SNYDER v. DIETZ AND WATSON, INC. et al

Filing 53

OPINION FILED. Signed by Judge Noel L. Hillman on 1/30/13. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
:
:
:
Plaintiff,
:
:
v.
:
:
DIETZ & WATSON, INC., et al., :
:
Defendants.
:
RICHARD SNYDER,

Civ. A. No. 11-0003 (NLH)(AMD)

OPINION

APPEARANCES:
Justin L. Swidler, Esq.
Joshua S. Boyette, Esq.
Swartz Swidler, LLC
1878 Marlton Pike East
Suite 10
Cherry Hill, NJ 08003
Counsel for plaintiff
Alan C. Milstein, Esq.
Jeffrey P. Resnick, Esq.
Sherman, Silverstein, Kohl, Rose & Podolsky, PC
East Gate Corporate Center
308 Harper Drive
Suite 200
Moorestown, NJ 08057
Claude Schoenberg, Esq.
Schoenberg Law Offices
2 Bala Plaza, Suite 300
Bala Cynwyd, PA 19004
Counsel for defendants
HILLMAN, District Judge
In this putative class action, plaintiff, Richard Snyder, a
former delivery driver for defendant Dietz & Watson, claims that
Dietz & Watson, and its president and vice president, also

defendants, violated the Racketeer Influenced Corrupt
Organizations Act (“RICO”) and the New Jersey Wage Payment Law
(“NJWPL”) by misrepresenting that deductions from drivers’
paychecks to account for shortages were lawful and placed in an
escrow account, when instead such withholdings were unlawful and
used by defendants for their own benefit.1

Presently before the

Court is defendants’ motion for judgment on the pleadings with
respect to plaintiff’s RICO claims.2

Also pending before the

Court is plaintiff’s motion to certify a class for his RICO and
NJWPL claims.

For the reasons that follow, defendants’ motion

for judgment on the pleadings will be denied, and plaintiff’s
motion for class certification will be denied without prejudice.
I.

JURISDICTION
Plaintiff sets forth claims derived from both federal and

New Jersey law.

The Court has subject matter jurisdiction over

plaintiff’s federal claims pursuant to 28 U.S.C. § 1331, and
supplemental jurisdiction over plaintiff’s related state law

1

In claims separate from the putative class action, plaintiff
also asserts that defendants retaliated against him by
terminating his employment when he complained of the alleged wage
violations, and by not paying him proper pay for the last two
weeks he worked, along with reimbursement for sick and vacation
time. The motions presently before the Court do not concern
plaintiff’s individual claims.
2

Defendants previously moved to dismiss plaintiff’s complaint,
which the Court granted in part and denied in part. With regard
to plaintiff’s RICO claims, the Court dismissed those claims, but
granted plaintiff leave to file an amended complaint. Plaintiff
did so, and he also filed a RICO case information statement.
2

claims pursuant to 28 U.S.C. § 1367.
II.

BACKGROUND
Plaintiff contends that in the spring of 2000, when he was

first given a permanent driving route, a Dietz & Watson employee,
Louisa Bergey, told him that a certain amount of money would be
deducted from his paycheck and placed in an escrow account in
order to cover any shortages in the money collected from
customers.

Plaintiff claims he was advised that once any

shortages were paid to defendants, the remaining funds would be
returned to him.

In February 2005, this policy was included in

the collective bargaining agreement defendants entered into with
the drivers’ union, the Food Driver Salesmen, Dairy & Ice Cream
Workers, Local No. 463 Union.
Plaintiff claims that in 2007, he was advised via telephone
by Ms. Bergey that she would begin to prospectively deduct $75
per pay period because he did not have sufficient funds in his
escrow account.

Plaintiff claims that he objected, but was told

that it was mandatory.

This $75 deduction was marked on each of

his paychecks as going to “Drivers Escro.”
Plaintiff claims that not only were defendants’ deductions
unlawful, defendants (1) knew they were unlawful, (2) knowingly
misrepresented the propriety of taking the deductions, (3) never
put the money in escrow and instead used the money for
themselves, and (4) perpetrated this scheme on many other

3

drivers.

These actions, plaintiff claims, violate RICO and

NJWPL, and such claims should be vindicated through a class
action.
Defendants have moved for judgment on the pleadings on
plaintiff’s RICO claims, arguing that they are preempted by the
National Labor Relations Act (“NLRA”) and cannot be maintained
because of plaintiff’s separate count for a NJWPL violation.
Defendants have also opposed plaintiff’s request to certify a
class on his RICO and NJWPL claims.
III. DISCUSSION
A.

Defendants’ motion for judgment on the pleadings
1.

Standard

A Rule 12(c) motion for judgment on the pleadings may be
filed after the pleadings are closed.

Fed. R. Civ. P. 12(c);

Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991).

In

analyzing a Rule 12(c) motion, a court applies the same legal
standards as applicable to a motion filed pursuant to Rule
12(b)(6).

Turbe, 938 F.2d at 428.

Thus, a court must accept all

well-pleaded allegations in the complaint as true and view them
in the light most favorable to the plaintiff.

Evancho v. Fisher,

423 F.3d 347, 351 (3d Cir. 2005).
2.

Analysis

Defendants have moved for judgment in their favor on
plaintiff’s RICO claims.
4

The RICO statute provides,
It shall be unlawful for any person employed by or
associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise's affairs
through a pattern of racketeering activity or
collection of unlawful debt.
18 U.S.C. § 1962(c).
to violate § 1962(c).

It is also unlawful for anyone to conspire
See 18 U.S.C. § 1962(d).

In order to adequately plead a violation of RICO, a
plaintiff must allege: (1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity, and a pattern of
racketeering activity requires at least two predicate acts of
racketeering.

Lum v. Bank of America, 361 F.3d 217, 223 (3d Cir.

2004) (citing Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479,
496 (1985); 18 U.S.C. § 1961(5)).

These predicate acts of

racketeering may include, inter alia, federal mail fraud under 18
U.S.C. § 1341 or federal wire fraud under 18 U.S.C. § 1343.
18 U.S.C. § 1961(1).

See

The federal mail and wire fraud statutes

prohibit the use of the mail or interstate wires for purposes of
carrying out any scheme or artifice to defraud.
1341, 1343.

See 18 U.S.C. §§

“‘A scheme or artifice to defraud need not be

fraudulent on its face, but must involve some sort of fraudulent
misrepresentation or omission reasonably calculated to deceive
persons of ordinary prudence and comprehension.’”
at 223 (citation omitted).

5

Lum, 361 F.3d

Defendants argue that plaintiff’s RICO claims are
unsupportable because the CBA contains a provision allowing for
the deductions, and claims for unfair labor practices under a CBA
are exclusively the domain of the NLRA, are for the National
Labor Relations Board (“NLRB”) to decide, and cannot serve as the
predicate acts for a RICO claim.

Defendants also argue that

because plaintiff claims that the deductions violate the NJWPL,
and the NJWPL has its own administrative scheme to remedy wage
violations, plaintiff cannot maintain a RICO claim.

Defendants

further argue that the NJWPL violation allegations cannot serve
as a predicate act for RICO because a NJWPL violation constitutes
a disorderly persons offense, which is not considered a crime.
Defendants’ positions could have merit if plaintiff’s RICO
claims were pleaded as defendants interpret them.

With regard to

defendants’ NLRA argument, it is true that the “Supreme Court has
consistently emphasized the primacy of the NLRB in resolving
unfair labor practice disputes.”
929 (3d Cir. 1982).

U.S. v. Boffa, 688 F.2d 919,

Thus, if it must be determined whether the

object of a scheme constitutes an unfair labor practice, such a
determination would have to be made through the “exclusive
authority of the NLRB to decide whether conduct of employers or
employees constitutes an unfair labor practice.”
at 929.

Boffa, 688 F.2d

Consequently, an alleged violation of a right afforded

by the NLRA, such as the duty to bargain collectively, cannot

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constitute a crime under the mail fraud statute.

Id. at 930.

Conversely, an allegation that an employer deprived an
employee of an economic benefit, such as wages and seniority, can
constitute a crime under the mail fraud statute.

Id.

This is

because a contract between employer and employee, and not the
NLRA, is the source of those benefits, and “[a]lthough they may
have been obtained as a result of employees’ exercise of rights
guaranteed by . . . the NLRA, these benefits are contractual, not
statutory, in nature.”

Id.

In this case, plaintiff does not allege that defendants
bargained unfairly in creating the CBA with the deductions
provision, or even that defendants’ conduct constitutes unfair
labor practices in violation of the NLRA.

If he did, such claims

would most likely fail to serve as predicate acts under RICO.
Instead, in his RICO claims, plaintiff alleges that defendants
committed fraud through the mail and wires, in violation of 18
U.S.C. §§ 1341 and 1343, when they (1) mailed and wired every
paycheck to him that contained the deductions, and (2) telephoned
him to tell him about the deductions, which defendants
misrepresented they were entitled to take, and which defendants
used for themselves rather than depositing in an escrow account.
Like Boffa explains, plaintiff’s right to his earnings is an
economic benefit conferred to him by virtue of his employment
with defendants, and the scheme to defraud him of that benefit

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through the mail and wire can constitute predicate acts to
support a RICO claim.

Simply because plaintiff could possibly

bring claims under the NLRA regarding defendants’ actions3 does
not mean that he is precluded from bringing claims under another
statute for those same actions.4

See Boffa, 688 F.2d at 931

(“[W]e decline to accept the proposition that the NLRA precludes
the enforcement of a federal statute that independently
proscribes that conduct as well.”).
Similarly, with regard to defendants’ arguments that
plaintiff’s NJWPL claims preclude his RICO claims, the fact that
defendants’ alleged conduct could constitute violations of NJWPL
does not preclude plaintiff’s RICO claims.

Putting aside issues

implicating the Supremacy Clause, which instructs that a state
law cannot be interpreted to override conflicting federal law,
see Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992)

3

Purportedly the CBA contains a provision allowing defendants to
withhold some of its drivers’ pay for shortages. Thus, read
literally, defendants’ conduct does not violate the CBA since the
CBA permits such conduct. Because the alleged conduct does not
violate the CBA, and plaintiff is not challenging the fairness of
the CBA, it could be said that the NLRA is not implicated in this
matter and is raised by defendant simply as a red herring. Of
course, any unfair practices in the creation of the CBA would be
a separate issue.
4

Plaintiff alleges that the paycheck deductions policy was in
effect since the spring of 2000, and the CBA containing this
provision was not created until February 2005. Setting aside
statute of limitation issues, five years of the alleged mail and
wire fraud precede the CBA and therefore the possible preemptive
application of the NLRA.
8

(citing U.S. Const. art. VI, cl. 2), plaintiff does not allege
that defendants’ purported violations of NJWPL serve as the
predicate act for his RICO claims.

As such, plaintiff’s

maintenance of a RICO claim based on allegations of mail and wire
fraud is not inconsistent with a separate claim for NJWPL
violations.

Plaintiff’s remedies and available damages under

RICO and NJWPL are different, compare 18 U.S.C. § 1964(c) with
N.J.S.A. 34:11-56a25, but that does not preclude either claim.
Consequently, plaintiff’s RICO claims may proceed past the
pleading stage.
B.

Plaintiff’s motion to certify a class action

Rule 23 of the Federal Rules of Civil Procedure allows a
class action if certain requirements are met.
must meet the “prerequisites” of Rule 23(a):
commonality, typicality, and adequacy.

First, the class
numerosity,

Second, the class must

fit one of the Rule 23(b) types of classes.

Where, as here, a

plaintiff seeks certification under Rule 23(b)(3), it requires
(1) “that the questions of law or fact common to class members
predominate over any questions affecting only individual
members,” and (2) “that a class action is superior to other
available methods for fairly and efficiently adjudicating the
controversy.”

Fed. R. Civ. P. 23(b)(3).

These requirements are

known as predominance and superiority, and plaintiff bears the
burden of establishing each element of Rule 23 by a preponderance

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of the evidence.

Behrend v. Comcast Corp., 655 F.3d 182, 190 (3d

Cir. 2011).
According to plaintiff’s complaint, he seeks to certify a
class on his RICO and NJWPL claims on behalf of himself and those
similarly situated, who “consist of all current and former
drivers of Defendants who were residents of New Jersey and were
subjected to Defendant’s Wage Deduction and Escrow Account
Policies.”5

(Amend. Compl. ¶ 90, Docket No. 18 at 13.)

Plaintiff

argues that even though discovery is still ongoing, he has enough
evidence at this time to support all the elements of Rule 23(a)
and (b)(3).

Defendants have opposed plaintiff’s motion, arguing

that plaintiff cannot meet those elements.
The Court finds that resolving the issue of class
certification is premature at this time.

At first blush,

plaintiff’s proposed class of at least 49 drivers who were all
subject to, and affected by, the same improper wage deduction
policy over the course of four years appears to be a perfect
candidate for certification as a class action.

As defendants

point out, however, a closer look at the proposed class shows
some flaws.

For example, even though plaintiff suggests that the

class would consist of at least 49 drivers, it is unclear whether
all of those drivers were subject to the deduction policy or had

5

Plaintiff further clarifies that the time period for his class
concerns all employees employed by defendants for the four years
prior to the filing of plaintiff’s complaint.
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deductions taken out of their paychecks.

Additionally, it is

unclear how many of the proposed class members are residents of
New Jersey.6
With the threshold issue of numerosity still unclear, the
Court will refrain from considering the other elements.

As

discovery continues and the record expands, plaintiff may then be
in a better position to meet his burden of demonstrating the
propriety of having his case proceed as a class action.
IV.

CONCLUSION
For the reasons expressed above, defendants’ motion for

judgment on the pleadings on plaintiff’s RICO claims is denied,
and plaintiff’s motion for class certification is denied without
prejudice to plaintiff’s right to refile his motion at a later
time.

An appropriate Order will be entered.

Date: January 30, 2013
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

6

Defendants argue that because some drivers live in New Jersey
but have Pennsylvania or Delaware driving routes, those drivers
would not be part of plaintiff’s proposed class of drivers who
live in New Jersey. The Court does not opine on that issue now,
other than to note that the NJWPL may still apply to those
drivers, and, regardless of that issue, plaintiff’s RICO claims
are not dependent on state law.
11