Eleventh Circuit Decides Moultrie’s Poultry Plaintiffs Run Afoul of RICO Pleading Standard

In Simpson/Roberts v. Sanderson Farms, Inc., No. 13-10624 (Mar. 7, 2014), the Eleventh Circuit considered whether two former employees of a poultry processing plant owned by Sanderson Farms properly stated a civil RICO claim under the Twombly and Iqbal pleading standards and held in the negative by affirming the district court’s dismissal of the plaintiffs’ amended complaint for failing plausibly to show injury or proximate cause.

Under a civil RICO claim, a plaintiff must establish three elements: (1) that the defendant committed a pattern of RICO predicate acts, (2) that the plaintiff suffered injury to business or property, and (3) that the defendant’s racketeering activity proximately caused the injury. In this case, Plaintiffs sued Sanderson alleging that a pattern of hiring illegal workers resulted in depressed wages for legal workers like the plaintiffs.

Plaintiffs’ first complaint was dismissed by the district court for failing to adequately plead that the defendant’s pattern of predicate acts proximately caused the alleged injury of depressed wages. In response, plaintiffs amended their complaint, exclusively invoking a violation of 18 U.S.C. § 1546 to establish a pattern of racketeering activity, but the district court again held the amended complaint offered no real evidence to plausibly suggest either injury or proximate cause.

On appeal, the Eleventh Circuit affirmed the dismissal of the amended complaint agreeing with the district court that plaintiffs failed to plausibly establish that they suffered an injury in the form of depressed wages or that their injury was the proximate cause of Sanderson’s alleged §1546 violations. Plaintiffs tried to show wage depression in two ways in their amended complaint, but both did not meet the higher pleading standards required by Twombly and Iqbal. Plaintiffs did not show wage depression with empirical data because their numbers showed that their wages actually increased over the relevant time period and plaintiffs offered no additional data or facts to demonstrate that without Sanderson’s alleged misconduct their wages would have increased substantially. Further, plaintiffs were unable to rely on a vague market theory to show their injury. Thus, with the minimal facts and data alleged, the plaintiffs failed to allege the § 1964(c) injury element “above the speculative level.” Finally, plaintiffs did not show a plausible direct relationship between the § 1546 violations and the allegedly depressed wages because plaintiffs offered no population data, no evidence of the relevant market, no before-and-after wage rates, nor any wage data from comparable poultry processing plants. This lack of data left open too many crucial variables in the plaintiffs’ theory of causation. With two of the three elements needed to state a civil RICO claim inadequately pled, the plaintiffs’ complaint did not meet the necessary pleading standard to survive dismissal.

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