Opinion
6:19-cv-01823-MK
09-21-2021
MARIA ORTIZ BAZAN; MARISELA HERNANDEZ; BERNABE CORTES REYES; MARTINA ANASTASIO HERNANDEZ; ASUNCION REYES PEREZ; LEONARDO SILVA CHAVEZ; RUFINO RENDON; and JUAN TORIBO LOPEZ, individuals, Plaintiffs / Counter Defendants, v. COLEMAN INDUSTRIES, INC, an Oregon domestic business corporation; COLEMAN AGRICULTURE, INC, an Oregon domestic business corporation; and WAFLA, a Washington non-profit organization, Defendants / Counter Claimants.
FINDINGS AND RECOMMENDATION
Mustafa T. Kasubhai United States Magistrate Judge
Plaintiffs Maria Ortiz Bazan, Marisela Hernandez, Bernabe Cortes Reyes, Martina Anastasio Hernandez, Asuncion Reyes Perez, Leonardo Silva Chavez, Rufino Rendon, and Juan Toribo Lopez (collectively “Plaintiffs”) filed this action against Defendants Coleman Industries, Inc., and Coleman Agriculture, Inc. (the “Coleman Defendants”), and Wafla, a Washington-based nonprofit organization (collectively “Defendants”), alleging, as relevant to the present motion, violations of the Migrant and Seasonal Agricultural Workers Protection Act (“AWPA”) and Oregon state law. See Second Am. Comp., ECF No. 57. Defendants move for partial summary judgment as to Wafla on all claims, and as to the Coleman Defendants on Plaintiffs first, second, and third claims. See Defs.' Mot. Partial Summ. J., ECF No. 24 (“Defs.' Mot.”). For the reasons that follow, Defendants' motion should be GRANTED in part and DENIED in part.
The Coleman Defendants motion as to Plaintiffs' first and second claims does not include Plaintiffs Martina Anastasio Hernandez and Rufino Rendon's 2018 claims.
BACKGROUND
Coleman Defendants
The Coleman Defendants operated a series of entities to manage various farms during the period at issue. During that time, Benjamin J. Coleman, Thomas J. Coleman, and John P. Coleman managed Coleman Agricultural, Inc. John Coleman Dep. 22:11-23:3, ECF No. 32-2.
Thomas Coleman managed the annual crops for the company, which included vegetables, grass seed, and other seed crops, while John Coleman supervised the hops crop, Benjamin Coleman managed the company's facilities and assets, and Melissa Coleman served as chairperson. Id. at 17:16-18:21.
Coleman Agricultural is owned by three farms: Westwood Farms, Echo Ridge Farms, and Champoeg Farms. Id. at 22:11-23:3. Those farms, in turn, are owned and governed as follows:
John Coleman Dep. at 20:2-21:9-22; see also Id. Ex. 31. During the period at issue, Coleman Agricultural utilized foreign workers through the United States Department of Labor's (“DOL”) H-2A temporary agricultural labor program, discussed in more detail infra. Id. at 25:22-24.
Farm
Owners
President
Secretary
Westwood Farms
John P. Coleman and Liz Coleman
John P. Coleman
John P. Coleman
Echo Ridge Farms
Thomas J. Coleman and Melissa Coleman
Thomas J. Coleman Coleman
Melissa Coleman
Champoeg Farms
Benjamin J. Coleman and Jen Coleman
Benjamin J. Coleman
Jen Coleman
A separate company, Coleman Industries, Inc., is also operated by members of the Coleman family. Coleman Industries “pools” the buying power of various Coleman-associated farms for items and provides payroll as well as “payable services” to Coleman-associated farms. Id. at 29:3-25. John F. Coleman, father of John P. Coleman, served as President of Coleman Industries, which he owned with his wife Kathleen. Id. at 28:1-24; see also Id. Ex. 31. Coleman Industries did not have official meetings or keep minutes but met approximately once a year to determine what percentage of cost each Coleman-associated farm owed. Id. at 86:10-20 (“[W]e sit down and we try to decide what is the crop -- what is the crops people are going to need help on or equipment for, and to get an idea what the need might be for each farm so we can develop those splits. And then we sit around and we agree or disagree, and we get to a point where we have an agreement, and then that's the percentage split you see there that's on that sheet.”). The Coleman Industries employee handbook represents that the company is the “umbrella organization” of a multitude of Coleman entities, including another farm-Valley Hop Farm:
Welcome to Coleman Industries, which is the umbrella organization covering Coleman Farms Inc., Westwood Farms Inc., Coleman Ranch, Champoeg Farms Inc., Fairfield Farms Inc., Echo Ridge Farms Inc., Joan Coleman Farms, Inc., Arrowhead Farms Inc. and Valley Hop Farm. Like any other business, we must make a profit to succeed and our success is due mainly to the excellent work and cooperation of our employees, for which we thank you.Dale Decl., Ex. E, ECF No. 33.
Valley Hop Farm
Valley Hop Farm owned several small farming properties, but primarily rented and leased the majority of its farming land from 2016 through 2018. John Coleman Dep. 38:17-39:25, ECF No. 32-2. Valley Hop Farm is owned and governed as follows:
Id. at 25:25-26:13, ECF No. 32-2. Valley Hop Farm met annually and kept minutes of its meetings. Id. at 37:7-38:5. Ben Coleman and John Coleman, together with the farm manager, decided what crops to plant at Valley Hop Farm. Id. at 39:25-40:2. During the period at issue, Valley Hop Farm and Coleman Industries shared office space. Id. at 40:19-41:10.
Farm
Owners
President
Secretary
Valley Hop Farm
John P. Coleman, Thomas J. Coleman, Michael Coleman, John F. Coleman, William A. Coleman
Benjamin J. Coleman
John P. Coleman
H-2A Program and Wafla
As noted, the Coleman Defendants participated in the H-2A temporary agricultural labor program. Jen Coleman Dep., Ex. 11, ECF No. 32-1. The H-2A program facilitates the lawful, temporary admission of nonimmigrant workers into the United States to work for companies that can demonstrate that there is a shortage of available domestic workers. See DOL Employer Guide to the H-2A Program, Bernasek Decl., Ex. 2, ECF No. 25-2. To be eligible to participate, a company must warrant that employing foreign workers will not diminish the wages or adversely affect the working conditions of domestic workers in corresponding employment. Id. Accordingly, a company employing H-2A workers must pay the same minimum Adverse Effect Wage Rate (“AEWR”) to both H-2A workers and domestic workers in corresponding employment. See Panko Dep., Ex. 5-13, ECF No. 32-3.
Defendant Wafla is a Washington non-profit agricultural trade association that works with its member farms to obtain foreign and domestic workers through the H-2A temporary agricultural labor program. Panko Dep., Ex. 1-13, ECF No. 32-3; see also Panko Decl. ¶ 3, ECF No. 26. The Coleman Defendants were members of Wafla in 2017 and 2018 and contracted with Wafla through an “Agency and Indemnity Agreement.” Panko Decl., Ex. 1, ECF No. 26-1. Wafla assisted the Coleman Defendants by, inter alia, preparing and submitting H-2A forms to government agencies, recruiting domestic and foreign workers, interviewing and hiring these workers, and transporting these workers to the Coleman Defendants' farms. Id. at ¶ 5. The Agency and Indemnity Agreement provided that Wafla “shall at no time be the employer of any of the member's domestic or foreign workers, ” Decl Panko., Ex. 1, ECF No. 26-1; however, on the 2017 H-2A Application, Wafla listed itself as an “Association - Joint Employer” and as the “Main Employer.” Jen Coleman Dep., Ex. 1 at 2, 7, ECF No. 32-1.
In 2017, Defendant Wafla applied, on behalf of the Coleman Defendants, to bring to the United States forty-four H-2A workers for agricultural work between April and November. Jen Coleman Depo., Ex. 1-4, ECF, No. 32-1. Upon approval of the application, the program mandated that the Coleman Defendants pay any domestic workers in corresponding employment to their H-2A counterparts, at minimum, the AEWR of $13.38/hour. Id. The H-2A workers were authorized to work at various Coleman-associated farms throughout the Willamette Valley and perform duties such as planting, hoeing, twining, pruning, and trellis repair; their duties were also included in the H-2A application job order. Id. at Ex. 9.
The Frank's Plaintiffs
Beginning in approximately 2013, Frank's Farm Labor Contracting, Inc. (“Frank's FLC”), contracted with Coleman Agricultural to supply farm workers to plant, string, train, weed, and harvest hops at the Coleman Agricultural-operated, Alluvial Farm, in Independence Oregon. de La Cerda Decl. ¶¶ 2-4, ECF No. 35; see also John Coleman Dep. 75:14-20, ECF No. 32-2.
In 2017, Frank's FLC began recruiting workers for Coleman Agricultural to again work at Alluvial Farm. de La Cerda. Decl. ¶ 7, ECF No. 35. John Coleman, however, informed Frank's FLC that its crew would be reassigned to Valley Hop Farm in Mt. Angel, Oregon. Id. at ¶ 8, ECF No. 35. Plaintiffs, with the exception of Rufino Rendon (the “Frank's Plaintiffs”), ultimately worked at Valley Hop Farm. Id. at ¶¶ 13-14; see also Rendon Decl., ECF No. 39.
Rufino Rendon was employed directly by Coleman Industries, Inc., in both 2017 and 2018. Rendon Decl., ¶¶ 2-4, ECF No. 39. Rendon alleges that defendants discriminated against him because of his national origin and due to his disability. Second Am. Compl., ¶¶ 125-34, ECF No. 57. Plaintiffs do not contest that summary judgement in regard to Rendon's claims against Wafla under ORS § 659A and under Title VII. Pls.' Resp. Opp'n Def Mot. For Partial Summ. J., at 25 n.89, ECF No. 32 (“Pls.' Opp'n”). Accordingly, summary judgment should be granted as to those claims as to those claims against Wafla.
Because Alluvial Farm utilized H-2A workers, the pay rate of domestic workers doing the same work at Alluvial Farm increased. Id. at ¶ 13. The Frank's Plaintiffs “continued to do the same work [they] had done at Alluvial Farms, ” but now at Valley Hop Farm. Id. at ¶ 14. While working at Valley Hop Farm, Mr. de La Cerda observed Coleman-owned buses bring H-2A workers to Valley Hop Farm to do the same work as his crew, though in a different field. Id. At ¶ 14. Mr. de La Cerda confronted John Coleman to request the additional AEWR rate for his crew; Coleman admitted that the individuals were H-2A workers but maintained that, because they were in a separate field, the Frank's Plaintiffs were not entitled to a higher rate. Id. at ¶¶ 18-19, ECF No. 35. As a result, the Frank's Plaintiffs were paid less than $13.38/hour for their labor. Id. at ¶ 13. The Coleman Defendants terminated their relationship with Frank's FLC in 2017 and no longer use his services. John Coleman Dep. 76:13-77:5; 106:5-8, ECF No. 32-2.
Defendants dispute that any H-2A laborers worked at Valley Hop Farm. Given the procedural posture of this case, however, the Court construes the evidence in the light most favorable to Plaintiffs. JL Beverage Co., LLC v. Jim Bean Brands Co., 828 F.3d 1098, 1105 (9th Cir. 2016).
STANDARD OF REVIEW
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Servs., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
DISCUSSION
Defendants move for summary judgment on two grounds. First, they assert that summary judgment for Wafla is appropriate on all of Plaintiffs' claims because Wafla was not a joint employer as defined by the controlling regulations. Second, they assert that summary judgment is appropriate as to the Coleman Defendants because (1) the Frank's Plaintiffs were not engaged in “corresponding employment” with the H-2A workers brought to the United States; (2) the Frank's Plaintiffs never had a contract with the Coleman Defendants; and (3) the Frank's Plaintiffs were not entitled to a higher rate under the AEWR and therefore their claim for failure to pay timely wages lacks merit. Plaintiffs disagree and argue instead that Wafla was, in fact, a joint employer and that the Coleman Defendants are liable under an alter ego theory on claims I, II, and III. Because the Court concludes that Wafla was not a joint employer, Defendants' motion should be granted as to Wafla on all of Plaintiffs' claims. Because, however, the Court concludes that Plaintiffs have made a prima facie showing of their alter ego theory, summary judgment is not appropriate as to claims I, II, and III. Accordingly, Defendants' motion should be denied as to those claims.
I.Wafla: Joint Employer Status
Defendants first argue that Wafla is entitled to summary judgment because Wafla was not Plaintiffs' joint employer of. Defs.' Mot. 4, ECF No. 24.
Congress adopted the AWPA out of frustration with prior efforts to regulate the abuses of agricultural labor contractors. See H.R. No. 885, 97th Cong., 2d Sess. at 2-3 (1982). In assessing whether a joint employment relationship exists under the AWPA, “the ultimate question to be determined is the economic reality-whether the worker is so economically dependent upon the agricultural employer/association as to be considered its employee.” 29 C.F.R. § 500.20(h)(5)(iii). The Ninth Circuit has identified relevant factors to apply under the “economic reality” test depending on the particular employment relationship evaluated in each case. See Torres-Lopez, 111 F.3d at 639-40; Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1469-70 (9th Cir. 1983). The AWPA regulations provide a non-exhaustive list of regulatory factors courts consider in analyzing whether a joint employment relationship exists. These regulatory factors include:
(A) Whether the agricultural employer/association has the power, either alone or through control of the farm labor contractor to direct, control, or supervise the worker(s) or the work performed (such control may be either direct or indirect, taking into account the nature of the work performed and a reasonable degree of contract performance oversight and coordination with third parties);
(B) Whether the agricultural employer/association has the power, either alone or in addition to another employer, directly or indirectly, to hire or fire, modify the employment conditions, or determine the pay rates or the methods of wage payment for the worker(s);
(C) The degree of permanency and duration of the relationship of the parties, in the context of the agricultural activity at issue;
(D) The extent to which the services rendered by the worker(s) are repetitive, rote tasks requiring skills which are acquired with relatively little training;
(E) Whether the activities performed by the worker(s) are an integral part of the overall business operation of the agricultural employer/association;
(F) Whether the work is performed on the agricultural employer/association's premises, rather than on premises owned or controlled by another business entity; and
(G) Whether the agricultural employer/association undertakes responsibilities in relation to the worker(s) which are commonly performed by employers, such as preparing and/or making payroll
records, preparing and/or issuing pay checks, paying FICA taxes, providing workers' compensation insurance, providing field sanitation facilities, housing or transportation, or providing tools and equipment or materials required for the job (taking into account the amount of the investment).29 C.F.R. § 500.20(h)(5)(iv).
In some circumstances, other non-regulatory factors gleaned from cases involving the Fair Labor Standards Acts are also relevant to analyzing whether a joint employment relationship exists. See Torres-Lopez, 111 F.3d at 640; Ray v. California Dep 't of Soc. Servs., 2020 WL 6784527, at *4 (CD. Cal. Oct. 27, 2020) (“The Ninth Circuit has identified additional factors that might be applicable, depending on the situation.”). These non-regulatory factors include:
(1) whether the work was a specialty job on the production line;
(2) whether responsibility under the contracts between a labor contractor and an employer pass from one labor contractor to another without material changes;
(3) whether the premises and equipment of the employer are used for work;
(4) whether the employees had a business organization that could or did shift as a unit from one worksite to another;
(5) whether the work was piecework and not work that required initiative, judgment or foresight;
(6) whether the employee had an opportunity for profit or loss depending upon the alleged employee's managerial skill;
(7) whether there was permanence in the working relationship; and
(8) whether the service rendered is an integral part of the alleged employer's business.Id. at 640-41 (internal quotations and citations omitted). “Whether an entity is a ‘joint employer' under . . . AWPA is a question of law.” Torres-Lopez, 111 F.3d at 638.
As a threshold matter, Plaintiffs do not address the above factors and argue instead that Wafla was a joint employer under the terms of the job order and Certified Application for Temporary Employment Certification. The Court disagrees and concludes the economic reality test as articulated in Torres-Lopez sets forth the appropriate analytical framework for examining Wafla's employment relationship with Plaintiffs.
A straightforward application of the economic reality test here reveals that Wafla was not a joint employer. Wafla's role was limited to assisting the Coleman Defendants in procuring both foreign and domestic workers. Panko Decl. ¶ 4, ECF No. 26. Wafla had no role in supervising Plaintiffs or directing their work. Id. at ¶ 7. Although Wafla recruited and screened workers, the ultimate hiring decision rested with the Coleman Defendants. John Coleman Dep. 70:9-71:5, ECF No. 32-2.
The record is unclear as to whether Wafla had the authority to terminate workers. John Coleman Dep. 71:13 - 18 (Q “Now, if an H-2A worker wasn't working out, who could fire that worker.” A “I think we could.” Q “Could wafla?” A “You know, I don't know if it ever happened. So I'm not sure.”).
The relationship of the H-2A workers once they arrived in the United States also weighs in favor of finding that Wafla was not a joint employer. Id. at 71:19-23. The work performed by the H-2A workers did not occur on premises owned or controlled by Wafla. Jen Coleman Dep., Ex. 9, ECF, No. 32-1. Wafla did not prepare payroll records or issue paychecks to Plaintiffs. Panko Decl. ¶ 7, ECF No. 26. Finally, none of the non-regulatory factors compel a finding that Wafla was a joint employer. In fact, many of those factors fail to shed much light on any purported relationship between Wafla and Plaintiffs.
On this record, therefore, the Court should find that Wafla was not Plaintiffs' joint employer. As such, Defendants' motion for summary judgment as to all claims against Wafla should be granted and those claims should be dismissed.
II.Coleman Defendants: AWPA and State Law Claim
The Coleman Defendants assert they are entitled to summary judgment on Plaintiffs' AWPA and state law claims. Defs.' Mot. 8-11, ECF No. 24. They contend that Plaintiffs' claims “are based on the incorrect assertion that the Frank's Plaintiffs were engaged in ‘corresponding employment' with foreign workers brought in by the Coleman Defendants to work under the H-2A Program.” Id. at 8-9.
Defendants acknowledge that the Coleman Defendants utilized H-2A workers in 2107 and 2018. Id. at 9. They assert, however, that their H-2A application did not include Valley Hop Farm, that the H-2A workers who participated in the program worked exclusively at farms managed by the Coleman Defendants, and that any domestic workers at those farms received the AEWR. Id. As a result, Defendants argue, Plaintiffs cannot establish that the Frank's Plaintiffs were in “corresponding employment” with the Coleman Defendants' foreign workers because they were not (a) employed by the Coleman Defendants and (b) worked at separate locations from the Coleman Defendants. Id.
Plaintiffs counter in response that Valley Hop Farm is an alter ego of an “integrated farming enterprise” managed by the Coleman family. Pl.'s Opp'n 18-22, ECF No. 32. Plaintiffs contend that the common ownership, management, and control of Coleman Agricultural, Coleman Industries, and Valley Hop Farm renders them a single employer despite each entity's separate corporate status. Id.
Defendants strenuously argue that Plaintiffs' failure to plead an alter ego theory and name Frank's FLC and Valley Hop Farm is fatal to their claims. The Court disagrees for at least two reasons. First, Defendants failed to direct the Court to any controlling authority in their briefing in support of their assertions. Second, given the common ownership among the various Coleman-associated entities, a simple review of the Second Amended Complaint would have placed the Coleman Defendants on notice that among the subjects of this lawsuit was Plaintiffs' allegation that the Coleman Defendants directed Plaintiffs to perform work on Valley Hop Farm. See, e.g., Second Am. Compl. ¶ 23 (“The Coleman Defendants decided the farm at which Francisco de La Cerda's [crew] would work and selected Valley Hop Farm, which was under their control.”). If Defendants believed Valley Hop Farm, or Frank's FLC for that matter, were necessary parties to this litigation, they were free to seek joinder at an earlier stage of this lawsuit. In any event, the Court concludes that consideration of Plaintiffs' alter ego theory is appropriate.
“[P]iercing the corporate veil ‘is an extraordinary remedy which exists as a last resort, where there is no other adequate and available remedy to repair plaintiff's injury.'” State ex rel. Neidig v. Superior Nat. Ins. Co., 343 Or. 434, 445 (2007) (quoting Amfac Foods v. Int'l Systems, 294 Or. 94, 103 (1982)). Veil piercing can apply “to claims against affiliated corporations.” Id. At 454. To prevail on an alter ego theory, a party must show:
[1] that another entity actually controlled (or was under common control with) the corporation, [2] that the other entity used its control over the corporation to engage in improper conduct, and [3] that, as a result of the improper conduct, the plaintiff was harmed.Id. at 454-55. See also Barrie v. NFH Oregon, LLC, No. 6:20-cv-01038-MC, 2020 WL 9211003, at *5 (D. Or. Nov. 4, 2020) (listing the necessary elements for establishing a prima facie case of alter ego theory); Brodle v. Lochmead Farms, Inc., No. 6:10-cv-06386-AA, 2011 WL 4913657, at *6 (D. Or. Oct. 13, 2011) (applying Oregon law to alter ego theory of liability). “[E]ach part of the test-control, wrongful conduct, and causation-can present close legal and factual questions that must be considered in reaching the ultimate equitable determination as to whether the corporate veil can be pierced.” Id. at 455. Accordingly, because “the necessary analysis is entirely fact dependent . . . summary judgment on piercing the corporate veil is rarely, if ever, appropriate.” Ram Express, LLC v. Progressive Com. Cas. Co., 303 Or.App. 211, 218 (2020).
A. Control
Control can be established where two companies are “operationally a single company for all practical purposes.” State ex rel. Neidig, 343 Or. at 456. In assessing whether two companies are “operationally a single company for all practical purposes, ” courts may consider whether the companies share common bank accounts, workspaces, “board members, executive officers, legal counsel, investment managers, accountants, and auditors” and whether board meetings are “held on the same day, and the minutes of the meetings were identical for the two companies.” State ex rel. Neidig, 343 Or. at 456.
Defendants assert that Plaintiffs have failed to offer evidence that the Coleman Defendants exercised control over Frank's FLC or Valley Hop Farm. Defs.' Reply 10, ECF No. 46. The Court disagrees. Valley Hop Farm and Coleman Industries shared office space. John Coleman Dep. at 40:25-41:10, ECF No. 32-2. The Coleman Industries employee handbook specifically references Valley Hop Farm as member of its “umbrella organization.” Dale Decl., Ex. E, ECF No. 33. Coleman Industries has an annual meeting at which owners and managers of the various Coleman-associated entities “sit down” and decide “what the need might be for each farm[.]” John Coleman Dep. 86:10-20, ECF No. 32-2. The Valley Hop Farm President and Secretary, who own substantial stakes in Coleman Agricultural, make decisions about what crops to plant. John Coleman Dep. At 22:11-23:3; 20:2-21:9-22; see also Id. Ex. 31. The record also indicates that Coleman-owned buses brought workers, presumably from the Coleman Agriculture H-2A workforce, to Valley Hop Farm when John Coleman grew dissatisfied with the pace of the domestic workers at the farm. de La Cerda Decl. ¶ 14, ECF No. 35. These facts are sufficient to make a prima facie showing that Valley Hop Farm and the other Coleman-associated entities were “operationally a single company for all practical purposes.” State ex rel. Neidig, 343 Or. at 456.
B. Improper Conduct and Causation
“The second element that must be proved to pierce the corporate veil is improper conduct.” State ex rel. Neidig, 343 Or. at 458 (citation omitted). Examples of improper conduct include “perpetration of a fraud, ” misrepresentations that are short of fraud such as “confusion or commingling of assets, and the evasion of federal or state regulation[.]” Id. at 459 (citations omitted); see also Id. (“the use of the corporate form to frustrate state or federal regulation can be sufficiently improper conduct”). A “plaintiff must also demonstrate a relationship between the misconduct and the plaintiffs injury.” Amfac, 294 Or. at 111.
Defendants contend that Plaintiffs have not adduced evidence that the Coleman Defendants engaged in improper control over Valley Hop Farm and Frank's FLC or conducted any abuse of the corporate form and that there is no evidence the Coleman Defendants engaged in conduct that caused the alleged harm to Plaintiffs. Defs.' Reply 10, ECF No. 46. These contentions, however, are not borne out by the record.
Defendants' assertion that improper conduct element must include some form of moral culpability misstates the standard. “The court has since explained that the term ‘moral culpability' is but one way of describing the type of improper conduct needed to pierce the corporate veil and refers to ‘dishonest or deceitful conduct intended to harm a third party.'” Handam v. Wilsonville Holiday Partners, LLC, 221 Or.App. 493, 497 (2008). In other words, “moral culpability” is “one way of describing the kind of improper conduct that is required to pierce the corporate veil.” State ex rel. Neidig, 343 Or. at 459-60.
Viewed in the light most favorable to Plaintiffs, the evidence here is sufficient to create an issue of fact as to whether the Coleman Defendants' conduct was improper and caused a harm to the Frank's Plaintiffs. Mr. de La Cerda indicated that he observed H-2A workers at Valley Hop Farm and that he confronted John Coleman to request the higher AEWR rate for his domestic workers, which was rejected. de La Cerda Decl. ¶¶ 14, 18-19. As a result, the Frank's Plaintiffs were paid less than the AEWR rate, in violation of the federally regulated H-2A program. Such an attempt to skirt a regulatory scheme is sufficient to make a showing of improper conduct. See Amfac, 294 Or. at 110 (citing, as examples of improper conduct, use of wholly owned subsidiary “to evade federal or state regulation”); see also United States v. Reading Co., 253 U.S. 26 (1920).
In sum, Plaintiffs have made a prima facie showing that Valley Hop Farm is an alter ego of the Coleman Defendants. See Aero Plan. Int'l, Inc. v. Air Assocs., Inc., 94 Or.App. 143, 145 (1988) (“To make a prima facie showing [of an alter ego theory], plaintiff must present facts which, if true, are sufficient to allow a factfinder to find in its favor.”). Accordingly, Defendants' motion for summary judgment as to Plaintiffs' AWPA claim should be denied.
C. Breach of Contract and Timely Payment of Wages
Given the Court's conclusion regarding Plaintiffs' successful prima facie showing of their alter ego theory, Defendants' arguments relating to Plaintiffs' breach of contract and timely wages claims must also fail. Defs.' Mot. 8-12, ECF No. 24. Assuming arguendo that the Coleman Defendants brought H-2A workers to Valley Hop Farm to do the same work as domestic workers, Plaintiffs would have been entitled to the higher AEWR wage rate, which they did not receive. See 20 C.F.R. § 655.122(a) (“The employer's job offer must offer to U.S. workers no less than the same benefits, wages, and working conditions that the employer is offering, intends to offer, or will provide to H-2A workers.”). Plaintiffs have demonstrated therefore that issues of material fact exist as to their breach of contract and timely wages claims. For example, viewing the evidence in the light most favorable to Plaintiffs, issues of fact exist as to whether the Coleman Defendants breached their contractual obligations by paying Plaintiffs lower wages than they were due under the terms of the DOL program for H-2A and domestic workers. Similarly, Plaintiffs have created issues of fact as to whether the Coleman Defendants violated ORS § 652.145 by failing to timely pay Plaintiffs the wages they were due. As such, Defendants' motion for summary judgment as to Plaintiffs' breach of contract and timely payment of wages claims should be denied.
RECOMMENDATION
For the reasons above, Defendants' motion for summary judgment (ECF No. 24) should be GRANTED on all claims as to Wafla but DENIED as to claims I (AWPA Claim), II (Breach of Contract Claim), and III (ORS § 652.145 claim), as to the Coleman Defendants.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a)(1) should not be filed until entry of the district court's judgment or appealable order. The Findings and Recommendation will be referred to a district judge. Objections to this Findings and Recommendation, if any, are due fourteen (14) days from today's date. See Fed.R.Civ.P. 72. Failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).