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November 20, 2000


The opinion of the court was delivered by: Schwartz, District Judge.


Plaintiffs, former employees of defendant Wilco Systems ("Wilco"), commenced this action seeking compensatory damages, punitive damages, and injunctive relief arising out of the alleged exploitation of domestic and foreign workers in violation of the Immigration and Nationality Act ("INA"), the Fair Labor Standards Act ("FLSA") and New York state law. Currently before the Court are separate motions to dismiss by Wilco and by defendants Janet Reno and Alexis Herman (the "government defendants"). For the reasons set forth below, Wilco's motion to dismiss is granted in part and denied in part, and the government defendants' motion is granted.

I. Factual Background

The following facts are accepted as true for the purposes of the motions to dismiss, unless otherwise noted. At all times relevant to the instant action, plaintiff Sona Shah ("Shah") was a citizen of the United States residing in the state of New Jersey. (Second Amended Complaint ("Compl.") ¶ 1.) Plaintiff Kai Barrett ("Barrett") is a citizen of the United Kingdom who worked for Wilco in the United States on an H-1B visa obtained by Wilco; such a visa permits an alien classified as a "nonimmigrant" to work in the United States for a defined period, subject to certain conditions.*fn1 (Id. ¶ 2; 8 U.S.C. § 1182(n).) Defendant Wilco, a corporation organized and existing under the laws of New York with offices located in New York, provides brokerage processing and related services, including software development, to the financial brokerage industry. (Id. ¶ 3; Memorandum of Law in Support of Defendant Wilco Systems, Inc.'s Motion to Dismiss and Strike Portions of the Second Amended Complaint ("Wilco's Mem.") at 1.) According to Wilco, most of its employees are computer programmers who develop, write, and customize its software products. (Wilco's Mem. at 1.) Defendants Janet Reno and Alexis M. Herman are, respectively, the current Attorney General of the United States (the "Attorney General") and U.S. Secretary of Labor (the "Secretary of Labor"). (Id. ¶¶ 4, 5.)

On or about September 16, 1996, Shah was hired as a computer programmer to work with the computer program "Gloss," and on or about the same day Barrett was hired by an affiliate of Wilco in London as a systems specialist to work on Wilco's internal computer system. (Id. ¶¶ 21, 22.) Both plaintiffs participated in Wilco's training program in London, England, and both apparently stayed on to work in the London offices. (Id. ¶ 23.) In the second week of June 1997, Wilco's managing director informed Shah that Wilco was seeking foreign workers for placement in its New York offices, and asked her if she would assist in the recruitment of Indian workers under a program that members of management referred to as "Operation Delhi Belly." (Compl. ¶¶ 26-27, 49.) Plaintiffs allege that Shah was told that Indian workers were needed because "Americans don't make quality workers — they're stupid, they're too expensive and difficult to control." (Id. ¶ 26.) Plaintiffs contend that Wilco discriminated against both foreign and domestic workers, and otherwise violated federal and state law in their employment of temporary foreign workers.

The specific allegations with regard to foreign workers focus on Barrett, who was transferred to Wilco's New York office from London on or about June 23, 1997, purportedly to replace a domestic worker. While on the London payroll, he was paid approximately $27,000 a year, and once on the New York payroll as an H-1B worker, his salary was never more than $48,000. (Id. ¶¶ 32-34.) Barrett was purportedly told that his salary was lower than the prevailing market rate because Wilco believed he could not leave his job due to his H-1B status. (Id. ¶ 34.) Upon his departure from Wilco, Barrett obtained a job as a computer programmer for which he received a salary of $75,000 and a bonus of $25,000. (Id. ¶ 35.)

The allegations with respect to domestic workers focus on Shah. When Shah returned to Wilco's New York office on or about June 22, 1997, she did not receive requested training or work assignments, and "was not provided with a seat, a desk, or a computer and was left idle." (Id. ¶ 36.) Despite the fact that domestic workers were qualified for available work assignments, the assignments were filled by foreign workers, who had received additional training not made available to domestic workers like Shah. (Id. ¶¶ 37, 38, 53-54.) Shah was eventually assigned to Wilco's consulting team at Goldman Sachs, but was replaced five weeks later by a British employee working on a H-1B visa. In September 1997, she was assigned to Natwest and was subsequently replaced by a foreign employee, and in February 1998 she was assigned to another client, ADP, where she was the only domestic worker among her team of programmers. (Id. ¶¶ 40, 42, 45, 46.) Other domestic workers had similar experiences. (Id. ¶¶ 43, 44, 47, 48.) Plaintiffs assert that "all rates of pay, training programs and working conditions were [] based upon the nationality of a worker." (Id. ¶¶ 28, 62.) The nonimmigrant employees working for Wilco, and specifically those working with plaintiff, were being paid significantly less than qualified domestic workers, both those working at Wilco and in the applicable market; the Indian employees were paid less than any other workers. (Id. ¶¶ 30, 58, 61, 62, 70.) Moreover, Wilco's foreign workers were also subject to inferior working conditions. (Id. ¶¶ 30, 71.)

In early 1998, several American workers were terminated after several of the Indian recruits had completed their training. (Id. ¶ 55.) On April 1, 1998, while she was assigned to ADP, Shah was terminated. (Id. ¶ 64.) Plaintiffs claim that she was terminated "because she was an American worker, as an example to the Indian workers . . . and in retaliation for her discussions and statements [to the other workers] regarding Wilco's employment practices." (Id.) In particular, plaintiffs allege that "Wilco discharged [Shah] as a reprisal for her efforts to secure her legal rights and as an attempt to intimidate and prevent foreign workers from looking into theirs . . ." (Id.) Plaintiffs state that at the meeting at which Shah was fired, "[she] was branded as `difficult to control' due to her efforts to give Indian employees information Wilco withheld from them in flagrant violation of the laws of the United States," and was isolated from the foreign employees so she would not encounter them when she left Wilco's premises. (Id. ¶¶ 65, 66, 68.) Shah was purportedly replaced by a foreign employee. (Id. ¶¶ 69, 70.)

Plaintiffs filed the instant action on December 14, 1999. The Second Amended Complaint sets forth class allegations pursuant to which Shah and Barrett are representative members for similarly situated domestic and foreign workers, specifically current and former employees of Wilco who work or worked as computer programmers, systems analysts, technicians, "or who in any way worked with Wilco's software program `Gloss'" within three years prior to the filing of the action. (Id. ¶¶ 6-14.) The basis for plaintiffs' allegations is a comprehensive scheme by Wilco pursuant to which Wilco imported foreign workers in order to displace domestic workers, paid foreign workers a salary that was "far below the prevailing wages for their skills in the local United States market" based on their nationality, and failed to adequately train domestic workers or to pay them a competitive salary. (Id. ¶¶ 28, 30, 44, 54, 57, 62.)

Plaintiffs assert eight causes of action: (i) against Wilco for employing domestic and H-1B workers under illegal terms, in violation of the INA, specifically 8 U.S.C. § 1182(n) ("Section 1182(n)"); (ii) against Wilco for discrimination against plaintiffs in the terms and conditions of employment in violation of unstated "Federal and State law"; (iii) against Wilco for retaliation against Shah in violation of Section 1182(n) and the FLSA, 29 U.S.C. § 215 ("Section 215"); (iv) against Wilco for failure to pay its employees overtime or holiday pay, in violation of the FLSA, 29 U.S.C. § 207, 216(d); (v) against Wilco for discrimination in violation of the unfair employment practices provision of the INA, 8 U.S.C. § 1324b ("Section 1324b"); (vi) against Wilco for discrimination in violation of the New York Human Rights Law, N.Y. Executive Law § 290, and the New York City Human Rights Law, Sec. 8-107 of the New York City Administrative Code; (vii) against Wilco for breach of contract and the duty of good faith and fair dealing; and (viii) against the government defendants for their failure to police the activities of entities seeking the admission of nonimmigrant workers, in violation of the Section 1182(n). (Id. ¶¶ 73-121.)

Defendant Wilco now moves to dismiss plaintiffs' first, second, third, and fifth causes of action as they relate to the INA for lack of subject matter jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1) ("Rule 12(b)(1)"), or for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6) ("Rule 12(b)(6)"). Wilco also moves, pursuant to Fed.R.Civ.P. 12(f) ("Rule 12(f)"), to strike plaintiffs' class allegations as they relate to the INA as irrelevant to the instant action. Moreover, to the extent the Court does not dismiss plaintiffs' first or second causes of action, Wilco moves for a more definite statement of these claims pursuant to Fed. R.Civ.P. 12(e) ("Rule 12(e)"). (Wilco's Mem. at 4 n. 2.) Further, Wilco moves to dismiss plaintiffs' third cause of action as it relates to the FLSA, and plaintiffs' seventh claim pursuant to Rule 12(b)(6).*fn2 The government defendants move to dismiss plaintiffs' eighth claim under Rule 12(b)(1) for lack of subject matter jurisdiction.

II. Discussion

A. Motion to Dismiss Standard

On a Rule 12 motion to dismiss, the Court must accept the factual allegations contained in the complaint as true, and draw all reasonable inferences in favor of the non-movant; it should not dismiss the complaint "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993) (noting that factual allegations in the complaint must be accepted as true on motion to dismiss); Press v. Quick & Reilly, Inc., 218 F.3d 121, 128 (2d Cir. 2000) (same). In order to survive dismissal, a plaintiff must assert a cognizable claim and allege facts that, if true, would support such a claim. See Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir. 1997).

On a Rule 12(b)(1) motion challenging the district court's subject matter jurisdiction, the Court may resolve the disputed jurisdictional fact issues by referring to evidence outside of the pleadings, such as affidavits, and if necessary, hold an evidentiary hearing. See Zappia Middle East Const. Co. Ltd. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir. 2000). However, when matters outside the pleadings are presented on a motion to dismiss for failure to state a claim under Rule 12(b)(6), the district court must either exclude the additional material and decide the motion on the complaint alone or convert the motion to one for summary judgment and afford all parties the ...

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