Cruz v. U.S., C-01-00892 CRB.

Citation219 F.Supp.2d 1027
Decision Date23 August 2002
Docket NumberNo. C-01-00892 CRB.,C-01-00892 CRB.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
PartiesSenorino R. CRUZ, et al., Plaintiffs, v. U.S.A., et al., Defendants.

Valeriano Saucedo, Miner, Barnhill & Galland, Visalia, CA, Paul A. Strauss, Miner, Barnhill & Galland, Chicago, IL, Morris J. Baller, Laura L. Ho, Debra A. Smith, Saperstein, Goldstein, Demchak & Baller, Oakland, CA, Matthew J. Piers, Jonathan A. Rothstein, Frederick S. Rhine, Gessler, Hughes & Socol, Ltd., Chicago, IL, for Plaintiffs.

Jean Lin, U.S. Dept. of Justice, Civil Division — Federal Programs Branch, Washington, DC, for U.S.

Raymond C. Marshall, Bingham McCutchen, LLP, San Francisco, CA, for Wells Fargo Bank.

Jonathan I. Blackman, Cristina M. Posa, Clearly, Gottlieb, Steen & Hamilton, New York City, for Banco De Mexico, S.A., Banco De Credito Rural, S.A., Estados Unidos Mexicanos, Banco National De

Credito Rural, SNC, and Patronato Del Ahorro Nacional.

MEMORANDUM AND ORDER

BREYER, District Judge.

These cases were brought by individuals from Mexico, known as braceros, who worked in the United States during World War II and some period of time thereafter. While working in the United States, the braceros had a portion of their wages withheld. The withheld wages were deposited in a United States bank and then transferred to a Mexican bank. The withholdings were to be refunded when the braceros returned to Mexico. Plaintiffs allege that this money was never returned. They seek redress from the United States, Mexico, and Wells Fargo Bank. All defendants have moved this Court to dismiss the filed actions.

BACKGROUND

With the outbreak of World War II, many American workers left their domestic jobs and joined the war effort. To address the resultant labor shortage, the United States looked to Mexico. On August 4, 1942 the United States and Mexico entered into the first in a series of agreements under which Mexican workers would come to work in United States. This first agreement covered agricultural workers.

The 1942 agreement between Mexico and the United States provided that the United States would enter a separate contract with each individual bracero. The United States then subcontracted the worker to the actual farmer or farmer association. Both the 1942 agreement between Mexico and the United States and the standard contract governing the relationship between each worker and the United States provided that ten percent of each worker's wages be retained and deposited into a Savings Fund. Upon proper application, the Savings Fund deductions were to be returned to the bracero when he returned to Mexico.

On April 26, 1943, the agreement between Mexico and the United States was amended. Under the amended agreement, the United States deposited the ten percent withholding into the Wells Fargo Bank account of the Bank of Mexico. The Bank of Mexico was then to forward the funds to the Mexican Agricultural Credit Bank, which was to return the funds to the agricultural braceros upon their return to Mexico.

By agreement between the United States and Mexico, all Savings Fund deductions were terminated on January 1, 1946. However, some braceros continued to work in the United States under the original agreements, as amended to exclude the Savings Fund and otherwise, through December 31, 1947.

With the problem of illegal immigration continuing unabated, in 1948 the United States and Mexico entered into another agreement. Notably, under this new agreement, each bracero entered into a contract directly with his employer in the United States. The United States was no longer a signatory to the individual work contract. Under this agreement, which was in effect from February 1948 through October 1948, the employer again withheld ten percent of each workers wages. However, the withheld wages were to be returned directly to the bracero in the form of a check upon termination of the work contract. The check was redeemable only when endorsed by the Immigration and Naturalization Service as the worker exited the United States on return to Mexico.

A new international agreement was again negotiated in 1949. Under its terms, the Mexican worker again contracted directly with his United States employer. Under this program, however, no savings deductions of any kind were authorized. The last agreement between the United States and Mexico expired December 31, 1964.

The United States and Mexico also entered into a similar agreement to supply labor to the railroad industry in 1943. The agreement was identical in all material respects except that the Bank of Mexico was to forward the withheld wages to the Mexican National Savings Bank for return to the braceros. As with the agricultural program, all Savings Fund deductions were terminated as of January 1, 1946. The railroad braceros program terminated in early 1946 and was never revived.

PROCEDURAL BACKGROUND

Senorino Ramirez Cruz, et al. v. United States, et al., (No. 01-0892) was filed on March 2, 2001. The Cruz plaintiffs filed a Second Amended Complaint ("SAC") on July 12, 2001. The named defendants are Mexico, Banco de Mexico, Banco Nacional de Credito Rural, S.N.C., as successor in interest to the Banco de Credito Agricola, S.A. (collectively "Mexican Defendants"), the United States, and Wells Fargo Bank ("Wells Fargo").

On March 20, 2002, De La Torre, et al. v. United States of America, et al., (No. 02-1942), Chavez, et al. v. United States of America, et al., (No. 02-1943), and Barba, et al. v. United States of America, et al., (No. 02-1944) were transferred to the Northern District of California from the U.S. District Court for the District of Columbia. On April 19, 2002, pursuant to Fed.R.Civ.P. 42(a), this Court consolidated the three transferred cases for purposes of discovery and motion practice.

While the consolidated complaints are nearly identical to the Cruz complaint, there are a few important differences. The consolidated complaints allege a class period continuing through 1964, whereas the Cruz class period terminates in 1949. They also name several federal government officials as additional defendants. Unlike Cruz, the consolidated complaints allege a cause of action under the Administrative Procedures Act ("APA"), 5 U.S.C. § 702, et seq., against the United States and a violation of the Anti-Peonage Act, 42 U.S.C. § 1994, by the Mexican Defendants and Wells Fargo. Finally, unlike the Cruz complaint, the consolidated complaints do not allege a cause of action under California's unfair competition law.

Now before the Court are motions to dismiss filed by all defendants. The Court will discuss each motion in turn.

DISCUSSION
I. Mexican Defendants

The Mexican Defendants contend that they are immune from suit in the United States courts. The United States law of sovereign immunity has changed significantly since the events giving rise to this action occurred. Therefore, the first question presented by the Mexican Defendants' motion is which law of sovereign immunity should control.

As a result of judicial deference to the political branches, primarily the executive, foreign sovereigns enjoyed nearly complete immunity from suit in the United States prior to 1952.1 See Verlinden B.V v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). In 1952, the State Department replaced absolute sovereign immunity with a policy of restricted sovereign immunity as set forth in the Tate Letter. Id. Twenty-four years later, this restrictive theory of sovereign immunity was codified as the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1330, 1602-1611 ("FSIA").

The operative events in these cases occurred before 1952. As a result, the Mexican Defendants claim that they are entitled to the absolute sovereign immunity enjoyed by foreign states prior to the Tate Letter and that these cases must be dismissed for lack of subject matter jurisdiction. Plaintiffs respond that the FSIA applies retroactively to events occurring prior to 1952 and that this Court has subject matter jurisdiction under the terms of the FSIA.2 The question, then, is whether the FSIA applies.

The starting point for retroactivity analysis is Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). In that case, the Supreme Court held that provisions of the Civil Rights Act of 1991 providing for compensatory and punitive damages, and the right to a jury trial, did not apply to a Title VII case pending on appeal. Id.

In Landgraf, the Court made clear that "the presumption against retroactive legislation is deeply rooted in our jurisprudence." Id. at 265, 114 S.Ct. 1483. With regard to civil laws, this presumption against retroactivity can be overcome only by an express statutory command that the law should be given retroactive effect. Id. at 280, 114 S.Ct. 1483. The Court also made clear, however, that a "statute does not operate `retrospectively' merely because it is applied in a case arising from conduct antedating the statute's enactment." Id. at 269, 114 S.Ct. 1483. Instead, a statute only operates retroactively where it "attaches new legal consequences to events completed before its enactment." Id. at 270, 114 S.Ct. 1483.

As stated by the Court:

When a case implicates a federal statute enacted after the events in suit, the court's first task is to determine whether Congress has expressly prescribed the statute's proper reach. If Congress has done so, of course, there is no need to resort to judicial default rules. When, however, the statute contains no such express command, the court must determine whether the new statute would have retroactive effect, i.e., whether it would impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed. If the statute would operate retroactively, our traditional...

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