Carmen v. Health Carousel, LLC

NOVIE DALE CARMEN, et al., Plaintiffs, v. HEALTH CAROUSEL, LLC, Defendant.

No. 1:20-cv-313

United States District Court, S.D. Ohio, Western Division

June 17, 2021

OPINION AND ORDER

DOUGLAS R. COLE UNITED STATES DISTRICT JUDGE

This cause comes before the Court on Defendant Health Carousel LLC's (“Health Carousel”) Motion to Dismiss Plaintiff Novie Dale Carmen's (“Carmen”) Amended Complaint and to Strike Carmen's Class Allegations contained in that Amended Complaint. (Doc. 12). For the reasons set forth below, the Court DENIES Health Carousel's Motion to Dismiss and DENIES Health Carousel's Motion to Strike, albeit on relatively narrow grounds. In short, the Court concludes that the issues that Health Carousel presents in its Motions are more appropriately addressed at the summary judgment and class certification stages, when the factual record is more fully developed. The Court also DENIES AS MOOT Health Carousel's earlier Motions to Dismiss and Strike (Doc. 5) as directed at Carmen's Original Complaint. (Doc. 1-1).

BACKGROUND

This putative class action challenges the legality of Health Carousel's labor recruiting practices. More specifically Carmen claims that Health Carousel engaged in “human trafficking, ” as that term is defined in 18 U.S.C § 1589 and “involuntary servitude, ” as defined in O.R.C. § 2905.32.

A. Health Carousel Recruits Foreign Nurses Like Carmen And Places

Them In American Health Facilities.

Health Carousel is a recruiting and staffing company headquartered in Hamilton County, Ohio, that enlists foreign nurses, primarily from the Philippines, to work in healthcare facilities across the United States. (Carmen's First Am. Compl., Doc. 11, (“Compl.”), ¶¶ 1, 9, #134-35). The healthcare facilities that employ the nurses pay Health Carousel an amount in excess of the nurse's hourly wages. (§at ¶ 11, #136). Health Carousel then pays the nurses the wages to which they are entitled, keeping the difference for itself. (Id.). As the description suggests, the amount of return that Health Carousel generates for a given nurse depends on how many hours that nurse works through the auspices of the Health Carousel program.

The nurses receive several benefits from Health Carousel in exchange for their participation in the arrangement. Beyond the obvious benefit of placing the nurses in a job, Health Carousel also sponsors the nurses' permanent U.S. resident visa petitions; pays related expenses, including examination, filing, and attorney's fees; pays airfare to the United States; provides free temporary housing in the United States; pays cash bonuses when participating nurses arrive in the United States; and provides medical benefits and life insurance. (Emp. Cont., Doc. 1-2, #30, 36).

Those benefits last, however, only while the nurse is employed through Health Carousel. So, for example, if a nurse is residing in Health Carousel-supplied housing, that nurse must leave such housing within 48-hours after her last shift as a Health Carousel employee. (Id. at #35). Health Carousel calls its business model the “Passport USA” program. (Compl., ¶¶ 11, 13, #136).

Each nurse executes two agreements as part of this business arrangement. The first is a form contract, the “Employment Contract, ”^[1] which each foreign nurse signs to initiate her employment relationship with Health Carousel. (Id. at ¶ 13, #136). As this agreement is executed before Health Carousel begins the visa process, nurses will almost always sign this contract while still abroad.

As relevant to this case, the Employment Contract includes four provisions that set forth a participating nurse's obligations. First, the contract contains a “Commitment Period” provision. This term requires the participating nurse to work “for a period of time commencing upon the completion of [the nurse's] orientation … and becoming fully licensed and ending upon the later of (i) 36 months or (ii) 6, 240 regular-time work hours.” (Emp. Cont., Doc 1-2, #31; Id., Exs. A & B, #35, 38). In other words, the period starts upon the later of orientation or licensure, and then continues for at least three years of 52-week-per-year, forty-hour work weeks (i.e., 3 x 52 x 40 = 6, 240). Moreover, any hours of overtime do not count toward the 6, 240-hour target. And, if a nurse takes any vacation, of course, that time off likewise will not accrue any hours in regard to the contractually-specified Commitment Period.

Second, each Employment Contract contains an “Exclusivity” provision. Here, a participating nurse acknowledges that Health Carousel will invest “a significant amount of time, effort, and money” into the participating nurse's licensing and visa processing. Based on that, the nurse agrees not to seek sponsorship or accept any employment in the United States from another company, without Health Carousel's written consent, before that nurse has fulfilled his or her obligations under the Employment Contract. (Id. at #31).

Third and relatedly, each Employment Contract contains a non-compete and non-solicitation clause. This term prohibits a nurse from “seek[ing] employment … with any other healthcare provider within 50 miles of [the nurse's] Client facilities for one year after [the date the nurse leaves Health Carousel if the nurse violated the terms of the Employment Contract].” (Id. at #32). A nurse who left Health Carousel before the end of the Commitment Period, for example, would trigger this non-compete obligation.

Fourth and finally, each of Health Carousel's Employment Contracts contains a “Breach Obligation” provision. This clause states that, in the event of a given nurse's breach, “[the nurse] agree[s] that damages sustained by Health Carousel … are impossible, or at least very difficult, to estimate accurately and, for that reason, [the nurse] agree[s] that the [liquidated damages] amount is a reasonable forecast of fair compensation for any such breach.” (Id.). The Employment Contract does not specify a dollar figure for the liquidated damages, but rather sets forth a list of expenses and potential lost profit items that both parties agree will be used to determine the liquidated damages amount in a given case.^[2] And rather than provide a precise computation, the term merely states, if the nurse breaches the Employment Contract, the nurse “shall pay the liquidated damages to be agreed upon and shall be settled amicably by the parties without prejudice of filing the case in the proper court.” (Id.).

But the Employment Contract at issue here also includes an Addendum that further amends the Breach Obligation provision. Through the Addendum, the parties agree to a range of specifically identified liquidated damages figures. The applicable figure in each case depends on when the breach occurs in relation to the progress on the nurse's visa application. More specifically, the liquidated damages are set at: $1, 000 if the breach occurs before Health Carousel filed for the visa; $10, 000 if the breach occurs after filing but before issuance of the visa; and finally, $20, 000 if the breach occurs after the issuance of the visa but before the end of the “Commitment Period.” (Addendum to Emp. Cont., Doc. 1-2, #29). The Complaint further alleges that Health Carousel amended the Addendum over time to increase the liquidated damages figures for nurses who were recruited later-for example, raising the top amount from $20, 000 to $35, 000. (Compl. at ¶ 38, #140).

Upon arrival in the United States, a nurse receives and signs various agreements that, together, form a 183-page “Employee Handbook.” (Employee Handbook, (“Handbook”), Doc. 12-1). The Handbook mostly consists of Health Carousel's workplace policies and employee benefits information. Some of these policies simply notify Health Carousel employees of standard safety practices, like how to react in the case of a fire or how to safely transport a patient. Other policies provide rules that govern the nurse's workplace behaviors. For example, the Handbook prevents nurses from discussing the terms and conditions of their employment and prohibits “gossip” at work. (Id. at #316). Still other policies further describe the relationship between Health Carousel and the nurses. The Handbook, for instance, explains that “[a]s long as [a nurse] remain[s] in good standing with Health Carousel, we will continue to be [that nurse's] advocate for immigration purposes.” (Id. at #213).

The Handbook also revises some provisions in a nurse's earlier Employment Contract. Two of those revisions are relevant to Health Carousel's Motion. First, while the Employment Contract provides that a nurse's “Commitment Period” does not begin until the nurse obtains full licensure, the Handbook explains that “[s]ecuring and maintaining [a] licensure or certification is each [nurse's] responsibility.” (Id. at § 9.2, #340). Second, the Handbook tweaks the Breach Obligation provision from the Employment Contract. The Handbook does not alter the liquidated damages figures, but it does use different language when describing other consequences that flow from a breach. Specifically, while the Employment Contract provides that the liquidated damages shall be “settled amicably, ” the Handbook drops that language and states only that any liquidated damages amount will be “due immediately and in full on or before the last day” of the nurse's employment. (Id. at #282). Further, the Handbook indicates that Health Carousel will file suit and seek damages from any nurse who breaches the Employment Contract and fails to pay liquidated damages. (Id.). The Handbook then warns nurses that if they “leave the country, Health Carousel can still obtain a judgment that will be enforceable abroad.” (Id.).

B. Health Carousel Employs Carmen.

Carmen is a citizen...