Javier v. Beck et al

MEMORANDUM OF LAW in Opposition re: 22 MOTION to Dismiss Plaintiff's Amended Complaint.. Document

S.D.N.Y.November 30, 2013

UNITED STATES DISTRICT COURT SOUTIII!RN DISTRICT OF NEW YORK - --- - ---X LESTER LEE JAVIER, Plaintiff, -vs- MARISSA TEVES BECK, HENRY R. BECK, MEDICAL DYNAMIC SYSTEMS, INC., OASIS PROFESSIONAL MANAGEM ENT GROUP, INC., ADVANCED PROFESSIONAL MARKETING, INC., GRILL 2 1 LLC, PAN DE SAL LLC, and GRAMERCY GROUP FOUR LLC, Defendants. ------------------------·----------------------------------------------X I 3 Civ. 2926 (WI IP) PLAINTIFF'S MEMORANDUM OF LAW JN OPPOSITION TO MOTION TO DISMISS JO HN HOWLEY, ESQ. Attorney for Plaintiff 350 Fifth Avenue, 59'11 Floor NewYork,New York 10!1 8 (2 12) 601 -2728 jhowley@johnhowicycsq.com Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 1 of 30 TABLE OF CONTENTS Argument Point I THE FAIR LABOR STANDARDS ACT (FLSA) CLAIMS ARE ADEQUATELY I>LEAf>ED ................... ................ ... .... .... ... 1 A. The Amended Complaint States Claims for Unpaid Time and Overtime ................... .. .... ................... 1 B. The Corporate Defendants Are Joint Employers as Defined by the FLSA ................. ... ................................. 4 C. The Individual Defendants Are Personally Liable for FLSA Violations ......................................................... 6 Point U THE TRAFFICKING VICTIMS PROTECTION ACT (TV I> A) CLAIMS ARE ADEQUATELY PLEADED ..................................... 8 A. Defendants Threatened Plaintiffwith Serious Harm as Defined by tbe TVP A ..................................................... 8 B. All Defendants Are Liable for Violations of the TVP A ............... 11 Point III THE RICO CLAIMS ARE ADEQUATELY I>LEADED ..................... 11 A. Plaintiff Alleges a RICO Enterprise Controlled by RICO Persons ..... . ...... ........ ...................................... ... 12 B. The Amended Complaint Alleges More Than Two Predicate Acts ....................... .............. .... ........... ............. 14 C. The Amended Complaint Alleges a Pattern of Racketeering Activity ................................ .... ........... ..... 17 D. The Amended Complaint Adequately Alleges a RICO Conspiracy .......................................................... 19 E. The Amended Complaint Alleges RICO Injuries ...................... 21 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 2 of 30 Point IV Tl-fE BREACH OF CONTRACT CLAIMS ARE ADEQUATELY PLEADED ................................... .... ........ 22 !'OINT V THE FRAUO, UNJUST ENRICHMENT, AND QUANTUM MERUIT CLAIMS ARE NOT DUPLICATIVE OF THE BREACH OF CONTRACT CLAIMS .....................•.................... 24 Conclusion ............................................................................ 25 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 3 of 30 TABLE OF AUTHORITIES CASES Ashcroji v. Iqbal, 566 U.S. 662 (2009) ...... ... . .. ... ........... . .. ...... .. . ................. .... ... .. . 2 H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 ( 1989) .. .. . . . ............. .. .... .. . . 19 lmperator Realty Co. v. Tu/1, 228 N.Y. 447, 127 N.E. 263 ( 1920) ........ .. ....... .. . ............ . 23 Barfield v. N. Y.C. Health & Hosps. Corp., 537 F.3d 132 (2d Ci r. 2008) ..... .. ...... ....... .. ... . 4 Cedric Kushner Promotions, Ltd v. King, 533 U.S. 158 (2001) .......... . .. . ............... ...... . 12 DeSilva v. North Shore-Long Island Jewish Health Sys., Inc., 770 F. Supp. 2d 497 (E.D.N.Y. 2011) .... ................. . ...... .. . .... . ..... .. ........... . ... . . ... . ... . .. . ... . .. ............. . 22 Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28 ( 1961) .. . .. .. .. ....... ....... .. ..... ..... .. . 5 Hecht v. Commerce Clearing House, Inc., 897 F.2d 21 (2d Cir. 1990) .. ......... .. .. ...... . .... . . 21 Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d Cir. 1999) ..... ....... ..... ...... .. ... ...... .. .. . 7 Kuebel v. Black & Decker, Inc., 643 F.3d 352 (2d Cir. 20 11) .. ... ....... . ............ . ... ... ...... . 3 Lundy v. Catholic Health Sys. of Long Island Inc., 71 1 F.3d I 06 (2d Cir. 2013) ... ... .......... . 2 NtLfSau Trust Co. v. Montrose Concrete Prods. Corp., 56 N.Y.2d 175, 451 N.Y.S.2d 663 ( 1982) ................... . .. ...... ........ .......... . ........... . . ... ............... ................... .. . ... . 23, 24 Nichols v. Mahoney, 608 F. Supp. 2d 526 (S.D.N.Y. 2009) . .... ... . ..... ........... ............. . 12, 13 Ruthe1jordFoodCorp. v. McComb,331 U.S. 722(1947) ....... . ...... . ..... ..... . ...... . ...... ... . 5 United States Fire ins. Co. v. United Limousine Serv., inc., 303 F. Supp. 2d 432 (S.D.N.Y. 2004) ............ . ...... ... ................... . ..... ....... . ...... . ............... .. . .......... . .. .. .. .... .. . . 20 United States v. Aulicino, 44 F.3d I I 02 (2d Cir. 1995) ........ . .. ... . .. .. .. . ...... ........... . ..... . 19 United States v. Bradley, 390 F.3d 145 (1st Cir. 2004) ... . ... . ..... ... .... ..................... . .... . 10 United States v. Calimlim, 538 F.3d 706, 712 (7th Cir. 2008) ................. . ..... ..... ... ... . ... . 8,9 United States v. Coonan, 938 F.2d 1553 (2d Cir. 1991 ) ......... .... . ........... ...... . ...... .. ... . . 13 United States v. Dann, 652 F. 3d 1160 (9lh Cir. 201 !) .... . ... ............ ................... . . ... .. . 8,9 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 4 of 30 United States v. Djoumessi, 538 F.3d 547 (6th Cir. 2008). .. . .... . . . . . . . . .. . . . . . .. . . . . . .. . . .. . . . . . .. 10 Young v. Cooper Cameron Corp .. 586 F.3d 201 (2d Cir. 2009).. .............. .......... .......... 2 Zheng v. Liberty Apparel Co., 355 f.3d 61 (2d Cir. 2003).. .. ........ .... .. ...... .. .. .. .. .. .. .. .. .. 4,6 STATUTES AND REGULATIONS 18 u.s.c. § 1341..................................................................... ..................... 15 18 u.s.c. § 1343.. .... .. . .. .. .. .. . . .. .. . .. . .. .. .. .. .. . .. .. .. .. .. .. .. .. .... .. .. .. .. .. . .. .. .. .. . .... .. .. . . .. 15 18 U.S.C. § 1351a...... ........ ....... ........... ............. .. ..... ............ . ............... ......... 15 18 u.s.c. § 1546.... ...... . .. .. .. . ... . .. . . ... . .. ..... .... .... .. .. ..... ...... .. .. .... .. .... . .. . .. .. ... .. . .. 15 18 u.s.c. § 1584............................... .............. ......... ................ .......... .......... 14 18 u.s.c. § 1589...... .. .... ................ ...... .............................. ........... .. ............ . 14 18 u.s.c. § 1590.......... .... .... . ........ ...... ......... .. .. .. ... ................ . . .... .. .......... ..... 14 18U.S.C. § 1961.......... .. ............................ .. .... .. ...... . .................... .... ......... .. 14 18 u.s.c. § 1961(3)............... ............... .............. ... .... ..................... ...... ........ 12 18 u.s.c. § 1961(4)............................. ................... .............. ............. ............ 12 1 8 U.S.C. §§ I 589, et seq............ ...... .. ...... .... ...... ........ ........ ......................... .... 8 29 C.F.R. § 785.27........ ....... .. . ... ..................... ................... ........ ... .... ..... . ... . .. 2 29 u.s.c. § 203(d). .......... ....... .. .. .. ......... ......... ... .. .. .. ... ... ... . ....... .... ... . ....... ..... 4, 6 29 U.S.C. §§ 201, et seq............................................. .......... ........................... 1 42 U.S.C. § 1383a ............... ......... .... . .. ................... , .. .... .. . .. .. .. . .. .. . .. . .. . .. .. .. . .. .. 14 8C.F.R.§214.2(h)(II)....... ...................... .. .... ... ........ .... ............... ........... .. .... 10 New York Penal Law§ I 55.05(2)(c)..... ........ ...... ........ .. .. .. . ................. .... ............ 16, 17 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 5 of 30 Argument Point I THE FAIR LABOR STANDARDS ACT (FLSA) CLAIMS ARE ADEQUATELY PLEADED Plaintiff alleges that the defendants violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201, et seq., by failing to pay him for all the hours he worked, and by failing to pay him overtime at 1.5 times his hourly rate for hours worked in excess of 40 hours per week. Amended Complaint ("Am. Compl."), First Claim for Relief, ,1~ 78- 90. Plaintiff further alleges that all of the corporate defendants are liable for these violations as joint employers, id. ~~ 79-81, and that the individual defendants are personally liable as employers and because lbey dominated and used the corporate entities to commit fraud, id. ~ 8-9, 80. A. The Amended Complaint States Claims for Unpaid Time and Overtime The FLSA requires employers to pay employees at least the minimum wage tor all hours worked. 29 U .S.C. § 206. The FLSA also requires employers to pay overtime to employees who work more than 40 hours per week "at a rate not less than one and one- halftimes the regular rate at which he is employed." Young v. Cooper Cameron Cmp., 586 F. 3d 201,204 (2d Ci.r. 2009) (citations omitted). The Second Circuit has held that, " in order to state a plausible FLSA overtime c laim, a p laintilfmust sufficiently allege 40 hours of work in a given workweek as well as some uncompensated time in excess of the 40 hours." Lundy v. Calholic Heallh Sys. ofLong Island Inc., 711 F.3d 106, 114 (2d Ci.r. 2013). "Detennining whether a p lausible claim bas been pled is 'a context-specific ta~k that requi res the reviewing court to draw on il~ judicial experience and common sense."' !d. (quoting Ashcroft v. Iqbal, 566 U.S . Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 6 of 30 662, 679 (2009)). Under this case-specific approach, "an approximation of overtime hours worked" is sufficient to meet the plausibility standard. Jd. at 114 n.7. Plaintiff has pleaded with particularity, on a week-by-week basis, the specific weeks when he worked more than 40 hours but wll!; paid lor less than 40 hours, and the specific number of hours he actually worked during each of those weeks. Am. Compl. ,1~ 89(a)-(m). PlaintifTbll!; also alleged in detail when aud how these hours were worked. Jd. ~~ 84-85. First, defendants required plaintiff to attend an English language training school. !d. ~ 85. Contrary to defendants' argument (Dcf. Br. at 8), this time was not exempt from compensation under regulations governing "lectures, meetings, training programs and similar activities," because that exemption applies only if plaintiff's attendance was .. in fact volun tary." 29 C.P.R.§ 785.27. Here, defendants required that plaintiff attend this school -even though he already spoke English- because the defendants were paid kickbacks by the school, and plaintifrs attendance allowed them to submit fraudulent applications for student visas i.nstead of the working visas they agreed to obtain. Am. Compl. ~ 85. Second, defendants failed to compensate plaintiff for time spent on work assignments for the defendants that were not billable to the third-party clinics where plaintiff was assigned. These tasks included "traveling to and meeting with representatives of medical facilities for interviews and to convince the medical facilities to retain defendants" and "encouragLingj existing clients to use more services or personnel, and follow[ingj up on payments by clients of invoices." /d. 84. 2 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 7 of 30 Defendants' argument that plaintiffs timcshccts are conclusive proof of the hours worked for pw·poses of this motion to dismiss ignores the Second Circuit's controlling precedent in Kuebel v. Black & Decker, Inc., 643 F.3d 352, 363 (2d Cir. 20 II) (reversing dismissal of FLSA claims and rejecting the argument that an employee is always bound by his timesheets where the evidence demonstrates that the timesheets did not reflect all hours worked). Plaintiff here was employed by defendants to provide services at third- party clinics that contracted with defendants. Am. Compl. 83. The timcsheets reflected work that plaintiff performed at those third-party clinics, and they were used to bill those third-party clinics for plaintiffs time. The additional time that defendants required plaintiff to spend on marketing and administrative tasks, and attending a worthless school, was not recorded on these timcshccts because that time was not chargeable to the third-party clinics. Defendants' attempt to use timesheets to disprove plaintiffs allegations on t!J.is motion to dismiss also ends up proving too much. For example, defendants argue that plaintiff could not have worked 42 hours during the period from May 12, 2011 to May 19,2011 because he "was approved for a two week leave" to study for a licensing exam. (Def. Br. at 9). This argument serves only to corroborate plaintiffs allegation that defendant Marissa Beck thwarted plaintiffs efforts to obtain his license - which would have allowed him to leave her employ - by granting leaves of absences only to suddenly demand that he return to work. Am. Compl. ,1,165-70. The timcsheets produced by defendants prove only that plaintiff was, in tact, required to work during a period of time when he should have been allowed to study for licensing exams. 3 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 8 of 30 Lastly, when defendants argue that plaintiff was paid the minimum wage even if he worked al the hours alleged, they are ignoring the fact that plaintiff's compensation was reduced when defendants required him to pay thousands of dollars in worthless school fees and illegal ly charged him thousands of dollars for immigration fees that the immigration laws require the employer to pay and not pass on to the employee. !d. 5(a), 41, 50, 52, 95. When these illegal fees are deducted from the total compensation paid, and that net compensation number is divided by the actual number of hours worked, plaintiff was not paid the minimum wage for all hours worked. B. The Corpor.ttc Defendants Arc Joint Employers as Defined by the FLSA It is undisputed that defendant Medical Dynamic qualifies as an "employer" for purposes of liability under the FLSA. However, five of the corporate defendants - Oasis, APMI, Grill 2 1, Pan de Sal, and Gramercy Group Four - move to dismiss pl aintifl~ s FLSA claims by arguing that they were not employers. The FLSA defines an "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). "This definition is necessarily a broad one, in accordance with the remedial purpose of the FLSA." Zhcmg v. Liberty Apparel Co., 355 F.3d 61, 66 (2d Cir. 2003), and it "recognizc[s] the possibility of joint employment for purposes of determining FLSA responsibilities." Barfield v. N 1' C. Health & Hasps. Corp., 537 F.3d 132, 141 (2d Cir. 2008). Consistent with the broad definition in the statute, the Second Circuit has rejected any rigid tests in favor of an examination of"the circumstances of the whole activ ity . . . viewed in light of 'cconomic reality. '" Zheng v. Liberty Apparel Co., 355 F.3d 61, 71 (2d 4 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 9 of 30 Cir. 2003) (citing Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947); Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28.33 (1961)). The first economic real ity in tlus case is found in the language of the employment contracts drafled by the defendants. Both employment contracts state that the employer is defendant Medical Dynamic ·'together with its afliliatcs." Am. Com pl. ,, 21, 203-06, 220-21. The Amended Complaint alleges that the "affi liates of defendant Medical Dynamic include defendants Oasis Professional Development Group, Inc., Advanced Professional Marketing, Inc., Grill 21 LLC, Pan de Sal LLC, and Gramercy GroLIP Four LLC." /d. 21. The specific allegations in the complaint adequately allege that each of these defendants is an affiliate of Medical Dynamic within the meaning of the employment contracts. When it came time for plaintiff to pay fees for his immigration visas, he did not make those payments to defendant Medical Dynamic, the purported "signatory" on the contracts, but instead was directed to make those payments to defendant Oasis, further evidence that Oasis was one of the "affiliates" in the employment agreements. /d. In support of their application to obtain a student visa for plaintiff, "the Becks submitted an account balance summary from Chase Bank for accounts owned by defendant Gramercy Group Four LLC ... as evidence that plaintiff's sponsor had sufficient resources to provide for his support" !d. ~54. If, as defendants now assert, Medical Dynamic was plaintiff's sole employer, then there would be no reason for a d ifferent entity, defendant Gramercy Group Four, to supply evidence of its abi lity to provide financial support for plaintiff as part of his visa application. 5 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 10 of 30 The /\mended Complaint also alleges that plaintiff worked for all oft he corporate defendants without any distinction or differentiation. For example, "when the Becks did not have enough work for plaintiff as a Physical Therapy Rehab Manager or Physical Therapy Ajde," they put plaintiJf"to work as a dishwasher, delivery boy, and cook at" defendant Grill 2 1 LLC. !d. 1/8. "ITJhe Becks also had him work for defendant Advanced Professional Marketing. Inc." !d. The Indentured Servant Clause in the employment contracts reqillred plaintiff to pay $ 15,000 to "the Company" if he stopped working for any reason other than his death or disability. As drafted by the defendants, "the Company" is defined in the employment contracts as "Medical Dynamjc .. . together with its afliliates, successors, and assigns." ld.1/43. By defining "the Company" as including all of Medical Dynamics "affiliates," the defendants ensured that any of its aililiates could enforce the Indentured Servant Clause. Where, as here, the defendants took great care to ensure that each and every corporate defendant was protected by the employment contracts, they cannot now claim that none of the corporate defendants were employers. C . T he Individual Defendants Arc Personally Liable for FLSA Viola tions Defendants Marissa and Henry Beck move to dismiss the FLSA claims aga inst them, as individuals. based on an ar!,'Uinent that they did not "qualifY as 'employers' for FLSA purposes." (Def. Br. at 7). As noted above, the FLSA defines an "employer" broadly to include "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d); see also Zheng v. Liberty Apparel Co., 355 F.3d 61.66 (2d Cir. 2003). The Becks easily fit within that definition because, as the 6 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 11 of 30 Amended Complaint alleges, they made virtually every decision for the corporate defendants, including decisions on payment of compensation. The Amended Complaint alleges that Marissa and Henry Beck personally completed and signed Labor Condition Certifications, visa petitions, and applications for social security cards that falsely described plaintiff's duties and compensation. Am. Com pl.~ 46, 51-54, 56-58. 65-7 I. The Becks personally approved and then arbitrarily revoked plaintiff's leave of absence to study for licensing exams. /d. 66, 70. They personally threatened to terminate, and then actually terminated his employment and H- I B visa. !d.~~ 65-77. These allegations plausibly show that Marissa and Henry Beck personally made all the important decisions concerning p laintiff's employment with their companies, including his compensation. They are more than suftlcient to establish that these ind ividual defendants "possessed the power to control the workers in question." Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999). The Becks are also personally liable for the FLSJ\ violations under a "piercing the corporate vei l" theory. As the Amended Complaint alleges, they disregarded corporate forms and formalities, dominating and controlling the corpo.rate defendants to cheat non- immigrant workers out of their wages, overtime payments, and contractual rights to legitimate immigration assistance. Am. Compl. 5. In addition to working for their companies, " the Becks also had (plaintiff] work for ... the Becks' relatives," defendant Grill 21 , and detendant APMI, based on their own personal wants. Jd. 8. Accepting these allegations as true. this Court should not dismiss the FLSA claims against the Becks personally. 7 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 12 of 30 Point II T HE TRAFFICKING VICTIMS PROTECTION ACT (TVP A) CLAIMS ARE ADEQUAT ELY PLEADED The Trafficking Victims Protection Act ("TVP/\''), 18 U.S.C. §§ 1589, et seq .. prohibits schemes intended to cause an employee to believe that he will suffer "serious ham1" if he does not continue to work for the employer. United States v. Dann, 652 F.3d I 160, 1169-70 (9th Cir. 20 II). Recognizing that that tb.e means used by modern-day traffickers arc 'increasingly subtle,'" id. at I 169 (citation omitted), Congress defined '·serious harm" very broadly to include: "any harm, whether physical or nonphysical , including psychological, financial, or reputational harm, that is sufficiently serious, under all the surrounding circumstances, to compel a reasonable person of the san1e background and in the same circumstances to perform or to continue performing labor or services in order to avoid that harm." 18 U.S.C. § 1589(c)(2). A. Defendants T hreatened Plaintiff with Serious Harm ns Defined by the TVP A The employment contracl~ at issue include a clause that required plaintiff to pay defendants $15,000 if he left their employ for any reason other than his death or disability. Am. Compl. "'i 5(e), 43 (the "Indentured Servant Clause"). Defendants' th reats to sue plaintiff for this $15,000 penalty if he stopped working for them was a threat of"serious harm" within the meaning of the TVPA. See, e.g., United States v. Dann. 652 F.3d I 160. 1171 (9th Cir. 20 I I) (threat that non-immigrant would owe $7,500 to employer if she left was a threat of "serious harm"); cf United States v. Calimlim, 538 F. 3d 706,712,714 (7th Cir. 2008) (threat to stop paying victim's poor family members constitutes serious harm). 8 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 13 of 30 Defendants' argument that they were merely warning of the possible adverse consequences oflcgitimate action ignores both the nature of the penalty they threatened to enforce and how they used threats to prevent plaintiff from gaining his freedom. The Indentured Servant Clause was an il legal penalty, not a valid liquidated damages clause, because the $15,000 penalty bore. no relation to the actual cost of providing immigration assistance to plaintiff. Indeed, instead of incurring any costs on plaintiffs behalf, the Amended Complaint alleges that defendants charged plaintiff thousands of dollars in fees for the inunigration assistance they were supposed to provide. Am. Compl. 11 S(a). Defendants also argue that, "[b)ecause the Agreement did not take effect until he renders services specified therein and Plaintiff did not do so, the confession of judgment is of no moment." (Def. Br. at II). It appears that defendants are arguing tbat the employment contracts were not breached because plaintiff never worked in the specific position identified in the contracts. We respond to that contract argument in Point IV below. For purposes of the TVPA claims, defendants" argument - that the $15.000 penalty was not enforceable because the employment agreements never came into effect - only establishes that the defendants threatened to enforce what they themselves concede is an unenforceable penalty. Defendants also threatened to withdraw plaintiff's I 1-1 B visa and warned that he would face deportation if he did not continue working for them. These threats also constituted threats of"serious harm" within the meaning of the TVPA. See, e.g., Dann, 652 F.3d at 1172 (threat to send non-immigrant back to Peru constituted threat of serious harm); Ca/im/im, 538 F.3d at 712 (immigrant victim ~did not have an exit option: because the threats in her case involved her immigration status, she could not fi·ccly work 9 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 14 of 30 for another employer in order to escape the threatened harm"); United States v. Djoumessi, 538 f.3d 547, 552 (6th Ci r. 2008) (threat to send victim back to Cameroon were coercive in light of victim's vulnembility as an illegal immigrant). When defendants argue that, under ordinary circwnstances, an employer is required by 8 C.F.R. § 2 14.2(h)(ll) to withdraw an H-1 B visa petition if the employee stops working, they ignore the extraordinary circumstances that they created in this case. In support of plaintiff's visa application, defendants submitted sworn statements under penalty ofperjwy to the USDOL and USCIS that they would pay plaintiff$35.53 per hour. Threatening to "~thdraw plaintiff's visa petition unless he worked for less than the wages defendants were legally required to pay does not constitute a legitimate warning. To the contrary, defendants' threats in violation of the labor and innnigration laws constitute precisely the type of"impropcr threats or coercion" prohibited by the TVPA. See United States v. Bradley, 390 F.3d 145, 151 (1st Cir. 2004). Defendants argue that the fact that they gave plaintiiT a leave of absence to study for licensing exams indicates that he wa~ always free to leave. (Dei Br. at 11 ). This argument misconstrues the complaint. As soon as plaintiiTtook the leave of absence, defendant Mrs. Beck "demanded that plaintiff return to work immediately or he would lose his ll-IB visa.•· Am. Compl. 66. The Amended Complaint alleges that every time plaintiff was close to getting his license - an event that would end his dependency of defendants - Marissa Beck did everything possible to prevent that from happening. She harassed plainti ff while he was trying to study by instructing her assistant, Jeffrey Samonte, to call plaintiff with non-existent work assignments. When this did not deter 10 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 15 of 30 plaintiff from pursuing his studies for the licensing exam, she threatened to withdraw his H- 1 B visa. /d. ,1,165-69. Defendants argue that their campaign of threats did not violate the TVPA because " had it been suc.Cessful , [it] would have compelled Plaintiff to return to work and not threaten his employers w ith a lawsuit." (Def. Br. at 11-12). This is a bizarre argument, to say the least. Taken to its logical conclusion, defendants' argument means that no claim can be brought under the TVP A if the employee seeks legal advice and commences or threatens to a lawsuit against his employer. lftl1at were the law (which it is not), then no case could ever be brought under the TVP A. B. All Defendants Are Liable for Violations of the TVP A As described above in Point I, all the corporate defendants had a contractua l right to plaintiff's labor because they chose to identify "the Company" as Medical Dynamic " together with its affiliates" in the employment contracts. Defendants Marissa and Henry Beck benefited from this broad definition of plaintiff' s "employer" by using plaintiff wherever it suited their personal interests, whether that be in their restaurants, in their staffing agencies, or even for the personal needs of their family members. Am. Compl. ~ 8. Under these circumstances, all of the defendants ac liable under the TVPA. Point Ill THE RICO C LAIMS ARE ADEQ UATELY PLEADE D The Amended Complaint a lleges that defendants managed and controlled an association-in-fact of different corporate entities to carry out an illegal scheme that included submitting fraudulent labor and inlmigratioo applications to tedexa.l government agencies, with the objective of recruiting, maintaining, and profiting from an acquiescent, II Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 16 of 30 submissive and compliant labor force of non-immigrant healthcare workers. Am. Com pl., Third Claim for Relief, ,[~ I 07-84. The Amended Complaint further alleges that the individual defendants, Marissa and Henry Beck, used the different corporate entities to carry out this sebeme after defendants Marissa Beck and APMI were permanently enjoined by lhis Court from violating federal labor laws. A. Plaintiff Alleges a RICO Enterprise Controlled by RICO Persons A RlCO claim must allege "the existence of two distinct entities: ( I) a 'person'; and (2) an 'enterprise that is not simply the same ' person' referred to by a different name." Cedric Kushner Promotions, Lrd. v. King, 533 U.S. 158, 161-62 (2001). The RICO statute defines a person as "any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. § 1961 (3). An "enterprise" is ·'any individual. partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although nota legal entity." 18 U.S.C. § 1961(4). There is no que~tion that defendants Marissa 6cck and Henry 13cck arc "persons," who are distinct from the corporate entities they own and control. The U.S. Supreme Court has held that an owner of corporations can be the RICO "person" when the corporations he owns and controls are the "enterprise," because the "corpor-dte owner/employee. a natural person, is distinct from the corpordtion itself, a legally different entity with different rights and responsibilities due to its different legal status." Cedric Kushner, 533 U.S. at 163; see also Nichols v. Mahoney, 608 F. Supp. 2d 526, 531 (S.D.N.Y. 2009) ("plaintiffs allege that Mahoney, the principal of the EMC entities, is the ' person,' and the EMC entities arc the enterprise. These allegations are sufficient to plead the existence oft\vo distinct entities."). 12 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 17 of 30 There also is no question that defendants Marissa and Henry Beck can be both RICO "persons" and members ofthc association-in-fact that comprises the "enterprise." See, e.g,. Nichols, 608 F. Supp. 2d at 533 (association-in-fact enterprise was a "distinct entity" where the "persons" were "Mahoney and EMC" and the entity was an association-in-fact comprised of Mahoney, EMC, and American Latin). The only question with respect to RICO •·persons" in this case is whether each corporate defendant considered separately can be a RICO person, while also being part of the association-in-fact enterprise. This appears to flow naturally fTom the holding in Ni,·hols, but if this Court should rule that the corporate defendants may not be both --persons" and members of the association-in-fact, then plaintiff would request leave to amend the complaint to identity only defendants Marissa and Henry Beck as "persons." The Second Circuit has held that "the existence of an association-in-fact is oflentimes more readily proven by what it does, rather than by abstract analysis of its structure. Thu.s, . . . proof of various racketeering acts may be relied on to establish the exis tence of the charged enterprise." United Stares v. Coonan, 938 F.2d 1553, 1559-60 (2d Cir. 1991). Here, the Amended Complaint alleges in detail how Marissa and Henry Deck engaged in criminal conduct, including submitting fraudulent applications under penalty of perjury to the USDOL and USCIS. The Amended Complaint also alleges the purpose of the association-in-fact enterprise - recruiting, maintaining, and profiting from an acquiescent, submissive, and compljant workforce of non-immigrant hcalthcarc workers - and how they created the association-in-fact and directed its activities to that end. 13 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 18 of 30 The Amended Complaint also describes bow the different entities functioned as a unit when il came to employing non-immigrant workers, fraudulently obtaining their working papers, coercing the workforce into submission, and hiding the defendants' illegal conduct from the government. For example, while defendant Medical Dynamic submitted plaintiff's visa applications as the formal "employer," defendants told plaintiiT to make payments to defendant Oasis for fees that Medical Dynamic was prohibited by the immigration laws from charging. Am. Compl. 41. The restaurants served as a way station for non-immigrants whom defendants were sti ll processing, and another entity, Gramercy Group, submitted financial records to the federal government in furtherance of their scheme. ld. ~~ 8, 54. Thus, contrary to defendants' arguments, this is not a case where plaintiiThas relied on "group pleadings." (Def. Br. at 14). B. The Amended Complaint Alleges More Than Two Predicate Acts Social Security Fraud, 42 U.S. C.§ 1383a: Plaintiff alleges that defendants commiuoo at least two predicate acts, as defined by 18 U.S.C. § 196 1, by submitting at least two fraudulent applications to the Social Security Administration in violation of 42 U.S.C. § 1 383a Am. Compl. ~~ 146-48. In their moving papers, defendants do not dispute that plaintiff has adequately alleged violations of 42 U.S.C. § 1383a, or that such violations qualify as predicate acts of racketeering under 18 U.S.C. § 1961. These two predicate acts, standing alone, are sufficient to sustain plaintiff's claims of RICO violations. Traffickillg wtd Forced Labor, 18 U.S.C. §§ 1584, 1589,1590: PlaintiiTaHcgcs that defendants violated Section 1584 ofTitle 18 of the U.S. Code by holding him in involuntary servitude, and that they violated Section 1589 by engaging in a scheme. plan 14 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 19 of 30 or pattern intended to cause him to believe that he would suffer serious harm if he stopped performing labor or services for defendants. Am. Compl. "1M! 119-26. 136. Plaintiff also alleges that defendants violated Section 1590 by recruiting him for labor or services in violation ofSections 1584 and 1589. /d.~ 127-30. Defendants' only response is that plaintiff cannot state a claim for violations of the TVPA. For the reasons set forth above in Pointll, that argument is without merit. Foreign Labor Controclitlg Fraud, 18 U.S.C § 135Ja: Plaintiff alleges that defendants used false statements to recruit hin1 to return to the Uni ted States to work for them after he returned to the Philippines. Am. Compl. , l'lfl37-141 . Defendants' only argument is that plaintiff was not recruited from a foreign country because he had previously been in the United States. and then went home. (Def. Br. at 15). They cite no legal authority, and plaintiff is aware of none, for the proposition that once an individual enters the United States and returns home to a foreign country, he can never again be recruited to come back to the United States in violation of I 8 U.S.C. § 135\a. Visa Froud, 18 U.S.C § 1546: Defendants' argument that their mul tiple acts of immigration f raud do not constitute predicate acts because plaintiff actually received visas ignores the nature of their fraud. Plaintiff was promised (and paid for) valid visas, not visas procured by fraud. Plaintiff also was harmed because defendants' fraud - representing to the government that he would be paid $35.53 per hour, when defendants intended cmd actually paid him only $15 per hour - resulted in him being paid less than half the hourly rate the immigration laws required defendants to pay hirn. Moil 011d Wire Froud, 18 U.S. C. §§ J341 and J343: Plaintiff has alleged specific instances when the defendants used the mails and wires: to tramnnit false 15 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 20 of 30 promises to induce him to leave the Philippines and work for them in the United States, Am. Compl. ~ 1 52(b); to trans.mit threats of serious harm to induce him to continue working for them, id ~ I 52( a); and to effectuate the termination of his H-1 B visa on false pretenses, id. I 52(1). Each of these allegations is sunicient to state a claim for mail or wire fraud. Defendants argue that another category of fraud alleged in the Amended Complaint- the usc of the mail and wires to make false statements to the USDOL and USCIS in connection with his working paper applications, id.1152(c)-G)- may have defrauded the federal government, but they did notdcfraud plaintiff because he actually obtained the visas. Again, this argument misses the point that the defendants' act~ of obtaining visas by means of fraud deprived plaintiff of his right to have defendants take "all reasonable steps" to ensure that he had valid visas. Extortio11, New York Pe11al Law § 1 55.05(2)(e): Defendants argue that plaintiff cannot &'ltisry the "harm" element of the New York extortion statute because he allegedly "derived benefits" from their illegal conduct, such as the visas they obtained and his compensation at more than the minimum wage. (Dcf. Br. at 17). These arguments ignore the facts that (a) the visas actually put plaintiff at risk of deportation because defendants obtained them by fraud; and (b) the immigration laws required that plaintiff be paid $35.53 per hour, not the minimum wage or even the $15 per hour he was paid. Tiles.: arguments also ignore the allegations that plaintiff was deprived of the thousands of dollars that he paid the defendants to obtain a valid visa, Am. Com pl. .. 154. that he was deprived of the thousands of dollars that defendants' required b.itn to pay to an English language school from which they received kickbacks, id. ~ 156, that he was 16 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 21 of 30 threatened with loss of his immigration status, deportation, and a $ 15,000 lawsuit to enforce the Indentured Servant Clause, id.1jl59, and that he was threatened with harm to his career and reputation, id. 158. Each of these harms, standing alone, is sufficient to satisfy the " harm" clement of the New York extortion statute because these allegations establish that defendants engaged in conduct "calculated to harm another person materially with respect to his health, safety, business, calling, career, frnancial condition, reputation or personal relationships." N.Y. Penal Law§ 155.05(2)(eXix). C. The Amended Complaint Alleges a Pattern of Racketeering Activity Defendants argue that plaintiff's allegations of a pattern of racketeering activity are "baseless" and constitute "conclusions of law." (Def. Mem. at 17-18). This argument ignores the numerous, detailed factual allegations in the Amended Complaint. The Amended Complaint alleges that in 2008, "the U.S. Department of Labor i$~Ued a determination letter finding that rdcfcndants Madssa J3eck and Al)MIJ had cheated employees out of almost $3 million in wages." Am. Compl. ,[2. "The U.S. Department of Labor also determined that Mrs. Beck had threatened employees with lawsuits and loss of their legal status- and actually commenced lawsuits against them - when they complained of her illegal conduct." /d. The Amended Complaint also alleges that the defendants required thei r employees to sign standard employment agreements, which contain the same Indentured Servant Clause and confession of judgment that the defendants required plaintiiito sign. !d. V 64. These factual a llegations establish that the defendants' threats that plaintiff would face lawsuit:; and loss of legal status are part of a pattern of conduct by the defendants 17 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 22 of 30 that pre-dates the 2008 determination letter. These arc not, as defendants argue, ·'baseless'' allegations or ·'conclusions of law." These are allegations of fact fully supported by public records, including the detemli.nation letter and this Court's 2009 pemumcnt injunction against defendants Marissa Beck and APMI. The number of individuals involved in defendants' fraudulent scheme is a lso alleged with specifici ty. The Amended Complaint alleges that "the Becks and their companies have filed more than 750 applications for H- 1 B visas since 2001, and many of those appl ications have been based on the Becks' willfully false and fraudulent submissions to the federal government." !d. V 7, 53. It alleges that defendants "have subnli.tted more than 969 Labor Condition Applications (LCAs) for H-1B visas since 200 I through different corporate entities they own and control, including defendants Medical Dynamic, Oasis, and APMJ." !d.~ 60. The Amended Complaint also a lleges that the defendants' specific scheme at issue in this lawsuit- fraudulently filing LCAs and vi:;a petitions for individual:; to work as ·' managers" at $35 or more per hour, when defendants never intended to employ any individuals in those positions or for those rates of pay - )las affected numerous other non- immigrants. Thus, the Amended Complaint alleges, "fi)n 20 11 an 2012 alone, the Reeks and their companies submitted at least 16 LCAs for Physical Therapy Rehab Managers, Physical Therapy Program Services Managers, and Rehab Managers," when they "never intended to employ, and never actually employed anyone" in those positions. !d.~ 6 I. In each of these cases, the defendants represented to USCIS that "these 'managers' would be paid a nlinimum of between $35.53 and $37.02 per hour," when the defendants " never 1 8 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 23 of 30 intended to pay such hourly rates to their employees and in fact paid these 'managers' at much lower rates." Jd. 163. These allegations of specific facts- which can be verified by reference to the defendants' own records and records on fi le with the federal government- establish that the defendants have engaged in a pattern of racketeering activity with a common purpose: "to profit from the fraudulent recruitment and forced labor and services of plaintiff and other non-immigrant employees, and to recruit, obtain, provide and maintain a consistent, submissive, and compliant non-immigrant labor force at the ir companies and c lients." !d. 1[ 177. Whether the pattern is viewed as closed-ended or opened-ended, these allegations are more than sufficient to establish that the defendants' predicate acts "'include a specific threat of repetition extending indefinitely into the future,"' ... "form 'part of a long-term association that exists for criminal purposes,"' ... and "constitute 'a regular way of conducting [an] ongoing legitimate business:·· Uniled Stales v. Aulicino, 44 F.3d II 02, 1111 (2d Cir. 1995) (quoling 1/J Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 242-43 ( 1989)). D. The Amended Complaint Adequately Alleges a RICO Conspiracy Defendants' only independent argument for dismissal of the RICO conspiracy claim is an assertion that plaintiff fails to allege that each defendant manifested an agreement to commit two predicate acts in further-ance of the common purpose of the RICO enterprise. (Oef. Br. at 18). Tllis argument ignores the detailed factual allegations in the Amended Complaint. 19 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 24 of 30 The words and actions of the individual defendants, Marissa and Henry Beck, are described in detail throughout the complaint, from defendant Marissa Beck' s submission of fraudulent documents to the federal government and numerous threats against plaintiff, see, e.g. , Am. Compl. W 36-39, 46, 56-58, to defendant Henry Beck's agreement to let his wife sign his name to liaudulent documents and hide behind his perceived legitimacy, as well as his own submission of fraudulent documents to the federal government, see, e.g. id. ~~ 4, 36-39. The Amended Complaint also alleges specifically how each of the corporate defendants also agreed to the RJCO conspiracy. For example, defendant Medical Dynan1ic agreed to submit fraudulent applications and petitions to federal government agencies. !d. ~~ 142-147. Defendant Oasis agreed to accept thousands of dollars from plaintiff to hide the fact that defendants were charging plaintiff immigration tees that the immigration laws prohibit them from charging. !d.~ 41. Defendants APMl and Grill21 used fa be document~ and employed plaintiff in positions and at rates of compensation inconsistent with the positions and rates of pay defendants reported to federal government ageoei~. /d. ,~ 8, 144. Defendant Gramercy Group allowed its bank account statements to be used in support of fraudulent visa petitions. /d. 11 54. "Considered as a whole, these allegations 'provide[) a substantial factual basis from which to infer an agreement among these defendants." ' Uniled States Fire lns. Co. v. United Limousine Serv. , Inc., 303 F. Supp. 2d 432,453 (S.D.N.Y. 2004). Lastly, there is no inconsistency between the allegation in Amended Complaint paragraph 188 that the agreement was entered into no later than 2008, and the allegation 20 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 25 of 30 in paragraph 174 that the predicate acts began in 200 I. (Dcf. Br. at 19). Predicate acts by some defendants in 2001 fall within a period described as " no later than 2008." E. The Amended Complaint Alleges RICO Injuries lo order to establish a RJCO injury, plaintiff must plead facts sufficient to show: ''( I) a violation of section 1962; (2) injury to his business or property; and (3) causation of the injury by the violation." Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23 (2d Cir. 1990). The violations of section 1962 are discussed above. In this section, plaintiff addresses the nature of his injuries and proximate cause. Among the RICO injuries claimed by plaintiff arc being: "deprived of lawful immigration status"; "forced to pay exorbitant and illegal fees"; " forced to work at wages less than the prevailing wage reported to the federal government in [defendants'] H-18 applications"; and "deprived of the right to be free from indentured servitude." Am. Compl. ,1183. Each of these injuries is an injury to plaintiff in his business or property. Each of these injuries was also proximately caused by the defendants' immigration fraud, social security fraud, mail and wire fraud, extortion, and other RJCO predicate acts. Defendants' argument that plaintiff was deprived of his immigration status by his own failure to return to work, and not by any RICO violation (Def. Br. at 20) looks only at the final termination of plaintiffs employment and visa by defendants. The injury, however, occurred long before that tina! act when defendants placed plaintiff in a state of involuntary servitude by a series of acts including threate ning to enforce the Indentured Servant Clause in the employment agreements, getting him a student visa instead of a working visa, and putting him in a precarious position by fraudulently oblaining an H-1 B visa aod social security card instead of the legitimate documents he paid them lo obtain. 21 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 26 of 30 This is not, therefore, a case where plaintiff's sole injury is the loss of employment or future income because he refused to participate in an enterprise engaged in a pallern of racketeering activity that targeted third parties. See DeSilva v. North Shore-i.ong island Jewish Health Sys., inc., 770 F. Supp. 2d 497, 515 (E.D.N. Y. 20 I I). This is a case where plaintiff was the direct target of the defendants' enterprise and pattern of racketeering activity. Defendants' argument that plaintiffs claim of lost wages as a RICO injury is duplicative of his claim oflost wages under the FLSA (Def. Br. at 20) ignores a critical difference between the FLSA and RICO injuries. The FLSA claim seeks wages lost due to dctcndants' failure to pay the minimum wage for all hours worked and failure to pay overtime. The RICO claims for lost wages are based on a much higher rate of pay required by the immigration laws, and not required by the FLSA. Thus, the RICO injury includes being deprived of the $35.53 per hour required by the immigration laws. This is a different injury than plaintif!'s claim for at least the minimum wage in his fLSA claim. The FLSA, therefore, does not "preempt"' the RICO claim. Point rv T HE BREACH OF CO NTRACT CLAIMS ARE AOEQUATELY PLEAOEI) Defendants argue that plaintiff never satisfied condition precedents in the employment agreements because he did not work "in the positions specified in the Agreements." (Def. Sr. at 20-21 ). The decision which "positions" were given to plaintiff. however, was completely within the control of the defendants. Plaintiff did not decide to work as a dishwasher, cook, or physical therapy a ide. He worked in these positions because defendants unilaterally assigned him to these positions and refused to 22 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 27 of 30 give him the positions stated in the employment agreements. Am. Compl. 1 230. Whether characterized as estoppel or waiver, where, as here, the defendants decided not to assi~n plaintiff to the positions specified in the agreements, the "condition precedent" that he work in those positions is exetL~ed. Nassau Trust Co. v. Montrose Concrete Prod1·. Corp., 56 N.Y.2d 175, 185,451 N.Y.S.2d 663, 668 (1982) (quoting lmperator Realty Co. v. Tu/1, 228 N.Y. 447, 457, 127 N.E. 263 (1920) (Cardozo, J.)) Defendants also argue that p laintiff failed to obtain a license to work as a Physical Therapist. The Amended Complaint, however, alleges numerous facts showing how the defendants constantly called him back to work and harassed him v.LJCATIVE OF THE BREAC H OF CONTRACT CLAIMS The Seventh Claim for Relief for common Jaw fraud is premised on specitl c representations defendants made to plaintiff, including false representations that were made to induce him to come to New York City before any contracts were signed. Am. Com pl. f~ 240a-m. These false representations caused plaiJJtiffto incur damages unrelated to the breach of contract claims, including "the time and expense of traveling from the Phil ippines and living in New York City" and " the loss of oppOrtunities to work for other, legitimate employers." !d. 1 246. 24 Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 29 of 30 The Eighth and Eleventh Claims for Relief seck damages for unjust enrichment and quantum meruit for plaintiff's labor and services "outside the scope of the 2009 Contract and the 201 1 Contract." Jd ,1~ 248, 265. For example, defendants may claim that work performed by plaintiff as a dishwasher and cook predated the formation of either contract. In that event, plaintiff is entitled to pursue a claim for unjust enrichment or quantum meruit. The Tenth. Twelfth, and Thirteenth Claims for Relief are each pleaded in the alternative: "In the event it is determined that the .. . Contract did not commence ... or . . . did not cover plaintiff's labor or services." Id W 259, 272,280. Given defendants' argument that the employment contracts did not govern their relationship with plaintin: they cannot be granted dismissal of these alternative claims on the grounds that the employment contracts did cover those relationships. Conclusion. For all the foregoing reasons. defendants' motion to dismiss should be denied in its entirety. Dated: New York, New York November 29, 2013 25 JOHN HOWLEY, ESQ. By: /s John J.P. llowlev John J.P. Howley IJH 9764] Afforney for Plaintiff 350 Fifth Avenue, 59111 Floor New York, New York 10118 (21 2) 60 1-2728 j howley@jobnhowlcyesq .com Case 1:13-cv-02926-WHP Document 26 Filed 11/30/13 Page 30 of 30