Varela v. Gonzales
| Decision Date | 17 October 2013 |
| Docket Number | CIVIL ACTION NO. 3:13-CV-1278-B |
| Parties | JAIME VARELA and YESICA WIEGERT, individually and on behalf of similarly situated individuals, Plaintiffs, v. DAVID BENITEZ GONZALES, ANA CRISTINA BENITEZ, INTELLIGENT MEXICAN MARKETING, INC., and MARKETING AND INVENTORY MANAGEMENT, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Plaintiffs Jaime Varela ("Varela") and Yesica Wiegert ("Wiegert") (together "Plaintiffs") brought this action on behalf of themselves and other similarly situated individuals against Defendants Intelligent Mexican Marketing, Inc. ("IMM"), Marketing and Inventory Management, LLC ("MIM"), David Benitez Gonzales ("Benitez"), and Ana Cristina Benitez ("Cristina") (collectively "Defendants"). Plaintiffs allege in their First Amended Complaint1 (the "Complaint") that they were paid depressed wages while employed by Defendants as a result of Defendants' illegalworker2 hiring scheme. They further assert that Defendants, through their scheme, violated and conspired to violate the Racketeering Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. 18 U.S.C. §§ 1962(c) and (d).
Now before the Court is the Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint ("Motion"), filed pursuant to FED. R. CIV. P. 12(b)(6), moving the Court to dismiss the Complaint on a number of grounds. (doc. 22). Finding that the allegations supporting Plaintiffs' RICO and RICO conspiracy claims are inadequate to establish Plaintiffs' standing to sue under RICO, the Court GRANTS the Motion and DISMISSES WITHOUT PREJUDICE Plaintiffs' Complaint.
IMM and MIM are Texas-based companies in the "business marketing, advertising, and consulting services for companies in the USA Hispanic Market." Am. Compl. ("Compl.") ¶ 12. While IMM and MIM are separate entities, they operate as a joint unit ("IMM/MIM"), sharing "employee, staff, and payroll obligations." Id. ¶¶ 12-13. Their respective leaders, Defendants Benitez (IMM President) and Cristina (MIM President), "jointly" run IMM/MIM as a single unit. Id. ¶ 13. Defendants have operated in this manner for "several years." Id. ¶ 14.
Plaintiffs were employed at IMM/MIM from 2011 until the summer of 2012. Id. ¶¶ 9, 15. Varela worked as a sales representative where she "was tasked with delivering products to the stores and negotiating more product sales with the stores." Id. ¶ 16. Wiegert, on the other hand, was a merchandiser, a position in which she "functioned as a sales representative, supervisor, and manager" while overseeing sales to four hundred stores and actively negotiating with new stores. Id. ¶¶ 20, 21. For compensation, Varela was paid a base salary and earned a 4-6% sales commission while Wiegert was paid just a base salary. Id. ¶¶ 17, 18, 22. In total, Plaintiffs were paid between $26,000 and $46,000 a year while working for IMM/MIM.4 Id. ¶ 23.
Over an unspecified period of time, Defendants hired and used illegal workers in positions similar to the Plaintiffs. Specifically, Defendants employed illegal workers "as supervisors, sales representatives, and in the warehouse." Id. ¶ 25. Defendants carried out this scheme through their participation in "all hiring decisions," including setting hiring policies, making hiring decisions, reviewing identity and employment authorization documents, background checks, visa applications, and recruiting. Id. ¶¶ 26-30, 32, 33. Defendants also traveled to Mexico with the purpose of hiring new employees, told undocumented employees they desired more workers from Mexico, and hired legal workers for the express purpose of driving illegal workers around. Id. ¶¶ 28-30, 33-35.
After leaving IMM/MIM, Plaintiffs filed a Complaint against the Defendants on behalf of themselves and other similarly situated employees who worked for IMM/MIM over the past four years. The Complaint asserts that the Defendants' illegal-worker-employing enterprise violatedRICO, 18 U.S.C. § 1962(c). It also asserts a claim under 18 U.S.C. § 1962(d) for Defendants' alleged conspiracy to violate § 1962(c) of RICO. Plaintiffs allege that because of Defendants' violation and conspiracy to violate RICO, they were paid "substantially less than the market rate for their services." Id. ¶ 23. In other words, Plaintiffs maintain that the Defendants' unlawful use of illegal workers allowed Defendants to increase the pool of available workers, thereby depressing Plaintiffs' wages as the demand for their services fell. Id. ¶ 45. In relief, Plaintiffs seek treble, punitive, and compensatory damages along with attorney's fees. (doc. 22).
Defendants now move for dismissal of the Complaint under FED. R. CIV. P. 12(b)(6), maintaining that the allegations in the ten-page Complaint fail to state a RICO violation or sustain a RICO conspiracy claim and, further, that the allegations fail to establish that the Defendants' RICO violations were the proximate cause of the Plaintiffs' alleged injuries, an essential requirement for standing to sue under RICO. The applicable legal standards follow.
FED. R. CIV. P. 12(b)(6) authorizes dismissal of a complaint that fails to state a claim upon which relief can be granted. In ruling on a Rule 12(b)(6) motion, the Court may generally "rely on the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice."5 Randall D. Wolcott, M.D., P.A. v. Sebelius, 635F.3d 757, 763 (5th Cir. 2011);Scanlan v. Texas A&M Univeristy, 343 F.3d 533, 536 (5th Cir. 2003). In examining the pleadings, the Court accepts "all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." Martin K Eby Constr. Co. V. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim for relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A facially plausible pleading contains "enough facts to raise a reasonable expectation that discovery will reveal evidence of the claim or element." Kopp v. Klein, 722 F.3d 327, 333 (5th Cir. 2013). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 556 U.S. at 679. A complaint containing nothing more than "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Id. at 678 (quoting Twombly, 550 U.S. at 555). If the allegations raise no entitlement to relief, "this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court." Cuviller v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Tombly, 550 U.S. at 557).
The parties disagree over whether FED. R. CIV. P. 9(b)'s heightened pleading requirements apply. The Defendants contend that the Amended Complaint contains certain allegations "soundingin fraud" that warrant Rule 9(b)'s application.6 Specifically, Defendants argue that one of Plaintiffs' allegations—"the falsifying of identification documents unlawfully expands the labor pool, which depresses Plaintiffs' wages," Compl. ¶ 24 —lends support for a RICO predicate act—fraud and misuse of visas, permits and other documents under 18 U.S.C. § 1546—that warrants Rule 9(b)'s application. Although Defendants concede this particular RICO predicate is not alleged, they argue for Rule 9(b)'s application to the extent Plaintiffs' RICO predicates rely on this allegation.
Generally, a plaintiff is only required, under Rule 8(a), to provide "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a). Rule 9(b) offers a heightened standard, requiring a party to "state with particularity the circumstances" surrounding its allegations. FED. R. CIV. P. 9(b). However, Rule 9(b) is only applicable when a party is "alleging fraud or mistake." Id. This includes "RICO claims resting on allegations of fraud," Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997), such as when the RICO predicate act alleged involves wire or mail fraud. See, e.g., Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134 (5th Cir. 1992). But where the "racketeering activity does not involve fraud," Rule 9(b) does not apply. Rolls-Royce Corp. v. Heros, Inc., 576 F. Supp. 2d 765, 777 (N.D. Tex. 2008) ().
Here, the claims themselves do not involve fraud. Plaintiffs' RICO claims are based on allegations of unlawful transporting, harboring, encouraging, and hiring of illegal workers. Just as "multiple courts" have found, this Court concludes that Rule 8(a)'s pleading requirements apply inthese circumstances, where the "'RICO action involv[es] non-fraud, immigration offenses as predicate activities.'" Cunningham v. Offshore Specialty Fabrications, Inc., 543 F. Supp. 2d 614, 627 (E.D. Tex. 2008) (quoting Trollinger v. Tyson Foods, Inc., No. 02-cv-23, 2007 WL 1574275, at *4-5 (E.D. Tenn. May 29, 2007).
Nonetheless, there is one allegation—Defendants falsified identification documents—that arguably involves fraudulent conduct. However, Plaintiffs' Response to Defendants' Motion never once mention this allegation, and the RICO claims do not appear to be grounded in this fact. In these circumstances, the Fifth Circuit instructs courts to consider the sufficiency of the complaint under Rule 8(a) without regard to the fraudulent allegation. See Lone Star Ladies...
To continue reading
Request your trial