Melissa Simpson v. Sanderson Farms, Inc., 2014 U.S. App. LEXIS 4259

Background

Plaintiffs Melissa Simpson and Sabrina Roberts, former hourly unskilled employees at Sanderson Farms’ Moultrie, GA plant, sued under federal and Georgia RICO alleging wage depression caused by the employer’s alleged § 1546 document fraud enabling hiring of undocumented workers.
Plaintiffs alleged Sanderson hired "likely more than 300" undocumented workers since 2008, and that this "mixed-status" labor pool depressed wages paid to legally authorized workers; plaintiffs pleaded no market or comparator wage data.
The amended complaint contained only plaintiffs’ own wage figures, which showed substantial increases during their employment (Simpson +34%; Roberts +36%).
District court dismissed the amended complaint with prejudice for failure to plausibly plead (1) injury (actual wage depression) and (2) proximate cause between § 1546 violations and any wage injury, under Twombly/Iqbal.
Eleventh Circuit affirmed, holding plaintiffs’ abstract market model and conclusory allegations insufficient to raise the claim above speculative level and insufficient to show a direct causal link required by Holmes.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs plausibly alleged an "injury to business or property" (wage depression)	Plaintiffs: hiring of undocumented workers via § 1546 fraud depressed market wages for legal workers	Sanderson: plaintiffs provided no market data and their own wages increased, so no plausible allegation of wage depression	Held: No — plaintiffs failed to plausibly plead actual wage depression; allegations speculative under Twombly/Iqbal
Whether plaintiffs pleaded but-for and proximate causation linking § 1546 violations to alleged wage injury	Plaintiffs: § 1546 false attestations were an essential step enabling hiring and thereby caused wage depression	Sanderson: causal chain is multi-step and remote; plaintiffs advanced only conclusory but-for allegations	Held: No — even assuming but-for causation, plaintiffs failed to plead the "direct relation"/proximate cause required by Holmes
Whether Mohawk II controls to save the pleadings	Plaintiffs: Mohawk II shows § 1546 violations can proximately cause wage depression	Sanderson: Mohawk II materially different on facts and applied pre-Twombly Conley standard	Held: Mohawk II inapposite — factually different and pre-dates Twombly/Iqbal pleading standard
Pleading requirements for market-based RICO wage claims (scope of market data needed)	Plaintiffs: market detail unavailable pre-discovery; abstract market theory should suffice	Sanderson: plaintiffs must plead enough market parameters to make wage-depression theory plausible	Held: Plaintiffs must plead at least some market parameters (geographic market, population estimates or comparators); vague market theory insufficient

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
Ashcroft v. Iqbal, 556 U.S. 662 (application of plausibility standard to factual allegations)
Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (proximate-cause "direct relation" requirement in RICO)
Williams v. Mohawk Industries, Inc. (Mohawk II), 465 F.3d 1277 (earlier Eleventh Circuit RICO holding; factually distinct)
Ironworkers Local Union 68 v. AstraZeneca Pharm., LP, 634 F.3d 1352 (applying Twombly/Iqbal to economic-injury pleading)
Hemi Group, LLC v. City of New York, 559 U.S. 1 (limitations on proximate cause where link not "straightforward")
Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (causal relationship and natural-consequence analysis in RICO fraud claims)
Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (concern about remote actions and damage ascertainment in RICO)
Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327 (requirement to plead contours of relevant market in antitrust rule-of-reason cases)
Lehrman v. Gulf Oil Corp., 500 F.2d 659 (use of comparable business profits as evidence of injury)