United States District Court, D. Colorado
December 21, 2016
RODOLFO LLACUA, et al., Plaintiffs,
WESTERN RANGE ASSOCIATION, et al., Defendants.
MEMORANDUM OPINION AND
RECOMMENDATION ON PLAINTIFFS' MOTION TO
AMEND THE SECOND AMENDED
B. Shaffer United States Magistrate Judge.
case comes before the court on the referred motion (doc.
#140, public entry for doc. #139) of the named Plaintiffs to
amend their Second Amended Complaint (“SAC, ”
doc. #73) in a proposed Third Amended Complaint
(“TAC”). Doc. #139-2 (redline version).
Defendants oppose that motion. Doc. #148. As follows, the
court grants the motion in part and recommends denying in
OF THE CASE
court previously described in more detail in its
Recommendation (doc. #125, referred to hereafter as the
“Recommendation”) on motions to dismiss the SAC,
five named Plaintiffs bring this lawsuit: Messrs. Llacua,
Huaman, Leovegildo Vilchez Guerra, Liber Vilchez Guerra, and
De La Cruz. TAC ¶¶ 18-22. The Recommendation
recites the SAC's allegations and claims in detail, and
the court here assumes familiarity with it. To summarize,
Plaintiffs bring a putative class action. Plaintiffs allege
that they are “originally from Peru” and worked
in the United States as “H-2A shepherd[s].” TAC
¶¶ 18-23. Plaintiffs allege that two industry
associations (Western Range Association, “WRA, ”
and Mountain Plains Agricultural Service, “MPAS,
” collectively the “Associations”) and five
ranches who are members of one or both
Associations violated § 1 of the Sherman Act by agreeing
to fix shepherds' offered and paid wages. Plaintiffs
further allege that the Associations and Dennis Richins, a
former officer of WRA, violated the Racketeer Influenced and
Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1964(c). Plaintiffs also bring several state law
U.S. Department of Labor (“DOL”) regulates the
employment of foreign shepherds under the H2-A program. The
DOL requires employers to “offer domestic workers
‘no less than the same benefits, wages, and working
conditions that the employer is offering, intends to offer,
or will provide to H-2A workers.” TAC ¶ 47
(quoting 20 C.F.R. § 655.122(a)). The employer must
offer the “worker at least the AEWR [Adverse Effect
Wage rate], the prevailing hourly wage rate … or the
Federal or State minimum wage rate, in effect at the time
work is performed, whichever is highest, for every hour or
portion thereof worked during a pay period.” TAC at
¶ 48 (quoting 20 C.F.R. § 655.122(1)). For
convenience, the court refers to these state-by-state
mandatory minimum wages as the “minimum wage.”
case has been pending since September 1, 2015, when two of
the Plaintiffs filed the original complaint. Doc. #1.
Plaintiffs have amended the complaint twice. Defendants moved
to dismiss each version. On March 8, 2016, the court held a
scheduling conference. Doc. #112. In light of the
then-pending motions to dismiss, the court did not enter a
scheduling order. Doc. #112. Accordingly, the court has not
yet set a deadline for motions to amend the pleadings. The
parties have proceeded with some discovery. Id.
3, 2016, this court recommended dismissal of the SAC's
federal claims with prejudice and recommended that the
district court decline to exercise supplemental jurisdiction
over the state law claims. Recommendation at pp. 41-42. On
July 1, 2016, Plaintiffs objected to the Recommendation; on
August 1, 2016, Defendants responded in support of the
Recommendation. Docs. #131, 135, 136. Soon thereafter, on
August 18, 2016, Plaintiffs filed their motion to amend the
SAC, requesting that if Judge Blackburn agreed with the
Recommendation that the Plaintiffs be permitted to file a
proposed TAC. Doc. #139. On September 6, Judge Blackburn
overruled Plaintiffs' objections and adopted the
Recommendation, except modifying to dismiss the federal
claims without prejudice to Plaintiffs' motion to amend.
Doc. #142. Plaintiffs then filed a notice of supplemental
authority in support of their motion to amend (doc. #144) and
a reply. Doc. #152. Judge Blackburn referred the motion to
amend to this court.
The Standard for Motions to Amend the Complaint.
15(a) provides that “[t]he court should freely give
leave when justice so requires.” Fed.R.Civ.P. 15(a)(2).
“The purpose of the Rule is to provide litigants the
maximum opportunity for each claim to be decided on its
merits rather than on procedural niceties.”
Minter v. Prime Equip. Co., 451 F.3d 1196,
1204 (10th Cir. 2006) (citations and internal quotation marks
If the underlying facts or circumstances relied upon by a
plaintiff may be a proper subject of relief, he ought to be
afforded an opportunity to test his claim on the merits. In
the absence of any apparent or declared reason-such as undue
delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, futility of amendment,
etc.-the leave sought should, as the rules require, be
Foman v. Davis, 371 U.S. 178, 182 (1962). Here,
Defendants oppose the motion on the grounds of failure to
previously cure deficiencies, undue prejudice, undue delay,
and futility. The court addresses futility first, as it is
dispositive for most of the proposed federal claims.
proposed amendment is futile if the complaint, as amended,
would be subject to dismissal.” Full Life Hospice
LLC v. Sebelius, 709 F.3d 1012, 1018 (10th Cir. 2013)
(internal quotation marks omitted). However, “a
well-pleaded complaint may proceed even if it strikes a savvy
judge that actual proof of [the alleged] facts is improbable,
and that a recovery is very remote and unlikely.”
Sanchez v. Hartley, 810 F.3d 750, 756 (10th Cir.
legal standards for a § 1 claim and the pleading
standard for its conspiracy element have not changed since
the court discussed those standards at length in the
Recommendation. Doc. #125 at pp. 9-17. “The essence of
a claim of violation of Section 1 of the Sherman Act is the
agreement itself.” Champagne Metals v. Ken-Mac
Metals, Inc., 458 F.3d 1073, 1082 (10th Cir. 2006).
“[T]he crucial question' is whether the challenged
anticompetitive conduct ‘stem[s] from independent
decision or from an agreement, tacit or express.'”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553
(2007). “[W]hen allegations of parallel conduct are set
out in order to make a § 1 claim, they must be placed in
a context that raises a suggestion of a preceding agreement,
not merely parallel conduct that could just as well be
independent action.” Id. at 556-557. The
allegations in Twombly are quite similar to
Plaintiffs' allegations here: multiple corporate
defendants engaged in the same conduct as their competitors,
consistent with the regulatory system that governed the
business in question. Id. at 567-68. With no
allegations of direct evidence that the defendants had agreed
among themselves to engage in that conduct, the Supreme Court
held that circumstantial allegations of parallel conduct were
insufficient to state a § 1 Sherman Act claim.
Id. at 564-66.
Plaintiffs' Antitrust Allegations Taken as a Whole
SAC, Plaintiffs alleged that MPAS, WRA, and their members
conspired to fix the wages offered and paid to shepherds.
Plaintiffs alleged that Defendants agreed to offer domestic
and foreign shepherds only the minimum wage. They alleged
that the job orders for domestic shepherds went unfilled,
such that Defendants hired only foreign shepherds. Plaintiffs
further alleged that Defendants agreed to fix the wages that
they paid at the minimum wage. The court concluded that the
SAC's alleged conspiracy was not plausible under
Twombly because (a) the Associations were authorized
by statute to recruit and hire on behalf of their members,
and thus were authorized to set the offered wages for their
members, and (b) Defendants' uniform offering and paying
only the minimum wage was consistent with a conspiracy but
not suggestive of it because the same conduct was equally or
more likely the result of parallel decisions under the H-2A
regulatory system. Recommendation at pp. 20, 29.
their motion to amend, Plaintiffs do not propose to cure the
deficiencies of the SAC with any direct allegations of an
agreement, nor any new circumstantial allegations that would
be plausible in light of the H-2A regulatory environment.
Plaintiffs continue to allege conclusorily that the
Associations are anticompetitive combinations of competitors.
TAC at ¶¶ 66, 88. They also continue to allege that
all Defendants conspired to fix the wages offered to
shepherds at the minimum wage. TAC at ¶¶ 5, 6,
7(i), 68, 170. Plaintiffs seek to add more detail regarding
the Associations' setting of the offered wages at the
minimum wage, and the members' knowing delegation of
hiring to the Associations. Id. at e.g.,
¶¶ 68, 69, 90, 91, 117-158, 246-50.
the proposed Third Amended Complaint drops the alleged
conspiracy to fix wages paid to foreign shepherds.
TAC at e.g., ¶¶ 4, 7(i), 7(ii), 91, 409,
412. Plaintiffs now concede that Defendants (and some
non-party ranches) at times pay experienced foreign shepherds
varying amounts above the minimum wage. Id. at
¶ 7(iv), 177-203, 217, 221, 222.Plaintiffs allege that
shepherding is a skilled profession in which years of
experience at a ranch make a shepherd's services more
valuable. See, e.g., TAC at ¶¶ 160-174,
175, 206-209. Plaintiffs point to admissions of some
Defendants regarding the value of shepherds' experience.
TAC at e.g., ¶¶ 160, 240. Thus, Plaintiffs
claim that although Defendants actually paid foreign
shepherds varying amounts above the minimum wage, they still
offered only the minimum wage.
purposes of factual support for the fixing of offered wages,
Plaintiffs continue to allege many facts that regard only
paid wages. See, e.g., TAC at ¶¶
104-110, 137-141, 150, 153 (alleging Association
correspondence, handbook, and DOL wage surveys). Plaintiffs
allege that Defendants' payments of higher wages support
a conspiracy to fix the offered wages in two ways. First,
they claim that the variation in pay shows that a
shepherd's skill and experience have additional value,
and thus the lack of variation in offered pay must show an
agreement to fix wages. TAC at ¶¶ 7(i), 7(ii), 159,
175. This theory does not take into account the equally
logical explanation that Defendants independently offer only
the minimum wage because they do not need to differentiate
their job openings by years of experience. Plaintiffs do not
allege anything in the H-2A regulatory system that requires
the employer to offer positions differentiated by experience
Plaintiffs allege that (a) Defendants pay higher wages but do
not disclose them to DOL, (b) the nondisclosure subjects
Defendants to risks of DOL fines and debarment from H-2A for
noncompliance with 20 C.F.R. § 655.122, and (c)
Defendants run those risks only to protect their agreement to
fix offered wages at the minimum wage. TAC at ¶¶
7(iii), 83-86, 177-182, 210-215; Doc. #152 at p.7. As with
the SAC, Plaintiffs continue to ignore that their own
allegations suggest more likely explanations for
Defendants' uniform offers of the minimum wage: each
Defendant wished to hire foreign shepherds under the H-2A
program to take advantage of their “vulnerable
immigration status.” TAC at ¶ 9.
allege that Defendants wish to exploit foreign workers'
immigration status so that among other things, Defendants can
obtain the value of their experience without needing to pay
more than “slight premiums” for it. TAC at
¶¶ 9-11, 82, 214-215. Plaintiffs allege that
Defendants know that in light of other, similar jobs paying
higher wages or offering better conditions, the minimum wage
is (or was, prior to November 2015) too low to attract
domestic shepherds. Id.; see also TAC at
¶¶ 229-37. Offering the minimum wage ensures that
the Defendants can hire foreign shepherds under H-2A. Thus,
the H-2A regulatory system gives each Defendant an
individual, parallel incentive to offer only the minimum
Recommendation concluded, there is no need for an agreement
to do what the Defendants would do anyway. Doc. #125 at p.
29. Regardless that nondisclosure of higher wages may violate
20 C.F.R. § 655.122(a) or other H-2A rules,
ranch's rule violation does not carry over to the
association or vice versa “unless the OFLC
Administrator determines that the association or another
association member participated in the violation.” 20
C.F.R. § 655.182(a). Twombly rejected the
theory that multiple defendants' alleged regulatory
violations suggest conspiracy. Recommendation at p. 13
(quoting Twombly, 550 U.S. at 566). Moreover,
Plaintiffs in this case continue to infer that prior to the
November 2015 rule change, disclosing the higher paid wages
to DOL would have resulted in Defendants paying a higher
minimum wage going forward. See, e.g., TAC at
¶¶ 104-105. Thus, each Defendant had a direct,
independent self-interest to not disclose the higher wages to
DOL. As in the SAC, Defendants' alleged conduct is
equally explainable by consciously parallel
their motion, Plaintiffs do not cite any new cases regarding
when a § 1 claim based on only circumstantial evidence
of an agreement is plausible. Instead, Plaintiffs again argue
that the Association Defendants' setting of wages for
their members is sufficient, specifically asserting that
“the existence of associations that uniformly offer
wages for their members' employees … constitutes
allegations that, if true, are direct evidence of an
agreement to restrain trade in violation of the Sherman
Act.” Doc. #152 at p. 2 n.1. In Plaintiffs' view,
if an industry association sets the offered wage for its
members, the association itself manifests the
competitors' agreement to unreasonably restrain trade.
than now asserting that the Association Defendants are
direct evidence of an agreement, this is the same
unavailing “association standard” argument.
Recommendation at pp. 21-24. More is required than merely the
existence of an industry association whose membership is
comprised of competitors: “a legally single entity
violate[s] [Section] 1 when the entity [i]s controlled by a
group of competitors and serve[s], in essence, as a
vehicle for ongoing concerted activity.” Am.
Needle, Inc. v. Nat'l Football League, 560 U.S. 183,
191 (2010) (emphasis added). An association is a vehicle for
concerted antitrust activity when it requires its members to
actively participate in the association's anticompetitive
conduct; this generally requires showing association rules,
canons or agreements that prohibit members from competing.
Recommendation at pp. 20-23 (citing cases).
rely again on a case that they cited in opposing the motions
to dismiss, Beltran v. InterExchange, Inc., 176
F.Supp.3d 1066 (D. Colo. 2016). In Beltran, the
plaintiffs alleged direct evidence of an agreement in that
“several of the [Defendant] Sponsors' employees
(the ‘Directors') explicitly admitted to
Plaintiffs' investigator that the Sponsors had expressly
agreed among themselves to keep au pair wages at the
lowest possible level;” the complaint also alleged the
specific telephone conversations in which those admissions
occurred. Beltran, 176 F.Supp.3d at 1073-74. The
court did not find the defendants' memberships in (or
officers' ties to) an industry association in themselves
made the conspiracy plausible. Rather, the plaintiffs alleged
that the industry association had recently sponsored a key
note speaker who, in a published article, advocated that the
members should not compete with each other on au
pair wages. Id. at 1078. That fact was part of
the circumstantial evidence that, together with the direct
admissions, the court found plausibly alleged antitrust
conspiracy. Id. at 1079. Thus, Beltran
still does not support Plaintiffs'
also cite a treatise on which they relied in their objections
to the Recommendation, 7 P. Areeda & H. Hovenkamp,
Antitrust Law ¶ 1477, p. 337 (3d Ed. 2006).
Plaintiffs rely on this treatise to argue “the Courts
have had little difficulty in treating organizations created
to serve their member-competitors or to regulate their market
behavior as continuing ‘agreements' among the
members, ” for purposes of finding an
‘agreement' in restraint of trade.” Doc. #152
at p. 2, n.1 (quoting Areeda and Hovenkamp ¶ 1477, p.
337). Section 1477 addresses intraenterprise conspiracy,
i.e., the circumstances in which a single
organization, such as a trade association, is capable of
constituting a conspiracy despite being incapable of
conspiring within itself. The treatise recognizes that trade
routinely treated as continuing conspiracies …of their
members … [but] [o]f course that leaves the second
question, whether the trade association's decision
controls the members' behavior in some way. * * * This
brings association rules having a competitive impact within
the reach of §1 of the Sherman Act.
Areeda and Hovenkamp ¶ 1477 at pp. 332-333. The trade
association as a collaboration of competitors is generally
permissible, and “the courts focus on and remedy only a
particular alleged impropriety - such as a particular rule
forbidding the members from engaging in competitive
bidding.” Areeda and Hovenkamp ¶ 1477 at pp.
333-34. The treatise then discusses several examples of
associations that controlled their members' actions
through rules or canons requiring non-competition.
Id. at 334-337. These are the same cases on which
Plaintiffs misplaced their reliance in opposing the motions
to dismiss. Recommendation at pp. 22-23. Just like the SAC,
the TAC does not point to any rules, canons or membership
agreements of WRA or MPAS that prohibit members from offering
above the minimum wage. The Areeda and Hovenkamp treatise does
not support Plaintiffs' argument regarding the
Plaintiffs' association argument continues to ignore that
the H-2A program specifically authorizes associations to
handle recruitment and hiring for ranches. 29 U.S.C. §
1801(d); 8 U.S.C. § 1188(d)(1) (“[a]
petition to import an alien as a temporary agricultural
worker, and an application for a labor certification with
respect to such a worker, may be filed by an association of
agricultural producers which use agricultural
services”); 20 C.F.R. § 655.131
(“[a]ssociations of agricultural employers may file an
Application for Temporary Employment Certification for H-2A
workers as a sole employer, a joint employer, or
agent”); 20 C.F.R. § 655.215(b)(1) (Nov. 16, 2015)
(H-2A applications for foreign herding and range livestock
workers “may be filed by an individual employer [or]
association”). Therefore, the fact that the
Associations set the offered wages for their members does not
make plausible that the Associations are vehicles for
anticompetitive activity. See Recommendation at p.
at least in the H-2A context, the fact that members
“knowingly allocate decisions regarding the wages
offered to domestic shepherds to these associations
constituted by competitor ranchers” (TAC ¶ 68;
see also Id. at ¶ 90; ¶¶ 246-250)
does not suggest a conspiracy. Alleging that the members
“do so with the knowledge that the Association
Defendants use job orders to illegally fix
shepherd wages at the wage floor in each state”
(Id. at ¶ 68; see also Id. at ¶ 6) is
the same conclusory assertion as in SAC ¶ 91.
Recommendation at p. 19. It remains conclusory. That each
ranch “knew or should have known that it was not
prohibited [by DOL] from setting its own offered wages, but
instead decided to delegate that function to the
Associations, ” TAC ¶ 247(v), likewise does not
suggest that the ranches delegated hiring to WRA because of a
conspiracy. It is equally if not more likely that the ranches
delegated to WRA because they wished to participate in the
H-2A program (TAC at ¶¶ 9-11, 82, 214-215), and
delegating was more efficient than each ranch individually
handling its own H-2A hiring. See, e.g., 20 C.F.R.
§ 655.121(2) (associations can file master applications
on behalf of several ranches).
short, Plaintiffs' motion to amend and proposed
amendments do not attempt to meet the pleading standards for
§ 1 antitrust conspiracy claims noted in the
Recommendation. Nor do Plaintiffs' rely on new cases to
take issue with those pleading standards. Just as the court
concluded in the Recommendation, Plaintiffs must meet
Twombly's requirement of fact allegations that
are not equally likely caused by consciously parallel
conduct. None of the documents attached to the TAC and none
of the specific, proposed fact allegations meet that
standard, as follows.
Attachments to the TAC: MPAS Job Orders for Domestic
Plaintiffs had otherwise pled facts to make the conspiracy
plausible, several of the job orders that Plaintiffs attach
to the TAC contradict that conspiracy. The court can
consider the attachments to the TAC at the Rule 12(b)(6)
phase. Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th
Cir. 2006). See also Gee v. Pacheco, 627 F.3d 1178,
1186 (10th Cir. 2010). Several of the MPAS job orders to
U.S. workers offer compensation above the minimum wage, and
do so in terms varying from ranch to ranch. See,
e.g., Doc. #139-3 at p. 4 ¶ 18 (2015 job order for
Auza, “[e]mployer may offer a bonus”);
Id. at p. 20 ¶ 18 (2014 job order for Child
Ranch, “[e]mployer, at the employer's discretion,
may pay wages higher than the established minimum wage
rate.”); Doc. #139-4 at p. 4 ¶ 18 (2015 job order
for Estill Ranches, “[b]onuses and/or wages that are
higher than the guaranteed wage rate may be offered at the
employer's discretion. Any such added benefit(s), if
elected by the employer, will be applied in a
non-discriminatory manner to all employees under this job
order who meet the employer's determined criteria,
example: length of service with the employer.”);
Id. at p. 30 ¶ 18 (2015 job order for Two Bar,
same language as for Estill). Indeed, Plaintiffs indirectly
recognize these facts in alleging that “MPAS admits
that ‘some employers offered and paid base wages in
excess of the published minimum, wage established by DOL'
and notes that ‘some offered opportunities to earn
additional pay and bonuses.'” TAC at ¶ 183
(footnote omitted). Because the TAC attachments show that
MPAS, Auza and Two Bar offered above the minimum in their job
orders, the court cannot infer that these Defendants agreed
to fix offered wages to domestic shepherds.
allege that these differences in the compensation that MPAS,
Auza and Two Bar offered are insignificant because they do
not state specific amounts for potential bonuses, which
Plaintiffs assert is a violation of unspecified DOL
regulations. See, e.g., TAC at ¶¶ 83, 84.
This is a legal conclusion that the court need not accept as
true. In 20 C.F.R. § 655.122, DOL defines the content
that it requires for job offers, and it does not mention any
requirement that the employer must specify the amounts of
potential bonuses or potentially higher wages. 20 C.F.R.
§ 655.122(a)-(q). The rule prohibits the employer from
providing better compensation to foreign shepherds than it
offers to domestic workers, but it does not specify the level
of detail that the employer must disclose regarding offered
The employer's job offer must offer to U.S. workers
no less than the same benefits, wages, and working
conditions that the employer is offering, intends to offer,
or will provide to H-2A workers. Job offers may not impose on
U.S. workers any restrictions or obligations that will not be
imposed on the employer's H-2A workers.
20 C.F.R. § 655.122(a) (emphasis added). The H-2A form
likewise requires the ranch to certify that “[t]he job
opportunity offers U.S. workers no less than the
same benefits, wages, and working conditions that the
employer is offering, intends to offer, or will provide to
H-2A workers and complies with the requirements at 20 CFR
655, Subpart B.” Doc. #139-6 at p. 8 ¶ 4 (emphasis
added). So long as the job orders describe the compensation
in sufficient detail to ensure the employer describes no less
than what it intends to offer to foreign shepherds, and at
least meets the minimum wage, the rule does not impose any
particular requirements on how the compensation must be
also argue that notwithstanding these offers of potential
bonuses and higher wages, the base wage rates MPAS
uniformly offered were the minimum wage. Doc. #152 at p. 9.
In support of their theory that the base wage rate is the key
and potential bonuses are immaterial, Plaintiffs cite In
re High Fructose Corn Syrup Antitrust Litig., 295 F.3d
651, 656 (7th Cir. 2002). The case does not support
Plaintiffs' argument. High Fructose notes that
an agreement to fix list prices (here, offered wages) can
constitute a per se violation of § 1. However, the court
expressly recognized that the existence of list prices and
transactions based off of them do not in themselves show more
than parallel conduct.
[I]f many sales are made at prices below the list price, the
fact that the sellers' list prices are the same is not
compelling proof of collusion. … But it wouldn't
be anyway, since identical list prices might be adopted by
imitation rather than by explicit agreement.
High Fructose, 295 F.3d at 656 (citing Reserve
Supply Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d
37, 53-54 (7th Cir. 1992)). Reserve Supply similarly
[T]he industry practice of maintaining price lists and
announcing price increases in advance does not necessarily
lead to an inference of price fixing. The fact that a
standard product is priced according to a standard formula
does not indicate that a conspiracy exists; one manufacturer
could have implemented the pricing system, and its
competitors could have decided independently to adopt it.
971 F.2d at 53. The Seventh Circuit's reasoning is
persuasive here. Particularly in light of the incentives
resulting from the H-2A program, MPAS, Auza and Two Bar's
“minimum wage plus” offers are at best only
consistent with an agreement to fix the base wage, not
suggestive of such an agreement. In sum, the MPAS job orders
attached to the TAC show that they did not agree to fix the
wages offered to domestic shepherds.
Association Documents that Plaintiffs Attach to the TAC:
Contracts With Shepherds, Correspondence, and Handbook.
rely upon several documents of MPAS and WRA as factual
support for the alleged agreement to fix offered wages. The
court addresses these in the order alleged.
Form Contracts or Affidavits With H-2A Shepherds
allege that form contracts or affidavits with H-2A shepherds
establish that MPAS and WRA, not the individual ranches, set
the offered wage. TAC at ¶¶ 126, 136. They attach
one example as to each association. Doc. #139-11, Ex. F at
pp. 2-4. However, as noted above, the fact that MPAS and WRA
set the offered wages to foreign shepherds for their members
is not suggestive of conspiracy in the H-2A context.
also essentially allege that the form contracts/affidavits
are misleading or unconscionable, and that this unlawfulness
supports the conspiracy to fix offered wages. Specifically,
they allege that MPAS' form contract with shepherds
informs the shepherd: “In the state of Texas this
occupation pays--$750 monthly, with house and
food.” TAC at ¶ 125 (Plaintiffs'
translation from Ex. F at p. 2, emphasis original to TAC).
Plaintiffs assert that $750 is only the minimum wage, and
therefore the MPAS contract is misleading. Plaintiffs allege
that WRA requires shepherds to execute an
affidavit before WRA interviews them in which they
state that they agree to (a) the minimum salary set by DOL
for the region, varying by state, without specifying either
those amounts or which state the shepherd will be hired in;
and (b) not be able to transfer or relocate at will. The
shepherd does not learn in which state WRA will place him
until later. TAC ¶¶ 134-135. Assuming the truth of
these allegations, as the court must, these documents support
Plaintiffs' more general allegations that WRA sets the
offered wage at the minimum and seeks to exploit foreign
shepherds' immigration status. However, as discussed
above, in the H-2A regulatory system, neither of those facts
suggests that WRA agreed with anyone to fix wages. See
supra at § II.A.
WRA Handbook for Members
also add allegations that in WRA's handbook for members,
WRA directs them to pay only the minimum wage. TAC at
¶¶ 137-142; Doc. #139-11, Ex. F at pp. 5-7.
141. The WRA handbook similarly establishes that members will
use the minimum wage as the rate they use to pay to their
shepherds. This is evident in part from how the handbook
treats the issue of shepherd paid vacation time.
142. All WRA contracts establish that an H-2A shepherd is
entitled to two weeks of vacation pay, id. at 6, and
the WRA handbook establishes that “[i]f a herder is
terminated[, ] the herder must be paid full wages due on date
of termination including, at the current rate of
pay, any unpaid vacation, ” id. at 7
(emphasis added). The only rate of pay that the handbook
could be referring to is the salary schedule with the DOL-set
wage floor, as this is the only rate of pay referenced in the
entirety of the member handbook.
TAC at ¶¶ 141-42 (emphasis original in TAC). This
document concerns paid wages, not offered wages.
Plaintiffs do not articulate how an instruction to members
regarding paid wages would support the alleged agreement to
fix the wages offered. Assuming that the WRA handbook
indirectly relates to offered wages, immediately following
the sentence that Plaintiffs quote, WRA provides a
“Wage Rate - 2010/2011” table in which WRA
states: “Plus room and board is supplied FREE to all
sheepherders in ADDITION to the full salary paid (no less
than the minimum stated above).” Doc. #139-11, Ex.
F at p. 7 (emphasis added). Thus, the handbook recognizes
that the wage rates stated therein are only minimums, and
that ranches can pay above those rates. It neither instructs
nor requires the ranches to offer or pay only the minimum
wage, and therefore adds no plausibility to the alleged
WRA's January 2015 Email to Oregon Members
the SAC, Plaintiffs continue to quote a sentence from a
January 2015 WRA email to its Oregon members that the court
addressed in the Recommendation. Doc. #125 at pp. 26-27.
[I]n January 2015, the WRA instructed its members in Oregon
to uniformly begin paying exactly the new DOL wage floor:
“[B]eginning January 1, 2015 the wage rate for
shepherds working in Oregon is $1, 326.46.” You
“should immediately adjust your wage payments to [that]
monthly wage amount.”
TAC at ¶¶ 102, 150 (compare SAC ¶¶ 99).
Plaintiffs do not attach the email.
quoted sentence informs the ranches of “the [new] wage
rate” in Oregon and that they should adjust their
“wage payments” accordingly. Again, Plaintiffs do
not articulate how an instruction from WRA regarding
paid wages would support the alleged conspiracy to
fix offered wages. Even assuming that this email
indirectly relates to offered wages, Plaintiffs allege that
WRA (on behalf of its members) always offered no more than
the minimum wage to shepherds. TAC at e.g.,
¶¶ 7(i), 70, 93. Plaintiffs allege that in Oregon,
WRA actually offered less than the minimum wage because it
made impermissible deductions from the minimum wage.
Id. at ¶¶ 7(iv), 145. Plaintiffs do not
identify WRA as having paid shepherds above the minimum wage,
nor as having knowledge (when it sent the email) that any of
its Oregon members had done so. Contrast this to
Plaintiffs' allegation that MPAS knew that some of its
members at times paid above the minimum wage. TAC at ¶
183, doc. #139-12 at pp. 114-116; see supra at
§ II.B. Given this context, the court cannot reasonably
infer from the quoted sentence that WRA instructed its Oregon
members to offer only the minimum wage, let alone that any of
the members agreed with such a directive. See
Recommendation at pp. 26-27.
WRA's January/February 2015 Emails with Oregon State
add allegations that in January and February 2015, WRA's
counsel exchanged several emails with representatives of the
Oregon Employment Department and the Oregon Bureau of Labor
and Industries. In the correspondence, WRA's counsel
seeks a meeting to advocate its position regarding deductions
from shepherds' wages for food and private benefits. TAC
at ¶ 153; Doc. #139-11, Ex. F at pp. 8-14. Plaintiffs
allege that WRA had instructed Oregon members to pay less
than the minimum wage that they had offered, by deducting
food and private benefits, and that the Oregon members did
pay less than the minimum wage. TAC ¶ 150-152.
Plaintiffs allege that this correspondence shows
“member ranches in Oregon are aware of [WRA's
violation of Oregon law regarding the minimum wage and what
can be deducted] and complicit in, the WRA's fixing of
wage offers.” TAC at ¶ 155.
these allegations and the correspondence in question regard
paid wages, not offered wages. Plaintiffs do not
articulate how an instruction from WRA regarding paid wages
would support the alleged conspiracy to fix offered wages.
Assuming that the correspondence indirectly relates to
offered wages, neither the TAC nor Plaintiffs' motion
makes clear how Plaintiffs believe the correspondence
supports the alleged conspiracy. Plaintiffs apparently refer
to a sentence in WRA's email dated February 3, 2015, in
which counsel says that “[s]ome of the Oregon WRA
members will want to participate in this discussion [between
WRA's counsel and the Bureau of Labor and Industries]
since they are the employers who will have to comply with the
final outcome of our discussions.” Doc. #139-11, Ex. F
at p. 11.
assuming that Plaintiffs are correct that WRA and its Oregon
members had violated the state's rules regarding
deductions, WRA's efforts to obtain a meeting with the
state agency to discuss the deductions policy does not
suggest an agreement to fix wages. It is equally or more
likely to arise from WRA's role for its members under the
H-2A program. That the members wanted to participate in the
meeting with the state agency also does not suggest an
agreement to fix wages; it is equally likely to arise from
parallel decisions to exercise their right to petition. Thus,
the court cannot reasonably infer from WRA's emails to
the Oregon state agency that WRA had agreed with its members
to fix offered wages. See, e.g., Khalik v. United Air
Lines, 671 F.3d 1188, 1191 (10th Cir. 2012) (when
allegations “encompass a wide swath of conduct, much of
it innocent, then the plaintiffs have not nudged their claims
across the line from conceivable to plausible.”).
MPAS's January 2015 Email to Oregon Members
allege that in January 2015, MPAS emailed its Oregon members
“regarding the Oregon minimum wage, communicating that
‘the mandated wage is $1603.33/month plus housing,
' [Ex. F] at 15, though Plaintiffs will need discovery to
determine if Defendant MPAS has fixed the wage below the
minimum in a manner similar to Defendant WRA.” TAC at
¶ 158. The lengthy paragraph from which Plaintiffs take
their quote reads:
Wage Change in Oregon!: On Friday, December 26, 2014 the
Oregon State Workforce announced: ''The Oregon
Employment Department (OED) has determined that it has been
calculating the minimum wage for sheepherders and livestock
workers incorrectly under Oregon's minimum wage laws.
Both the Oregon Bureau of Labor and Industries (BOLI) and
U.S. Department of Labor (USDOL) have informed OED that the
minimum wage laws generally apply to all livestock workers,
and USDOL has informed OED that it must notify all affected
employers of this change in its enforcement of the H-2A
program.... Under 20 Code of Federal Regulations §
655.122(1) and 20 CFR § 655.120(a), an employer, in its
job offer, must offer, advertise, and pay "a wage that
is the highest of the Adverse Effect Wage Rate, the
prevailing hourly wage or piece rate, the agreed-upon
collective bargaining wage, or the Federal or State minimum
wage, except where a special procedure is approved for an
occupation or specific class of agricultural
employment." Furthermore, under 20 CFR § 655.135(e)
and 20 CFR § 653.501(d)(2)(xii), an employer submitting
a job order must certify that it will comply with all
applicable state laws. This includes state laws governing the
minimum wage... Therefore, OED may not approve a job order
for workers engaged in the range production of livestock
unless the worker would be paid either (1) an hourly wage
that was at least equal to the Oregon minimum wage (and
otherwise complied with the requirements of 20 CFR part 655)
or (2) a salary that, on a monthly basis, equaled the minimum
wage multiplied by 2, 080 hours and divided by 12... If the
offered wage does not comply with Oregon's minimum wage
laws, OED must reject the job order... Our office will
implement this change January 1, 2015 on any current and
future job listings posted within our iMatchSkills
system." Based on this announcement as of January 1,
2015 the wage for both Open Range Livestock Workers and
Sheepherders in the state of Oregon is $1603.33/month plus
housing. MPAS is looking into this matter and we will keep
you up to date if things change, but as of 1/1/15 the
mandated wage is $1603.33/month plus housing.
Doc. #139-11, Ex. F at p. 15. Plaintiffs focus on the last
sentence's phrase “the mandated wage” to
allege that MPAS directed members to offer only the minimum
wage. TAC at ¶ 158.
Plaintiffs read the “mandated wage” as referring
either to a wage mandated by MPAS, or as misinforming the
members that the minimum wage was both a floor and a ceiling.
In the context of the complete paragraph, however, the court
cannot reasonably infer either reading. The paragraph advises
members regarding compliance with the minimum wage mandated
by DOL and the Oregon Employment Department, not by MPAS. The
paragraph uses the phrase “minimum wage” eight
times and specifies that the job order must be “at
least equal to the Oregon minimum wage.” Doc.
#139-11, Ex. F at p. 15 (emphasis added). Taking the
paragraph as a whole, the court cannot reasonably infer that
MPAS instructed or required its Oregon members to offer only
the minimum wage.
The Equilibrium Wage for Shepherds
their briefing, Plaintiffs also argue that their allegations
of higher payments to foreign shepherds show the
“equilibrium wage” is above the offered minimum
wage. Doc. #139 at p. 3; Doc. #152 at p. 8. Plaintiffs define
the equilibrium wage as the wages that shepherds would earn
but for the Defendants' conspiracy to fix wages. On this
issue, Plaintiffs' motion reads more like a motion to
reconsider the Recommendation than a motion to amend the SAC.
Plaintiffs argue that in the Recommendation, this court
erroneously assumed the equilibrium wage was below minimum
wage and ignored the allegations that other ranch workers
earn far more than the minimum wage for H-2A shepherds. Doc.
#139 at p. 4. Judge Blackburn has already adopted the
Recommendation in the meanwhile, thus mooting this
Plaintiffs' new allegations, the court can reasonably
infer in their favor that at least some H-2A shepherds are
paid above the minimum wage because (a) the minimum wage is
too low to reflect the value of shepherds' experience,
(b) ranches are reacting to other market forces, (c) the
ranches' views of fairness, etc. This does not, however,
reasonably infer an “equilibrium wage” as
Plaintiffs have defined it because Plaintiffs have not
alleged a plausible conspiracy to cause the difference
between offered wages and paid wages. As noted above, the
case on which Plaintiffs rely held that transactions based on
a list price do not in themselves show more than independent,
parallel decisions. High Fructose, 295 F.3d at 656.
This fact is too weak to find the conspiracy plausible.
equilibrium wage, Plaintiffs also point to allegations that
shepherds and other farm or ranch workers in states where WRA
and MPAS do not control hiring are paid far more than the
minimum wage. TAC at ¶¶ 229-37. As support,
Plaintiffs attach DOL prevailing wage surveys in ND and TX.
Doc. #139-11, Ex. F at pp. 83-90; Doc. #139-12, Ex. F at pp.
91-113. But Plaintiffs do not allege that these other farm or
ranch workers are subject to H-2A regulations. On their face,
the DOL wage surveys regard specifically U.S. workers, not
H-2A workers. Id. That the H-2A shepherds earn far
less than other types of U.S. ranch workers is equally
explainable by the H-2A rules that set the minimum wage for
H-2A shepherds, while the wages for other, similar U.S. ranch
jobs were not set under the H-2A rules. This fact is too weak
to make the alleged wage fixing conspiracy plausible.
Director/Officer Overlap Between WRA and Members.
would add allegations that two members of WRA have officer
ties to WRA: Dennis Richins (owner of Richins Livestock) was
formerly a president of WRA's board and executive
director of WRA. Steve Raftopolous, an officer of Two Bar,
was a formerly a president of WRA's board. Plaintiffs
allege that both men are “intimately familiar with the
policies of the association, ” and had “frequent
conversations with the rest of the WRA Board regarding
various items affecting members, including lawsuits filed
over shepherd wages.” TAC at ¶¶ 248(ii),
(iii); 250(ii), (iii). In Plaintiffs' motion to amend,
they appear to refer to these allegations in asserting that
“the Ranches in particular have had extensive control
over the Associations.” Doc. #139 at p. 7.
reasonable inferences from the overlapping officers and
directors are that these two Ranch Defendants knew of and
could have established WRA's practice of uniformly
offering the minimum wage to shepherds for WRA's members.
However, as noted above, Plaintiffs have not alleged any
facts that WRA ever made that practice mandatory for its
members. Compare Osborn, 797 F.3d at 1067 (the
“member banks appointed representatives to the …
associations' Boards of Directors, which in turn
established the anticompetitive … rules” that
required anticompetitive conduct). Plaintiffs do not allege
any specific meetings, discussions, statements, or
communications of these two individuals that would suggest
they did anything as former officers or directors of WRA to
create or implement a wage fixing conspiracy.
short, taking all of Plaintiffs' antitrust allegations
together as the court did in the overview section, these
allegations do not sum up to a plausible conspiracy to fix
offered wages. Rather, the documents attached to the TAC
contradict the conspiracy as to MPAS, Auza and Two Bar's
offers to domestic shepherds. As in the SAC, individual
parallel actions under the unique influence of the DOL
regulatory scheme are more likely explanations for all of the
alleged concerted conduct. Thus the proposed amendment would
(a) be directly akin to the claims that Twombly
found did not allege a plausible conspiracy and (b) contrast
to the allegations of direct and circumstantial fact
allegations that made antitrust conspiracies plausible in for
example Beltran, 176 F.Supp.3d at 1079,
Champagne Metals, 458 F.3d at 1086-87, and the other
cases cited in the Recommendation. Accordingly, for the same
reasons the court found in the Recommendation regarding the
SAC, the court finds that Plaintiffs' proposed amendment
to their antitrust claims is futile. The court recommends
denying the motion to amend as to the antitrust claims.
Civil Racketeering Influenced and Corrupt Organizations
Recommendation discusses in detail the allegations and claims
that Plaintiffs (specifically, Messrs. De La Cruz, Huaman,
Leovegildo Vilchez Guerra, and Liber Vilchez Guerra) pled in
the SAC for their civil RICO claims against WRA, Richins and
MPAS. Doc. #125 at pp. 34-41. In short, “[t]he elements
of a civil RICO claim are (1) investment in, control of, or
conduct of (2) an enterprise (3) through a pattern (4) of
racketeering activity.” Dewey v. Lauer, No.
08-cv-01734-WYD-KLM, 2009 WL 3234276, at *3 (D. Colo. Sep.
30, 2009) (internal quotation marks omitted, quoting Tal
v. Hogan, 453 F.3d 1244, 1261 (10th Cir. 2006)).
Plaintiffs' SAC attempted to bring two claims for
violations of RICO, both of which failed for lack of
distinctiveness between the “person” who
allegedly operated the “enterprise” and the
alleged enterprise. Count IV against WRA and Richins failed
because Plaintiffs pled Mr. Richins and the WRA as both the
persons and enterprises. Count V against MPAS failed because
it pled an association in fact between MPAS and its members -
but alleged only the usual business that MPAS conducted on
behalf of its members. Recommendation at pp. 36-41.
court will first address the aspects of proposed Counts IV, V
and VI in which Plaintiffs have not changed their theories of
“persons” and “enterprises.”
Plaintiffs continue to allege that Richins as a former
director and officer of WRA associated in fact with WRA. TAC
at ¶ 256. This claim is futile. In their Notice of
Supplemental Authority and Reply, Plaintiffs rely heavily on
the Tenth Circuit's recent reversal of one of the cases
cited in the Recommendation, George v. Urban Settlement
Servs., No. 13-cv-01819-PAB-KLM, 2014 WL 4854576, at *8
(D. Colo. Sep. 30, 2014). The Recommendation quotes
George's reasoning that officers of a
corporation acting within that role cannot form an
association of fact with the corporation. Doc. #125 at p. 38.
The Tenth Circuit did not reverse this aspect of
George, and to the contrary, continues to recognize
that “officers and employees of an organization cannot,
in the ordinary course of their duties, constitute an
association in fact separate from the organization
itself.” George v. Urban Settlement Servs.,
833 F.3d 1242, 1249 (10th Cir. 2016) (quoting, as did the
Recommendation, Bd. of Cty. Comm'rs of San Juan Cty.
v. Liberty Grp., 965 F.2d 879, 886 (10th Cir. 1992)).
Counts IV and VI against respectively WRA and MPAS, these
claims continue to assert each enterprise is an association
in fact between the Associations and their members. The law
has not changed on this issue: pleading the usual business
between an association and its members fails the distinctness
element. Yellow Bus Lines, Inc. v. Drivers, Chauffeurs
& Helpers Local, 883 F.2d 132, 141 (D.C. Cir. 1989),
rev'd in part on other issues on rehrg, 913 F.2d
948, 956 (D.C. Cir. 1990) (en banc). “[I]f an
entity is named as a defendant in a RICO action, the
enterprise it participates in cannot merely be a reframing of
the same entity that is the target of the indictment.”
United States v. Mongol Nation, 132 F.Supp.3d 1207,
1219 (C.D. Cal. 2015), appeal pending (citing
Yellow Bus, the alleged association in fact between
an unincorporated gang's “leadership and official
membership” and its circle of unofficial members and
hang-arounds was insufficient because “[t]here is
simply no substance to the [alleged] … enterprise
independent of [the Defendant].” Id. at 1221.
Plaintiffs' reliance on the Tenth Circuit's
George opinion as a purported change in the law is
misplaced. George does not address a claim alleging
an association of fact between an association and its
members. The case recognizes that “associations in
fact” among corporations that are already related to
each other - parents and subsidiaries for instance -
typically fail for lack of distinctiveness: “[I]t's
true that a defendant corporation, acting through its
subsidiaries, agents, or employees typically can't be
both the RICO ‘person' and the RICO
‘enterprise.'” George, 833 F.3d at
1249 (citing inter alia Brannon v. Boatmen's First
Nat. Bank of Oklahoma, 153 F.3d 1144, 1149 (10th Cir.
1998); In re ClassicStar Mare Lease Litig., 727 F.3d
473, 493 (6th Cir. 2013)). The Tenth Circuit also noted that
“because ‘an employer and its employees cannot
constitute a RICO enterprise, ' a ‘manufacturer
plus its dealers and other agents (or any subset of the
members of the corporate family) do not constitute' a
RICO enterprise.” George, 833 F.3d at 1249
(quoting Fitzgerald v. Chrysler Corp., 116 F.3d 225,
226-28 (7th Cir. 1997)).
Recommendation noted, all of these cases must be read in
light of the purpose of RICO: to “prevent a person from
victimizing, say, a small business … or to prevent a
person from using a corporation for criminal purposes.”
Cedric Kushner, 533 U.S. at 162. Plaintiffs here
instead essentially allege that WRA or MPAS (as the
“persons” sued in these claims) used themselves
(i.e., their status as industry associations acting
on behalf of their members) for criminal purposes. Because
they lack distinctness, Counts IV and VI are accordingly
in Count V against Mr. Richins, Plaintiffs plead in the
alternative that Richins is the person who operated WRA as
the enterprise. TAC at ¶ 257. This claim does not appear
to be futile for lack of distinctiveness between the person
and enterprise. “The corporate owner/employee, a
natural person, is distinct from the corporation itself, a
legally different entity with different rights and
responsibilities due to its different legal status.”
Cedric Kushner, 533 U.S. at 163. See also Ad-X
Int'l, Inc. v. Kolbjornsen, 97 F.App'x 263,
266-67 (10th Cir. 2004) (applying Cedric Kushner,
individual debtor as RICO person alleged to have used his
bankruptcy estate as a RICO enterprise was sufficiently
distinct); Mongol Nation, 132 F.Supp.3d at 1218
(“an individual employee or officer may always be named
as the RICO person distinct from the corporate
enterprise”); ClassicStar, 727 F.3d at 492
(“individual defendants are always distinct from
corporate enterprises”); N. Star Gas Co. v. Pac.
Gas & Elec. Co., No. 15-cv-02575-HSG, 2016 WL
5358590, at *20-21 (N.D. Cal. Sep. 26, 2016) (“no
question that the RICO Act proscribes employees from using
their jobs as a vehicle to conduct a racketeering
enterprise”). It may strike a savvy judge that proof of
Richins operating WRA as a RICO enterprise is improbable
(Sanchez, 810 F.3d at 756), but Plaintiffs
sufficiently allege Richins as a RICO person distinct from
WRA as the enterprise.
other arguments of futility regarding the RICO claim are not
persuasive. Richins argues that Plaintiffs do not allege
racketeering activity. Doc. #148 at pp. 15-17.
As defined in 18 U.S.C. § 1961(1)(B),
“racketeering activity” includes indictable acts
of mail and wire fraud as prohibited under 18 U.S.C.
§§ 1341 and 1343, respectively. To establish a
pattern of racketeering activity, the plaintiffs must allege
at least two predicate acts. See 18 U.S.C. §
George, 833 F.3d at 1254. Plaintiffs allege that
through WRA, Richins engaged in predicate acts of wire fraud
and mail fraud, submitting job orders to state workforce
agencies and H-2A Applications to DOL that falsely certified
compliance with requirements regarding shepherds' expense
reimbursement. TAC at ¶¶ 257-61, 275-79, 283-96,
Count V. Plaintiffs allege that a regulation required
reimbursement of all travel expenses (beginning from the H-2A
worker's hometown), medical checkups, and criminal
background checks. TAC at ¶ 460.
Richins argues that DOL regulations do not require
reimbursement of any expenses incurred before leaving the
home country (“pre-departure” expenses). Doc.
#148 at pp. 16-17. Richins quotes the DOL's preamble to
the 2010 version of 20 C.F.R. § 655.122 as announced in
Temporary Agricultural Employment of H-2A Aliens in the
United States, 75 Fed. Reg. 6884 (Feb. 12, 2010):
Coverage of Transportation Expenses
Under the 2008 Final Rule, the employer provides for travel
expenses and subsistence for foreign workers only to and from
the appropriate U.S. consulate or port of entry. Under this
Final Rule, the employer is required to pay the costs of
transportation from the worker's place of recruitment to
and from the place of employment.
Doc. #148 at p. 17 (quoting 75 Fed. Reg. at 6884-01). This
does not support Richins' argument. Rather, the quoted
excerpt itself says that DOL extended its former rule to
encompass “transportation from the worker's place
of recruitment.” The rule further specifies: “the
employer must pay the worker for reasonable costs incurred by
the worker for transportation and daily subsistence from
the place from which the worker has come to work for the
employer, whether in the U.S. or abroad to the place of
employment.” 20 C.F.R. § 655.122(h)(1) (emphasis
added). Finally, Richins does not address Plaintiffs'
contention that the same DOL pronouncement also:
noted that this was a new cost to be incurred by employers
and that it would, on average cost an employer $60 more in
transportation costs, which is the average cost of a
roundtrip bus ticket between the hometown of an H-2A worker
and the location of the majority of American consulates that
process H-2A visas. Id. at 6, 954 & n.47.
TAC at ¶ 308. The court cannot find from Richins'
response that as a matter of law DOL does not require
reimbursement of travel expenses from the worker's
hometown. At this point, the court cannot conclude that
pre-departure travel expenses are not required reimbursements
under Section 655.122(h)(1).
the medical checkup and criminal background check expenses,
this is a closer call. Plaintiffs have the burden under Rule
9(b) to plead fraud with particularity. Plaintiffs allege
that WRA's certification of compliance with 20 C.F.R.
§ 655.122 is fraudulent in part because WRA did not
intend to pay the medical checkup and background check
expenses. However, the only expenses for which the rule
expressly requires reimbursement are “transportation
and daily subsistence.” 20 C.F.R. § 655.122(h)(1).
In their reply brief, Plaintiffs point instead to 20 C.F.R.
§ 655.122(p). This subsection in relevant part limits
“deductions from the worker's paycheck” to
those that are “reasonable, ” including that
“an employer subject to the FLSA may not make
deductions that would violate the FLSA.” 20 C.F.R.
§ 655.122(p)(1), (2). Plaintiffs assume that for
purposes of this rule, a failure to reimburse is the same as
a deduction. Richins' response does not address this
question. Nor does it appear that the Defendants' motions
to dismiss the SAC addressed this question. In the absence of
briefing on whether DOL has offered interpretive guidance,
the court cannot conclude that Section 655.122(h)(1) does not
require reimbursement of Plaintiffs' medical check-up and
background check expenses.
also argues that the claim fails to allege predicate acts
because the job orders and H-2A applications were wired or
mailed to government agencies, and government approvals of
those applications are not property or money. Doc. #148 at p.
20. “To establish the predicate act of mail fraud, [a
plaintiff] must allege (1) the existence of a scheme or
artifice to defraud or obtain money or property by false
pretenses, representations or promises, and (2) use of the
United States mails for the purpose of executing the
scheme.” Tal, 453 F.3d at 1263 (internal
quotation marks omitted). “The elements of wire fraud
are very similar, but require that the defendant use
interstate wire, radio or television communications in
furtherance of the scheme to defraud.” Id.
(quotation omitted). See also Dewey v. Lauer, No.
08-cv-01734-WYD-KLM, 2009 WL 3234276, at *3 (D. Colo. Sept.
argument fails. Plaintiffs do not allege that Richins
operated WRA to deprive government agencies of money or
property; they allege that Richins operated WRA to deprive
Plaintiffs of money through misrepresentations to the
government agencies. TAC at Count V. Civil RICO claims do not
require that the predicate act be directed to the same person
whom the defendant intends to deprive of property or money.
Bridge v. Phoenix Bond & Indemnity Co., 553 U.S.
639, 643 (2008). “The gravamen of the offense is the
scheme to defraud, and any mailing that is incident to an
essential part of the scheme satisfies the mailing element,
” even if the mailing itself “contain[s] no false
information, ” and “even if no one relied on any
misrepresentation.” Bridge, 553 U.S. at 647-48
(citation and quotation marks omitted). The only limitation
on this principle is that the victim's injury must
“not [be] derivative of someone else's.”
Phoenix Bond & Indem. Co. v. Bridge, 477 F.3d
928, 932 (7th Cir. 2007), aff'd, Bridge, 553
U.S. 639. See also CGC Holding Co., LLC v. Broad &
Cassel, 773 F.3d 1076, 1088-89 (10th Cir. 2014)
(“[D]espite its usefulness as a stand-in for causation,
strict first-party reliance is not a prerequisite to
establishing a RICO violation”). Giving the TAC
reasonable inferences, Plaintiffs allege that WRA's
scheme of false certifications injured no one but Plaintiffs.
In short, to the extent Count V alleges Mr. Richins as the
person who operated WRA as a RICO enterprise (TAC at ¶
257), filing the TAC to bring this claim is not futile.
does Richins show any other reason under Foman to
deny Plaintiffs' motion to file this amended claim.
Richins argues that because (a) Plaintiffs failed to cure
deficiencies in previous amendments, (b) his consent to
Plaintiffs' request to file the SAC was with the
understanding that it would be Plaintiffs' last, and (c)
Plaintiffs' several amendments already resulted in three
rounds of Rule 12 motions, incurring further attorneys'
fees in this case would be unduly prejudicial. In light of
Judge Blackburn's September 6, 2016 order that rejected
this court's recommendation to dismiss the claims with
prejudice because the SAC was already Plaintiff's third
complaint, the court does not find the failure to cure or
undue prejudice warrant denying the motion.
undue delay argument has more substance but ultimately is not
This Circuit … focuses primarily on the reasons for
the delay. We have held that denial of leave to amend is
appropriate when the party filing the motion has no adequate
explanation for the delay.
Minter v. Prime Equip. Co., 451 F.3d 1196, 1205-06
(10th Cir. 2006) (internal quotations and footnotes omitted).
“[C]ourts have denied leave to amend where the moving
party was aware of the facts on which the amendment was based
for some time prior to the filing of the motion to amend,
” or “when it appears that the plaintiff is using
Rule 15 to make the complaint ‘a moving
target.'” Id. at 1206 (footnote and
internal quotations omitted).
Plaintiffs argue that their timing is justified because they
could not anticipate that the court would “misperceive
the nature of this claim.” Doc. #139 at p. 15. This
argument ignores that all of the cases the Recommendation
cites on this issue (doc. #125 at pp. 37-38) predate the
SAC. Plaintiffs' multiple rounds of
amendments were inefficient for the court and parties alike.
Shortly after Plaintiffs filed this action, Rule 1 was
amended to “emphasize that just as the court should
construe and administer these rules to secure the just,
speedy and inexpensive determination of every action, so the
parties share the responsibility to employ the rules in the
same way.” Fed.R.Civ.P. 1, 2015 Advisory Committee
Note. It is difficult to see how Plaintiffs' approach has
been consistent with that responsibility. However, there is
no trial date set, and the parties have proceeded in the
meanwhile with at least some discovery. Under the
circumstances, Plaintiffs “ought to be afforded an
opportunity to test [their] claim on the merits.”
Foman, 371 U.S. at 182. The court will not find that
Plaintiffs' delay was so undue as to warrant denying
Plaintiffs' request to bring the amended RICO claim
the court recommends denying the motion to amend as to the
RICO claims in Counts IV and VI, and Count V to the extent it
is based on Richins as an association in fact with WRA (TAC
at ¶ 256). The court grants the motion to amend as to
Count V based on Richins as the person operating WRA as the
The State Law Claims
TAC, Plaintiffs propose to bring four state law claims, three
of which they also pled in the SAC. Two of the four proposed
state law claims brought by Plaintiff de la Cruz against MPAS
allege that MPAS violated the Nevada minimum wage statute by
failing to pay him (and a putative class) the minimum wage.
TAC at Count VII. Plaintiff de la Cruz further alleges that
the same conduct also breached contract, quasi-contract or
equitable principles. Id. at Count X. As the court
will further address by separate order, Plaintiffs recently
filed an unopposed motion to sever and transfer Count VII (of
the TAC, formerly Count VI of the SAC) to the District of
Nevada. Doc. #156. Plaintiffs describe Count VII as regarding
a “different course of conduct” than the other
claims. Doc. #156 at p. 1. Plaintiffs request severance and
transfer of this claim to the District of Nevada, where
another plaintiff has filed a putative class action regarding
the same claim against MPAS (among other defendants),
Castillo v. Western Range Association, et
al., Civ. 16-237-RCJ-VPC. Id. at 2. However,
Plaintiffs did not seek to sever or transfer Mr. de la
Cruz's proposed, new claim regarding the same conduct
under Nevada common law: Count X, entitled breach of
contract, quasi-contract or equitable relief for failure to
pay the Nevada minimum wage.
it appears that the court must first give leave for
Plaintiffs to file the TAC before the court can sever and
transfer Count VII. Consistent with the Recommendation, Judge
Blackburn declined to exercise supplemental jurisdiction over
the SAC's state law claims (including the now Count VII),
albeit without prejudice to Plaintiffs' motion to amend
the SAC. In their motion to sever and transfer, Plaintiffs do
not address whether the court can sever and transfer a claim
in such a posture. Moreover, until the TAC is accepted,
Plaintiff de la Cruz has not yet brought Count X. From a
judicial economy perspective, it would make little sense to
address severance and transfer of Counts VII and X
separately. Therefore, the court proceeds here with
Plaintiffs' motion to file the state law claims that they
propose in the TAC. The court will address the motion to
sever and transfer by subsequent, separate order(s).
do not address whether they believe any of the proposed state
law claims would fail under Rule 12(b)(6). Defendants'
previous motions to dismiss argued that the three existing
state law claims failed because Plaintiffs had not pled
sufficient facts regarding their contracts and the amounts
for which Plaintiffs assert WRA and MPAS owe them
reimbursement. In the TAC, Plaintiffs add fact allegations
regarding both. TAC at ¶¶ 332-347. None of the
state law claims, Counts VII-X, appear to be
futile. With respect to undue delay in seeking
leave to amend these claims, as noted above Plaintiffs'
counsel should have been aware of the facts regarding their
contracts and unreimbursed expenses that they now seek to
add. The court will not look with favor on any further
motions to amend the complaint, but Plaintiffs have leave to
file the state law claims.
foregoing reasons, the court RECOMMENDS denying in part and
GRANTS in part Plaintiffs' motion to file the TAC as
follows. The court RECOMMENDS that the motion to file amended
complaint be DENIED as to Counts I-IV, V (in part, as
described above regarding ¶ 256 asserting an association
in fact among Richins and WRA) and VI. Amending to state
those claims would be futile. With respect to Count V against
Mr. Richins, the motion is GRANTED IN PART to the extent it
asserts (¶ 257) Mr. Richins as the RICO
“person” and WRA as the RICO
“enterprise.” The motion to file an amended
complaint is GRANTED as to Counts VII-X. The court
further RECOMMENDS that after Judge Blackburn rules on any
objections to this recommendation (or after the time has
passed without objections), Plaintiffs should prepare and
file a version of the TAC that omits all claims for which
Plaintiffs do not have permission to file.
FURTHER ORDERED that within 7 days, Plaintiffs shall confer
and file a motion to restrict under Local Rule 7.2 regarding
docket entry #139 and its attachments.
 Recently, Plaintiffs have moved (doc.
#156) to sever Plaintiff Rafael de la Cruz's Nevada
minimum wage claim (Count VII in the TAC) and transfer it to
the District of Nevada. As explained in more detail below,
the court will address that motion by separate order.
 Defendant Martin Auza Sheep Company
(“Auza”); Defendant Cunningham Sheep Company
(“Cunningham”); Defendant Nottingham Land and
Livestock, LLLP (“Nottingham”) and Two Bar Sheep
Co., LLC (“Two Bar”); and Defendant Dennis
Richins d/b/a Dennis Richins Livestock
(“Richins”). Plaintiffs have dismissed three
 Plaintiffs filed the entirety of doc.
#139 and its attachments under seal. Within seven days,
Plaintiffs shall confer and file a motion to restrict that
complies with D.C.COLO.LCivR 7.2 regarding that
 Plaintiffs allege that five Defendants
paid above minimum wage: MPAS, Auza, Two Bar, Cunningham, and
Nottingham. Id. at ¶¶ 186-204. They
further allege that four nonparty ranches paid above minimum
wage. Id. at ¶¶ 205-209. However,
Plaintiffs also allege generically that
“Defendants” paid above the minimum wage.
Id. at e.g., ¶¶ 85, 86, 214, 215.
Whether the group allegation suffices is questionable.
See, e.g., Compliance Marketing, Inc., v. Drugtest,
Inc., Case No. 09-cv-1241-JLK, 2010 WL 1416823, at *6
(D. Colo. Apr. 7, 2010) (“generalized allegations of
agreements … do not provide sufficient factual basis
to demonstrate concerted action”). For argument's
sake, the court assumes that all Defendants paid above
 Plaintiffs generally assume that
Defendants paid wages that they did not offer, and the court
will assume this is true. However, two paragraphs differ:
Plaintiff Leovegildo Vilchez Guerra alleges that he was
offered above the minimum wage that Defendants represented to
DOL as the offer. TAC at ¶ 221. Plaintiffs also allege
that Defendants “intended to offer” above the
minimum wage to foreign shepherds (TAC at ¶ 85),
implying that they did so. If Defendants offered varying
compensation to foreign shepherds, regardless of whether that
information was disclosed to DOL, that fact alone would
contradict Plaintiffs' remaining theory of
 The court does not reach whether any
Defendants actually violated DOL regulations.
 Plaintiffs also contend that the
regulatory environment is relevant only if there is a
“showing of clear repugnancy” with the Sherman
Act sufficient to show immunity. Doc. #152 at p. 10 (citing
Nat'l Gerimedical Hosp. & Gerontology Ctr. V.
Blue Cross, 452 U.S. 378, 388-89 (1981)).
Twombly demonstrates that the regulatory environment
is relevant to the plausibility of the alleged conspiracy,
regardless of whether it also meets the standard for implied
 Plaintiffs also argue that the law may
be “evolving” because a petition for
certiorari was granted regarding Osborn v. Visa
Inc., 797 F.3d 1057 (D.C. Cir. 2015). Doc. #139 at pp.
6-7. The petition was later dismissed as improvidently
granted. Visa v. Osborn, No. 15-961, 2016 WL
6808590, at *1 (U.S. Nov. 17, 2016).
 As discussed below, Plaintiffs allege
that MPAS and WRA directed members to offer the minimum wage
in correspondence and a handbook excerpt attached to the TAC,
but the documents do not support the contention.
 Plaintiffs argue that 29 U.S.C.
§ 1801 et seq. is irrelevant because it regards
only recruitment of migrant or seasonal U.S. agricultural
workers, not H-2A workers. Doc. #139 (Motion) at p. 8
(referring to Plaintiffs' objections, Doc. #131, at pp.
7-8). Excepting foreign workers, “the term
‘migrant agricultural worker' means an individual
who is employed in agricultural employment of a seasonal or
other temporary nature, and who is required to be absent
overnight from his permanent place of residence.” 29
U.S.C. § 1802(8)(A). The domestic job orders appear to
fall within this definition.
 Defendants argue that the
“attachments to the Second Amended Complaint had
revealed [this] all along.” Doc. #148 at p. 11. In
earlier briefing, Defendants did not rely on this argument
until MPAS's reply. Doc. #91 (Motion) at p. 3 n.3; Doc.
#105 (Reply) at p. 3. The court recommended dismissal without
reaching this issue.
 As to WRA and its members, the
attachments to the TAC do not appear to show variation in the
compensation offered. See, e.g., Doc. #139-3 at pp.
12, 26; Doc. #139-4 at pp. 12, 21; Doc. #139-5 at p. 5; Doc.
#139-6 at pp. 17, 40, 64, 76. Whether WRA and its members
varied the offered compensation would be a fact issue to
resolve later if any of the antitrust claims were
 The MPAS H-2A applications attached
to the TAC appear to offer foreign shepherds only the minimum
wage. See, e.g., Doc. #139-6 at pp. 2-12, 30, 53,
92. Yet, in opposing the motions to dismiss, Plaintiffs
recognized that “in a free market, Ranchers would offer
U.S. workers more not less than foreign
workers.” Doc. #96 at p. 23, n.7. If any of the
antitrust claims against MPAS were plausible, its offered
compensation to foreign shepherds would be a fact
 The Tenth Circuit does not appear to
have addressed whether an industry-wide list price suggests
an agreement to fix prices. Cf., In re Urethane Antitrust
Litig., 768 F.3d 1245, 1264 (10th Cir. 2014) (only
assuming “[f]or the sake of argument … that
evidence of parallel price-increase announcements would not
establish a price-fixing conspiracy”).
 Plaintiffs refer to this document,
Doc. #139-11, Ex. F at pp. 3-4, as both an attestation and as
WRA's form contract with shepherds. TAC at e.g.,
¶¶ 127-135, 246(iv), 247(iv). The court presumes
both allegations to be true at this phase.
 Plaintiffs also attach two sets of
comments filed by WRA and/or MPAS in DOL rulemaking
proceedings. Doc. #139-11 at pp. 17-56, #139-12 at pp.
117-61. Plaintiffs allege those comments only with respect to
other issues, not as factual support for the alleged
conspiracy. TAC at ¶¶ 160, 240, 316-19. The court
expressly does not reach whether any of the communications
with government agencies are subject to immunity
 In the SAC, Plaintiffs alleged that
H-2A shepherds were uniformly offered and paid no more than
the minimum wage. The reasonable inference from those
allegations was that the minimum wage had always sufficed for
filling Defendants' jobs, regardless that other types of
ranch workers earned more. Recommendation at pp. 6, 29,
 See also N. Star, 2016 WL
5358590, at *21 (“It is true that private civil actions
under the state are being brought almost solely against
legitimate defendants, rather than against the archetypal,
intimidating mobster. Yet this defect - if defect it is - is
inherent in the statute as written, and its correction must
lie with Congress, ” quoting Odom v. Microsoft
Corp., 486 F.3d 541, 553 (9th Cir. 2007)).
 Richins also argues that circuits
have differed regarding whether the Fair Labor Standards Act
(“FLSA”) requires reimbursement of
“transportation costs for the departure.” Doc.
#148 at p. 17. However, Plaintiffs do not allege that WRA
misrepresented compliance with the FLSA. The FLSA also does
not immunize WRA from the H-2A requirements but rather
“applies independently of the H-2A requirements and
imposes obligations on employers regarding payment of
wages.” 20 C.F.R. § 655.122(h)(1).
 It further appears that
Plaintiffs' counsel should have known already many of the
facts that they propose to add as relevant to this claim,
such as the specific amounts of unreimbursed expenses. TAC at
 If the court did not find the
proposed antitrust claims to be futile, Plaintiffs' delay
in seeking to amend those claims would likewise give the
court some pause. Plaintiffs assert that they are reacting to
new theories raised recently by the Defendants and are adding
facts obtained from discovery. Doc. #139 at 2; Doc. #152
(Reply) at 2. Yet, Plaintiffs were aware when they filed
their earlier complaints that Defendants at times paid three
of the Plaintiffs more than the minimum wage. TAC at
¶¶ 217, 221, 222. Plaintiffs also knew (or should
have known) that the MPAS job orders attached to the SAC
varied regarding the compensation offered, and other facts
that they propose to add for these claims: MPAS's
contract, doc. #139-11, Ex. F. at p. 2; and WRA's
affidavit, Id. at p. 3. However, this is not
entirely clear from the TAC's attachments. For instance,
the affidavit that Plaintiff Leovegildo Vilchez Guerra signed
for WRA is BATES stamped, but the TAC does not state who
produced the document. Doc. #139-11, Ex. F at p. 3.
 The court has supplemental
jurisdiction over the state law claims because they are
“so related” to the RICO claim against Richins
that “they form part of the same case or controversy
under Article III of the United States Constitution.”
28 U.S.C. § 1367(a). Count VIII regards the same facts
as the RICO claim under common law theories. Count IX regards
MPAS's same alleged illegal deductions from a different
Plaintiff, Mr. De La Cruz. Counts VII and X regard rather
different facts (MPAS's alleged failure to pay the Nevada
minimum wage) but nonetheless appear so related that they
form part of the same case and controversy.
 All of the claims on which Plaintiff
Rodolfo Llacua was named would be futile, as would all claims
against the Ranch Defendants (Martin Auza Sheep Corporation,
Cunningham Sheep Company, Dennis Richins Livestock,
Nottingham Land and Livestock, LLLP; and Two Bar Sheep Co.
LLC). This Recommendation would leave the remaining
Plaintiffs to be Esliper Huaman, Leovegildo Vilchez Guerra,
Liber Vilchez Guerra and Rafael de la Cruz; and the remaining
Defendants would be WRA, MPAS and Dennis Richins.