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Ferro v. Metropolitan Center for Mental Health

United States District Court, S.D. New York

May 16, 2014

MARIA GONZALEZ FERRO, ALEXANDRA CATTARUZZA, MARA OLIVA, SILVANA BONIL, CATALINA ANGEL, LUMA RIVERA, MARIA PAZ CUEVAS, MARCIA ZORRILLA, EULALIA PEREZ, DANIEL CRIADO, ERIC LOSADA, RICARDO VACCA, and HEYDI DE LA CRUZ on their own behalf and on behalf of a class similarly situated, Plaintiffs,
v.
METROPOLITAN CENTER FOR MENTAL HEALTH, ANDREW PARDO, GENE YELLIN, DAVID BELGRAY, RUBY BENJAMIN, JOSEPHINE DIAZ, TERESA GOUDIE, YVETTE JANSSEN, HOWARD KATZ, BETH RABINOVE, SHARLENE BIRD and JUSTIN STERN, Defendants.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Plaintiffs Maria Gonzalez Ferro, Alexandra Cattaruzza, Mara Oliva, Silvana Bonil, Catalina Angel, Luma Rivera, Maria Paz Cuevas, Marcia Zorrilla, Eulalia Perez, Daniel Criado, Eric Losada, Ricardo Vacca, and Heydi de la Cruz move for reconsideration of this Court's Memorandum and Order, filed March 27, 2014, dismissing their claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c), and the Federal Insurance Contributions Act ("FICA"), 26 U.S.C. § 3111, against defendants Metropolitan Center for Mental Health, its executive director, Andrew Pardo, and directors Gene Yellin, David Belgray, Ruby Benjamin, Josephine Diaz, Teresa Goudi, Yvette Janssen, Howard Katz, Beth Rabinove, Sharlene Bird, and Justin Stem (collectively, "MCMH"). For the reasons discussed, plaintiffs' motion is denied.

BACKGROUND

In a Memorandum and Order dated March 27, 2014 (the "Order"), this Court dismissed plaintiffs' claims brought against MCMH under RICO, 18 U.S.C. § 1964(c), and FICA, 26 U.S.C. § 3111. (Memorandum and Order ("Order") 14, Docket # 29.)

Familiarity with the facts as described in the Order is assumed. In the Order, the Court determined that, as alleged, MCMH's allegedly fraudulent communications to the Immigration and Naturalization Service (the "INS") were not plausibly the proximate cause of plaintiffs' alleged ultimate harm, namely the loss of wages and benefits arising out of their misclassification as independent contractors and could not form a basis for a claim under RICO. (Id. at 8-9.) The Court further determined that plaintiffs' allegations that MCMH failed to pay its share of contributions under FICA were an attempt to asselt a private cause of action under the Internal Revenue Code (the "IRC"). (Id. at 9.) Finding no private cause of action, the Court dismissed the claim. (Id. at 10.)

LEGAL STANDARD

Motions for reconsideration are governed by Local Civil Rule 6.3 and Rule 60(b), Fed.R.Civ.P. A motion to reconsider is "addressed to the sound discretion of the district court[.]" See Mendell ex rel. Viacom, Inc. v. Gollust , 909 F.2d 724, 731 (2d Cir. 1990). A motion for reconsideration "is generally not favored and is properly granted only upon a showing of exceptional circumstances." Pichardo v. Ashcroft , 374 F.3d 46, 55 (2d Cir. 2004) (internal citation and quotation marks omitted). "The standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc. , 70 F.3d 255, 257 (2d Cir. 1995). "[A] motion to reconsider should not be granted where the moving party seeks solely to relitigate an issue already decided." Id.

Motions for reconsideration "should be granted only when the defendant identifies an intervening change of law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust , 729 F.3d 99, 104 (2d Cir. 2013) (internal citation and quotation marks omitted).

DISCUSSION

Plaintiffs raise two points in Support of their motion for reargument. First, plaintiffs argue that in dismissing their RICO claim the Court failed to consider that the allegedly fraudulent mailings to the Internal Revenue Service (the "IRS") caused a portion of their ultimate injury, namely the overpayment of taxes. Second, plaintiffs argue that the second cause of action, which the Court characterized as a claim under FICA, should have been characterized as a fraud claim.

I. Plaintiffs' Alleged RICO Claim

Plaintiffs assert that the Court mischaracterized the ultimate harm alleged as "[p]laintiffs' presence in the U.S." As will be shown, the assertion is incorrect. According to the First Amended Complaint (the "FAC"), the loss alleged was "the loss of beneficial working conditions and benefits, " as well as "general damages including, but not limited to, loss of wages and benefits." (First Am. Compl. ("FAC") ¶ 16.) The FAC also alleges that the mailings to the INS and IRS were perpetrated for "the same [orJ similar purposes." (Id. ¶ 15.) The FAC describes the allegedly fraudulent mailings as being part of a "scheme to deprive plaintiffs... of benefits" and made "in order to secure inexpensive labor for foreign nationals." Id . ¶¶ 11-12.) The Court interpreted these allegations to suggest that MCMH, through fraudulent means, brought the plaintiffs into the country and subsequently misclassified them as independent contractors. (See Order 8.) Consequently, the Court understood the plaintiffs' ultimate harm to be the lost wages and benefits arising out of their misclassification. (See id. at 8-9 ("Though it is plausible that absent MCMH's representations, plaintiffs would not have gained entry to the United States, it does not follow that their mere presence here caused their alleged ultimate harm, namely their loss of wages and benefits.").)

According to plaintiffs, the allegedly fraudulent mailings to the IRS also contributed to their injury, a fact allegedly overlooked by the Court. As an initial matter, if the plaintiffs' misclassification was, as the FAC alleged, plaintiffs' ultimate harm, then the mailings to the IRS could not have plausibly caused the misclassification; they would have been a consequence of it. As an alternative interpretation, plaintiffs assert that MCMH's mailings to the IRS caused subsequent harm, namely the overpayment of taxes.

Under RICO, harm caused by predicate acts, even subsequent to the ultimate harm, may be compensable. See Sedima, S.P.R.L. v. Imrex Co. , 473 U.S. 479, 497 (1985). Thus, assuming the allegedly fraudulent IRS mailings were the proximate cause of the overpayment, plaintiffs may be able to recover under RICO. In Support of this argument, plaintiffs asselt that "[i]t is clear" that the mailings to the IRS were the proximate cause of their overpayment of ...


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