Plaintiffs’ Response to Motion to Dismiss

Summary: In this class action case, Heygood, Orr & Pearson represented a proposed class comprised of current employees of Swift Beef whose wages were depressed by Swift Beef’s scheme to hire illegal workers for the purpose of depressing its employee’s wages.  After the case was filed, Swift Beef filed a motion to dismiss the asserted claims.  On behalf of proposed class of employees, the below brief was filed in opposition to the motion to dismiss.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
BLANCA VALENZUELA, MARGIE
SALAZAR, JOSE A. SERRATO, JOSIE
RENDON, CLARA TOVAR, CONSUELO
ESPINO, MARIA AVILA, ERNESTINA
NAVARRETTE, MARIA E. MUNOZ,
AMANDA SALCIDO, CANDELARIO G.
ORTEGA, MARIA ORTIZ, JOSE OLIVA,
RAFAELA CHAVEZ, ELODIA ARROYO,
SUSANA CARDIEL, GRACIE RIOS, AND
LEONEL RUIZ, individually and on behalf of
all others similarly situated

VS.

SWIFT BEEF COMPANY, INC. D/B/A
SWIFT COMPANY, SWIFT & COMPANY,
HICKS, MUSE, TATE & FURST, INC., HM
CAPITAL PARTNERS OF DALLAS, LLC
and JOHN DOES I-V

Civil Action No. 3-06CV2322-N

PLAINTIFFS’ RESPONSE TO SWIFT & COMPANY AND SWIFT

BEEF COMPANY’S MOTION TO DISMISS AND BRIEF IN SUPPORT

Michael E. Heygood

State Bar No. 00784267

Charles W. Miller

State Bar No. 24007677

Heygood, Orr, & Pearson

2331 W. Northwest Highway, 2nd Floor

Dallas, Texas 75220

1-877-446-9001

214-237-9002 (Fax)

ATTORNEYS FOR PLAINTIFFS

 .

TABLE OF CONTENTS

I. PRELIMINARY STATEMENT

II. ARGUMENT AND AUTHORITIES

A. The National Labor Relations Board’s Primary Jurisdiction Over Certain Labor Issues Does Not Deprive this Court of its Subject Matter Jurisdiction Over this Case Because the Labor Issues Are Collateral.

B. The Unions are Not Indispensable Parties, But Can Be Joined if Necessary.

1. The Unions Are Not Indispensable Parties.

2. The Unions Can Be Joined If Necessary Under 18 U.S.C. § 1965(d).

C. Plaintiffs’ Complaint Satisfies RICO’s Proximate Cause Standard.

D. Plaintiffs’ Complaint Is Sufficient to State a Claim Under the RICO Statute.

1. Plaintiffs’ Complaint Adequately Pleads Violations of the Federal Immigration Laws, the Predicate Acts for Plaintiffs’ RICO Claims.

2. Plaintiffs’ Complaint Adequately Pleads a RICO Enterprise.

a. Plaintiffs’ Enterprise Allegations Are Sufficiently Specific.

1) The “Wrongful Documentation Enterprise.”

2) The “Swift Enterprise.”

b. Plaintiffs’ Enterprise Allegations Sufficiently Allege Continuity.

c. Plaintiffs’ Enterprise Allegations Sufficiently Allege that the RICO Persons Are Distinct from the RICO Enterprises.

1) The “Wrongful Documentation Enterprise” is Distinct from Defendants.

a) Baker Is Distinguishable and Has Been Rejected by Courts in Similar Cases.

b) The Swift Defendants’ Other Distinctness Cases Are Distinguishable.

 2) The “Swift Enterprise” is Distinct from the Individual Defendants.

d. Plaintiffs Are Not Using the Doctrine of Respondeat Superior to Circumvent RICO.

e. Plaintiffs’ Complaint Sufficiently Alleges the Swift Defendants’ Participation in the Affairs of the Enterprise. 30

3. Plaintiffs’ Complaint Adequately Pleads Violations of § 1962(a), (b), and (d).

a. The Complaint Sufficiently Alleges a Violation of § 1962(a).

b. The Complaint Sufficiently Alleges a Violation of § 1962(b).

c. The Complaint Sufficiently Alleges a Violation of § 1962(d).

4. Plaintiffs Have Sufficiently Pleaded a Pattern of Racketeering Activity.

E. The Court Should Exercise Supplemental Jurisdiction Over Plaintiffs’ State-Law Claims.

F. If the Court Determines that a More Definite Statement Is Required, Plaintiffs Are Willing To File an Amended Complaint.

III. CONCLUSION

.

TABLE OF AUTHORITIES

CASE LAW

Abraham v. Singh,

480 F.3d 351 (5th Cir. 2007) 18, 28, 34

 

Anza v. Ideal Steel Supply Corp.,

126 S.Ct. 1991 (2006) 8, 9, 10

 

Atkinson v. Anadarko Bank & Trust Co.,

808 F.2d 438 (5th Cir. 1987) 27, 28

 

Baker v. IBP, Inc.,

357 F.3d 685 (7th Cir. 2004) 4, 5, 8, 14, 25, 26, 31, 32

 

Brewer v. Salyer,

No. CV F 06-01324 AWI DLB, 2007 U.S. Dist. LEXIS

(E.D. Cal. May 16, 2007) 21, 22, 35

 

Bridge v. Invest Am., Inc.,

748 F. Supp. 948 (D. R.I. 1990) 6, 7, 8

 

Britt v. Grocers Supply Co.,

978 F.2d 1441 (5th Cir. 1992) 4

 

Brittingham v. Mobil Corp.,

943 F.2d 297 (3d Cir. 1999) 26

 

Burstein v. First Penn-Pacific Life Ins. Co.,

No. 01-985-CIV-Graham/Turnoff, 2002 U.S. Dist. LEXIS 28115

(S.D. Fla. Feb. 12, 2002) 27

 

Butchers’ Union Local No. 498 v. SDC Inv., Inc.,

788 F.2d 535 (9th Cir. 1986) 6, 7

 

Cash Today of Texas, Inc. v. Greenberg,

No. 4:01-CV-A, 2003 U.S. Dist. LEXIS 80 (N.D. Tex. Jan. 6, 2006) 31

 

Cedric Kusher Promotions, Ltd. v. King,

533 U.S. 158 (2001) 18, 19, 28, 29

 

Commercial Cleaning Servs. v. Colin Serv. Sys., Inc.,

271 F.3d 374 (2d Cir. 2001) 8, 14

 

Commun. Workers of Am. v. Beck,

487 U.S. 735 (1988) 4

 

Connell Constr. Co. v. Plumbers & Steamfitters Local Union No. 100,

421 U.S. 616 (1974) 3, 4

 

Crowe v. Henry,

43 F.3d 198 (5th Cir. 1995) 16

 

Delta Truck & Tractor, Inc. v. J.I. Case Co.,

855 F.2d 241 (5th Cir. 1988) 20

 

Fitzgerald v. Chrysler Corp.,

116 F.3d 225 (7th Cir. 1997) 27

 

H.J., Inc. v. N.W. Bel. Tel. Co.,

492 U.S. 229 (1989) 20

 

In re Burzynski,

989 F.2d 733 (5th Cir. 1993) 32

 

Jaguar Cars v. Royal Oaks Motor Car Co.,

46 F.3d 258 (3d Cir. 1995) 27

 

Mendoza v. Zirkle Fruit Co.,

301 F.3d 1163 (9th Cir. 2002) 8, 10, 11, 12, 13, 14, 26, 33

 

Mohawk Indus. v. Williams,

126 S.Ct. 2016 (2006) 9

 

Office Outfitters, Inc. v. A.B. Dick Co.,

83 F. Supp. 2d 772 (E.D. Tex. 2000) 20

 

Reves v. Ernst & Young,

507 U.S. 170 (1993) 30, 31, 32

 

Rolls Royce Motors, Inc. v. Charles Schmitt & Co.,

657 F. Supp. 1040 (S.D.N.Y. 1987) 7

 

TransFirst Holdings, Inc. v. Phillips,

No. 3:06-CV-2303-P, 2007 U.S. Dist. LEXIS 36590

(N.D. Tex. May 18, 2007) 25

 

Trollinger v. Tyson Foods,

370 F.3d 602 (6th Cir. 2004) 4, 5, 6, 11, 14

 

Trollinger v. Tyson Foods, Inc.,

No. 4:02-CV-23, 2007 U.S. Dist. LEXIS 38882

(E.D. Tenn. May 29, 2007) 10, 15, 16, 17, 18, 19, 21,

22, 23, 25, 26, 28, 29, 35

 

United States v. Elliott,

571 F.2d 880 (5th Cir. 1978) 15, 26

 

United States v. Goldin Indus.,

219 F.3d 1271 (11th Cir. 2000) 25

 

United States v. Neapolitan,

791 F.2d 489 (7th Cir. 1986) 32

 

United States v. Palumbo Bros.,

145 F.3d 850 (7th Cir. 1998) 4

 

United States v. Turkette,

452 U.S. 576 (1981) 15, 20, 23

 

Vaca v. Sipes,

386 U.S. 171 (1967) 5, 6

 

Williams v. Mohawk Indus., Inc.,

465 F.3d 1277 (11th Cir. 2006) 5, 8, 9, 10, 11, 12, 14, 15, 16, 17,

21, 23, 24, 25, 26, 27, 28, 31, 32

.

STATUTES

8 U.S.C. § 1324 8, 11, 12, 13, 14, 31

18 U.S.C. § 1961 13, 24, 33

18 U.S.C. § 1962 3, 24, 32, 33, 34

18 U.S.C. § 1964 24

18 U.S.C. § 1965 6, 7

.

FEDERAL RULES OF CIVIL PROCEDURE

FRCP 8 3, 13, 34

FRCP 9 11

FRCP 12 3, 16, 26

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
BLANCA VALENZUELA, MARGIE
SALAZAR, JOSE A. SERRATO, JOSIE
RENDON, CLARA TOVAR, CONSUELO
ESPINO, MARIA AVILA, ERNESTINA
NAVARRETTE, MARIA E. MUNOZ,
AMANDA SALCIDO, CANDELARIO G.
ORTEGA, MARIA ORTIZ, JOSE OLIVA,
RAFAELA CHAVEZ, ELODIA ARROYO,
SUSANA CARDIEL, GRACIE RIOS, AND
LEONEL RUIZ, individually and on behalf of
all others similarly situatedPlaintiffs,VS.

SWIFT BEEF COMPANY, INC. D/B/A
SWIFT COMPANY, SWIFT & COMPANY,
HICKS, MUSE, TATE & FURST, INC., HM
CAPITAL PARTNERS OF DALLAS, LLC
and JOHN DOES I-V

Defendants.

Civil Action No. 3-06CV2322-N

PLAINTIFFS’ RESPONSE TO SWIFT & COMPANY AND SWIFT

BEEF COMPANY’S MOTION TO DISMISS AND BRIEF IN SUPPORT

Pursuant to Federal Rule of Civil Procedure 12, Plaintiffs hereby file their Response to Defendants Swift & Company and Swift Beef Company’s (the “Swift Defendants”) Motion to Dismiss and Brief in Support (“Motion to Dismiss”) seeking dismissal of Plaintiffs’ First Amended Complaint (the “Complaint”). In support thereof, Plaintiffs respectfully state as follows:

I. PRELIMINARY STATEMENT

The Swift Defendants have moved to dismiss Plaintiffs’ Complaint on the grounds that the Court lacks subject matter jurisdiction over the case, Plaintiffs failed to join indispensable parties, and the Complaint fails to state a RICO claim. For the reasons discussed below, the Swift Defendants’ motion should be denied in its entirety.

First, the National Labor Relations Board’s (“NLRB”) primary jurisdiction over certain labor-related claims does not deprive federal courts of jurisdiction over cases alleging that employers violated the RICO statute by hiring and harboring illegal immigrants to depress wages because (i) RICO is an independent federal remedy and (ii) the labor questions are collateral issues.

Second, the existence of collective-bargaining agreements does not establish the local unions as Plaintiffs’ exclusive representatives in all wage-related litigation. This case involves damages for alleged violations of RICO—not an alleged breach of a collective bargaining agreement. Therefore, the unions are not indispensable parties.

Third, Plaintiffs’ Complaint satisfies RICO’s proximate cause standard by alleging that Defendants hired and harbored illegal immigrants to keep labor costs as low as possible and, as a result, Plaintiffs’ wages were lower than they would be if Defendants had not engaged in that illegal conduct.

Fourth, Plaintiffs’ Complaint sufficiently pleads each and every element necessary to state a claim under the RICO statute, including:

  • The Swift Defendants committed numerous RICO predicate acts by participating in an ongoing scheme to hire and harbor illegal immigrants in violation of RICO and the Immigration and Naturalization Act (“INA”);
  • Two distinct, ongoing RICO enterprises—the “Wrongful Documentation Enterprise” and the “Swift Enterprise”—were used to perpetrate an ongoing scheme to hire and harbor illegal immigrants;
  • The Swift Defendants participated in the operation or management of the “Wrongful Documentation Enterprise”;
  • The Swift Defendants invested their racketeering income in a RICO enterprise by using the money they saved by paying lower wages to pay third-party recruiters to find more illegal workers in violation of § 1962(a) of the RICO statute;
  • The Swift Defendants acquired or maintained an interest in the “Wrongful Documentation Enterprise” in violation of § 1962(b) of the RICO statute and Plaintiffs’ injuries (in the form of lower wages) resulted from the Swift Defendants acquisition or control of that enterprise; and
  • The Swift Defendants engaged in a pattern of racketeering activity by engaging in an ongoing scheme to hire and harbor illegal immigrants.

Fourth, this Court should retain supplemental jurisdiction over Plaintiffs’ state-law claims because the Complaint states a claim for violations of the RICO statute.

Fifth, although Plaintiffs believe that the Complaint easily satisfies Rule 8’s liberal notice pleading standard, Plaintiffs are willing to file an amended complaint if the Court determines that a more definite statement is required.

II. ARGUMENT AND AUTHORITIES

A. The National Labor Relations Board’s Primary Jurisdiction Over Certain Labor Issues Does Not Deprive this Court of its Subject Matter Jurisdiction Over this Case Because the Labor Issues Are Collateral.

The Swift Defendants contend that this case should be dismissed under Rule 12(b)(1) because of the NLRB’s primary jurisdiction over certain labor-related disputes. (Motion to Dismiss at 5-7.) This argument should be rejected because federal courts may decide labor disputes that emerge as collateral issues in cases brought under independent federal remedies. Connell Constr. Co. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 626 (1974). Following Connell, the Sixth and Seventh Circuits have already held that the NRLB’s primary jurisdiction over certain labor-related claims did not deprive federal courts of jurisdiction over cases like this. More specifically, those circuits have held federal courts have jurisdiction in cases in which plaintiffs allege that employers violated the RICO statute (by hiring and harboring illegal immigrants to depress wages) because (i) RICO is an independent federal remedy and (ii) the labor questions were collateral issues. Trollinger v. Tyson Foods, 370 F.3d 602, 610 (6th Cir. 2004); Baker v. IBP, Inc., 357 F.3d 685, 689-90 (7th Cir. 2004).

Unable to distinguish Trollinger and Baker, the Swift Defendants contend that the decisions were incorrectly decided. First, the Swift Defendants argue that the Baker Court improperly relied, in part, on United States v. Palumbo Bros., 145 F.3d 850, 861 (7th Cir. 1998) because that case involved a criminal prosecution under the RICO statute. (Mot. to Dismiss at 6.) Such reliance was proper because the predicate offenses in both cases were federal crimes (i.e., alleged violations of § 274 of the INA) other than violations of the labor laws. See Baker, 357 F.3d at 689. Moreover, Baker’s holding is consistent with the well-established principle that federal courts may decide disputes brought under independent federal remedies even if the disputes involve collateral labor issues. Id. at 690 (citing Connell, 421 U.S. at 626).

Second, the Swift Defendants maintain that Baker and Trollinger were incorrectly decided because the issues in those cases (i.e., RICO predicate offenses, causation, and damages) were intertwined with the collective bargaining process and, thus, within the NLRB’s primary jurisdiction. (Mot. to Dismiss at 7.) But the Swift Defendants cite no authority for this proposition. (See id.) The Swift Defendants’ argument is not only at odds with Baker and Trollinger, but is also inconsistent with numerous cases holding that federal courts may decide collateral labor-law questions in cases brought under independent federal remedies. Connell, 421 U.S. at 626 (holding that federal courts may decide collateral labor-law questions in antitrust suits); Commun. Workers of Am. v. Beck, 487 U.S. 735, 743-44 (1988) (federal court could decide whether activity is unfair labor practice under NLRA when issue was raised as defense to claim over which federal court had jurisdiction); Britt v. Grocers Supply Co., 978 F.2d 1441, 1448-49 (5th Cir. 1992) (holding that the plaintiffs’ ADEA claims were not preempted by NLRA because traditional preemption analysis does not apply when two federal statutes conflict). This Court should follow the overwhelming weight of authority—including two circuit court decisions directly on point—and hold that the Plaintiffs’ RICO claims are not preempted by the NLRA.

B. The Unions are Not Indispensable Parties, But Can Be Joined if Necessary.

1. The Unions Are Not Indispensable Parties.

Relying on the Seventh Circuit’s decision in Baker, the Swift Defendants contend that the local unions representing the Swift employees are indispensable parties to this suit. (Mot. to Dismiss at 8-11 (citing Baker, 357, F.3d at 690-91 (dismissing plaintiffs’ RICO claim because, inter alia, the plaintiffs failed to join their local union).) But the Swift Defendants did not apprise this Court that the Sixth Circuit and Eleventh Circuits have disagreed with Baker’s analysis in RICO cases alleging that employers knowingly hired illegal immigrants to depress wages. See Trollinger, 370 F.3d at 620-22 (disagreeing with Baker Court’s conclusion that union was necessary party to RICO suit alleging that defendants depressed wages by hiring and harboring illegal immigrants); Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1285 (11th Cir. 2006) (noting that its holding that the plaintiffs’ complaint stated a RICO claim conflicted with the Seventh Circuit’s decision in Baker).

As explained by the Trollinger Court, the fundamental flaw in Baker is the Seventh Circuit’s misplaced reliance on Vaca v. Sipes, 386 U.S. 171, 186 (1967) for the proposition that the union was a necessary party to the plaintiffs’ RICO action. Baker, 357 F.3d at 690-91 (citing Vaca, 386 U.S. at 186). In Vaca, the Supreme Court held that an employee cannot sue for an alleged violation of his collective bargaining agreement containing an exclusive contractual remedy without exhausting the contractual grievance process. Vaca, 386 U.S. at 186; see also Trollinger, 370 F.3d at 621 (discussing the Baker Court’s reliance on Vaca). In Trollinger, the Sixth Circuit concluded that Vaca did not make the union a necessary party case because the case involved alleged damages resulting from RICO violations, not an alleged breach of a collective bargaining agreement with an exclusive contractual remedy. Trollinger, 370 F.3d at 621. Moreover, the Trollinger Court reasoned that the historical context in which the Labor Management Relations Act (“LMRA”) was enacted indicates that Congress did not intend to establish unions as employees’ exclusive representative in all wage-related litigation. Id. at 621.

Here, the existence of collective-bargaining agreements does not establish the local unions as Plaintiffs’ exclusive representative in all wage-related litigation. This case involves damages for alleged violations of RICO, not an alleged breach of a collective bargaining agreement. Therefore, this Court should follow the Sixth Circuit’s decision in Trollinger and reject the Swift Defendants’ assertion that the local unions are indispensable parties.

2. The Unions Can Be Joined If Necessary Under 18 U.S.C. § 1965(d).

If the Court determines that the unions are indispensable parties, the unions can be easily joined as parties under the RICO statute’s nationwide service of process provision. See 18 U.S.C. § 1965(d). Under § 1965(d), process in a RICO case “may be served on any person in any judicial district in which such person resides, is found, has an agent, or transacts his affairs.” The Swift Defendants contend that the unions are indispensable parties, but the unions cannot be joined under the RICO statute’s nationwide service of process provision because the “ends of justice” do not require their joinder. (Mot. to Dismiss at 9 (citing Butchers’ Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 539 (9th Cir. 1986).) This argument is incorrect for two reasons.

First, the “ends of justice” limitation on the RICO statute’s nationwide service is inapplicable to nationwide service under 18 U.S.C. § 1965(d). Bridge v. Invest Am., Inc., 748 F. Supp. 948, 954 (D.R.I. 1990) (the “ends of justice” limitation in § 1965(b) is inapplicable to nationwide service under § 1965(d)); Rolls Royce Motors, Inc. v. Charles Schmitt & Co., 657 F. Supp. 1040, 1055 n.10 (S.D.N.Y. 1987) (same). In Butchers’ Union, 788 F.2d at 539, the Swift Defendants’ authority for the “ends of justice” limitation on nationwide service, the plaintiffs argued that the court had jurisdiction over the defendants based on 18 U.S.C. § 1965(b). In that case, the Ninth Circuit rejected the plaintiffs’ attempt to invoke § 1965(b) based on the “ends of justice” limitation found in that provision. Id. Critically, however, 18 U.S.C. § 1965(d)—the nationwide service provision at issue in this case—does not contain an “ends of justice limitation” and courts have refused to imply such a limitation, noting that “a section 1965(b) ‘ends of justice’ determination is proper only upon an allegation that venue is improper as to some defendants.” Bridge, 748 F. Supp. at 953; Rolls Royce Motors, 657 F. Supp. at 1055 n.10. None of the Defendants have challenged venue; therefore, the Court need not engage in an “ends of justice” analysis.

Second, even if the “ends of justice” limitation were applicable, justice requires that the Court exercise jurisdiction over the local unions if the Court determines that they are necessary parties. Bridge, 748 F. Supp. at 952 (noting that even if “ends of justice” limitation applied, ends of justice required court to exercise jurisdiction over defendants because of desirability of having entire dispute litigated in one court). Without nationwide service under 18 U.S.C. § 1965(d), Plaintiffs may not be able to join the local unions as parties without filing separate lawsuits where each local union is located. Because of the desirability of having the entire dispute litigated in one court, the ends of justice require the Court to exercise jurisdiction over the local unions if they are necessary parties. Bridge, 748 F. Supp. at 952.

C. Plaintiffs’ Complaint Satisfies RICO’s Proximate Cause Standard.

Relying on the Supreme Court’s decision in Anza v. Ideal Steel Supply Corp., 126 S.Ct. 1991, 1996 (2006), the Swift Defendants contend that Plaintiffs’ Complaint does not satisfy RICO’s proximate cause standard. (Mot. to Dismiss at 11-14.) This argument has been rejected by the Second, Sixth, Ninth, and Eleventh Circuits in similar cases. Williams, 465 F.3d at 1287-91 (plaintiff satisfied RICO’s proximate cause standard by alleging that defendant hired and harbored illegal immigrants to keep labor costs as low as possible and, as a result, plaintiffs wages were lower than they would be if defendants had not engaged in that illegal conduct); Trollinger, 370 F.3d at 619 (same); Mendoza v. Zirkle Fruit Co., 301 F.3d 1163, 1171-72 (9th Cir. 2002) (same); Commercial Cleaning Servs. v. Colin Serv. Sys., Inc., 271 F.3d 374, 383 (2d Cir. 2001) (plaintiff satisfied RICO’s proximate cause standard by alleging that defendant was able to hire cheaper labor and compete unfairly by hiring illegal immigrants).

Critically, the Eleventh Circuit’s decision in Mohawk addressed the precise issue raised by the Swift Defendants (i.e., whether the plaintiffs’ allegations satisfied RICO’s proximate cause standard in light of the Supreme Court’s Anza decision). Mohawk, 465 F.3d at 1287-91. In that case, the district court held that the plaintiffs’ claim that their wages were lower than they would be if the defendant had not hired illegal immigrants satisfied RICO’s proximate cause standard and the Eleventh Circuit affirmed that decision. Id. at 1261-62. Subsequently, the Supreme Court vacated the Eleventh Circuit’s decision and remanded the case for reconsideration in light of Anza. Mohawk Indus. v. Williams, 126 S. Ct. 2016 (2006). On remand, the Eleventh Circuit held that the plaintiffs’ allegations (i.e., that the defendant depressed the wages it paid to legal worker by knowingly hiring and harboring illegal workers) satisfied Anza’s requirement that the alleged violation led to the plaintiffs’ injuries. Mohawk, 465 F.3d at 1287-91.

Here, Plaintiffs allege that the defendants hired and harbored illegal immigrants to keep labor costs as low as possible and, as a result, the plaintiffs wages were lower than they would be if the defendants had not engaged in that illegal conduct. (Compl. ¶¶ 2, 42-48, 51, 65, 70-76.) These allegations are identical to the proximate cause allegations that the Eleventh Circuit found to be sufficient in Mohawk. Mohawk, 465 F.3d at 1287-91. Therefore, the Swift Defendants’ assertion that Plaintiffs’ proximate cause allegations are somehow insufficient is simply without merit.

Moreover, the Swift Defendants’ argument that Plaintiffs have not satisfied Anza’s proximate-cause requirements because other economic factors affect wage rates was considered and rejected in Mohawk. Id. at 1289. The Mohawk Court held that the plaintiffs met the requirements of Anza by alleging that the defendant distorted the normal market forces in the local community by hiring numerous illegal immigrants. Id. That is precisely what Plaintiffs allege happened in this case: the Swift Defendants distorted normal market forces by hiring numerous illegal immigrants in the communities where Swift’s meat-packing plants are located. (Compl. ¶¶ 2, 42-48, 51, 65, 70-76.) These allegations are clearly sufficient to satisfy the proximate-cause requirements of the RICO statute. Mohawk, 465 F.3d at 1289. D. Plaintiffs’ Complaint Is Sufficient to State a Claim Under the RICO Statute.

1. Plaintiffs’ Complaint Adequately Pleads Violations of the Federal Immigration Laws, the Predicate Acts for Plaintiffs’ RICO Claims.

The Swift Defendants contend that Plaintiffs’ Complaint fails to adequately plead violations of the INA, the predicate offenses for Plaintiffs’ RICO claims. (Mot. to Dismiss at 17-18.) The Swift Defendants’ argument suffers from the same fatal defect as their proximate cause argument—it ignores the fact that the Sixth, Ninth, and Eleventh Circuits have already held that lawsuits alleging similar facts were sufficient to state a claim under RICO. Williams, 465 F.3d at 1283 (holding that plaintiffs’ allegation that defendant knowingly hired and harbored illegal immigrants sufficiently stated predicate acts for plaintiffs’ RICO claim); Mendoza, 301 F.3d at 1168 (same); Trollinger, 370 F.3d at 611 (knowingly hiring and harboring illegal immigrants are predicate offenses under RICO). These courts have recognized that complaints alleging that defendants knowingly hired and harbored illegal aliens contain sufficient allegations of predicate acts to state a claim under the RICO statute. Id.

In Mohawk, the Eleventh Circuit rejected a similar challenge to the sufficiency of the plaintiff’s allegations of RICO predicate acts. Mohawk, 465 F.3d at 1283. There, as here, the plaintiffs alleged that the defendant violated § 274 of the INA (8 U.S.C. § 1324) by knowingly hiring and harboring illegal immigrants. The Eleventh Circuit held that the allegations in that case were sufficient allegations of RICO predicate acts:

Plaintiffs allege that Mohawk has violated and continues to violate: (1) 8 U.S.C. § 1324(a)(3)(A), which makes it a federal crime to “knowingly hire for employment at least 10 individuals with actual knowledge that the individuals are aliens” during a twelve-month period; (2) 8 U.S.C. § 1324(a)(1)(A)(iii), which makes it a federal crime to “harbor, or shield from detection” aliens that have illegally entered the United States. . . . Consequently, we conclude that the plaintiffs have properly alleged a “pattern of racketeering activity.”

Id.

Likewise, in Mendoza, the Ninth Circuit was “unpersuaded” by the defendants’ “hyper-technical” argument that the plaintiffs’ allegation that the defendants knowingly hired and harbored illegal immigrants was insufficient to show a RICO predicate act:

The district court held that the “Illegal Immigrant Hiring Scheme” as pleaded involved a predicate RICO act, knowingly hiring undocumented workers in violation of Immigration and Naturalization Act § 274. We are unpersuaded by the growers’ argument that the district court erred in this respect. Their argument rests on a hypertechnical reading of the complaint inconsistent with the generous notice pleading standard. The complaint alleges that the defendants had knowledge of illegal harboring “and/or” smuggling. Even if knowledge of smuggling were required by the statute, an issue about which we express no opinion, the complaint easily contains this allegation.

Mendoza, 301 F.3d at 1168 (emphasis added; internal citations omitted).

Here, as in Mohawk and Mendoza, Plaintiffs’ Complaint contains sufficient allegations of RICO predicate acts—that the Swift Defendants committed acts of racketeering by knowingly hiring and harboring illegal immigrants. (Compl. ¶¶ 37-48.) First, contrary to the Swift Defendants’ assertion, the Complaint contains detailed factual allegations regarding the Swift Defendants’ predicate RICO acts, including:

  • The practice of knowingly hiring and harboring more than twenty illegal immigrants each calendar year (id. ¶¶ 37-48, 60-69);
  • The use of the government’s Basic Pilot internet verification program to evade the requirements of the Immigration Reform and Control Act (id. ¶¶ 40-41);
  • The use of third parties (i.e., “coyotes” or documentation middlemen) to recruit and obtain fake immigration papers for individuals that the Swift Defendants knew were illegal immigrants (id. ¶¶ 60-65);
  • Instructing Swift employees to falsify employment verification documents (id. ¶ 38); and
  • The “blind eye policy” of ignoring obvious facts indicating that the identification documents do not relate to the individuals tendering them (Id.).

These allegations concerning the Swift Defendants’ predicate acts are sufficient to satisfy Rule 8’s liberal notice pleading requirements. Mendoza, 301 F.3d at 1168 (concluding that the plaintiffs satisfied Rule 8’s liberal notice pleading requirements by alleging that the defendants knowingly hired illegal immigrants).

Second, the Complaint specifically identifies the statutory provisions that make knowingly hiring and harboring illegal immigrants RICO predicate acts: (i) § 274 of the INA (codified in 8 U.S.C. § 1324) (which makes it a crime to knowingly hire or harbor illegal immigrants) and (ii) 18 U.S.C. § 1961(1)(F) (which makes the crimes of hiring and harboring illegal immigrants RICO predicate acts). (Compl. ¶¶ 37, 42-48.) The Swift Defendants’ argument that the Complaint is somehow deficient because Plaintiffs allegedly failed to provide pinpoint cites to the subsections of 8 U.S.C. § 1324 that make hiring and harboring illegal immigrants federal crimes is inconsistent with the applicable notice pleading requirements and, therefore, without merit.

2. Plaintiffs’ Complaint Adequately Pleads a RICO Enterprise.

Even though the Second, Sixth, Ninth, and Eleventh Circuits have held that similar complaints were sufficiently specific to state a claim under the RICO, the Swift Defendants’ eleven-page discussion of Plaintiffs’ alleged failure to “plead a cognizable RICO” enterprise does not discuss or attempt to distinguish any of these cases. (Mot. to Dismiss at 18-29.) Instead, the Swift Defendants’ enterprise argument relies on inapposite cases and dicta from the Seventh Circuit’s Baker decision. (Id.) As discussed in detail below, the allegations regarding the RICO enterprise in Plaintiffs’ Complaint are sufficient to state a RICO claim.

a. Plaintiffs’ Enterprise Allegations Are Sufficiently Specific.

Plaintiffs allege the existence of two RICO enterprises: (i) the “Wrongful Documentation Enterprise” and the “Swift Enterprise.” (Compl. ¶¶ 60-69.) The Swift Defendants complain that the Plaintiffs’ allegations concerning these enterprises are insufficiently specific. The Supreme Court has held that the existence of an enterprise “is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.” United States v. Turkette, 452 U.S. 576, 583 (1981). The definitive factor in determining the existence of a RICO enterprise is the existence of an association of individual entities, however loose or informal, that furnishes a vehicle for the commission of two or more predicate crimes, that is, the pattern of racketeering activity requisite to the RICO violation. United States v. Elliott, 571 F.2d 880 (5th Cir. 1978). The enterprise allegations in Plaintiffs’ Complaint—which are similar to enterprise allegations held to be sufficient in Mohawk and Trollinger—clearly meet this standard. See Mohawk, 465 F.3d at 1283-86 (holding that the plaintiffs’ enterprise allegation were sufficient to state a RICO claim); Trollinger v. Tyson Foods, Inc., No. 4:02-CV-23, 2007 U.S. Dist. LEXIS 38882, at *32-44 (E.D. Tenn. May 29, 2007) (same).

1) The “Wrongful Documentation Enterprise.”

Plaintiffs allege that the “Wrongful Documentation Enterprise” (i) is an association-in-fact enterprise consisting of Defendants and third-party “documentation middlemen” used to violate federal immigration laws by hiring and harboring illegal immigrants using fake identification documents. (Compl. ¶¶ 60-65.) The Swift Defendants contend that the Complaint contains insufficient allegations regarding the “Wrongful Documentation Enterprise” because the Complaint does not (i) specifically identify “documentation middlemen” and “Individual Defendants” and (ii) does not describe the role each defendant played in the RICO conspiracy. (Mot. to Dismiss at 19-21.) For the reasons discussed below, Plaintiffs’ allegations regarding the “Wrongful Documentation Enterprise” sufficiently alleges the existence of a RICO enterprise.

“To establish an association-in-fact enterprise, a plaintiff must show evidence of an ongoing organization, formal or informal, and evidence that the various associates function together as a continuing unit.” Crowe v. Henry, 43 F.3d 198, 205 (5th Cir. 1995) (reversing district court’s dismissal of plaintiff’s complaint because complaint sufficiently alleged existence of association-in-fact enterprise). Here, Plaintiffs’ allegations regarding the “Wrongful Documentation Enterprise” are similar to allegations that sufficiently alleged the existence of association-in-fact enterprises in Mohawk and Trollinger. Mohawk, 465 F.3d at 1283-86; Trollinger, 2007 U.S. Dist. LEXIS 38882, at *32-44.

In Mohawk, the plaintiffs alleged that the defendant and third-party temp agencies/ recruiters conspired to violate federal immigration laws, destroy documentation and harbor illegal workers. Mohawk, 465 F.3d at 1284. With one exception, none of the temp agencies/recruiters were specifically identified in the complaint. See id. Rejecting the defendants’ argument that the plaintiffs’ enterprise allegations were insufficiently specific, the Eleventh Circuit held that the plaintiffs sufficiently alleged the existence of an association-in-fact enterprise consisting of the defendant and the third-party temp agencies/recruiters:

Given the Rule 12(b)(6) stage of the litigation, the plaintiffs’ complaint must be taken as true, and it has sufficiently alleged an “enterprise” under RICO; that is an association-in-fact between Mohawk and third-party recruiters. This Court has never required anything other than a “loose or informal” association of distinct entities. Mohawk and the third-party recruiters are distinct entities that, at least according to the complaint, are engaged in a conspiracy to bring illegal workers into this country for Mohawk’s benefit. As such, the complaint sufficiently alleges an enterprise under RICO.

Id.

Critically, nothing in Mohawk suggests the complaint was deficient because it did not specifically name the temp agencies/recruiters and Mohawk employees involved in the conspiracy. See id. Likewise, in Trollinger, the district court held that the plaintiffs’ allegations of an association consisting of Tyson Foods and unidentified temp agencies supplying illegal immigrants to Tyson Foods for a fee sufficiently alleged the existence of a RICO enterprise. Trollinger, 2007 U.S. Dist. LEXIS 38882, at *32-38. Moreover, nothing in either opinion suggests that the complaints contained insufficient allegations concerning the role that each person or entity played in the alleged enterprises. See id. Here, Plaintiffs’ allegations concerning the “Wrongful Documentation Enterprise” are virtually identical to the enterprise allegations in Mohawk and Trollinger. (See Compl. ¶¶ 60-65.) Therefore, the Swift Defendants’ contention that the Complaint contains insufficient allegations regarding the “Wrongful Documentation Enterprise” is simply without merit.

2) The “Swift Enterprise.”

Plaintiffs also allege that the “Individual Defendants” (i.e., Swift management) conspired to carry out the illegal hiring scheme (using third-party documentation middlemen) and, therefore, conducted Swift’s affairs in a way that violated the RICO statute. (Compl. ¶¶ 66-69.) The Swift Defendants contend that Plaintiffs’ allegations concerning the “Swift Enterprise” are insufficient because: (i) the allegations do not contain enough factual details; (ii) the Swift Facilities (i.e., Swift’s processing plants) are inanimate objects; and (iii) Swift is not named as a participant in the “Swift Enterprise.” (Mot. to Dismiss at 19-21.) This argument conflicts with a recent decision in Trollinger denying the defendant’s motion to dismiss similar allegations concerning the “Tyson Enterprise.” Trollinger, 2007 U.S. Dist. LEXIS 38882, at *41-44.

First, Plaintiffs’ allegations regarding the “Swift Enterprise” sufficiently allege a RICO enterprise. In Trollinger, the court interpreted similar allegations concerning the “Tyson Enterprise”—an alleged conspiracy to carry out a scheme to hire illegal immigrants—as alleging that the individual defendants were conducting the affairs of Tyson in a way that violated RICO. Id. at *43. Not surprisingly, the court held that the plaintiffs’ allegations were sufficient to bring the enterprise “into the realm of RICO.” Id.; see also Cedric Kusher Promotions, Ltd. v. King, 533 U.S. 158, 163 (2001) (noting that “an employee who conducts the affairs of a corporation through illegal acts comes within the terms of a statute that forbids ‘any person’ unlawfully to conduct an ‘enterprise’”); Abraham v. Singh, 480 F.3d 351, 357 (5th Cir. 2007) (allegation that owner of corporation conducted the corporation’s affairs through a pattern of racketeering activity stated a RICO claim). Here, Plaintiffs are making precisely the same allegations about the “Swift Enterprise”—that Swift management participated in a conspiracy (using Swift employees and third-party documentation middlemen) to carry out a scheme to hire illegal immigrants. (Compl. ¶¶ 60-69.) For the reasons discussed in Trollinger, these allegations sufficiently allege a RICO enterprise. Trollinger, 2007 U.S. Dist. LEXIS 38882, at *41-44.

Second, contrary to the Swift Defendants’ assertion, Plaintiffs do not allege that Swift’s processing plants, standing alone, constitute a RICO enterprise. (See Mot. to Dismiss at 18 n.81.) Instead, as discussed above, Plaintiffs’ allegations concerning the “Swift Enterprise” relate to Swift management’s participation in a RICO conspiracy to depress wages by hiring and harboring illegal immigrants. (See Compl. ¶¶ 60-69.)

Third, the Swift Defendants’ contention that the “Swift Enterprise” does not involve Swift is inconsistent with the most basic principle of corporate law—that a corporation is only capable of acting through its agents. Cedric Kusher, 533 U.S. at 165. Here, Swift’s agents (i.e., Swift management) carried out a scheme to depress wages (and thereby enriched the Swift Defendants) by hiring and harboring illegal immigrants. (See Compl. ¶¶ 60-69.) Under these circumstances, Swift is legally responsible for the conduct of its management. Trollinger, 2007 U.S. Dist. LEXIS 38882, at *41-44 (denying a motion to dismiss the plaintiffs’ allegations concerning a RICO enterprise conducted by Tyson’s management).

b. Plaintiffs’ Enterprise Allegations Sufficiently Allege Continuity.

The Swift Defendants contend that Plaintiffs’ Complaint fails to plead that the RICO enterprises had the requisite continuity because it does not allege: (i) that the enterprise had an existence apart from the pattern of racketeering activity; (ii) an ongoing organization; or (iii) a hierarchical or consensual decision-making structure. (Mot. to Dismiss at 21-22.) An enterprise is proven “by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.” United States v. Turkette, 452 U.S. 576, 580 (1981). “Continuity is both a closed and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that projects into the future with a threat of repetition.” H.J., Inc. v. N.W. Bel. Tel. Co., 492 U.S. 229, 241 (1989) (holding that complaint should not have been dismissed because, under the facts alleged, it might be possible for the plaintiff to demonstrate the requisite continuity to prove his RICO complaint). For the reasons discussed below, Plaintiffs’ Complaint sufficiently alleges continuity.

First, Plaintiffs’ Complaint sufficiently alleges that the “Wrongful Documentation Enterprise” and “Swift Enterprise” had an existence apart from the pattern of racketeering activity. Plaintiffs allege:

  • The “Wrongful Documentation Enterprise,” an association-in-fact enterprise consisting of Defendants and third-party “documentation middlemen,” conspired to violate federal immigration laws by hiring and harboring illegal immigrants using fake immigration documentation and that the third-party middlemen were paid a fee for their services. (Compl. ¶¶ 60-65); and
  • The Individual Defendants (i.e., Swift management) conspired to carry out the illegal hiring scheme (using third-party documentation middlemen) and, therefore, conducted Swift’s affairs in a way that violated the RICO statute. (Compl. ¶¶ 66-69).

In similar cases, courts have determined that similar complaints satisfied RICO’s enterprise requirement. Mohawk, 465 F.3d at 1277 (concluding that alleged association of defendant and third-party temp agencies/recruiters sufficiently alleged RICO enterprise); Trollinger, 2007 U.S. Dist. LEXIS 38882, at 36-38 (same); Brewer v. Salyer, No. CV F 06-01324 AWI DLB, 2007 U.S. Dist. LEXIS, at *33-34 (E.D. Cal. May 16, 2007) (plaintiff sufficiently alleged that RICO person (named defendant) was distinct from RICO enterprise (business the defendant used to carry out the illegal hiring scheme)).

Second, Plaintiffs’ Complaint sufficiently alleges that the “Wrongful Documentation Enterprise” and “Swift Enterprise” are ongoing organizations. (Compl. ¶¶ 38-69.) Plaintiffs allege:

  • A “long-term practice of violating the Immigration Reform and Control Act and the Immigration Nationality Act” using false identification documents and ignoring obvious facts indicating that the identity documents do not relate to the people tendering them (the “Blind Eye Policy”) (Compl. ¶ 38);
  • “The Blind Eye Policy has been approved by the Swift Defendants and the Individual Defendants and has been a long-standing policy at the Swift Facilities” (id. ¶ 39);
  • “The Swift Defendants have employed more than twenty (20) individuals each calendar year who did not have a legal right to work at the Swift Facilities, pursuant to the immigration and citizenship laws of the United States” (id. ¶ 42);
  • “The Defendants have committed at least two acts of racketeering activity not separated by more than ten years since the enactment of RICO. The Defendants’ ongoing and systematic efforts to defraud those individuals who had the legal right to work at the Swift Facilities, including Plaintiffs, pose a threat of ongoing and continuing illegal activity” (id. ¶ 55); and
  • The Defendants used the “Wrongful Documentation Enterprise” and “Swift Enterprise” to carry out a long-term scheme to hire and harbor illegal immigrants in violation of RICO (id. ¶¶ 60-69).

In Trollinger and Brewer—cases involving allegations of similar long-running illegal hiring schemes—the courts held that the plaintiffs’ allegations sufficiently alleged continuity. Trollinger, 2007 U.S. Dist. LEXIS 38882, at 36-38 (concluding that the plaintiffs satisfied the continuity requirement by alleging that Tyson had an ongoing relationship with temporary employment services with illegal workers); Brewer, 2007 U.S. Dist. LEXIS, at *31-34. Here, Plaintiffs’ allegations of a long-term and continuing scheme to hire and harbor illegal immigrants sufficiently plead closed and open-ended continuity—either of which is sufficient to satisfy RICO’s continuity requirement. Brewer, 2007 U.S. Dist. LEXIS, at *31-34 (plaintiff’s allegations of four-year illegal hiring scheme sufficiently alleged closed and open-ended continuity).

Third, Plaintiffs’ Complaint sufficiently alleges that the “Wrongful Documentation Enterprise” and “Swift Enterprise” function as continuing units. Turkette, 452 U.S. at 580 (enterprise is proven “by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit”). In Mohawk and Trollinger, the courts held that the plaintiffs sufficiently alleged that the defendants and third-party recruiters functioned as continuing RICO units. Mohawk, 465 F.3d at 1283-84; Trollinger, 2007 U.S. Dist. LEXIS 38882, at *36-38. As discussed above, Plaintiffs’ enterprise allegations are virtually identical to the allegations in Mohawk and Trollinger. (Compl. ¶¶ 60-69.) Accordingly, the Swift Defendants’ argument that Plaintiffs’ Complaint fails to sufficiently allege continuity is not well founded and should be rejected.

c. Plaintiffs’ Enterprise Allegations Sufficiently Allege that the RICO Persons Are Distinct from the RICO Enterprises.

The Swift Defendants erroneously contend that the Complaint fails to allege that the RICO persons (i.e., the Defendants) are distinct from the RICO enterprises. (Mot. to Dismiss at 22-27.) This argument is inconsistent with well-settled RICO jurisprudence. As discussed in detail below, Plaintiffs sufficiently pleaded distinct RICO enterprises.

1) The “Wrongful Documentation Enterprise” is Distinct from Defendants.

The Swift Defendants argue that the Defendants and the “Wrongful Documentation Enterprise” are the same thing (i.e., that there is somehow no distinction between Defendants, on the one hand, and Defendants plus the documentation middlemen, on the other). (Mot. to Dismiss at 22-27.) Contrary to the Swift Defendants’ assertion, the Complaint expressly alleges that the documentation middlemen are distinct from the Defendants and that Defendants’ relationship with the documentation middlemen formed an association-in-fact RICO enterprise:

  • “The Individual Defendants and the Swift Defendants entered into various agreements with persons to help get fake immigration documentation for individuals who the Defendants knew were illegal immigrants (hereinafter referred to as ‘documentation middlemen’)” (Compl. ¶ 60);
  • “At all times relevant, the documentation middlemen, who were retained to help prospective employees obtain fake and false immigration documentation, maintained their own business operations and were not agents of the Swift Defendants and were paid a fee for their work performed” (Compl. ¶ 61);
  • “The Defendants reviewed the fake immigration documentation obtained by the documentation middlemen and, pursuant to the Blind Eye Policy, accepted such documentation when they knew that such workers were illegal immigrants” (Compl. ¶ 62); and
  • “Plaintiffs allege that each relationship with the documentation middlemen formed [an] association-in-fact RICO enterprise, pursuant to § 1964(4), with the purpose of recruiting hourly employees to the Swift Facilities. The Defendants participated in the affairs of each of these association-in-fact RICO enterprises by paying for services for workers [they] knew to be illegal immigrant labor” (Compl. ¶ 63).

In considering the Motion to Dismiss, the Court must assume the truth of Plaintiffs’ allegations—not the Swift Defendants’ characterization of the Complaint. Mohawk, 465 F.3d at 1284 (“Given the Rule 12(b)(6) stage of the litigation, the plaintiffs’ complaint must be taken as true, and it has sufficiently alleged an enterprise under RICO; that is an association-in-fact enterprise between Mohawk and third-party recruiters). Under RICO, a person is “any individual or entity capable of holding a legal or beneficial interest in property.” 18 U.S.C. § 1961(3). Thus, a corporation may be both a RICO person (i.e., a defendant) and also a part of an association-in-fact enterprise consisting of the corporation plus other corporations or natural persons:

To find that a defendant cannot be part of the enterprise would undermine the purposes of the RICO statute. Indeed, RICO requires that the person be “employed by or associated with” the enterprise. 18 U.S.C. § 1962(c). Thus, a § 1962(c) defendant may be simultaneously a RICO person and a member of the RICO enterprise. Although RICO forbids the imposition of liability where the enterprise is nothing more than a subdivision or a part of the person, the requirement does not run the other way. Thus, the fact that each corporation was a defendant “person” and also part of the union of corporations which was the enterprise does not as a matter of law preclude a conviction.

United States v. Goldin Indus., 219 F.3d 1271, 1276 (11th Cir. 2000); TransFirst Holdings, Inc. v. Phillips, No. 3:06-CV-2303-P, 2007 U.S. Dist. LEXIS 36590, at *13 (N.D. Tex. May 18, 2007) (recognizing that corporate defendant may be both be RICO person and, along with other corporations or individuals, member of association-in-fact enterprise).

Here, Plaintiffs have alleged such association-in-fact enterprises, contending that the documentation middlemen are third parties. The Mohawk and Trollinger courts concluded that the complaints alleging association-in-fact enterprises consisting of the defendants and third-party recruiters satisfied RICO’s distinctness requirement. Mohawk, 465 F.3d at 1284 (the complaint satisfied RICO’s distinctness requirement by alleging that the defendant third-party recruiters were distinct entities engaged in a conspiracy to bring illegal workers into the country for the defendant’s benefit); Trollinger, 2007 U.S. Dist. LEXIS 38882, at 37-38 (same). Because the documentation middlemen are third parties (and, thus, distinct from Defendants), they, together with Defendants formed an association-in-fact enterprise under RICO. Tellingly, the Swift Defendants do not discuss or make any effort to distinguish Mohawk or Trollinger in their analysis of the distinctness issue. (Mot. to Dismiss at 22-27.) Instead, the Swift Defendants base their argument on Baker — a case that has been rejected by other courts in similar cases, and numerous cases involving different factual circumstances. (Id.)

a) Baker Is Distinguishable and Has Been Rejected by Courts in Similar Cases.

Contrary to the Swift Defendants’ assertion, the Baker Court did not hold that IBP and the third-party were not an association-in-fact enterprise. Baker, 357 F.3d at 691-92. In dicta, the Seventh Circuit observed that “it was not clear” how the association-in-fact had a common purpose because the recruiters wanted to be paid more for their services, but IBP would like to pay them less. Id. at 691. The Swift Defendants’ reading of Baker’s dicta (which seems to require that the purpose of the enterprise be the sole purpose of each member of the enterprise) is contrary to Fifth Circuit law, was expressly rejected by the Eleventh Circuit in Mohawk, and is inconsistent with the Sixth and Ninth Circuits, which have held that similar complaints stated a claim under RICO. United States v. Elliot, 571 F.2d 880, 898 (5th Cir. 1978) (concluding that “thread” tying the various members of enterprise together was the desire to make money); Mohawk, 465 F.3d at 1285-86 (rejecting Baker and concluding that the complaint sufficiently alleged that Mohawk and third-party recruiters had the common purpose of making money by providing illegal workers to Mohawk so that Mohawk could reduce its labor costs and the recruiters could get paid); Mendoza, 301 F.3d at 1171-75 (holding that similar allegations stated claim under RICO); Trollinger, 2007 U.S. Dist. LEXIS 38882, at *32-44 (holding that plaintiffs sufficiently pleaded RICO enterprise by alleging association-in-fact enterprise consisting of defendants and third-party recruiters).

b) The Swift Defendants’ Other Distinctness Cases Are Distinguishable.

Likewise, the other cases cited by the Swift Defendants are factually distinguishable and do not support the Swift Defendants’ argument that this case should be dismissed for lack of distinctness. First, the Swift Defendants cite Brittingham v. Mobil Corp., 943 F.2d 297, 299 (3d Cir. 1999) for the proposition that plaintiffs failed to sufficiently plead that Defendants are not distinct from the third-party recruiters. (Mot. to Dismiss at 24.) But, unlike this case, Brittingham involved a motion for summary judgment. Brittingham, 943 F.2d at 303. In Brittingham, the court affirmed summary judgment for the defendants, in part, because the plaintiffs did not produce evidence showing that the defendants and their advertising agencies formed a distinct enterprise. Id. at 303. Thus, Brittingham has no bearing on the issue of whether Plaintiffs have sufficiently alleged a distinct enterprise for purposes of Rule 12(b)(6). Moreover, even if Brittingham had involved a motion to dismiss, the Third Circuit subsequently disapproved of that decision in Jaguar Cars v. Royal Oaks Motor Car Co., 46 F.3d 258, 263 (3d Cir. 1995). Tellingly, the Swift Defendants failed to apprise this Court of the Jaguar Cars decision. (See Mot. to Dismiss at 22-27.)

Second, the Swift Defendants rely on the Seventh Circuit’s decision in Fitzgerald v. Chrysler Corp., 116 F.3d 225, 228 (7th Cir. 1997) to support their argument that Plaintiffs failed to sufficiently plead distinctness. (Mot. to Dismiss at 24-25.) In Fitzgerald, the plaintiff alleged that Chrysler was the RICO person and its subsidiaries and dealers constituted the enterprise. Affirming the dismissal of the RICO claim, the Seventh Circuit held that Chrysler’s dealers and subsidiaries were too akin to employees to hold Chrysler liable under RICO. See Fitzgerald, 116 F.3d at 228. This case, as alleged, is distinguishable from Fitzgerald. (Compl. ¶¶ 60-69.) Plaintiffs claim that the third-party documentation middlemen are independent from Defendants, and that the independent documentation middlemen were integral to the RICO conspiracy. (Id.) For purposes of a motion to dismiss, these allegations are sufficient to show that Defendants and the enterprise are distinct. Mohawk, 465 F.3d at 1286; Burstein v. First Penn-Pacific Life Ins. Co., No. 01-985-CIV-Graham/Turnoff, 2002 U.S. Dist. LEXIS 28115, at *18-19 (S.D. Fla. Feb. 12, 2002) (distinguishing Fitzgerald and holding that plaintiff’s allegation that defendant and independent insurance brokers constituted RICO enterprise was sufficient to show defendant and enterprise were distinct).

Third, the Swift Defendants incorrectly cite Atkinson v. Anadarko Bank & Trust Co., 808 F.2d 438, 441 (5th Cir. 1987), a case involving a judgment notwithstanding the verdict, as supporting their argument that Plaintiffs failed to adequately plead distinctness. (Mot. to Dismiss at 25.) The Atkinson Court held that the evidence was insufficient to establish that the defendant bank, its holding company, and employees were associated in any manner apart from the activities of the bank. Id. at 441. As discussed above, the Atkinson Court’s determination that there was insufficient evidence of a distinct RICO enterprise has no bearing on the issue before this Court: whether Plaintiffs have sufficiently pleaded a distinct RICO enterprise for purposes of a Rule 12(b)(6) motion. Here, Plaintiffs’ allegation that Defendants and the third-party documentation middlemen formed an association-in-fact enterprise to hire and harbor illegal immigrants is sufficient to survive a motion to dismiss. Mohawk, 465 F.3d at 1284; Trollinger, 2007 U.S. Dist. LEXIS 38882, at 37-38.

2) The “Swift Enterprise” is Distinct from the Individual Defendants.

To the extent that the Swift Defendants also contend that the “Swift Enterprise” is not distinct from the Individual Defendants (which is not clear from their briefing) (see Mot. to Dismiss at 22-27), their argument is inconsistent with a controlling Supreme Court case. Cedric Kushner, 533 U.S. at 163. In Cedric Kushner, the Supreme Court held that a corporate owner or employee who conducts the corporation’s affairs in a RICO-forbidden way is distinct from the corporation for purposes of the RICO statute:

While accepting the “distinctness” principle, we nonetheless disagree with the appellate court’s application of that principle to the present circumstances – circumstances in which a corporate employee, “acting within the scope of his authority,” allegedly conducts the corporation’s affairs in a RICO-forbidden way. The corporate owner/employee, a natural person, is distinct from the corporation itself, a legally different entity with different rights and responsibilities due to its different legal status. And we can find nothing in the statute that requires more “separateness” than that.

Id. Following Cedric Kushner, the Fifth Circuit recently held that an owner who conducted his corporation’s affairs through a pattern of racketeering activity was distinct from the corporation for purposes of the RICO statute. Abraham, 480 F.3d 357.

Here, Plaintiffs’ Complaint alleges that the Individual Defendants conducted the Swift Defendant’ affairs in a RICO-forbidden way by using the using the Swift Defendants to carry out the illegal immigrant hiring scheme. (Compl. ¶¶ 66-69.) These allegations are indistinguishable from Trollinger, a case holding the plaintiffs sufficiently pleaded a distinct RICO enterprise (i.e., the Tyson Enterprise) by alleging that the individual defendants conducted Tyson’s affairs to conduct an illegal hiring scheme in violation of RICO. Trollinger, 2007 U.S. Dist. LEXIS 38882, at *41-44 (citing Cedric Kushner, 533 U.S. at 163). Here, Plaintiffs’ Complaint alleges that the Individual Defendants conducted the Swift Defendants’ affairs in a RICO-forbidden way sufficiently alleges a distinct “Swift Enterprise.” (Compl. ¶¶ 66-69.) Therefore, the Swift Defendants’ Motion to Dismiss the Complaint because of Plaintiffs’ alleged failure to plead a distinct enterprise should be denied.

d. Plaintiffs Are Not Using the Doctrine of Respondeat Superior to Circumvent RICO.

Misquoting Paragraph 51 of the Complaint, the Swift Defendants contend that Plaintiffs are attempting to use the doctrine of respondeat superior to circumvent RICO’s requirement of a distinct RICO enterprise. (Mot. to Dismiss at 27-28.) Plaintiffs are doing no such thing. As discussed above, Plaintiffs have pleaded two distinct RICO enterprises—the “Wrongful Documentation Enterprise” and the “Swift Enterprise”—and have sued the Swift Defendants and the Individual Defendants (i.e., Swift management) for the RICO violations alleged in the Complaint. (See supra § II.D.2.c.) Paragraph 51 of the Complaint has nothing to do with Plaintiffs’ enterprise allegations. (Compl. ¶ 51.) Instead, Paragraph 51 is nothing more than a reference to the fact that, under the principles of respondeat superior, the Swift Defendants may be liable for their employees’ illegal and tortious conduct.

e. Plaintiffs’ Complaint Sufficiently Alleges the Swift Defendants’ Participation in the Affairs of the Enterprise.

The Swift Defendants erroneously contend that the Complaint fails to allege that the Swift Defendants conducted the affairs of the “Wrongful Documentation Enterprise.” (Mot. to Dismiss at 28.) In Reves v. Ernst & Young, 507 U.S. 170, 185 (1993), the Supreme Court held that to “conduct or participate, directly or indirectly, in the conduct of [an] enterprise’s affairs, one must participate in the operation or management of the enterprise itself.” Contrary to the Swift Defendants’ assertion, Plaintiffs’ allegations regarding the “Wrongful Documentation Enterprise” expressly state that the Swift Defendants participated in the operation or management of the enterprise:

  • “The Individual Defendants and the Swift Defendants entered into various agreements with persons to help get fake immigration documentation for individuals who the Defendants knew were illegal immigrants (hereinafter referred to as ‘documentation middlemen’)” (Compl. ¶ 60);
  • “The Defendants reviewed the fake immigration documentation obtained by the documentation middlemen and, pursuant to the Blind Eye Policy, accepted such documentation when they knew that such workers were illegal immigrants. The management of the Swift Facilities acquiesced and approved of this illegal hiring” (Compl. ¶ 62);
  • “The Swift Defendants participated in the affairs of each enterprise through a pattern of racketeering activity, knowingly employing and harboring illegal immigrants, as set forth herein. As a result, the Swift Defendants are each a RICO ‘person,’ pursuant to § 1961(3)” (Compl. ¶ 64); and
  • “Plaintiffs were proximately damaged as a direct result of the pattern of racketeering activity perpetrated by each of these association-in-fact enterprises. . . .” (Compl. ¶ 65.)

The essence of the allegations is that the Swift Defendants participated in the “operation or management” of the “Wrongful Documentation Enterprise.” See Mohawk, 465 F.3d at 1286 (holding that similar allegations regarding Mohawk’s participation in alleged illegal hiring scheme satisfied operation-or-management test).

Like their distinctness argument, the Swift Defendants’ operation-or-control argument is based on summary judgment cases and Baker, a case that has been subsequently rejected by other courts in similar cases. (Mot. to Dismiss at 28 (citing Reves, 507 U.S. at 185 (summary judgment case); Cash Today of Texas, Inc. v. Greenberg, No. 4:01-CV-A, 2003 U.S. Dist. LEXIS 80, at *6 (N.D. Tex. Jan.6, 2006) (summary judgment case); Baker, 357 F.3d at 691-92).) Reves and Greenberg involved motions for summary judgment and were decided based on the summary judgment evidence. Reves, 507 U.S. at 185; Greenberg, 2003 U.S. Dist. LEXIS 80, at *6. Neither case dealt with the issue before this Court—the sufficiency of the operation-or-management allegations in Plaintiffs’ Complaint. Moreover, although Baker involved a motion to dismiss, it has been rejected by other courts considering the issue. See Mohawk, 465 F.3d at 1286 (rejecting Baker Court’s analysis of operation-or-management issue).

3. Plaintiffs’ Complaint Adequately Pleads Violations of § 1962(a), (b), and (d).

a. The Complaint Sufficiently Alleges a Violation of § 1962(a).

The Swift Defendants erroneously contend that the Complaint fails to state a claim under § 1962(a) because it does not allege that the Swift Defendants invested income derived from racketeering activity in a RICO enterprise. (Mot. to Dismiss at 29 (citing In re Burzynski, 989 F.2d 733, 744 (5th Cir. 1993) (in a section 1962(a) claim, the RICO person must have received income from the pattern of racketeering activity and used that income to operate the enterprise)).) The Complaint states a § 1962(a) claim by alleging: (i) that the Swift Defendants derived income (in the form of lower payroll costs) from the illegally scheme to hire and harbor illegal immigrants (ee, e.g., Compl. ¶¶ 60, 69); (ii) that the Swift Defendants paid the documentation middlemen to supply and provide false immigration documents for the illegal immigrants (id. ¶¶ 60, 61); and (iii) the Swift Defendants’ pattern of racketeering activity was the proximate cause of Plaintiffs’ damages (id. ¶¶ 65, 76). Under Rule 8’s liberal notice pleading standard, these allegation sufficiently allege that the Swift Defendants’ invested their racketeering income in a RICO enterprise by using the money they saved by paying lower wages to illegal immigrants to pay the documentation middlemen to find more illegal workers. Fed. R. Civ. P. 8.

b. The Complaint Sufficiently Alleges a Violation of § 1962(b).

The Swift Defendants argue that the Complaint fails to state a claim under § 1962(b) because the Complaint does not allege that the (i) Swift Defendants acquired or maintained an interest in or control of a RICO enterprise and (ii) Plaintiffs’ injuries resulted from the Swift Defendants’ control of that RICO enterprise. (Mot. to Dismiss at 31-32.) This argument is based on a hyper-technical interpretation of the Complaint—the same type of hyper-technical interpretation that the Ninth Circuit rejected in Mendoza, 301 F.3d at 1168. Read as a whole, the Complaint sufficiently alleges that the Swift Defendants acquired or maintained an interest in the “Wrongful Documentation Enterprise” and that Plaintiffs’ injuries (i.e., lower wages) resulted from the Swift Defendants’ acquisition or control of that enterprise:

  • “By manipulating and controlling the labor market, the Defendants have acquired or maintained an interest in, or control of, an enterprise affecting interstate commerce through their pattern of racketeering activity in violation of 18 U.S.C. § 1962(b)” (Compl. ¶ 58);
  • “The Individual Defendants and the Swift Defendants entered into various agreements with persons to help get fake immigration documentation for individuals who the Defendants knew were illegal immigrants (hereinafter referred to as ‘documentation middlemen’)” (Compl. ¶ 60);
  • “The Defendants reviewed the fake immigration documentation obtained by the documentation middlemen and, pursuant to the Blind Eye Policy, accepted such documentation when they knew that such workers were illegal immigrants. The management of the Swift Facilities acquiesced and approved of this illegal hiring” (Compl. ¶ 62);
  • “The Swift Defendants participated in the affairs of each enterprise through a pattern of racketeering activity, knowingly employing and harboring illegal immigrants, as set forth herein. As a result, the Swift Defendants are each a RICO ‘person,’ pursuant to § 1961(3)” (Compl. ¶ 64); and
  • “Plaintiffs were proximately damaged as a direct result of the pattern of racketeering activity perpetrated by each of these association-in-fact enterprises because this pattern of racketeering activity caused the wages paid at the Swift Facilities to be depressed below what they would have been in the labor market consisting only of legal workers.” (Compl. ¶ 65.)

Under the applicable notice pleading standard, these allegations sufficiently allege that the Swift Defendants acquired or maintained an interest in a RICO enterprise by paying the documentation middlemen to find illegal workers and, as a result, depressed the wages the Swift Defendants paid to their legal workers. Fed. R. Civ. P. 8.

c. The Complaint Sufficiently Alleges a Violation of § 1962(d).

The Swift Defendants contend that Plaintiffs § 1962(d) RICO conspiracy claim should be dismissed because Plaintiffs’ Complaint allegedly fails to state a claim under § 1962(a), (b), or (c). For the reasons discussed above, the Complaint states a RICO claim under each of these sections—any one of which is sufficient to support Plaintiffs’ RICO conspiracy claim. Abraham v. Singh, 480 F.3d 351, 357 (5th Cir. 2007) (plaintiffs’ complaint stated a § 1962(d) RICO conspiracy claim by alleging that the defendants conspiring § 1962(c)). Therefore, the Swift Defendants’ motion to dismiss Plaintiffs’ RICO conspiracy claim should be denied.

4. Plaintiffs Have Sufficiently Pleaded a Pattern of Racketeering Activity.

The Swift Defendants’ argument that the Complaint fails to sufficiently plead a pattern of racketeering activity simply repeats their argument that the enterprise lacked continuity. (Mot. to Dismiss at 33-34.) For the reasons discussed above (see supra § II.D.2.b.), Plaintiffs’ allegations of a long-term and continuing scheme to hire and harbor illegal immigrants are sufficiently plead closed and open-ended continuity—either of which is sufficient to satisfy RICO’s continuity requirement. See Trollinger, 2007 U.S. Dist. LEXIS 38882, at 36-38 (concluding that the plaintiffs satisfied the continuity requirement by alleging that Tyson had an ongoing relationship with temporary employment services with illegal workers); Brewer, 2007 U.S. Dist. LEXIS, at *31-34 (plaintiff’s allegations of a four-year illegal hiring scheme sufficiently alleged closed and open-ended continuity). Therefore, the Swift Defendants’ motion to dismiss the Complaint based on Plaintiffs’ alleged failure to plead a pattern of racketeering activity should be denied.

E. The Court Should Exercise Supplemental Jurisdiction Over Plaintiffs’ State-Law Claims.

The Swift Defendant contend that the Court should decline to exercise jurisdiction over Plaintiffs’ state-law claims if the Court dismisses Plaintiffs’ federal law claims. (Mot. to Dismiss at 34.) For the reasons discussed above, Plaintiffs’ RICO claims against the Swift Defendants should not be dismissed. Therefore, the Court should retain supplemental jurisdiction over the state-law claims.

F. If the Court Determines that a More Definite Statement Is Required, Plaintiffs Are Willing To File an Amended Complaint.

In the alternative, the Swift Defendants ask the Court to require Plaintiffs to submit a more definite statement of their claims. (Mot. to Dismiss at 35.) If the Court determines that a more definite statement is required or is deficient in any other respect, Plaintiffs are willing to file an amended complaint with additional factual details.

III. CONCLUSION

For the foregoing reasons, the Motion to Dismiss should be denied in its entirety. Alternatively, if the Court believes that the Complaint is deficient in any respect, the Court should give Plaintiffs leave to replead.

Respectfully Submitted,

/s/ Michael E. Heygood

Michael E. Heygood

State Bar No. 00784267

Charles W. Miller

State Bar No. 24007677

Heygood, Orr & Pearson

2331 W. Northwest Highway, 2nd Floor

Dallas, Texas 75220

1-877-446-9001

214-237-9002 (Fax)

ATTORNEYS FOR PLAINTIFFS