Walters et al v. McMahen et al
Filing
185
MEMORANDUM OPINION. Signed by Judge Richard D Bennett on 7/6/11. (bmh, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BIZZIE WALTERS, et al.
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Plaintiffs,
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Civil Action No.: RDB-11-0751
v.
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TODD MCMAHEN, et al.
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Defendants.
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MEMORANDUM OPINION
On March 22, 2010, Plaintiffs Bizzie Walters, Annie Hodge, Annette Baldwin, Katrena
Cooper and Barbara Allen filed a Class Action Complaint in the United States District Court for
the Middle District of Alabama and initiated this class action lawsuit.
Plaintiffs name as
Defendants twenty-nine current and former Perdue Farms, Inc. (“Perdue”) employees.1 In a one
count conspiracy claim, Plaintiffs allege that Defendants conspired to depress the wages of the
legal, hourly-paid employees of Perdue in violation of the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. through a scheme of hiring and falsely
attesting to the work authorization of large numbers of illegal immigrants.
On May 28, 2010, Defendants filed a motion for joinder of Perdue, transfer of venue and
/ or dismissal and for stay of discovery. (ECF No. 61). Concurrently, Perdue filed a motion to
intervene in the suit. (ECF No. 63). Subsequently, Plaintiffs filed a First Amended Class Action
Complaint (ECF No. 80) on June, 18, 2010. Plaintiffs filed this action on behalf of themselves
1
Todd McMahen, Tol Dozier, Nancy Hollis, Alberto Asyn, Elana Asyn, Richard Jamison, Jim Hungate, Amparo
Herrera, Maria Salizar Gonzalez, Jeff Beckman, Jerry Layne, David Castro, Angie Wood, Julio Unzueta, Emperatriz
“Paola” Beatty, Jim Booth, Terry Ashby, Jeanette Cox, Sandra Herrera, Leslie Cox, Gustavo “Gus” Paez, Randy
Brown, Efrem Andrews, Gilberto “Fernando” Rivera, Bennie Gray, Charlie Carpenter, Bel Holden, Rob Helfin, and
Gary Miller (collectively, “Defendants”).
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and on behalf of a class consisting of all other persons legally authorized to be employed in the
U.S., who have been employed at any of the Perdue facilities identified in this action as hourly
wage earners in the four years prior to the filing of this case and up through trial. Am. Compl. ¶
185. On March 18, 2011, this case was transferred from the Middle District of Alabama to this
Court, (ECF No. 147) and on April 5, 2011, Perdue withdrew its motion to intervene. (ECF No.
163).
Presently pending before this Court is Defendants’ Motion for Dismissal (ECF No. 61).2
The Defendants move to dismiss on the ground that Plaintiffs fail to state a claim for relief under
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937
(2009). Plaintiffs have filed a response in opposition to Defendants’ motion (ECF No. 179).
The parties’ submissions have been reviewed and this Court held a hearing on June 9, 2011,
pursuant to Local Rule 105.6 (D. Md. 2010)3
The Plaintiffs’ one count civil RICO claim in this case relies on an expansive legal theory
previously rejected by other United States District Courts. Essentially, the claim is that midlevel human resources employees have engaged in a conspiracy to indirectly enrich themselves
by causing Perdue to violate United States immigration laws, thereby increasing its net profit,
thereby increasing the potentiality of higher salaries for its employees. See infra n.13. This
claim is simply not plausible. The logical extent of that legal theory would be to create civil
RICO causes of action as to any allegedly illegal human resources decisions made by mid-level
corporate employees. Furthermore, even if this theory were plausible, a corporation cannot
conspire with its employees and, with rare exception, employees of a corporation, when acting
2
Defendants’ motion to dismiss was filed as part of the joint motion for joinder of Perdue, transfer of venue and stay
of discovery, (ECF No. 61) filed in advance of the First Amended Complaint, but still deemed to be applicable to
that amended complaint.
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The parties agreed that the pending Motion to Dismiss is applicable to the amended complaint.
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within the scope of their employment, cannot conspire among themselves. No exceptions to this
intracorporate conspiracy doctrine, well recognized by the United States Court of Appeals for the
Fourth Circuit, apply in this case. As the Plaintiffs simply have no discernible independent
personal stake in this matter, any effort to further amend their complaint would be futile.
Accordingly, for the reasons that follow, Defendants’ Motion to Dismiss (ECF No. 61) is
GRANTED, and this case is DISMISSED WITH PREJUDICE.
I. Background
In ruling on a motion to dismiss, “[t]he factual allegations in the Plaintiff’s complaint
must be accepted as true and those facts must be construed in the light most favorable to the
plaintiff.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
Defendants are employees of Perdue, the alleged third largest poultry processing
company in the United States. Am. Compl. ¶ 6. Perdue is headquartered in Salisbury, Maryland
and owns and operates poultry processing facilities in Dothan, Alabama; Perry, Georgia;
Monterey, Tennessee; Cromwell, Kentucky; Dillon, South Carolina; Accomac, Virginia;
Bridgewater, Virginia; Concord, North Carolina; Georgetown, Delaware; Lewiston, North
Carolina; Milford, Delaware; Rockingham, North Carolina; Salisbury, Maryland; and
Washington, Indiana. Id. ¶ 3, 4. Plaintiffs allege that “Corporate Co-Conspirators,” including
defendants Helfin and Miller, conspired with unnamed “Facility Co-Conspirators” and the other
named Defendants, employees in Perdue’s Human Resources (“HR”) departments, to implement
a scheme of hiring illegal immigrants. Id. ¶ 43. Plaintiffs allege that these hiring practices save
Perdue millions of dollars in labor costs because illegal immigrants will work longer hours for
lower wages than American citizens. Id. ¶ 43. Plaintiffs allege that these practices depress the
wages of Perdue’s legally authorized workers. Id. ¶ 184.
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Plaintiffs state that corporate management directs HR managers and their staff members
to accept false documents from illegal immigrants and to falsely attest to the authenticity of such
documents in the hiring process. Id. ¶ 45. Plaintiffs allege that Defendants therefore engage in a
host of illegal practices, including but not limited to: hiring workers who were previously
employed at Perdue using different identifications, hiring workers known to be present in the
United States illegally or using facially false documents, and hiring workers who use multiple
sets of documents in order to work extra shifts. Id. ¶ 46.
Plaintiffs allege that these practices are pervasive and that a scheme of illegal hiring is in
place at each of Perdue’s processing facilities. Id. ¶ 184. At the Dothan plant, for example,
Plaintiffs allege that Defendants Dozier, Hollis, Alberto Asyn, Elana Fernandez and other
unnamed parties in the HR department use “some or all” of the hiring practices alleged in ¶¶ 4546. Id. ¶ 68. Plaintiffs lay out the corporate hierarchy at the plant, stating that Dozier is
responsible for assisting McMahen and other corporate officers in setting the class’s wages
below market rates.
Plaintiffs further assert that McMahen knows and approves of an
immigration law conspiracy at the Dothan facility. Id. ¶ 74. Plaintiffs repeat functionally the
same argument as to the named Defendants at the Perry facility, Id. ¶¶ 80-90; the Monterey
facility, Id. ¶¶ 91- 105; the Cromwell facility, Id. ¶¶ 106-21; the Dillon facility, Id. ¶¶ 122-35;
and the Accomac facility, Id. ¶¶ 136-48. Plaintiffs further allege, on information and belief, that
the same illegal hiring conspiracy is in place at Perdue’s eight other facilities: Bridgewater, Id.
¶¶ 149-52; Concord, Id. ¶¶ 153-56; Georgetown, Id. ¶¶ 157-60; Lewiston, Id. ¶¶ 161-64;
Milford, Id. ¶¶ 165-68; Rockingham, Id. ¶¶ 169-72; Salisbury, Id. ¶¶ 173-76 Washington, Id. ¶¶
177-80.
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Plaintiffs allege that Perdue’s hiring practices are RICO predicate acts.4 First, Plaintiffs
allege that certain Defendants violated 8 U.S.C. § 1324(a)(3)(A),5 a predicate offense under 18
U.S.C. § 1961(1)(F), by knowingly hiring hundreds of unauthorized and fraudulently
documented workers, who had been brought into the United States from Mexico with assistance.
Id. ¶ 53, 54. Second, Plaintiffs allege that certain Defendants violated 18 U.S.C. §§ 1546(b)(1),
(2) and (3), racketeering acts under 18 U.S.C. § 1961(1)(B), by accepting fake or fraudulent
documents from newly hired workers and making false attestations as to their legal status on I-9
forms.6 Id. ¶ 56, 57. Conducting the affairs of an enterprise through a pattern of racketeering
activity is illegal under 18 U.S.C. § 1962(c), and Plaintiffs therefore allege that Defendants,
though their scheme of illegal hiring violated § 1962(d), which finds unlawful any conspiracy to
violate § 1962(a)-(c).
II. Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Rule 12(b)(6) of the
Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim
upon which relief can be granted; therefore, a Rule 12(b)(6) motion tests the legal sufficiency of
a complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). When ruling on
such a motion, the court must “accept the well-pled allegations of the complaint as true,” and
4
Section 1961 of RICO defines the operative terms of § 1962 - § 1968. “Racketeering activity” is defined in § 1961
through a set of predicate violations – violations of other enumerated statutes.
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“Any person, who, during any 12-month period, knowingly hires for employment at least 10 individuals with
actual knowledge that the individuals are aliens as described in subparagraph (B) shall be fined under title 18 or
imprisoned for not more than 5 years, or both. (B) An alien described in this subparagraph is an alien who – (i) is an
unauthorized alien (as defined in section 1324a(h)(3) of this title), and (ii) has been brought into the United States in
violation of this subsection.” 8 U.S.C. § 1324(a)(3).
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All United States employers must complete and retain a Form I-9 for each individual they hire for employment in
the United States verifying employment eligibility.
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“construe the facts and reasonable inferences derived therefrom in the light most favorable to the
plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997).
A complaint must be dismissed if it does not allege “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also
Simmons v. United Mort. and Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. Jan. 21, 2011);
Andrew v. Clark, 561 F.3d 261, 266 (4th Cir. 2009). Under the plausibility standard, a complaint
must contain “more than labels and conclusions” or a “formulaic recitation of the elements of a
cause of action.” Twombly, 550 U.S. at 555. Well-pleaded factual allegations contained in the
complaint are assumed to be true “even if [they are] doubtful in fact,” but legal conclusions are
not entitled to judicial deference. See id. (noting that “courts are not bound to accept as true a
legal conclusion couched as a factual allegation”) (internal quotation marks omitted). Thus, even
though Rule 8(a)(2) “marks a notable and generous departure from the hyper-technical, codepleading regime of a prior era, . . . it does not unlock the doors of discovery for a plaintiff armed
with nothing more than conclusions.” Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. at 1937, 1950
(2009).
To survive a Rule 12(b)(6) motion, the legal framework of the complaint must be
supported by factual allegations that “raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. The Supreme Court has explained recently that “[t]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to
plead a claim. Iqbal, 129 S. Ct. at 1949. The plausibility standard requires that the pleader show
more than a sheer possibility of success, although it does not impose a “probability requirement.”
Twombly, 550 U.S. at 556. Instead, “[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
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for the misconduct alleged.” Iqbal, 129 S. Ct. at 1937. Thus, a court must “draw on its judicial
experience and common sense” to determine whether the pleader has stated a plausible claim for
relief. Id.
III. Analysis
A. Failure to State a Claim
Under the Racketeer Influenced and Corrupt Organizations Act, it is unlawful for “any
person employed by or associated with any enterprise” to conduct “such enterprise’s affairs
through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. 8 U.S.C. §
1962(c). Section 1961 of RICO spells out specific acts which are predicate violations. Section
1961(1)(F)7 defines a violation of 8 U.S.C. § 1324(a)(3)(A) as a RICO predicate act. Under §
1961(1)(B)8 violations of 18 U.S.C. §§ 1546(b)(1), (2) and (3)9 are likewise predicate offenses.
Under § 1962(d) it is unlawful to conspire to violate any provision of § 1962 (a), (b) or
(c) of RICO. To plead a violation of § 1962(d), a plaintiff must allege that “each defendant
agreed that another coconspirator would commit two or more acts of racketeering.” Proctor v.
Metro. Money Store Corp., et al., 645 F. Supp. 2d 464, 477 (D. Md. 2009) (quoting United States
v. Pryba, 900 F.2d 748, 760 (4th Cir. 1990)).
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“Any act which is indictable under the Immigration and Nationality Act, section 274 (relating to bringing in and
harboring certain aliens), section 274 (relating to aiding or assisting certain aliens to enter the United States), or
section 278 (relating to import of aliens for immoral purpose) if the act indictable under such section of Act was
committed for the purpose of financial gain.” 18 U.S.C. § 1961(1)(F).
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“(B) any act which is indictable under any of the following provisions of title 18, United States Code: section 1546
(relating to fraud and misuse of visa, permits and other documents).” 18 U.S.C § 1961(1)(B).
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“Whoever uses – (1) an identification document, knowing (or having reason to know) that the document was not
issued lawfully for the use of the possessor, (2) an identification document knowing (or having reason to know) that
the document is false, or (3) a false attestation, for the purpose of satisfying a requirement of section 274A(b) of the
Immigration and Nationality Act, shall be fined under this title, imprisoned for not more than 5 years or both.” 18
U.S.C. § 1546(b)(1)-(3).
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Plaintiffs bring a one count conspiracy claim under § 1964(c)10 for a violation of §
1962(d), alleging predicate violations under § 1324(a)(3)(A) and 18 U.S.C. §§ 1546(b)(1) - (3).
Amend Comp. ¶ 181. Plaintiffs assert that Federal Rule of Civil Procedure 8, not Federal Rule
of Civil Procedure 9(b) should govern the pleading of these claims.
Pls.’ Opp’n at 14.11
However, this Court need not reach a decision on the appropriate pleading standard; Plaintiffs
fail to state a claim under the lower threshold of Rule 8, and would necessarily fail under the
more rigorous Rule 9(b).12
Regardless of the pleading standard applied, Plaintiffs fail to state a claim. Plaintiffs
present no more than conclusory allegations to suggest that the Defendants formed a conspiracy
under 18 U.S.C. § 1962(d). Plaintiffs allege a scheme of illegal hiring in which supervisors
direct HR staff members to violate immigration laws. Amend Comp. ¶ 45. In a similar civil
RICO case alleging predicate violations of §1324(a) and §1546 brought in the Northern District
of Alabama, the Court explained the standard of pleading under § 1962(d), stating that plaintiffs
must “describe in detail the conspiracy, including the identity of the co-conspirators, the object
of the conspiracy and the date and substance of the conspiratorial agreement.” Cruz v. Cinram
Intl. Inc., 574 F. Supp. 2d 1227, 1236 (N.D. Ala. 2008). Here, Plaintiffs fail to provide any facts
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“Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue
therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the
cost of the suit, including a reasonable attorney’s fee, except that no person may rely upon any conduct that would
have been actionable as fraud in the purchase or sale or securities to establish a violation of section 1962.” 18
U.S.C. § 1964(c).
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The Defendants have alternatively argued that the complaint does not satisfy the pleading requirement of either
Rule 8 or Rule 9(b).
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Parenthetically, this Court will note, however, that it appears that Rule 9(b) does apply to the allegations of false
attestation which are part of the claims under §§ 1546(b)(1), (2) and (3). The pleading standard of Rule 9(b) applies
to “all averments of fraud.” Hershey v. MNC Fin., Inc., 774 F. Supp. 367, 376 (D. Md. 1991). This Court recently
found that when the alleged racketeering sounds in fraud, plaintiffs asserting RICO claims must meet the pleading
standard of Rule 9(b). Kun Lee v. PMG 1001, LLC, No. RDB-09-1514, 2010 WL 14823 at *3 (D. Md. January 11,
2010). Plaintiffs’ claims of “false attestation” under §1546 sound in fraud and therefore should meet the Rule 9(b)
pleading standard.
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indicative of such an agreement, including when or where the agreement took place, or the
specific substance of any communications between management and HR staff regarding hiring
policy. Plaintiffs do not state facts sufficient to present a “plausible” claim under Twombly.
Plaintiffs also fail to adequately plead agreement to the conspiracy on the part of each
defendant, as required by the United States Court of Appeals for the Fourth Circuit in United
States v. Pryba, 900 F.2d 748, 760 (4th Cir. 1990). In Pryba, the court found that to support a
conspiracy conviction under § 1962(d), each defendant must agree that he or another would
violate § 1962(c). Id. at 760. Plaintiffs repeat that at each facility Defendants use “some or all”
of the illicit hiring practices alleged, Am. Compl. ¶ 71, but Plaintiffs fail to detail the personal
agreement or involvement of each defendant. Moreover, as to eight of the Perdue facilities,
Plaintiffs offer no facts supporting their allegations of predicate violations and conspiracy. They
have pled on information and belief alone. Plaintiffs’ claims rest heavily on conjecture; they
have not advanced their allegations beyond a “speculative level” as Twombly requires. Twombly,
550 U.S. at 555.
Plaintiffs’ claims as to the predicate RICO violations are similarly insufficient. In Beck v.
Prupis, the Supreme Court held that “injury caused by an overt act that is not an act of
racketeering or otherwise wrongful under RICO is not sufficient to give rise to a cause of action
under § 1964(c) for a violation of § 1962(d).” 529 U.S. 494, 505 (2000). Thus Plaintiffs must
plead facts sufficient to support a plausible inference that the alleged conspiracy actually gave
rise to acts of racketeering which were the proximate cause of the Plaintiffs’ injury.
A violation § 1324(a)(3)(A) occurs when an individual knowingly hires at least 10
individuals who are aliens, with knowledge that these individuals were brought into the United
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States in violation of the subsection. Plaintiffs’ pleading of this predicate violation is simply a
recitation of the statute:
“They have personally hired hundreds of workers (and more than ten per year,
each) with actual knowledge that the workers were unauthorized for employment,
used fraudulent identity documents that did not pertain / relate to them, and had
been brought into the country with the assistance of others on their illicit journey
across the U.S.-Mexico border. . . .”
Am. Compl. ¶ 54. Plaintiffs do not identify a single worker specifically known to be an illegal
alien. Rather, Plaintiffs only allege in a conclusory fashion that Defendants at various facilities
“observe[] the largely illegal workforce and know[] that most of these people are not U.S.
citizens.” Am. Compl. ¶ 83. Additionally, Plaintiffs allegations as to the means by which the
illegal workers were brought into the country are unfounded.
Plaintiffs state only: “on
information and belief, Defendant Paez is also responsible for directly working with ‘coyotes’
and ‘runners’ to obtain employment at Perdue for the illegal immigrants when they arrive in the
local community.” Id. ¶ 108. This conclusion is not supported by any facts and is not entitled to
judicial deference.
Plaintiffs likewise fail to state a claim under the predicate violation of 18 U.S.C. §§
1546(b)(1)-(3). Plaintiffs explain that Defendants attest, under penalty of perjury, to the veracity
of workers’ identification documents when filling out I-9 forms. Id. ¶ 58. Plaintiffs’ complaint
states: “this is a false attestation because the HR staff members know the documents presented
are fake / fraudulent.” Id. ¶ 58. The HR staff’s alleged knowledge stems from being “directed
by their superiors to accept . . . false documents and make these false attestations,” and from the
alleged hiring practices themselves, which include “hiring workers who are known to have
previously been employed at Perdue under different identities” or “hiring workers whose
background information . . . is plainly invalid and / or inconsistent on its face.” Id. ¶ 46.
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Plaintiffs again fail to give any specific examples of known illegal employees, workers whose
papers were found to be facially fraudulent or workers hired for multiple shifts using dual
identities. Plaintiffs do not provide any underlying facts supporting the statement that these
practices are taking place.
Additionally, under § 1964(c) a Plaintiff must plead injury to “business or property by
reason of” the violation of the violation of § 1962(d). Plaintiffs allege that the “hourly wages for
the Class . . . are depressed below market levels (the going rate for unskilled labor in the area by
employers which do not employ illegal workers).” Am. Compl. ¶ 73. Plaintiffs state no
underlying data or figures to support assertion. The complaint states no facts addressing: (1) the
wages of any class members (2) the market wage of area employers who do not employ illegal
workers (3) how the Plaintiffs can purport to determine which area employers do and do not
“employ illegal workers” for purposes of calculating market wages. Plaintiffs, therefore, cannot
sustain a claim because they fail to “raise a right to relief above a speculative level.” Twombly,
550 U.S. at 555.
This Court’s decision to dismiss this case is bolstered by the recent failure of
substantially similar civil RICO claims relying on identical legal theories brought in district
courts throughout the country. See Nichols v. Mahoney, 608 F. Supp. 2d 526 (S.D.N.Y. 2009);
Trollinger v. Tyson Foods, 543 F. Supp. 2d 842 (E.D. Tenn. 2008); Hall v. Thomas, 753 F. Supp.
2d 1113 (N.D. Ala. 2010).13 In Nichols, for example, the Southern District of New York
dismissed a civil RICO claim alleging the same predicate violations of immigration statutes as in
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Two legally and factually analogous cases against poultry processors, Trollinger v. Tyson Foods, 543 F. Supp. 2d
842 (E.D. Tenn. 2008) and Hall v. Thomas, 753 F. Supp. 2d 1113 (N.D. Ala. 2010), were found to be without merit
and were decided for the defendants on summary judgment. While these cases did survive motions to dismiss, both
cases were filed pre-Iqbal and therefore are of limited value in analyzing the legal sufficiency of the pleading in the
instant case. Both Trollinger and Hall are nevertheless indicative of the lack of factual backing characterizing this
particular strain of civil RICO cases based on alleged use of illegal immigrant labor. In both cases, defendants were
subjected to a lengthy discovery process for identical allegations.
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the instant case. As in this case, the Nichols court found that the plaintiffs failed to provide
adequate factual information to sustain a claim, and noted that unlawful employment of aliens is
not a RICO predicate act — only the hiring of “illegal aliens who are known to have been
smuggled (‘brought’) into the United States” qualifies as a RICO predicate offense. Nichols, 608
F. Supp. 2d at 534.
Moreover, while Plaintiffs rely heavily in their analysis on the Williams v. Mohawk
Indus., Inc., 465 F.3d 1277 (11th Cir. 2006) line of cases,14 Mohawk is readily distinguishable
from the instant case. In Mohawk, the conspiracy outlined involved named third party recruiters
who conspired with Mohawk employees to bring undocumented aliens across the border for
employment purposes. Id. at 1281-2. In this case, by contrast, the conspiracy alleged involves
no third party efforts and the complaint contains almost no facts regarding the arrival of the
allegedly illegal workers in the United States. Moreover, Mohawk was decided pre-Iqbal,
limiting its precedential value. Nichols, 608 F. Supp. 2d at 538. Substantial reliance on Mohawk
does little to advance Plaintiffs’ claims.
B. The Intracorporate Conspiracy Doctrine
Even if Plaintiffs’ claims were sufficiently plausible, they are nevertheless barred by the
intracorporate conspiracy doctrine. The intracorporate conspiracy doctrine, developed in the
antitrust context, holds that because the acts of corporate agents are attributable to the
corporation itself, a corporation lacks the multiplicity of actors required to form a conspiracy.
Marmott v. Maryland Lumber Co., 807 F.2d 1184 (4th Cir. 1986). As this Court has previously
noted, a corporation cannot conspire with its employees — and employees, when acting within
the scope of their employment, cannot conspire amongst themselves. AGV Sports Group, Inc. v.
14
Williams v. Mohawk Indus., Inc., 314 F. Supp. 2d 1333 (N.D. Ga. 2004), aff’d in part, rev’d in part on other
grounds by 465 F.3d 1277 (11th Cir. 2006).
12
Protus IP Solutions, Inc., No. RDB 08-3388, 2009 WL 1921152, at *4-5 (D. Md. July 1, 2009).
The United States Court of Appeals for the Fourth Circuit has identified two exceptions to the
intracorporate conspiracy doctrine: (1) when a corporate officer has an “independent personal
stake” in achieving the illegal objectives of the corporation, Greenville Publ’g Co. v. Daily
Reflector, Inc., 496 F.2d 391, 399 (4th Cir. 1974); Shoregood Water Co. v. United States Bottling
Co., No. RDB 08-2470, 2009 WL 2461689 at *7 (D. Md. Aug. 10, 2009); and (2) when the
agent’s acts are unauthorized. Buschi v. Kirven, 775 F.2d 1240, 1252-3 (4th Cir. 1985).
In United States v. Gwinn, No. 5:06-cv-00267, 2008 WL 867927 (S.D. W. Va. Mar. 31
2008), the Southern District of West Virginia engaged in a thorough review of the Fourth
Circuit’s continued application of the intracorporate conspiracy doctrine in civil RICO cases in
light of the Supreme Court’s decision in Cedric Kushner Promotions Ltd. v. Don King et al., 533
U.S. 158 (2001).
In Cedric Kushner, the Supreme Court found that a corporation’s sole
proprietor could be a natural person, and also an “enterprise” for the purposes of establishing
liability under § 1962(c). Id. at 163. The Court made clear, however, that its holding created no
inconsistency with “antitrust law’s intracorporate conspiracy doctrine.” Id. at 166. The court in
Gwinn explained that while some courts have viewed Cedric Kushner as an indication that the
intracorporate conspiracy doctrine should not be extended to RICO claims brought under §
1962(d) the Fourth Circuit has consistently found that the intracorporate conspiracy doctrine can
be broadly applied to conspiracy cases, including civil RICO claims. Gwinn, 2008 WL 867927
at * 22-23 (citing Detrick v. Panalpina Inc., 108 F.3d 529, 544 (4th Cir. 1997)). While the
Fourth Circuit has yet to rule directly on this issue, Cedric Kushner should not change this
Circuit’s analysis of the applicability of the intracorporate conspiracy doctrine to non-antitrust
cases. See Culver v. JBC Legal Group, P.C., No. 5:04-cv-389, 2005 WL 5621875, at *6
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(W.D.N.C. June 28, 2005) (unpublished) (holding that the intracorporate conspiracy doctrine is
not limited to antitrust cases).
The Fourth Circuit has long held that “a single entity cannot conspire amongst itself.”
Gwinn, 2008 WL 867927, at * 23 (quoting Cohn v. Bond, 965 F.2d 154, 159 (4th Cir. 1991)).
This principle has consistently been applied outside of the antitrust context. See, e.g., Buschi,
775 F.2d at 1253 (holding the intracorporate conspiracy doctrine applicable to cases arising
under 42 U.S.C. § 1983). Addressing § 1962(d) specifically, district courts in the Fourth Circuit
pre-Cedric Kushner uniformly held that the intracorporate conspiracy doctrine can act to bar
civil RICO claims brought under this section. Sadighi v. Daghighfekr, 36 F. Supp. 2d, 279
(D.S.C. 1999); Huntingdon Life Sciences, Inc. v. Rokke, 986 F. Supp. 982, 991 (E.D. Va. 1997);
Broussard v. Meineke Discount Muffler Shops, Inc., 945 F. Supp. 901, 911-12 (W.D.N.C. 1996)
rev’d on other grounds, 155 F. 3d 331 (4th Cir. 1998).
Post-Cedric Kusher, the Fourth Circuit has continued to apply the intracorporate
conspiracy doctrine in non-antitrust conspiracy cases. See ePlus Tech., Inc. v. Aboud, 313 F.3d
166 (4th Cir. 2002) (noting the general applicability of the intracorporate conspiracy doctrine to
a non-antitrust conspiracy claim);15 Lewin v. Cooke, 28 F.App’x 186 (4th Cir. 2002)
(unpublished) (applying the intracorporate conspiracy doctrine to a state law conspiracy claim).
In ePlus, for example, the court affirmed its pre-Cedric Kushner stance that “it is generally true
that under the intracorporate immunity doctrine . . . corporate employees cannot conspire with
each other or with the corporation.” 313 F.3d at 179. Thus, claims brought under § 1962(d)
likewise continue to be governed by the intracorporate conspiracy doctrine.
15
In ePlus, the plaintiff brought a civil conspiracy claim under state law and RICO § 1962(d). The court noted the
general applicability of the intracorporate conspiracy doctrine, but found that the case fell under the independent
personal stake exception. As a result, the court did not specifically note whether it considered the intracorporate
conspiracy doctrine in relation to the state law claim, the RICO claim, or both. ePlus, 313 F.3d at 179.
14
Applying the doctrine to the instant case, it is clear that Plaintiffs’ claims are barred. The
Defendants are all current or former employees of Perdue acting within the scope of their
employment, Am. Compl. ¶ 45, and, as such, cannot conspire amongst themselves. Neither
recognized exception applies. Plaintiffs specifically state that the Defendants were directed by
management to pursue the particular hiring policy here alleged — there was no action outside the
scope of the agents’ authority. Id. Likewise, the independent personal stake exception has no
bearing here.
For that exception to apply, a conspirator must possess a personal interest
independent and “wholly separable” from the interests of the corporation. Selman v. Am. Sports
Underwriters, Inc., 697 F. Supp. 225, 239 (W.D. Va. 1988). See Greenville Publ’g Co., 496
F.2d at 399; Gwinn, 2008 WL 867927, at *25 (“Where a corporation’s success is directly
dependent on the agent’s success in furthering the illegal activity, the two are directly related and
are not ‘wholly independent’ of one another.”). Plaintiffs here allege no interest on the part of
the Defendants independent of their relationship with the Perdue corporation; Defendants’
alleged interests and the profitability of the company are, instead, completely intertwined.16
Therefore, Plaintiffs cannot sustain a claim under § 1962(d).
IV. Dismissal with Prejudice
In Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618, 630 (4th Cir. 2008), the Fourth
Circuit held that dismissal with prejudice was warranted where “amendment would be futile in
light of the [complaint’s] fundamental deficiencies.” See also Ganey v. PEC Solutions, Inc., 418
16
At the hearing held by this Court on June 9, 2011, Plaintiffs explained that the alleged scheme aimed to increase
Perdue’s overall profitability. Plaintiffs alleged that greater profits would, in turn, benefit the Defendants in the
form of higher wages and bonuses for “keeping labor costs low.” Plaintiffs provided no facts supporting the
conclusion that Defendants would, in fact, receive greater compensation from their alleged activities. Cf. ePlus, 313
F.3d at 179-80 (holding that the independent personal stake exception applied when a conspirator’s aim was to profit
by sending her employer into bankruptcy). Defendants, therefore, have no independent personal stake in the alleged
scheme.
15
F.3d 379, 391 (4th Cir. 2005) (affirming a denial to leave to amend where any amendment would
be futile).
Here, dismissal with prejudice is appropriate.
Plaintiffs have no presently pending
motion for leave to amend and a previous amendment did not cure fundamental deficiencies in
the complaint. Plaintiffs continue to rely on conclusory allegations and boilerplate recitations of
the elements of their cause of action. Moreover, even if Plaintiffs were able to meet the pleading
standard of Twombly and Iqbal, the intracorporate conspiracy doctrine bars the expansive civil
RICO claim proffered by the Plaintiffs. Thus, amendment of this complaint would be futile.
Plaintiffs cannot plead conspiracy of these parties as allegedly configured within the corporate
entity, Perdue Farms, Inc.
CONCLUSION
For the reasons stated above, Defendants’ Motion to Dismiss is GRANTED and this case
is DISMISSED WITH PREJUDICE. A separate Order follows.
Dated:
July 6, 2011
/s/____________________________
Richard D. Bennett
United States District Judge
16
17
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