Antitrust Law Daily Wrap Up, RICO—N.D. Iowa.: Underpaid foreign worker’s RICO claims will proceed, (Jun 24, 2024)

By Martin A. Steinberg, J.D.

The harm an H-2A employee allegedly suffered was directly caused by the submitted fraudulent visa forms.

The federal court in Sioux City, Iowa, denied two motions to dismiss a RICO case filed by a foreign truck driver against Golden Opportunities International, LLC. The truck driver was brought to this country as an agricultural worker but was instead employed as a truck driver at a lower pay rate. He asserted that Golden Opportunities and four other named defendants engaged in an ongoing scheme to submit false visa applications to bring in lower paid foreign workers. The driver had previously dismissed the other defendants from the case. The court denied as moot Golden Opportunities’ motion to dismiss the original complaint and denied the motion to dismiss the amended complaint because the driver had sufficiently alleged proximate cause of his monetary losses as a result of the scheme to defraud the H-2A program (Hanekom v. Kuchenbecker Excavating, Inc., No. C23-3046-LTS-KEM (N.D. Iowa June 12, 2024)).

The U.S. Department of Labor’s (USDOL) H-2A program allows U.S. employers to bring foreign nationals to the country to fill temporary agricultural jobs. An employer may petition for foreign nationals to perform agricultural labor or services, as defined by 20 C.F.R. § 655.103(c), on a seasonal or temporary basis if USDOL certifies that: (1) there are insufficient available workers within the U.S. to perform the job; and (2) the employment of H-2A workers will not adversely affect the wages and working conditions of similarly situated American workers.

Kuchenbecker Excavating and H&S Farms allegedly claimed a lack of available workers in the U.S. in their area of operations and provided this information to Golden Opportunities, who then submitted to USDOL multiple temporary employment certification applications. Each of these applications claimed the need for workers for Kuchenbecker Excavating and H&S Farms to fulfill various agricultural functions, such as help to haul and spread chicken manure on fields, to assist with livestock feeding, and daily maintenance. These applications also included a certification that the filing entity would pay the highest of the adverse effect wage rate (AEWR), the applicable prevailing wage, the agreed-upon collective bargaining rate or the Federal or State minimum wage. The defendants together had filed over twelve H-2A applications, through which they have brought in South African H-2A workers to work on job orders from 2018 up to the time the complaint was filed. Plaintiff was one of these workers.

The amended complaint alleged that Golden Opportunities, along with Kenneth Kuchenbecker, Heather Smidt, Kuchenbecker Excavating, Inc., and H&S Farms-Livestock, LLC, misused the H-2A visa program by employing him as a truck driver and not as an agricultural worker. The driver charged that instead of performing the work listed in the job orders, he performed unrelated trucking work that would not have qualified for the H-2A visa program and was never disclosed to the driver or USDOL.

Golden Opportunities sought dismissal of Count V, which asserts a violation of RICO § 1962(d). Golden Opportunities further argued that if the RICO counts are dismissed, the court should decline to exercise ongoing supplemental jurisdiction over the remaining counts, as they arise under state law. In its motion to dismiss, Golden Opportunities also sought dismissal of Count IV, a violation of RICO § 1962(c), however this count was asserted only against the defendants who were previously dismissed.

Section 1962(c) of RICO makes it "unlawful 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 or collection of unlawful debt. A violation of § 1962(c) requires a plaintiff to show ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. A conspiracy violation under § 1962(d) exists when a conspirator intended to further an undertaking which, if completed, would satisfy all of the elements of a substantive criminal offense of § 1962(c).

Proximate cause. The driver sufficiently pled the proximate cause requirement of a RICO claim. To maintain a RICO claim, a plaintiff must have suffered injury by reason of a RICO violation. Rather than a bright-line rule, proximate cause in RICO is a flexible standard that requires a fact-intensive inquiry. The harm alleged was directly due to the fraudulent visa forms, not subsequent underpayments. Plaintiff was paid the wage his visa forms stated, but the harm was that the visa forms misstated the class of work he was performing so that he could be paid an agricultural worker's wage rather than a trucker's wage. Accordingly, the harm was not caused by a series of independent decisions after Golden Opportunities' involvement ended, but plausibly resulted from its involvement in the allegedly fraudulent visa scheme. Plaintiff sufficiently alleged that Golden Opportunities played a role in this scheme. Rather than simply filling out requested forms, Plaintiff alleged that Golden Opportunities knew or should have known that the forms were fraudulent and profited from this fraud because it received payment for recruiting foreign workers.

Injury to business or property. The amended complaint contained sufficient allegations of loss of income to constitute a RICO injury. To have standing to make a RICO claim, a party must have sustained an injury to business or property that was caused by a RICO violation. A showing of injury requires proof of concrete financial loss, and not a mere injury to a valuable intangible property interest.

The court rejected Golden Opportunities’ contention that various Eighth Circuit cases established that injuries to employment or income from employment are not RICO injuries. Those cases were distinguishable from this case because each of them involved injuries suffered from alleged RICO violations that were not directed at the plaintiff.

The driver was the target of the RICO violations alleged in the amended complaint. Rather than losing income in retaliation for criticizing RICO activity directed at others, he alleged that Golden Opportunities engaged in a conspiracy directed at him that resulted in him being underpaid for trucking work and expending his own money on housing and other costs. These allegations were concrete financial losses and sufficiently alleged that he was injured in his business or property by reason of a violation of section 1962.

The Case is No. C23-3046-LTS-KEM.

Judge: Strand, L.

Attorneys: Alexander Vincent Kornya (Iowa Legal Aid) and Lori J. Johnson (Farmworker Justice) for Carel Hanekom. Bradley J. Kaspar (Pickens Barnes & Abernathy) for Golden Opportunities International LLC.

Companies: Golden Opportunities International LLC

Cases: RICO IowaNews