust theory, there are several potentially serious problems with the RICO claim. First, a RICO plaintiff must allege that the defendants were part of an adequately-defined “enterprise,” which can be identified separately from the defendants themselves. Many federal circuit courts have held that company and its subsidiaries or other corporate affiliates cannot together make up an “enterprise,” as they are essentially part of the same corporate unit. See, e.g., U1it4less, Inc. v. Fedex Corp., 871 F.3d 199, 208 (2d Cir. 2017). While the Ninth Circuit has not addressed that issue specifically, it has held that an enterprise cannot consist merely of a company and its employees (Living Designs, Inc. v. E.I. Dupot de Nemours and Co., 431 F.3d 353, 361 (9th Cir. 2005)). Here, Ticketmaster is a wholly-owned subsidiary of Live Nation Entertainment (the complaint even refers to them collectively as “Ticketmaster”), and thus it does not appear that they can combine to form a distinct enterprise for RICO purposes.

Second, a RICO plaintiff must also allege a “pattern” of racketeering, which includes two or more relevant criminal acts that are related and continuous over an adequate period of time (typically more than a year), or else are ongoing. Here, the alleged acts are wire fraud, and the only fraudulent acts specified—the misrepresentations regarding the issuance and value of the presale codes—took place on specific days in November 2022 and August 2023, about nine months apart. That may well not be enough to establish a pattern.

Third, when the alleged racketeering activity is wire fraud, and the case is brought in federal court, the complaint must satisfy Federal Rule of Civil Procedure 9(b), by specifying the details of the fraud, including who did what, and how the scheme was designed to obtain the victims’ property through deception. While this case was filed in state court, it is likely to be removed to federal (as discussed above). And the Cendajas complaint does not say which of the named defendants—Live Nation and Ticketmaster—did what with respect to the alleged presale fraud.

Fourth, by the same token, it is not clear that the plaintiffs—or at least some of them—suffered harm to their “business or property,” another requirement for bringing a RICO claim. Those who bought Swift merchandise in reliance on defendants’ promises that it would help them get presale access might satisfy this hurdle. But the complaint does not say which plaintiffs fall into that category.

I would expect the defendants to remove the case to federal court based on the RICO claim, and then move to dismiss that claim, with a fair chance of prevailing. If the plaintiffs want to remain in state court, one option would be to replace the RICO count with one under California Penal Code § 496(c), which effectively allows a private lawsuit for treble damages against a defendant who obtains property through fraud. The remedy is the same as under RICO, but the pleading requirements are easier, and the state court venue would avoid the stricter standards applied under the Federal Rule of Civil Procedure.

As the RICO claim is currently drafted, I suspect that the defendants will be able to Shake It Off, and whether they want to or not, the plaintiffs will have to Begin Again if they don’t want that section of the complaint left with a Blank Space. Oh, hell. Look what you made me do.