System Management, Inc. v. Loiselle, No. Civ.A. 99-10744-WGY.

Citation91 F.Supp.2d 401
Decision Date09 March 2000
Docket NumberNo. Civ.A. 99-10744-WGY.
PartiesSYSTEM MANAGEMENT, INC., Forget Me Not Services, Inc., Jose Cruz, Victor Laboy, Juan Ayala and Juan Ortega, on their own behalf and that of similarly situated contract cleaning companies, employees, and former employees, Plaintiff, v. Kenneth LOISELLE, Defendant.
CourtU.S. District Court — District of Massachusetts

Gabriel O. Dumont, Jr., Law Offices of Gabriel Dumont, Boston, MA, for Plaintiffs.

Patricia A. Sullivan, Edwards & Angell, LLP, Providence, RI, for Defendants.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

INTRODUCTION

The plaintiffs in this action, System Management, Inc. ("System Management"), Forget Me Not Services, Inc. ("Forget Me Not"), Jose R. Cruz, Victor Laboy, Juan Ayala, and Juan Ortega (collectively, the "Plaintiffs"), bring a putative class action against Kenneth Loiselle ("Loiselle") pursuant to the civil remedies provision of Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(a) and 1962(c). The Plaintiffs consist of two corporations engaged in the business of providing janitorial and custodial services throughout Massachusetts (System Management and Forget Me Not) (the "Corporate Plaintiffs"), and four individuals who have been employed as janitors or custodians at various locations within Massachusetts (Cruz, Laboy, Ayala and Ortega) (the "Individual Plaintiffs"). The defendant Loiselle is the sole owner and chief executive officer of Aid Maintenance, a Rhode Island corporation engaged in providing janitorial and custodial services within Massachusetts, Rhode Island, Connecticut, and New Hampshire. Aid Maintenance, originally named as a co-defendant, ceased to be a defendant in this action when the Amended Complaint was filed, which named only Loiselle as a defendant.

The crux of the action against Loiselle involves allegations that he has, through Aid Maintenance, engaged in a pattern of hiring underpaid illegal aliens to work as janitors or custodians at various work sites that are under cleaning contracts with Aid Maintenance. The Plaintiffs claim that Loiselle has underpaid these illegal aliens in violation of Massachusetts law relating to the wage rate for the cleaning of public buildings, has neglected to provide paid holidays, and has under-represented the number of hours the janitors have worked in order to pay a lower actual hourly rate. To effectuate this scheme, Loiselle has allegedly engaged in fraud in connection with identification documents, knowingly transported aliens in furtherance of their illegal presence in the United States, and engaged in mail fraud with respect to legal representations, furthered by invoices and payments sent or received by mail. The two Corporate Plaintiffs allege that Loiselle's practices have enabled Loiselle to under-bid on cleaning contracts, thereby resulting in a loss of business for the Corporate Plaintiffs. The individual Plaintiffs Laboy, Ayala, and Ortega claim lost work, wages, and benefits caused by Loiselle. Cruz, in particular, was employed by Aid Maintenance and claims wages and holiday pay directly owed to him. All Plaintiffs have brought this action on their own behalf and on behalf of other similarly situated contract cleaning companies, employees, and former employees.

Loiselle has filed the instant motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).

RELEVANT LEGAL STANDARDS— MOTION TO DISMISS

In reviewing a motion to dismiss, the Court must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiffs. See Monahan v. Dorchester Counseling Ctr., 961 F.2d 987, 988 (1st Cir.1992). The Court may grant dismissal "only if `it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Roeder v. Alpha Indus., Inc., 814 F.2d 22, 25 (1st Cir.1987) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 [1957]). In order to survive this motion to dismiss, however, the Plaintiffs must set forth "factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988). The Court "need not accept `bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like.'" Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996) (quoting Aulson v. Blanchard, 83 F.3d 1, 3 [1st Cir.1996]).

FACTUAL BACKGROUND

The detailed factual background of this case informs this Court's analysis. For the purposes of a motion to dismiss, factual allegations in the complaint will be considered true. According to the Amended Complaint, Aid Maintenance has a troubled history of employing illegal aliens. See Am. Compl. ¶¶ 7-11. According to the records of the Immigration and Nationality Service ("INS"), Aid Maintenance has been "a known employer of illegal aliens since 1980." Id. ¶ 7. Although the Amended Complaint does not attribute that comment to a particular record in the INS documents, it presumably emerges from formal INS investigations.

In April 1991, the INS initiated a formal investigation of Aid Maintenance after apprehending fifteen illegal aliens who were then employed by Aid Maintenance. See id. During that investigation, on June 11, 1991, the INS examined 269 I-9 forms, representing Aid Maintenance's hourly workforce, and determined that sixty-six of the employees had alien registration cards which had been issued to another person, and that thirty-nine employees had presented alien registration cards which had never been issued by the INS. See id. ¶ 8. "In April 1992, the INS informed Aid Maintenance of the identity of the improperly documented aliens." Id.

In August 1992, the INS re-initiated its investigation as a result of information received from the United States Navy regarding employees then working at the Naval Education and Training Center in Newport, Rhode Island. See Am. Compl. ¶ 9. INS subsequently determined that five of thirty-four Aid Maintenance employees at the Training Center were among those previously identified by the INS (in April 1992) as having improper documentation. See id. Additionally, of the thirty-four employees, only four had social security numbers that corresponded to their names. See id. Seventeen illegal aliens employed by Aid Maintenance and working at the Training Center were apprehended by the INS. See id.

In September 1992, the INS discovered 208 irregularities in the manner in which I-9 forms, maintained by Aid Maintenance, had been completed and determined that Aid Maintenance did not actively screen for illegal aliens. See id. ¶ 10. As a result of this investigation, INS estimated that up to 150 of Aid Maintenance's then 280 employees were illegal aliens. See Am. Compl. ¶ 10. "On July 18, 1997, an Administrative Law Judge, in a proceeding brought by the INS, determined that Aid Maintenance had knowingly hired and continued to employ illegal aliens in violation of the Immigration and Nationality Act." Id. ¶ 11.

In 1994, Aid Maintenance successfully bid against other contract cleaning companies for a contract to clean the Wellesley and Framingham campuses of the Massachusetts Bay Community College (the "College") for the period October 1994 through June 1995. See id. ¶ 12. During the contractual period, on or about February 1, 1995, Loiselle executed and returned, via mail, a Cleaning Services Contract Addendum as follows:

As required by chapter 149 Sections 26 through 27H of the General Laws of the Commonwealth of Massachusetts, prescribed rates of wages as furnished by the Executive office of Labor apply to the maintenance and cleaning of public buildings. The cleaning contractor is required to adhere to the provisions of this law as determined applicable to the services provided. The contractor, by virtue of providing cleaning services and accepting payment for same, attests to compliance with the requirements of chapter 149 and any other laws of the Commonwealth which might be applicable to the services provided.

Id.; see also Am. Compl. Ex. B.

From February 1995 through July 1995, Loiselle sent the College periodic invoices via mail, and received periodic payments via mail, for services rendered by Aid Maintenance. See id. ¶ 14. The Plaintiffs have listed the particulars of these invoices and checks, including date and amount.

As of January 1, 1995, the prevailing hourly wage rates for the Wellesley and Framingham campuses were $9.29 and $8.60, respectively. See Am. Compl. ¶ 13. Loiselle paid his employees at the College substantially less than those prevailing rates. See id. ¶ 16. On August 11, 1998, the Auditor for the Common-wealth of Massachusetts, A. Joseph DeNucci, published a report on the College (the "Auditor's Report"), including the results of the Auditor's investigation into employment practices at the College during 1995. See id. The Auditor's Report found that from February 1, 1995 to June 30, 1995, the cleaning contractor (Aid Maintenance) had paid its employees assigned to the College hourly rates ranging from $4.45 to $8.00. See id. ¶ 17. The report breaks down this activity by time segment. In the period from October 1, 1994 through January 31, 1995, Aid Maintenance paid less than the prevailing rate. From February 1, 1995 to June 30, 1995, there was a significant decrease in cleaning labor hours per month once Aid Maintenance began paying the prevailing minimum wage rate. See Am. Compl. Ex. B at 26.

The Plaintiffs also assert that Aid Maintenance failed to pay employees for six holidays despite Aid Maintenance's having sent the College invoices for holiday pay. See id. ¶ 18. The College paid those invoices, but none of the Aid Maintenance employees received any holiday pay. See id.

In or about June 1995 and 1996,...

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