Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Foreign shepherds’ wage fixing conspiracy claims recommended for dismissal, (Jun 7, 2016)

By Greg Hammond, J.D.

Five foreign shepherds that worked in the United States under temporary H-2 visas failed to set forth plausible claims that various trade associations, ranches, and an individual conspired to fix the wages offered and paid to shepherds at the minimum Department of Labor wage floor, a magistrate judge in the federal district court in Denver has concluded. The magistrate judge consequently recommended that the three Section 1 Sherman Act claims be dismissed with prejudice, noting that the conduct described by the shepherds was equally likely to result from the defendants’ independent, lawful action based on the H-2A program and Department of Labor regulations that established the minimum wage (Llacua v. Western Range Association, June 3, 2016, Shaffer, C.).

Five Peruvian shepherds brought Sherman Act and Racketeer Influenced and Corrupt Organizations Act (RICO) claims against two associations (Western Range Association and Mountain Plans Agricultural Service), five ranches, and an individual. The shepherds claimed that the defendants conspired to fix the wages offered and paid to shepherds at the minimum Department of Labor wage floor.

No plausible agreement. The magistrate judge first noted the absence of any facts that directly established a Section 1 agreement. Instead, the Shepherds relied on circumstantial allegations of conspiracy, including that: (1) the defendants fix wages by focusing on the fact that the Rancher defendants are members of the Association defendants that handle hiring for ranches; (2) the Association defendants and Rancher defendants’ memberships create opportunities for the defendants to communicate regarding the recruiting and hiring of shepherds; (3) the Association defendants always offer the minimum wage permitted by the Department of Labor; (4) the defendants have common motives to fix and depress wages; and (5) the wages offered to shepherds were very low and largely stagnated until the Department of Labor’s new rule in November 2015.

None of these arguments, however, were persuasive because the facts alleged describe conduct equally likely to result from the defendants’ independent, lawful action based on the H-2A program and Department of Labor regulations that established the minimum wage. In particular, the magistrate judge determined that the fact that the Association defendants handled the recruiting and hiring of both domestic and foreign shepherds for their members did not suggest an agreement to fix wages because there was no allegation that the Association defendants prohibited their members from offering more than the minimum wage. In addition, the conduct complained of was equally consistent with independently following the Department of Labor’s minimum wage and foreign hiring regulations, because it was in each defendant’s interest to not pay higher wages than legally required and necessary to adequately fill positions.

RICO enterprise. The shepherds also brought two RICO claims, but the magistrate judge determined that the plaintiffs failed to allege any RICO enterprise. Specifically, the shepherds claimed that there were three enterprises: (1) an enterprise between Western Range Association and its former executive director; (2) an enterprise between Western Range Association and its members; and (3) an enterprise between Mountain Plains Agricultural Service and its members. However, the shepherds merely alleged that the enterprises engaged in the defendants’ usual business interactions of the Association defendants—submitting job orders and H-2A applications. The magistrate judge concluded that an organization cannot join with its own members to do that which it normally does and thereby form an enterprise separate and apart from itself. In addition, a corporation and its officer cannot be a RICO association-in-fact concerning conduct undertaken in the corporation’s regular business as an officer of the corporation, the magistrate judge found.

The case is No. 15-1889-REB-CBS.

Attorneys: Andrew Arthur Schmidt (Andrew Schmidt Law PLLC) for Rodolfo Llacua. Amber J. Munck (Greenberg Traurig, LLP) and Naomi G. Beer (Greenberg Traurig, LLP) for Western Range Association. Elizabeth K. Dorminey (Wimberly Lawson Steckel Schneider & Stine, PC) for Mountain Plains Agricultural Service. J. Roderick Betts (Paul Plevin Sullivan & Connaughton LLP) for Martin Auza Sheep Corp.

Companies: Western Range Association; Mountain Plains Agricultural Service; Martin Auza Sheep Corp.

Cases: Antitrust RICO ColoradoNews