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Castellanos v. Worldwide Distribution Systems USA LLC

United States District Court, E.D. Michigan, Southern Division

November 16, 2017




         Plaintiff Narciso Jose Alejandro Castellanos, on behalf of himself and other similarly situated individuals, sued Defendants[1] alleging (I) a violation of 18 USC § 1962(c), (II) a violation of 18 USC § 1962(d), (III) a violation of 29 USC § 201, (IV) a violation of 18 USC § 1595, (V) constructive and actual fraud, and (VI) breach of contract. ECF 1. Plaintiff later dismissed Count IV, ECF 62, and the Court certified a class[2] for Counts I and II, ECF 31. Now before the Court are Defendants' Motion for Partial Summary Judgment on Counts I, II, and V, ECF 57, and Plaintiff's Motion for Partial Summary Judgment on Counts I, II, and VI, ECF 58. For the reasons set forth below, the Court will deny Plaintiff's motion and grant in part and deny in part Defendants' motion.


         Defendant Worldwide Distribution Systems USA, LLC ("SUSA") is an IT staffing firm, and its employees include Defendants Rajat Mohan and Jessica Rodriguez. ECF 57, PgID 554. Plaintiff, a Mexican citizen and trained computer analyst, emailed Rodriguez seeking employment with SUSA. ECF 57-4, PgID 614. SUSA ultimately extended an offer, and the parties executed an employment offer letter promising Plaintiff a $52, 000 annual salary. ECF 59-1, PgID 697. SUSA then sent letters to the U.S. Embassy in Mexico requesting a TN Visa for Plaintiff. Id. at 684-85. Plaintiff alleges that, while in Mexico, he incurred expenses to secure the visa and to relocate to the United States to begin his employment. ECF 1, PgID 10-11. Once he arrived, however, Plaintiff did not start earning his salary. ECF 59-4, PgID 863. Rather, he was told that he would not be paid until his services were contracted to a third party-but he was still expected to report to SUSA daily. Id. at 863-64. The parties dispute whether Plaintiff was first informed of this arrangement while the parties negotiated Plaintiff's employment or after Plaintiff arrived in the United States. Regardless, Plaintiff remained in the United States for approximately five months waiting to be placed. Id. at 865. He ultimately decided to return home, and then brought suit.


         The Court must grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party must identify specific portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the non-moving party may not simply rest on the pleadings, but must present "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis omitted).

         A fact is material if proof of that fact would establish or refute an essential element of the cause of action or defense. Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984). A dispute over material facts is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In considering a motion for summary judgment, the Court must view the facts and draw all reasonable inferences" in the light most favorable to the nonmoving party." 60 Ivy St. Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).


         I. Private RICO Cause of Action

         The RICO statute creates a private cause of action for a "person injured in his business or property by reason of a violation of section 1962[.]" 18 USC § 1964(c). Section 1962 prohibits four types of activities: (a) investing income derived from a pattern of racketeering activity in an enterprise, (b) acquiring or maintaining an interest in an enterprise through a pattern of racketeering activity, (c) conducting an enterprise's affairs through a pattern of racketeering activity, and (d) conspiring to violate any of the first three prohibitions. 18 USC § 1962. In Counts I and II (the "RICO Claims"), Plaintiff has alleged violations of (c) and (d).

         Before the Court can assess the merits of Plaintiff's claims, however, it must confirm that there is a cause of action. In the RICO Claims, Plaintiff alleges he suffered the following injuries: (1) funds spent to arrange for travel to the United States, (2) loss of job in Mexico to take to the position with SUSA, (3) funds spent to continue to reside in the U.S., (4) loss of the promised $52, 000 salary, (5) separation from his family, and (6) distress, fear, and other intangible harms. ECF 1, PgID 10-12. The Court will address each injury in turn, but only the third injury is actionable.

         A. Harms Suffered Abroad

         Plaintiff cannot bring a cause of action under § 1964(c) for harms suffered outside the United States. As a general principle, statutes do not apply extraterritorially absent clearly expressed congressional intent. Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 255 (2010). Courts apply a two-step framework when analyzing extraterritoriality issues: first courts ask whether the presumption against extraterritoriality has been rebutted, and if it has not been rebutted then courts determine whether the case at hand presents a domestic issue. RJR Nabisco, Inc. v. European Cmty., 136 S.Ct. 2090, 2101 (2016). The Supreme Court recently applied this framework to § 1964(d) and determined that the statute does not overcome the presumption against extraterritoriality. Id. at 2106. To prevail here, Plaintiff "therefore must allege and prove a domestic injury to its business or property." Id. (emphasis in original). Because Plaintiff suffered injuries one and two before he arrived to the United States, the harms are not domestic injuries. Consequently, they are not actionable under § 1964(c).

         Plaintiff contends that the injuries suffered in Mexico are actionable because Defendants conducted the alleged racketeering in the United States. ECF 67, PgID 1108. In support of his position, Plaintiff argues that RJR Nabisco held that RICO applies to some foreign racketeering activity. ECF 67, PgID 1111. But Plaintiff's argument is misplaced.

         To properly apply the holding in RJR Nabisco, one first must understand how the RICO statute is structured: § 1962 provides a list of prohibitions that are all premised on "racketeering activity." The statute defines "racketeering activity" as acts in violation of a laundry list of separate criminal statutes, which are known as predicates. 18 U.S.C. § 1961(1). The statute provides two enforcement measures to deter violations of § 1962: criminal penalties under § 1963 and civil remedies under § 1964. Accordingly, for a private plaintiff to prevail, he needs to show that (1) he can bring a cause of action under § 1964(c), and (2) there was a violation of § 1962.

         Because of the RICO Act's structure, RJR Nabisco addressed two distinct questions: (1) whether the substantive prohibitions listed in § 1962 apply extraterritorially, and (2) whether the private cause of action provided by § 1964(c) applies to injuries that are suffered in foreign countries. RJR Nabisco, 136 S.Ct. at 2099-100. In answering the first question, the Supreme Court noted that some predicates apply to foreign conduct. Id. at 2101. The Supreme Court therefore held that some violations of § 1962 apply extraterritorially-not directly through § 1962-but to the extent that the statute that provides the predicate act applies extraterritorially. Id. at 2102-03 ("A violation of ยง 1962 may be ...

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