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Zavala v. Wal-Mart Stores

August 28, 2006

VICTOR ZAVALA; EUNICE GOMEZ; ANTONIO FLORES; OCTAVIO DENISIO; HIPOLITO PALACIOS; CARLOS ALBERTO TELLO; MAXIMILIANO MENDEZ; ARTURO : ZAVALA; FILIPE CONDADO; LUIS GUTIERREZ; DANIEL ANTONIO CRUZ; PETR ZEDNEK; TERESA JAROS; JIRI PFAUSER; HANA PFAUSEROVA; PAVEL KUNC; AND MARTIN MACAK, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
WAL-MART STORES, INC., DEFENDANT.



The opinion of the court was delivered by: Greenaway, Jr., U.S.D.J.

FOR PUBLICATION

OPINION

This matter comes before the Court on the motion to dismiss Count One and Count Two of Plaintiffs' Second Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to FED. R. CIV. P. 12(b)(6), by Defendant Wal-Mart Stores, Inc. ("Wal-Mart"). For the reasons set forth below, this motion will be granted.

INTRODUCTION

The background to this case is set forth in this Court's Opinion of October 7, 2005 (the "Dismissal Opinion"). See Zavala v. Wal-Mart Stores, Inc., 393 F. Supp. 2d 295 (D.N.J. 2005). In this Court's Order of September 30, 2005, Wal-Mart's motion to dismiss was granted in part, and Counts One and Two of the Complaint were dismissed without prejudice. On November 21, 2005, Plaintiffs filed the Second Amended Complaint. Count One of the Second Amended Complaint alleges violation of RICO, 18 U.S.C. § 1962(c). Count Two alleges RICO conspiracy, in violation of 18 U.S.C. § 1962(d). On January 20, 2006, Wal-Mart filed the instant motion to dismiss these RICO claims.

ANALYSIS

I. Governing Legal Standards

A. Standard for a Rule 12(b)(6) Motion to Dismiss

On a motion to dismiss for failure to state a claim, pursuant to FED. R. CIV. P. 12(b)(6), the court must accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 (3d Cir. 1994). A complaint should be dismissed only if the alleged facts, taken as true, fail to state a claim. See In re Warfarin Sodium, 214 F.3d 395, 397-98 (3d Cir. 2000). The question is whether the claimant can prove any set of facts consistent with his or her allegations that will entitle him or her to relief, not whether that person will ultimately prevail. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

While a court will accept well-pled allegations as true for the purposes of the motion, it will not accept unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. See Morse v. Lower Merion School District, 132 F.3d 902, 906 n.8 (3d Cir. 1997). All reasonable inferences, however, must be drawn in the plaintiff's favor. See Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987). Moreover, the claimant must set forth sufficient information to outline the elements of his or her claims or to permit inferences to be drawn that the elements exist. See FED. R. CIV. P. 8(a)(2); Conley, 355U.S. at 45-46. "The defendant bears the burden of showing that no claim has been presented." Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005).

The Supreme Court has characterized dismissal with prejudice as a "harsh remedy." New York v. Hill, 528 U.S. 110, 118 (2000). Dismissal of a count in a complaint with prejudice is appropriate if amendment would be inequitable or futile. "When a plaintiff does not seek leave to amend a deficient complaint after a defendant moves to dismiss it, the court must inform the plaintiff that he has leave to amend within a set period of time, unless amendment would be inequitable or futile." Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002).

II. Defendant's 12(b)(6) Motion to Dismiss

"In order to plead a violation of RICO, plaintiffs must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir. 2004); see also Sedima v. Imrex Co., 473 U.S. 479, 496 (1985). The Supreme Court has construed § 1962(c) to also require that a plaintiff plead: 1) distinctness, as to the RICO 'person' and 'enterprise,' Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 (2001); and 2) proximate causation of the claimed injury by the racketeering conduct, Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 268 (1992). Count One fails to meet these requirements. Moreover, Plaintiffs have failed to state a valid claim of involuntary servitude.

A. The Distinctness Requirement

The Supreme Court has held that the language of § 1962(c) creates a pleading requirement of distinctness: "to establish liability under § 1962(c) one must allege and prove the existence of two distinct entities: (1) a 'person'; and (2) an 'enterprise' that is not simply the same 'person' referred to by a different name." Kushner, 533 U.S. at 161.

Count One of the Second Amended Complaint contains a serious, fatal problem, in that it alleges that the RICO person and the RICO enterprise are the same. Plaintiffs first define the RICO person: "At all relevant times, Wal-Mart and its various contractors were 'persons' within the meaning of RICO, 18 U.S.C. §§ 1961(3) and 1962(c)." (Sec. Am. Compl. ¶ 124.) Plaintiffs next define the RICO enterprise: "At all relevant times, Wal-Mart and its contractors formed an association-in-fact . . . referred to as the 'Wal-Mart Enterprise.'" (Sec. Am. Compl. ¶ 125.) If the members of ...


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