PANWAR v. ACCESS THERAPIES, INC et al
ORDER - For the foregoing reasons, Defendants' Motion to Dismiss (Dkt. 68) is GRANTED in part and DENIED in part. The Motion to Dismiss is GRANTED on Counts I, II, VI, and VII, and DENIED on Counts III, IV, and V. Counts I, II, and VI are DISMISSED without prejudice, and Count VII is DISMISSED with prejudice. Signed by Judge Tanya Walton Pratt on 9/30/2013. (CBU)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
RITURAJ SINGH PANWAR, on behalf of
himself and all others similarly situated,
ACCESS THERAPIES, INC.,
RN STAFF, INC., doing business as
REHABILITY CARE, and
Case No. 1:12-cv-00619-TWP-TAB
ENTRY ON MOTION TO DISMISS
This matter is before the Court on a Motion to Dismiss filed by Defendants Access
Therapies, Inc. (“Access Therapies”), RN Staff, Inc. (d/b/a Rehability Care) (“RN Staff” or
“Rehability Care”), and Ramon Villegas (“Mr. Villegas”) (collectively, “Defendants”) (Dkt. 68).
Plaintiff Rituraj Singh Panwar (“Mr. Panwar”) filed this lawsuit against the Defendants on behalf
of himself and all others similarly situated for violations of the Racketeer Influenced and Corrupt
Organization Act, 18 U.S.C. § 1662(C) (“RICO”), the Trafficking Victims Protection Act, 18
U.S.C., §§ 1589-90, 1595 (“TVPA”), the Indiana Statutory Wage Law, Ind. Code § 22-2-5-2
(“Indiana Wage Law”), the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”).
Additionally, Mr. Panwar asserts claims under Indiana common law for breach of contract and
unjust enrichment. Defendants argue that Mr. Panwar’s claims actually allege violations of the
Immigration and Nationality Act and must be dismissed because he did not exhaust his
administrative remedies prior to bringing this lawsuit.
For the reasons set forth below,
Defendants’ Motion to Dismiss is GRANTED in part and DENIED in part.
The following facts are from Mr. Panwar’s Second Amended Class Action Complaint
(Dkt. 63) (“Second Amended Complaint”) and are accepted as true for purposes of this motion to
dismiss. Mr. Panwar is a citizen of India and currently resides in New York, New York. Mr.
Panwar earned a Master’s degree in Kinesiology from Southeastern Louisiana University and a
second Master’s degree in Hospital Management from the University of New Orleans while in
the United States on a student visa. Access Therapies is an Indiana corporation with its principal
place of business in Indianapolis, Indiana. RN Staff, which does business under the name
Rehability Care, is an Indiana corporation with its principal place of business in Westfield,
Indiana. Access Therapies and RN Staff share several of the same officers, including Prithvi
Dhani, who is President of both Access Therapies and RN Staff, and Manuel Garcia, who is
listed as an incorporator of both RN Staff and Vice President of Access Therapies.
The H-1B Visa Program
A United States employer can petition the federal government to allow a foreign national
to work in the United States as an H-1B nonimmigrant worker in certain specialty occupations
under the Immigration and Nationality Act (“INA”). Under the H-1B visa program, employees
are required to perform services in specialty occupations that typically require a bachelor’s or
Examples of specialty occupations include physical therapists, computer
professionals, engineers, scientists, professors, and attorneys. H-1B employers are required to
pay their H-1B employees the higher of (a) actual wages the employer pays co-workers in related
positions, or (b) the prevailing wage for the specialty occupation, as determined by an
independent survey of wages paid to workers similarly employed in the geographic area of
intended employment. Employers are also required to pay H-1B employees for “non-productive
time,” which are periods of time in which an H-1B employee is not assigned to a paid client
position because the employer has no paid work for him to do or because the employee lacks a
license or permit. The industry refers to periods of non-productive time as “benching.” The
wage requirements are designed to prevent employers from luring foreign employees to sit idle,
unpaid, while the employer attempts to find third-party client work, and also to prevent the influx
of inexpensive foreign labor for professional services. Failure to pay an H-1B employee for
“benched” time is considered fraud under the INA.
In order to receive an H-1B nonimmigrant classification from the federal government and
employ H-1B workers, employers must complete a Labor Condition Application (“Application”)
and file it with the Department of Labor (“DOL”). The Application requires the employer to
identify an H-1B employee’s job, geographic location, and specific wage. The Application also
requires the employer to certify that it will pay the H-1B employee for non-productive time. H1B employers must file a new Application if the geographic location of an H-1B employee’s job
changes, and an H-1B visa is valid only as long as an employer who petitioned the government
for an H-1B visa employs the H-1B employee. If the employer terminates the employee, the
employee loses his immigration status and typically has to return to his home country unless
another employer receives an H-1B visa for the employee at or about the time the employee is
terminated, or if the employee otherwise obtains another valid immigration status. The employer
may not require the H-1B employee to pay a penalty for leaving employment prior to any agreed
date; however, the employer may seek liquidated damages from the employee’s breach of
contract that cover reasonably estimated damages. The employer also may not require the
employee to pay the H-1B visa application fee.
Access Therapies’ and RN Staff’s Operations
Access Therapies actively recruits potential H-1B employees abroad, primarily in India
and the Philippines, as well as domestically by recruiting students who are in the United States
on student visas and are nearing graduation. Access Therapies promises potential employees that
it will pay them a specific wage and sponsor their H-1B visa applications. If the individual
accepts the employment offer, Access Therapies sends the employee a two-year employment
agreement (the “Employment Agreement”) that, among other things, specifies the employee’s
wage/salary and position. However, the employment contract is between the employee and
Rehability Care, not Access Therapies. Access Therapies tells the employee that it does business
as Rehability Care, but RN Staff is actually the company doing business as Rehability Care. The
employee is also required to execute a Promissory Note in which the employee agrees to pay
Rehability Care $20,000.00 if the employee fails to complete the two-year employment term.
Employees are also required to pay the application fees for filing the Application.
After recruiting potential employees and securing employment commitments from these
individuals, Access Therapies then relies on RN Staff to file the necessary paperwork to obtain
the H-1B visa, including filing the Application with the DOL and the U.S. Citizenship and
Immigration Services. In the Application, RN Staff certifies that the employee for whom an
application is filed will be paid a specified wage, including payments to be made during nonproductive time. Once the DOL approves an RN Staff Application, the H-1B employee for
whom the Application was filed can legally work for RN Staff/Rehability Care.
Mr. Panwar’s Employment
Mr. Panwar applied for a position as a physical therapist with Access Therapies around
the time he was to graduate from the University of New Orleans in 2010. Mr. Villegas, a
recruiter for Access Therapies, followed up with Mr. Panwar in April 2010 and informed him
that Access Therapies was interested in hiring him and would assign him to one of its openings
in the New York area once his H-1B visa was approved. Access Therapies e-mailed Mr. Panwar
an Employment Agreement, which was between Mr. Panwar and Rehability Care. Rehability
Care agreed to sponsor Mr. Panwar for his H-1B visa and complete the necessary paperwork on
his behalf. In both the e-mail and in a telephone conversation, Mr. Panwar was told that Access
Therapies did business as Rehability Care, not RN Staff. Under the terms of the Employment
Agreement, Rehability Care was to employ Mr. Panwar as a physical therapist for a period of
two years at a weekly net pay of $800.00 to $1,000.00. The Employment Agreement also
provided that Rehability Care would provide housing for Mr. Panwar for the first three months of
his employment, for up to $600.00 per month.
Mr. Panwar signed the Employment Agreement on June 10, 2010. After Mr. Panwar
signed the Employment Agreement, Mr. Villegas called Mr. Panwar and demanded that he pay
$1,500.00 for the filing of his H-1B application, falsely telling him that it was the employee’s
responsibility to cover his visa fees. Mr. Panwar responded that he could only afford to pay
$750.00, which Access Therapies accepted. On July 8, 2010, RN Staff sent U.S. Citizenship and
Immigration Services an Application to secure an H-1B visa for Mr. Panwar. RN Staff certified
that Mr. Panwar would be paid the prevailing wage and that he would be paid at least on a
monthly basis. Mr. Panwar was never provided a copy of the Application.
Mr. Panwar’s H-1B visa was approved on April 5, 2011. On April 8, 2011, Mr. Villegas
told Mr. Panwar that his H-1B visa had been approved and encouraged him to continue studying
for the permanent physical therapy license exam, but did not provide him a job assignment. Mr.
Panwar responded by requesting an immediate work assignment, but Access Therapies ignored
his request. On August 18, 2011, Mr. Villegas told Mr. Panwar that Access Therapies was not
required to pay him until he attained his physical therapy license, which is contrary to DOL
regulations for the H-1B visa program. Mr. Panwar contacted Access Therapies on a daily basis
to inquire about a work assignment, but was repeatedly told that he should focus on his license
exam and would only be paid when he received his license and was placed with a client. In June
2011, Mr. Villegas called Mr. Panwar and threatened to revoke his H-1B visa if he kept asking
about his placement or payment for non-productive time. From April 2011 until December
2011, Mr. Panwar did not receive any payments from Access Therapies or RN Staff.
On December 5, 2011, Mr. Panwar was finally placed with a client in New York City.
Rehability Care paid him a gross wage of $21.00 per hour, and he was assigned approximately
35 hours per week. This amount was less than the $800.00 to $1,000.00 per week net pay agreed
to under the terms of the Employment Agreement, and less than the prevailing wage in the range
of $66,477.00 and $94,182.00 stated in the Application. Mr. Panwar never received payment for
non-productive time, nor was he reimbursed for the $750.00 he paid toward the H-1B visa
Mr. Panwar filed his original Complaint in this case on May 8, 2012 (Dkt. 1). On May 9,
2012, the same day Defendants were served with the Complaint, Mr. Villegas left Mr. Panwar a
voicemail message threatening to terminate his employment and revoke his visa because he had
filed the lawsuit. Mr. Panwar’s attorney returned the call, informing Mr. Villegas of the possible
legal consequences for terminating Mr. Panwar’s employment. The following day, Mr. Villegas
sent Mr. Panwar an e-mail informing him that his employment had been terminated. Mr. Panwar
had not filed any complaints with the DOL prior to filing his Complaint in this Court.
II. LEGAL STANDARD
When reviewing a 12(b)(6) motion, the Court takes all well-pleaded allegations in the
complaint as true and draws all inferences in favor of the Plaintiffs. Bielanski v. Cnty. of Kane,
550 F.3d 632, 633 (7th Cir. 2008) (citations omitted); Fed. R. Civ. P. 12(b)(6). However, the
allegations must “give the defendant fair notice of what the . . . claim is and the grounds upon
which it rests” and the “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Stated differently, the complaint must
include “enough facts to state a claim to relief that is plausible on its face.” Hecker v. Deere &
Co., 556 F.3d 575, 580 (7th Cir. 2009) (citations omitted).
To be facially plausible, the
complaint must allow “the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).
Additionally, the court is not required to accept the plaintiffs’ legal conclusions in their
complaint as true. Id.
As an initial matter, Mr. Panwar asserts that the Defendants’ 12(b)(6) motion to dismiss
is untimely because they have already filed an answer to Mr. Panwar’s First Amended Complaint
(Dkts. 16; 44 & 45), and the Second Amended Complaint did not add any new counts; it only
enlarged the proposed class by two years and clarified that certain causes of action were brought
on behalf of the putative class. He argues that when a defendant has already answered a
complaint, a Rule 12(b) motion in response is improper unless it is directed only at the new
allegations in the amended complaint.
Under Seventh Circuit law, however, “it is well
established that the amended pleading supersedes the original pleading . . . . ‘Once an amended
pleading is interposed, the original pleading no longer performs any function in the case. . . .’”
Wellness Cmty.-Nat'l v. Wellness House, 70 F.3d 46, 49 (7th Cir. 1995) (quoting 6 C. Wright, A.
Miller, & Mary Kay Kane, Federal Practice and Procedure § 1476 at 556–57, 559 (1990)).
Defendants filed their Motion to Dismiss in lieu of an answer to the Second Amended
Complaint, thus the Rule 12(b)(6) motion is proper. Regardless, the standards under Rule 12(c)
and 12(b)(6) are identical. Pisciotta, 499 F.3d at 633.
Defendants move to dismiss all counts of Mr. Panwar’s Second Amended Complaint,
arguing that, regardless of the causes of actions set forth in the complaint, he is essentially
asserting claims for violations of the INA which would require that he first exhaust his
administrative remedies through the DOL. Pursuant to statutory authority under 8 U.S.C. §
1182(n)(2)(A), the Secretary of Labor has established administrative procedures by which
aggrieved nonimmigrants working under the H-1B visa program can seek redress. 20 C.F.R. §
655.805(a)(1) and (2). Under the INA, an aggrieved party must first file a complaint with the
Wage and Hour Division of the DOL, which then makes a determination of the validity of the
complaint. 8 U.S.C. § 1182(n)(2)(A)-(n)(5)(A). If the party is dissatisfied with this decision, he
can then make an appeal to an administrative law judge. 20 C.F.R. §§ 655.840, 655.820,
655.840. If the party disagrees with the administrative law judge’s decision, he can then petition
to the Secretary of Labor for review. 20 C.F.R. §§ 655.840, 655.845. After appealing to the
Secretary of Labor, the party may then pursue remedies in the appropriate United States District
Court. 20 C.F.R. § 655.850. Courts have held that there is no private right of action, absent
exhaustion of administrative remedies, for parties who believe their employer violated the terms
of an H-1B visa agreement in violation of the INA, and such claims are appropriately dismissed
under Rule 12(b)(6). Alves v. Masters Entm’t Grp., LLC, No. 3:07-CV-305-TS, 2008 WL
4452145, at *4 (N.D. Ind. Sept. 30, 2008); see also Zhang v. China Gate, Inc., No. 2686834,
2007 WL 2686834 (W.D. Wash. Sept. 7, 2007); Venkatraman v. REI Sys., Inc., 417 F.3d 418
(4th Cir. 2005); Shah v. Wilco Sys., Inc., 126 F. Supp. 2d 641 (S.D.N.Y. 2000).
Mr. Panwar asserts that he has brought claims under other federal statutes and state
statutory and common law, not under the INA, and therefore he is not required to follow the
administrative procedures set forth above. However, a plaintiff may not circumvent the nonavailability of a private cause of action under § 1182(n) of the INA simply by pleading the same
claim under a different cause of action.
Shibeshi v. Philander Smith College, No.
4:11CV00513JMM, 2011 WL 4529455, at *2 (E.D. Ark. Sept. 30, 2011). Thus, the Court must
determine whether there is an independent basis for each of Mr. Panwar’s causes of action, or
whether he is merely restating a claim for violations of the INA.
Violations of RICO
In Counts I and II of Mr. Panwar’s Second Amended Complaint, he alleges that the
Defendants are an enterprise that conducted its affairs through a pattern of racketeering activity
in violation of 18 U.S.C. §§ 1962(c) and (d). Specifically, Mr. Panwar alleges the racketeering
activity includes false and fraudulent representations to the federal government, Mr. Panwar, and
other class members; underpayment of Mr. Panwar’s and other class members’ wages in
violation of federal law; immigration document falsification in violation of 18 U.S.C. § 1546;
interstate mail and wire fraud; and retaliation against Mr. Panwar by threatening and terminating
his job and visa.
To state a claim under RICO, a plaintiff must show the “(1) conduct (2) of an enterprise
(3) through a pattern (4) of racketeering activity.” Richmond v. Nationwide Cassel L.P., 52 F.3d
640, 644 (7th Cir. 1995) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)). In
addition, the complaint must identify the enterprise, which “must be more than a group of people
who get together to commit a ‘pattern of racketeering activity’. . . and more than a group of
associated businesses that ‘are operated in concert’ under the control of one family.” Id. at 645
(internal citations omitted). The enterprise need not be a formal legal entity; an association-infact enterprise is “a group of persons associated together for a common purpose of engaging in a
course of conduct and can be shown by evidence of an ongoing organization, formal or informal,
and by evidence that the various associates function as a continuing unit.” Boyle v. United
States, 556 U.S. 938, 944-45 (2009).
To be liable under RICO, the person (or corporate entity, as the case may be) must
participate in the operation or management of the enterprise itself, and must be separate and
distinct from the enterprise. Richmond, 52 F.3d at 646. Liability requires a showing that the
defendants conducted or participated in the conduct of the enterprise’s affairs, “not just their own
affairs.” Id. (emphasis in original); see also Browning v. Flexteel Indus., Inc., No. 3:11-cv-480
JD, 2013 WL 3224593 (N.D. Ind. June 25, 2013) (“[A]n association-in-fact enterprise must be
meaningfully distinct from the entities that comprise it such that the entity sought to be held
liable can be said to have controlled and conducted the enterprise rather than merely its own
affairs.”) The association-in-fact enterprise also must have some sort of structure consisting of at
least three features: a purpose, relationships among those associated with the enterprise, and
longevity sufficient to permit the associates to pursue the enterprise’s purpose. Browning, 2013
WL 3224593 at *6 (citing Boyle, 566 U.S. at 946).
Mr. Panwar’s Second Amended Complaint fails to sufficiently allege the existence of an
enterprise for purposes of RICO liability. The conduct alleged by Mr. Panwar merely involves
the companies’ own affairs, including recruiting, hiring, and placing employees, and not the
affairs of a separate enterprise. Mr. Panwar also has not alleged that the Defendants had a
structure and goals separate from the predicate acts themselves, which is necessary for a finding
of an association-in-fact enterprise. See Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 400
(7th Cir. 2009) (“A RICO enterprise is more than a combination of persons who commit alleged
predicate acts of racketeering.”). The fact that the Defendants allegedly used fraudulent means
to carry out their own business affairs does not automatically turn them into a RICO enterprise.
Every conspiracy is not an enterprise for RICO purposes. Bachman v. Bear, Stearns & Co., Inc.,
178 F.3d 930, 932 (7th Cir. 1999).
Defendants also do not meet the “family resemblance” test articulated by the Seventh
Circuit in Fitzgerald v. Chrysler Corp., 116 F.3d 225 (7th Cir. 1997).
Under the family
resemblance test, the court should determine how close the current case is to the prototypical
RICO case. Id. at 227. The prototypical RICO case is one in which a person seizes control of a
previously legitimate firm and uses the firm’s resources, contacts, facilities, and appearance of
legitimacy to perpetuate more, and less easily discovered, criminal acts than he could do without
channeling his criminal activities through the enterprise that he has taken over.
operations of Access Therapies and RN Staff do not resemble the prototypical RICO enterprise,
as the alleged criminal acts were used to further the legitimate business of the companies.
The Court finds that Mr. Panwar has not adequately alleged an association-in-fact
enterprise in his Second Amended Complaint, and thus has failed to state a claim under RICO.
Therefore, the Court GRANTS Defendants’ motion to dismiss Counts I and II of Mr. Panwar’s
Second Amended Complaint.
Violations of the TVPA
Count III of Mr. Panwar’s Second Amended Complaint alleges that Defendants violated
18 U.S.C. §1589(a) by obtaining the labor and services of Mr. Panwar and class members by
means of the abuse or threatened abuse of law or legal process. Specifically, Mr. Panwar alleges
that Defendants required him to sign a Promissory Note that would require him to pay the
Defendants $20,000.00 if he terminated his employment prior to the end of the term of the
Employment Agreement, and threatened to revoke his visa if he continued to inquire about his
placement or wages. Defendants argue that Mr. Panwar is merely alleging violations of the INA
despite technically pleading under the TVPA.
The factual allegations in Mr. Panwar’s complaint sufficiently allege a separate and
distinct cause of action for violations of the TVPA. While the TVPA was primarily designed to
“combat trafficking of persons, especially into the sex trade, slavery, and slavery-like
conditions” and to provide “protection and assistance to victims of trafficking,” H.R. Conf. Rep.
106-939, at 1 (2000), the threatened harm to the victim is not required to be as serious as the
harm typically involved in those forms of human trafficking.
“Trafficking also involves
violations of other laws, including labor and immigration codes and laws[.]” Id. at 4. The fact
that Congress explicitly contemplated that the TVPA could apply where a defendant engages a
plaintiff in forced labor by means of violations of immigration and labor laws suggests that a
victim would not have to exhaust administrative remedies under the INA prior to brining a claim.
However, the plaintiff may not simply re-label a claim based entirely upon allegations that the
defendant violated the H-1B visa program requirements as a TVPA claim; there must be some
additional threat of harm involved. See 18 U.S.C. § 1589(a).
Additionally, courts have held that threatened financial harm may constitute a type of
“serious harm” for purposes of the TVPA. Mr. Panwar cites Nunag-Tando v. E. Baton Rouge
Parish Sch. Bd., 790 F. Supp. 2d 1134, 1144 (C.D. Cal. 2011) as persuasive authority applicable
to this case. In Nunag-Tando, the plaintiffs were Filipino nationals who worked as teachers in
the United States under H-1B visas. When the employees complained to the defendants about
their working conditions, the defendants threatened to deport them, allow their visas to expire,
terminate them, or sue them, and required them to pay an additional $10,000.00 to remain in the
program. In addition, the employees were often indebted for the $5,000.00 “recruitment fee”
that they had to pay to the defendants to come to the United States, which they would not be able
to pay if they left the teaching job. The court held that the plaintiffs had sufficiently alleged that
defendants threatened the abuse of legal process, and that the potential financial harm faced by
plaintiffs was sufficiently serious such that their labor was forced as contemplated by § 1589(a).
Id. at 1146. See also United States v. Calimlim, 538 F.3d 706, 714 (7th Cir. 2008) (“[W]hen
Congress amended the [TVPA] it expanded the definition of involuntary servitude to include
nonphysical forms of coercion.”).
Likewise, in this case, Mr. Panwar alleges that the Defendants used non-physical forms
of coercion and threats of serious financial harm to keep him employed with Rehability Care.
While the alleged failure to pay Mr. Panwar for non-productive time is technically a violation of
the INA, it was the threat of being in debt to the Defendants under the $20,000.00 Promissory
Note and having his visa revoked that kept Mr. Panwar from voluntarily terminating his
employment, not just the immigration law violation itself. The Court finds that Mr. Panwar has
adequately stated a claim under the TVPA, and therefore DENIES the Defendants’ motion to
dismiss Count III.
Violations of the Indiana Statutory Wage Law
Count IV of Mr. Panwar’s Second Amended Complaint alleges that RN Staff and Access
Therapies violated the Indiana Wage Law by failing to pay him and the class members their full
wages during their employment. Again, Defendants argue that this claim falls under the INA for
which there is no private right of action. Indiana Code section 22–2–5–1 provides that an
employer “shall pay each employee at least semimonthly or biweekly, if requested, the amount
due the employee.” I.C. § 22-2-5-1(a). The statute further provides that “[p]ayment shall be
made for all wages earned to a date not more than ten (10) days prior to the date of payment.”
Id. The Indiana Wage Law is intended to govern not only the frequency, but the amount an
employer must pay its employee. St. Vincent Hosp. & Health Care Ctr., Inc. v. Steele, 766
N.E.2d 699, 704 (Ind. 2002).
Mr. Panwar alleges that he is owed payment for both “benched time” and the amount that
he was underpaid based upon the amount agreed upon in the Employment Agreement, the
Application and the “prevailing wage” provision of the INA. However, only the amount due
under the Employment Agreement for work actually performed would be subject to the Indiana
Wage Payment Statute. The statute defines “wages” as “all amounts at which the labor or
services rendered is recompensed . . . .” I.C. § 22-2-9-1 (emphasis added). The money owed to
Mr. Panwar for benched time is not based upon labor or services rendered; rather, it is an amount
that is statutorily mandated under the INA to prevent abuse under the H-1B visa program. The
claim for benched time wages is purely based upon an alleged violation of the INA, so Mr.
Panwar would have to pursue a remedy for this alleged violation through administrative channels
with the DOL.
In contrast, the amount that Mr. Panwar alleges he is owed due to underpayment under
the terms of the Employment Agreement for work that he did perform does fall within the
definition of “wages” under the statute because it is independent of any violations of the INA.
The parties agreed to the amount that Mr. Panwar would be paid for his services in the
Employment Agreement, and Defendants allegedly failed to pay him that full amount. The
underpayment of wages actually earned is logically a situation covered by the Indiana Wage
Law. See Steele, 766 N.E.2d at 704 n.4 (so long as an employer is in compliance with minimum
wage laws, the Indiana Wage Law still applies where the employer and employee have reached a
mutual agreement regarding the employee’s wage). The Court does not have to determine
whether the Defendants violated the INA in order to determine whether Mr. Panwar was paid
less than the amount agreed upon in the Employment Agreement. Therefore, the Court DENIES
the Defendants’ motion to dismiss Count IV.
Breach of Contract Under Indiana Common Law
Count V of Mr. Panwar’s Second Amended Complaint alleges that RN Staff and Access
Therapies breached their contract with Mr. Panwar and the other class members under Indiana
common law. Defendants argue the claim should be dismissed because, if Defendants’ motion to
dismiss is granted, the Court would lack subject matter jurisdiction over this claim. Because the
Court has not dismissed all of Mr. Panwar’s federal claims, the Court may still properly exercise
supplemental jurisdiction over the state breach of contract claim.
See 28 U.S.C. § 1367.
Defendants also assert that Mr. Panwar has not properly pleaded a class breach of contract claim
because he has not shown that the class members’ contracts are sufficiently similar. On a motion
to dismiss, the Court accepts the facts pleaded in the complaint as true and views them in light
most favorable to Mr. Panwar. At this stage, the Court need not determine whether the purported
class members’ contracts are sufficiently similar to warrant class certification.1 Therefore, the
Court DENIES the Defendants’ motion to dismiss Count V.
Unjust Enrichment Under Indiana Common Law
Count VI of Mr. Panwar’s Second Amended Complaint is a claim for unjust enrichment
under Indiana common law based upon Access Therapies’ and/or RN Staff’s demand that Mr.
Panwar and other class members pay a portion of their visa application fees in violation of the H1B regulations. Because this claim directly alleges a violation of the INA, the Court finds that
Mr. Panwar must exhaust his administrative remedies with the DOL before he can bring a claim
based on his payment of H-1B visa fees in violation of 20 C.F.R. § 655.731. Therefore, the
Court GRANTS the Defendants’ motion to dismiss Count VI.
Violation of the Anti-Retaliation Provision of the Fair Labor Standards Act
Count VII of Mr. Panwar’s Second Amended Complaint alleges that Defendants
violated the anti-retaliation provision of the FLSA with respect to Mr. Panwar individually.
After Mr. Panwar filed his original Complaint, he was terminated from his position with
Rehability Care. He then amended his Complaint to add a claim for retaliation under the FLSA.
Mr. Panwar alleged in his original Complaint that the Defendants’ failure to pay him any wages
during non-productive time in violation of 20 C.F.R. § 655(c)(7)(i) is a violation of the FLSA’s
minimum wage requirement under 29 U.S.C. § 206.
The Court notes that Mr. Panwar’s breach of contract claim can only be based upon the Employment Agreement,
not the terms of the Application. The Application is an agreement between the employer and the Department of
Labor; it is not contractual in nature between the employee and the employer. Shibeshi, 2011 WL 4529455 at *2.
Any claims based upon allegations that the Defendants violated the terms of the Application would have to be
addressed administratively with the DOL.
The FLSA’s anti-retaliation provision makes it unlawful “to discharge or in any other
manner discriminate against any employee because such employee has filed any complaint or
instituted or caused to be instituted any proceeding under or related to [the FLSA].” 29 U.S.C. §
215(a)(3). To state a claim under the FLSA anti-retaliation provision, the plaintiff must allege
that he participated in FLSA-protected activity and that he suffered an adverse employment
action as a result. Kasten v. St. Gobain Performance Plastics Corp., 703 F.3d 966, 772 (7th Cir.
2012). The complaint must be related to conduct regulated by the FLSA, not just a general
complaint about wages. Hernandez v. City Wide Insulation of Madison, Inc., 508 F. Supp. 2d
682, 690 (E.D. Wis. 2007).
The Court finds that Mr. Panwar’s claim that failure to pay him at least minimum wage
for non-productive time does not constitute an FLSA violation. Mr. Panwar argues that the INA
incorporates the FLSA by reference in 20 C.F.R. § 655.731(c)(7)(i). This subsection addresses
wage obligations for H-1B employees in non-productive status, and the end of this provision
states that H-1B employees must be paid the required wage as defined by the FLSA “for all
hours performing work.” 20 C.F.R. § 655.731(c)(7)(i) (emphasis added). There is no reference
to the FLSA with regard to payment for non-productive time in the INA regulations, nor is
payment for non-productive time a right that is protected by the FLSA; the regulation
specifically refers to “hours performing work.” Id. There is also no indication that this reference
was intended to permit H-1B employees to assert an FLSA claim for any other INA violation.
The right to payment for non-productive time is a right that is bestowed to H-1B employees
under the INA, so any failure to pay such wages would be a violation of the INA, not the FLSA.
Because Mr. Panwar’s original Complaint did not allege a violation of an FLSA protected right,
his retaliation claim also fails as a matter of law. Therefore, the Court GRANTS Defendants’
motion to dismiss on Count VII.
For the foregoing reasons, Defendants’ Motion to Dismiss (Dkt. 68) is GRANTED in
part and DENIED in part. The Motion to Dismiss is GRANTED on Counts I, II, VI, and VII,
and DENIED on Counts III, IV, and V.
Counts I, II, and VI are DISMISSED without
prejudice, and Count VII is DISMISSED with prejudice.
Hon. Tanya Walton Pratt, Judge
United States District Court
Southern District of Indiana
G. John Cento
CENTO LAW LLC
Eamon F. Redmond
KOTCHEN & LOW, LLP
Andrew P. Wirick
HUME SMITH GEDDES GREEN &
Michael F. Brown
PETERSON BERK & CROSS, S.C.
Jeffrey B. Fecht
RILEY BENNETT & EGLOFF LLP
Daniel Aaron Kotchen
KOTCHEN & LOW LLP
Bryce H. Bennett, Jr.
RILEY BENNETT & EGLOFF LLP
Justin T. Ervin
KOTCHEN & LOW LLP
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