David et al v. Signal InternationaL LLC et al

Filing 1713

ORDER AND REASONS granting in part and denying in part 1431 Motion for Judgment on the Pleadings; denying 1582 Motion for Judgment on the Pleadings; denying 1594 Motion to Dismiss. Signed by Judge Susie Morgan on 8/12/2014. (bwn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
KURIAN DAVID, et al.
Plaintiffs

CIVIL ACTION

VERSUS

No. 08-1220

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION “E”

Related Cases:
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,
Plaintiff

CIVIL ACTION

VERSUS

No. 12-557

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION “E”

LAKSHMANAN PONNAYAN ACHARI, et al.,
Plaintiffs

CIVIL ACTION

VERSUS

No. 13-6218
(c/w 13-6219, 13-6220,
13-6221, 14-732)

SIGNAL INTERNATIONAL, LLC, et al.,
Defendants

SECTION "E"

Applies To: David v. Signal (08-1220)
ORDER AND REASONS
Before the Court is a 12(c) Motion for Partial Judgment on the Pleadings1 and a

1

R. Doc. 1431.

1

12(b)(6) Motion to Dismiss,2 both filed by Signal International, LLC ("Signal"), as well as
a 12(c) Motion for Partial Judgment on the Pleadings filed by Burnett.3 Plaintiffs oppose all
of the motions.4 Considering the briefs, the record, and the parties arguments at oral
argument, the court rules as follows.
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 Defendants5
recruited them to work as temporary workers for Signal and forced them to pay inbound
travel expenses, visa expenses, and other recruiting expenses. Plaintiffs allege they were
induced by Defendants to pay such sums because Defendants knowingly made false
promises and representations regarding "the nature and terms and conditions of the
immigration and work opportunities offered."6 Plaintiffs also claim they were discriminated
against and subjected to forced labor as welders, pipefitters, and marine fabrication workers
at Signal's facilities in Pascagoula, Mississippi and Orange, Texas. Once Plaintiffs arrived
at Signal facilities in the United States, Plaintiffs claim Signal forced the workers to live in
deplorable conditions and used various tactics to compel the Plaintiffs to continue working
for Signal.

2

R. Doc. 1594.

3

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.
4

R. Doc. 1491; R. Doc. 1602; R. Doc. 1598.

5

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.
6

R. Doc. 1706, p. 30.

2

Plaintiffs allege Signal and Burnett violated the Trafficking Victims Protection Act
of 2003 ("TVPRA")(15 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).7
Plaintiffs claim Signal violated the Civil Rights Act of 1866 (42 U.S.C. § 1981) ("Section
1981") and the Fair Labor Standards Act ("FLSA")(29 U.S.C. § 201, et seq.).8 Additionally,
Plaintiffs bring claims against Signal and Burnett for fraud, negligent misrepresentation,
and breach of contract under state law.
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.9 The Court thereafter ordered Plaintiffs to file fourth
and fifth amended complaints to clarify their causes of action and to state which law their
state law claims arise under.10 After Plaintiffs filed their fifth amended complaint, Signal
filed a 12(b)(6) Motion to Partially Dismiss Plaintiffs' state law claims, putting forth the
same arguments as its Rule 12(c) motion, and additionally asking the Court to decline to
exercise jurisdiction over Plaintiffs' state law claims.11 Burnett filed a Rule 12(c) Motion for
Partial Judgment on the Pleadings seeking to dismiss the TVPRA, RICO, and the Klu Klux
Klan Act claims in Plaintiffs' fourth amended complaint, as well as Plaintiffs' state law

7

R. Doc. 1706, pp. 56-71, 116-118.

8

R. Doc. 1706, pp. 71-73.

9

R. Doc. 1431.

10

R. Doc. 1518; R. Doc. 1584.

11

R. Doc. 1594.

3

claims for fraud and negligent misrepresentation.12
Plaintiffs then sought and obtained leave to file a sixth amended complaint to add
various Signal entities as defendants.13 In Plaintiffs' sixth amended complaint, they do not
seek recruitment fees under Section 1981. Plaintiffs seek "compensatory damages for the
deprivation of Plaintiffs' civil rights during their time in Signal's Pascagoula, Mississippi
and/or Orange, Texas employment up to the point at which each Plaintiffs' employment
at Signal was terminated."14 Plaintiffs do not pray for compensatory damages related to the
recruitment fees they incurred prior to or after working at Signal under Section 1981.
Accordingly, Signal's 12(c) Motion for Judgment on the Pleadings seeking dismissal of
Plaintiffs' claim for recruitment fees under Section 1981 is DENIED AS MOOT. However,
with respect to the remaining issues raised in both Signal's and Burnett's motions, the
amended complaints have not rendered any of those issues moot. Accordingly, the Court
will rule on each motion in turn.
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

12

R. Doc. 1582.

13

R. Doc. 1706.

14

R. Doc. 1706, p. 73 (emphasis added).

4

that would entitle him to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007);
Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007). As the Fifth Circuit explained in
Gonzales 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, 128 S.Ct. 1937, 1949, 173
L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct.
1955, 167 L.Ed.2d 929). "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 F. App'x
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, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007).
5

ANALYSIS
A. Signal's Motion for Partial Judgment on the Pleadings Under Rule 12(c)15
Signal seeks dismissal of Plaintiffs' claims for recruitment fees, visa expenses, and
travel expenses, asserting these fees and expenses are not recoverable under FLSA.16
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.17 Under FLSA,
"wage" is defined as both cash wages and "the reasonable cost ... to the employer of
furnishing such employee with board, lodging, or other facilities, if such board, lodging, or
other facilities are customarily furnished by such employer to his employees." 29 U.S.C. §
203(m). The court in Rivera v. Brickman Group, Ltd. explained how the FLSA minimum
wage is calculated in light of an employer's deductions:
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

15

R. Doc. 1431.

16

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.
17

R. Doc. 1706, pp. 115-116.

6

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.18 Signal, on the other hand, argues the Fifth Circuit's decision in
Castellanos-Contreras v. Decatur Hotels, LLC holds that Plaintiffs are not entitled to be
reimbursed for those sums under FLSA. 622 F.3d 393 (5th Cir. 2010).
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 category for which the workers claimed reimbursement - inbound
travel expenses, visa expenses, and recruitment expenses - should be deducted from the
workers' first week's wage under FLSA. The Fifth Circuit held that no statute or regulation
expressly required an employer to deduct the cost of inbound travel expenses or visa
expenses before determining whether a minimum wage was paid. Id. at 400. As such, the
workers were not entitled to be reimbursed for such expenses as a matter of law. Id.
Accordingly, to the extent Signal seeks to dismiss Plaintiffs' FLSA claim for inbound travel
and visa expenses, Signal's motion is granted.
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

18

R. Doc. 1706, p. 116.

7

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,

8

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.19
As such, Plaintiffs have adequately stated a claim for recruitment fees under FLSA. Signal's
request to dismiss Plaintiffs' claim for recruitment fees under FLSA is denied.
B. Signal's 12(b)(6) Motion20
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 Plaintiffs' state
law claims to the extent they are alternatively based on the state law of Mississippi or
Texas.21 Signal does not seek dismissal of claims based on Indian law. Signal argues
Plaintiffs' claims under the laws of Texas or Mississippi should be dismissed because under
Louisiana's choice-of-law rules, the law of India will apply to these claims and as a result,
application of the law of Texas or Mississippi would be extraterritorial. Signal contends
these claims are implausible under the laws of Texas and Mississippi due to their
extraterritorial nature.

Alternatively, Signal asks the Court to decline to exercise

jurisdiction over Plaintiffs' state law claims.
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

19

R. Doc. 1706, p. 42.

20

R. Doc. 1594.

21

Signal's 12(c) Motion for Partial Judgment on the Pleadings also requested dismissal of
Plaintiffs' state law claims. See R. Doc. 1431.

9

employment in the United States."22 Plaintiffs allege Defendants broke promises and
misrepresented the availability of work and immigration opportunities after Plaintiffs paid
exorbitant "recruitment fees" to the Defendants for processing immigration documents.
Plaintiffs bring these state law claims under Indian law, Mississippi law, or Texas law
depending upon the Plaintiff, the defendant, and the actions complained of, and sometimes
alternatively. Signal believes the Court should dismiss Plaintiffs' state law claims because
Plaintiffs' claims require the application of "the law of another country."23
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.24 Louisiana's choice-of-law rules are used
to determine the law to be applied in any given case, and by themselves, do not provide a
basis for dismissing Plaintiffs' state law claims. Louisiana's choice-of-law rules define
"state" law to include the law of "any foreign country or territorial subdivision thereof that
has its own system of law." La. Civ. Code art. 3516. Indeed, a federal court may apply
foreign law to pendant state law claims. See e.g. McGee v. Arkel Int'l LLC, 671 F.3d 539 (5th
Cir. 2012). As Signal has noted, choice of law is a legal question to be decided by the Court.
The Court has not determined the law to be applied to the state law claims made in this
case. As a result, the Court will not dismiss the state law claims based on extraterritoriality.

22

R. Doc. 1706, p. 79.

23

R. Doc. 1431, p. 19.

24

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.

10

Signal's motion, insofar as it seeks to dismiss Plaintiffs' state law claims, is denied.
2. Supplemental Jurisdiction
Signal also asks the Court to decline to exercise supplemental jurisdiction over
Plaintiffs' state law claims. Under 28 U.S.C. § 1367(c)(1), "district courts may decline to
exercise supplemental jurisdiction over a claim ... if the claim raises a novel or complex
issue of state law." Signal argues the Court should decline to exercise supplemental
jurisdiction because Plaintiffs' complaint alleges their state law claims under Indian law,
Texas law, and Mississippi law in the alternative. Signal also asks the Court to decline to
exercise supplemental jurisdiction over Plaintiffs' state law claims because, if Indian law
applies, differences in Indian law will require additional depositions and research which
would undermine judicial economy, convenience, and fairness. 25
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

25

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.

11

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.
C. Burnett's 12(c) Motion for Partial Judgment on the Pleadings26
Burnett moves to dismiss Plaintiffs' claims under TVPA, RICO, and the Klu Klux

26

R. Doc. 1582.

12

Klan Act, as well as Plaintiffs' fraud and negligent misrepresentation claims under state
law.27 Burnett argues Plaintiffs' complaint does not contain sufficient factual material to
support those claims, and Plaintiffs have failed to adequately plead fraud under Rule 9.
Burnett also asserts Plaintiffs have failed to state a claim with respect to their state law
claims because they are grounded in events occurring abroad.
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
27

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.

13

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.28 Plaintiffs claim
Burnett knowingly promised them green cards, even though they were ineligible, in order
to induce Plaintiffs to pay large fees to travel and work in the United States.29 Plaintiffs
allege with great detail Burnett's role in their recruitment: his alleged false advertisement
of green cards and permanent residency, his alleged misrepresentations to the workers and
U.S. government officials, and his collaborated efforts with Signal to discourage the workers
from organizing and to ensure the workers continued to work at Signal without complaint.30
In March 2007, Plaintiffs allege Burnett, in collaboration with Signal, threatened Plaintiffs
not to take legal action against Signal, and instructed Plaintiffs "they could depend only on
Signal to maintain their H-2B immigration status and pursue their green card
applications."31 Burnett is identified specifically in 187 paragraphs in the fifth amended

28

R. Doc. 1706, pp. 19-30.

29

Id. at p. 29.

30

R. Doc. 1706, pp. 27-49.

31

R. Doc. 1706, p. 49.

14

complaint and 298 times in the RICO fraud chart.32 Plaintiffs allegations are sufficient to
state a claim under Section 1589(a)(2) for using "serious harm" to obtain Plaintiffs' labor.
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., 2013 WL 5486783 (S.D.
Ind. Sept. 30, 2013). Because Plaintiffs have alleged Burnett induced them into incurring
substantial debts and Plaintiffs were compelled 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

32

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.

15

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 (USCIS)."33 However, Burnett's
disagreement with the version of the facts alleged in Plaintiffs' complaint is insufficient to
support a Rule 12(c) motion. The Court must accept all factual allegations in Plaintiffs'
complaints as true, and Burnett has failed to point to any authority to demonstrate
Plaintiffs' claims under the TVPA should be dismissed. Accordingly, the Court denies
Burnett's request to dismiss Plaintiffs' TVPA claims.
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"34 and a "pattern of
racketeering activity" requires at least two acts of racketeering, the last of which must have
occurred within ten years of the first. 18 U.S.C. § 1961(5). Private individuals who are
injured by criminal RICO activity may recover damages in a civil action. 18 U.S.C. § 1964(c).

33

R. Doc. 1582, pp. 12-13.

34

"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).

16

Plaintiffs allege Defendants, including Burnett, were a part of three distinct enterprises
during various stages of the Plaintiffs' recruitment.
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.35 The Court is not persuaded it
should reach a contrary decision when Plaintiffs' factual allegations have not altered since
this Court's previous decision.
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.36 Individual Plaintiffs Vijayan, Kadakkarapally, Singh,
Kumar, and Chellappan allege the same cause of action in the fifteenth claim for relief based
on their alleged detention on March 9, 2007.37 Burnett argues there are no facts alleged
indicating he was involved in the Plaintiffs' detention and there is no indication from
Plaintiffs' complaint that Burnett was involved in any conspiracy.
To state a claim under 42 U.S.C. § 1985(3), Plaintiffs must allege: (1) a conspiracy
involving two or more persons; (2) for the purpose of depriving, either directly or indirectly,
35

R. Doc. 288.

36

R. Doc. 1706, p. 75.

37

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.

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a person or class of persons of the equal protection of laws; and (3) an act in furtherance
of the conspiracy; (4) which causes injury to a person or property, or a deprivation of any
right or privilege of a citizen of the United States. Suttles v. U.S. Postal Serv., 927 F. Supp.
990, 1000-01 (S.D. Tex. 1996)(citing United Bhd of Carpenters & Joners of Am. v. Scott,
463 U.S. 825, 828-29 (1983)).
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."38 Plaintiffs further allege Burnett attended a meeting at Signal's facilities on March
8, 2007, and Burnett "told the workers that they were ineligible for other kinds of
immigration relief and could depend only on Signal to maintain their H-2B immigration
status and pursue their green card applications."39 Plaintiffs claim Signal personnel and
Burnett reached agreement about "what should be said" at various meetings with the Indian
H-2B workers, and Signal personnel told the workers that Signal would sponsor their green
cards if they stayed at Signal and "obeyed Signal's rules."40 The Court finds the facts alleged
in Plaintiffs' complaint sufficient to state a claim under the Klu Klux Klan Act for Plaintiffs
fourth and fifteenth claims for relief. The facts pled demonstrate a relationship between
Signal and Burnett, as well as Burnett's involvement in the Plaintiffs' alleged detention at
Signal's facilities. Accordingly, Burnett's motion to dismiss is denied insofar as he seeks to
dismiss Plaintiffs' claims under the Klu Klux Klan Act.

38

39

R. Doc. 1706, pp. 47-48.

R. Doc. 1706, p. 49.

40

R. Doc. 1706, p. 54.

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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.41
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.42 Plaintiffs allege Burnett failed to disclose the truth that applying for a green
card is "fundamentally incompatible" with applying for the H-2B visas used by the Plaintiffs
to work at Signal.43 Plaintiffs' RICO Fraud Chart, accompanying the sixth amended
complaint, adequately details with specificity Burnett's representations made in meetings
and communications with the Plaintiffs. The Court finds Plaintiffs have satisfied Rule 9(b)'s
requirement of pleading fraud with particularity. Plaintiffs' state law claims of fraud and
negligent misrepresentation are adequately supported by factual allegations in the

41

R. Doc. 1582-1, p. 28.

42

See, e.g. R. Doc. 1706-1, pp. 13, 38, 65. (Plaintiffs' RICO Fraud Chart).

43

R. Doc. 1706, p. 30.

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complaint and the RICO Fraud Chart. Burnett's motion is denied insofar as he seeks
dismissal of Plaintiffs' state law claims based on Rule 9(b).44
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."45
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.
44

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.
45

R. Doc. 1582-1, p. 31.

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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.
New Orleans, Louisiana, this 12th day of August, 2014.

____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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