United States District Court, S.D. Indiana, Indianapolis Division
MOTION TO DISMISS FIRST AMENDED COUNTERCLAIMS
DEBRA MCVICKER LYNCH, Magistrate Judge.
This matter is before the court on a motion by counterclaim defendants Access Therapies, Inc., Manuel Garcia, Harvinder Dhani, Ramon Villegas, Michelle Marcos, Eugene Garcia, and Tess Mabesa to dismiss the counterclaims filed against them by defendant Erickson Mendoza. (Dkt. 65). Mr. Mendoza filed an opposition to their motion. The counterclaim defendants did not file a reply brief. Twelve of the fifteen counterclaims seek relief solely against defendant Access Therapies, Inc. ("Access"). The other three counterclaims are (1) a claim under the Trafficking Victims Protection Act, 18 U.S.C. §§1589-1590 and 1595 and (2) two RICO claims. The court will first address the counterclaims against Access Therapies alone before addressing the three counterclaims that include the individual defendants.
Standard of Review
A claim survives a motion to dismiss under Rule 12(b)(6) if it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" United Food and Commercial Workers Unions v. Walgreen Co., 719 F.3d 849, 853 (7th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Plaintiff Erickson Mendoza's counterclaims arise out of his employment relationship with Access. Mr. Mendoza is a physical therapist. Access is a professional staffing agency that contracts with nursing homes to provide physical therapists on a temporary basis. In August 2010, Mr. Mendoza (who is a citizen of the Philippines) contacted Access about potential employment by it within the United States. Access agreed to hire Mr. Mendoza and to act as his sponsor for obtaining an H-1B visa, without which he could not work in the United States. Access agreed to hire Mr. Mendoza for a term of three years, to provide him with free housing for those three years, and to pay the fees associated with the H-1B visa process. Access provided Mr. Mendoza with a written contract and, although the term regarding housing benefits stated that housing benefits were limited to three months instead of the three-year term, Access assured Mr. Mendoza that his housing benefits were for the entire three years. Based on that assurance, Mr. Mendoza signed the contract.
The visa process included Mr. Mendoza's completion of certain requirements. He took remediation classes associated with a test of English-language proficiency that he was required to, and did, pass. He obtained certain credentials through the Foreign Credentialing Commission on Physical Therapy. Access paid the fees associated with the classes, test, and credentials, but required Mr. Mendoza to sign two promissory notes for these expenses. One note was for $610. The second note was for $750. Mr. Mendoza alleges that Access's demand that he sign these notes was contrary to his employment rights.
On July 1, 2011, Access filed an application for an H-1B visa with the Department of Labor ("DOL"). The application stated that Mr. Mendoza was to begin work on October 1, 2011, and represented that Mr. Mendoza would be paid $32 per hour. On February 12, 2012, Access told Mr. Mendoza that his visa had been approved but that he needed to participate in an interview with a U.S. consular in Manila. During that interview, the consular discovered a discrepancy between the $32/hour figure in the DOL application and a $29/hour figure in the contract that Access had sent to Mr. Mendoza. The consular temporarily suspended final approval of the application pending receipt of an amended contract from Access. Access provided Mendoza with an amendment to his contract that contained the $32/hour figure and told Mr. Mendoza to give the amendment to the consular. Access coached Mr. Mendoza about not making any statements to the consular that would indicate he or Access was involved in fraudulent behavior by presenting one wage amount to the government to gain a visa but privately contracting to pay a lower wage amount. He was coached to report that he had an amended contract matching the $32 figure and it mistakenly had not yet been sent. Mr. Mendoza gave the consular the amended contract and on May 1, 2012, the H-1B visa received final approval. Despite the amended contract, Mr. Mendoza alleges that Access failed to pay wages to him at the rate it promised and for the periods of time it was required to do so.
On July 1, 2012, Mr. Mendoza arrived in Indianapolis ready for an assignment from Access. At that time, Access required him to sign a promissory note for $20, 000, which would have to be paid if Mr. Mendoza did not fulfill the three-year term of his written agreement. This was the third promissory note that Access had required him to sign. Mr. Mendoza signed five other promissory notes near the beginning of his tenure with Access. He signed two notes on July 27, 2012, for $2, 479.11 and $15, 000, respectively. He signed two notes on August 24, 2012, for $200 and $164, respectively. He signed a note on August 28, 2012, for $1, 910.25. Mr. Mendoza contends that these promissory notes demand payment for items that Access either had no legal right to require Mr. Mendoza to pay, or Access promised it would pay, or Access promised it would not charge to Mr. Mendoza. He also contends that the $20, 000 note was extortionate and used to coerce Mr. Mendoza to remain in Access's employ despite its continued broken promises.
Mr. Mendoza contends that Access and its principals use the H-1B visa process to prey on vulnerable foreign nationals like himself. He asserts that Access lured him to its employ with promises of good wages, benefits, and working conditions, but then reneged on those promises while at the same time trapping him into servitude. He alleges that Access required him, and other workers, to sign unconscionable promissory notes that contain illegal penalty clauses and used the threat of enforcing those notes to coerce him not to complain or seek relief based on his working conditions or Access's broken promises. The counterclaims seek relief under state law theories (breach of contract, unjust enrichment, and a wage statute) and various federal statutes, including RICO, the Trafficking Victims Protection Act, and the Truth in Lending Act.
I. INA "Exhaustion"
The defendants make an overarching argument that because Mr. Mendoza's counterclaims are grounded in part on conduct by Access or its employees allegedly in violation of H-1B visa program requirements under the Immigration and Naturalization Act (INA) and implementing regulations, Mr. Mendoza cannot pursue any of his claims in court. They contend that although Mr. Mendoza has "technically" pleaded non-INA substantive claims ( e.g., RICO claims, Truth in Lending Act claims, and Indiana contract and wage-related claims), "the substance of the Counterclaims is alleged violations of the INA." (Dkt. 66 at p. 5). From this premise, the defendants argue that because there is no private right of action under the INA and because violations of the INA can be remedied through an administrative complaint process under the aegis of the Department of Labor, the counterclaims must be dismissed in their entirety. ( Id. at p. 6).
Mr. Mendoza does not contest the absence of a private right of action under the INA, either express or implied, and district courts that have examined the question generally have adopted the viewpoint of the Fourth Circuit Court of Appeals that there is no implied right of action under the INA. Venkatraman v. REI Systems, Inc., 417 F.3d 418, 423-24 (4th Cir. 2005) (finding no implied right of action under the INA to redress claim by United States citizen employee who alleged his employer had violated the INA by falsely ...