Kyle Edwards v. Prime Inc. ( 2010 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 09-11699 APR 9, 2010
________________________ JOHN LEY
D. C. Docket No. 08-01016-CV-AR CLERK
KYLE EDWARDS,
DIANE GEORGE,
RYAN CADE,
KAMERON BATTLES,
KELLY KEY,
individually, collectively and on behalf of
a class of similarly-situated employees,
TERRENCE FORMAN,
JIMMY D. LINCOLN,
Plaintiffs-Appellants,
versus
PRIME INC.,
d.b.a. Ruth's Chris Steak House,
MARKHAM OSWALD,
JESUS MOLINA,
an individual which may or may
not be his real name,
RUTH'S HOSPITALITY GROUP INC.,
Defendants-Appellees,
RUTH'S CHRIS STEAK HOUSE, INC.,
themselves and on behalf of a class of
defendants that operate restaurants named
"Ruth's Chris Steak House,"
Defendant.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(April 9, 2010)
Before CARNES, HULL and ANDERSON, Circuit Judges.
CARNES, Circuit Judge:
Ruth’s Hospitality Group, the parent company of Ruth’s Chris Steak House,
is proud of its origins. The company boasts that forty-five years after its founder,
Ruth Fertel, mortgaged her home to purchase her first restaurant, it has grown into
a chain of more than 120 steakhouse restaurants in seven countries. Though it has
become an international operation, the company insists that “our success continues
to be driven by our adherence to Ruth’s core values.”1 Ruth Fertel “understood the
value of each and every employee’s contribution to her success,” and that is why
the business continues to be a place “where respect, integrity and pride are a way
of life.”2 Not only that but the company “continues to value the unique differences
of each and every team member.”3 Or so it says.
1
Ruth’s Hospitality Group, Corporate Overview, http://phx.corporate-ir.net/phoenix.
zhtml?c=190038&p=irol-homeProfile (last visited Apr. 1, 2010).
2
Ruth’s Hospitality Group, Employment, http://www.ruthschris.com/Careers (last visited
Apr. 1, 2010).
3
Id.
2
The seven former employees of one Ruth’s Chris Steak House franchise who
are the plaintiffs in this lawsuit not only beg to differ but also have pleaded to the
contrary, at least insofar as the franchise where they worked is concerned.
According to their allegations, that particular franchise had the core values of a
criminal enterprise and provided anything but an atmosphere of respect, integrity,
and pride for its employees. More specifically, they allege that the Ruth’s Chris
Steak House in Birmingham, Alabama, knowingly provided illegal aliens with
names and social security numbers of American citizens to use for illegal
employment, unlawfully took employees’ tips, discriminated on the basis of race,
and retaliated against employees who challenged those and other practices.
Those allegations are contained in an amended complaint that asserts claims
based on the Racketeer Influenced and Corrupt Organizations Act, the Fair Labor
Standards Act, 42 U.S.C. § 1981, and Alabama common law. The district court
dismissed four of the fifteen counts in the amended complaint under Federal Rule
of Civil Procedure 12(b)(6) and certified those rulings as partial final judgments
under Rule 54(b). The plaintiffs have appealed those four rulings, and they have
attempted to appeal a number of others that were not certified for interlocutory
appeal. Our decision, like the complaint and the district court’s judgment, is a
mixed bag. We end up reversing the district court’s judgment with respect to the
3
RICO claim, affirming the judgment insofar as it includes the other claims that
were certified to us under Rule 54(b), and dismissing for lack of jurisdiction the
attempted appeal of the rulings that were not certified to us.
I.
This case, as we indicated, involves allegations brought by former
employees of Ruth’s Chris Steak House in Birmingham, Alabama, against the
restaurant and its owner, operator, and franchisor. More particularly the
defendants are Prime, Inc., a Ruth’s Chris franchisee that owns and operates the
restaurant where the plaintiffs worked; Mark Oswald, who owns and manages
Prime; and Ruth’s Chris Steak House, Inc.,4 which franchises Ruth’s Chris
restaurants.
At this stage we must and do assume that any well-pleaded allegations in the
amended complaint are true. What we state as facts in this part of the opinion have
not been established as facts in anything other than the pleading sense. They may
or may not turn out to be actual facts. Count 1 claims that the defendants engaged
in a pattern of racketeering activity in violation of the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. §§ 1961–1968.5 The federal crime that is
4
Ruth’s Chris Steak House, Inc. changed its name to Ruth’s Hospitality Group before
this lawsuit was filed.
5
For Count 1, the plaintiffs seek Rule 23 certification as class representatives suing on
behalf of similarly-situated past and present hourly-wage employees who were employed at
4
said to trigger RICO liability is a criminal enterprise to violate federal immigration
laws. Prime knowingly hired and employed illegal aliens, allowed them to work
under the names of former Ruth’s Chris employees who were United States
citizens, and provided them with the former employees’ social security numbers.
In addition, the defendants gave the illegal aliens more time than federal law
permits to produce paperwork establishing their eligibility to work in this country
and sometimes did not require the illegal aliens ever to produce the paperwork.
To fill open positions, Prime’s management asked the illegal aliens employed in
the restaurant whether they knew of any other illegal aliens who were interested in
working there. Prime paid illegal aliens in cash and preferred them over United
States citizens. As part of the illegal enterprise the company also provided illegal
aliens with name tags showing names other than their own.
Counts 2–6 claim that the defendants violated the Fair Labor Standards Act,
29 U.S.C. §§ 201–219, primarily by unlawfully taking and keeping plaintiffs’ tips
for their own profit.6 Because Prime paid the plaintiffs as “tipped employees,” it
claimed a “tip credit” and paid them an hourly wage below the minimum wage that
otherwise would have applied. As a standard practice Prime withheld a percentage
Prime’s franchise restaurants operated as Ruth’s Chris Steak House.
6
Counts 2–6 were brought on behalf of all the plaintiffs, except for Diane George, and on
behalf of other “similarly-situated employees.”
5
of servers’ tips, and a portion of that money was paid to “the house.” The rest was
placed into a “tip pool,” which Prime used to pay other employees, including some
who were not eligible to participate in the tip pool. When a manager or supervisor
believed that a customer had tipped an employee too much, the manager or
supervisor persuaded the customer to reduce the amount of the tip to the employee
or not to tip at all. Those practices, it is claimed, rendered defendants’ use of the
tip credit unlawful under the FLSA, requiring them to pay direct wages for the full
minimum wage and to return the tips.
Prime also required the plaintiffs to perform excessive non-serving tasks and
duties. Managers and supervisors occasionally “clocked out” the plaintiffs even
though they were still working. In some instances, managers and supervisors
docked plaintiffs’ hours. Prime also did not keep accurate records of the amount of
time employees worked. For the violations claimed in Counts 2–6, the plaintiffs
request injunctive and declaratory relief, all unlawfully taken tips, lost minimum
and overtime wages, liquidated damages matching the amount of lost tips and
wages, and reasonable attorney’s fees.
The next two claims in the amended complaint assert violations of Alabama
state law.7 Count 7 claims that Prime and Oswald intentionally interfered with two
7
Counts 7 and 8 are brought by all the individual plaintiffs, except for Diane George.
6
business relationships. One of those relationships was between Prime’s employees
and the patrons who dine at the restaurant. Prime and Oswald knew about the
business relationship in which “employees give patrons excellent service with the
expectation they will be rewarded for such service by getting tips and greater tips
from patrons, and patrons so reward and pay servers, some of which gets dispersed
to other employees via a ‘tip pool.’” The other relationship was among Prime’s
employees who contribute to or receive money from the tip pool. Prime and
Oswald intentionally interfered with those business and contractual relations “by
taking amounts of money” from the plaintiffs “based on such gratuities paid to
servers regardless of whether Defendants otherwise complied with the FLSA in
compensating employees.” Count 8 alleges that the same conduct constituted
conversion under state law. Count 7 and Count 8 both seek relief in the form of
compensatory and punitive damages.
The final seven counts of the amended complaint involve individual claims
of unlawful discrimination or retaliation. Only a few of them are relevant to this
appeal.8 One of the claims that is relevant is Count 12, in which Kyle Edwards, a
8
The following claims are not at issue in this appeal: In Count 9 Diane George, an
African American, alleges that Prime violated § 1981 by subjecting her to a hostile work
environment on the basis of her race. In Count 10 Kameron Battles, an African American,
alleges that Prime violated § 1981 by denying him job positions and shifts on the basis of his
race. Battles alleges in Count 11 that Prime and Oswald violated § 1981 and the FLSA by
retaliating against him for filing this action. In Count 15 Kelly Key alleges that Prime violated
Alabama Code § 25-5-11.1 by retaliating against her for filing a workers’ compensation claim
7
Caucasian, alleges that Prime subjected him to a hostile work environment on the
basis of his race, in violation of § 1981. While working at Ruth’s Chris, Edwards
was targeted by Hispanic and Latino employees who repeatedly threatened him at
the restaurant. One employee cursed Edwards and threatened to cut his throat. He
complained to Prime’s management about the hostile work environment, but they
failed to take any action “because Prime disfavored Caucasian Edwards in favor of
its Hispanic and Latino employees and did not want to upset them out of fear of
disrupting its supply of cheap illegal labor.” In addition to being threatened,
Edwards was also shunned. One Hispanic employee threatened Edwards, telling
him that it was “going to be bad” for the person who was complaining about
Prime’s employment of illegal aliens.
Count 13 involves Edwards’ claim of retaliation by the defendants, a claim
that he brought on behalf of himself and other similarly-situated employees. In
February 2008, Edwards’ attorney gave the general manager of the Birmingham
restaurant a copy of the complaint he intended to file in this lawsuit. After that,
Edwards was subjected to added scrutiny at work, and the defendants took “no
effective action to prevent . . . Edwards’ hostile work environment including
another employee’s additional threat to Edwards after [he] had complained about a
with Prime.
8
threat.” Management also reduced his hours and did not allow him to participate
in Prime’s retirement plan. In order to decrease Edwards’ pay and cover up the
fact that it was withholding for “the house” a portion of servers’ tips, Prime started
referring to the withheld percentage as a service charge on the tip reports filled out
by banquet servers. Edwards claims that amounted to retaliation that violates the
FLSA and § 1981, and he seeks several different forms of relief, including punitive
damages.
Finally, Count 14 is Kelly Key’s claim of retaliation against Prime.
Shortly after this lawsuit was filed, Prime terminated Key’s health care benefits
and then fired her. She contends that action violated the FLSA and § 1981, and she
seeks several different forms of relief, including punitive damages.
II.
In February 2009, the defendants moved to dismiss part of the amended
complaint, which the district court took up at a motion docket. The plaintiffs
contend that at the motion docket the district court judge informed all parties
present that he was no longer accepting cases, like this one, with Rule 23
allegations. Plaintiffs assert that when cases with Rule 23 allegations were called
at the motion docket, the district court judge gave counsel for the plaintiffs in those
cases the option of either withdrawing their clients’ Rule 23 allegations or having
9
the case reassigned to another judge. Plaintiffs assert that they were not given that
choice even though their case includes Rule 23 allegations. Three days after the
motion docket, plaintiffs filed a motion for reassignment, which was denied on
February 23, 2009.
In response to the defendants’ motion to dismiss, the district court issued an
order and accompanying memorandum opinion in March 2009. See Edwards v.
Prime, Inc., No. 08-1016 (N.D. Ala. Mar. 4, 2009).9 The court dismissed with
prejudice Counts 1, 7, 8, and 12 of the amended complaint. It determined that
Count 1, the RICO claim, failed to sufficiently allege that the defendants had
engaged in a pattern of racketeering activity. The court concluded that the state
law tort claims in Counts 7 and 8 were preempted by the FLSA. It also decided
that Edwards’ § 1981 hostile work environment claim, which is Count 12, failed to
allege that he was discriminated against because of his race.
The district court also dismissed with prejudice Counts 2–6, but only to the
extent that they request declaratory and injunctive relief. The court concluded that
the remedial provisions of the FLSA do not provide for equitable relief. The
district court also dismissed with prejudice Counts 13–14, but only to the extent
9
The district court’s March 4, 2009 memorandum opinion incorporates by reference
several parts of the court’s earlier opinion, which had addressed the original complaint. See
Edwards v. Prime, Inc., No. 08-1016 (N.D. Ala. Dec. 11, 2008).
10
that Edwards and Key requested punitive damages, which the court found to be
unavailable under 29 U.S.C. § 215.
In its March 4, 2009 order accompanying the memorandum opinion, the
district court stated:
Pursuant to Rule 54(b), F.R.Civ.P., the court expressly determines that
there is no just reason for delay in the entry of final judgment against
plaintiffs as to the claims contained in Counts I, VII, VIII, and XII.
Accordingly, the Clerk is DIRECTED to enter final judgment against
plaintiffs as to all said claims.
Those four counts are the only ones against which final judgment was entered.
In their notice of appeal the plaintiffs stated that they sought reversal of the
district court’s March 4, 2009 order, as well as “all the District Court’s decisions
subsumed by that order, including without limitation, those in the District Court’s
Memorandum Opinion also entered on March 4, 2009 that accompanied said
Order, and the District Court’s Order entered on February 23, 2009 denying
Plaintiff’s Motion for Re-assignment of this action.” In their briefs to this Court
the plaintiffs assert six contentions. They contend that the district court: (1)
should not have dismissed Count 1, because it properly alleges a RICO claim
arising from the defendants’ hiring and employment of illegal aliens; (2) should
not have dismissed Counts 7 and 8, because those state law tort claims are not
preempted by the FLSA; (3) should not have dismissed Edwards’ claim of racial
11
discrimination under § 1981, because Count 12 did allege that Edwards was
discriminated against “on the basis of his race”; (4) should not have rejected their
claims for declaratory and injunctive relief under Counts 2–6, their primary FLSA
claims, because that type of relief is available for those claims; (5) should not have
out punitive damages under Counts 13 and 14, which allege violations of the
FLSA’s anti-retaliation provision; and (6) should not have denied their motion to
reassign the case to another judge, because that denial violated their procedural due
process right to be treated the same as the plaintiffs in other cases containing class
action allegations.
III.
Neither party challenges our jurisdiction to consider this appeal, but “we are
obligated to address jurisdictional questions” that occur to us. Frulla v. CRA
Holdings, Inc., 543 F.3d 1247, 1250 (11th Cir. 2008). Some have.
An appeal from a final judgment of the district court, one disposing of all the
claims and defenses of all the parties in a lawsuit, poses no jurisdictional problem.
See 28 U.S.C. § 1291. “Ordinarily, however, an order adjudicating fewer than all
the claims in a suit, or adjudicating the rights and liabilities of fewer than all the
parties, is not a final judgment from which an appeal may be taken.” Lloyd
Noland Found., Inc. v. Tenet Health Care Corp., 483 F.3d 773, 777 (11th Cir.
12
2007) (citing Lex Tex Ltd. v. Unifi, Inc. (In re Yarn Processing Patent Validity
Litig.), 680 F.2d 1338, 1339 (11th Cir. 1982)).
Here, the district court entered a final judgment on Counts 1, 7, 8, and 12
and certified those claims under Rule 54(b) for immediate appellate review.10 The
parties’ appetite for appellate review, however, exceeds that of the district court.
They are eager for us to consider the entire case. They want an appeal that will
consume the entire case, including the district court’s partial dismissal of Counts
2–6, 13, and 14, and its denial of the plaintiffs’ motion to reassign the case to a
different judge. The district court, however, did not certify those decisions under
Rule 54(b), and no final judgment has disposed of all the claims in this case.
A.
Appellate jurisdiction over an appeal from an interlocutory decision certified
under Rule 54(b) is limited to the rulings or orders certified by the district court.
10
Federal Rule of Civil Procedure 54(b) provides:
When an action presents more than one claim for relief—whether as a claim,
counterclaim, crossclaim, or third-party claim—or when multiple parties are
involved, the [district] court may direct entry of a final judgment as to one or
more, but fewer than all, claims or parties only if the court expressly determines
that there is no just reason for delay. Otherwise, any order or other decision,
however designated, that adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties does not end the action as to any of the
claims or parties and may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.
13
See Fogade v. ENB Revocable Trust, 263 F.3d 1274, 1296–97 (11th Cir. 2001)
(“Because no final judgment has been entered disposing of all the claims in this
case, our appellate jurisdiction is confined to the issues made appealable under
Rule 54(b).”); see also United Indus., Inc. v. Eimco Process Equip. Co., 61 F.3d
445, 448 (5th Cir. 1995) (“We lack appellate jurisdiction over the two rulings not
referenced by court’s certification. In an interlocutory appeal certified by the
district court under . . . Rule 54(b), we have no jurisdiction to consider orders of
the district court outside the scope of certification.”); cf. S.H. v. Edwards, 886 F.2d
292, 293 (11th Cir. 1989) (en banc) (“This case is before the court on a very
limited certificate issued by the district court under Rule 54(b) . . . . This ruling is
not to be interpreted as involving anything other than the one issue presented.”).
If it were otherwise, certification of one claim would effectively certify all
decided claims, and that would undermine the “the historic federal policy against
piecemeal appeals,” a policy that Rule 54(b) preserves, Sears, Roebuck & Co. v.
Mackey, 351 U.S. 427, 438, 76 S. Ct. 895, 901 (1956). See Ebrahimi v. City of
Huntsville Bd. of Educ., 114 F.3d 162, 166 (11th Cir. 1997) (repeating our
instruction that district courts should “exercise the limited discretion afforded by
Rule 54(b) conservatively”); Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965
(9th Cir. 1981) (Kennedy, J.) (Rule 54(b) certifications “must be reserved for the
14
unusual case in which the costs and risks of multiplying the number of proceedings
and of overcrowding the appellate docket are outbalanced by pressing needs of the
litigants for an early and separate judgment as to some claims or parties.”). We
have no jurisdiction to consider interlocutory orders outside the scope of
certification, unless some other basis of jurisdiction exists. See Fogade, 263 F.3d
at 1296–97; United Indus., 61 F.3d at 448.
The plaintiffs insist, however, that the district court’s Rule 54(b)
certification “subsume[s]” all of the decisions they are now challenging before this
Court. The text of the certification order does not support that assertion. The
district court expressly certified its dismissal of only four claims—those contained
in Counts 1, 7, 8, and 12. Where the court, in the next sentence of its order,
directed the clerk “to enter final judgment against plaintiffs as to all said claims,” it
plainly was referring only to the four claims it had just “said” were appropriate for
final judgment.
The district court did not certify its decision to dismiss Counts 2–6, which
only extended to the declaratory and injunctive relief sought in those claims; nor
did it certify its decision to dismiss Counts 13 and 14, which only extended to the
punitive damages sought in those claims. The fact that the district court’s partial
dismissal of those claims came in the same order in which it certified its dismissal
15
of the claims contained in Counts 1, 7, 8, and 12 does not alter our analysis. Rule
54(b) does not give us jurisdiction to review entire orders but only those portions
of orders that are properly made into a final judgment and certified under the rule.
Although the district court did not state why it declined to certify its
decisions with regard to the claims contained in Counts 2–6, 13, and 14, the court’s
reason is obvious. None of those partial dismissals is a final judgment disposing of
an entire claim.11 The district court could not have properly certified them because
they are not the stuff of Rule 54(b) certification. See Brandt v. Bassett (In re
Southeast Banking Corp.), 69 F.3d 1539, 1547 (11th Cir. 1995) (“A judgment
properly may be certified under the terms of Rule 54(b) only if it possesses the
requisite degree of finality. That is, the judgment must completely dispose of at
least one substantive claim.” (citation omitted)); see also Liberty Mut. Ins. Co. v.
Wetzel, 424 U.S. 737, 744 n.4, 96 S. Ct. 1202, 1206 n.4 (1976) (“[A] complaint
asserting only one legal right, even if seeking multiple remedies for the alleged
violation of that right, states a single claim for relief.”).
11
The district court’s partial dismissal of Counts 2–6 foreclosed injunctive and
declaratory relief, but it left intact the rest of the claim, including the plaintiffs’ request for all
unlawfully taken tips, lost minimum and overtime wages, liquidated damages matching the
amount of lost tips and wages, and reasonable attorney’s fees. Likewise, the court’s partial
dismissal of Counts 13 and 14 foreclosed punitive damages under the FLSA, but it left intact the
plaintiffs’ request for compensatory damages, back pay and benefits, liquidated damages
matching the amount of lost back pay and benefits, reinstatement or front pay, and reasonable
attorney’s fees.
16
B.
There are statutory exceptions to the final judgment rule. One, contained in
28 U.S.C. § 1292(a)(1), bestows appellate jurisdiction over interlocutory orders
“granting, continuing, modifying, refusing or dissolving injunctions.” Although
the parties did not suggest it, we may have jurisdiction under § 1292(a) to review
the district court’s partial dismissal of Counts 2–6, which was phrased in terms of a
dismissal “to the extent that these five counts request injunctive and declaratory
relief.” But only if that dismissal amounted to the refusal to issue an injunction.
Section 1292(a) is not, however, a golden ticket litigants can use to take any
decision affecting injunctive relief on a trip to the court of appeals. Just because a
district court’s order has the “practical effect of refusing an injunction,” it does not
automatically qualify for immediate appeal under § 1292(a)(1). Carson v. Am.
Brands, Inc., 450 U.S. 79, 84, 101 S. Ct. 993, 996–97 (1981). The Supreme Court
has instructed us that unless such an order threatens a “‘serious, perhaps
irreparable, consequence’” and can be “‘effectually challenged’ only by immediate
appeal, the general congressional policy against piecemeal review will preclude
interlocutory appeal.” Id. at 84, 101 S.Ct. at 997 (quoting Baltimore Contractors,
Inc. v. Bodinger, 348 U.S. 176, 181, 75 S. Ct. 249, 252 (1955)); see also Citizens
Concerned About Our Children v. Sch. Bd. of Broward County, Fla., 193 F.3d
171285, 1289 (11th Cir. 1999) (“[A]n order that does not rule on a request for
injunctive relief, but that has the effect of denying it, may be immediately
appealable. For such an interlocutory order to be appealable before final judgment,
the prospective appellant must show that the denial of injunctive relief has a
‘serious, perhaps irreparable, consequence, and that the order can be effectually
challenged only by immediate appeal.’” (citations omitted)).
An interlocutory order that explicitly denies an injunction, however, “fits
squarely within the plain language of § 1292(a)(1),” regardless of whether an
immediate appeal is necessary to avert a “serious, perhaps irreparable,
consequence.” Cable Holdings of Battlefield, Inc. v. Cooke, 764 F.2d 1466, 1471
(11th Cir. 1985) (quoting Carson, 450 U.S. at 84, 101 S.Ct. at 996–97); see also
Hutchinson v. Pfeil, 105 F.3d 566, 569 (10th Cir. 1997); Holmes v. Fisher, 854
F.2d 229, 232 (7th Cir. 1988); I.A.M. Nat’l Pension Fund Benefit Plan A v. Cooper
Indus., Inc., 789 F.2d 21, 24 n.3 (D.C. Cir. 1986).
The plaintiffs in this case have never argued that irreparable harm may result
from the district court’s decision to dismiss the claims in Counts 2–6 insofar as
they request injunctive relief, or that immediate appeal of that decision is necessary
to avert such harm. Nor have the plaintiffs moved the district court for a
preliminary injunction, which indicates that irreparable harm is not likely. See
18
Citizens Concerned About Our Children, 193 F.3d at 1289–90 (“[A] failure to seek
immediate relief militates against a conclusion that delaying appeal to final
judgment inflicts irreparable harm.”). We therefore lack jurisdiction under §
1292(a)(1) to consider the injunctive relief issue, unless the district court explicitly
denied an injunction. See Carson, 450 U.S. at 84, 101 S.Ct. at 997; Cable
Holdings, 764 F.2d at 1471. And the court did not. Under these circumstances we
have no jurisdiction to review before final judgment the district court’s partial
dismissal of Counts 2–6.
C.
The district court also did not certify its February 23, 2009 order denying the
plaintiffs’ motion to reassign the case to another judge, undoubtedly because Rule
54(b)’s plain language limits its application to judgments disposing of claims or
parties. The plaintiffs’ contention is not that this ruling was or even could have
been certified under Rule 54(b), but instead that we should exercise pendent
appellate jurisdiction over it. “Pendent appellate jurisdiction is present when a
nonappealable decision is ‘inextricably intertwined’ with the appealable decision
or when ‘review of the former decision [is] necessary to ensure meaningful review
of the latter.’” King v. Cessna Aircraft Co., 562 F.3d 1374, 1379 (11th Cir. 2009)
(quoting Swint v. Chambers County Comm’n, 514 U.S. 35, 51, 115 S. Ct. 1203,
19
1212 (1995)). We see no difficulty in resolving the certified issues without
deciding whether the district court properly denied the plaintiffs’ motion for
reassignment. See, e.g., King, 562 F.3d at 1380; Summit Med. Assocs., P.C. v.
Pryor, 180 F.3d 1326, 1335 (11th Cir. 1999) (“[W]e may resolve the Eleventh
Amendment immunity issue here without reaching the merits of standing[, so
t]hese issues are neither ‘inextricably intertwined’ nor ‘necessary to ensure
meaningful review’ of one another.”); Harris v. Bd. of Educ. of Atlanta, 105 F.3d
591, 595 (11th Cir. 1997) (declining pendent appellate jurisdiction because the
qualified immunity issue could be resolved “without reaching the merits of the
remaining questions” raised by the parties). Because the February 23, 2009 order
denying the motion to reassign is interlocutory and no exception to the final
judgment rule applies to it, we lack jurisdiction to review that order.
IV.
“We review de novo the district court’s grant of a motion to dismiss under
Rule 12(b)(6).” Redland Co., Inc. v. Bank of Am. Corp., 568 F.3d 1232, 1234
(11th Cir. 2009). We take the factual allegations in the complaint as true and
construe them in the light most favorable to the plaintiffs. Rivell v. Private Health
Care Sys., Inc., 520 F.3d 1308, 1309 (11th Cir. 2008). We are not, however,
required to accept the labels and legal conclusions in the complaint as true.
20
Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261 (11th Cir. 2009); see also
Ashcroft v. Iqbal, 556 U.S. __, 129 S. Ct. 1937, 1949 (2009) (“[T]he tenet that a
court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.”); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555, 127 S. Ct. 1955, 1965 (2007) (stating that a complaint “requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do”).
Dismissal for failure to state a claim is proper if the factual allegations are
not “enough to raise a right to relief above the speculative level.” Rivell, 520 F.3d
at 1309 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. at 1965). “A complaint may
be dismissed if the facts as pled do not state a claim for relief that is plausible on its
face.” Sinaltrainal, 578 F.3d at 1260 (citing Iqbal, 129 S.Ct. at 1950; Twombly,
550 U.S. at 561–62, 570, 127 S.Ct. at 1968–69, 1974). “Stated differently, the
factual allegations in the complaint must ‘possess enough heft’ to set forth ‘a
plausible entitlement to relief.’” Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500
F.3d 1276, 1282 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at
1966–67).
V.
We begin by applying those standards to Count 1, the RICO claim. Under
21
18 U.S.C. § 1962(c), it is illegal “for any person employed by or associated with
any enterprise engaged in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity.” 18 U.S.C. §
1962(c). “[T]o establish a federal civil RICO violation under § 1962(c), the
plaintiffs must satisfy four elements of proof: (1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.” Williams v. Mohawk Indus., Inc.,
465 F.3d 1277, 1282 (11th Cir. 2006) (internal quotation marks omitted); see also
Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S. Ct. 3275, 3285
(1985).12
“An act of racketeering is commonly referred to as a ‘predicate act.’”
Mohawk, 465 F.3d at 1283 (quoting Maiz v. Virani, 253 F.3d 641, 671 (11th Cir.
2001)). “A ‘pattern’ of racketeering activity”—a combination of elements 3 and
4—“is shown when a racketeer commits at least two distinct but related predicate
acts.” Id. “‘If distinct statutory violations are found, the predicate acts will be
considered to be distinct irrespective of the circumstances under which they
12
Although not at issue in this appeal, civil RICO plaintiffs must also satisfy the
requirements of 18 U.S.C. § 1964(c). That provision provides “that ‘[a]ny person injured in his
business or property by reason of’ RICO’s substantive provisions has the right to ‘recover
threefold the damages he sustains . . . .’” Mohawk, 465 F.3d at 1282 (quoting 18 U.S.C. §
1964(c)) (alterations added by Mohawk). “Thus, under § 1964(c), civil RICO claimants, such as
the plaintiffs here, must show (1) the requisite injury to ‘business or property,’ and (2) that such
injury was ‘by reason of’ the substantive RICO violation.” Id. at 1282–83.
22
arose.’” Id. (quoting Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1397
(11th Cir. 1994), modified on other grounds by 30 F.3d 1347 (11th Cir. 1994)).
Under RICO the term “racketeering activity” includes, among other things,
any violation of section 274 of the Immigration and Nationality Act, provided that
the act was committed for financial gain. 18 U.S.C. § 1961(1)(F); see Mohawk,
465 F.3d at 1283. In this case the plaintiffs allege that the defendants engaged in
“racketeering activity” by violating several provisions of INA § 274, which is
codified at 8 U.S.C. § 1324, and that they did so for financial gain. Specifically,
the plaintiffs allege that the defendants violated: (1) 8 U.S.C. § 1324(a)(3)(A),
which makes it a federal crime for any person to “knowingly hire[ ] for
employment at least 10 individuals with actual knowledge that the individuals are
[illegal] aliens” during a 12-month period; (2) 8 U.S.C. § 1324(a)(1)(A)(iv), which
makes it a federal crime for any person to “encourage[ ] or induce[ ] an alien to
come to, enter, or reside in the United States, knowing or in reckless disregard of
the fact that such coming to, entry, or residence is or will be in violation of law”;
(3) 8 U.S.C. § 1324(a)(1)(A)(iii), which makes it a federal crime for any person to
knowingly or recklessly “conceal[ ], harbor[ ], or shield[ ] from detection, or
attempt[ ] to conceal, harbor or shield from detection” an alien who “has come to,
entered, or remains in the United States” illegally; and (4) 8 U.S.C. §
23
1324(a)(1)(A)(v), which makes it a federal crime for any person to conspire to
commit, or to aid and abet, any violation of § 1324(a)(1)(A)(i)–(iv). According to
the amended complaint, the defendants have committed “tens and scores if not
hundreds,” of these predicate acts. We will address in turn each of those four
statutory theories of predicate acts.
A.
Section 1324(a)(3)(A) provides: “Any person who, during any 12-month
period, knowingly hires for employment at least 10 individuals with actual
knowledge that the individuals are aliens described in [§ 1324(a)(3)(B)] shall be
fined under Title 18 or imprisoned for not more than 5 years, or both.” 8 U.S.C. §
1324(a)(3)(A). The term “alien” refers to (1) “an unauthorized alien,” as defined
in § 1324a(h)(3), who (2) “has been brought into the United States in violation of
[§ 1324(a)].” See 8 U.S.C. § 1324(a)(3)(B).13
Thus, an element of § 1324(a)(3)(A) is that the defendant had actual
knowledge that the illegal aliens who were hired had been brought into the country
in violation of § 1324(a). See Commercial Cleaning Servs., L.L.C. v. Colin Serv.
Sys., Inc., 271 F.3d 374, 387 (2d Cir. 2001); Nichols v. Mahoney, 608 F. Supp. 2d
13Section 1324a(h)(3) defines an unauthorized alien, “with respect to the employment of
an alien at a particular time,” as an “alien [who] is not at that time either (A) an alien lawfully
admitted for permanent residence, or (B) authorized to be so employed by this chapter or by the
Attorney General.” 8 U.S.C. § 1324a(h)(3).
24
526, 534 (S.D.N.Y. 2009) (“If the employer does not know that at least 10 of its
illegal hires were ‘brought into’ the country by some third party (as opposed to
walking across the border themselves, or arriving on a visitor’s or student visa and
overstaying their welcome), then it has not committed a RICO predicate act by
hiring them . . . .”).
That “brought into” element makes § 1324(a)(3)(A) different from §
1324a(a)(1)(A), which also addresses the hiring of illegal aliens. See Nichols, 608
F. Supp. 2d at 534 (comparing the two provisions).14 While both provisions make
it illegal for a person or other entity to hire an alien knowing that he is not
authorized to work in this country, § 1324(a)(3)(A) has the added element of
knowledge that the alien was brought into the country illegally. That added
element makes a difference when it comes to the penalty. See id. If an employer
hires 10 or more illegal aliens with knowledge that they are unauthorized aliens
who have been illegally brought into this country, § 1324(a)(3)(A) applies and the
employer may be fined, sentenced to as much as 5 years in prison, or both. And
that crime would be a RICO predicate act. See 18 U.S.C. § 1961(1)(F). By
contrast, if an employer knowingly hires aliens not authorized to work in this
14
Section 1324a(a)(1)(A), among other things, makes it illegal for a person or other
entity “to hire . . . for employment in the United States an alien knowing the alien is an
unauthorized alien (as defined in [§ 1324a(h)(3)]) with respect to such employment.” See §
1324a(a)(1)(A).
25
country, without knowledge that they were brought into this country illegally, only
§ 1324a would be violated. For a violation of § 1324a only civil penalties are
available, unless there is a “pattern or practice” in which case a conviction may
result in a fine and a sentence of up to six months. See 8 U.S.C. § 1324a(f)(1).
And that crime would not be a RICO predicate act. See 18 U.S.C. § 1961(1)(F);
see also United States v. Zheng, 306 F.3d 1080, 1085 (11th Cir. 2002) (“The
criminal sanctions prescribed for a violation of § 1324a are much less stringent
than those prescribed for a violation of § 1324.”).
The differences between §§ 1324(a)(3)(A) and 1324a(a)(1)(A) suggest that
Congress found the combination of bringing illegal aliens into this country and
hiring them to be a far more serious problem than hiring aliens who were here
illegally but had not been brought here. Congress obviously sought not only to
deter employers from directly joining forces with those who bring in illegal aliens
but also to prevent employers from encouraging the practice by hiring aliens
knowing that they had been brought in illegally.
The district court concluded that the plaintiffs had failed to plead that Prime
or any of its employees had actual knowledge that the unauthorized aliens whom
they hired had been “brought into the United States” in violation of § 1324. The
plaintiffs contend that they have pleaded enough because they allege that Prime
26
“repeatedly violated and continues to violate 8 U.S.C. § 1324(a)(3)(A), which
makes it a federal crime to knowingly hire for employment at least 10 individuals
with actual knowledge that the individuals are aliens during a twelve month
period.” Am. Complaint ¶ 36 (quotation marks omitted). They argue that a similar
allegation was held to be sufficient in Williams v. Mohawk Indus. Inc., 465 F.3d
1277, 1281–82 (11th Cir. 2006), and should be sufficient here. We are
unpersuaded.
The complaint in Mohawk, unlike the one in this case, specifically alleged
that the defendant had hired illegal aliens knowing that those workers were
“smuggled or otherwise brought” into the United States illegally. Williams v.
Mohawk Indus., Inc., 314 F. Supp. 2d 1333, 1346 (N.D. Ga. 2004), aff’d in part,
rev’d in part on other grounds by 465 F.3d 1277 (11th Cir. 2006). Here, by
contrast, the plaintiffs have never alleged that any of the defendants knew the
aliens who were hired had been illegally brought into the United States. The
closest the plaintiffs come is their allegation that “Prime hired and allowed
employees to remain employees despite the fact that . . . they were known by
Prime’s management as unauthorized or ineligible to work or even be in this
Country.” Am. Complaint ¶ 26 (emphasis added). Perhaps that allegation “gets
the [§ 1324(a)(3)(A)] complaint close to stating a claim, but without some further
27
factual enhancement it stops short of the line between possibility and plausibility
of entitlement to relief.” Twombly, 550 U.S. at 557, 127 S.Ct. at 1966 (quotation
marks omitted). An employer may know that it hired illegal aliens without
knowing how they made their way into the United States. As the district court
recognized in this case, “Individuals who enter this country legally may overstay
their welcome and become unauthorized to work without ever having been brought
in illegally, whether by others or by themselves.” Edwards v. Prime, Inc., No. 08-
1016, at 12 (N.D. Ala. Mar. 4, 2009). Likewise, they may have entered this
country illegally on their own instead of having been “brought into” it. See
Nichols, 608 F. Supp. 2d at 534 (noting that some illegal hires “walk[ ] across the
border themselves, or arriv[e] on a visitor’s or student visa and overstay[ ] their
welcome”). Because the “brought into” element is essential to § 1324(a)(3)(A),
plaintiffs who do not allege it have not alleged a predicate act under that provision.
They may have alleged a violation of § 1324a(a)(1)(A), but that is not a predicate
act for RICO purposes.
Although in some cases a plaintiff who fails to allege the “brought into”
element necessary for a § 1324(a)(3)(A) violation might be entitled to a second
chance to plead it, see Commercial Cleaning Servs., 271 F.3d at 387 & n.5, these
plaintiffs have already had their second chance. In dismissing without prejudice
28
the RICO claim made by the plaintiffs in their original complaint, the district court
stressed the plaintiffs’ failure to allege the “brought into” element of §
1324(a)(3)(A). In drafting their amended complaint, the plaintiffs had an
opportunity to fix the problem, assuming they were able to do so without violating
Rule 11. Because they did not fix it, they have failed to plead a violation of §
1324(a)(3)(A) and so cannot establish a predicate act that way.
B.
The plaintiffs have more predicate act success with their allegations that the
defendants violated § 1324(a)(1)(A)(iv), the elements of which are: “(1)
encouraging or inducing; (2) an alien; (3) to come to, enter, or reside in the United
States; and (4) knowing or in reckless disregard that the alien’s coming to,
entering, or residing in the United States is illegal.” United States v. Lopez, 590
F.3d 1238, 1250 (11th Cir. 2009).15
15
Section 1324(a)(1)(A)(iv) provides that any person who “encourages or induces an
alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact
that such coming to, entry, or residence is or will be in violation of law” shall be punished as
provided in § 1324(a)(1)(B). 8 U.S.C. § 1324(a)(1)(A)(iv).
Where the violation of § 1324(a)(1)(A)(iv) “was done for the purpose of commercial
advantage or private financial gain,” the defendant may “be fined under Title 18, imprisoned not
more than 10 years, or both.” § 1324(a)(1)(B)(i). Where the violation was not for pecuniary
gain, a fine under Title 18 is still possible, but the maximum term of imprisonment is 5 years. §
1324(a)(1)(B)(ii). Subsection (B) also contains enhanced penalties where the violation causes
serious bodily injury or places any person’s life in jeopardy, see § 1324(a)(1)(B)(iii), or causes
death, see § 1324(a)(1)(B)(iv).
29
The only element the defendants contend has not been sufficiently pleaded is
the first one, which is that the plaintiffs “encouraged or induced” illegal aliens to
reside in this country. The district court concluded the plaintiffs had not pleaded
that element even though they had alleged that the defendants had knowingly
supplied the aliens with jobs and with social security numbers to facilitate their
employment. The court believed those alleged actions do not amount to
encouragement or inducement for purposes of § 1334(a)(1)(A)(iv). See Edwards
v. Prime, Inc., No. 08-1016, at 12–13 (N.D. Ala. Dec. 11, 2008). We believe the
district court was mistaken.
This Court has given a broad interpretation to the phrase “encouraging or
inducing” in this context, construing it to include the act of “helping” aliens come
to, enter, or remain in the United States. See Lopez, 590 F.3d at 1249–51; United
States v. Ndiaye, 434 F.3d 1270, 1278 (11th Cir. 2006); United States v. Kuku, 129
F.3d 1435, 1437 (11th Cir. 1997). In Lopez we held that the district court had
accurately presented the substantive law of § 1324(a)(1)(A)(iv) to the jury by
informing it that the term “encourage” was defined as “to knowingly instigate, to
incite to action, to give courage to, to inspirit, to embolden, to raise confidence, to
help, to forward, and/or to advise.” Lopez, 590 F.3d at 1247; see also id. at 1249
(citing similar dictionary definitions of “encourage” with approval). The defendant
30
in that case had captained a boat to the Bahamas, refueled it, spent the night,
picked up aliens from a hotel, and then driven the boat as it returned with the aliens
towards the United States. Id. at 1252. This Court held that conduct was “more
than adequate” to support a conviction under § 1324(a)(1)(A)(iv). Id.
Similarly, in Ndiaye this Court affirmed a defendant’s conviction under §
1324(a)(1)(A)(iv) for helping one illegal alien fraudulently obtain a social security
number. 434 F.3d at 1296. The defendant contended that the government “failed
to show any actual, potential or perceived relationship between immigration status
and receipt of a Social Security number.” Id. He argued “that while there may be
some correlation between the issuance of Social Security numbers and aliens
employed in the United States, the act of merely helping someone obtain a Social
Security number cannot be construed as ‘encouraging or inducing’ them to reside
in this country in violation of the criminal statute.” Id. at 1297–98 (emphasis
added). We rejected that argument. Since the alien “was able to work in the
United States because of the Social Security number he was issued,” we held that a
reasonable “jury could have found that [the defendant] encouraged or induced an
alien . . . to reside in the United States, knowing it was in violation of the law.” Id.
at 1298; see also id. (“A jury could find that [the defendant’s] assistance in helping
[an alien] obtain a Social Security card, which the evidence established he is not
31
entitled to have, encouraged or induced him to reside in this country in violation of
the statute.”). Consistent with that decision is Kuku in which we affirmed a
conviction under § 1324(a)(1)(A)(iv) for fraudulently approving social security
card applications that were filed on behalf of illegal aliens. 129 F.3d at 1437.
Although the scope of § 1324(a)(1)(A)(iv) was not at issue in that case, we did
recognize that social security numbers can be used “to apply for federal benefits, to
attend school, and to obtain employment.” Id.; see also Ndiaye, 434 F.3d at 1298
(discussing Kuku).
The district court in this case, without the benefit of either Lopez or
Ndiaye,16 held that the amended complaint failed to allege a predicate act under §
1334(a)(1)(A)(iv) because “mere employment” of illegal aliens is not enough to
encourage or induce aliens to reside in the United States. The district court cited,
and the defendants press, United States v. Khanani, 502 F.3d 1281, 1289 (11th Cir.
2007), as support for that conclusion. The Khanani decision is fine as far as it
goes, but it did not involve the additional, and under Ndiaye critical, fact of
employer-supplied social security numbers.
The amended complaint alleges not only that the defendants hired and
16
The Lopez decision was published nine months after the district court issued its second
memorandum opinion in this case. The Ndiaye decision is from 2006, but neither party cited it
to the district court or in their initial briefs to this Court. After finding the decision, we gave the
parties an opportunity to supplementally brief its application to this case.
32
actively sought out individuals known to be illegal aliens but also that the
defendants provided them with names and social security numbers to facilitate
their illegal employment. See Am. Complaint ¶ 34 (the defendants “provid[ed]
known illegal aliens with names and Social Security numbers of American citizens
to use in their illegal employment”); see also id. ¶ 26.
Recognizing the striking similarity between Ndiaye and this case, the
defendants have managed to come up with a number of proposed distinctions, but
resourcefulness is one thing and persuasiveness is another. They contend that the
amended complaint alleges only that the defendants knowingly encouraged or
induced illegal aliens to work in the United States instead of encouraging or
inducing them to “reside” here. According to them, the prospect of working at a
particular restaurant (even a Ruth’s Chris Steak House!) does not provide any
realistic incentive for staying in this country. They insist that aliens could reside
outside the United States and simply enter periodically as work is needed. That
argument borders on the frivolous. As we held in Ndiaye, the act of knowingly
providing illegal aliens with social security numbers can “encourage or induce”
them to reside in this country. See Ndiaye, 434 F.3d at 1296–98 (noting, and later
rejecting, the defendant’s argument that: “[w]hile many aliens used Social
Security numbers to secure employment while residing in the United States, those
33
aliens had already entered the country . . . and there was no evidence that anyone
was ‘induced’ to live here by obtaining such a card”). The defendants’ argument
runs against the common sense knowledge that most illegal aliens, especially the
ones who end up working here, come to this country for work. See Zheng, 306
F.3d at 1087 (noting that one “primary reason” for illegal immigration is “the
chance of employment in the United States” (citation omitted)). Their ability to
find and keep jobs depends to a considerable extent on improperly obtaining the
necessary documentation.17
Continuing to gnaw at the issue, the defendants also argue that Ndiaye can
be distinguished because it was a multi-defendant case involving a massive
conspiracy to file false immigration documents with the Social Security
Administration. See Ndiaye, 434 F.3d at 1277–78. They point out that the
defendant in that case who was convicted under § 1324(a)(1)(A)(iv) had helped
more than 70 illegal aliens obtain social security numbers and cards. Id. at 1278.
But the number of aliens he helped was not material to our holding. The actual
17
At oral argument, defense counsel suggested that fraudulent social security numbers
are unrelated to residency because some people, such as those with a student visa, are allowed to
live in the United States even though they may not work here. When we suggested to counsel
that at least some aliens would be encouraged to reside here if they had a social security number,
she replied: “That point I concede.” That concession, which she could hardly have avoided, is
important because the amended complaint was dismissed on a Rule 12(b)(6) motion, and a RICO
predicate act under § 1324(a)(1)(A)(iv) can be stated if the defendants knowingly encouraged or
induced “an alien” to reside in the United States.
34
charge in that case was that the defendant encouraged or induced “one specific
alien” to reside in the United States by helping him fraudulently obtain a social
security number. Id. at 1296. One or one hundred, it is all the same for purposes
of this § 1324(a)(1)(A)(iv) “encouraging or inducing” issue.
Scraping the bone, the defendants argue that the amended complaint does
not allege that the aliens were in possession or even had knowledge of the social
security numbers under which they were allowed to work. At most, they suggest,
the numbers were used for employment at Prime. They are wrong. The amended
complaint alleges that Prime “even provided” the illegal alien employees with the
names and social security numbers of former Ruth’s Chris employees. Am.
Complaint ¶ 26. Construing that allegation in the light most favorable to the
plaintiffs, Prime gave the social security numbers to the illegal aliens, allowing
them to use the numbers for the purpose of getting and holding jobs.
The meat of the matter is that the amended complaint adequately pleads that
the defendants encouraged or induced an alien to reside in the United States, and
either knew or recklessly disregarded the fact that the alien’s residence here was
illegal, in violation of § 1324(a)(1)(A)(iv). It thereby states a predicate act of
racketeering. And because the amended complaint also alleges that the defendants
did that “far more times than two,” it adequately pleads the pattern of racketeering
35
activity necessary to state a RICO claim. See Mohawk, 465 F.3d at 1283; Cox, 17
F.3d at 1397.
C.
For the reasons we have just discussed, the plaintiffs are entitled to get past
the Rule 12(b)(6) stage on their allegation of a § 1324(a)(1)(A)(iv) predicate act.
That one theory may also be enough to get them past summary judgment and to a
verdict, or it may not. Because we have no way of knowing what the evidence will
show about that theory of the case, and in the interests of completeness, we need to
address the plaintiffs’ other theories of racketeering.
The first additional theory involves § 1324(a)(1)(A)(iii), which makes it a
crime for any person who: “knowing or in reckless disregard of the fact that an
alien has come to, entered, or remains in the United States in violation of law,
conceals, harbors, or shields from detection, or attempts to conceal, harbor, or
shield from detection, such alien . . . .” 8 U.S.C. § 1324(a)(1)(A)(iii). When
viewed against the allegations of the amended complaint, the question presented by
this theory of racketeering is whether knowingly providing an illegal alien with
employment and a social security number is enough to constitute concealing,
harboring, or shielding the alien from detection for § 1324(a)(1)(A)(iii) purposes.
The defendants argue that in Khanani we held that the knowing employment
36
of an illegal alien is not enough by itself to violate § 1324(a)(1)(A)(iii). They point
to this sentence in that opinion: “If Khanani merely had employed illegal aliens
without ‘knowingly’ encouraging or inducing them to reside in the United States,
he would not have committed the elements of the offenses . . . .” Khanani, 502
F.3d at 1289 (emphasis added). That sentence is subject to interpretation, but a
more important point about it for present purposes is signaled by the first word:
“If.” The Khanani decision could not have established anything about what falls
short of violating § 1324(a)(1)(A)(iii). It could not have because in that case we
actually held that there was a violation of the provision. A holding that X + Y is
enough to violate a provision does not mean that X alone is not enough. And that
is true even if we say in the opinion that X alone would not be enough. We have
pointed out many times that regardless of what a court says in its opinion, the
decision can hold nothing beyond the facts of that case. E.g., Watts v. BellSouth
Telecomms., Inc., 316 F.3d 1203, 1207 (11th Cir. 2003) (“Whatever their opinions
say, judicial decisions cannot make law beyond the facts of the cases in which
those decisions are announced.”); United States v. Aguillard, 217 F.3d 1319, 1321
(11th Cir. 2000) (“The holdings of a prior decision can reach only as far as the
facts and circumstances presented to the Court in the case which produced that
decision.” (quotation marks omitted)). All statements that go beyond the facts of
37
the case—and sometimes, but not always, they begin with the word “if”—are dicta.
See, e.g., United States v. Eggersdorf, 126 F.3d 1318, 1322 n.4 (11th Cir. 1997)
(“[L]anguage in . . . [an opinion] not necessary to deciding the case then before us”
is dicta); Moon v. Head, 285 F.3d 1301, 1318 (11th Cir. 2002) (Carnes, J.,
concurring) (“Those statements are dicta. They are dicta because they go beyond
the facts of the [earlier] case itself . . . .”). And dicta is not binding on anyone for
any purpose. See, e.g., McNely v. Ocala Star-Banner Corp., 99 F.3d 1068, 1077
(11th Cir. 1996) (“[W]e are not required to follow dicta contained in our own
precedents . . . .”); Great Lakes Dredge & Dock Co. v. Tanker Robert Watt Miller,
957 F.2d 1575, 1578 (11th Cir. 1992) (because what is said in a prior opinion
about a question not presented there is dicta, and dicta is not binding precedent, a
later panel is “free to give that question fresh consideration”). In any event, in
Khanani the employer did not provide the illegal aliens with social security
numbers and names; this employer allegedly did. Moreover, the Khanani opinion
did not consider the way that § 1324(a)(i)(A)(iii) had been revised over the years.
The statutory evolution of § 1324(a)(i)(A)(iii) indicates that knowingly or
recklessly hiring illegal aliens probably is enough by itself to constitute concealing,
harboring, or shielding from detection for purposes of the statute. See United
States v. Kim, 193 F.3d 567, 573–74 (2d Cir. 1999) (explaining the evolution of
38
this provision); see also Zheng, 306 F.3d at 1085 (citing Kim with approval).
Section 1324(a) was enacted in 1952 and remained unchanged until 1986. The
current version of § 1324(a)(1)(A)(iii) is nearly identical to the pre-1986 version,
which provided that a person who “willfully or knowingly conceals, harbors, or
shields from detection, or attempts to conceal, harbor, or shield from detection [an
illegal alien], in any place, including any building or any means of transportation,”
is guilty of a felony. 8 U.S.C. § 1324(a)(3) (1982); see also 8 U.S.C.A. § 1324
note (West 2006). However, there is one important difference for our purposes.
The pre-1986 version of § 1324(a) had also stated: “Provided, however, [t]hat for
the purposes of this section, employment (including the usual and normal practices
incident to employment) shall not be deemed to constitute harboring.” 8 U.S.C. §
1324(a) (1982) (emphasis added). Significantly, Congress removed that exception
when it revised the statute in 1986. See The Immigration Reform and Control Act
of 1986, Pub.L. No. 99-603, § 112(a), 100 Stat. 3359, 3381–82 (1986). The
Second Circuit pointed out that “after the 1986 amendment, § 1324 no longer
excluded employment from the prohibition against harboring.” Kim, 193 F.3d at
574. That observation led that court to conclude that “[t]he present version of §
1324, which is sufficiently broad on its face to encompass the knowing or reckless
harboring of illegal aliens by employers, was plainly intended to have that
39
breadth.” Id.
We tend to agree with the Second Circuit that the revision history of §
1324(a)(1)(A)(iii) strongly indicates that one who hires an alien knowing or
recklessly disregarding his illegal status is guilty of concealing, harboring, or
shielding from detection. See Zheng, 306 F.3d at 1086–87 (taking the revision
history of § 1324 into account when deciding a related issue). As we have
explained, “changes in statutory language generally indicate an intent to change the
meaning of the statute.” DIRECTV, Inc. v. Brown, 371 F.3d 814, 817 (11th Cir.
2004) (quotation marks and alterations omitted); see also Rumsfeld v. Forum for
Academic & Institutional Rights, Inc., 547 U.S. 47, 57–58, 126 S. Ct. 1297, 1306
(2006) (“We refuse to interpret the [statute] in a way that negates its recent
revision, and indeed would render it a largely meaningless exercise.”); Heintz v.
Jenkins, 514 U.S. 291, 294, 115 S. Ct. 1489, 1490–91 (1995) (stating that a “rather
strong reason[ ] for believing that the Act applies” to a particular group is the fact
that an express exemption for the group had existed in the prior enacted version of
the statute, but “Congress repealed [that] exemption in its entirety”); Snapper, Inc.
v. Redan, 171 F.3d 1249, 1257–58 (11th Cir. 1999) (examining the previous
enacted versions of a statute as an aid to interpreting the current version).
As strongly as the revision history indicates it, however, we need not decide
40
whether knowingly employing illegal aliens alone is enough. Here the allegations
are that the defendants not only knowingly employed illegal aliens, but also that
they provided them with social security numbers and names, and paid them in cash
in order to conceal, harbor, and shield the aliens from detection. See United States
v. Shum, 496 F.3d 390, 392 (5th Cir. 2007) (characterizing proof that the
defendant had provided false identification to illegal alien employees and failed to
file their social security paperwork as “ample evidence” that he had taken “steps
that would shield their identities from detection by the government”); Kim, 193
F.3d at 574–75 (finding sufficient evidence to support conviction for harboring
where the defendant took steps designed to help the illegal alien employee remain
undetected); see also United States v. Ye, 588 F.3d 411, 417 (7th Cir. 2009)
(recognizing that government detection of illegal aliens becomes more difficult
when an employer intentionally fails to keep accurate employment records for its
illegal workers and pays them in cash). That is enough to state a violation of §
1324(a)(1)(A)(iii). And, as we mentioned earlier, a violation of that provision is a
predicate act for civil RICO purposes.
D.
The next predicate act alleged in the amended complaint is a violation of §
1324(a)(1)(A)(v), which makes it a federal crime to “engage[ ] in any conspiracy to
41
commit any of the preceding acts [those in § 1324(a)(1)(A)(i)–(iv)], or aid[ ] or
abet[ ] the commission of any of the preceding acts.” 8 U.S.C. § 1324(a)(1)(A)(v).
The amended complaint says the defendants violated that provision “by engaging
in conspiracies to commit, and aiding and abetting others to commit, the preceding
violations [of §§ 1324(a)(1)(A)(iii) and (iv)].” Am. Complaint ¶ 34c. The district
court concluded that the amended complaint did not plead a predicate act under §
1324(a)(1)(A)(v) because it failed to describe any substantive violations of §§
1324(a)(1)(A)(iii) and (iv). The district court also found the allegation was
conclusory and therefore insufficient under Twombly.
We have already concluded that the amended complaint does adequately
plead a pattern of racketeering activity. We agree, however, with the district court
that the conspiracy and aiding and abetting allegations do not pass muster under
Twombly. The mere use of the words “conspiracy” and “aiding and abetting”
without any more explanation of the grounds of the plaintiffs’ entitlement to relief
is insufficient. See Twombly, 550 U.S. at 555, 127 S.Ct. at 1964–65; Sinaltrainal,
578 F.3d at 1261. For that reason, we leave intact the district court’s ruling that the
allegations in the amended complaint involving 1324(a)(1)(A)(v) do not state a
predicate act. That’s the end of our RICO discussion.
VI.
42
We turn now to a claim arising under another statute. The district court
dismissed Count 12 of the amended complaint in which plaintiff Edwards
attempted to plead a hostile work environment claim under 42 U.S.C. § 1981. To
plead that claim Edwards was required to allege that: (1) he belongs to a protected
group; (2) he was subjected to unwelcome harassment; (3) the harassment was
based on his membership in the protected group; (4) it was severe or pervasive
enough to alter the terms and conditions of employment and create a hostile or
abusive working environment; and (5) the employer is responsible for that
environment under a theory of either vicarious or direct liability. See Bryant v.
Jones, 575 F.3d 1281, 1296 (11th Cir. 2009); Miller v. Kenworth of Dothan, Inc.,
277 F.3d 1269, 1275 (11th Cir. 2002) (requiring the same elements for a Title VII
hostile work environment claim); see also Shields v. Fort James Corp., 305 F.3d
1280, 1282 & n.2 (11th Cir. 2002) (noting that Title VII and § 1981 hostile work
environment claims have the same elements and are subject to the same analytical
framework).
Edwards contends the district court erred in dismissing Count 12 of the
amended complaint for failure to state a claim under § 1981. The district court
decided that the “conclusory allegations only describe, albeit ambiguously,
discrimination based on employment status, not race, and certainly do not meet the
43
pleading standards for a racially hostile [work] environment.” Edwards v. Prime,
Inc., No. 08-1016, at 14 (N.D. Ala. Mar. 4, 2009). Edwards argues that the court
should have given more weight to the opening sentence of Count 12, which asserts
that “[i]n his work for Prime, Plaintiff Edwards was subjected to a hostile
discriminatory environment on the basis of his race, in violation of 42 U.S.C. §
1981.” That broad statement, however, is merely a “formulaic recitation of the
elements” of a § 1981 claim and, standing alone, does not satisfy the pleading
standard of Federal Rule of Civil Procedure Rule 8. Twombly, 550 U.S. at 555,
127 S.Ct. at 1965; see Iqbal, 129 S.Ct. at 1949 (“[T]he tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.”). Instead, the “complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at
570, 127 S.Ct. at 1974); see Sinaltrainal, 578 F.3d at 1261; Rivell, 520 F.3d at
1309; Fin. Sec. Assurance, 500 F.3d at 1282. An introductory conclusion cannot
take the place of factual allegations in stating a plausible claim for relief.
Although the amended complaint does allege that Edwards was threatened,
assaulted, and shunned by his Hispanic and Latino co-workers, which created a
44
hostile work environment, it does not plausibly allege that he was harassed because
he is Caucasian. To the contrary, the allegations are that he was threatened by a
Hispanic co-worker because he complained about Prime’s employment of illegal
aliens. See Am. Complaint ¶ 124 (“Plaintiff Edwards was threatened on the job
again by [a] Hispanic Latino of Defendant Prime, who told Edwards it was ‘going
to be bad’ for the person who was complaining about Prime’s employment of
illegal aliens.”). The amended complaint also alleges that Prime failed to intervene
because it did not want to upset the Hispanic and Latino employees and
compromise its ability to hire cheap illegal labor. That allegation, like the other
one, suggests that Prime discriminated against Edwards because he had
complained, or because his co-workers believed he had complained, about Prime’s
employment of illegal aliens—not because of his race. The facts that Edwards is
Caucasian and that the co-workers who were threatening and shunning him were
Hispanic or Latino, by themselves, do not state a plausible claim of race
discrimination. Those factual allegations are not “enough to raise a right to relief
above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. at 1965.18
18
Edwards argues that an employer’s failure to remedy a hostile work environment is not
excused by the employer’s belief that it needs to appease a group of employees. Cf. Diaz v. Pan
Am. World Airways, Inc., 442 F.2d 385, 389 (5th Cir. 1971) (preferences of customers or co-
workers do not defeat a claim of sex discrimination). That may be true, but as we have
explained, the amended complaint does not adequately allege that the hostility of Edwards’ co-
workers was based on his membership in a protected group.
45
For these reasons we agree with the district court that Count 12 of the
amended complaint does not state a claim for relief under § 1981.
VII.
Turning to the state law claims, the district court dismissed Count 7, which
attempted to assert against Prime and Oswald a claim for wrongful interference
with a business relationship. It also dismissed Count 8, which attempted to state a
claim for conversion against the same two defendants. The court dismissed both
claims on the ground that they were preempted by the Fair Labor Standards Act.
Although the parties have primarily focused on the preemption issue in their
arguments to us, Prime and Oswald also contend that neither count states a claim
under Alabama law. If they are right about that, there is no need for us to address
the preemption issue.
A.
The state law problem with Count 7, according to Prime and Oswald, is that
it does not allege that either one of them was a third party, or stranger, to the
business relationships described in the amended complaint. Under Alabama law,
the tort of wrongful interference with a business relationship has five elements: (1)
the existence of a protected business relationship; (2) of which the defendant knew;
(3) to which the defendant was a stranger; (4) with which the defendant
46
intentionally interfered; and (5) damage. White Sands Group, LLC v. PRS II,
LLC, __ So. 3d __, 2009 WL 2841114, *7 (Ala. 2009). The third element in that
framework, and the only one at issue in this appeal, places the burden on the
plaintiff to establish (or at this stage to plead) that the defendant was a stranger to
the protected business relationship with which the defendant interfered. Waddell
& Reed, Inc. v. United Investors Life Ins. Co., 875 So. 2d 1143, 1154 (Ala. 2003).
A plaintiff fails to meet that burden when the defendant is a party in interest to the
allegedly injured business relationship. Id. (citing Colonial Bank v. Patterson, 788
So. 2d 134, 137 (Ala. 2000), overruled on other grounds by White Sands, 2009 WL
2841114, at *7; Ex parte Blue Cross & Blue Shield, Inc., 773 So. 2d 475, 480 (Ala.
2000)).
The Alabama Supreme Court has stated that “a defendant is a party in
interest to a business or contractual relationship if the defendant has any beneficial
or economic interest in, or control over, that relationship.” Tom’s Food, Inc. v.
Carn, 896 So. 2d 443, 454 (Ala. 2004) (quotation marks and citation omitted); see
also Waddell & Reed, 875 So. 2d at 1157 (“A person with a direct economic
interest in the contract is not a stranger to the contract. Parties to an interwoven
contractual arrangement are not liable for tortious interference with any of the
contracts or business relationships.” (quoting LaSonde v. Chase Mortgage Co., 577
47
S.E.2d 822, 824 (Ga. Ct. App. 2003); Waddell’s emphasis omitted)). When the
defendant is an essential party to the allegedly injured business relationship, the
defendant is a participant in that relationship instead of a stranger to it. See Tom’s
Food, 896 So. 2d at 455 (holding that the defendant was not a stranger to the
business relationship between the other two parties because the defendant “was
involved in creating that relationship”); see also Waddell & Reed, 875 So. 2d at
1157; BellSouth Mobility, Inc. v. Cellulink, Inc., 814 So. 2d 203, 214 (Ala. 2001)
(holding that where a contract would not have been consummated without the
participation of a certain party, that party is “anything but a stranger to the
relationship”); Cobb v. Union Camp Corp., 786 So. 2d 501, 506 (Ala. Civ. App.
2000) (holding that defendant landowner was “an essential party,” instead of a
stranger, to the business relationship between its timber harvester and a logger who
entered a contract with the harvester), rev’d on other grounds by Ex parte Union
Camp Corp., 816 So. 2d 1039 (Ala. 2001).
Count 7 of the amended complaint fails to allege any facts indicating that
Prime and Oswald were strangers to the business relationships with which they
allegedly interfered. Because a restaurant’s proceeds depend on its patrons and its
costs depend heavily on its payroll, the defendants had an obvious economic
interest in both the employee-patron relationship and the employees’ relationships
48
with each other. See Tom’s Food, 896 So. 2d at 454; Waddell & Reed, 875 So. 2d
at 1157. Even though Prime and Oswald should not interfere with tips that patrons
give to employees of the restaurant, see 29 C.F.R. § 531.52 (2009) (requiring a
customer’s tipping of a server to be “free of any control by the employer”), they
still exercise control over the employee-patron relationship through their
management of the premises, the menu, and their employees’ service to patrons.
Like the defendants in Tom’s Food, Prime and Oswald were essential parties to the
business relationships alleged in Count 7. They were involved in creating those
relationships; without them the plaintiffs would have had no relationship with the
patrons of the restaurant or with their co-workers. See Tom’s Food, 896 So. 2d at
455; see also BellSouth Mobility, 814 So. 2d at 214; Cobb, 786 So. 2d at 506.
The plaintiffs argue that a restaurant does not always create the business
relationship between a customer and a server, because in some instances customers
choose to dine at a restaurant not because of the food but because of the servers.
(The epitome of that, we suppose, might be one of those establishments in which
some of the employees are not fully clothed.) The plaintiffs compare a restaurant
and its servers to the proverbial chicken and egg, and they ask us not to hazard a
guess as to which came first. This is one instance, however, in which the chicken
must come before the egg. A customer cannot be impressed with the service at a
49
restaurant before there is one. Without a restaurant there are no servers and no
patrons to strike up a relationship. See Tom’s Food, 896 So. 2d at 455. The
connections among the defendants, the employees, and the restaurant’s patrons are
“interwoven” enough that Prime and Oswald are not strangers to the relationship
between their employees and their patrons. See id.; Waddell & Reed, 875 So. 2d at
1157. Because the defendants were not strangers to the business relationships with
which they allegedly interfered, Count 7 of the amended complaint fails to state a
claim under Alabama law.19
B.
The state law claim attempted in Count 8 is conversion. Prime and Oswald
contend the attempt fails because there is no allegation the defendants took specific
money that could be identified. They are right. To establish a claim for conversion
under Alabama law, there must be “a wrongful taking or a wrongful detention or
interference, or an illegal assumption of ownership, or an illegal use or misuse of
another’s property.” Covington v. Exxon Co., 551 So. 2d 935, 938 (Ala. 1989)
(citations omitted); see also Ex parte Anderson, 867 So. 2d 1125, 1129 (Ala.
2003). The Alabama Supreme Court has repeatedly held that an action for the
19
The most helpful case to the defendants’ side of this issue is Tom’s Food, which their
counsel apparently overlooked. To his credit, counsel for the plaintiffs cited it as a “But see”
authority in his reply brief. We appreciate his professionalism.
50
conversion of money is improper unless there is earmarked money or specific
money capable of identification. E.g., Hensley v. Poole, 910 So. 2d 96, 101 (Ala.
2005); Campbell v. Naman’s Catering, Inc., 842 So. 2d 654, 659 (Ala. 2002); Gray
v. Liberty Nat’l Life Ins. Co., 623 So. 2d 1156, 1160 (Ala. 1993); Convington, 551
So. 2d at 938; see also Limbaugh v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
732 F.2d 859, 862 (11th Cir. 1984).
Money is specific and capable of identification where, for example, it is
“money in a bag, coins or notes that have been entrusted to the defendant’s care, or
funds that have otherwise been sequestered, and where there is an obligation to
keep intact and deliver this specific money rather than to merely deliver a certain
sum.” Gray, 623 So. 2d at 1160 (emphasis added); see also Hensley, 910 So. 2d at
101. That rule was applied in Lewis v. Fowler, 479 So. 2d 725, 727 (Ala. 1985),
where the Alabama Supreme Court declined to extend the definition of “specific
money capable of identification” to money that an employer withheld from an
employee’s wages in response to a garnishment action. Although the employer
may have owed the employee a certain sum of money, there was “no obligation to
return the identical money, but only a relationship of debtor or creditor.” Id.
(emphasis added). Employees care about the amount of their wages, not whether
they receive particular coins or bills, or money in a bag or chest, or payment into a
51
special account. Id.; see also SouthTrust Bank v. Donely, 925 So. 2d 934, 938
(Ala. 2005) (citing Knox v. Moskins Stores, Inc., 2 So. 2d 449, 450 (1941), for the
proposition that “there is no conversion when an employer allegedly erroneously
assigns an employee’s wages”); Campbell, 842 So. 2d at 660 (affirming summary
judgment against plaintiff on a conversion claim where the employer had
continued to deduct premiums from his paycheck even though it had stopped
paying those premiums to the employee’s insurance company).
The plaintiffs argue that it is enough that the amended complaint alleges the
defendants “converted specific and identifiable amounts of money” and that “the
amounts taken [were] and [are] identified by, calculated and based on tips and
gratuities paid to servers.”20 They insist that we must accept those allegations as
true given the procedural posture of this case.
The plaintiffs’ argument misunderstands Alabama law. The amended
complaint alleges that the defendants converted identifiable amounts of money.
20
With respect to the conversion claim, the amended complaint states:
Defendants Prime, as part of its regular business practices implemented and
approved by Defendant Oswald, converted specific and identifiable amounts of
money from Plaintiffs (but not Plaintiff George) and other employees; the amounts
taken [were] and [are] identified by, calculated and based on tips and gratuities paid
to servers. These takings of money were and are wrongful retentions of or
interference with Plaintiffs’ money and constituted conversion of money that
belonged to Plaintiffs regardless of whether Defendants otherwise complied with the
FLSA in compensating Plaintiffs.
52
Identifiable amounts of money are one thing, specific money capable of
identification is another. Cases such as Gray and Lewis held that an action for the
conversion of money requires the money itself, not just the amount of it, to be
specific and capable of identification. See Gray, 623 So. 2d at 1160 (conversion
claim requires “specific money,” such as money in a bag, rather than a “certain
sum” of money, where only the quantity is known); Lewis, 479 So. 2d at 727
(conversion claim requires an obligation to return “identical money,” not merely an
obligation to pay a debt). In cases where employees brought conversion claims to
recover improperly withheld wages, a particular amount of money was at stake but
the plaintiffs lost because “specific money” was not. See Campbell, 842 So. 2d at
660; Lewis, 479 So. 2d at 727; Knox, 2 So. 2d at 450. This case is no different.
The plaintiffs want their tips returned but it would be implausible to suggest, and
they have not alleged, that Prime and Oswald have those particular tips stored in a
bag somewhere, much less segregated in a fashion that would permit matching
them up to each individual plaintiff.
The plaintiffs point to the allegation in the amended complaint that servers
had to fill out tip reports accounting for the percentage of tips that would be “taken
by the house.”21 They argue that was an “earmarking” process and that by alleging
21
The amended complaint alleges that Ruth’s Chris took 25% of its servers’ tips. Servers
had to complete “tip reports” that included this calculation: (Gross Tips + Bartender, Carver
53
it the amended complaint states a claim under Alabama’s law of conversion. Their
argument confuses the method by which the amount was calculated with the
requirement that the money itself be specific and identifiable. See Hensley, 910
So. 2d at 101 (holding that there was no cause of action for conversion where the
plaintiff claimed he was due a 30% share of business profits but did not prove “that
the money at issue was in any way segregated or identifiable”); Gray, 623 So. 2d at
1160; Lewis, 479 So. 2d at 727. The amended complaint does not allege that the
withheld tips were ever “sequestered” from other monies collected by the
defendants. See Covington, 551 So. 2d at 939 (holding that funds “never
segregated into a separate account” were commingled money and therefore not
“specific and identifiable”); cf. Greene County Bd. of Educ. v. Bailey, 586 So. 2d
893, 899–900 (Ala. 1991) (holding that plaintiff had stated a claim for conversion
where the complaint alleged that the defendant wrongfully took funds that had
been “specifically deposited” in a school’s “lunchroom account”).
As the Alabama Supreme Court stated in Lewis:
Clearly, there is no identifiable coin or bill, and nothing that has been
sealed up in a particular letter, “wrapped up to itself,” or placed in a
bag or chest. There is no evidence that this money was placed in a
special account. It is merely money which was not paid to an
employee . . . .
Fees ! House 5% [20% Gratuity x .25] = Net Total).
54
479 So. 2d at 727. Count 8 of the amended complaint fails to state a claim for
conversion under Alabama law.
VIII.
We REVERSE the district court’s dismissal of Count 1 of the amended
complaint and AFFIRM its dismissal of Counts 7, 8, and 12. We DISMISS the
appeal for lack of appellate jurisdiction insofar as it concerns any other claims or
rulings.
55