This case arises from claims that two agricultural companies leveraged the hiring of undocumented immigrants in order to depress the wages of their legally documented employees. We are called upon to decide two significant issues. First, we must determine whether, under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, legally documented agricultural workers have standing to sue their employers, whom they allege depressed their salaries by conspiring to hire undocumented workers at below market wages. Second, we must consider the constitutionality of supplemental subject matter jurisdiction involving a party over whom there is no independent basis for federal court jurisdiction. The district court resolved both questions in favor of the defendants and dismissed this lawsuit on the pleadings. We reverse.
Background
Olivia Mendoza, Juana Mendiola, and the purported class (“employees”) are agricultural laborers for Zirkle Fruit Company and Matson Fruit Company (“growers”), which operate fruit orchards and packing houses in Eastern Washington, the heart of Washington’s fruit industry. According to the complaint,
Eastern Washington is the heart of Washington’s famed apple and fruit industry. This area ... is uniquely suited for growing fruit....
In Washington state there are more than 15,000 fruit packers and 30,000 orchard pickers of fruit. Many оperations require unskilled, low-wage laborers for harvesting and packing and other related tasks requiring manual labor. While the industry now generates over $1 billion, many of these workers live in poverty.
Defendants Matson and Zirkle operate fruit orchards and packing houses. Matson and Zirkle are motivated to keep labor costs as low as possible and, due to a variety of complex social and economic factors, the industry’s demand for low-skilled workers has attracted many workers of Mexican citizenship. Many of these Mexican nationals are illegal immigrants who have been smuggled into the U.S. and/or harbored in the U.S. by relatives, friends, and the employers. Matson and Zirkle ... knowingly hire workers of illegal status because illegal workers are willing to accept wages that are significantly lower*1167 than wages would be in a labor market comprised solely of legally authorized workers.
The Immigration and Naturalization Service has conducted investigations finding that as much as half the growers’ workforce is employed illegally, and the growers have been targeted for “raids and other law enforcеment procedures.”
According to the complaint, the scheme is facilitated by Selective Employment Agency, Inc., a separate company that employs the workers and then “loans” them to the growers. “Defendants Matson and Zirkle use Selective Employment as a ‘front company’ for the purpose of perpetrating this scheme with the hope that each will be thus shielded from charges that they violated federal law.” Although Selective Employment was named only as an association-in-fact enterprise, not as a defendant, in the federal RICO claim, the complaint alleged a state conspiracy claim that did name Selective Employment as a defendant.
The district court dismissed the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
The employees moved for reconsideration, proffering a proposed amended complaint that alleged a conspiracy broader than the named growers and included more specific causation allegations. The amended complaint states that the growers and unnamed conspirators “comprise a large percentage of the fruit orchards and packing houses in the area, and therefore affect wages throughout the labor market for apple pickers and fruit packers, [such that] competition with respect to wages is stifled and suppressed.” The proffered complaint also adds six paragraphs explaining how the scheme injures the workers. Nonetheless, the district court denied the motion, clarifying that it was not dismissing merely for difficulty of proof, but for lack of concrete injury and proximate causation.
In addition, the district court, quite reluctantly, granted Selective Employment’s motion to dismiss pursuant to Rule 12(b)(1). The district court determined that it was bound by Ayala v. United States,
Discussion
We note at the outset that the district court dismissed this case on the pleadings. Consеquently, our review is de novo, and we may affirm the dismissal “only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Swierkiewicz v. Sorema N.A.,
The district court offered two bases for dismissal on the pleadings: RICO standing and supplemental jurisdiction. We discuss those issues below, but first we address one proffered alternative ground for affirming the dismissal for failure to state a claim, an argument that need not detain us long. RICO prohibits engaging in a pattern of “racketeering activity,” defined as violating certain laws; as such, a predicate illegal act must be alleged. 18 U.S.C. §§ 1962(c), 1961(1)(F). The district court held that the “Illegal Immigrant Hiring Scheme” as pleaded involved a predicate RICO act, knowingly hiring undocumented workers in violation of Immigration and Naturalization Act § 274, 8 U.S.C. § 1324. We are unpersuaded by the growers’ argument that the district сourt erred in this respect. Their argument rests on a hypertechnical reading of the complaint inconsistent with the generous notice pleading standard. See Swierkiewicz,
I. Standing
A. Statutory Standing
We turn first to the statutory standing requirements particular to RICO. Under RICO, “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court” for civil damages. 18 U.S.C. § 1964(c). This statute is quite similar to the antitrust statute granting standing to “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws,” 15 U.S.C. § 15(a), and consequently the two have been interpreted in tandem. Holmes v. Sec. Inv. Protection Corp.,
In a series of cases beginning in the antitrust context and later extended to RICO, the Supreme Court clarified that potential plaintiffs who have suffered
In this circuit, we focus on three nonexhaustive factors in considering causation, that is whether the injury is “too remоte” to allow recovery:
(1) whether there are more direct victims of the alleged wrongful conduct who can be counted on to vindicate the law as private attorneys general; (2) whether it will be difficult to ascertain the amount of the plaintiffs damages attributable to defendant’s wrongful conduct; and (3) whether the courts will have to adopt complicated rules apportioning damages to obviate the risk of multiple recoveries.
Ass’n of Wash. Pub. Hosp. Dists. v. Philip Morris Inc.,
Our analysis is guided by two key cases, both decided after the district court’s original opinion. See Knevelbaard Dairies v. Kraft Foods, Inc.,
The relationships among the parties in this case bear a striking resemblance to those in Knevelbaard Dairies, an antitrust case in which we recently held that the plaintiffs had standing. There, milk producers sued defendant cheese producers, who illegally fixed the price of cheese, which in turn set the price of milk artificially low.
The Second Circuit, the only circuit to have considered allegations of illegal immigrant hiring based on the same predicate act as that at issue here, held that the plaintiffs had standing to sue under RICO. In Commercial Cleaning, a competitor alleged that the defendant janitorial service underbid it by relying on laborers that the defendant knew to be undocumented.
Turning to the first factor, taking the allegations in the complaint as true, we are unable to discern a more direct victim of the illegal conduct. The documented employees here do not complain of a passed-on harm. They allege that the scheme hаd the purpose and direct result of depressing the wages paid to them by the growers. Thus, as the district court correctly determined, “plaintiffs have stated a claim that they are the direct victims of the illegal hiring scheme.”
As in Knevelbaard Dairies and Commercial Cleaning, the scheme aims to gain an illegal commercial advantage — here, disproportionate bargaining power in employment contracts — in the growers’ dealings with the employees. Neither the government nor the undocumented workers are an intervening third party in this scheme, despite the growers’ arguments to the contrary. The сlaims here thus differ fundamentally from passed-on injury cases. See Imagineering Inc. v. Kiewit Pac. Co.,
We also note that the undocumented workers cannot “be counted on to bring suit for the law’s vindication.” Holmes,
The second concern to which we direct our attention is the speculative measure of harm. The district court noted that “intervening factors ... could have interfered with the plaintiffs receiving higher pay absent the defendants’ hiring of undocumented workers. These intervening factors include the wage paid by other orchards in the area, the skill and qualifications of each plaintiff, the profitability of the defendants’ businesses without the undocumented workers, and the general
The district court’s analysis focused primarily on eause-in-fact, not proximate cause, and it is inaрpropriate at this stage to substitute speculation for the complaint’s allegations of causation. As we explained in Knevelbaard Dairies when we rejected the claim that milk prices might have been lower due to independent factors instead of the cheese price fixing: “Whether experts will be able to measure the difference between the allegedly restrained price for milk and the price that would have prevailed but for the antitrust violation remains to be seen; in deciding a Rule 12(b)(6) motion we are dealing only with the complaint’s allegations, which in this instance do not make the claim speculative.”
Similarly here, the workers must be allowed to make their case through presentation of evidence, including experts who will testify about the labor market, the geographic market, and the effects of the illegal scheme. Questions regarding the relevant labor market and the growers’ power within that market are exceedingly complex and best addressed by economic experts and other evidence at a later stage in the proceedings. For now, it is sufficient that the employees have alleged market power — they must not be put to the test to prove this allegation at the pleading stage. See Scheidler,
Finally, it is important to distinguish between uncertainty in the fact of damage and in the amount of damage. Knutson v. Daily Review, Inc.,
Turning to the final factor, the growers do not appear to argue that there is a significant risk of multiple recovery in this case. No other potential plaintiffs emerge with clarity. Also, as the Second Circuit reasoned, even if there are other classes of рotential plaintiffs who could recover for the alleged illegal hiring scheme, such lawsuits would not threaten multiple recovery of passed-on harm. Commercial Cleaning,
B. Constitutional Standing
Because they are invoking federal jurisdiction, the employees must establish “the irreducible constitutional minimum of standing” in addition to meеting the statutory standing requirements. Lujan, 504 U.S at 560-61. This minimum or threshold consists of three factors: (1) injury in fact: “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical,” id. at 560 (citations and internal quotations omitted); (2) causation: the injury must be fairly traceable to the defendant’s challenged action, id.; and (3) redressability: “it must be likely as opposed to merely speculative that the injury will be redressed by a favorable decision,” id. at 561 (internal quotations omitted).
Based on the complaint, the employeеs easily meet this test. First, they allege a concrete, actual injury in their lost wages. As discussed above, their causation allegations are sufficient at this stage. See Scheidler,
II. Supplemental Party Jurisdiction
The employees sued Selective Employment solely under state lаw, precluding federal question jurisdiction, and all parties are Washington citizens, precluding diversity jurisdiction. See 28 U.S.C. §§ 1331 & 1332. In such a situation, absent an independent basis for federal subject matter jurisdiction, Congress has authorized the district court to exercise supplemental jurisdiction:
[T]he district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include сlaims that involve the joinder or intervention of additional parties.
28 U.S.C. § 1337(a).
Prior to the passage of § 1337, supplemental jurisdiction was more circumscribed and the addition of a party was one factor that barred jurisdiction over additional claims brought by plaintiffs. See generally Denis F. McLaughlin, The Federal Supplemental Jurisdictional Statute—A Constitutional and Statutory Analysis, 24 Ariz. St. L.J. 849, 859-89 (1992). In 1973, the Supreme Court expressed some skepticism about “pendent party jurisdiction” — jurisdiction over plaintiffs’ claims requiring the addition of parties not involved in the main lawsuit. The Court characterized this issue as a “subtle and complex question with far-reaching implications.” Moor v. County of Alameda,
The statutory grant of jurisdiction is, of course, limited by constitutional boundaries. Upon careful review, however, we are convinced that the controlling constitutional standard remains that articulated in United Mine Workers of America v. Gibbs,
A. Ayala V. United States
Selective Employment relies on Ayala v. United States,
Significantly, Ayala also came before intervening decisions that clarified that Ayala’s restrictive interpretation does not survive the 1990 passage of § 1367. We explained in Galt G/S v. Hapag-Lloyd AG,
B. Constitutionality of Supplemental Jurisdiction Under § 1367
Any lingering doubt that Ayala establishes a binding constitutional rule is put to rest by the Supreme Court’s recent decision in Raygor v. Regents of the University of Minnesota,
In Mine Workers v. Gibbs, this Court held that federal courts deciding claims within their federal-question subject matter jurisdiction, 28 U.S.C. § 1331, may decide state law claims not within their subject matter jurisdiction if the federal and state law claims “derive from a common nucleus of operative fact” and comprise “but one constitutional ‘case.’ ”... This Court later made*1174 clear that absent authorization from Congress, a district court could not exercise pendent jurisdiction over claims involving parties who were not already parties to a claim independently within the court’s subject matter jurisdiction. See Finley v. United States,490 U.S. 545 ,109 S.Ct. 2003 ,104 L.Ed.2d 593 (1989).
Selective Employment providеs no compelling rationale to restrict supplemental jurisdiction beyond the limitation imposed in Gibbs. Indeed, the district court suggested that it would hold otherwise but for the belief that its hands were tied by Ayala. The district court’s instincts were vindicated by the Supreme Court’s later ruling in Raygor. We acknowledge, of course, that federal courts are courts of limited jurisdiction. U.S. Const. Art. III, sec. 2; Finley,
Finally, we note that none of our sister circuits has imposed a per se constitutional restriction on supplemental jurisdiction over additional parties. See Hinson v. Norwest Financial S.C., Inc.,
Thus, to avoid dismissal for lack of federal subject matter jurisdiction, the employеes must show that the state conspiracy claims against Selective Employment constitute part of the same constitutional case as the federal RICO claims against the growers. Assuming that the claims meet the Gibbs standard, the district court has the power to exercise supplemental jurisdiction. The decision to exercise that jurisdiction remains discretionary with the district court. City of Chicago v. Int'l Coll. of Surgeons,
REVERSED and REMANDED.
Notes
. These facts, which are derived from the complaint, must be taken to be true because the case was dismissed on the pleadings for lack of jurisdiction and failure to state a claim. United States v. One 1997 Mercedes E420,
. The complaint also alleged a mail fraud RICO predicatе in sending forms falsely verifying employment eligibility to the government. In a ruling that has not been appealed, the district court held that the mail fraud scheme did not provide an adequate RICO predicate act because the employees were not the party defrauded.
. The district court "remanded” the remaining state law claims against the growers. As the parties acknowledge, dismissal, not remand, was called for because this suit was originally brought in federal court. See 28 U.S.C. § 1447.
. The growers suggest that the employees would have to show a “property right” in the lost wagеs, by showing that they were promised or contracted for higher wages. This argument is misplaced in the context of RICO. This case does not implicate procedural due process; rather, what is required is precisely what the employees allege here: a legal entitlement to business relations unhampered by schemes prohibited by the RICO predicate statutes. 18 U.S.C. §§ 1962(c), 1961(1); Dumas v. Major League Baseball Prop.,
. The statute restricts supplemental jurisdiction in certain cases where the underlying basis for federal jurisdiction is diversity. 28 U.S.C. § 1337(b). This provision is not at issue in this case, which rests on federal question jurisdiction.