Llacua v. W. Range Ass'n

930 F.3d 1161

Rodolfo LLACUA; Esliper Huaman; Leovegildo Vilchez Guerra; Liber Vilchez Guerra; Rafeal De La Cruz, Plaintiffs - Appellants,

v.WESTERN RANGE ASSOCIATION; Mountain Plains Agricultural Service ; Martin Auza Sheep Corporation; Nottingham Land and Livestock, LLLP; Two Bar Sheep Corporation, LLC ; Cunningham Sheep Company; Dennis Richins, D/B/A Dennis Richins Livestock, Defendants - Appellees.

No. 17-1113

United States Court of Appeals, Tenth Circuit.

Filed July 16, 2019

David H. Seligman (Alexander N. Hood with him on the briefs), Towards Justice, Denver, Colorado for Plaintiffs-Appellants.

James Larry Stine, Wimberly, Lawson, Steckel, Schneider & Stine, P.C., Atlanta Georgia, and Amber J. Munck, Greenberg Traurig, Denver, Colorado (Elizabeth K. Dorminey, Wimberly, Lawson, Steckel, Schneider & Stine, P.C., Atlanta, Georgia, and Naomi G. Beer and Harriet McConnell, Greenberg Traurig, Denver, Colorado, with them on the brief), for Defendants-Appellees Western Range Association and Mountain Plains Agricultural Service.

Kenneth F. Rossman IV, Lewis Roca Rothgerber Christie LLP, Denver, Colorado, (Stacy Kourlis Guillon, Lewis Roca Rothgerber Christie LLP, Denver, Colorado; Bradford J. Axel, Stokes Lawrence, P.S., Seattle, Washington; and J. Rod Betts, Paul, Plevin, Sullivan & Connaughton LLP, San Diego, California, with him on the brief), for Defendants-Appellees Nottingham Land and Livestock, LLLP, Two Bar Sheep Corporation, LLC, Cunningham Sheep Company, and Martin Auza Sheep Company.

Before HARTZ, MURPHY, and McHUGH, Circuit Judges.

MURPHY, Circuit Judge.

I. INTRODUCTION

Five Peruvian shepherds (the "Shepherds")¹ who worked in the Western United States pursuant to H-2A agricultural visas² brought antitrust³ claims, on behalf of themselves and similarly situated classes of shepherds, against several sheep ranchers (the "Rancher Defendants"),⁴ two associations (the "Association Defendants"),⁵ and Dennis Richins⁶ (referred to collectively as the "Defendants"). The Shepherds alleged the Defendants "conspired and agreed to fix wages offered and paid to shepherds at the minimum DOL wage floor." The Shepherds also brought class action RICO⁷ claims against Richins and the Association Defendants. The RICO claims focus on allegedly false assurances made by the Association Defendants to the federal government that H-2A shepherds are being properly reimbursed for "reasonable costs incurred by the worker for transportation and daily subsistence from the place from which the worker has come to work for the employer," as required by 20 C.F.R. § 655.122.

The district court dismissed the antitrust claims on the ground the allegations in the operative complaint, the second amended complaint ("SAC"), did not plausibly allege an agreement to fix wages. The district court dismissed the RICO claims because the SAC failed to allege the existence of enterprises distinct from the persons alleged to have engaged in those enterprises. Thereafter, the district court denied the Shepherds’ request to file a third amended complaint ("TAC"). It concluded the majority of the proposed amendments were futile. Alternatively, the district court concluded the proposed amendments were dilatory and allowing amendment would unduly prejudice the Defendants. The Shepherds appeal, asserting the SAC states valid Sherman Act and RICO claims and insisting the district court abused its discretion in denying their motion to file the TAC. We agree that the district court erred in dismissing the RICO claim naming Richins as a defendant. In all other regards, the district court is affirmed. Thus, exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court affirms in part , reverses in part , and remands to the district court for further proceedings.

II. DISCUSSION

A. Second Amended Complaint

1. Background

a. Federal Regulatory Background

The federal regulatory scheme governing the importation and employment of H-2A shepherds is set out in detail in the SAC. Because it is necessary to an understanding of the Shepherds’ antitrust claims, this court sets out the regulatory scheme at some length.

H-2A shepherds are nonimmigrant foreign nationals permitted to work temporarily in the United States under visas authorized by the DOL.⁸ The H-2A program allows for issuance of visas to foreign workers to fill agricultural positions employers cannot fill through the domestic labor market.⁹ See generally 8 U.S.C. §§ 1101(a)(15)(H)(ii)(a), 1188. Under regulations promulgated by the DOL to implement its statutory duty to protect American workers, employers must first offer the job to workers in the United States. 20 C.F.R. § 655.121.¹⁰ Furthermore, the employer must offer domestic workers "no less than the same benefits, wages, and working conditions that the employer is offering, intends to offer, or will provide to H-2A workers." Id. § 655.122(a).¹¹ Only if an American worker does not accept a position offered through this process can the employer submit an Application for Temporary Employment Certification (an "H-2A Application") to the DOL. See generally 8 U.S.C. § 1188(a), (c)(3)(A).

The DOL can promulgate exceptions to the H-2A visa program, known as "special procedures," for particular agricultural industries. See 20 C.F.R. § 655.102. The DOL has implemented special procedures governing the minimum wage for H-2A shepherds.¹² See id .; see also Labor Certification Process for the Temporary Employment of Aliens in Agriculture in the United States: Adverse Effect Wage Rate for Range Occupations Through 2016, 80 Fed. Reg. 70,840, 70,840 (Nov. 16, 2015) (hereinafter the "2015 Special Procedures"); Special Procedures: Labor Certification Process for Employers Engaged in Sheepherding and Goatherding Occupations under the H–2A Program, 76 Fed. Reg. 47,256 (Aug. 4, 2011) (hereinafter the "2011 Special Procedures").¹³ Under the 2011 Special Procedures, the DOL established an AEWR component of the minimum wage that varied by state. As of November 16, 2015, the AEWR component of minimum wage for H-2A shepherds was raised by the DOL to $1206.31 per month and made uniform across all states.¹⁴ See 2015 Special Procedures, 80 Fed. Reg. 70,840, 70,840.¹⁵ The SAC alleges that there is no statute, regulation, or special procedure preventing employers from offering higher wages to domestic workers, via relevant Job Orders, or to foreign shepherds via H-2A Applications.

b. The Parties

i. The Association Defendants

WRA and MPAS are membership associations for sheep ranchers. They recruit and hire shepherds for their member ranches. WRA characterizes itself as a joint employer on Job Orders and H-2A Applications. See 20 C.F.R. § 655.103(b) (defining the term "joint employment").¹⁶ MPAS, on the other hand, characterizes itself as an agent for its member ranches. See id. (defining the term "agent"); see also 20 C.F.R. § 655.133 (setting out requirements for agents). The relevant statute and regulations expressly contemplate that agents and associations acting as an agent can file Job Orders on behalf of sheep ranchers. 8 U.S.C. § 1188(d) ; 20 C.F.R. §§ 655.130, 655.131, 655.133. The Shepherds specifically focus on WRA’s and MPAS’s recruitment and hiring of "open range" shepherds.¹⁷ From October 1, 2013, to October 1, 2014, WRA hired approximately 55% of all open range shepherds hired in the United States. During that same time frame, MPAS hired approximately 36% of all open range shepherds hired in the United States. WRA and MPAS submitted Job Orders for domestic workers on behalf of the Rancher Defendants. They also submitted H-2A Applications to DOL on behalf of the Rancher Defendants.

ii. The Rancher Defendants

Each of the Rancher Defendants is alleged to be, or have been, members of WRA or MPAS within the four years prior to the filing of the SAC. The Rancher Defendants are located in multiple western states. All of them, however, send their sheep to Colorado for "finishing." Except as to Richins, see supra n. 6, the Shepherds do not allege any facts that distinguish the Rancher Defendants from other members of WRA and/or MPAS. For example, the Shepherds allege they were each an WRA or MPAS "employee,"¹⁸ but do not identify the ranches at which they worked. Instead, after identifying each of the Rancher Defendants, the remainder of the SAC refers to these Defendants collectively.¹⁹

iii. The Shepherds

Paragraph forty-three of the SAC describes the essential functions of a shepherd as follows:

shepherds tend herds of 1,000 sheep or more, often in rugged high altitude terrain or dry desert conditions, hauling water for the animals, herding them to grazing areas and making sure they have enough to eat, keeping them from going astray, and protecting them from the constant threat of natural predators like coyotes, mountain lions, and wolves, harmful or poisonous plants, and man-made dangers like highways and domesticated dogs. During lambing ... season, the shepherds assist the animals in the birthing process, and at all times, the shepherds provide for the health and medical needs of the herd.

Appellant’s App. Vol. I at 31. The complaint also alleges that the life of a shepherd is socially isolated and generally devoid of most modern conveniences Americans take for granted (i.e., access to functional indoor plumbing).

c. The Allegations in the Second Amended Complaint

i. Antitrust Claims²⁰

Job Orders submitted to the DOL by the Association Defendants during the relevant period offered exactly the applicable minimum wage. See supra at 1169–70 & n.10 (explaining that the Job Order process is a highly regulated attempt to hire domestic shepherds as a precursor to the filing of an H-2A Application). WRA filed Job Orders on behalf of multiple member ranches with an identical wage rate for all ranches operating in a state. For instance, one of the many representative Job Orders attached to the SAC offers eighteen possible domestic shepherds $750.00 per month—the then-minimum wage for H-2A shepherds...