                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


ECLECTIC PROPERTIES EAST, LLC, a        No. 12-16526
California limited liability company;
RISOLA FAMILY LP II, a Florida             D.C. No.
limited partnership; CECA 3000, LP,     5:09-cv-00511-
a Nevada limited partnership;               RMW
CHEATHAM PROPERTIES, LLC, a
California limited liability company,
successor in interest of John and         OPINION
Mary Cheatham; VAS ENTERPRISES I
LLC, a California limited liability
company; AMNON DANUS; RIVKA
DANUS; LINDA FARRELL; JOSEPH W.
AMIRKHAS; JOSEPH W. AMIRKHAS,
as Trustee under the Amirkhas Trust,
dated January 14, 2000; JUSTUS L.
AHREND; SUSAN W. AHREND,
Trustees of the Justus and Susan
Ahrend Trust, dated December 6,
1990; KEVORK BELIKIAN; SYLVIA S.
BELIKIAN, Trustees under the
Kevork Belikian and Sylvia S.
Belikian Living Trust, dated July 10,
2000; MANI ETEMAD; SUSAN
KHOSHNOOD, Trustee of the Mani
Etemad and Susan Khoshhood 2001
Revocable Trust; EUGENIA GAGNON,
Trustee of the Genie Debs
Revocable Trust, dated October 10,
1995; THOMAS H. LINDEN; SYLVIA
2 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

E. LINDEN, Trustees of the Thomas
H. Linden and Sylvia E. Linden
Family Trust, dated September 19,
2000; JOHANNES MODERBACHER;
EILEEN STARR MODERBACHER, as
Trustees of the Moderbacher Family
Trust, established by Declaration of
Trust, dated February 1, 2006;
RICHARD W. SIEBERT; DEBRA M.
SIEBERT, Trustees of the Siebert
Family Trust U/DT, dated January
13, 2003; ALLEN ERNEST HOM,
Trustee for the Allen Ernest Hom
Trust, dated August 19, 1992; LINDA
J. CALL, Trustee for the Linda
Jeanne Call Family Trust, dated
September 12, 2002,
                 Plaintiffs-Appellants,

                  v.

THE MARCUS & MILLICHAP
COMPANY, a California corporation;
MARCUS & MILLICHAP REAL
ESTATE INVESTMENT SERVICES INC.,
a California corporation; MARCUS &
MILLICHAP REAL ESTATE
INVESTMENT BROKERAGE
COMPANY, a California corporation;
SOVEREIGN INVESTMENT COMPANY,
a California corporation; SOVEREIGN
SCRANTON LLC, a Delaware limited
liability company; SOVEREIGN CC,
  ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 3

LLC, a Delaware limited liability
company; SOVEREIGN JF, LLC, a
California limited liability company;
PAUL A. MORABITO, individually
and as the alter-ego of Eureka
Petroleum Inc., a New York
corporation, Tibarom Inc., a
Delaware corporation, Tibarom NY
LLC, a Nevada limited liability
company, Tibarom PA LLC, a
Nevada limited liability company,
Scranton Lube, LLC a Delaware
limited liability company; EUREKA
PETROLEUM, a New York
corporation; TIBAROM INC., a
Delaware corporation; TIBAROM NY
LLC, a Nevada limited liability
company; TIBAROM PA LLC, a
Nevada limited liability company;
SCRANTON LUBE, LLC, a Delaware
limited liability company; NY
SEVEN LUBE, LLC, a Delaware
limited liability company; NEW
YORK LUBE NUMBER 3, LLC, a
Delaware limited liability company;
ROCHESTER LUBE, LLC, a Delaware
limited liability company; BARUK
MANAGEMENT, INC., a California
corporation; JACK WAELTI,
individually and as the alter-ego of
the QSR Group One, LLC, a Florida
limited liability company, The QSR
Group, LLC, a Florida limited
4 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

liability company, and the QSR
Group II, LLC, a Florida limited
liability company AKA The QSR
Group Two, LLC; THE QSR GROUP
ONE, LLC, a Florida limited liability
company; THE QSR GROUP, LLC, a
Florida limited liability company;
THE QSR GROUP II, LLC, a Florida
limited liability company, AKA The
QSR Group Two, LLC; PGP
VALUATION, INC., an Oregon
corporation; GLEN D. KUNOFSKY;
MARCUS MUIRHEAD; ALEXANDER
MICKLE; SEAN PERKIN; DONALD
EMAS; ANDREW LESHER; STEWART
WESTON; BRICE HEAD; DAIZY
GOMEZ; BRET KING,
                 Defendants-Appellees.


     Appeal from the United States District Court
         for the Northern District of California
   Ronald M. Whyte, Senior District Judge, Presiding

                 Argued and Submitted
       March 14, 2014—San Francisco, California

                    Filed May 7, 2014
    ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 5

 Before: J. Clifford Wallace and Ronald M. Gould, Circuit
    Judges, and Paul C. Huck, Senior District Judge.*

                      Opinion by Judge Gould




  *
     The Honorable Paul C. Huck, Senior District Judge for the U.S.
District Court for the Southern District of Florida, sitting by designation.
6 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

                           SUMMARY**


                                RICO

   The panel affirmed the dismissal of an action under the
Racketeering Influenced and Corrupt Organizations Act.

    The panel held that the plaintiffs did not plead facts
sufficient under Federal Rules Civil Procedure 8(a) and 9(b)
to support a plausible theory of RICO and RICO conspiracy
violations in connection with an alleged real estate scheme.
The panel held that the complaint did not meet the pleading
standards required by Bell Atlantic Corp. v. Twombly and
Ashcroft v. Iqbal because it did not contain adequate factual
allegations to plausibly infer that the defendants specifically
intended to defraud, and therefore did not show a plausible
entitlement to relief.


                             COUNSEL

Susan Alexander (argued), Sanford Svetcov, and Andrew S.
Love, Robbins Geller Rudman & Dowd LLP, San Francisco,
California; David J. George and Bailie L. Heikkinen, Robbins
Geller Rudman & Dowd LLP, Boca Raton, Florida; and
Bonny E. Sweeney and Phong L. Tran, Robbins Geller
Rudman & Dowd LLP, San Diego, California, for Plaintiffs-
Appellants.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
   ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 7

Daniel Purcell (argued), John W. Keker, and Dan Jackson,
Keker & Van Nest LLP, San Francisco, California, for
Defendants-Appellees The Marcus & Millichap Company,
Sovereign Investment Company, Sovereign Scranton LLC,
Sovereign CC, LLC, and Sovereign JF, LLC.

David C. Scheper, Julio V. Vergara, and Katherine B. Farkas,
Scheper Kim & Harris LLP, Los Angeles, California, for
Defendants-Appellees Marcus & Millichap Real Estate
Investment Services, Inc., Marcus & Millichap Real Estate
Investment Brokerage Company, Marcus Muirhead, Sean
Perkin, Donald Emas, Andrew Lesher, Stewart Weston, Brice
Head, and Bret King.

Dennis C. Vacco and Brendan H. Little, Lippes Mathias
Wexler Friedman LLP, Buffalo, New York, for Defendants-
Appellees Paul A. Morabito and Baruk Management, Inc.

Timothy A. Horton, McKenna Long & Aldridge LLP, San
Diego, California, for Defendants-Appellees Tibarom NY,
LLC and Tibarom PA, LLC.

Scott Wm. Davenport, Manning & Kass, Ellrod, Ramirez,
Trester LLP, Irvine, California, for Defendant-Appelle PGP
Valuation, Inc.

Eugene Ashley, Hopkins & Carley, ALC, San Jose,
California, for Defendants-Appellees Glen Kunofsky and
Daizy Gomez.
8 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

                             OPINION

GOULD, Circuit Judge:

    We consider whether Plaintiffs-Appellants have pleaded
facts sufficient under Federal Rules of Civil Procedure 8(a)
and 9(b) to support a plausible theory of Racketeering
Influenced and Corrupt Organizations Act (“RICO”) and
RICO conspiracy violations against Defendants-Appellees.
We have jurisdiction under 28 U.S.C. § 1291, and we hold
that Plaintiffs’ complaint does not meet the pleading
standards required by Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009);
Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011); and In re
Century Aluminum Co. Securities Litigation, 729 F.3d 1104
(9th Cir. 2013). The complaint does not contain adequate
factual allegations to plausibly infer that Defendants
specifically intended to defraud, and therefore does not show
a plausible entitlement to relief.1 The district court did not err
in dismissing Plaintiffs’ complaint on the pleadings.

                                   I

    The scheme alleged by Plaintiffs began when defendants
Paul Morabito and Jack Waelti purchased 22 commercial
real estate properties in bulk for a total of about $20.3
million. Morabito, Waelti, and their related companies then
added a commercial lease for a franchise on each property.
Morabito and his related entities placed Jiffy Lube franchises


  1
     Because we hold that Plaintiffs did not plead a plausible intent to
defraud as to all Defendants, we do not reach the individual defendants’
independent personal defenses as to other elements of RICO or corporate
liability.
       ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 9

on the properties he owned, while Waelti and his related
entities placed Church’s Chicken franchises on theirs.2 The
Morabito and Waelti entities executed sale-leaseback
transactions with Sovereign Investment Company or a related
entity,3 becoming tenants on the real estate that they had
purchased. According to Plaintiffs, the fair market value of
the 22 commercial real estate properties was not $20.3
million, but $11.1 million.

    Plaintiffs allege that the Morabito, Waelti, and Sovereign
entities conspired to pay inflated rent payments so that the
properties would appear far more valuable to third parties.
Sovereign Investments then marketed the properties for sale
to the public through the Marcus & Millichap Company



   2
      Some of the Jiffy Lube leases were held by Defendants Eureka
Petroleum, Tibarom Inc., Tibarom NY, LLC, Tibarom PA, LLC, and
Scranton Lube, LLC, all of which are alleged to be alter-egos of Paul
Morabito and are also separately named as defendants. Other Jiffy Lube
leases were held by Defendants New York Seven Lube LLC, New York
Lube Number 3, LLC, and Rochester Lube, LLC. These Defendants are
alleged to have been controlled by Morabito. We refer to these two
groups collectively as the “Morabito entities.” The Church’s Chicken
leases were held by Defendants The QSR Group, LLC, The QSR Group
One, LLC, all of which are alleged to be alter-egos of Jack Waelti and are
also separately named as defendants. Collectively, we refer to this group
as the “Waelti entities.” We take no position on the allegations relating
to the corporate relationships in these groups alleged in the complaint. See
footnote 1, supra.
   3
     The complaint alleges that Defendants Sovereign Scranton LLC,
Sovereign CC, LLC, and Sovereign JF, LLC, are all alter-egos of
Defendant Sovereign Investment Company. We refer to this group as the
“Sovereign entities.” Again, we take no position on the allegations in the
complaint relating to the corporate relationships in this group. See
footnote 1, supra.
10 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

(“M&M”).4 Plaintiffs allege that the brokers used sham
appraisals performed by defendant PGP Valuation, Inc., to
support the inflated property values. Plaintiffs purchased all
of the properties in a series of independent transactions for a
combined $30.3 million in 2004, 2005, and 2006. The
Morabito and Waelti entities at first performed on their
leases, some for up to four years, making a total of about $8.1
million in rent payments to Plaintiffs. The franchisees began
having problems making their rent payments in 2006 and
2007, and eventually each breached its lease, leaving more
than $59 million in future rent payments unpaid. Plaintiffs
tried to mitigate their losses, but could not find tenants at
comparable rents.

    Plaintiffs filed suit alleging that each of the defendants
had violated RICO, 18 U.S.C. § 1962(c), and that Defendants
had collectively violated 18 U.S.C. § 1962(d)’s prohibition on
RICO conspiracies, along with related state common law and
statutory claims. The district court dismissed the case under
Federal Rule of Civil Procedure 12(b)(6), concluding that
Plaintiffs had not met their burden under Rules 8(a) and 9(b)
to plausibly allege that Defendants specifically intended to
defraud Plaintiffs. Because the district court dismissed the
individual RICO claims, it also dismissed the RICO
conspiracy claim against all Defendants. Finally, after
dismissing all of the federal claims, the district court declined


 4
   The complaint alleges that Marcus & Millichap Real Estate Investment
Services, Inc. and Marcus & Millichap Real Estate Investment Brokerage
Company are alter egos of the Marcus & Millichap Company. The
complaint also lists a number of individual employees of the M&M
entities as individual defendants. We refer to this group collectively as
“M&M” but take no position on the allegations relating to the corporate
relationships in this group. See footnote 1, supra.
   ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 11

to exercise supplemental jurisdiction over Plaintiffs’ state law
claims. Plaintiffs filed a timely notice of appeal.

                                   II

     We review de novo the district court’s judgment granting
a motion to dismiss for failure to state a claim under Rule
12(b)(6). Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th
Cir. 2007). In reviewing an appeal from a motion to dismiss,
all facts are taken from the complaint and construed in the
light most favorable to the non-moving party. Id.

                                   III

    Rule 8 requires a complaint to include “a short and plain
statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). To meet this requirement, the
Supreme Court has held that an “entitlement to relief”
requires “more than labels and conclusions . . . . Factual
allegations must be enough to raise a right to relief above a
speculative level.” Twombly, 550 U.S. at 555. Although “a
well-pleaded complaint may proceed even if it strikes a savvy
judge that actual proof is improbable,” id. at 556, plaintiffs
must include sufficient “factual enhancement” to cross “the
line between possibility and plausibility.” Id. at 557.5 This


   5
     Rule 9(b) requires that “circumstances constituting fraud” must be
alleged with particularity but allows fraudulent intent to be alleged
generally. Federal Rule of Civil Procedure 9(b). We have held that the
plausibility analysis of Twombly and Iqbal applies equally to Rule 9 as it
does to Rule 8. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047,
1055 (9th Cir. 2011). Accordingly, although the language of Rule 9 poses
no barrier in itself to general pleading of fraudulent intent, Twombly and
Iqbal’s pleading standards must still be applied to test complaints that
contain claims of fraud.
12 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

standard represents a balance between Rule 8’s roots in
relatively liberal notice pleading and the need to prevent “a
plaintiff with a largely groundless claim” from “‘tak[ing] up
the time of a number of other people, with the right to do so
representing an in terrorem increment of settlement value.’”
Id. at 557–58 (quoting Dura Pharmaceuticals, Inc. v. Broudo,
544 U.S. 336, 347 (2005)).

     Establishing the plausibility of a complaint’s allegations
is a two-step process that is “context-specific” and “requires
the reviewing court to draw on its judicial experience and
common sense.” Iqbal, 556 U.S. at 679. First, a court should
“identif[y] pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth.” Id.
Then, a court should “assume the[] veracity” of “well pleaded
factual allegations” and “determine whether they plausibly
give rise to an entitlement to relief.” Id. “Where a complaint
pleads facts that are merely consistent with a defendant’s
liability, it stops short of the line between possibility and
plausibility of entitlement to relief.” Id. at 678 (citation
omitted). When considering plausibility, courts must also
consider an “obvious alternative explanation” for defendant’s
behavior. Id. at 682 (quoting Twombly, 550 U.S. at 567).

    We have applied Twombly and Iqbal’s plausibility
standard in two recent cases. In Starr v. Baca, 652 F.3d 1202
(9th Cir. 2011), we analyzed the apparent shift in the
Supreme Court’s analysis of Rule 8 pleading standards,
comparing the “more demanding” Twombly and Iqbal
standard to the “more lenient” rule applied in Swierkiewicz v.
Sorema, N.A., 534 U.S. 506 (2002) and Erickson v. Pardus,
551 U.S. 89 (2007) (per curiam). Starr, 652 F.3d at 1216.
We noted that in Swierkiewicz, the Supreme Court held that
“Rule 8(a) establishes a pleading standard without regard to
   ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 13

whether a claim will succeed on the merits. Indeed, it may
appear on the face of the pleadings that a recovery is very
remote and unlikely but that is not the test.” Starr, 652 F.3d
at 1215 (quoting Swierkewicz, 534 U.S. at 514–15).
Similarly, we recognized that in Erickson, the Supreme Court
reversed our sister circuit’s determination that a complaint
was overly conclusory and held that a relatively sparse
complaint satisfied Rule 8(a)’s pleading standards. Starr,
652 F.3d at 1215 (citing Erickson, 551 U.S. at 94). Despite
a potential conflict between the two groups of cases, we
concluded that the Supreme Court’s precedents established
the following principles:

       First, to be entitled to the presumption of
       truth, allegations in a complaint or
       counterclaim may not simply recite the
       elements of a cause of action, but must
       contain sufficient allegations of underlying
       facts to give fair notice and to enable the
       opposing party to defend itself effectively.
       Second, the factual allegations that are taken
       as true must plausibly suggest an entitlement
       to relief, such that it is not unfair to require
       the opposing party to be subjected to the
       expense of discovery and continued litigation.

Starr, 652 F.3d at 1216. We applied these principles to hold:
“If there are two alternative explanations, one advanced by
defendant and the other advanced by plaintiff, both of which
are plausible, plaintiff’s complaint survives a motion to
dismiss under Rule 12(b)(6). Plaintiff's complaint may be
dismissed only when defendant’s plausible alternative
explanation is so convincing that plaintiff's explanation is
implausible.” Id. (emphasis in original).
14 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

    A more recent examination of Rule 8(a) confronted the
application of the plausibility standard to a complaint with
less factual support than that in Starr. In re Century
Aluminum Co. Secs. Litig., 729 F.3d 1104 (9th Cir. 2013).
We affirmed the dismissal of the complaint in Century
because, “[w]hen faced with two possible explanations, only
one of which can be true and only one of which results in
liability, plaintiffs cannot offer allegations that are merely
consistent with their favored explanation but are also
consistent with the alternative explanation. Something more
is needed, such as facts tending to exclude the possibility that
the alternative explanation is true, in order to render
plaintiffs’ allegations plausible.” 729 F.3d at 1108 (internal
quotation marks and citations omitted) (quoting Iqbal,
556 U.S. at 678; citing Twombly, 550 U.S. at 554). Unlike
Starr, where the plaintiff’s plausible complaint survived a
motion to dismiss by offering facts that tended to exclude the
defendant’s innocuous alternative explanation, we held that
the complaint in Century established only a “possible”
entitlement to relief, and thus could not support further
proceedings. Century, 729 F.3d at 1108.

                              IV

    Applying Twombly, Iqbal, Starr, and Century to the
complaint at issue in this appeal, we conclude that Plaintiffs
have not made the kind of factual allegations that “nudg[e]
their claims across the line from conceivable to plausible.”
Twombly, 550 U.S. at 570.

                               A

   We start with the elements a plaintiff must plead to state
a RICO violation. See Iqbal, 556 U.S. at 675. The RICO
   ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 15

statute sets out four elements: a defendant must participate in
(1) the conduct of (2) an enterprise that affects interstate
commerce (3) through a pattern (4) of racketeering activity or
collection of unlawful debt. 18 U.S.C. § 1962(c). In
addition, the conduct must be (5) the proximate cause of harm
to the victim. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S.
479, 496-97 (1985). To show the existence of an enterprise
under the second element, plaintiffs must plead that the
enterprise has (A) a common purpose, (B) a structure or
organization, and (C) longevity necessary to accomplish the
purpose. Boyle v. United States, 556 U.S. 938, 946 (2009).
Racketeering activity, the fourth element, requires predicate
acts, which in this case are alleged to be mail and wire fraud
under 18 U.S.C. §§ 1341 and 1343. The mail and wire fraud
statutes are identical except for the particular method used to
disseminate the fraud, and contain three elements: (A) the
formation of a scheme to defraud, (B) the use of the mails or
wires in furtherance of that scheme, and (C) the specific
intent to defraud. Schreiber Distrib. Co. v. Serv-Well
Furniture Co., Inc., 806 F.2d 1393, 1399 (9th Cir. 1986). It
is this final sub-element, the defendant’s specific intent to
defraud, that is at issue here.

    “In order to prove a violation of 18 U.S.C. § 1341, there
must be a showing of a specific intent to defraud. The intent
to defraud may be inferred from a defendant’s statements and
conduct.” United States v. Peters, 962 F.2d 1410, 1414 (9th
Cir. 1992). In the absence of direct evidence of intent, the
party asserting fraud must first prove “the existence of a
scheme which was reasonably calculated to deceive persons
of ordinary prudence and comprehension,” and then, “by
examining the scheme itself” the court may infer a
defendant’s specific intent to defraud. United States v.
Green, 745 F.2d 1205, 1207 (9th Cir. 1984) (internal
16 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

quotation marks omitted) (quoting United States v. Bohonus,
628 F.2d 1167, 1172 (9th Cir. 1980)).

    Plaintiffs’ fraud theory requires them to show more than
a business deal gone bad for economic and non-fraudulent
reasons. They must establish that Defendants had the specific
intent to defraud, and Plaintiffs may establish that intent by
showing the existence of a plausible fraudulent scheme. “The
level of factual specificity needed to satisfy this pleading
requirement will vary depending on the context.” Century,
729 F.3d at 1107 (citing Robbins v. Oklahoma, 519 F.3d
1242, 1248 (10th Cir. 2008)). When companies engage in
sale-leaseback transactions that are facially legitimate, pay
rent and operate legitimate businesses for years thereafter,
and otherwise act as routine participants in American
commerce, a significant level of factual specificity is required
to allow a court to infer reasonably that such conduct is
plausibly part of a fraudulent scheme.

                                B

     We proceed in our analysis by removing conclusory
statements of law from the complaint. Iqbal, 556 U.S. at 679.
Trimmed of “legal conclusions” and “threadbare recitals of a
cause of action,” Id. at 678, Plaintiffs’ argument that the
alleged scheme reflects an intent to defraud contains two
prongs. First, Plaintiffs point to the rapid increase in the price
of the properties from the alleged “true market value” at the
time of the Morabito or Waelti entities’ initial purchase to the
prices at the time that the properties were sold to Plaintiffs,
and the Plaintiffs’ subsequent inability to sell the properties
at those higher prices, or to lease the properties at rental rates
reflecting those higher prices, after the leases were breached.
Second, they argue that Defendants portrayed the real estate
   ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 17

investments as “safe and secure,” despite the fact that the
tenants were not rated by credit agencies. We conclude that
neither argument contains sufficient factual allegations to
state a plausible entitlement to relief.

                              1

    The key factual allegation that supports Plaintiffs’ first
argument is that Defendants sold property worth $11.1
million to Plaintiffs for $30.3 million while spending $8.1
million on rent to maintain the alleged scheme until all
properties were sold. We conclude that this allegation does
not create a plausible entitlement to relief for two reasons.

     First, although the increase in price is consistent with
Defendants’ alleged fraudulent intent, it does not tend to
exclude a plausible and innocuous alternative explanation.
See Century, 729 F.3d at 1108. The alternative explanation
in this case comes from Plaintiffs’ own complaint: they allege
that long-term commercial real estate leases typically support
future property sales “at a multiple of the actual market
value.” Although the increase here appears large—nearly
three times the alleged original true value—Plaintiffs plead
no facts that would tend to show that this increase was not
typical, appropriate, or the product of legitimate market
forces. Further, relying on our “judicial experience and
common sense,” Iqbal, 556 U.S. at 679, we note that real
estate values can be variable, and that fluctuations in prices
over a period of years are not necessarily unusual, nor are
they conclusive proof of wrong-doing, as changes may reflect
market conditions. This is particularly true when, as here, the
culminating events that harmed Plaintiffs took place in the
midst of a deep national recession that seriously affected the
18 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

real estate market.6 All of the facts Plaintiffs have presented
are consistent with both their theory of liability and this
innocent alternative, that the recession decreased business
viability and property values. Plaintiffs have not met their
burden to do “[s]omething more” to “render [their]
allegations plausible within the meaning of Iqbal and
Twombly.” Century, 729 F.3d at 1108.

     Second, the complaint alleges no specific facts supporting
its conclusion that the properties’ “true fair market valu[e]”
was just $11.1 million. The complaint does not cite any
documents or sources for this value, nor does it explain the
methodology by which this value was derived. Further,
Plaintiffs’ complaint alleges that Defendants had purchased
the properties from independent third parties (not alleged to
be a part of the conspiracy or named as defendants in this
case) for about $20.3 million. Absent factual support
showing that the true market value was $11.1 million, and
taking into account the evidence in Plaintiffs’ own complaint
that undermines their allegation that the property was worth
only $11.1 million, we decline to accept the conclusory
assertions of property values as facts. See First Nationwide


  6
    We take judicial notice of the recession in the US economy from
December 2007 to June 2009. See W. Coast Hotel Co. v. Parrish,
300 U.S. 379, 399 (1937) (“We may take judicial notice of the
unparalleled demands for relief which arose during the recent period of
depression and still continue to an alarming extent despite the degree of
economic recovery which has been achieved.”); see also The National
Bureau of Economic Research, “U.S. Business Cycle Expansions and
Contractions,” http://www.nber.org/cycles (establishing the dates of the
recession); The Bureau of Labor Statistics, United States Department of
Labor, “The Recession of 2007–2009,” http://www.bls.gov/spotlight/2012
/recession/pdf/recession_bls_spotlight.pdf (compiling data on
employment, consumer spending, and economic output).
      ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 19

Bank v. Gelt Funding Corp., 27 F.3d 763, 770 (2d Cir. 1994)
(holding that allegations of a methodologically unreliable
appraisal were not sufficient to establish property values as a
fact in a RICO complaint).7 Removing this conclusory
valuation allegation from our consideration of the complaint’s
factual allegations supports the Defendants’ alternative
explanation that the changing sale prices reflected not fraud
but changing market conditions. Removal of this allegation
shrinks the amount the property values were alleged to have
changed over time and establishes that Defendants paid out
most of their alleged gains to Plaintiffs in rental payments
and other operating expenses required to run the fast food and
auto maintenance businesses for up to four years. Far from
establishing a plausible entitlement to relief, Plaintiffs’
preferred reading of the complaint requires us to draw
“implausible” inferences that Defendants had the specific
intent to defraud Plaintiffs. Starr, 652 F.3d at 1216
(emphasis in original).8 The Plaintiffs’ fraud theory is not
plausible when considered in light of the innocent explanation
that failure of franchise businesses in making rental
payments, and their abandonment of leases, took place in the
context of a deep national recession. We hold the Plaintiffs’


      7
       Plaintiffs’ theory—and its after-the-fact, conclusory property
valuations—requires us to believe that Defendants also overpaid for the
properties by more than $9 million, a proposition that itself is implausible.
  8
   Our conclusion here is not in conflict with Starr. The principle that
case establishes is that a tie goes to the plaintiffs when there are multiple
plausible theories at the pleadings stage of litigation. Starr, 652 F.3d at
1216–17. But the problem here is that in the context of Defendants’
specific intent to defraud, Plaintiffs’ complaint alleges facts that
support—at best—a “possible” basis to believe that Defendants
specifically intended to defraud, not a “plausible” one. See Century,
729 F.3d at 1108 (distinguishing Starr).
20 ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO.

fraud theory is not plausible, but we do not consider or make
any statement about whether their theory is “probable” or
dismiss their complaint because it does not meet a
“probability requirement.” Rule 8 does not impose such a
requirement. Twombly, 550 U.S. at 556; Starr, 652 F.3d at
1217.

                               2

    Plaintiffs also contend that we can infer Defendants’
specific intent to defraud from the fact that Defendants
allegedly concealed the risky nature of the real estate
investments. Plaintiffs contend that their argument that
Defendants concealed the risks is supported by the allegation
of three sets of facts: 1) that the tenants had not been rated by
credit agencies, 2) that Defendants were aware of this, and
3) that Defendants described the investments as “safe and
secure” or other similar assertions.

     But these facts do not allow us to make the Plaintiffs’
preferred inference that Defendants had the necessary
specific intent to defraud Plaintiffs. First, the statements by
Defendants about the relative security of the investments
constitute “puffing” or related expressions of opinion that are
common in sales and not actionable as fraud. See United
States v. Gay, 967 F.2d 322, 328–29 (9th Cir. 1992). Second,
for this kind of behavior to support a claim of fraud, Plaintiffs
must show “deceitful concealment of material facts,”
Bohonus, 628 F.2d at 1172 (9th Cir. 1980), but the complaint
does not allege deceit. There is no allegation that Plaintiffs
requested properties with credit-rated tenants, or even
requested information about whether the tenants on the
properties they were being sold had been so rated. In short,
Plaintiffs have not alleged facts sufficient to show “the
     ECLECTIC PROPS. EAST V. MARCUS & MILLICHAP CO. 21

existence of a scheme which was reasonably calculated to
deceive persons of ordinary prudence and comprehension,”
Green, 745 F.2d at 1207 (9th Cir. 1984), and without such a
showing, we cannot properly infer fraudulent intent.

                                     V

    The complaint purported to allege intentional fraud in the
inflation of property values on properties sold to Plaintiffs.
However, the complaint’s factual allegations do not support
a plausible inference that Defendants had the required
specific intent to defraud, nor do they tend to exclude the
alternative explanation that the transactions were merely a
group of business deals gone bad during a deep recession.
Because we affirm the dismissal of Plaintiffs’ RICO
allegations, we also affirm the dismissal of Plaintiffs’
allegations of RICO conspiracy. See Religious Tech. Ctr. v.
Wollersheim, 971 F.2d 364, 368 n.8 (9th Cir. 1992). We
affirm the district court’s dismissal of this complaint.9

     AFFIRMED.




 9
    Plaintiffs did not raise the district court’s dismissal without prejudice
of their state law claims or its denial of their complaint without leave to
amend in their briefing to us, so the state law and leave to amend issues
are waived. United States v. Kama, 394 F.3d 1236, 1238 (9th Cir. 2005).
We express no opinion on whether viable state law claims have been or
could be pleaded by Plaintiffs.
