DE LA FUENTE v. COLUMBIA RECYCLING CORP (2023)

ORDER

This matter is before the Court on Defendants Columbia Recycling Corporation and Gold Pond Corporation's Motion to Dismiss [Doc. 25]. After consideration of the parties' arguments, the applicable law, and the relevant parts of the record, the Court DENIES Defendants' Motion to Dismiss [Doc. 25].

I. Background

Defendants are corporations in the carpet industry based in Dalton, Georgia. [Docs. 19 at 5; 19-3]. Plaintiffs Victor Hugo Tapia Romero and Osvaldo de la Fuente are Mexican nationals. [Doc. 19 at 4, 11]. On October 20, 2021, Defendants sent a job offer letter by mail to Plaintiff Romero through a labor recruiter (“Romero's Initial Offer”). [Doc. 26-2]. The letter offered at-will employment as “a Line Technician” starting at $13.50 per hour with a benefit program, company apartment and transportation for one month, and weekly bonus opportunities contingent upon TN visa approval.¹ [Id.]. Plaintiff Romero signed the offer on October 21, 2021. [Id.]. That same day, Defendants sent another offer of employment. [Doc. 19-1]. This letter offered employment as an “Industrial Engineer” for an employment period “up to three years” for an “annual salary” of “$38,500.00 plus overtime and monthly bonus[es] with “one month of housing and transportation support” subject to TN visa approval (“Romero's Subsequent Offer”). [Id.]. Defendants also provided Plaintiff Romero with a support letter for the TN visa application, which listed the position offered as “industrial engineer,” included details of the position, listed the employment period as “up to three years,” and listed the average employees' earnings as a “minimal annual salary of $38,500.00 plus a standard employee benefits package (housing and transportation).” [Doc. 19-3].

Similarly, Defendants sent a job offer letter ² by mail to Plaintiff de la Fuente on February 22, 2022. [Doc. 26-1]. The letter offered at-will employment as “a Mechanical Technician” starting at $13.00 per hour with a benefit program, company apartment and transportation for one month, and weekly bonus opportunities contingent upon TN visa approval (“de la Fuente's Initial Offer”). [Id.]. Plaintiff de la Fuente signed the offer on March 28, 2022. [Id.]. That same day, Defendants sent another offer of employment. [Doc. 19-2]. This letter offered employment as an “Electronics Engineer” for an employment period “up to three years” for an “annual salary” of “$38,500.00 plus overtime and monthly bonus[es] with “one month of housing and transportation support” subject to TN visa approval (“de la Fuente's Subsequent Offer”). [Id.]. Defendants also provided Plaintiff de la Fuente with a support letter for the TN visa application, which listed the position offered as “electronics engineer,” included details of the position, listed the employment period as “up to three years,” and listed the average employees' earnings as a “minimal annual salary of $38,500.00 plus a standard employee benefits package (housing and transportation).” [Doc. 19-4].

Plaintiffs each submitted the support letters to the United States Embassy and received TN visa approval. [Doc. 19 at 4, 12]. Plaintiff Romero began working for Defendants on June 18, 2022, and Plaintiff de la Fuente began working for Defendants on May 31, 2022. [Id. at 4]. When Plaintiffs began work, they were not employed as an “Industrial Engineer” or “Electronics Engineer” with a salary. Rather, they were performing manual labor for $13.00 per hour and overtime at $19.50 per hour. [Id. at 12, 20]. Plaintiffs claim that the Defendants had no intention of employing them as an industrial or electronics engineer or providing them with the $38,500 per year salary.

Plaintiffs subsequently filed this action alleging RICO violations under OCGA § 16-14-6(b); breach of contract, filing false information returns under 26 U.S.C. § 7434; a claim for overtime pursuant to the Fair Labor Standards Act (“FSLA”), 29 U.S.C. § 216(b); and an individual claim by Plaintiff de la Fuente for retaliation pursuant to the FLSA, 29 U.S.C. § 215(a)(3). Defendants filed a Motion to Dismiss for Failure to State a Claim [Doc. 25].

II. Legal Standard

Under the Federal Rules of Civil Procedure, a party may move to dismiss an action for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “A district court considering a motion to dismiss shall begin by identifying conclusory allegations that are not entitled to an assumption of truth ․” Randall v. Scott, 610 F.3d 701, 709 (11th Cir. 2010). Next, a court must “accept[ ] the facts alleged in the complaint as true, drawing all reasonable inferences in the plaintiff's favor.” Keating v. City of Miami, 598 F.3d 753, 762 (11th Cir. 2010).

III. Discussion

Defendants argue that this case should be dismissed because Plaintiffs cannot establish each cause of action. The Court disagrees and denies the Motion to Dismiss [Doc. 25].

A. Plaintiffs' Breach of Contract and FLSA Claims

Defendants argue that Plaintiffs' breach of contract and FLSA ³ claims should be dismissed because the Plaintiffs agreed to work as at-will employees for $13.00 per hour and that the subsequent job offers were not binding contracts. In reviewing a motion to dismiss, this Court must make “all reasonable inferences in the plaintiff's favor.” Keating, 598 F.3d at 762. Because the Complaint alleges sufficient facts to make it plausible that the subsequent job offer resulted in a binding contract, dismissal would be improper.

Defendants argue that Plaintiffs claims cannot stand because the only employment accepted was at-will employment paying around $13.00 per hour, which Plaintiffs received. In support of this claim they point out that the subsequent offers were never signed by the Plaintiffs and that the support letters were addressed to the U.S. Embassy, not the Plaintiffs. But this Court views the facts in the light most favorable to the Plaintiff, so the focus is on whether it is plausible that the subsequent offer letters became binding on the parties. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (“[A] complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations ․ Factual allegations must be enough to raise a right to relief above the speculation level ․”).

“[A]n existing contract is superseded and discharged whenever the parties subsequently enter upon a valid and inconsistent agreement completely covering the subject matter embraced by the original contract.” Chewning v. Huebner, 142 Ga. App. 112, 113, 235 S.E.2d 573 (1977). “The nature and character of the services to be performed, the place of employment and the amount of compensation to be paid [ ] are all essential elements of an employment contract ․” Sawyer v. Roberts, 208 Ga. App. 870, 871, 432 S.E.2d 610 (1993). Under Georgia law, an employment contract that is terminable at will is not enforceable, and an “employment contract containing no definite term of employment is terminable at the will of either party.” Edwards v. Cent. Ga. HHS, Inc., 253 Ga. App. 304, 305, 558 S.E.2d 815 (2002). But, “[a]lthough terminable-at-will employment does not give an employee a contractual right to remain employed, an at-will employment relationship can give rise to certain contractual rights. In a terminable-at-will employment contract, the original terms for compensation are enforceable for that work actually performed under the contract.” Shelnutt v. Mayor, 333 Ga. App. 446, 450, 776 S.E.2d 650 (2015).

Particularly when considered with the support letters that were sent contemporaneously, the Subsequent Offer Letters establish the nature and character of the services to be performed, the place of employment, and the amount of compensation to be paid. [See, e.g., Doc. 19-2 (describing the employment as “electronics engineer at Columbia Recycling Corporation” with an annual salary of “$38,500.00 plus overtime and monthly bonus”); Doc. 19-4 (providing a more detailed description of the work to be performed)]. The lack of Plaintiffs' signatures does not defeat the potential validity of the contracts. The offers were for employment “up to three years” and therefore were performable in less than a year. Accordingly, the agreements did not need to be consented to in writing to be valid. Cf. Edwards v. Cent. Ga. HHS, Inc., 253 Ga. App. 304, 305, 558 S.E.2d 815 (2002) (“An oral contract of employment for a term beyond one year is unenforceable under the statute of frauds.”).

While the indefiniteness of “up to three years” may result in the contracts' employment being at-will, any recovery is not necessarily barred. Plaintiffs may still be entitled to “work actually performed under the contract.” Shelnutt, 333 Ga. App. at 450, 776 S.E.2d 650. For example, Plaintiffs may be able to recover for their costs of traveling to Georgia. Accordingly, summary judgment is improper here.

B. Plaintiffs' Tax Claims

The Amended Complaint includes a cause of action for filing false tax returns under 26 U.S.C. § 7434. Defendants argue this claim should be dismissed because it lacks particularity. The Court disagrees.

A pleading must include “a short and plain statement of the claim showing that the pleader is entitled to relief ․” Fed. R. Civ. Pro. 8. When “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. Pro 9(b). 26 U.S.C. § 7434 provides that “[i]f any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return.”

Plaintiffs allege that in 2021 through 2023, the Defendants provided the IRS false tax returns that failed to reflect the Plaintiffs' earned wages to avoid paying taxes. [Doc. 19 at 24–25, 43]. To support this claim, the Amended Complaint alleges that Plaintiff Osvaldo requested his earnings records from the U.S. Social Security Administration which indicated that he had no earnings or withholdings during the time that he worked for Defendants. [Id. at 26]. Although likely insufficient to fully establish the claim, this is sufficiently particular to survive a motion to dismiss.

C. Plaintiffs' RICO Claims

Plaintiffs allege Defendants violated the Georgia Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Under OCGA § 16-14-4(a), “[i]t shall be unlawful for any person, through a pattern of racketeering activity or proceeds derived therefrom, to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property, or personal property of any nature, including money.” “To establish a valid civil RICO claim, a plaintiff must show that the defendant violated or conspired to violate Georgia's RICO Act and that the RICO violation proximately caused injury to the plaintiff.” Five Star Athlete Mgmt., Inc. v. Davis, 355 Ga. App. 774, 778, 845 S.E.2d 754 (2020). Defendants argue that these claims should be dismissed because (1) Plaintiffs lack standing because RICO is an improper vehicle for an employment dispute; (2) Plaintiffs participated in any alleged visa fraud; (3) Plaintiffs' predicate acts are insufficiently pled; and (4) Plaintiffs cannot establish proximate cause.

i. Plaintiffs Have Standing to Bring a RICO Action.

Defendants allege that the Plaintiffs lack standing because employment services cannot serve as the basis of a RICO claim. To establish a violation of OCGA § 16-14-4(a), Plaintiffs must allege that Defendants acquired or maintained an “interest in or control of any enterprise, real property, or personal property of any nature, including money.” While it is true that the acquisition of employment services does not meet this requirement, Five Star, 355 Ga. App. at 781, 845 S.E.2d 754, that is not the only basis for this claim. Taking the Plaintiffs' allegations as true, Defendants benefitted from obtaining Plaintiffs' employment at a lower market price, thereby increasing their profits. O.C.G.A. § 16-14-4(a) is clear that money can form the basis of a RICO claim, so Plaintiffs do have standing to bring the suit.

ii. Plaintiffs' Claims are Not Barred by Plaintiffs' Participation

Defendants argue that Plaintiffs' claims are barred by the doctrine of in pari delicto because the Plaintiffs participated in any alleged fraud. “The doctrine of in pari delicto is an equitable doctrine that states ‘a plaintiff who has participated in wrongdoing may not recover damages resulting from the wrongdoing.’ ” Official Comm. of Unsecured Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145, 1152 (11th Cir. 2006). See also O.C.G.A. § 23-1-15. In pari delicto has not been applied to a Georgia RICO action, but has been applied to Federal RICO actions in the Eleventh Circuit. See id. at 1156. However, the Court does not need to determine whether it applies in Georgia RICO actions because it does not apply under the facts as pleaded.

Defendants claim that when Plaintiffs submitted the support letters to the U.S. Embassy, they were aware that the employment information was incorrect. However, the Amended Complaint tells a different story. More specifically, the Amended Complaint alleges that Plaintiffs “did not know the support letters were fraudulent because, among other things, they were consistent with the job offers Plaintiffs and other Mexican engineers had accepted.” [Doc. 19 at 18]. As already noted, this Court must “accept[ ] the facts alleged in the complaint as true, drawing all reasonable inferences in the plaintiff's favor.” Keating, 598 F.3d at 762. Accordingly, this Court takes Plaintiffs' allegations that they were unaware that the information within the Support Letters was fraudulent as true and determines that the doctrine of in pari delicto does not apply.

iii. Plaintiffs Sufficiently Pled the Predicate Acts

Plaintiffs alleged that Defendants committed the following predicate acts: (1) mail fraud in violation of 18 U.S.C. § 1341; (2) wire fraud in violation of 18 U.S.C. § 1343; (3) fraud in foreign labor contracting in violation of 18 U.S.C. § 1351; (4) visa fraud in violation of 18 U.S.C. § 1546; and (5) false statements and writings, in violation of O.C.G.A. § 16-10-20. Cf. O.C.G.A. § 16-14-3(5)(C); Maddox v. S. Eng'g Co., 216 Ga. App. 6, 7–8, 453 S.E.2d 70 (1994). Defendants argue that the predicate acts alleged within the Amended Complaint are not plausible. First, Defendants' sole challenge to Plaintiffs' allegations of mail fraud, wire fraud, fraud in foreign labor contracting, and visa fraud is that Plaintiffs cannot establish that any fraud occurred. In support of this argument, Defendants claim that Plaintiffs could not have been misled by the subsequent offer letters or support letters because the initial offer letters Plaintiffs agreed to were transparent about the terms of the offered employment. Therefore, Plaintiffs were on notice of any discrepancies between the initial and subsequent offers. However, as noted above, genuine disputes of material fact exist as to whether Plaintiffs were reasonably misled by the subsequent offer letters.

Second, Defendants argue that Plaintiffs failed to sufficiently plead a violation of O.C.G.A. § 16-10-20 as a predicate act. This claim is founded in the Defendants' alleged submission of incomplete tax information regarding Plaintiffs' earnings to the Georgia Department of Revenue. As discussed above, Plaintiffs have pled sufficient facts regarding this allegation to survive a motion to dismiss.

iv. Plaintiffs Have Sufficiently Pled Proximate Cause

Finally, Defendants argue that Plaintiffs cannot establish that any violation of the Georgia RICO acts proximately caused any injuries. To establish a RICO claim, a plaintiff must show that “the defendant's violation of or conspiracy to violate the RICO statute was the proximate cause of the injury.” Wylie v. Denton, 323 Ga. App. 161, 165, 746 S.E.2d 689 (2013) “To satisfy the proximate cause element of RICO, a plaintiff must show that her injury flowed directly from at least one of the predicate acts. This burden is not met where a plaintiff shows merely that his injury was an eventual consequence of the predicate act or that he would not have been injured but for the predicate act.” Id. (punctuation omitted). Defendants claim that Plaintiffs suffered no injuries; rather, they entered at-will employment and stayed in the United States after leaving that employment. But as noted above, regardless of whether Plaintiffs were at-will employees, they may still be entitled to damages for work performed or moving expenses incurred.

IV. Conclusion

Defendants' Motion to Dismiss [Doc. 25] is DENIED. Accordingly, Plaintiffs' Motion to Defer Ruling on the Motion to Dismiss [Doc. 40] is DISMISSED AS MOOT.

IT IS SO ORDERED, this 30th day of November, 2023.

FOOTNOTES

1.   The U.S. Government created the TN visa program to permit certain professionals from Mexico and Canada to enter the United States for employment. See 8 C.F.R. § 214.6(a).

2.   The initial offer letters listing Romero's employment as a “Line Technician” [Doc. 26-2] and de la Fuente's employment as a “Mechanical Technician” [Doc. 26-1] do not appear in the pleadings. Because of this, Plaintiffs argue that this Court must convert the Motion to Dismiss into a Motion for Summary Judgment. But the Court's review is focused on whether the subsequent letters created valid, binding contracts such that the initial offer letters became irrelevant. Considering the limited use of these documents in the analysis and the disposition of the Motion to Dismiss, the Court declines to convert the Motion to Dismiss.

3.   Plaintiffs' breach of contract claims (Count II) and FLSA claims (Counts IV and V) are all based on the validity of the subsequent employment offers, so the Court will address these claims together.

WILLIAM M. RAY, II, UNITED STATES DISTRICT JUDGE