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Walters v. McMahen, No. 11-1796

Decided: July 5, 2012

A group of hourly-wage employees of Perdue Farms, Inc. (Perdue) filed a civil conspiracy action under 18 U.S.C. § 1962(d) of the Racketeer Influenced and Corrupt Organizations Act (RICO).  The plaintiffs alleged that corporate managers of Perdue, human resources staff, and plant managers conspired to hire aliens not authorized to work in the United States to reduce labor costs, which caused the depression of wages paid to hourly-wage employees.  Defendants individually violated 8 U.S.C. § 1324 in “bringing in and harboring certain aliens,” specifically knowingly hiring ten or more unauthorized aliens.  Each of the defendants allegedly hired hundreds of such workers with actual knowledge that they were unauthorized for employment.  The complaint alleged that the defendants violated 18 U.S.C. § 1546(b)(1)-(3) by using false identification documents and fraudulently attesting to the validity of such in the completion of government forms.  The district court dismissed the action with prejudice, holding that plaintiffs failed to allege a civil conspiracy claim on which relief could be granted.  The plaintiffs filed a timely appeal.

A district court’s dismissal of an action under Rule 12(b)(6) is reviewed de novo.  Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), require that complaints in civil actions be alleged with greater specificity.  First, a court must accept as true all factual allegations contained in a complaint, but does not have to accord such deference to legal conclusions.  The recital of elements of a cause of action supported only by conclusory statements is not sufficient to survive a 12(b)(6) motion.  Second, to survive such a motion, a complaint must state a “plausible claim for relief.”  Iqbal, 556 U.S. at 678.   This requires that the complaint allege sufficient facts to establish the elements of the claim, crossing “the line from conceivable to plausible.”  Twombly, 550 U.S. at 570.

The district court concluded that the plaintiffs’ amended complaint contained deficiencies that were fatal to the prosecution of the action.  First, the complaint failed to plead with sufficient particularity the existence of a conspiracy among the defendants.  Second, the amended complaint lacked sufficient facts supporting either alleged RICO predicate act.  Finally, the court concluded that the entire theory on which the amended complaint was based was barred by intracorporate immunity.

The plaintiffs alleged that the defendants violated 18 U.S.C. 1962(d) by conspiring to violate 18 U.S.C. § 1962(c), which prohibits conducing the affairs of an enterprise through a pattern of racketeering activity.  An act of racketeering under RICO is referred to as a “predicate act.”  While private litigants may recover from racketeering injuries under 18 U.S.C. 1964(c), their injuries must flow from the predicate acts.  Because the plaintiffs only allege two predicate acts, their failure to plead sufficient facts to establish the elements of either would require dismissal.

The first predicate act alleged is the knowing act of hiring multiple unauthorized aliens.  This predicate act has been analyzed in similar contexts by two other circuits: Edwards v. Prime, Inc., 602 F.3d 1276 (11th Cir. 2010), and Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271 F.3d 374 (2d Cir. 2011).  These cases explain that, in order to satisfy the illegal hiring requirements, a defendant must hire ten or more aliens within a 12-month period with actual knowledge that they are not authorized to work in the United States.  Edwards, 602 F.3d at 1292–93.  Additionally, the defendants must have actual knowledge that the unauthorized aliens were brought into the country in violation of 8 U.S.C.  § 1324(a).  Id. at 1293; Commercial Cleaning Servs., 271 F.3d at 387.  The second element is crucial and distinguishes 8 U.S.C. § 1324(a)(3), the RICO predicate, from 8 U.S.C. § 1324(a)(1), which penalizes hiring unauthorized aliens without knowledge that they were brought into the country illegally.  The district court found that plaintiffs failed to identify any employee known to be an unauthorized alien and made only conclusory allegations regarding how they unauthorized aliens were brought into the United States. While the plaintiffs did not need to identify particular unauthorized aliens, plaintiffs failed to provide factual support concerning whether the defendants had actual knowledge of the unauthorized aliens’ entry into the United States.  Only two allegations bear on illegal entrance into the United States: that the defendants had actual knowledge that the workers “had been brought into the country with the assistance of others on their illicit journey across the U.S.-Mexico border” and that a specific hiring clerk worked directly with coyotes and runners to obtain employment for illegal aliens.  These allegations are insufficient to establish a violation of the illegal hiring predicate.

Plaintiffs argued that the use of “judicial experience and common sense,” as authorized by Iqbal, 556 U.S. at 679, would lead to the conclusion that the aliens were brought into the United States within the meaning of 8 U.S.C. § 1324(a)(3)(B)(ii) because it is not plausible that they walked across the border and to a Perdue location on their own.  Once aliens arrive in the United States, any assistance they received from other parties is immaterial to the illegal hiring predicate.  While judicial experience and common sense may suggest that unauthorized aliens did not travel to Maryland or elsewhere entirely on foot, it is not obvious that such aliens allegedly employed at Perdue’s facilities were brought into the United States by others.  Accordingly, the facts do not sufficiently allege a violation of the illegal hiring predicate.

The second predicate act alleged the fraudulent use and false attestation of documents in violation of 18 U.S.C. § 1546(b).  The district court concluded the allegations were insufficient for two reasons: the plaintiffs failed to identify any single unauthorized employee and failed to state sufficient facts to support their claims.  As mentioned above, the plaintiffs’ failure to identify any of the unauthorized aliens involved is not fatal to their amended complaint.  However, because plaintiffs have not alleged facts establishing that they suffered an injury proximately caused by the defendants’ violation of the false attestation predicate, their claim also fails with regard to this predicate act.  While a mere violation of 18 U.S.C. § 1962(d) is all that is required to establish criminal liability, a plaintiff may recover in an action for civil conspiracy  only upon establishing injury caused by an act that is itself tortious.  Beck v. Prupis, 529 U.S. 494, 501–02, 501 n. 6 (2000).  In this case, the plaintiffs had to allege facts establishing that a violation of the false attestation predicate proximately caused the plaintiffs’ injury.  Based on this requirement, the defendants’ acts did not cause the injury alleged by the plaintiffs because the wage depression alleged is not directly linked to any violation of the false attestation predicate.

The compensable injury resulting from a violation of 18 U.S.C. § 1962(c) is the harm caused by the predicate acts, which must be the “but for” and proximate causes of the injury.  The fraudulent use of identification documents and false attestations are crimes against the government of the United Sates and do not directly impact plaintiffs’ wage levels.

Accordingly, the plaintiffs failed to allege a plausible violation of either RICO predicate act, thus the plaintiffs failed to establish a claim supporting their allegation under 18 U.S.C.  § 1962(d) of a conspiracy to violate 18 U.S.C. § 1962(c).  The district court’s judgment is affirmed.

Full Opinion

-Michelle Theret