Guan v. Ran et al

MOTION to Dismiss for Failure to State a Claim in Amended Complaint

E.D. Va.May 24, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION FEI GUAN, Plaintiff, v. BING RAN; ALICE GUAN; ADVANCED SYSTEMS TECHNOLOGY AND MANAGEMENT, INC.; AND QI TECH, LLC, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 1:17-cv-00332 (JCC/IDD) DEFENDANT ADVANCED SYSTEMS TECHNOLOGY AND MANAGEMENT, INC.’S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO DISMISS Defendant Advanced Systems Technology and Management, Inc. (“AdSTM”) respectfully submits this memorandum of law in support of its motion to dismiss the Amended Complaint pursuant to (1) Fed. R. Civ. P. 12(b)(6) because Counts I through III fail to state a claim upon which relief can be granted under the human trafficking statute, and (2) Fed. R. Civ. P. 12(b)(1) because Count V’s request for declaratory relief fails to allege a justiciable case or controversy. INTRODUCTION Plaintiff is a resident alien who came to the United States in 2008 to join his sister, defendant Alice Guan, and work at AdSTM, the Northern Virginia engineering and consulting firm Ms. Guan founded. Since Plaintiff began working at AdSTM in October 2008, AdSTM has paid Plaintiff a healthy salary, benefits, tuition support and bonuses. With this lawsuit, Plaintiff seeks to recover payments he made to defendant Bing Ran from October 2008 to August 2014. Plaintiff alleges these payments were required by agreements Mr. Ran and Ms. Guan made in a Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 1 of 18 PageID# 311 - 2 - property settlement agreement arising out of their divorce and incorporated into a court order. Even though Plaintiff concedes AdSTM was not a party to this property settlement agreement and was not bound by that agreement or the court order, Plaintiff seeks to recover the alleged payments from AdSTM as well as from Ms. Guan and Mr. Ran. This is not Plaintiff’s first bite at the apple. Plaintiff initially filed this lawsuit on March 24, 2017, primarily asserting violations of the federal human trafficking statute. Because the Complaint failed to allege a proper claim of human trafficking—described by Congress as “a contemporary manifestation of slavery”—AdSTM filed a motion to dismiss the Complaint for failure to state a claim. (Dkts. 22-23.) Plaintiff responded to this motion by filing his Amended Complaint on May 10, 2017. (Dkt. 33.) The Amended Complaint fails to cure the deficiencies of the initial complaint pointed out in AdSTM’s motion to dismiss, however, and it raises no new valid claims. Reciting essentially the same set of underlying facts as the initial complaint, Plaintiff makes substantially similar legal claims, including the identical “peonage” claims under the federal human trafficking statute (Counts I and II). The Amended Complaint replaces the initial complaint’s trafficking conspiracy counts for a direct trafficking claim (Count III), and adds a request for declaratory relief (Count V).1 Just like the initial complaint, the Amended Complaint fails to allege the type of conduct targeted by the Trafficking Victims Protection Act, a statute enacted to protect victims from involuntary servitude. Courts define this “contemporary manifestation of slavery” as serious physical or psychological coercion that as a practical matter eliminates the victim’s ability to exercise free will or choice to work for an employer. Where, as here, an alleged “victim” is highly educated, well-paid, and free to leave the defendant’s employ 1 Count IV of the Amended Complaint maintains the common law unjust enrichment claim, but against the individual defendants only. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 2 of 18 PageID# 312 - 3 - at any time, there is no violation of this Act. Plaintiff’s Amended Complaint against AdSTM should be dismissed in its entirety. STATEMENT OF FACTS During the relevant period, October 2008 to August 2014, AdSTM paid Plaintiff $557,214.84 in salary and bonuses, plus health care benefits and tuition reimbursement. Am. Compl. Exs. B and D.2 Remarkably, given the purported severity of the allegations, Plaintiff has chosen to remain employed at AdSTM for the nearly three years since that time, and remains at AdSTM today. Plaintiff began working at AdSTM in October 2008 at an annual salary of $75,000, “working primarily from home” and under the “direction and supervision” of his sister, defendant Alice Guan, Am. Compl. ¶¶ 94-96, 101, who helped her brother relocate to the United States under an H-1B work visa. Am. Compl. ¶¶ 20-21, 31 and Ex. B. By the end of the claimed period, in August 2014, Plaintiff was earning $104,000 per year. Am. Compl. Ex. D. Plaintiff’s salary thus increased by $29,000 during the relevant period, reflecting a 38.67% adjustment or a 6.45% annual raise average. Am. Compl. Ex. D. Plaintiff also received monthly bonuses—of which no portion was paid to Mr. Ran—starting at $300 per month, then $1,000 per month, and progressing to $2,000, $2,850 and $3,175. Am. Compl. Ex. D. Nothing in the Amended Complaint demonstrates any physical or psychological coercion eliminating Plaintiff’s ability to exercise his free will to seek a different job in the United States or in a different country. 2 When evaluating a complaint under Rule 12(b)(6), the court must consider documents attached to or incorporated by reference in the complaint. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 3 of 18 PageID# 313 - 4 - Plaintiff’s circumstances bear no resemblance to the Act’s purpose to prevent the “contemporary manifestation of slavery.”3 Plaintiff was born in China and graduated from Tsinghua University in Beijing, China in 1996 with a major in Electronics and a minor in Mechanical Engineering. Am. Compl. ¶¶ 1-2. He came to the United States in 2008 under an H-1B work visa sponsored by AdSTM, a Northern Virginia engineering and consulting firm founded by Plaintiff’s sister, Ms. Guan. Am. Compl. ¶¶ 2-3, 5, 16, 31. Ms. Guan rented a home she owned to Plaintiff for a low monthly rent of $1,300.4 Am. Compl. ¶¶ 30, 35. She did not even require him to pay for his utility charges for another year thereafter. Am. Compl. ¶ 36. According to Plaintiff’s signed offer letter, Am. Compl. ¶ 21 and Ex. B, Plaintiff was eligible to participate in AdSTM’s employee benefits program, including its group health and dental plans. Am. Compl. Ex. B., p. 1. Plaintiff’s employment was at-will. Thus, Plaintiff was “free to resign from AdSTM at any time and for any reason.” Am. Compl. Ex. B., p. 2. The offer letter was clear: Nothing in this offer letter, in any documents you may receive from or provide to AdSTM, or in any other materials AdSTM may give to you either before or after your employment begins, may be construed to limit the at-will nature of your employment. No one at AdSTM has the authority to modify the at-will nature of this employment relationship, whether orally or in writing. Am. Compl. Ex. B., p. 2 (emphasis added). 3 Indeed, Plaintiff’s last-reported salary of $104,000 is the equivalent of a GS-13 government employee. See Attached Exhibit 1. 4 Even if it was somehow problematic to rent a house to Plaintiff for $1,300 per month, the numerous paragraphs of the Amended Complaint relating to the private living arrangements agreed upon by Plaintiff and his sister are irrelevant to any of the Amended Complaint’s allegations with respect to AdSTM. See, e.g., Am. Compl. ¶¶ 30, 35-37, 104, 106, 120. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 4 of 18 PageID# 314 - 5 - Plaintiff’s claims are grounded on a 2006 Parenting, Support, and Property Settlement Agreement (“PSA”) between Ms. Guan and Mr. Ran, stemming from their divorce. Am. Compl. ¶¶ 45-46 and Ex. A. The PSA was amended in June and October 2008. Am. Compl. ¶¶ 49, 51, 56-57 and Ex. C. Plaintiff bases his Amended Complaint on language contained in the October 2008 amendment providing for AdSTM’s continued employment of Ms. Guan’s two brothers including Plaintiff. Am. Compl. ¶¶ 58-59 and Ex. C. That amendment was later incorporated into an order entered by the Alexandria Circuit Court on May 13, 2016. A copy of the Circuit Court Order is attached as Exhibit 2 to this memorandum.5 AdSTM was not a party to the original PSA, the June or October 2008 amendments, or the May 2016 Circuit Court Order. Am. Compl. Ex. A, ¶ 9(j) pp. 11-12 (stating “this agreement does not directly bind AdSTM” since it is a separate legal entity and is not a party to this agreement); Am. Compl. Ex. C; attached Ex. 2. Thus, AdSTM was not bound by the allegedly offensive language. According to Plaintiff, the PSA required him to pay Mr. Ran one-half of his net income received from AdSTM and, if he did not do so, Mr. Ran and AdSTM would “have no obligation to pay and hire” Plaintiff. Am. Compl. ¶¶ 51, 56-58 and Ex. C. Even though he claims he knew nothing about the PSA before accepting his position at AdSTM, id. ¶¶ 26-27, 52-53, 56, 62-65, Plaintiff was aware of the alleged requirement to pay Mr. Ran before his first day of at-will employment at AdSTM. Am. Compl. ¶ 70. Nevertheless, Plaintiff claims he agreed to pay Mr. Ran because his sister, Ms. Guan, told him he would be terminated from AdSTM and required to leave the United States if he did not. Am. Compl. ¶¶ 71, 75. This alleged statement by Ms. Guan is both factually and legally incorrect, however. Plaintiff could have remained in the United 5 The court may consider documents attached to a motion to dismiss if those documents are central to plaintiff’s claim or sufficiently referred to in the complaint, so long as plaintiff does not challenge their authenticity. Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Plaintiff can have no reason to challenge the authenticity of this court order. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 5 of 18 PageID# 315 - 6 - States through the sponsorship of another employer if he had elected to seek other employment. And he was free to do so when he first learned of the alleged payment requirement before he began his employment at AdSTM. But Plaintiff chose to move forward, receiving from AdSTM the full salary promised him, plus health benefits and paid tuition. Am. Compl. ¶¶ 94, 101 and Exs. B, D. From October 2008 to August 2014, Plaintiff claims to have made monthly payments to Mr. Ran. Am. Compl. ¶¶ 97-98, 118-119 and Ex. D.6 Not only do these payments have nothing to do with AdSTM, but also, even after factoring in the alleged payments, Plaintiff received approximately $397,272.36 in net salary and bonuses from AdSTM during this period, plus health benefits and paid tuition. Am. Compl. Exs. B, D. Plaintiff fails to explain why he did not simply decline to work for AdSTM. In his Amended Complaint, Plaintiff now claims he had no option because a non-compete agreement purportedly prevented him from seeking another employer. Am. Compl. ¶¶ 80, 85-86. But that agreement was not signed until October 20, 2008, id. Ex. F, after Plaintiff’s start date. Plaintiff ignores that he was under no obligation or coercion to begin working for AdSTM when he first learned of the payment requirement before his start date. Am. Compl. ¶ 70. Plaintiff enjoyed free will either to return to China or seek employment with another U.S. company under a different work visa—and he alleges no facts or law to support otherwise. Even after he started working with AdSTM, Plaintiff was an at-will employee who was free to terminate his own employment at any time. Am. Compl. Ex. B., p. 2. Plaintiff mischaracterizes the breadth of the non-compete agreement, which does not restrict Plaintiff 6 The Complaint alleges facts relating to work Plaintiff allegedly performed for, and payments he received from defendant Qi Tech, LLC. Am. Compl. ¶¶ 147-155 and Ex. E. It is unclear how these allegations are relevant to the claims against AdSTM. They are therefore not discussed here. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 6 of 18 PageID# 316 - 7 - from working for all companies. Am. Compl. Ex. F, ¶ 8 p. 3. Further, AdSTM has never sought to enforce this non-compete agreement against Plaintiff, and there is no current dispute over Plaintiff’s ability to leave AdSTM and seek employment elsewhere. No fact contained in the Amended Complaint comes anywhere near the conduct the statute was enacted to prevent—serious physical or psychological coercion eliminating a person’s ability to exercise free will. Plaintiff is a well-educated, highly compensated individual who made a choice to begin working, and remain working to this day, at AdSTM. That choice is not actionable as a matter of law. STANDARD OF REVIEW To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter” to set forth “a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when pleaded facts, accepted as true, permit the court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679 (citations omitted). The complaint must provide more than legal conclusions or a “formulaic recitation of the elements of a cause of action.” Id. at 678 (quoting Twombly, 550 U.S. at 555). Nor is it sufficient for a complaint to rely on naked assertions without factual support, legal conclusions couched as factual allegations, unwarranted inferences, or unreasonable conclusions or arguments. Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 555; E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000). Moreover, because Plaintiff’s trafficking claims consist of alleged criminal violations (with a civil remedy under § 1595 of the Act), they not only must pass muster under Twombly and Iqbal, but also must be strictly construed in favor of defendants. Crandon v. United States, Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 7 of 18 PageID# 317 - 8 - 494 U.S. 152, 158 (1990) (applying rule of lenity where governing standard in civil case came from criminal statute); Fed. Commc’ns Comm’n v. Am. Broad. Corp., 347 U.S. 284, 296 (1954) (criminal statutes must be strictly construed even when they are applied in civil cases). The Amended Complaint does not survive review under these standards. ARGUMENT I. PLAINTIFF FAILS TO ALLEGE A COGNIZABLE TRAFFICKING CASE The primary claims of the Amended Complaint against AdSTM (Counts I - III) allege violations of the Trafficking Victims Protection Reauthorization Act (“TVPRA” or the “Act”)7 under that statute’s civil remedy provision. Each of these Counts fails to allege facts necessary to support a plausible case within the Act’s legislative purpose and should be dismissed for that reason. A. Plaintiff Alleges No Coercion The conduct alleged by Plaintiff simply falls outside the type of conduct the Act was enacted to prevent. The central issue of the statute “does not concern the terms and conditions of Plaintiff’s employment, as such, but rather the volitional nature of that employment.” Muchira v. Al-Rawaf, No. 1:14-cv-770, 2015 U.S. Dist. LEXIS 49806, at **30-31 (E.D. Va. Apr. 15, 2015) (internal citation omitted), aff’d, 850 F.3d 605 (4th Cir. 2017). “[T]he critical inquiry for the purposes of the TVPA is whether a person provides those services free from a defendant’s physical or psychological coercion that as a practical matter eliminates the ability to exercise free will or choice.” Id. 7 The TVPRA amended the Trafficking Victims Protection Act (“TVPA”), which was enacted “to combat trafficking in persons, a contemporary manifestation of slavery whose victims are predominantly women and children, to ensure just and effective punishment of traffickers, and to protect their victims.” Pub. L. No. 106-386 (2000). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 8 of 18 PageID# 318 - 9 - Here, nothing in Plaintiff’s Amended Complaint alleges conduct eliminating Plaintiff’s ability to exercise his free choice to work for AdSTM (or not). The Amended Complaint alleges only that Plaintiff made monthly payments to Mr. Ran, and his sister Alice Guan told him he would be terminated and lose his visa status if he stopped making those payments. Am. Compl. ¶¶ 71, 75, 97-98. This alone, Plaintiff alleges, caused him to feel he “had no option.” Am. Compl. ¶¶ 74, 93. Such facts cannot support a reasonable inference that Plaintiff was forced to work at AdSTM against his will or that any of the defendants, let alone AdSTM, eliminated his ability to leave AdSTM’s employ at any time. Plaintiff’s assertion that the terms of his H-1B visa did not allow him to pursue other employment opportunities is legally incorrect. There is nothing in the statute suggesting an H-1B visa recipient cannot seek a new sponsoring employer. In fact, 8 U.S.C. §1184(n)8 specifically authorizes H-1B nonimmigrant aliens to accept new employment upon the filing, by a prospective employer, of a new H-1B petition. With his Amended Complaint, Plaintiff asserts for the first time that his non-compete agreement prevented him from leaving AdSTM. This assertion is also incorrect. See infra Part IV. But even if Plaintiff’s free decision to leave AdSTM’s employ did result in the loss of his visa status, adverse, but legitimate, consequences of the immigration rules do not rise to the level of coercion the Act is intended to prevent. The Act was not intended to prohibit employers from acknowledging legitimate consequences potentially arising from an employee’s voluntary or involuntary termination. Muchira v. Al-Rawaf, 850 F.3d 605, 622-25 (4th Cir. 2017). Plaintiff has alleged nothing more here. The Amended Complaint contains no factual allegations to 8 “A nonimmigrant alien . . . previously issued a visa or otherwise provided nonimmigrant status under section 101(a)(15)(H)(i)(b) is authorized to accept new employment upon the filing by the prospective employer of a new petition on behalf of such nonimmigrant as provided under subsection (a). Employment authorization shall continue for such alien until the new petition is adjudicated.” 8 USCS § 1184(n)(1). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 9 of 18 PageID# 319 - 10 - support the inference that AdSTM (or any defendant) coerced Plaintiff to work at AdSTM against his free will. Plaintiff’s attempt to shoehorn his allegations into a claim of a “contemporary manifestation of slavery” under the TVPRA is misguided at best and unavailing. For example, in Muchira v. Al-Rawaf, the Fourth Circuit affirmed the district court’s rejection of plaintiff’s forced labor claim, noting the statute is intended to address harm or threat of harm “sufficiently serious to compel [a] person to remain in her condition of servitude when she otherwise would have left.” 850 F.3d at 618 (emphasis in original; internal citations and quotes omitted). The Muchira plaintiff admitted she came to the United States willingly, could terminate her employment at any time, and understood a possible and legitimate consequence of her decision to leave was that she would have to leave the country. Id. at 619, 622-25. Yet she “wanted to remain in the United States and enjoy its abundant educational and employment opportunities.” Id. at 625. Where an employee “knows he has a choice between continued service and freedom,” there is no violation of the Act even if the employer “has led him to believe that the choice may entail consequences that are exceedingly bad.” Turner v. Unification Church, 473 F. Supp. 367, 375-76 and n.1 (D.R.I. 1978)9 (quoting United States v. Shackney, 333 F.2d 475, 486 (2d Cir. 1964), aff’d, 602 F.2d 458 (1st Cir. 1979). See Headley v. Church of Scientology Int’l, 687 F.3d 1173, 1180 (9th Cir. 2012) (rejecting forced labor claims where the alleged victims were able to leave at any time); Alvarado v. Universidad Carlos Albizu (Carlos Albizu Univ.), Inc., No. 10-22072-CIV, 2010 U.S. Dist. LEXIS 87662, at **5-10 (S.D. Fla. Aug. 25, 2010) (granting motion to dismiss, acknowledging that to accept plaintiff’s logic would mean 9 Turner involved the then-existing criminal statutes prohibiting peonage and involuntary servitude (18 U.S.C. §§ 1581 and 1583) which are substantively the same as today. The TVPA and TVPRA made limited changes to the peonage statute, increasing permissible jail time in 2000 and granting a private civil remedy in December 2008. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 10 of 18 PageID# 320 - 11 - “virtually all immigration regulation violations that adversely affect employees could be characterized as ‘abuse or threatened abuse’ of the law or legal process by the employer”). Similarly, Plaintiff “earned a healthy salary, and enjoyed the same freedoms and rights of employment as any other alien resident.” Alvarado, 2010 U.S. Dist. LEXIS at *11. If AdSTM had terminated his employment, as Plaintiff claims was threatened by Ms. Guan, “he was free to seek employment with another employer or to leave the United States.” Id. Accepting all the facts alleged in the Amended Complaint as true, whether couched as “debt servitude” (Counts I and II) or “trafficking” (Count III), these facts do not and cannot demonstrate a plausible claim that AdSTM knowingly forced or coerced Plaintiff to come to the United States, or to remain in AdSTM’s employ against his will by means of serious psychological harm, or abuse (or threatened abuse) of law or legal process. Plaintiff’s decision to remain at AdSTM even after he ceased making any payments in August 2014 alone belies any threats of harm or abuse here.10 B. Plaintiff Fails To Allege AdSTM Acted Knowingly And Willfully Even if the alleged payments to Mr. Ran could be construed as “debt servitude” or “trafficking” (they cannot), the Amended Complaint fails to allege any facts to support its bare conclusions that AdSTM “knowingly and willfully” held Plaintiff in involuntary servitude to satisfy a debt, Am. Compl. ¶ 160, “knowingly benefitted financially” from this debt, id. ¶ 175, and “knowingly and willfully” trafficked Plaintiff to the United States to obtain his involuntary labor, id. ¶ 188. United States v. Dann, 652 F.3d 1160, 1170 (9th Cir. 2011) (scienter is an express requirement of the TVPRA); United States v. Calimlim, 538 F.3d 706, 711 (7th Cir. 2008) (same). 10 Further, to the extent the Amended Complaint is seeking repayment of the monies paid to Mr. Ran from his AdSTM salary, this is an improper claim under the TVPRA. Alvarado, 2010 U.S. Dist. LEXIS 87662, at **6-8 (rejecting plaintiff’s argument that failure to pay him additional monies allegedly owed under the labor laws constituted a misuse of legal process under the TVPRA). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 11 of 18 PageID# 321 - 12 - Plaintiff concedes AdSTM was neither a party to the alleged PSA agreement between Ms. Guan and Mr. Ran, nor bound by that agreement. Am. Compl. Ex. A, ¶ 9(j) pp. 11-12. Indeed, AdSTM paid Plaintiff the full salary promised him, plus benefits, tuition support and bonuses. The only alleged motive or interest in the PSA or the payments paid to Mr. Ran are personal to Mr. Ran and Ms. Guan, and adverse to any alleged interest of AdSTM. Neither Mr. Ran’s nor Ms. Guan’s alleged knowledge or intent can be imputed to AdSTM as a matter of law. In re Derivium Capital, LLC, 716 F.3d 355, 367-68 (4th Cir. 2013) (under the “adverse interest” exception “the wrongs of an agent are not imputed to the principal if the agent acted adverse to the principal’s interests”); Allen Realty Corp. v. Holbert, 227 Va. 441, 446, 318 S.E.2d 592, 594- 95 (1984) (agent’s knowledge is not imputed to the principal where the agent acts out of a personal motive or interest adverse to the principal’s interests). In sum, Counts I, II and III of the Amended Complaint should be dismissed because they fail to allege facts fundamental to a plausible case within the legislative purpose and requirements of the TVPRA. II. COUNTS I AND II FAIL TO ALLEGE “DEBT SERVITUDE” Counts I and II should be dismissed for an additional reason—the Amended Complaint fails to allege the existence of a debt. Both Counts I and II of the Amended Complaint are predicated on a finding of “peonage,” also called “debt servitude” or “debt bondage.”11 And the existence of a debt is fundamental to any claim of peonage. United States v. Reynolds, 235 U.S. 133, 144 (1914); Bailey v. State of Alabama, 219 U.S. 219, 242-43 (1911) (peonage is a condition of compulsory service where an individual is compelled to work until such debt is paid 11 “Debt bondage” is the “status or condition of a debtor arising from a pledge by the debtor of his . . . personal services . . . as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined.” 22 U.S.C. § 7102(5). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 12 of 18 PageID# 322 - 13 - off). Moreover, the conduct on which Plaintiff relies occurred before the Act provided a civil remedy for “peonage.” A. The Act Did Not Provide A Civil Remedy At The Time Of The Alleged Conduct Congress first provided a civil remedy to victims of trafficking with the passage of the TVPRA in 2003. Pub. L. No. 108-193 (2003). Initially, the Act limited this civil remedy to specific violations of Chapter 77 of Title 18, which did not include the “peonage” provisions relied upon in Counts I and II of the Amended Complaint.12 It was not until December 23, 2008 that the Act’s civil remedy provision was expanded to allow a trafficking victim to sue for a violation of any section of Chapter 77, including the peonage claims alleged by Plaintiff here. Pub. L. No. 110-457 (2008). Plaintiff alleges he made his first payment to Mr. Ran on October 2008. Therefore, the nucleus of facts given rise to his allegations—the original PSA, each amendment thereto, and Ms. Guan’s alleged notification to Plaintiff of the PSA’s terms—all predate the Act’s expansion of a civil remedy to claims for peonage. And it is well-settled that the Act does not operate retroactively. Velez v. Sanchez, 693 F.3d 308, 324-25 (2d Cir. 2012); Ditullio v. Boehm, 662 F.3d 1091, 1100-02 (9th Cir. 2011); Doe v. Siddig, 810 F. Supp. 2d 127, 136 (D.D.C. 2011). For this reason alone, the Court should dismiss Counts I and II. B. The Amended Complaint Alleges No Debt Counts I and II must be dismissed for the additional and simple reason that there was no debt to support a finding of “debt servitude.” In no way can the alleged payments to Mr. Ran be characterized as a debt. Indeed, Plaintiff admits that: (1) the PSA did not describe the payments as a loan, Am. Compl. ¶ 126; (2) Mr. Ran never described the payments as a debt, id. ¶ 124; (3) 12 The specific violations are: §1589 (prohibiting forced labor); § 1590 (prohibiting recruitment or transportation of a person to provide or obtain that person’s labor or services); and § 1591(prohibiting sex trafficking). Pub. L. No. 108-193, § 4(a)(4)(A). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 13 of 18 PageID# 323 - 14 - Mr. Ran never discussed with Plaintiff any repayment of a debt, id. ¶ 125; (4) the document Mr. Ran allegedly mentioned to Plaintiff in 2014 did not mention any debt, id. ¶ 127; and (5) Plaintiff never signed any document stating the payments were in payment of a loan, id. ¶¶ 128-129. Thus, the Amended Complaint alleges no facts to support an inference that Plaintiff was compelled by AdSTM (or any of the defendants) to work under a yoke of indebtedness. Without such indebtedness, Counts I and II must be dismissed for failure to state a claim. III. COUNT III ALLEGES NO CONDUCT ON THE PART OF ADSTM Count III also fails to state a valid claim against AdSTM because the only facts alleged in support of this separate claim for trafficking relate to conduct by Ms. Guan alone. To state a claim for trafficking against AdSTM, Plaintiff must demonstrate that AdSTM recruited, transported, harbored or otherwise obtained Plaintiff’s services with the knowledge that Plaintiff would be subjected to involuntary servitude.13 In support of his Section 1590 claim, Plaintiff claims Ms. Guan offered a position to Plaintiff, who then resided in Japan, Am. Compl. ¶ 20; Ms. Guan conducted all discussions leading up to Plaintiff’s decision to come to the United States, id. ¶¶ 21-22; Ms. Guan hired an immigration attorney to represent Plaintiff, id. ¶ 28; Ms. Guan arranged for Plaintiff’s housing, id. ¶ 30; Ms. Guan picked Plaintiff and his family up from the airport, and transported them to the home they would lease from her, id. ¶ 33-34. Plaintiff fails to allege how AdSTM recruited, harbored, provided or obtained his services, a necessary element to prove trafficking under this statute. This claim must also fail because Plaintiff cannot demonstrate he was recruited for labor or services in violation of the Act. In other words, because Plaintiff has failed to allege any 13 Section 1590 of the Act establishes penalties for anyone who “knowingly recruits, harbors, transports, provides, or obtains by any means, any person for labor or services in violation of” any of the provisions prohibiting peonage, slavery, involuntary servitude, or forced labor. 18 U.S.C. § 1590(a). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 14 of 18 PageID# 324 - 15 - predicate violation of peonage, slavery, involuntary servitude, or forced labor (for all the reasons set forth in the preceding sections of this brief), there can be no violation of Section 1590. The Court should dismiss Count III for these additional reasons. IV. NO CASE OR CONTROVERSY EXISTS FOR COUNT V Count V of the Amended Complaint asks the Court to declare an Employee Proprietary Information and Non-Compete Agreement signed by Plaintiff void and unenforceable because it prevents him from seeking employment outside of AdSTM. Am. Compl. ¶¶ 218, 220-21 and Ex. F. But AdSTM has not sought to enforce this non-compete agreement against Plaintiff, thus Plaintiff cannot allege facts sufficient to show a “case of actual controversy” required for declaratory relief.14 The facts alleged in support of a declaratory judgment request must show a real and substantial controversy between the parties, having immediate and real adverse legal interests. MedImmune Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Plaintiff must show that he is under an imminent threat of harm unless the dispute is resolved. And unsubstantiated and hypothetical fears of enforcement are insufficient to demonstrate such harm. Pub. Serv. Comm’n v. Wycoff Co., 344 U.S. 237, 244 (1952) (disagreement must not be nebulous or contingent, but must be sufficiently fixed and final for the court to see what legal issues it is deciding and what effects its decision will have on the adversaries); Jones v. Sears Roebuck & Co., 301 Fed. App’x 276, 282-83 (4th Cir. 2008) (no actual controversy where defendant took no action, even of a preliminary nature, against plaintiff and showed no intent to take future legal action against plaintiff). Cf. Assurance Data, Inc. v. Malyevac, 286 Va. 137, 144, 747 S.E.2d 804, 808 (2013) 14 The Declaratory Judgment Act provides in pertinent part, “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 15 of 18 PageID# 325 - 16 - (non-competition agreements “are neither enforceable nor unenforceable in a factual vacuum” under Virginia law). Plaintiff therefore must show AdSTM’s enforcement, or threatened enforcement, of the non-compete. Because AdSTM has never sought enforcement of the non-compete nor indicated to Plaintiff that it would do so (nor has Plaintiff indicated any desire to leave AdSTM’s employ), Plaintiff cannot make this showing. Numerous courts have dismissed declaratory judgment claims in similar circumstances, holding that, although an actual breach by the plaintiff is not required, an Article III case or controversy does not exist with respect to the enforceability of a non-competition agreement unless there is a real likelihood the agreement will be enforced. E.g., Funk v. Syngenta Seeds, Inc., No. 14-md-2591, 2017 U.S. Dist. LEXIS 74367, at **189-194 (D. Kan. May 15, 2017) (dismissing request for declaration regarding enforceability of non-compete provision in absence of allegation that defendant threatened to enforce non-compete provision); Brunner v. Liautaud, No. 14-c-5509, 2015 U.S. Dist. LEXIS 46018, at **31-36 (N.D. Ill. Apr. 8, 2015) (dismissing declaratory judgment claim where plaintiffs failed to allege facts showing defendant intended to enforce the non-compete agreement, or how their conduct may even violate that agreement, thus claimed fear of an impending lawsuit was unreasonable); Educ. Mgmt. Servs. v. Cadero, No. SA-14-CA-587, 2015 U.S. Dist. LEXIS 183297, at **5-6 (W.D. Tex. Jan. 7, 2015) (dismissing declaratory judgment claim where complaint failed to allege facts showing defendant intended to enforce the non-compete agreement); Boudreaux v. OS Rest. Servs., LLC, No. 13-5333, 2013 U.S. Dist. LEXIS 150829, at **13-16 (E.D. La. Oct. 21, 2013) (dismissing declaratory judgment action where complaint did not allege threat of litigation or any conduct that would make litigation a certainty; allegation that plaintiff’s ability to support his family had been adversely affected was not sufficient). Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 16 of 18 PageID# 326 - 17 - Plaintiff’s motive in raising this new request for declaratory relief is evident. Realizing his inability to demonstrate the serious conduct and coercion required by the Act, Plaintiff now raises the non-compete agreement to bootstrap his inappropriate trafficking claims. But Plaintiff’s hypothetical concern over the non-compete agreement cannot demonstrate a real and substantial controversy; nor can it demonstrate any actual coercion by AdSTM, let alone the serious physical or psychological coercion required to state a claim under the human trafficking statute. The Court should deny Plaintiff’s tactical efforts and dismiss Count V for lack of standing. Gribin v. Hammer Galleries, Div. Hammer Holdings, Inc., 793 F. Supp. 233, 236-37 (C.D. Cal. 1992) (court can decline jurisdiction if it appears that the suit was filed for an improper tactical purpose); see also Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995) (court has the discretion to determine whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies the “case or controversy” prerequisite). CONCLUSION For the foregoing reasons, AdSTM respectfully requests that the Court dismiss the Amended Complaint against AdSTM without leave to amend these claims, since no amendment can cure the factual and legal deficiencies of Plaintiff’s claims under the TVPRA and the Declaratory Judgment Act. Dated: May 24, 2017 /s/ James B. Kinsel James B. Kinsel (VSB No. 44247) Rebecca Bricken Segal (VSB No. 73403) PROTORAE LAW, PLLC 1921 Gallows Road, Suite 950 Tysons, VA 22182 (p) 703-749-8507 (f) 703-942-6758 jkinsel@protoraelaw.com rsegal@protoraelaw.com Counsel for Defendant Advanced Systems Technology and Management, Inc. Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 17 of 18 PageID# 327 - 18 - CERTIFICATE OF SERVICE I hereby certify that on May 24, 2017, I electronically filed a true and correct copy of the foregoing paper with the Clerk of the Court using the CM/ECF system, which will send electronic notification of such filing (NEF) to all registered users of the Court’s CM/ECF system who have filed notices of appearance in this matter. /s/ James B. Kinsel Case 1:17-cv-00332-JCC-IDD Document 46 Filed 05/24/17 Page 18 of 18 PageID# 328 Exhibit 1 Case 1:17-cv-00332-JCC-IDD Document 46-1 Filed 05/24/17 Page 1 of 2 PageID# 329 SALARY TABLE 2014-DCB INCORPORATING THE 1% GENERAL SCHEDULE INCREASE AND A LOCALITY PAYMENT OF 24.22% FOR THE LOCALITY PAY AREA OF WASHINGTON-BALTIMORE-NORTHERN VIRGINIA, DC-MD-VA-WV-PA TOTAL INCREASE: 1% EFFECTIVE JANUARY 2014 Annual Rates by Grade and Step Grade Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 Step 10 1 $ 22,336 $ 23,083 $ 23,825 $ 24,565 $ 25,307 $ 25,743 $ 26,477 $ 27,218 $ 27,246 $ 27,942 2 25,114 25,711 26,542 27,246 27,551 28,361 29,171 29,980 30,790 31,600 3 27,400 28,313 29,226 30,139 31,053 31,966 32,879 33,792 34,705 35,618 4 30,761 31,785 32,810 33,835 34,860 35,885 36,909 37,934 38,959 39,984 5 34,415 35,563 36,711 37,859 39,006 40,154 41,302 42,450 43,597 44,745 6 38,363 39,641 40,919 42,198 43,476 44,754 46,032 47,310 48,589 49,867 7 42,631 44,052 45,473 46,894 48,315 49,736 51,158 52,579 54,000 55,421 8 47,212 48,786 50,360 51,934 53,508 55,082 56,655 58,229 59,803 61,377 9 52,146 53,884 55,622 57,360 59,098 60,836 62,573 64,311 66,049 67,787 10 57,426 59,340 61,254 63,168 65,083 66,997 68,911 70,825 72,740 74,654 11 63,091 65,194 67,297 69,400 71,504 73,607 75,710 77,813 79,916 82,019 12 75,621 78,142 80,662 83,183 85,703 88,224 90,744 93,264 95,785 98,305 13 89,924 92,922 95,919 98,916 101,914 104,911 107,909 110,906 113,904 116,901 14 106,263 109,804 113,346 116,887 120,429 123,970 127,512 131,053 134,595 138,136 15 124,995 129,161 133,328 137,494 141,660 145,827 149,993 154,160 157,100 * 157,100 * * Rate limited to the rate for level IV of the Executive Schedule (5 U.S.C. 5304 (g)(1)). Applicable locations are shown on the 2014 Locality Pay Area Definitions page: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2014/locality-pay- area-definitions/ Case 1:17-cv-00332-JCC-IDD Document 46-1 Filed 05/24/17 Page 2 of 2 PageID# 330 Exhibit 2 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 1 of 29 PageID# 331 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 2 of 29 PageID# 332 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 3 of 29 PageID# 333 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 4 of 29 PageID# 334 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 5 of 29 PageID# 335 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 6 of 29 PageID# 336 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 7 of 29 PageID# 337 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 8 of 29 PageID# 338 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 9 of 29 PageID# 339 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 10 of 29 PageID# 340 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 11 of 29 PageID# 341 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 12 of 29 PageID# 342 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 13 of 29 PageID# 343 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 14 of 29 PageID# 344 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 15 of 29 PageID# 345 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 16 of 29 PageID# 346 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 17 of 29 PageID# 347 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 18 of 29 PageID# 348 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 19 of 29 PageID# 349 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 20 of 29 PageID# 350 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 21 of 29 PageID# 351 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 22 of 29 PageID# 352 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 23 of 29 PageID# 353 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 24 of 29 PageID# 354 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 25 of 29 PageID# 355 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 26 of 29 PageID# 356 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 27 of 29 PageID# 357 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 28 of 29 PageID# 358 Case 1:17-cv-00332-JCC-IDD Document 46-2 Filed 05/24/17 Page 29 of 29 PageID# 359