Zelaya v. Hammer

516 F.Supp.3d 778

Isabel ZELAYA, Geronimo Guerrero, Carolina Romulo Mendoza, Luis Roberto Bautista Martínez, Martha Pulido, Catarino Zapote Hernández, and Maria Del Pilar Gonzalez, individually and on behalf of all others similarly situated, Plaintiffs,

v.Robert HAMMER, et al., Defendants.

Case No. 3:19-cv-62

United States District Court, E.D. Tennessee, Northern Division, at Knoxville.

Filed January 31, 2021

Araceli Martinez-Olguin, Pro Hac Vice, National Immigration Law Center, Los Angeles, CA, Arthur R. Bookout, Pro Hac Vice, One Rodney Square, Wilmington, DE, Eben P. Colby, Pro Hac Vice, Boston, MA, Jeremy Berman, Pro Hac Vice, One Manhattan West, New York, NY, Julia Solorzano, Pro Hac Vice, Michelle Lapointe, Pro Hac Vice, Norma Ventura, Pro Hac Vice, Southern Poverty Law Center, Decatur, GA, Kevin L. Herrera, Pro Hac Vice, National Immigration Law Center, Chicago, IL, Meredith B. Stewart, Pro Hac Vice, Southern Poverty Law Center, New Orleans, LA, Philip F. Cramer, Pro Hac Vice, William L. Harbison, Pro Hac Vice, John L. Farringer, IV, Sherrard Roe Voigt & Harbison, PLC, Nashville, TN, Trudy S. Rebert, Pro Hac Vice, National Immigration Law Center, Jackson Heights, NY, Whitney D. Wester, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom, LLP, Houston, TX, for Plaintiffs.

Kenny L. Saffles, Leah Walker McClanahan, U.S. Department of Justice, Knoxville, TN, for Defendants Robert Hammer, David Vicente, Francisco Ayala, Billy Riggins, Anthony Martin, Matthew Grooms, Jerrol S. Partin, Theodore Francisco, Travis Carrier, Trevor Christianson, Glen Blache, Brenda Dickson, George Nalley, Clint Cantrell, Ricky Thornburgh, Jonathan Hendrix, Ryan Hubbard, Wayne Dickey, James Liles, Michael Perez, Keith Hale, Dennis Fetting, Deni Bukvic, Kashif Chowhan, Blake Diamond, Paul Criswell, Jeffery Klinko, Jeffrey Schroder, David Lodge, Wayne Hinkle, Connie Stephens, Tommy Pannell, Shannon Hope, Troy McCarter, Bradley Harris, Joshua McCready, Ronald Appel, Bobby Smith, Robert Whited, Trey Lund, Michelle Evans, Nicholas R. Worsham, Steven Ledgerwood, Christopher Cannon, John Heishman, Aunrae Navarre, Ricky Smith, Matthew Moon, Jason Miller, Jeff Bednar, Austin Williams, United States of America.

Caitlyn Luedtke Elam, Lawrence F. Giordano, Lynn C. Peterson, Mary Ann Stackhouse, Terry Mitchell Panter, Lewis, Thomason, King, Krieg & Waldrop, P.C., Knoxville, TN, for Defendant John Witsell.

Leah Walker McClanahan, U.S. Department of Justice (Knox USAO) Office of U.S. Attorney, Knoxville, TN, for Defendant Does.

MEMORANDUM OPINION

TRAVIS R. MCDONOUGH, UNITED STATES DISTRICT JUDGE

This putative class action arises from a large immigration raid executed in northeastern Tennessee. Various Defendants have filed motions to dismiss. (Docs. 328, 330, 332, 334.) For the following reasons, the motions to dismiss will be GRANTED IN PART and DENIED IN PART .

I. BACKGROUND

The Southeastern Provision Meatpacking Plant (the "Plant")¹ is situated in the small town of Bean Station, Tennessee. (Doc. 315, at 20.)² Its primary business at the relevant time was processing and packaging beef. (Id. ) The Plant is a large, two-story warehouse connected to several small buildings. (Id. ) It contains three offices, a locker room, bathrooms, several large freezer sections, a processing area, and a "kill floor" where workers butcher cattle. (Id. ) The Plant's physical and electronic records are stored in the offices and a storage area. (Id. at 21.)

A. The Search Warrant

At some point, the Internal Revenue Service ("IRS") began investigating the Plant's owner, James Brantley, for possible violations of federal tax and immigration law. (Id. ) On April 2, 2018, a federal magistrate judge issued a warrant for the IRS to search the Plant and to seize a list of items, such as financial records, employee records, currency, and electronic storage devices. (Id. ; see also Doc. 315-1, at 2–7.) The warrant was predicated on the affidavit of IRS Special Agent Nicholas R. Worsham. (Doc. 315-2.) In his affidavit, Worsham swore that investigation of the Plant had given him probable cause to believe that Brantley had evaded assessment and payment of federal employment taxes in violation of 26 U.S.C. § 7201 ; willfully failed to collect and pay federal employment taxes in violation of 26 U.S.C. § 7202 ; filed false federal tax returns in violation of 26 U.S.C. § 7206(1) ; and unlawfully employed illegal aliens in violation of 8 U.S.C. § 1324(a). (See id. at 4.) While the affidavit referenced the suspected presence of undocumented immigrants at the Plant, it did not discuss—and the warrant did not authorize—the seizure, detention, or arrest of any individual, undocumented or otherwise. (Doc. 315, at 21–22; see also Docs. 315-1, 315-2.)

The affidavit explained that Worsham had been an IRS special agent since 2006, investigating potential violations of federal internal-revenue, money-laundering, and currency laws. (Doc. 315-2, at 3.) Worsham began investigating Brantley and the Plant because personnel at Citizens Bank had noticed large, weekly cash withdrawals from Southeastern Provision's accounts. (Id. at 7.) Pamela Brantley (wife of James Brantley), Kelsey Brantley (daughter of Pamela and James), and Priscilla Keck, an employee of Southeastern Provision, made the withdrawals. (Id. at 7–8.) They told bank personnel that "the cash was used for payroll." (Id. at 8.) Bank personnel toured the Plant with Pamela Brantley, observed the installation of a large vault, and heard her explain that "the employees were Hispanic and were paid weekly with cash." (Id. ) According to Worsham, his knowledge, experience, and training suggested that employers "who pay employees with cash often do so to avoid paying various types of taxes including federal employment taxes" and that employers "who employ illegal aliens often pay the illegal aliens in cash because [they] do not possess appropriate documentation to complete" tax forms. (Id. at 4.) After the investigation began, Worsham obtained documents reflecting Southeastern Provision's $25 million in cash withdrawals since 2008. (Id. at 7–8.)

As part of the investigation, a confidential informant (the "Informant") gained employment at the Plant in May 2017. (Id. at 8.) The Informant completed no paperwork and provided no documentation or identification prior to hiring. (Id. ) After the Informant used a fake name when speaking with a person he/she knew from the area, a Plant employee encouraged the Informant to use his/her real name and "not to worry" because one "need not have a lawful identity" to work at the Plant. (Id. at 8–9.) Plant personnel told the Informant that the wage was $10 per hour, payable weekly in cash. (Id. at 9.) Other employees told the Informant that they received the same pay in the same manner and that all employees recorded their hours in a logbook in a main office or lobby area at the end of each day. (Id. ) The Informant was told he/she would "be a ‘supervisor’ because [he/she] was capable of speaking both Spanish and English," from which the Informant inferred "that many of the other employees spoke only Spanish." (Id. )

The Informant worked at the Plant for four days, during which time he/she observed "approximately 25 employees working on the production line, 4 employees on the cleaning crew, 3 employees working as mechanics, 3 employees driving fork lifts, and two females working in the main lobby." (Id. at 9–10.) Other than the women in the lobby, every employee the Informant observed was Hispanic. (Id. at 10.) Worsham concluded that this was "relevant" because "representatives of Southeastern Provision told Citizens Bank personnel that the large cash withdrawals were made for the purpose of paying cash wages to Hispanics. " (Id. (emphasis in original).) During the week that the Informant worked at the Plant, Worsham learned that representatives of Southeastern Provision withdrew $101,000 in cash from Citizens Bank; assuming each employee worked eight hours per day, Worsham calculated that hourly wages for the employees the Informant observed would have been $72.14—more than Worsham estimated that production-line workers, cleaners, mechanics, and fork-lift drivers ordinarily earn—leading Worsham to conclude that the Plant likely employed more than the 35 people the Informant observed (Id. ) and more than the 39 (2013), 32 (2014), 37 (2015), and 23 (2016) W-2 employees Southeastern Provision reported to federal authorities in prior tax years (Id. at 16). The Informant also knew independently that some workers at the Plant had lost jobs at another meat-processing facility because their identity documentation was fraudulent. (Id. at 10.) Finally, on March 2, 2018, law-enforcement agents instructed the Informant to return to the Plant while equipped with covert-video-surveillance equipment, during which he/she observed 60–70 mostly Hispanic employees at the Plant. (Id. at 11.)

Worsham reviewed bank records for Southeastern Provision and concluded that the company had withdrawn cash sums ranging from $62,000 to $122,000 each week of 2017. (Id. ) Based upon the Informant's observations and the bank records, law enforcement conducted surveillance of two representatives of Southeastern Provision on October 11, 2017, and November 14, 2017. (Id. at 12.) Each was observed withdrawing large sums of cash from the bank before returning to the Plant (or, in the case of one representative who lived adjacent to the Plant, to the representative's residence). (Id. ) Aerial photographs of the Plant on October 11, 2017, and November 14, 2017, confirmed the presence of 87 passenger vehicles and 80 passenger vehicles, respectively. (Id. at 13.)

Worsham also concluded that, for tax years 2013–2016, Southeastern Provision withdrew cash exceeding reported wages by amounts between approximately $1.5 million to $2.6 million. (Id. at 15–17.) Worsham's calculations led him to conclude that he had "probable cause to believe that for 2013 through 2016,...