Melissa Simpson v. Sanderson Farms, Inc. , 744 F.3d 702 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-10624
________________________
D.C. Docket No. 7:12-cv-00028-HL
MELISSA SIMPSON,
SABRINA ROBERTS,
on behalf of themselves and all those similarly situated,
Plaintiffs - Appellants,
versus
SANDERSON FARMS, INC.,
PERRY HAUSER, et al.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
________________________
(March 7, 2014)
Before MARCUS and EDMONDSON, Circuit Judges, and VINSON, * District
Judge.
*
Honorable C. Roger Vinson, United States District Judge for the Northern District of Florida,
sitting by designation.
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MARCUS, Circuit Judge:
Plaintiffs Melissa Simpson and Sabrina Roberts appeal the dismissal of a
putative class action suit brought under the Racketeer Influenced and Corrupt
Organizations (RICO) Act, 18 U.S.C. §§ 1961-68. In this case, we must determine
whether these two former employees of a poultry processing plant owned by
Sanderson Farms, Inc. have stated a civil RICO claim under the pleading standard
articulated by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). More precisely, we examine
today whether the plaintiffs have alleged enough facts plausibly to establish two
things: first, that they were actually injured; and, second, that the claimed predicate
RICO violations were a proximate cause of the injury. The plaintiffs have
attempted to show injury in the form of depressed wages. They further claim that
the defendants proximately caused depressed wages by falsely attesting -- in
violation of 18 U.S.C. § 1546 -- that their illegal employees presented genuine
work-authorization and identification documents. The district court dismissed the
amended complaint for failing plausibly to show proximate cause.
The essential problem with the amended complaint is that it offers virtually
no real evidence to plausibly suggest either injury or proximate cause. The only
wage data even mentioned in the amended complaint show that the plaintiffs
actually received increasing wages at the plant. In attempting to plead injury
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nonetheless, the plaintiffs have presented only a conclusory market model that is
stated at a very high order of abstraction. That model does not permit the plausible
inference of injury, nor does it plausibly establish that the defendants’ alleged
violations of § 1546 directly caused the plaintiffs’ wages to become depressed.
Accordingly, we affirm.
I.
It is by now clear that to state a prima facie civil RICO claim under 18
U.S.C. § 1964(c), a plaintiff must establish “three essential elements”: first, that the
defendant committed a pattern of RICO predicate acts under 18 U.S.C. § 1962;
second, that the plaintiff suffered injury to business or property; and, finally, that
the defendant’s racketeering activity proximately caused the injury. Avirgan v.
Hull, 932 F.2d 1572, 1577 (11th Cir. 1991); see Holmes v. Secs. Investor Prot.
Corp., 503 U.S. 258, 265-68 (1992).
We review de novo the dismissal of a civil RICO complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6). See Ironworkers Local Union 68 v.
AstraZeneca Pharm., LP, 634 F.3d 1352, 1359 (11th Cir. 2011). At this stage in
the proceedings, we accept as true the facts as the plaintiffs have alleged them. Id.
Additionally, “[w]e may affirm the district court’s judgment on any ground that
appears in the record, whether or not that ground was relied upon or even
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considered by the court below.” Powers v. United States, 996 F.2d 1121, 1123-24
(11th Cir. 1993).
The facts as pled and the procedural history are straightforward. Plaintiffs
Simpson and Roberts formerly worked at a poultry processing plant in Moultrie,
Georgia. Defendant Sanderson Farms, Inc. owns the Moultrie plant, which
employs over 1,500 workers and is one of the largest employers in Colquitt
County. Simpson worked at the plant from 2008 to 2010, while Roberts worked
there from 2009 to 2010. The plaintiffs were legally authorized to work in the
relevant period, and both provided hourly-paid, unskilled labor. The amended
complaint does not describe the plaintiffs’ actual duties at the Moultrie plant, nor
does it begin to explain what constitutes “unskilled” labor.
On February 16, 2012, the plaintiffs filed a putative class action suit under
the federal and Georgia RICO statutes. 1 The plaintiffs named one corporate and
seven individual defendants (collectively, “defendants” or “Sanderson”):
Sanderson Farms, Inc., a Mississippi corporation; Jennifer Harrison Buster,
Sanderson Farms’ corporate human resources manager; Perry Hauser, the complex
manager of Sanderson Farms’ poultry processing plant in Moultrie, Georgia; Jeff
1
Georgia’s RICO provisions are “essentially identical to the federal RICO statutes,” Morast v.
Lance, 807 F.2d 926, 933 (11th Cir. 1987), and in fact the Georgia definition of “racketeering
activity” expressly incorporates the federal list of predicate offenses. See O.C.G.A. § 16-14-
3(9)(A)(xxix). Thus, where a plaintiff fails to state a federal claim under a particular predicate,
his state-law claim under that predicate will fail as well.
4
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Black, the plant’s assistant manager; Demishia Croft, the plant’s human resources
manager; Aristides Carral-Gomez, a human resources employee; Janie Perales, a
human resources employee; and Karina Fondon, a human resources employee.
In their first complaint, the plaintiffs alleged that Sanderson committed
patterns of three substantive RICO predicate acts: violations of 8 U.S.C.
§ 1324(a)(3)(A) (knowingly hiring unauthorized aliens who have been brought
illegally into the United States); violations of 18 U.S.C. § 1028(a)(7) (knowingly
transferring, possessing, or using, without lawful authority, another person’s means
of identification in order to engage in unlawful activity); and violations of 18
U.S.C. § 1546 (fraud and misuse of visas, permits, and other documents). The first
complaint also alleged conspiracies under 18 U.S.C. § 1962(d) and
18 U.S.C. § 1028(f). See 18 U.S.C. § 1962(d) (“It shall be unlawful for any person
to conspire to violate any of the provisions of subsection (a), (b), or (c) of this
section.”); id. § 1028(f) (“Any person who attempts or conspires to commit any
offense under [§ 1028] shall be subject to the same penalties as those prescribed
for the offense . . . .”).
According to the complaint, this pattern of racketeering activity allowed
Sanderson, since 2008, to pay depressed wages to all genuinely work-authorized
employees at its chicken processing plant. Finally, the plaintiffs claimed in the
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first complaint that each pattern of predicate acts was a “substantial and direct
factor in causing the depressed wages.” Compl. ¶ 80.
On September 13, 2012, the district court dismissed the first complaint
without prejudice. See Simpson v. Sanderson Farms, Inc., 7:12-CV-28, 2012 WL
4049435, at *16 (M.D. Ga. Sept. 13, 2012). The court determined that the
plaintiffs had sufficiently pled the § 1546 predicate acts but had not adequately
shown violations of § 1324(a)(3)(A) or § 1028(a)(7). Id. at *3-11. Without
explaining its reasoning, the court also found that the plaintiffs had sufficiently
alleged that they suffered injury. Id. at *15. Nevertheless, the court dismissed the
first complaint in its entirety, concluding that the plaintiffs had failed adequately to
plead -- as they were required to do -- that the surviving predicate acts (§ 1546
violations) proximately caused their alleged injury (depressed wages). Id.
On October 5, 2012, the plaintiffs filed a new five-count amended
complaint, again alleging racketeering charges grounded in both the federal and
Georgia RICO laws. Notably, they did not re-allege predicate violations of
§ 1324(a)(3)(A) or § 1028(a)(7), and accordingly no claims arising from those
predicate acts are now before us. The amended complaint also omitted all prior
allegations of a § 1962(d) conspiracy to violate § 1324(a)(3)(A) and a § 1028(f)
conspiracy to violate § 1028(a)(7). Instead, to establish a pattern of racketeering
activity, the plaintiffs exclusively invoked § 1546.
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Section 1546(a) provides in relevant part:
Whoever knowingly makes under oath, or as permitted under penalty
of perjury under section 1746 of title 28, United States Code,
knowingly subscribes as true, any false statement with respect to a
material fact in any application, affidavit, or other document required
by the immigration laws or regulations prescribed thereunder,
. . . [s]hall be fined under this title or imprisoned . . . .
18 U.S.C. § 1546(a). Section 1546(b) additionally provides:
Whoever uses --
(1) an identification document, knowing (or having reason to
know) that the document was not issued lawfully for the use of the
possessor,
(2) an identification document knowing (or having reason to know)
that the document is false, or
(3) a false attestation,
for the purpose of satisfying a requirement of section 274A(b) of the
Immigration and Nationality Act, shall be fined under this title,
imprisoned not more than 5 years, or both.
Id. § 1546(b).
At this stage, the plaintiffs’ theory of the case is very simple: since 2008,
Sanderson has allegedly used the vehicle of § 1546 violations to hire “likely more
than 300” unskilled, illegal employees at the Moultrie plant. Am. Compl. ¶ 2. The
plaintiffs essentially say that, in the course of completing I-9 forms for illegal
workers, the defendants have accepted and certified obviously fake identification
documents. This misconduct has allegedly depressed the wages that Sanderson has
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paid to all genuinely work-authorized, hourly-paid, unskilled employees at the
Moultrie plant.
Although the amended complaint states -- more than ten times -- that
Sanderson pays depressed wages, the plaintiffs have not pled any data or facts that
actually evince a decrease in wages over time. In fact, the only wage data detailed
in the amended complaint are statements of the plaintiffs’ own Sanderson wages,
which increased considerably during the relevant period. Thus, Simpson is said to
have earned a starting wage of approximately $8.50 per hour in 2008 and an
ending wage of approximately $11.40 per hour in 2010 (a thirty-four-percent
increase over two years), while Roberts’ wage reportedly climbed from
approximately $8.50 per hour in 2009 to approximately $11.55 per hour in 2010 (a
thirty-six-percent increase over one year).
Rising wages notwithstanding, the amended complaint attempts to show
injury by positing a gap between the hourly wages that the plaintiffs actually
received at Sanderson and the wages they “would have received had the
Defendants not violated § 1546.” Am. Compl. ¶ 69. In support, the amended
complaint postulates a market model. To operate the Moultrie plant, Sanderson
must employ “over 1,500” hourly-paid workers at any one time. Id. ¶ 62. Rather
than hiring from a limited number of legal candidates, however, the defendants
allegedly select from a bloated, “mixed status” pool that includes both legal and
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illegal workers. Id. ¶ 63. The plaintiffs further allege that, compared to legal
workers, illegal aliens tend to work for lower wages. Id. ¶¶ 16, 64. All told, the
plaintiffs mean to invoke the basic logic of supply and demand: when many
candidates jockey for few positions, competition among workers drives wages
down. Nevertheless, the amended complaint does not specify or even estimate the
number of legal or illegal workers in the relevant market -- however that market
may be defined. Nor have the plaintiffs explained why, for the purposes of this
market analysis, legal and illegal workers may be treated interchangeably.
Because the plaintiffs have nonetheless assumed that Sanderson pays the same
“market hourly wage for unskilled labor” to both legal and illegal workers,
Sanderson’s decision to hire illegal workers has allegedly depressed the wages paid
to all unskilled workers at the Moultrie plant -- legal and illegal alike. Id. ¶ 62.
To link this theory with Sanderson’s § 1546 violations, the plaintiffs have
said that, “but for” the § 1546 offenses, the defendants never could have hired
illegal workers in the first place. Id. ¶ 68. In the plaintiffs’ words, Sanderson must
falsify I-9 forms “to avail itself of the mixed status labor supply.” Id. ¶ 65.
Moreover, because Sanderson must hire “large numbers” of illegal workers, it
cannot employ those workers off the books. Id. ¶ 66. This “wholesale failure to
complete I-9 forms” would “dramatically increase the risk of federal prosecution,”
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particularly since the Department of Homeland Security arrested at least twenty-
five illegal workers in a 2008 raid of the Moultrie plant. Id. ¶¶ 35, 66.
Not surprisingly, Sanderson moved once again to dismiss the plaintiffs’
amended complaint for failure to state a claim. Sanderson argued again that the
plaintiffs had not shown injury, but-for cause, or proximate cause, and, again,
Sanderson claimed that the plaintiffs had failed to introduce enough data (indeed,
any data) to yield the conclusion that wages were actually depressed. Finally,
Sanderson argued that the amended complaint’s theory of proximate cause was
merely a string of conclusory premises.
The district court dismissed the amended complaint, this time with
prejudice, largely agreeing with Sanderson. The court held that the amended
complaint could not survive a motion to dismiss “because it fail[ed] to allege
sufficient facts to show that the § 1546 violations proximately caused depressed
wages.” Simpson v. Sanderson Farms, Inc., 7:12-CV-28 HL, 2013 WL 443620, at
*5 (M.D. Ga. Feb. 5, 2013). The trial court reasoned that the plaintiffs could not
rely on pre-Twombly precedent to prove the sufficiency of their pleadings, that
actual data was required to support the wage depression claim, that the plaintiffs’
but-for causation argument was wholly conclusory and not supported by any actual
data or facts, and, finally, that the plaintiffs had not shown a direct causal link
between injury and injurious conduct.
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The plaintiffs timely appealed from the order dismissing their amended
complaint.
II.
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a
short and plain statement of the claim showing that the pleader is entitled to relief.”
Specifically, “[t]o survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). The
plausibility standard is met only where the facts alleged enable “the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. A plaintiff cannot rely on “naked assertion[s] devoid of further factual
enhancement.” Id. (alteration in original) (internal quotation marks omitted).
Rather, a complaint must present sufficient factual matter, accepted as true, to
“raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. A
plaintiff need not plead “detailed factual allegations,” but he must demonstrate
“more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. In other words, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678.
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When measured against these pleading standards, the amended complaint
does not come close to stating a plausible claim for relief under the federal or
Georgia racketeering statutes. It is indisputable that 18 U.S.C. § 1964(c) requires
RICO plaintiffs to prove both an “injury to business or property,” see Avirgan, 932
F.2d at 1577, and proximate cause linking the defendants’ pattern of racketeering
activity with the injury that the plaintiffs suffered, see Holmes, 503 U.S. at 265-68.
Sanderson does not contest that depressed wages, if sufficiently pled, could qualify
as an injury to a “business interest.” See Williams v. Mohawk Indus., Inc.
(Mohawk II), 465 F.3d 1277, 1286-87 (11th Cir. 2006) (per curiam) (holding that
employees could plead RICO injury by showing that employer depressed wages).
Thus, the first issue in this case involves the level of factual specificity required to
establish injury (that wages were actually depressed) at the pleading stage.
We have had little occasion to answer this question since the rulings in
Twombly and Iqbal. In fact, by our count, we have only once applied the new
plausibility standard to evaluate the question of RICO injury at the pleading stage.
See AstraZeneca, 634 F.3d at 1364-69 (affirming dismissal order in RICO case
because “insurers have not alleged plausible economic injury”). Nevertheless,
because this is not a close case, we need not engage in any creative legal analysis
to conclude that the plaintiffs have not plausibly shown injury.
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The plaintiffs accuse Sanderson of depressing wages, but the only actual
wage data in the amended complaint say that the plaintiffs’ wages rose -- and not
inconsiderably, at that. Thus, we are told, Simpson earned a thirty-four-percent
wage increase over her two years at Sanderson, while Roberts earned a thirty-six-
percent increase in her one year working there. Of course, the mere fact that their
wages increased does not preclude the plaintiffs from showing depressed wages.
If, absent Sanderson’s misconduct, the plaintiffs’ wages would have increased
substantially more than thirty-four and thirty-six percent, respectively, and if that
wage depression would have directly resulted from a pattern of racketeering
activity, then the plaintiffs could have adequately pled a RICO claim.
The problem here, however, is that the plaintiffs have pled injury at only the
highest order of abstraction and with only conclusory assertions. They have
offered no market data that might permit us plausibly to infer a gap between the
wages they actually received at Sanderson and the wages they would have received
but for the alleged § 1546 misconduct. Certainly, the plaintiffs have provided no
direct evidence of lost profits. They have not, for example, offered or even
estimated the wages paid by any comparable poultry processing plant employers in
the relevant market, in the state, or even in the region -- let alone attempted to
distinguish between the wages paid by those employers who hire illegal workers
and those who do not. See Lehrman v. Gulf Oil Corp., 500 F.2d 659, 667 (5th Cir.
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1974) (establishing that plaintiffs may prove injury by showing “the profits of
business operations that are closely comparable to the plaintiff’s”). 2 Nor does the
amended complaint state or even suggest that the plaintiffs’ wages decreased -- or
even increased at a slower rate -- after Sanderson began hiring illegal workers. See
id. (explaining that a plaintiff can establish injury by “compar[ing] the plaintiff’s
profit record prior to the violation with that subsequent to it”). In fact, according to
the amended complaint, Sanderson has employed illegal workers at the Moultrie
plant since the plant opened in 2005. See Am. Compl. ¶ 25. The plaintiffs offer no
comparators to wages before that time.
Unable to marshal any empirical data in their favor, the plaintiffs rely
instead on a vague market theory. They insist that there are enough illegal workers
in the mixed-status labor pool to logically infer the depression of wages paid to
legal workers. In certain markets, that is surely true. See De Canas v. Bica, 424
U.S. 351, 356-57 (1976) (recognizing that “acceptance by illegal aliens of jobs on
substandard terms as to wages and working conditions can seriously depress wage
scales and working conditions of citizens and legally admitted aliens” (emphasis
added)). The conclusion is not self-evident in all markets, however, and the
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted as
binding precedent all Fifth Circuit decisions issued before October 1, 1981.
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plaintiffs have alleged no facts to render it plausible here. In other words, they
have provided no parameters and no data to ground an abstract market theory.
To begin with, the plaintiffs have entirely failed to describe the relevant
labor market in quantifiable terms. They have not so much as estimated the
number of unskilled workers in the market, nor have they stated -- or offered
literally any suggestion as to how we might even guess -- what percentage of that
workforce is work-authorized. This missing population data is essential to the
plaintiffs’ theory of harm. Wages are depressed, the plaintiffs say, because
Sanderson opened the market to undocumented labor and thereby increased the
number of workers in the market who are willing to work for less. This increased
supply of low-wage workers has allegedly forced wages down.
Whatever its abstract appeal, this conclusion is unsupported by any concrete
facts or data in the amended complaint. Holding all else equal, any set number of
illegal workers will affect wages less perceptibly in larger markets. Indeed, in a
large enough market, the wage impact of any given number of illegal workers may
even be de minimis. Here, the plaintiffs have suggested neither the number of
illegal, unskilled workers in the market (the relevant “numerator”) nor the total
number of unskilled workers in the market (the relevant “denominator”). What’s
more, they have failed to plead the relevant population data even in the smaller
universe of the Moultrie plant. The plaintiffs have said that Sanderson has hired at
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least three hundred undocumented workers since 2008. That’s the numerator. But
the plaintiffs have not pled the corresponding denominator. While they have
claimed that the Moultrie plant employs 1,500 workers at any one time, they have
not so much as estimated the number of workers hired at the plant -- in total --
since 2008. By their own admission, the rate of turnover in the poultry processing
industry is “extremely high.” Am. Compl. ¶ 17. Without at least some
demographic information, we cannot plausibly infer whether the presence of illegal
workers has actually depressed wages in a wholly nebulous labor market or in the
more limited confines of the Moultrie plant.
Moreover, the plaintiffs have failed even to identify the relevant geographic
market, leaving us with no frame of reference. Although the plaintiffs have alleged
that Sanderson’s Moultrie plant is “one of the largest employers in Colquitt
County, Georgia,” that assertion does not tell us whether their claims implicate the
market across the entire county, some subset of the county, or some larger
geographic region -- say, a series of contiguous counties. Cf. Mohawk II, 465 F.3d
at 1289 (“[W]holesale illegal hiring depresses wages for the legal workers in north
Georgia where Mohawk is located.” (emphasis added)).
The Supreme Court has “repeatedly observed that Congress modeled
§ 1964(c) on the civil-action provision of the federal antitrust laws.” Holmes, 503
U.S. at 267 (citations omitted). Under our post-Twombly precedent, rule-of-
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reason 3 antitrust plaintiffs must always “present enough information in their
complaint to plausibly suggest the contours of the relevant geographic . . .
market[].” Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327, 1336 (11th Cir.
2010). Here, where the plaintiffs’ theory of injury also undeniably relies on
assertions about a relevant market, we think the analogy is particularly appropriate.
According to the plaintiffs, legal-market wages are higher than mixed-status wages
at least in part because the market supply of legal labor is “limited.” But because
the plaintiffs have failed to offer any population data, and have neglected to
provide any geographic frame of reference, we find it difficult, if not impossible,
plausibly to conclude that the legal labor supply actually is limited. Presumably,
there are other legal workers in contiguous counties and nearby places who might
choose to work at Sanderson, or who might move nearby to obtain employment.
In the face of Plaintiffs’ market-based theory of harm, we think it not too much to
expect the pleading to tell us something more about the relevant geographic
market.
3
Rather than draw a comparison to rule-of-reason cases, the plaintiffs would have us analogize
RICO to cases involving antitrust violations per se, for which the injurious effect is presumed at
the pleading stage. The plaintiffs cite no case law in support of their proposed analogy, and,
indeed, our RICO precedent expressly forecloses it. Rather than presuming injury at the
pleading phase, we have already established that, after Twombly, we will affirm the dismissal of
a civil RICO complaint that does not articulate enough facts to “allege[] plausible economic
injury.” AstraZeneca, 634 F.3d at 1364-70.
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In fact, our antitrust precedent requires plaintiffs to plead factual support for
all manner of market claims. 4 In Jacobs, for instance, we said that while the
“parameters of a given market are questions of fact,” a rule-of-reason complaint
must contain sufficient information to plausibly define the relevant product
market.5 Id. at 1336. Ultimately, we held that the Jacobs plaintiffs failed to plead
actual harm because, “beyond the bald statement that consumers lost hundreds of
millions of dollars, there [was] nothing establishing the competitive level above
which [the defendant’s] allegedly anti-competitive conduct artificially raised
prices.” Id. at 1339. In this case, the plaintiffs have similarly relied on the bald
assertion that “[t]he Scheme saves Sanderson millions of dollars in labor costs.”
4
The plaintiffs cite to an antitrust case, Palmyra Park Hospital Inc. v. Phoebe Putney Memorial
Hospital, 604 F.3d 1291 (11th Cir. 2010), to argue that we will accept vague descriptions of
“economic forces” as factual at the pleading stage. Pet’r’s Rep. Br. 15-16. But Palmyra does not
stand for the broad principle that the plaintiffs extract from it. Contrary to their characterization,
the Palmyra complaint actually alleged a plethora of specific market facts. See Compl. ¶ 2,
Palmyra Park Hosp. Inc. v. Phoebe Putney Mem’l Hosp., No. 08-00102 (M.D. Ga. July 3, 2008)
(describing a specific and limited market); id. ¶¶ 16-35 (giving highly specific descriptions of the
tying and tied markets); id. ¶¶ 36-38 (showing reasons why the market was limited and could not
easily adjust); id. ¶ 44 (showing a precise injury of $18 million in lost patient revenues); id. ¶¶
45-55 (providing specific data on defendant hospital’s market share and market power); id. ¶¶
55-59 (noting admissions from insurance companies that their contracts with defendant hospital
precluded them from doing business with plaintiff hospital); id. ¶ 64 (deploying expert analysis
to compare average healthcare costs across geographic markets).
5
The plaintiffs insist that market details are not available pre-discovery and should not be
required at the pleading phase. Our antitrust precedent specifically rejects that argument. The
Jacobs plaintiffs argued that their complaint had been erroneously dismissed, claiming that they
were entitled to “add facts in discovery” about market share and product substitutability. 626
F.3d at 1338. In response, we explained that accepting the plaintiffs’ argument “would absolve
[plaintiffs] of the responsibility under Twombly to plead facts ‘plausibly suggesting’ the relevant
submarket’s composition.” Id. Here, the plaintiffs cannot similarly invoke discovery to avoid
pleading some specific market details.
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Am. Compl. ¶ 16. Jacobs tells us that, without more facts, such a naked market
claim fails plausibly to demonstrate the fact of injury.
We do not mean to suggest that the plaintiffs were required to plead all of
this market data in order to make a plausible showing of injury. We have no
occasion to say how much data would have been enough, and we do not mean to
announce a comprehensive list of strategies for showing plausible injury in similar
cases. Our conclusion here is instead much simpler: because the plaintiffs’ theory
of injury turns peculiarly on assertions about the relevant labor market, the
amended complaint cannot plausibly show injury without pleading any of these
market facts or data.
The plaintiffs cannot state a claim unless they “raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 555. Since the plaintiffs have
conceded that their own Sanderson wages actually increased, and since they have
offered no facts to establish that they were injured nonetheless, their allegations of
depressed wages invite us to speculate. Although the plaintiffs have not shown or
offered any data about the prevailing market wage, we might guess that employers
who hire only legal workers pay a higher rate. While the plaintiffs have not
identified the geographic market, we might also guess that it includes Colquitt
County and parts of the surrounding area. And although the plaintiffs have not
even estimated the number of legal and illegal workers in that geographic market,
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we might surmise that there are enough illegal workers to force wages down at
least somewhat. But after Twombly and Iqbal, this speculation does not state a
claim. The plaintiffs have therefore failed to allege § 1964(c)’s injury element
“above the speculative level.”
Section 1964(c) also requires a civil RICO plaintiff to show -- plausibly --
that his injury occurred “by reason of” a defendant’s pattern of racketeering
activity. In this case, because the plaintiffs have failed to plead even the fact of
wage depression, they have failed a fortiori to show that Sanderson’s alleged
§ 1546 violations caused wage depression in even a “but-for” sense. Plainly, there
is no such thing as a “but for” cause of something that did not happen.
But even if we were to assume that the amended complaint established
injury and but-for cause, the plaintiffs still have failed to adequately plead that
their injury occurred “by reason of” Sanderson’s alleged § 1546 misconduct. As
the Supreme Court has interpreted § 1964(c), a civil RICO plaintiff must always
establish a proximate-causal, “direct relation” between the injury and injurious
conduct at issue. See Holmes, 503 U.S. at 268. To qualify as a direct cause of a
plaintiff’s injury, a RICO defendant’s misconduct must have been a “substantial
factor in the sequence of responsible causation.” Mohawk II, 465 F.3d at 1288 n.5
(quoting Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1399 (11th Cir.
1994), modified on other grounds by 30 F.3d 1347 (11th Cir. 1994)). The pattern
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of RICO predicate acts need not be the “sole cause” of a plaintiff’s injury, see Cox,
17 F.3d at 1399, but a plaintiff must indisputably show that a defendant’s
racketeering activity was more than merely a “but for” cause of harm. See
Holmes, 503 U.S. at 268; Green Leaf Nursery v. E.I. DuPont De Nemours & Co.,
341 F.3d 1292, 1307 (11th Cir. 2003); Beck v. Prupis, 162 F.3d 1090, 1095-96
(11th Cir. 1998), aff’d, 529 U.S. 494 (2000).
Here, the plaintiffs have effectively conceded that their theory of proximate
cause is just but-for cause repackaged. In the amended complaint, for example,
they have attempted to establish proximate cause by stating that “the violations of
§ 1546 are a direct and substantial cause of the depressed wage rates.” Am.
Compl. ¶ 69. But the plaintiffs cannot plausibly establish proximate cause merely
by tacking a conclusory allegation onto their high-level market claims. In their
Opening Brief, moreover, they say that the amended complaint “explains precisely
how the § 1546 violations are an essential step in the hiring process of illegal aliens
at the Plant, not just the ‘but for’ cause. . . .” Pet’r’s Br. 23. But to identify an
“essential step” in a process is merely to claim that, “but for” that step, the process
could not proceed. These allegations are not nearly enough to establish a plausible
direct connection between the alleged misconduct -- violations of § 1546 -- and
depressed wages.
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The Supreme Court recognized a directness requirement in the civil RICO
cause of action in part to avoid the difficulty involved in “ascertain[ing] the
damages caused by some remote action.” Anza v. Ideal Steel Supply Corp., 547
U.S. 451, 458 (1991). That concern is proper here. In the plaintiffs’ proposed
theory of causation, § 1546 violations are undeniably remote from depressed
wages. Section 1546 violations may be an “essential step” in the defendants’
scheme, but they are not the only -- or even the final -- step.
With enough factual support, this attenuated, multi-step causal theory could
still be “direct.” Indeed, we have previously held that, with the proper facts
alleged, a plaintiff can show a proximate-causal link between § 1546 violations and
wage depression. See Mohawk II, 465 F.3d at 1294 (holding, on the facts of that
case, that an employer’s alleged § 1546 violations were “neither indirect nor too
remote” to be a proximate cause of employees’ depressed wages). In this case,
however, the amended complaint does not contain sufficient facts to establish a
plausible direct relation between the remote § 1546 violations and the allegedly
depressed wages. The plaintiffs have failed to render wage depression the “natural
consequence” of Sanderson’s alleged § 1546 misconduct. See Bridge v. Phoenix
Bond & Indem. Co., 553 U.S. 639, 658 (2008). Even if we credit the amended
complaint’s causal chain in the simplest but-for sense, the plaintiffs have alleged
no facts whatsoever to suggest that the labor market necessarily operates in the
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manner they hypothesize. See Hemi Group, LLC v. City of New York, 559 U.S. 1,
14-15 (2010) (plurality opinion) (no proximate cause where plaintiff’s injury did
not “necessarily” follow from defendant’s RICO predicate acts and connection was
not “straightforward”). Without pleading population data, the relevant geographic
market, before-and-after wage rates, or wage data from comparable poultry
processing plant employers, the plaintiffs have failed to define too many crucial,
operative variables in their theory of causation. The multi-step causal chain they
posit is not straightforward, and, at least on these pleadings, the relationship
between injury and injurious conduct is not direct.
In short, the amended complaint was properly dismissed for failing to
establish two of the essential elements of the § 1964(c) cause of action. The
plaintiffs have not plausibly pled either the fact of injury, or a proximate-causal
link between Sanderson’s alleged § 1546 violations and depressed wages.
III.
The plaintiffs lean heavily on Mohawk II, 465 F.3d 1277, where this Court
affirmed the denial of a motion to dismiss a civil RICO complaint that alleged,
among other things, a direct relation between an employer’s § 1546 violations and
the depressed wages of legal workers. Mohawk II is inapposite for two reasons.
First, Mohawk II is distinguishable because it presented sharply different facts. In
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the second place, even if the two cases had been more analogous, the pleading
standard applied in Mohawk II has since been abandoned by the Supreme Court.
For starters, the plaintiffs in Mohawk II alleged numerous illegal acts by the
employer, not just the making of false statements. Notably, Mohawk allegedly
conspired with recruiting agencies to “hire and harbor” unauthorized workers for
its carpet manufacturing business. Mohawk II, 465 F.3d at 1281. The Mohawk II
legal-worker plaintiffs alleged that Mohawk’s employees traveled to the Mexican
border, recruited “literally thousands” of undocumented workers, physically
transported those workers into the relevant market, accepted fraudulent
documentation from those illegal workers, took steps to shield the illegal workers
from detection, and offered incentive payments to recruiters in order to hire still
more illegal labor. Id. at 1281-82, 1289. Moreover, unlike the plaintiffs here, the
Mohawk II plaintiffs identified the relevant geographic market as “North Georgia.”
Id. at 1281-82, 1289-90. And, importantly, unlike the amended complaint in this
case, the Mohawk II complaint alleged that “illegal workers now constitute a
majority of the work force in many of Mohawk’s facilities in North Georgia.”
Compl. ¶ 75, Williams v. Mohawk Indus., Inc., No. 04-00003 (N.D. Ga. Jan. 6,
2004).
The RICO allegations in Mohawk II relied on all of those facts. Like this
case, Mohawk II involved allegations arising under the federal and Georgia RICO
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statutes. But unlike this case, which involves at this stage only allegations of
§ 1546 predicate acts relating to fraud or misuse of certain documents, Mohawk II
overwhelmingly concerned numerous predicate acts under § 1324, including
hiring, concealing, harboring, and shielding illegal aliens, and inducing their
unauthorized border-crossing. In fact, in our ten-page discussion of the federal
RICO claims at issue in Mohawk II, we never once mentioned § 1546, false
attestations, or the fraudulent use of documents. We did hold that the plaintiffs
stated a Georgia RICO claim predicated upon § 1546, but, even there, we noted
that the plaintiffs had alleged “hundreds, probably thousands, of violations of”
§ 1546. Mohawk II, 465 F.3d at 1293-94. Quite simply, Mohawk II is a
profoundly different case.
Moreover, the Supreme Court has since abrogated the pleading standard
applied by our Court in Mohawk II. In Mohawk II, we explained that we would
not affirm the dismissal of a complaint “unless it appear[ed] beyond doubt that the
plaintiff [could] prove no set of facts in support of his claim.” Id. at 1282 n.2
(quoting Beck v. Deloitte & Touche, 144 F.3d 732, 735 (11th Cir. 1998)). This
“no set of facts” language in Mohawk II was pulled verbatim from Conley v.
Gibson, 355 U.S. 41, 45-46 (1957), which the Supreme Court categorically retired
in Twombly. See Twombly, 550 U.S. at 562-63 (announcing that Conley v.
Gibson’s “no set of facts” language had “earned its retirement”).
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In fact, Mohawk II drew support from cases in other circuits that also relied
on the now-abrogated Conley v. Gibson standard. Thus, in Mohawk II, we
referenced the Sixth Circuit’s decision in a similar case, where that court reversed
the dismissal of a RICO complaint after finding that it “could not conclude that
there was no likelihood of success on the merits.” Mohawk II, 465 F.3d at 1290-
91 (citing Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 619 (6th Cir. 2004)).
Mohawk II also cited to a Ninth Circuit case, Mendoza v. Zirkle Fruit Co., 301
F.3d 1163 (9th Cir. 2002), which similarly invoked the Conley v. Gibson standard.
See Mohawk II, 465 F.3d at 1286; Mendoza, 301 F.3d at 1169 (“At this stage of
the proceedings, we cannot say that there is no set of facts that could be proved, to
satisfy these requirements.”) (internal quotation marks omitted). Since Mohawk II
relied upon the now-retired Conley v. Gibson standard, it does not control our legal
analysis about the sufficiency of the pleadings in the instant case.
The plaintiffs argue nevertheless that Twombly and Iqbal are irrelevant to
the Mohawk II analysis, because they claim that Mohawk II found proximate cause
as a matter of law -- independent of the factual peculiarities of that case. We are
unpersuaded. The plaintiffs point us to the following passage from Mohawk II:
“Although under Georgia law the plaintiffs are limited to predicate acts arising out
of 18 U.S.C. § 1546, we conclude that the plaintiffs’ allegations are neither indirect
nor too remote to satisfy Georgia’s proximate-cause requirement under state-law
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RICO.” 465 F.3d at 1294. Contrary to the plaintiffs’ claim, however, this passage
does not mean that the Court announced a conclusion of law unaffected by the
nature or quality of detail the plaintiffs may have alleged. Mohawk II did not hold
(nor could it have held) that, in a civil RICO case, an employer’s § 1546 violations
always proximately cause its work-authorized employees’ wages to become
depressed. The finding of proximate cause between Mohawk’s § 1324 and § 1546
violations and depressed wages plainly was limited to the “particular factual
circumstances of [that] case.” Id. at 1290.
In short, the plaintiffs have failed plausibly to establish two of the elements
of a civil RICO cause of action -- that they suffered an injury in the form of wage
depression, or that, even if we were to assume they had plausibly shown injury and
but-for cause, their injury was directly and proximately caused by Sanderson’s
pattern of § 1546 violations. Accordingly, we AFFIRM.
27