United States ex rel. Lesnik v. Eisenmann Se

UNITED STATES OF AMERICA, ex rel. GREGOR LESNIK; STJEPAN PAPES, Plaintiffs, v. EISENMANN SE, et al., Defendants.

No. 16-CV-01120-LHK

United States District Court, N.D. California, San Jose Division

September 19, 2021

ORDER GRANTING IN PART AND DENYING PLAINTIFFS' THIRD MOTION FOR DEFAULT JUDGMENT AS TO TRAFFICKING VICTIMS PROTECTION REAUTHORIZATION ACT CLAIM

RE: DKT. NO. 560

LUCY H. KOH, UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiffs Gregor Lesnik and Stjepan Papes' (collectively, “Plaintiffs”) third motion for default judgment as to Plaintiffs' Trafficking Victims Protection Reauthorization Act (“TVPRA”) claim against Defendants ISM Vuzem d.o.o., ISM Vuzem USA, Inc. Vuzem USA, Inc., Robert Vuzem, Ivan Vuzem, and HRID-Mont d.o.o. ECF Nos. 560 (“Mot.”). Having considered the Plaintiffs' briefing, the relevant law, and the record in this case, the Court GRANTS in part and DENIES in part Plaintiffs' third motion for default judgment as to Plaintiffs' TVPRA claim.

I. BACKGROUND

A. Factual Background

1. The Parties

Defendant ISM Vuzem d.o.o. is a Slovenian business entity with its principal place of business in Slovenia. Third Amended Complaint, ECF No. 269, at ¶ 9 (“TAC”). Defendant ISM Vuzem USA, Inc. was a South Carolina corporation with its principal place of business in South Carolina. Id. at ¶ 12. Defendant Vuzem USA, Inc. was a California corporation with its principal place of business in California. Id. at ¶ 13. Defendant Robert Vuzem is a resident of Slovenia. Id. at ¶ 10. Defendant Ivan Vuzem is a resident of Slovenia. Id. at ¶ 11. Defendant HRID-MONT d.o.o. is a Slovenian corporation with its principal place of business in Slovenia. Id. at ¶ 14.

Plaintiff Gregor Lesnik is a resident of Slovenia and was allegedly hired by ISM Vuzem d.o.o. and brought to the United States to work at the Tesla manufacturing plant in Fremont, California in 2015. Id. at ¶ 1. Plaintiff Stjepan Papes is a resident of Croatia and was allegedly hired by ISM Vuzem d.o.o. and brought to the United States to work at various locations between 2013 and 2015, including at the Tesla manufacturing plant in Fremont, California. Id. at ¶ 2.

2. Alleged Conduct of the Defendants

Plaintiffs allege that the Eisenmann Corporation (“Eisenmann”), a former Defendant in this case, formed relations with a number of manufacturing entities, such as Tesla, to perform construction work related to Eisenmann's equipment. TAC at ¶ 70. Plaintiffs allege that Eisenmann, to fulfill these agreements, would hire subcontractors who would then provide the laborers necessary to complete the equipment installation. Id. at ¶ 84, 107-8. Among those subcontractors were ISM Vuzem d.o.o., ISM Vuzem USA, Inc., and Vuzem USA, Inc. Id.

Although all of the work described in the TAC occurred in the United States, ISM Vuzem d.o.o. did not use American workers. Instead, the TAC alleges that ISM Vuzem d.o.o. and the other subcontractor Defendants hired workers internationally. For example, to help install a paint shop at a Tesla facility in Fremont, California, ISM Vuzem d.o.o. hired Lesnik and Papes. Id. at ¶¶ 1-2, 60, 111, 213. Lesnik and Papes were allegedly brought to the United States on B-1 visas that are generally reserved for skilled work, even though ISM Vuzem d.o.o. and other Defendants allegedly knew the workers would actually be performing unskilled construction work. Id. at ¶¶ 58-91, 211. ISM Vuzem d.o.o. and other Defendants allegedly submitted letters to the United States Consulate containing false statements to obtain B-1 visas on Lesnik and Papes' behalf. Id. at ¶¶ 206, 211, 213, 216.

The TAC alleges that Lesnik and Papes, once in the United States, were paid far below minimum wage and were forced to work extreme hours. Lesnik allegedly worked at least 10-12 hours a day, over 80 hours a week, and received almost no time off work. Id. at ¶ 237. Papes worked a similar number of hours. Id. ISM Vuzem d.o.o also allegedly threatened to withhold pay if workers became too sick to work or reported a job injury; threatened to withhold medical benefits if workers reported a job injury; threatened to cancel visas; threatened to file a civil suit against Lesnik while he was hospitalized; and even told Lesnik that “this will not go well for you.” Id. at ¶ 315, 338-39. The TAC also alleges that the foreign workers were subject to poor living conditions in the United States, such as being housed in facilities without kitchens, having multiple workers sleep in the same bedroom, and typically having 6 to 10 workers share a single bathroom. Id. at ¶ 318.

B. Procedural Background

Plaintiffs filed the complaint initiating this lawsuit on March 7, 2016. ECF No. 1. On July 15, 2016, Plaintiffs filed the First Amended Complaint. ECF No. 20. On April 25, 2017, the United States filed a notice that it would not intervene in the instant case. ECF No. 25. On April 25, 2017, the Court unsealed the complaint. ECF No. 26.

On August 8, 2017, the Court granted Plaintiffs' motion to file a Second Amended Complaint, and directed the United States to make a “prompt decision” regarding intervention. ECF No. 31. On October 5, 2017, the United States filed another notice that it would not intervene in the instant case. ECF No. 34. On November 11, 2017, Plaintiffs filed the Second Amended Complaint. ECF No. 37.

On July 12, 2018, various moving Defendants-Eisenmann, Tesla, Mercedes-Benz, Deere, REHAU, LaX, VW, Discatal, and BMW-filed a motion to dismiss the Second Amended Complaint. ECF No 219. On October 1, 2018, the Court granted in part and denied in part the motion to dismiss the Second Amended Complaint. ECF No. 255.

On October 31, 2018, Plaintiffs filed a 108-page Third Amended Complaint. ECF No. 269. (“TAC”). The TAC alleges 13 causes of action (some of which are duplicative). At issue in the instant third motion for default judgment is Plaintiffs' claim pursuant to the TVPRA (Count 9). Id. at ¶ 312.

On March 28, 2019, Plaintiffs filed summons returned notices for the TAC on Defendants. ECF Nos. 362-372. On April 17, 2019, Plaintiffs filed motions for entry of default against seven Defendants. ECF Nos. 382-388. On November 11, 2019, Plaintiffs filed motions for entry of default against the remaining Defendants. ECF Nos. 425-428. On November 7, 2019, the Clerk of the Court entered default against four of the Defendants. ECF Nos. 430-433. On January 16, 2020, the Clerk of the Court entered default against the seven remaining Defendants. ECF Nos. 443-449.

On February 19, 2020, the Court ordered Plaintiffs to file motions for default judgment by February 28, 2020. ECF No. 457. On February 28, 2020, Plaintiffs filed a motion for default judgment on their False Claims Act claim. ECF No. 461. On February 29, 2020, Plaintiffs filed a motion for default judgment on their Federal Labor Standards Act claims. ECF No. 470. On February 29, 2020, Plaintiffs also filed a motion for default judgment on their TVPRA claim and state trafficking claim. ECF No. 468.

On June 26, 2020, the Court denied without prejudice Plaintiffs' motions for default judgment. ECF No. 498. The Court explained that there were numerous deficiencies in Plaintiffs' motions, including (1) that Plaintiffs' motions failed to address the Court's subject matter and personal jurisdiction, and (2) that three of Plaintiffs' four default judgment motions failed to brief the Eitel factors, which govern entries of default judgment. Id.

On August 24, 2020, Plaintiffs filed a second round of motions for default judgment and entry of final judgment. ECF Nos. 501, 505, and 506. Plaintiffs filed a second motion for default judgment and an entry of final judgment on Plaintiffs' Fair Labor Standards Act claim. ECF No. 501. Plaintiffs filed a second motion for default judgment and an entry of final judgment on Plaintiffs' False Claims Act claim. ECF No. 505. Plaintiffs filed a third motion for default judgment and an entry of final judgment on Plaintiffs' TVPRA claim. ECF No. 506.

On August 25, 2020, Plaintiffs filed notices of voluntary dismissal without prejudice of their California trafficking claims and California wage claims. ECF Nos. 512, 513.

On February 10, 2021, the Court denied Plaintiffs' second round of motions for default judgment without prejudice. ECF No. 551. The Court found that Plaintiffs had failed to establish the Court's personal jurisdiction over Defendants, which the Court must do before entering default judgment. Id. at 11. Furthermore, the Court found that Plaintiffs had failed to provide evidence that Defendants Magna d.o.o and We-Kr d.o.o. were properly served. Id. at 13.

On April 8, 2021, Plaintiffs filed a third motion for default judgment on Plaintiffs' TVPRA claim. ECF No. 560 (“Mot.”). On April 9, 2021, Plaintiffs filed a third motion for default judgment on Plaintiffs' False Claims Act claim. ECF No. 564 (“Mot.”). On April 11, 2021, Plaintiffs filed a third motion for default judgment on Plaintiffs' Fair Labor Standards Act claim. ECF No. 565.

On September 17, 2021, the Court denied Plaintiffs' third motion for default judgment as to Plaintiffs' False Claim Act claim and dismissed Plaintiffs' False Claim Act claim with prejudice. ECF No. 585.

The Court will address Plaintiffs' third motion for default judgment as to Plaintiffs' Fair Labor Standards Act claims in a separate order.

C. Requests for Judicial Notice

The Court may take judicial notice of matters that are either “generally known within the trial court's territorial jurisdiction” or “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). Moreover, courts may consider materials referenced in the complaint under the incorporation by reference doctrine, even if...