Francis v. Apex USA, Inc., Case No. CIV-18-583-SLP
| Decision Date | 05 February 2019 |
| Docket Number | Case No. CIV-18-583-SLP |
| Citation | 406 F.Supp.3d 1206 |
| Parties | Dorret FRANCIS; Anthony Kennedy; and Christine Pearce, on behalf of themselves and all others similarly situated, Plaintiffs, v. APEX USA, INC.; Hotelmacher, LLC, dba Holiday Inn Express; Sontag, Inc., dba Hampton Inn Clinton; Steakmacher, LLC dba Montana Mike's Steakhouse; Schumacher Investments, LLC dba Water Zoo Indoor Water Park ; Walter Schumacher; and Carolyn Schumacher, Defendants. |
| Court | U.S. District Court — Western District of Oklahoma |
Brady R. Henderson, Megan E. Lambert, American Civil Liberties Union of Oklahoma, Oklahoma City, OK, Caitlin Boehne, Christopher J. Willett, Rebecca C. Eisenbrey, Equal Justice Center, Austin, TX, Carole Vigne, Legal Aid at Work, San Francisco, CA, Catherine Fisher, Eben Colby, Isaac N. Saidel-Goley, Skadden Arps Slate Meagher & Flom LLP, Boston, MA, for Plaintiffs.
A. Wayne Billings, C. Eric Shephard, Kevin R. Donelson, Fellers Snider Blankenship Bailey & Tippens, for Defendants.
Before the Court are the Motions to Dismiss and/or Strike Plaintiffs' Class Action Complaint [Doc. Nos. 21-22 and 24-28] filed by each of the Defendants.1 Plaintiffs have filed a collective Memorandum in Opposition [Doc. No. 31] and Defendants have filed a collective Reply [Doc. No. 32].2 The matter is fully briefed and ready for decision. For the reasons set forth below, Defendants' Motions are denied.3
Plaintiffs and putative class members (collectively, Plaintiffs) are J-1 visa students who worked for one or more of the Defendants in the State of Oklahoma. Defendants are individuals and entities engaged in the hospitality industry and own or operate businesses including two hotels, a restaurant and a water park in Clinton, Oklahoma. Plaintiffs allege, inter alia, that Defendants recruited Plaintiffs through a J-1 sponsor agency. Plaintiffs further allege Defendants subjected them to forced labor during the course of their employment in violation of the Trafficking Victims Protection Act of 2000 (TVPA) as amended by the Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA).4
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead sufficient factual allegations "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that they defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
To evaluate the sufficiency of the allegations of the complaint under the " Twombly / Iqbal pleading standard" the court undertakes a "two-prong approach." Alpenglow Botanicals, LLC v. United States , 894 F.3d 1187, 1195 (10th Cir. 2018) (citation omitted). Under the first prong, the court determines which allegations are not entitled to the assumption of truth and includes "legal conclusions" and "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Id. (citation omitted). The second prong requires the court to assume the truth of the well-pleaded factual allegations and determine whether they state a plausible claim for relief. Id. (citation omitted).
"Generally, the sufficiency of a complaint must rest on its contents alone." Gee v. Pacheco , 627 F.3d 1178, 1186 (10th Cir. 2010). Thus, "[w]hen a party presents matters outside of the pleadings for consideration ... ‘the court must either exclude the material or treat the motion as one for summary judgment.’ " Brokers' Choice of Am., Inc. v. NBC Universal, Inc. , 861 F.3d 1081, 1103 (10th Cir. 2017) (quoting Alexander v. Oklahoma , 382 F.3d 1206, 1214 (10th Cir. 2004) ). Certain exceptions exist, and the court may consider: (1) documents attached to the complaint as exhibits; (2) documents referenced in the complaint that are central to the plaintiff's claims if the parties do not dispute the documents' authenticity; and (3) matters of which the court may take judicial notice. Gee , 627 F.3d at 1186.
During the time period May 29, 2008 through December 31, 2013, Defendants recruited Plaintiffs from Jamaica for work in the United States pursuant to the J-1 visa program. Plaintiffs were recruited to work for one or more of the Defendant entities located in Clinton, Oklahoma – Sontag, Inc. dba Hampton Inn Clinton; Hotelmacher LLC dba Holiday Inn Express; Steakmacher, LLC, dba Montana Mike's Steakhouse; and Schumacher Investments, LLC, dba Water Zoo Indoor Water Park. Defendants Walter Schumacher and Carolyn Schumacher, husband and wife, own and/or operate the Defendant entities. Defendant Apex USA, Inc. (APEX) is a not-for-profit corporation organized under the laws of Oklahoma and headquartered in Clinton, Oklahoma. APEX was designated as a J-1 sponsor by the United States Department of State.
Defendants used non-party individuals to act as recruiters (the Recruiters) to recruit Plaintiffs for employment. On behalf of the Defendant entities, Defendants Walter and Carolyn Schumacher directed the recruitment efforts. The Recruiters would supply information regarding terms of employment with one or more of the Defendant entities through an offer of employment letter (Offer Letter). The basic pay rates in the Offer Letter equaled or exceeded the federal minimum wage. Plaintiffs were promised, inter alia, certain earning potential and wages and affordable housing within walking distance of the place of employment.
Throughout the recruitment process, the Recruiters demanded and collected various fees from Plaintiffs s including airfare and travel expenses, consular fees and U.S. embassy interview fees. The extent of the fees was intentionally hidden from Plaintiffs and staggered so that Plaintiffs felt compelled to continue paying the required fees in fear of losing the previously paid fees.
To pay these fees, Plaintiffs used their savings and borrowed money from family members, friends and banks. Defendants did not pay Plaintiffs the wages as represented and, in some circumstances, Plaintiffs earned so little that they could not afford return airfare or repay the debt incurred. Defendants also failed to provide suitable and affordable housing as represented. For example, Plaintiffs were housed in three-bedroom houses owned by Defendant Schumacher along with up to 15 other class members.
Plaintiffs felt they had no choice but to continue to work for Defendants. Plaintiffs could not repay their debts, could not afford the return travel home and did not believe they could obtain additional employment in Clinton. Defendant Walter Schumacher told Plaintiffs they would not get hired anywhere else in Clinton. And Defendants retaliated against at least one Plaintiff when she attempted to obtain additional employment by changing her work schedule such that maintaining a second job for a non-Defendant employer was impossible. Another Plaintiff was told that she was being denied a position at a local K-Mart because she worked for Defendants.
During their employment, Defendant Schumacher subjected Plaintiffs to threats of implied physical harm. For example, Defendant Schumacher told Plaintiffs that he carried a firearm in his car. Defendant Schumacher also made it known to Plaintiffs that he was a current and/or former police sheriff suggesting his close ties to law enforcement. He also threatened Plaintiffs with deportation when they complained about wages and working conditions. Under the totality of these circumstances, Plaintiffs felt compelled to continue working for Defendants.
Plaintiffs' sole claim for relief arises under the TVPRA which "establishes a civil cause of action for victims of prohibited trafficking activity." See Menocal v. GEO Group, Inc. , 882 F.3d 905, 916 (10th Cir. 2018) ; 28 U.S.C. § 1595(a). Plaintiffs bring claims pursuant to the TVPRA's forced labor provision, 28 U.S.C. § 1589(a). A defendant is liable under 18 U.S.C. § 1589(a) if he or she "knowingly provides or obtains the labor or service of a person" through the following:
18 U.S.C. § 1589(a).
The TVPRA defines "serious harm" to include "any harm, whether physical or nonphysical, including psychological, financial, or reputational harm, that is sufficiently serious, under all the surrounding circumstances, to compel a reasonable person of the same background and in the same circumstances to perform or to continue performing labor or services in order to avoid incurring that harm." 18 U.S.C. § 1589(c)(2). The statute is " ‘intended to reach cases in which persons are held in a condition of servitude through nonviolent coercion.’ " Camayo v. John Peroulis & Sons Sheep, Inc. , Nos. 10-cv-00772-MSK-MJW and 11-cv-01132-MSK-MJW, 2012 WL 4359086 at *4 n. 4 (D. Colo. Sept. 24, 2012) (unpublished op.) (quoting Kiwanuka v. Bakilana , 844 F. Supp.2d 107, 115 (D. D.C. 2012) ). "The ‘threat of financial harm constitutes serious harm within the meaning of the TVPA.’ " Paguirigan v. Prompt Nursing Emp't Agency LLC , No. 17-cv-1302(NG)(JO), 2018 WL 4347799 at *8 (E.D. N.Y. Sept. 12, 2018) (unpublished op.) (internal quotation marks and citations omitted).
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