Opinion ID: 4521050
Heading Depth: 3
Heading Rank: 2

Heading: Torres’s Lawsuits against Vitale’s

Text: Torres then instituted a barrage of lawsuits against Vitale’s stemming from the underpayment of wages. This is the second of those lawsuits. The first was filed in May 2018 in the United States District Court for the Western District of Michigan against Vitale’s, Salvatore Vitale, and Belinda Pierson alleging violations of the FLSA. That suit asks to certify a collective action to recover unpaid wages. See Torres v. Vitale’s Italian Rest., Inc., No. 1:18-cv-547 (W.D. Mich.) (the “FLSA lawsuit”). The complaint in the FLSA lawsuit seeks to employ the FLSA’s opt-in collective action mechanism for all of Vitale’s employees who were harmed by this scheme. No. 19-1515 Torres v. Vitale, et al. Page 4 Although the present suit involves the same factual scenario as in the FLSA lawsuit, Torres now pursues damages and class certification under RICO. In his complaint, Torres sets forth numerous theories under which he asserts a claim under the civil RICO statute, including: (1) a tax evasion scheme through which Vitale’s defrauded local, state, and federal authorities in order to avoid paying tax withholdings; (2) a wage-theft scheme in which the two-timecard system was used to intentionally defraud the employees of proper wages; and (3) a worker’s-compensationinsurance scheme, through which Vitale’s defrauded its insurance carriers by submitting fraudulent wage amounts to the carriers that were relied upon in calculating insurance premiums. These schemes, Torres contends, amount to RICO violations through mail and wire fraud of the federal government, the state government, the city governments, the employees, and the insurance carriers. Torres maintains that the conduct of Vitale’s amounted to a common illegal enterprise, the purpose of which was to defraud tax authorities, employees, and insurance carriers in order to realize greater profits. To further its fraudulent scheme, Vitale’s allegedly committed mail fraud and wire fraud by sending fraudulent pay stubs, W-2 forms, paychecks, and other documents through the mail and the wires. Finally, Torres contends that the mail fraud and wire fraud constituted a pattern of racketeering activity as required for a civil RICO claim. He sought certification of a class of all current and former employees of the three Vitale’s restaurants where he had worked who had been paid in cash. As Torres sees it, Vitale’s engaged in tax evasion by under-reporting the hours its employees worked and failing to pay the required withholdings to tax authorities on the cash payments made for hours recorded on the second timecard. Similarly, Torres claims that Vitale’s decreased the employees’ taxable income by not properly reporting the cash payments to the tax authorities. According to Torres, the effect of this underreporting was to expose him to tax liabilities and penalties and decrease his future social security benefits. The same basic facts form the basis for Torres’s claim that Vitale’s engaged in a scheme of wage theft. Salvatore and Belinda communicated fraudulent deposits that, because of the two-timecard system, did not accurately depict the employees’ earnings. And every direct deposit, which did not accurately reflect his pay, is claimed to be an act of wire fraud. Similarly, Vitale’s No. 19-1515 Torres v. Vitale, et al. Page 5 allegedly committed mail fraud when it mailed Torres his yearly W-2 tax form, which did not record his cash payments. Finally, the same facts also give rise to Torres’s theory that Vitale’s engaged in a scheme to defraud its worker’s compensation carriers by under-reporting hours. In other words, because Vitale’s allegedly under-reported the wages paid to the employees, it received lower insurance premiums than it would have otherwise. The district court dismissed all of Torres’s claims relating to his employment prior to 2018 as barred by RICO’s four-year statute of limitations, leaving only the conduct relating to his time at Vitale’s Grand Rapids location from 2017 to 2018. The district court then dismissed those claims as precluded by the FLSA. Adopting the reasoning from a case out of the Eastern District of New York, the district court held that “Congress specifically intended to combat [the alleged] practices by enacting the broad remedial scheme contained within the Fair Labor Standards Act.” R. 29 at PageID 577. The district court held that Torres could not maintain a RICO action against Vitale’s under these facts because “all of the alleged predicate acts are violations of the FLSA itself.” Id. at PageID 578. Torres filed a timely appeal, raising only one issue: Whether the district court erred in concluding that the FLSA precludes RICO suits when the underlying conduct also violates the FLSA.