In Simpson v. Sanderson Farms, Inc., Case No. 13-10624 (decided March 7, 2014), the United States Court of Appeals for the Eleventh Circuit affirmed the dismissal of a putative class action filed under the Racketeer Influenced and Corrupt Organizations (RICO) Act. The plaintiffs alleged that the defendants’ practice of hiring illegal immigrants had depressed the wages of employees who were lawfully in the country. For practitioners, the larger significance of thisSimpson decision lies in the Eleventh Circuit’s enforcing of a high standard for pleading the factual basis for a claim.
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the United States Supreme Court stated that to survive a motion to dismiss, a plaintiff must plead sufficient facts to state a plausible claim for relief. The Eleventh Circuit relied upon that standard to find that the plaintiffs in the Simpson case had not plead enough facts to state a claim that they had been injured by a RICO violation. Of particular concern to the Court was the plaintiffs’ failure to plead sufficient facts to establish that the defendants’ alleged hiring of illegal immigrants had depressed wages. Opinion, p. 12. The Court found that the plaintiffs offered only conclusory assertions of depressed wages. It noted that the plaintiffs had presented no “market data” that would permit a court to infer a gap between the wages actually received by the plaintiffs and what they would have received but for the alleged illegal conduct. Opinion, p. 13. They did not define the relevant labor market “in quantifiable terms” Opinion, p. 15 (emphasis in original). They did not plead how many illegal workers were in that market. Opinion, p. 15. They did not plead how many total workers the defendants had hired. Opinion, p. 16. Plaintiffs had not identified the geographic scope of the relevant labor market. Opinion, p. 16. “[B]ecause the plaintiffs’ theory of injury turns peculiarly on assertions about the relevant labor market, the amended complaint cannot plausibly show injury without pleadingany of these market facts or data.” Opinion, p. 19.
The Simpson case sets a high bar for pleadings by a plaintiff. Obtaining the facts that the Court found missing in the complaint in the Simpson case would have required a considerable investigation before filing the complaint, possibly including the hiring of an expert to perform a market analysis the Court appeared to require. In the future, defendants in federal court should be expected to cite Simpson frequently in an effort to attack inadequate pleadings.