Court Opinion

ID: 2996760
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:31:15.042122+00
Date Added: 2024-06-11T12:12:28.416270
License: Public Domain

In the
 United States Court of Appeals
                 For the Seventh Circuit
                           ____________

Nos. 02-3967 & 02-4065
DEBORAH BAKER and RICHARD ENYEART,
                        Plaintiffs-Appellants, Cross-Appellees,

                                  v.

IBP, INC.,
                          Defendant-Appellee, Cross-Appellant.
                           ____________
             Appeals from the United States District Court
                   for the Central District of Illinois.
               No. 02-4019—Michael M. Mihm, Judge.
                           ____________
    ARGUED MAY 30, 2003—DECIDED FEBRUARY 4, 2004
                    ____________

  Before FLAUM, Chief Judge, and EASTERBROOK and
RIPPLE, Circuit Judges.
  EASTERBROOK, Circuit Judge. Plaintiffs want to represent
all persons, authorized to work in the United States, who
have been or are now employed at IBP’s meat-processing
plant in Joslin, Illinois. They appeal from the district
court’s decision that their claim should have been submitted
to the National Labor Relations Board rather than a court.
Despite Fed. R. Civ. P. 23(c)(1) (“As soon as practicable
after the commencement of an action brought as a class
2                                   Nos. 02-3967 & 02-4065

action, the court shall determine by order whether it is to be
so maintained”), the district judge dismissed the suit
without mentioning the class aspects of the complaint. The
two plaintiffs, as ex-employees at Joslin, likely are poor
representatives of its current employees— not just because
plaintiffs quit, but because the plant’s workers already have
a representative: a union certified by the NLRB. The claim
in this case is that IBP’s wages are too low, and that sort of
contention must be presented by the union rather than
individual members of the labor force. Plaintiffs’ request to
proceed on behalf of a class of all workers shows that they
seek to usurp the union’s role. But we are getting ahead of
ourselves.
  Plaintiffs’ complaint alleges, and we must assume given
the case’s posture, that about half of the employees at IBP’s
Joslin plant are aliens who cannot lawfully work in the
United States—and that IBP not only knows in a statistical
sense that many of its non-citizen employees lack the sort
of visas that authorize working here but also can identify
which ones they are, yet winks at obviously fake green
cards and other spurious credentials. IBP alerts its unau-
thorized employees to stay away the days when immigra-
tion officials conduct inspections. (The complaint leaves it
to the imagination how IBP learns these dates.) When
immigration officials do manage to catch and remove aliens
not allowed to work (or be) in the United States, IBP pays
“recruiters” to smuggle them back into the country and
immediately re-employs them under new aliases and new
bogus identification. Moreover, the complaint alleges, IBP
has arrangements with immigrant-welfare organizations,
such as the Chinese Mutual Aid Association based in
Chicago, under which these groups refer known illegals to
IBP for employment. The upshot, plaintiffs believe, is that
wages at the Joslin plant are depressed by about $4 per
hour compared with what IBP would have to pay if the
labor force included only U.S. citizens plus aliens holding
green cards.
Nos. 02-3967 & 02-4065                                        3

  If the allegations are true, managers at IBP have com-
mitted hundreds of felonies. We have no idea whether any
of the plaintiffs’ allegations is accurate, though we do know
that the United States has not commenced a criminal
prosecution. Still, the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. §§ 1961-68, permits
private actions for three times the loss caused by a pattern
of racketeering activity. See 18 U.S.C. §1964(c). Since 1996,
RICO has included among its predicate offenses “any act
which is indictable under the Immigration and Nationality
Act, section 274 [8 U.S.C. §1324] (relating to bringing in
and harboring certain aliens) . . . if the act indictable under
such section of such Act was committed for the purpose of
financial gain”. 18 U.S.C. §1961(1)(F). Plaintiffs contend
that, for financial gain (a reduction in the wages it must
pay), IBP brings in and employs illegal aliens, violating 8
U.S.C. §1324(a)(3)(A) and thus, derivatively, RICO. (Section
274(a)(3)(A) makes it a crime to hire more than 10 persons
in any 12-month period “with actual knowledge that the
individuals are aliens described in subparagraph (B)”.
Subparagraph (B) reads: “An alien described in this sub-
paragraph is an alien who (i) is an unauthorized alien (as
defined in section 1324a(h)(3) of this title), and (ii) has been
brought into the United States in violation of this subsec-
tion.”)
  Two courts of appeals have held that similar allegations
present claims that must be resolved on the merits. See
Commercial Cleaning Services, L.L.C. v. Colin Service
Systems, Inc., 271 F.3d 374 (2d Cir. 2001); Mendoza v.
Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002). Without
citing either decision, the district court nonetheless dis-
missed the suit for want of subject-matter jurisdiction, see
Fed. R. Civ. P. 12(b)(1), on the ground that it is a labor
dispute in disguise and must be presented to the NLRB. See
2002 U.S. Dist. LEXIS 24669, 171 L.R.R.M. (BNA) 2355 (C.D. Ill.
Oct. 21, 2002). The district court relied principally on San
4                                     Nos. 02-3967 & 02-4065

Diego Building Trades Council v. Garmon, 359 U.S. 236
(1959). Because Commercial Cleaning Services was com-
menced by a competitor rather than an employee, Garmon
was not relevant to its disposition. But the plaintiffs in
Mendoza were employees; that decision cannot be distin-
guished so easily—though for reasons that we discuss later
it matters that the labor force in Mendoza was not union-
ized, while IBP’s staff not only has an exclusive bargaining
representative but also works under a collective bargaining
agreement.
  Subject-matter jurisdiction is the first question, as it must
be in all suits filed in federal court. The district
judge described Garmon as creating a rule of preemption
and held that, because the labor laws preempt RICO, there
is no federal jurisdiction. This reasoning is hard to follow.
Federal statutes do not “preempt” other federal statutes,
and, though one may repeal another implicitly if they are
irreconcilable, RICO was enacted after the National Labor
Relations Act. Federal laws do preempt state laws, but
preemption is a defense and thus does not affect sub-
ject-matter jurisdiction. Caterpillar Inc. v. Williams, 482
U.S. 386, 393 (1987); Gully v. First National Bank, 299 U.S.
109, 116 (1936).
  Garmon held that state law may not regulate conduct
arguably protected or arguably forbidden by federal labor
laws. That is a genuine doctrine of preemption, with a jur-
isdictional overlay: federal labor law so occupies the field of
labor relations that it is impossible to formulate a claim
under state law. See Avco Corp. v. Machinists Union,
390 U.S. 557 (1968). This misleadingly named doctrine of
“complete preemption” has jurisdictional significance in the
sense that federal law’s dominance allows removal under 28
U.S.C. §1441(b) without regard to diversity of citizenship.
See Beneficial National Bank v. Anderson, 123 S. Ct. 2058
(2003). Yet plaintiffs filed their case in federal court, exactly
Nos. 02-3967 & 02-4065                                      5

where the doctrine of “complete preemption” directs liti-
gants. Federal courts are authorized to hear many la-
bor-relations disputes by 29 U.S.C. §185, and others by the
federal-question jurisdiction. See Teamsters v. Troha, 328
F.3d 325 (7th Cir. 2003). RICO is a federal statute, and a
claim based on it therefore arises under federal law for
purposes of 28 U.S.C. §1331.
  Applied to claims in federal court, and arising under
federal law, Garmon has nothing to do with either preemp-
tion or subject-matter jurisdiction. It is a rule of primary
jurisdiction, allocating to an administrative agency the first
crack at certain matters. See, e.g., Marquez v. Screen Actors
Guild, Inc., 525 U.S. 33, 49-50 (1998). And the doctrine of
primary jurisdiction is implemented by abstention—which
means by staying rather than dismissing the litigation. See,
e.g., Arsberry v. Illinois, 244 F.3d 558, 563-64 (7th Cir.
2001). Once the agency has completed its work, the parties
return to court for the resolution of any remaining issues.
Here, for example, if the dispute were referred to the NLRB,
and the Board determined that labor law neither protected
nor prohibited IBP’s conduct, the litigation could resume.
Dismissal for want of subject-matter jurisdiction was
inappropriate.
  IBP has filed a cross-appeal, arguing that the district
court’s decision should be one on the merits (and thus with
prejudice to renewal later) rather than for lack of jurisdic-
tion. Yet although dismissal under Rule 12(b)(1) was inap-
propriate, it does not follow that decision should have been
rendered on the merits; abstention in favor of the Labor
Board’s primary jurisdiction remains an option that must
be considered.
  Garmon and its successors are principally about the
relation between state and federal policy, but the doctrine
applies even in federal-question cases that include issues
within the Labor Board’s charge. See Laborers Health &
6                                    Nos. 02-3967 & 02-4065

Welfare Trust v. Advanced Lightweight Concrete Co., 484
U.S. 539, 552 (1988). We applied this principle in Talbot v.
Robert Matthews Distributing Co., 961 F.2d 654, 662 (7th
Cir. 1992), to hold that a RICO action based on predicate
acts that also violate federal labor law is incompatible with
the NLRB’s role in implementing labor policy. But it was
vital in Talbot that “the underlying conduct of the plaintiffs’
RICO claim [was] wrongful only by virtue of the labor laws”
(ibid.; emphasis in original), something that cannot be said
of plaintiffs’ claim here. Section 274 of the Immigration and
Nationality Act is not one of the federal labor laws; it
post-dates the National Labor Relations Act and is in some
respects incompatible with it. Although aliens may be
“employees” for purposes of the NLRA, see Sure-Tan, Inc. v.
NLRB, 467 U.S. 883, 892 (1984), those without proper visas
do not receive the same benefits under the NLRA as persons
whose employment is lawful. See Hoffman Plastic Com-
pounds, Inc. v. NLRB, 535 U.S. 137 (2002). When the
predicate offenses of a particular claim under RICO are fed-
eral crimes other than transgressions of the labor laws, no
dispute falls within the Labor Board’s primary jurisdiction,
even if labor relations turn out to be implicated in some
other fashion. See, e.g., United States v. Palumbo Brothers,
Inc., 145 F.3d 850, 861-63 (7th Cir. 1998). If the predicates
are state offenses that themselves would be preempted
by Garmon, then invoking those laws indirectly through
RICO does not evade that doctrine; but if the predicate acts
are offenses that could be prosecuted directly (as charges
under 8 U.S.C. §1324 could be) without any Garmon prob-
lem, then it is difficult to see why invoking RICO in quest of
treble damages gives the Labor Board a role.
  How could a pattern of violating §274 (the underlying
activity that plaintiffs allege) be “arguably protected” or
“arguably prohibited” by §7 or §8 of the National Labor
Relations Act? IBP does not contend that hiring illegal
aliens is even “arguably” protected by the NLRA. Nor does
Nos. 02-3967 & 02-4065                                        7

the NLRA prohibit or regulate the employment of aliens (see
Sure-Tan); it is immigration law, not the NLRA, that
distinguishes among categories of visa and thus determines
which non-citizens are authorized to work. According to
IBP, what is “arguably prohibited” by §8(a)(5) of the NLRA,
29 U.S.C. §158(a)(5), is a failure to bargain with the union.
“Failure to bargain in good faith” is the best classification
of the activities alleged in plaintiffs’ complaint, IBP insists.
Yet employers must treat with unions only about manda-
tory subjects of collective bargaining, and then only at the
union’s request. See Ford Motor Co. v. NLRB, 441 U.S. 488
(1979). Whether to hire illegal aliens is not a mandatory
subject of bargaining; employers need not dicker with
unions about which federal crimes to commit! Anyway, the
union representing workers at IBP’s Joslin facility has not
asked to bargain about this subject, and it is not even
arguably a violation of the NLRA to refrain from bargaining
about a subject that neither employer nor union wants to
negotiate. In the absence of a request to bargain and a
refusal to do so, no one could file a charge with the NLRB; in
the absence of a (potential) charge the Board lacks primary
jurisdiction of the dispute. Perhaps there could be room for
bargaining between IBP and its unions over ancillary
subjects, such as the precautions IBP takes when recruiting
workers and evaluating the credentials applicants proffer.
Yet plaintiffs do not contend that the union representing
workers at Joslin has asked to bargain over this subject and
been rebuffed; and if it had tried in vain to bargain, the
union itself would be the aggrieved party. It, and not
individual workers, would be the right party to file a charge
that IBP had committed an unfair labor practice.
  What IBP tries to characterize as a potential dispute
about the bona fides of its bargaining strategy really has
nothing to do with negotiations and everything to do with
substance. The complaint alleges that IBP has expanded
8                                   Nos. 02-3967 & 02-4065

the pool of available labor and thus depressed the price that
labor can command. When supply rises and demand is
constant, price falls. Employers and unions bargain in the
shadow of supply and demand; they do not bargain about
what supply and demand will be. IBP concedes that the
NLRB has never concluded that an employer violated the Act
by expanding the supply of labor and thus depressing
wages, or that the employer has any duty to bargain about
efforts to augment the supply of labor. Employers regularly
line up additional help; they may, for example, recruit and
train persons who will serve as permanent replacements if
the union strikes. This supply-expanding activity is lawful,
see NLRB v. Mackay Radio & Telegraph Co., 304 U.S. 333,
345-46 (1938), and employers need not bargain with unions
about it. Nor need employers bargain about other acts, such
as closing plants and moving operations to places where
labor is cheaper, that expand the effective size of the labor
pool. See First National Maintenance Corp. v. NLRB, 452
U.S. 666 (1981) (adding, however, that the employer must
bargain about what happens to employees dismissed in the
closure).
  To see the limited effect of Garmon on activity that affects
the size of the labor pool, and thus the outcome of bargain-
ing over wages, consider claims under the antitrust law
that particular activities have unduly raised (or depressed)
the price of labor and of goods made with that labor. Most
arrangements between labor and management are pro-
tected from antitrust challenge by §6 of the Clayton Act, 15
U.S.C. §17, and a “nonstatutory exemption” to the Sherman
Act. See Brown v. Pro Football, Inc., 518 U.S. 231 (1996).
But some remain open to contest, see Connell Construction
Co. v. Plumbers Union, 421 U.S. 616 (1975), and the
Supreme Court has never thought that antitrust challenges
to labor arrangements are forbidden by the Garmon
doctrine because they arise from, or may affect, bargaining
between unions and employers. Quite the contrary, the
Nos. 02-3967 & 02-4065                                       9

Court held in Connell that Garmon does not interfere with
antitrust claims just because “labor law questions [may]
emerge as collateral issues in suits brought under inde-
pendent federal remedies”. 421 U.S. at 626. If Garmon does
not block contentions that reduction of supply had driven
the price of labor too high, it does not block contentions that
seeking out new supply has driven the price too low. Many
federal statutes require courts to resolve issues that touch
on labor relations. Consider ERISA: pension and welfare
benefits often turn on the interpretation or validity of
collective bargaining agreements, questions that courts
resolve without the Labor Board’s assistance. See, e.g.,
Central States Pension Fund v. Gerber Truck Service, Inc.,
870 F.2d 1148 (7th Cir. 1989) (en banc); Moriarty v. Larry
G. Lewis Funeral Directors Ltd., 150 F.3d 773 (7th Cir.
1998). Just so with a claim under RICO.
  Garmon preemption is only part of the battle for
plaintiffs, however. Their wages were set by a collective
bargaining agreement; the wages of persons working at the
Joslin plant today are determined under a collective bar-
gaining agreement. This suit is at its core about the ade-
quacy of the wages IBP pays, and, if the NLRB is out, it still
does not follow that plaintiffs are entitled to represent all
of the other workers. They have a representative—one that
under the NLRA is supposed to be “exclusive” with respect to
wages, see 29 U.S.C. §159(a)—their union. Individual
workers may step into the union’s shoes only if it has
violated its duty of fair representation. See Vaca v. Sipes,
386 U.S. 171, 186 (1967). Yet the complaint does not name
the union as a party and does not contend that the union
neglected its duty to represent the employees’ interests with
respect to wages.
  Unless something went seriously wrong with the union’s
representation of the workers, IBP as the employer is not
only entitled but also legally required to pay at the rates
10                                   Nos. 02-3967 & 02-4065

specified by the collective bargaining agreement. Without
the union as a party, the litigants could not settle this suit
for higher hourly pay (or back pay)— that would be a real
refusal on IBP’s part to bargain with its union—nor could
the judge order IBP to increase its rate of pay. Yet it is only
financial relief that plaintiffs seek. As ex-employees, they
could obtain nothing else. (Normally equity will not enjoin
the commission of a crime, such as future violations of §274.
Whether RICO creates an exception to this rule in private
litigation is a question that has divided the circuits, and
that the Supreme Court did not resolve in Scheidler v.
National Organization for Women, Inc., 537 U.S. 393
(2003).) Plaintiffs have not established the foundation for
displacing the union as their representative with respect to
wages. We don’t say that this is impossible—for all we
know, the union may be controlled by persons not autho-
rized to work in the United States and may be pursuing a
policy of expanding employment opportunities for those
similarly situated—but only that plaintiffs have not tried.
  Lest this be taken as an invitation to add the union as a
party and start it anew as a hybrid RICO/DFR suit, we add
that there is another fatal problem in this complaint: spe-
cification of the “enterprise.” Section 1962(c) makes it
“unlawful for any person employed by or associated with
any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate,
directly or indirectly, in the conduct of such enterprise’s
affairs through a pattern of racketeering activity”. For
purposes of this section, the “person” must be IBP, the only
defendant. But how is IBP conducting the affairs of an
enterprise through a pattern of racketeering activity? The
complaint alleges that the “enterprise” is IBP plus the
persons and organizations who help it find aliens to hire.
We may assume that this congeries is a “group of indivi-
duals associated in fact although not a legal entity” (18
Nos. 02-3967 & 02-4065                                     11

U.S.C. §1961(4))—though the complaint comes perilously
close to alleging that IBP plus its agents and employees is
the “enterprise,” a theory that won’t fly. See Bucklew v.
Hawkins, Ash, Baptie & Co., 329 F.3d 923, 934 (7th Cir.
2003). And it is not altogether clear how this “association in
fact” has a common purpose, an essential ingredient. See
United States v. Turkette, 452 U.S. 576, 583 (1981). IBP
wants to pay lower wages; the recruiters want to be paid
more for services rendered (though IBP would like to pay
them less); the Chinese Mutual Aid Association wants to
assist members of its ethnic group. These are divergent
goals.
  Even if the congeries is an enterprise, how is it that IBP
operates or manages that enterprise through a pattern of
racketeering activity? The nub of the complaint is that IBP
operates itself unlawfully—it is IBP that supposedly hires,
harbors, and pays the unlawful workers, for the purpose
of reducing its payroll. IBP does not manage or operate
some other enterprise by violating §274; the complaint does
not allege—and on appeal plaintiffs do not seek an opportu-
nity to show—that IBP has infiltrated, taken over, manipu-
lated, disrupted, or suborned a distinct entity or even a
distinct association in fact. Contrast United States v.
Neapolitan, 791 F.2d 489, 500 (7th Cir. 1986). Without a
difference between the defendant and the “enterprise” there
can be no violation of RICO. See Sedima, S.P.R.L. v. Imrex
Co., 473 U.S. 479, 496-97 (1985); Fitzgerald v. Chrysler
Corp., 116 F.3d 225, 227-28 (7th Cir. 1997); Haroco, Inc. v.
American National Bank & Trust Co., 747 F.2d 384, 401-02
(7th Cir. 1984), affirmed on other grounds, 474 U.S. 606
(1985).
  These conclusions enable us to bypass still another po-
tential problem with plaintiffs’ theory: the difficulty of
establishing that unlawful hiring of aliens caused a dimi-
nution in their wages. RICO provides treble damages for
12                                 Nos. 02-3967 & 02-4065

direct injuries but not remote ones. See Holmes v. SIPC,
503 U.S. 258 (1992). Although the ninth circuit concluded
in Mendoza that the injury workers suffer when wages are
depressed by competition from aliens is similar to the kind
of injuries redressed under the antitrust laws, things may
not be so straightforward. An increased supply of labor
logically affects, not just the wages at IBP’s Joslin plant,
but wages throughout the region (if not the country).
Workers can change employers (leaving IBP for higher pay
elsewhere), and this process should cause equilibration
throughout the labor market. Yet plaintiffs’ theory is not
that too many aliens depress wages around Joslin; it is that
IBP pays lower wages than some competitors, and that
effect would be very hard to attribute to particular viola-
tions of 8 U.S.C. §1324(a)(3)(A). Suppose that plaintiffs
believed that IBP has violated the Fair Labor Standards
Act by failing to calculate other workers’ overtime premium;
could plaintiffs obtain damages from IBP even though it
had paid them all that the FLSA requires? Cf. Mid-State
Fertilizer Co. v. Exchange National Bank, 877 F.2d 1333
(7th Cir. 1989). Given the other problems in this case,
however, it is unnecessary to decide whether this circuit
will follow Mendoza once the issue must be faced and
resolved.
  The judgment is modified from a dismissal for lack of
jurisdiction to a dismissal for failure to state a claim on
which relief may be granted. As so modified, it is affirmed.
Nos. 02-3967 & 02-4065                               13

A true Copy:
      Teste:

                     ________________________________
                     Clerk of the United States Court of
                       Appeals for the Seventh Circuit

                 USCA-02-C-0072—2-4-04