Goddess and Baker Wacker L.L.C. v. Sterling Bay Companies, L.L.C

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

GODDESS AND BAKER )

WACKER L.L.C., on behalf of )

itself and all others )

similarly situated, )

)

Plaintiff, )

) No. 21 C 1597

v. )

) Judge John Z. Lee

STERLING BAY COMPANIES, )

L.L.C. )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

Plaintiff Goddess and Baker Wacker, L.L.C. (“Goddess”) is a tenant in a

building in downtown Chicago managed by Defendant Sterling Bay Companies,

L.L.C. (“Sterling Bay”). Goddess alleges that Sterling Bay conspired with three

unions—International Union of Operating Engineers Local 399 (“Local 399”); AFL-

CIO, Service Employees International Union, Local 1 (“Local 1”); and Teamsters

Local 705 (“Local 705”) (collectively “the Unions”)—to force Goddess and other

Sterling Bay tenants to use only unionized labor to maintain and make improvements

to their properties. And so, Goddess brings this putative class action alleging that

Sterling Bay violated the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), 18 U.S.C. § 1961 et seq., by colluding with the Unions to extort Goddess in

violation of the Hobbs Act, 18 U.S.C. § 1951 et seq.

Sterling Bay moves to dismiss Goddess’s complaint under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim and, in the alternative, to refer the case

to the National Labor Relations Board (“NLRB”). For the following reasons, Sterling

Bay’s motion to dismiss is denied, and Sterling Bay’s motion to refer this case to the

NLRB under the doctrine of primary jurisdiction is granted.

I. Background1

Goddess is a coffee shop and bakery that has rented commercial space in 121

W. Wacker Drive (“121 Wacker”) since 2016. Class Action Compl. (“Compl.”) ¶ 19,

ECF No. 1. Sterling Bay manages 121 Wacker and is responsible for supervising

contractors’ access to the building. Id. ¶ 8.

Since its lease began, Goddess has made extensive improvements to the

premises, including “electrical installation, carpentry, drywalling, tile installation,

plumbing, painting, and ceiling installation.” Id. ¶ 20. According to Goddess,

Sterling Bay has forced it to use unionized labor for all of this work. Id. ¶ 21. This

is in keeping with Sterling Bay’s practice of forcing all tenants at several other

Sterling Bay-managed properties to do the same. See id. ¶ 24.

As Goddess sees it, the management company’s union-only policy stems from

a conspiratorial agreement between Sterling Bay and the Unions to require tenants

to use unionized labor. Id. ¶ 12. The arrangement purportedly works as follows. At

each Sterling Bay building, the chief engineers, who are members of Local 399, report

1 The following well-pleaded factual allegations are accepted as true for purposes of the

motion to dismiss. Roberts v. City of Chi., 817 F.3d 561, 564 (7th Cir. 2016).

the presence of any nonunionized contractors to their union. Id. ¶ 14. Local 399

notifies Sterling Bay of the nonunionized workers and threatens to picket the Sterling

Bay building and display the notorious “Scabby the Rat”2 in front of the building, if

Sterling Bay does not remove the nonunionized workers. Id. The other two unions,

who benefit from the arrangement, agree to join the picket. See id.

In an effort to avert picketing in front of its building, Sterling Bay then contacts

the tenant that employed the nonunion labor and orders it to stop using nonunion

labor. Id. Over time, this arrangement hardened into Sterling Bay’s policy to require

all tenants to submit proof of a contractor’s union membership before the contractor

is allowed access to the building. Id. ¶¶ 15, 41. This policy is enforced through

Sterling Bay’s tenant handbook and its directions to its building managers to deny

contractors access to the building if the contractors cannot prove that they are union

members. Id. ¶ 15. Sterling Bay communicates this policy to all tenants before they

begin a move or contract work. Id. ¶ 41.

Because unionized labor is more expensive than nonunionized labor, id. ¶¶ 16–

18, Goddess has spent at least twenty percent more on improvements than it would

have if Sterling Bay had permitted it to use nonunionized labor. Id. ¶ 23. Goddess

brings this putative class action under RICO §§ 1962(c)–(d) to recover these damages

for itself and all other Sterling Bay tenants forced to pay a “premium” for unionized

labor. Goddess pleads racketeering activity under § 1962(c) and predicate offenses of

2 Scabby is the popular name for a giant inflatable rat used by trade unions to draw

attention to picketing and strikes. See Constr. and Gen. Labs.’ Union No. 330 v. Town of

Grand Chute, 915 F.3d 1120, 1123 (7th Cir. 2019).

extortion under the Hobbs Act, 18 U.S.C. § 1951, based on Sterling Bay’s alleged

“wrongful threat,” id. §1951(b), of a “hot cargo agreement”3 in violation of § 8(e) of the

National Labor Relations Act (“NLRA”), 29 U.S.C. § 151 et seq. See id. § 158(e).

Goddess also pleads conspiracy to engage in racketeering activity under § 1962(d).

Sterling Bay moves to dismiss the complaint under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim. See Def. Sterling Bay Cos.’ Mot.

Dismiss, ECF No. 23; Mem. Supp. Mot. Dismiss (“Def.’s Mem.”), ECF No. 24. In the

alternative, Sterling Bay ask the Court to refer the case to the NLRB under the

primary jurisdiction doctrine. See Def. Sterling Bay Co.’s Mot. Primary Jurisdictional

Referral NLRB, ECF No. 25; Mem. Supp. Mot. Primary Jurisdictional Referral

NLRB, ECF No. 26. Because Sterling Bay raises primary jurisdiction as both a

ground for dismissal and an alternative basis for NLRB referral, the Court addresses

both motions here.

II. Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a

claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This standard

“is not akin to a probability requirement, but it asks for more than a sheer possibility

3 A hot cargo agreement is an agreement by a business not to deal with nonunionized

labor. See Bldg. and Const. Trades Council of Metro. Dist. v. Assoc. Builders and

Contractors of Mass./R.I., Inc., 507 U.S. 218, 223 (1993).

that a defendant has acted unlawfully.” Id. (cleaned up). “Where a complaint pleads

facts that are merely consistent with a defendant’s liability, it stops short of the line

between possibility and plausibility of entitlement to relief.” Id. (cleaned up).

When considering a motion to dismiss, courts accept “all well-pleaded factual

allegations as true and view them in the light most favorable to the plaintiff.”

Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013). At the same time,

courts are “not bound to accept as true a legal conclusion couched as a factual

allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Accordingly, “[t]hreadbare

recitals of the elements of a cause of action, supported by mere conclusory statements,

do not suffice” to state a claim. Iqbal, 556 U.S. at 678.

III. Analysis

RICO provides a civil cause of action for plaintiffs damaged by long-term

criminal schemes, including organized crime. See 18 U.S.C. § 1964(c). To state a

RICO claim, a plaintiff must plead “(1) conduct (2) of an enterprise (3) through a

pattern (4) of racketeering activity.” Menzies v. Seyfarth Shaw LLP, 943 F.3d 328,

336 (7th Cir. 2019). This introduces several terms requiring definition.

A RICO “enterprise” can be either a legal entity (such as a corporation,

partnership, or association), or a “group of individuals associated in fact.” 18 U.S.C.

§ 1961(4); see Boyle v. United States, 556 U.S. 938, 943–44 (2009).

“Racketeering activity” is any predicate offense listed in 18 U.S.C. § 1961(1),

including crimes such as bribery, extortion, fraud, money laundering, or drug

trafficking. Id.

To plead a “pattern” of racketeering activity, the plaintiff must show “at least

two acts of racketeering activity,” id. § 1961(4), and “a relationship between the

predicate acts as well as a threat of continuing activity—a standard known as the

‘continuity plus relationship’ test.” Menzies, 943 F.3d at 337 (quoting DeGuelle v.

Camilli, 664 F.3d 192, 199 (7th Cir. 2011)). The pattern of racketeering activity must

also “affect interstate or foreign commerce.” § 1962(c).

Finally, the plaintiff must prove that the defendant is a RICO “person,”

meaning an individual or entity “distinct from the RICO enterprise,” who is

responsible for the challenged conduct (i.e., the racketeering activity). Sabrina Roppo

v. Travelers Com. Ins. Co., 869 F.3d 568, 588 (7th Cir. 2017) (quoting United Food &

Com. Workers Unions & Emps. Midwest Health Benefits Fund v. Walgreen Co., 719

F.3d 849, 853 (7th Cir. 2013)).

According to Goddess, Sterling Bay (the RICO “person”) colluded with the

Unions (together comprising an “associated-in-fact enterprise”) to engage in

numerous acts of extortion (the “conduct” and “racketeering activity”) against

Goddess and other Sterling Bay tenants to force them to use only unionized labor for

moving and contract work. Goddess brings two counts under this theory: conduct or

participation in a RICO enterprise under § 1962(c), and RICO conspiracy under

§ 1962(d).

A. NLRB Primary Jurisdiction

Sterling Bay first argues that Goddess’s RICO claims should be dismissed

because they are “inextricably tied to labor issues” governed by the NLRA.4 Def.’s

Mem. at 1. Sterling Bay points out that Goddess’s extortion claim (the “racketeering

activity”) is based on an underlying allegation of a “hot cargo agreement” in violation

of § 8(e) of the NLRA. Thus, in Sterling Bay’s view, Goddess’s RICO claim falls within

the primary jurisdiction doctrine, because the alleged extortion on which it is

predicated is “wrongful only by virtue of the labor laws.” Talbot v. Robert Matthews

Distrib. Co., 961 F.2d 654, 662 (7th Cir. 1992).

As an initial matter, it bears mentioning that “[f]ederal statutes do not preempt

other federal statutes.” Baker v. IBP, Inc., 357 F.3d 685, 688 (7th Cir. 2004)

(emphasis added). Goddess’s RICO claim—unlike a state law claim that

irreconcilably conflicts with federal law—is not dead on arrival simply because it

covers the same ground as the NLRA. The question is not whether the NLRA

preempts Goddess’s RICO claim, necessitating its dismissal. Instead, the question is

whether the NLRB has “primary jurisdiction” over the labor law issues in the dispute

such that the Court should stay the case in order for the agency to resolve the issues

“within [its] special competence.” United States v. W. Pac. R.R. Co., 352 U.S. 59, 64

(1956); see Reiter v. Cooper, 507 U.S. 258, 268 (1993) (“[P]rimary jurisdiction . . .

requires the court to enable a ‘referral’ to the agency, staying further proceedings so

as to give the parties reasonable opportunity to seek an administrative ruling.”).

4 Sterling Bay makes a primary jurisdiction argument in both its motion to dismiss and

its motion for primary jurisdiction referral. For efficiency’s sake, the arguments are

addressed together.

An NLRB primary jurisdiction analysis proceeds in two stages. First, the

Court must determine whether primary jurisdiction applies; i.e., whether the

plaintiff’s claims involve labor law issues “within the exclusive original jurisdiction

of the agency to resolve.” Arsberry v. Illinois, 244 F.3d 558, 563 (7th Cir. 2001).

Second, it must determine whether to stay the litigation pending the NLRB’s

determination of the labor law issues, or dismiss the case without prejudice. See

Reiter, 507 U.S. at 268–69 (noting that, when a court finds that the NLRB has

primary jurisdiction, “it has discretion either to retain jurisdiction [i.e., enter a stay]

or, if the parties would not be unfairly disadvantaged, to dismiss the case without

prejudice”).

1. Whether Primary Jurisdiction Applies

Typically, “[n]o fixed formula exists for applying the doctrine of primary

jurisdiction.” Western Pacific, 352 U.S. at 64. But Seventh Circuit precedent cabins

the inquiry here. In Talbot, the Seventh Circuit held that the NLRB has primary

jurisdiction over a RICO claim when “the underlying conduct of plaintiffs’ RICO claim

is wrongful only by virtue of the labor laws.” 961 F.2d at 662. Sterling Bay argues

that Talbot requires the Court to find primary jurisdiction here because proof that

Sterling Bay violated the NLRA (specifically, engaged in a hot cargo agreement in

violation of § 8(e)) is necessary for Goddess to prove the “wrongfulness” element of its

§ 1961(1) predicate extortion claim. See 18 U.S.C. § 1951(b)(2) (extortion requires

“wrongful use of actual or threatened force, violence, or fear”). Goddess naturally

favors a narrower interpretation, asserting that conduct is “wrongful only by virtue

of” labor law only when the actual predicate offense arises under labor law. Because

Goddess alleges Hobbs Act violations, not labor law violations, as predicates for its

RICO claim, Goddess argues that this case does not implicate Talbot’s rule.

Sterling Bay has the better argument here. First, the predicate offense in

Talbot was mail fraud, which, like the purported Hobbs Act violation here, is not a

labor law violation in itself. 961 F.2d at 662. Yet, because the finding of mail fraud

depended on a finding that the defendants violated their duties to bargain fairly

under the NLRA, the Talbot court found referral appropriate. See id. Second,

Talbot’s language supports the broader interpretation. Talbot held that the inquiry

centers on the “underlying conduct” of the RICO claim. Id. (emphasis added). In the

RICO context, “conduct” describes what the defendant actually did to further the

criminal enterprise, not what predicate offense the plaintiff pleads. See Goren v. New

Vision Int’l., Inc., 156 F.3d 721, 727 (7th Cir. 1998) (“conduct” means “participat[ion]

in the operation or management of the enterprise” (quoting Reves v. Ernst & Young,

507 U.S. 170, 179 (1993)). Finally, the cases Talbot cites support the position that

primary jurisdiction is appropriate if resolution of labor law issues is necessary to the

resolution of the plaintiff’s claim (a “but-for” test). See Brown v. Keystone Consol.

Indus., Inc., 680 F. Supp. 1212, 1225 (N.D. Ill. 1988) (“[B]ut for the proscriptions of

the labor law, defendants' conduct simply would not be either mail or wire fraud.”

(emphasis omitted) (quoting Butchers' Union Loc. No. 498 v. SDC Inv., Inc., 631 F.

Supp. 1001, 1011 (E.D. Cal. 1986)); Butchers’ Union, 631 F. Supp. at 1011 (holding

that NLRA “preempted” RICO claim because labor law determined “[w]hether the

conduct constitute[d] a fraud”); see also DeSilva v. N. Shore-Long Island Jewish

Health Sys., Inc., 770 F. Supp. 2d 497, 516 (E.D.N.Y. 2011) (RICO claim precluded

where it was “based on the same facts that would allow recovery under” the Fair

Labor Standards Act, 29 U.S.C. § 201 et seq.).

There is no reason to treat the alleged extortion in this case differently than

the mail and wire frauds at issue in Talbot, Brown, and Butchers’ Union. Goddess

does not allege any legal obligation or set of facts separate from the NLRA (or the

conduct that it proscribes) that would make Sterling Bay and the Unions’ alleged

extortion “wrongful.” Indeed, the gravamen of Goddess’s complaint is that it was

forced to use union labor against its will. That claim could just as easily have been

brought under § 8(e)’s prohibition on hot cargo agreements. And “[w]hen a plaintiff

challenges an action that is ‘arguably subject to § 7 or § 8 of the [NLRA],’ this

challenge is within the primary jurisdiction of the NLRB.” Marquez v. Screen Actors

Guild, Inc., 525 U.S. 33, 49 (1998) (second alteration in original) (quoting San Diego

Bldg. Trades Council v. Garmon, 359 U.S. 236, 245 (1959)).

Goddess points to two recent cases within this district that reached the

opposite conclusion, retaining primary jurisdiction over RICO claims based on Hobbs

Act violations despite their entanglement with the NLRA’s prohibition of unfair labor

practices. See CivCon Servs., Inc. v. Accesso Servs., LLC, No. 20 C 1821, 2020 WL

6075869 (N.D. Ill. Oct. 15, 2020); Wacker Dr. Exec. Suites, LLC v. Jones Lang LaSalle

Ams. (Ill.), LP, No. 18-CV-5492, 2019 WL 2270000 (N.D. Ill. May 28, 2019). The Court

respectfully declines to follow either case. In CivCon, which also involved alleged

extortionary enforcement of hot cargo agreements between a property manager and

various unions, the court retained primary jurisdiction (in dicta, by the way) because

“the Court here is not being asked to resolve whether the alleged hot cargo agreement

violates the NLRA. The predicate claim under RICO here is the Hobbs Act, not the

NLRA.” 2020 WL 6075869, at *5. But as explained above, Talbot focuses the inquiry

on whether the defendant’s conduct violated the NLRA, not whether the plaintiff

pleaded a predicate offense that is itself a violation of the NLRA. See 961 F.2d at 662

(NLRB had primary jurisdiction over mail fraud claim because the challenged

conduct was only fraudulent because it violated the NLRA); see also DeSilva, 770 F.

Supp. 2d at 516 (explaining that “civil RICO claims [are] precluded where . . . the

RICO claims are based on the same facts that would allow recovery under [an]

alternative scheme” such as the NLRA). And in Wacker, the court had no occasion to

consider the applicability of the primary jurisdiction doctrine. See generally 2019 WL

2270000.

Goddess next contends that referral to the NLRB on the basis of primary

jurisdiction is improper because “any complaint to the NLRB must be filed within six

months of the violation,” and the NLRB therefore does not have jurisdiction. Pl.

Goddess Baker Wacker L.L.C.’s Resp. Sterling Bay’s Mot. Primary Jurisdictional

Referral NLRB (“Pl.’s Resp. Mot. NLRB Referral”) at 3, ECF No. 32 (citing 29 U.S.C.

§ 160(b)). Goddess argues that referral to the NLRB is time-barred because Goddess

alleges in its reply brief that Sterling Bay began forcing it to use unionized labor in

2016 and ended that practice in 2019. But this argument is inconsistent with its own

complaint, which states that “Sterling Bay’s implementation and enforcement of its

mandatory union-only rule is still in existence.” Compl. ¶ 43, see also, e.g., id. ¶¶ 44–

45. Taking this to be true, the statute of limitations likely would not run until the

last act constituting a violation of the statute. Kovacs v. United States, 614 F.3d 666,

676 (7th Cir. 2010); see Drake v. Richerson, 948 F. Supp. 2d 817, 824 (N.D. Ohio 2013)

(“continuing violation” doctrine may apply to NLRB statute of limitations). Goddess’s

limitations objection does not help it here.

Goddess also argues that the issue Sterling Bay proposes for referral is an

“abstract policy question” rather than a “real dispute.” Pl.’s Resp. Mot. NLRB

Referral at 4. But Sterling Bay’s framing of the question does not mean there is no

legitimate dispute for the NLRB to decide. The NLRB would be tasked with

determining whether Sterling Bay violated the NLRA by participating in a hot cargo

agreement under § 8(e). That dispute is well within the NLRB’s authority to hear.

Finally, Goddess claims that a referral to the NLRB would leave it without a

remedy because the NLRB cannot award money damages (with the exception of

backpay to employees). This is an overstatement. Once the NLRB issues its decision,

Goddess will be able to resume this action (if the Court retains jurisdiction) or refile

its complaint (if the Court dismisses the case without prejudice) and pursue money

damages just as it is doing now. See Baker, 357 F.3d at 688 (“Once the [NLRB] has

completed its work, the parties return to court for the resolution of any remaining

issues. Here, for example, if the dispute were referred to the NLRB, and the Board

determined that labor law neither protected nor prohibited IBP's conduct, the

litigation could resume.”).

For all of the above reasons, the Court concludes that the NLRB has primary

jurisdiction as to the conduct alleged in this case.

2. Whether to Stay or Dismiss Without Prejudice

The only remaining issue is whether to stay this case pending the NLRB’s

review or dismiss the complaint without prejudice. The Supreme Court instructs that

dismissal without prejudice is appropriate in cases such as this “if the parties would

not be unfairly disadvantaged.” Reiter, 507 U.S. at 268. In this context, a party may

be unfairly disadvantaged if the case involves a “damage[s] action for past conduct

[that] cannot be easily reinstituted at a later time” because it is “likely to be [time-

]barred by the time the [agency] acts.” Carnation Co. v. Pac. Westbound Conf., 383

U.S. 213, 223 (1966); see Belfiore v. Procter & Gamble Co., 311 F.R.D. 29, 75 (E.D.N.Y.

2015) (noting that when deciding whether to stay or dismiss, “the paramount concern

is that the deferral not work as a time-bar” (quoting Johnson v. Nyack Hosp., 86 F.3d

8, 11 (2d Cir. 1996))). The statute of limitations for a RICO claim is four years after

the plaintiff discovers, or should have discovered, the injury. Rotella v. Wood, 528

U.S. 549, 552 (2000). Precisely when Goddess discovered or should have discovered

that it was being forced to use union labor for its improvements is a factual question

that cannot be resolved on the current record. See Brownmark Films, LLC v. Comedy

Partners, 682 F.3d 687, 690 (7th Cir. 2012) (when a statute of limitations begins to

run is usually inappropriate to resolve at the 12(b)(6) stage because the question

“typically turn[s] on facts not before the court at that stage in the proceedings”); see

also Sidney Hillman Health Ctr. of Rochester v. Abbott Lab’ys, Inc., 782 F.3d 922,

927–28 (7th Cir. 2015) (district court abused its discretion by dismissing RICO claim

based on statute of limitations before discovery). Because it is unclear when the

statute of limitations will expire, the Court finds that dismissing the complaint

without prejudice risks unfairly prejudicing Goddess and, therefore, will stay the case

pending the NLRB’s review.

B. Sterling Bay’s Remaining Rule 12(b)(6) Arguments

1. Relationship to Interstate Commerce

Sterling Bay raises a number of other arguments to dismiss the claims. First,

it contends that Goddess inadequately pleads a relationship between the alleged

enterprise’s activities and interstate commerce. Sterling Bay points out that the

enterprise’s alleged activities occur only in downtown Chicago. But even if the

enterprise’s activities only occur within one state, the interstate commerce element

can be met by a showing that the enterprise’s activities “affect” interstate commerce.

§ 1962(c). This bar is quite low. See United States v. Muskovsky, 863 F.2d 1319, 1325

(7th Cir. 1988), cert. denied, 489 U.S. 1067 (1989); CivCon, 2020 WL 6075869, at *4

(interstate commerce element of RICO claim requires “de minimis effects”). Goddess

alleges that some Sterling Bay tenants injured by the enterprise’s purported extortion

are headquartered in other states. This suffices to show that the enterprise “affects”

interstate commerce for present purposes.

2. Extortion

Next, Sterling Bay argues that Goddess’s allegations of “wrongful threats” fail

to state a claim under the Hobbs Act. In support, Sterling Bay notes that the

complaint does not identify any threats Sterling Bay made to Goddess or any other

tenants. This argument likewise is unpersuasive. To state a claim for extortion

under the Hobbs Act, the plaintiff must show that the defendant obtained property5

from the plaintiff with consent induced by “wrongful use of actual or threatened force,

violence, or fear, or under color of official right.” 18 U.S.C. § 1951(b). Exploiting a

plaintiff’s fear of economic loss is a basis for liability under § 1951(b). See United

States v. Sturman, 49 F.3d 1275, 1281 (7th Cir. 1995); see also United States v. Koziol,

993 F.3d 1160, 1182 (9th Cir. 2021). And when the alleged extortion preys upon an

existing fear (such as fear of business failure), “a defendant can be liable under the

Hobbs Act for the wrongful exploitation of [that] fear . . . even if there is no explicit

threat.” United States v. Orlando, 819 F.3d 1016, 1024 (7th Cir. 2016).

Here, Goddess alleges that Sterling Bay agrees with the Unions to prevent any

of its tenants from using nonunion labor by, inter alia, announcing that policy in its

tenant handbook and preventing the tenants from starting work unless they use

union contractors. Sterling Bay’s tenants pay these higher labor costs because they

fear economic loss from being unable to make improvements to their businesses.

5 The parties do not discuss the “obtain property” element in their pleadings, but the

Court notes that the “obtain property” element is satisfied when the defendant deprives the

plaintiff of property and “direct[s] its transfer to another of his choosing, irrespective of

whether he receives a personal benefit as a result.” United States v. Brissette, 919 F.3d 670,

679 (1st Cir. 2019) (collecting cases). Thus, even though Goddess has not asserted that

Sterling Bay itself acquired the extorted property (the increased labor costs), its allegations

that Sterling Bay’s coercion increased business for Union members establish this element.

Taken as true, these factual allegations “allow[] the court to draw the reasonable

inference,” Iqbal, 556 U.S. at 678, that Sterling Bay extorted Goddess, preying on its

existing fear of losing business by not being able to complete renovations, even though

Goddess has not alleged that Sterling Bay explicitly threatened it. See Orlando, 819

F.3d at 1024; Wacker, 2019 WL 2270000, at *12 (holding that allegations that

defendant imposed a union-only rule on tenants using fear of economic harm sufficed

to state a claim for Hobbs Act extortion).

3. Existence of an “Enterprise”

Next, Sterling Bay argues that Goddess has not alleged that Sterling Bay and

the Unions constitute an associated-in-fact enterprise. An associated-in-fact

enterprise is “a group of persons associated together for a common purpose of

engaging in a course of conduct.” Boyle, 556 U.S. at 944 (quoting United States v.

Turkette, 452 U.S. 576, 580 (1981)). To be an associated-in-fact enterprise, a group

must have “a purpose, relationships among those associated with the enterprise, and

longevity sufficient to permit these associates to pursue the enterprise's purpose.” Id.

Sterling Bay contends that Goddess has not pleaded the existence of an

enterprise because it has not alleged that Sterling Bay and the Unions acted together

to pursue a joint purpose. Sterling Bay leans on the Seventh Circuit’s distinction

between commercial enterprises, “where each entity acts in its individual capacity to

pursue its individual self-interest,” and joint enterprises, “where each individual

entity acts in concert with the others to pursue a common interest.” Bible v. United

Student Aid Funds, Inc., 799 U.S. 633, 656 (7th Cir. 2015). In Sterling Bay’s view,

the complaint pleads only that Sterling Bay, the Unions, and their agents acted

pursuant to their individual self-interests. For example, Sterling Bay claims that

Sterling Bay removes the nonunion contractors “to avoid pressure” from Local 399,

not to benefit the Unions, and that Local 1 and Local 705 join the threatened

picketing “to support Local 399 and other unions generally.” Def.’s Mem. at 15.

Sterling Bay’s construction is overly narrow. Even though the individual actors may

have their own underlying motivations for participating in the alleged scheme,

Goddess alleges that they all work towards a common goal—keeping Sterling Bay’s

buildings union-only. Indeed, in Wacker, the court found a common interest sufficient

to establish an associated in fact enterprise on very similar facts. Compare, e.g., 2019

WL 2270000, at 14 (“WDES claims that JLL zealously enforces the union-only policy

by directing its building managers to keep non-union contractors out of the buildings

it manages . . . Building managers require proof of union membership before

permitting a contractor into the building and deny building access to non-union

contractors.”), with, e.g., Compl. at ¶ 15 (“Before Sterling Bay permits a tenant to use

a contractor in its office space, it requires proof of the contractor’s union

membership”); id. ¶ 41 (“Sterling Bay maintains a strict policy and practice to not

allow any contractor to access the building without its approval. It will not approve

any non-union firm.”).

Here, Goddess has alleged facts showing that Sterling Bay and the Unions

acted cooperatively for the “purpose” of preventing Sterling Bay tenants from using

nonunion contractors. While discovery may reveal otherwise, Goddess’s allegations

“allow the court to draw the reasonable inference” that Sterling Bay and the Unions

formed an enterprise—which is enough for their claim to survive at the pleading

stage. Iqbal, 556 U.S. at 678.

4. Conspiracy

Finally, Sterling Bay argues that Goddess’s § 1962(d) conspiracy claim fails

because Goddess has failed to state a claim for a § 1962(c) violation. But this is a

derivative argument, and because the viability of the § 1962(c) claim will depend

largely upon the determination by the NLRB, Sterling Bay’s request to dismiss the

conspiracy claim also is denied.

IV. Conclusion

For the foregoing reasons, Sterling Bay’s motion to dismiss for failure to state

a claim is denied. Sterling Bay’s motion for primary jurisdictional referral to the

NLRB is granted. The parties are directed to request from the NLRB a ruling on

whether Sterling Bay and the Unions engaged in a hot cargo agreement in violation

of § 8(e) of the NLRA as alleged in the complaint. The Court enters a stay of

proceedings in this case pending the NLRB’s decision. The parties are ordered to file

a status report within five days of the NLRB’s determination.

IT IS SO ORDERED. ENTERED: 3/22/22

—

John Z. Lee

United States District Judge

18