David v. Signal International, LLC
David v. Signal International, LLC
Opinion of the Court
ORDER AND REASONS
Before the Court is a 12(c) Motion for Partial Judgment on the Pleadings
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs are twelve citizens of India who secured H-2B visas to work in the United States for Signal in the aftermath of Hurricane Katrina. Plaintiffs allege the
Plaintiffs allege Signal and Burnett violated the Trafficking Victims Protection Act of 2003 (“TVPRA”)(18 U.S.C. § 1589), the Racketeer Influenced and Corrupt Organizations Act (“RICO”) (18 U.S.C. § 1962 et seq.), and the Klu Klux Klan Act (42 U.S.C. § 1985).
Signal filed a 12(c) Motion for Partial Judgment on the Pleadings seeking to dismiss Plaintiffs’ state law claims, claim for recruitment fees under Section 1981, and claim for recruitment fees, inbound travel expenses, and visa expenses under FLSA contained in Plaintiffs’ third amended complaint.
Plaintiffs then sought and obtained leave to file a sixth amended complaint to add various Signal entities as defendants.
STANDARD OF LAW
Signal and Burnett’s motions under Rule 12(b)(6) and Rule 12(c) are governed by the same legal standard. The standard for dismissal under Rule 12(c) is the same as that for dismissal for failure to state a claim under Rule 12(b)(6). Johnson v. Johnson, 385 F.3d 503, 528 (5th Cir. 2004). Pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court may dismiss a complaint, or any part of it, for failure to state a claim upon which relief may be granted if the plaintiff has not set forth factual allegations in support of his claim that would entitle him to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Cuvillier v. Taylor, 508 F.8d 397, 401 (5th Cir. 2007). As the Fifth Circuit explained in Gonzalez v. Kay:
“Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Supreme Court recently expounded upon the Twombly standard, explaining that “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A Claim has- facial plausibility when the plaintiff pleads factual-content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. It follows that “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not ‘show[n]’- — that the pleader is entitled to relief.” Id. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)).
577 F.3d 600, 603 (5th Cir. 2009).
The Court cannot look beyond the factual allegations in the pleadings to determine whether relief should be granted. See Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In assessing the Plaintiffs’ complaint, the Court must accept all well-pleaded facts as true and liberally construe all factual allegations in the light most favorable to the Plaintiffs. Spivey, 197 F.3d at 774; Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). “Dismissal is appropriate when the complaint ‘on its face show[s] a bar to relief.’ ” Cutrer v. McMillan, 308 Fed.Appx. 819, 820 (5th Cir. 2009) (per curiam) (unpublished) (quoting Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)). A court may grant a motion for judgment on the pleadings when no genuine issues of material fact remain and the case can be decided as a matter of law. Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007).
A. Signal’s Motion for Partial Judgment on the Pleadings Under Rule 12(c)
Signal seeks dismissal of Plaintiffs’ claims for recruitment fees, visa expenses, and travel expenses, asserting these fees and expenses are not recoverable under FLSA.
In their complaint, Plaintiffs claim Signal violated FLSA by failing to pay Plaintiffs the applicable minimum wage as a result of Signal’s unlawful deductions from Plaintiffs’ wages for travel expenses, visa expenses, and recruitment expenses, all of which were allegedly paid entirely by Plaintiffs for the benefit or convenience of Signal.
In other words, when the employer pays for “board, lodging, or other facilities,” it may add the costs of those facilities to the cash wage for purposes of complying with the FLSA minimum. The Department of Labor has stipulated that an employer may not count as “other facilities” goods or services that are “primarily for the benefit or convenience of the employer,” 29 C.F.R. § 531.3(d)(1), and, as a corollary, has provided that employers may not pass along to employees expenses for such goods or services, 29 C.F.R. § 531.35. If an employer does pass along such an expense, then the expense is deducted from the cash wage to determine compliance with the FLSA minimum.
2008 WL 81570 at *7 (E.D.Pa. Jan. 7, 2008).
Plaintiffs pray for reimbursement of travel expenses, visa expenses, and recruitment expenses, arguing these sums were “primarily for the benefit” of Signal and therefore those expenses must be deducted from Plaintiffs’ wages to determine whether a minimum wage was paid under FLSA.
In Decatur Hotels, a group of foreign workers brought to the United States under H2B visas sued their employer, a hotel operator. The workers sought to recover from the employer their travel expenses, visa fees, and recruitment payments, arguing such sums must be deducted from the first week’s wage before calculating whether a minimum wage, under the FLSA, was paid. Asserting that the deductions took their pay below minimum wage, the workers sued their employer under FLSA to be reimbursed for such expenses.
On appeal from the district court’s order granting in part the workers’ summary judgment motion and denying the employer’s summary judgment motion, the Fifth Circuit addressed whether each cate-
With respect to recruitment fees, Decatur Hotels held the employer “was not required to reimburse the workers for the fees they paid [recruiters]” because the workers had not put forth any “evidence to support the concept that [the employer] required recruitment fees to be paid to the [recruiters] or that it required the workers to use these recruiters to apply.” Id. at 403. The Fifth Circuit distinguished Brickman, which held the costs of recruitment fees were found to be “primarily for the benefit of the employer,” and that the employer was not allowed to pass those costs along to the employees to the extent that doing so reduced their wages below the FLSA minimum. 2008 WL 81570 at *14. The Brickman court based its decision on the fact that the employees had no choice but to go through the employer’s recruiters. Id. at *13. The Fifth Circuit in Decatur Hotels found the employer and the workers shared the recruitment expenses which were “apportioned to each party appropriately.” Id. at 404. As such, the workers did not demonstrate the recruitment fees were “primarily for the benefit” of their employer so those fees were not to be deducted before calculating whether a minimum wage was paid under FLSA. Id.
The Fifth Circuit’s determination that recruitment expenses were not reimbursable in Decatur Hotels was based on the lack of evidence put forth by the plaintiffs .at the summary judgment stage to show: 1) the employer required the workers to pay recruiters or, 2) that the employer required the workers to use recruiters. Id. at 403. Accordingly, Decatur Hotels leaves open the possibility for a plaintiff to recover recruitment fees under FLSA if he or she can show the employer required the employee to use a recruiter and to pay the recruiter.
Unlike Decatur Hotels, this Court must only determine whether the factual allegations in the complaint support Plaintiffs’ claim for recruitment fees under FLSA. In deciding a Rule 12(b)(6) or Rule 12(c) motion, the Court cannot look beyond the factual allegations in the pleadings to determine whether relief should be granted. See Spivey, 197 F.3d at 774. Based on facts alleged in Plaintiffs’ sixth amended complaint, taken as true, Plaintiffs have stated a claim for recruitment fees under the FLSA because Plaintiffs allege Signal required them to pay recruiters and Signal required the Plaintiffs to use recruiters.
B. Signal’s 12(b)(6) Motion
After Plaintiffs’ filed their fifth amended complaint, Signal filed a Motion to Partially Dismiss for Failure to State a Claim under Rule 12(b)(6) seeking dismissal of
1. Dismissal of State Law Claims
Plaintiffs bring claims of fraud, negligent misrepresentation, and breach of contract under state law alleging the Defendants made “untrue statements ... regarding the nature and terms and conditions of applications and opportunities for immigration status and employment in the United States.”
Signal’s argument is misplaced. Signal has failed to cite a single case or statute demonstrating a Louisiana court, or any court, would dismiss Plaintiffs’ claims merely because they arise from events occurring abroad.
2. Supplemental Jurisdiction
Signal also asks the Court to decline to exercise supplemental jurisdiction
Under 28 U.S.C. § 1367(c), a district court may decline to exercise supplemental jurisdiction over state law claims when: “(1) the claim raises a novel or complex issue of state law; (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction; (3) the district court has dismissed all claims over which it has original jurisdiction; or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.” Additionally, the Fifth Circuit has identified “the common law factors of judicial economy, convenience, fairness, and comity” as relevant in evaluating whether supplemental jurisdiction should be declined. Brookshire Bros. Holding, Inc. v. Dayco Products, Inc., 554 F.3d 595, 602 (5th Cir. 2009).
Contrary to Signal’s assertions, Plaintiffs’ state law claims are not so “complex” as to warrant the Court’s declining to exercise supplemental jurisdiction. At present, Plaintiffs’ state law claims are pled under Indian law, Texas law, and Mississippi law, and sometimes in the alternative. The fact that the claims are pled in the alternative does not render them complex. Once the parties fully brief, and the Court decides, which law applies to which state law claim, Signal’s fears of complexity will be abated. Signal has not pointed to any provision of state law which is so “novel” or “complex” as to warrant declining the exercise of supplemental jurisdiction under 28 U.S.C. § 1367(c). Furthermore, Plaintiffs’ state law claims do not predominate over their federal law claims and none of the other grounds for declining to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c) are applicable.
Even if the Court ultimately decides Indian law applies to some or all claims, Signal has failed to show the application of Indian law by this Court undermines judicial economy, convenience, or fairness. The parties have ample time to research any applicable provisions of Indian law prior to the trial date. Further, Signal has not persuaded the Court additional depositions are warranted if Indian law applies. This Court has exercised supplemental jurisdiction over Plaintiffs’ state law claims since this case was filed in March, 2008. Indeed, the common law factors of judicial economy, convenience, fairness, and comity weigh in favor of continuing to exercise supplemental jurisdiction over Plaintiffs’ state law claims. Forcing the Plaintiffs’ to bring their state law claims in state court, and thereby forcing Signal to defend these claims in a different forum at this time would be a waste of the judicial resources already expended. This Court’s exercise of supplemental jurisdiction over Plaintiffs’ state law claims is proper.
Burnett moves to dismiss Plaintiffs’ claims under TVPA, RICO, and the Klu Klux Klan Act, as well as Plaintiffs’ fraud and negligent misrepresentation claims under state law.
1. Sufficiency of Factual Material Alleged
a. TVPA
Burnett argues Plaintiffs’ complaint lacks factual allegations sufficient to state a claim under the TVPA. Burnett contends Plaintiffs do not allege that Burnett ever forced Plaintiffs to work for Signal or ever threatened any Plaintiff with deportation if they refused to continue working for Signal. Burnett believes he provided legal and necessary immigration services to allow Plaintiffs to enter the United States.
Plaintiffs’ complaints include two related claims under the TVPA: a claim for forced labor under 18 U.S.C. § 1589 (“Section 1589”), and a claim for trafficking under 18 U.S.C. § 1590 (“Section 1590”). Plaintiffs’ bring suit under 18 U.S.C. § 1595 (“Section 1595”), which allows an individual who is a victim of a violation under the TVPA to bring a civil action against anyone who “knowingly benefits, financially or by receiving anything of value from participation in a venture which that person know or should have known has engaged in an act in violation of [the TVPA].” 18 U.S.C. § 1595.
Section 1589 prohibits anyone who “knowingly provides or obtains the labor or services of a person by any one of, or by any combination of, the following means: (1) by means of force, threats of force, physical restraint, or threats of physical restraint to that person or another person; (2) by means of serious harm or threats of serious harm to that person or another person; (3) by means of the abuse or threatened abuse of law or legal process; or (4) by means of any scheme, plan, or pattern intended to cause the person to believe that, if that person did not perform such labor or services, that person or another person would suffer serious harm or restraint.” 18 U.S.C. § 1589.
In Plaintiffs’ sixth amended complaint and RICO fraud chart, plaintiffs allege Burnett entered into joint venture agreements with other defendants to place advertisements and conduct seminars in Indian cities to recruit workers for Signal, promising permanent residency (green cards) in the United States.
Under Section 1589(c)(2), “serious harm” includes financial harm “that is sufficiently serious ... to compel a reasonable person .. to perform or to continue performing labor services in order to avoid incurring that harm.” Courts have found that threats of being in debt and being unable to repay those debts constitutes “serious harm” sufficient to survive a motion to dismiss. See Nunag-Tanedo v. East Baton Rouge Parish School Bd., 790 F.Supp.2d 1134 (C.D.Cal. 2011); Panwar v. Access Therapies, Inc., 975 F.Supp.2d 948 (S.D.Ind. 2013). Because Plaintiffs have alleged Burnett induced them into incurring substantial debts and Plaintiffs were eom-pelled to continue working to repay those debts, Plaintiffs’ complaints contain sufficient facts to state a claim under Section 1589(a)(2).
Plaintiffs also allege a trafficking claim under Section 1590 of the TVPA. Section 1590 provides a claim against any person who “knowingly recruits, harbors, transports, provides, or obtains by any means, any person for labor or services in violation of this chapter ...” 18 U.S.C. § 1590. The violations of Section 1589 are included in the chapter for violations of Section 1590. Thus, because Plaintiffs have alleged Burnett unlawfully recruited them in violation of Section 1589, Plaintiffs also have pled sufficient facts to state a claim under Section 1590 against Burnett. See Nunag-Tanedo, 790 F.Supp.2d at 1147 (“Plaintiffs have sufficiently alleged that Defendants are involved in a fraudulent scheme involving forced labor, and with the intentional nature of this matter Plaintiffs have also sufficiently alleged that Defendants recruited, transported, and provided Plaintiffs for that forced labor.”).
In sum, Plaintiffs’ claims under the TVPA are sufficiently supported by factual allegations in the complaint. Burnett insists his actions were not “illegal nor illicit” and his representations were “a correct and proper statement of both the law and the climate with the United States Citizenship and Immigration Services (US-CIS).”
b. RICO
Burnett asserts Plaintiffs’ RICO claim is not supported by sufficient factual material. RICO imposes criminal and civil liability upon those who engage in certain “prohibited activities” which are listed in 18 U.S.C. § 1962(a) through (c). Each prohibited activity includes, as one necessary element, proof either of “a pattern of racketeering activity” or of “collection of an unlawful debt.” Regardless of which subsection the plaintiff relies upon, all RICO claims under § 1962 have three common elements: (1) a person who engages in (2) a pattern of racketeering activity, (3) connected to the acquisition, establishment, conduct, or control of an enterprise. Abraham v. Singh, 480 F.3d 351, 355 (5th Cir. 2007).
The statute specifically defines “racketeering activity”
Plaintiffs have adequately pled a RICO enterprise and a continuing pattern of racketeering activity. The complaint, supported by the RICO Fraud Chart, is replete with communications sufficient to support the alleged predicate acts of mail fraud, wire fraud, involuntary servitude, and forced labor. Further, this Court already denied a similar motion filed by Burnett seeking to dismiss Plaintiffs’ RICO claims.
c. Klu Klux Klan Act
, Burnett asserts Plaintiffs’ complaint fails to allege sufficient facts to state a claim under the Klu Klux Klan Act (42 U.S.C. § 1985(3)). In their fourth claim for relief, Plaintiffs allege Burnett conspired with Signal and other defendants to deprive Plaintiffs of their Thirteenth Amendment rights in violation of the Klu Klux Klan Act based upon their alleged confinement at Signal’s facilities.
To state a claim under 42 U.S.C. § 1985(3), Plaintiffs must allege: (1) a conspiracy involving two or more persons; (2)
Contrary to Burnett’s argument, Plaintiffs have sufficiently pled causes of action under the Klu Klux Klan Act against Burnett. Plaintiffs allege Signal and Burnett “reached an agreement regarding steps that they would take to discourage further worker organization efforts ... and to prevent the Indian H-2B workforce from exercising their legal rights.”
d. State Law Claims
Burnett also argues Plaintiffs’ complaint fails to state a claim for relief for fraud and negligent misrepresentation. Burnett concedes that the portion of Plaintiffs’ complaint concerning Plaintiffs’ recruitment does contain factual assertions and not merely legal conclusions, but Burnett argues those factual allegations do not comply with Rule 9(b) for alleging fraud with particularity.
To state a claim for fraud under Rule 9(b), “a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). A plaintiff must “specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Herrmann Holdings Ltd. v. Lucent Technologies, 302 F.3d 552, 564-65 (5th Cir. 2002). Plaintiffs allege Burnett promised, via emails and statements made in person, to obtain green cards for the Plaintiffs.
2. Extraterritoriality
Burnett also moves to dismiss Plaintiffs’ fraud and negligent misrepresentation claims by briefly arguing those state law claims are implausible because they arise from events abroad. Burnett asserts Plaintiffs’ state law claims should be dismissed because they do not “implicate Louisiana, Mississippi, or Texas law.”
For the reasons set forth above, Burnett’s motion, to the extent it seeks dismissal of Plaintiffs’ state law claims because Indian law may apply, is denied.
CONCLUSION
For the above-stated reasons, Signal’s 12(c) Motion for Partial Judgment on the pleadings is GRANTED IN PART and DENIED IN PART. To the extent Signal seeks dismissal of Plaintiffs’ claim for recruitment fees under FLSA, Signal’s motion is DENIED. To the extent Signal seeks dismissal of Plaintiffs’ claim for recruitment fees under Section 1981, Signal’s motion is DENIED AS MOOT. To the extent Signal seeks dismissal of Plaintiffs’ claim for inbound travel and visa expenses under FLSA, Signal’s motion is GRANTED.
IT IS FURTHER ORDERED that Signal’s 12(b)(6) Motion to Partially Dismiss Plaintiffs’ state law claims be and hereby is DENIED for the reasons set forth above.
IT IS FURTHER ORDERED that Burnett’s Rule 12(c) Motion for Partial Judgment on the Pleadings be and hereby is DENIED for the reasons set forth above.
. R. Doc. 1431.
. R. Doc. 1594.
. R. Doc. 1582. The Court uses "Burnett” to collectively refer to the following defendants: Malvern C. Burnett, the Gulf Coast Immigration Law Center, LLC and the Law Offices of Malvern C. Burnett, APC.
.R. Doc. 1491; R. Doc. 1602; R. Doc. 1598.
. The defendants include: Signal, Malvern Burnett, Gulf Coast Immigration Center, LLC, The Law Offices of Malvern C. Burnett, APC, J & M Associates, Inc., J & M Marine, Inc., Billy Wilks, Global Resources, Inc., Dewan Consultants, Pvt., and Sachin Dewan. Plaintiffs allege all defendants were involved in the scheme to recruit Plaintiffs to work in the United States.
. R. Doc. 1706, p. 30.
. R. Doc. 1706, pp. 56-71, 116-118.
. R. Doc. 1706, pp. 71-73.
. R. Doc. 1431.
. R. Doc. 1518; R. Doc. 1584.
. R. Doc. 1594.
. R. Doc. 1582.
. R. Doc. 1706.
. R. Doc. 1706, p. 73 (emphasis added).
. R. Doc. 1431.
. R. Doc. 1431, p. 7. Signal also argues Louisiana’s choice of law rules require dismissal of Plaintiffs’ state law claims. The Court will address this argument in reference to Signal’s 12(b)(6) motion to dismiss discussed below.
. R. Doc. 1706, pp. 115-116.
. R. Doc. 1706, p. 116.
. R. Doc. 1706, p. 42.
. R. Doc. 1594.
. Signal’s 12(c) Motion for Partial Judgment on the Pleadings also requested dismissal of Plaintiffs' state law claims. See R. Doc. 1431.
. R. Doc. 1706, p. 79.
. R. Doc. 1431, p. 19.
. Because this Court has federal question jurisdiction and is exercising supplemental jurisdiction over Plaintiffs’ state law claims, the Court must apply the law of the state in which it sits, Louisiana. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The Court must also apply Louisiana’s choice of law rules. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). At this juncture, the parties have not fully briefed, nor has the Court determined, which law applies to Plaintiffs’ state law claims based on Louisiana’s choice of law rules.
. During discovery, "one, maybe two" Plaintiffs asserted the Fifth Amendment at their depositions. R. Doc. 1549-1, p. 18. Signal argues differences between the Fifth Amendment and India's right to be free from self incrimination warrant re-deposing these Plaintiffs.
. R. Doc. 1582.
. R. Doc. 1582. Burnett does not seek dismissal of Plaintiffs' breach of contract claim under state law. See R. Doc. 1582-1, p. 2, n. 1. Burnett's motion seeks to dismiss the claims made in Plaintiffs' fourth amended complaint. However, Plaintiffs sought and obtained leave to file a fifth and sixth amended complaint after Burnett filed his motion. Because the factual allegations in Plaintiffs' fifth and sixth amended complaints are identical to those alleged in the fourth amended complaint, the Court will address Burnett’s arguments as they relate to those amended complaints.
.R. Doc. 1706, pp. 19-30.
. Id., at p. 29.
. R. Doc. 1706, pp. 27-49.
. R. Doc. 1706, p. 49.
. The substantive allegations in Plaintiffs’ sixth amended complaint are identical to those alleged in Plaintiffs' fifth amended complaint. Plaintiffs’ sought and obtained leave to file the sixth amended complaint only to add certain Signal entities as named defendants.
.R. Doc. 1582, pp. 12-13.
. “Racketeering activity” includes offenses indictable under the provisions of Title 18 of the United States Code covering section 1341 (relating to mail fraud) and section 1343 (relating to wire fraud). 18 U.S.C. § 1961(1).
. R. Doc. 288.
. R. Doc. 1706, p. 75.
. R. Doc. 1706, p. 119. On March 9, 2007, Vijayan, Kadakkarapally, Singh, Kumar, and Chellappan allege they were detained for several hours after Vijayan had attempted suicide. R. Doc. 1706, pp. 50-52.
. R. Doc. 1706, pp. 47-48.
. R. Doc. 1706, p. 49.
. R. Doc. 1706, p. 54.
.R. Doc. 1582-1, p. 28.
. See, e.g. R. Doc. 1706-1, pp. 13, 38, 65. (Plaintiffs’ RICO Fraud Chart).
. R. Doc. 1706, p. 30.
. The Court notes that it has previously denied a similar motion to dismiss Plaintiffs' claims for failure to plead fraud with particularity. See R. Doc. 288, p. 13.
. R. Doc. 1582-1, p. 31.
Reference
- Full Case Name
- Kurian DAVID v. SIGNAL INTERNATIONAL, LLC, Defendants Related Cases: Equal Employment Opportunity Commission v. Signal International, LLC, Defendants Lakshmanan Ponnayan Achari v. Signal International, LLC, Applies To: David v. Signal (08-1220)
- Cited By
- 3 cases
- Status
- Published