Carmen v. Health Carousel, LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

NOVIE DALE CARMEN, et al.,

Plaintiffs,

Case No. 1:20-cv-313

v. JUDGE DOUGLAS R. COLE

HEALTH CAROUSEL, LLC,

Defendant.

OPINION AND ORDER

This cause comes before the Court on Defendant Health Carousel, LLC’s

(“Health Carousel”) Motion to Dismiss Plaintiff Novie Dale Carmen’s (“Carmen”)

Amended Complaint and to Strike Carmen’s Class Allegations contained in that

Amended Complaint. (Doc. 12). For the reasons set forth below, the Court DENIES

Health Carousel’s Motion to Dismiss and DENIES Health Carousel’s Motion to

Strike, albeit on relatively narrow grounds. In short, the Court concludes that the

issues that Health Carousel presents in its Motions are more appropriately addressed

at the summary judgment and class certification stages, when the factual record is

more fully developed. The Court also DENIES AS MOOT Health Carousel’s earlier

Motions to Dismiss and Strike (Doc. 5) as directed at Carmen’s Original Complaint.

(Doc. 1-1).

BACKGROUND

This putative class action challenges the legality of Health Carousel’s labor

recruiting practices. More specifically, Carmen claims that Health Carousel engaged

in “human trafficking,” as that term is defined in 18 U.S.C. § 1589 and “involuntary

servitude,” as defined in O.R.C. § 2905.32.

A. Health Carousel Recruits Foreign Nurses Like Carmen And Places

Them In American Health Facilities.

Health Carousel is a recruiting and staffing company headquartered in

Hamilton County, Ohio, that enlists foreign nurses, primarily from the Philippines,

to work in healthcare facilities across the United States. (Carmen’s First Am. Compl.,

Doc. 11, (“Compl.”), ¶¶ 1, 9, #134–35). The healthcare facilities that employ the

nurses pay Health Carousel an amount in excess of the nurse’s hourly wages. (§at ¶

11, #136). Health Carousel then pays the nurses the wages to which they are entitled,

keeping the difference for itself. (Id.). As the description suggests, the amount of

return that Health Carousel generates for a given nurse depends on how many hours

that nurse works through the auspices of the Health Carousel program.

The nurses receive several benefits from Health Carousel in exchange for their

participation in the arrangement. Beyond the obvious benefit of placing the nurses in

a job, Health Carousel also sponsors the nurses’ permanent U.S. resident visa

petitions; pays related expenses, including examination, filing, and attorney’s fees;

pays airfare to the United States; provides free temporary housing in the United

States; pays cash bonuses when participating nurses arrive in the United States; and

provides medical benefits and life insurance. (Emp. Cont., Doc. 1-2, #30, 36).

Those benefits last, however, only while the nurse is employed through Health

Carousel. So, for example, if a nurse is residing in Health Carousel-supplied housing,

that nurse must leave such housing within 48-hours after her last shift as a Health

Carousel employee. (Id. at #35). Health Carousel calls its business model the

“Passport USA” program. (Compl., ¶¶ 11, 13, #136).

Each nurse executes two agreements as part of this business arrangement. The

first is a form contract, the “Employment Contract,”1 which each foreign nurse signs

to initiate her employment relationship with Health Carousel. (Id. at ¶ 13, #136). As

this agreement is executed before Health Carousel begins the visa process, nurses

will almost always sign this contract while still abroad.

As relevant to this case, the Employment Contract includes four provisions

that set forth a participating nurse’s obligations. First, the contract contains a

“Commitment Period” provision. This term requires the participating nurse to work

“for a period of time commencing upon the completion of [the nurse’s]

orientation … and becoming fully licensed and ending upon the later of (i) 36 months

or (ii) 6,240 regular-time work hours.” (Emp. Cont., Doc 1-2, #31; Id., Exs. A & B, #35,

38). In other words, the period starts upon the later of orientation or licensure, and

then continues for at least three years of 52-week-per-year, forty-hour work weeks

(i.e., 3 x 52 x 40 = 6,240). Moreover, any hours of overtime do not count toward the

6,240-hour target. And, if a nurse takes any vacation, of course, that time off likewise

will not accrue any hours in regard to the contractually-specified Commitment

Period.

1 The Court can properly consider both the Handbook (Doc. 12-1) and the Employment

Contract (Doc. 1-2) as part of this motion to dismiss because Carmen referred to both

documents in her Complaint and those documents are central to her TVPA claims. See Hivner

v. Active Elec., Inc., 878 F. Supp. 2d 897, 901 (S.D. Ohio 2012) (citing Tellabs, Inc. v. Makor

Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007)).

Second, each Employment Contract contains an “Exclusivity” provision. Here,

a participating nurse acknowledges that Health Carousel will invest “a significant

amount of time, effort, and money” into the participating nurse’s licensing and visa

processing. Based on that, the nurse agrees not to seek sponsorship or accept any

employment in the United States from another company, without Health Carousel’s

written consent, before that nurse has fulfilled his or her obligations under the

Employment Contract. (Id. at #31).

Third and relatedly, each Employment Contract contains a non-compete and

non-solicitation clause. This term prohibits a nurse from “seek[ing] employment …

with any other healthcare provider within 50 miles of [the nurse’s] Client facilities

for one year after [the date the nurse leaves Health Carousel if the nurse violated the

terms of the Employment Contract].” (Id. at #32). A nurse who left Health Carousel

before the end of the Commitment Period, for example, would trigger this non-

compete obligation.

Fourth and finally, each of Health Carousel’s Employment Contracts contains

a “Breach Obligation” provision. This clause states that, in the event of a given

nurse’s breach, “[the nurse] agree[s] that damages sustained by Health Carousel …

are impossible, or at least very difficult, to estimate accurately and, for that reason,

[the nurse] agree[s] that the [liquidated damages] amount is a reasonable forecast of

fair compensation for any such breach.” (Id.). The Employment Contract does not

specify a dollar figure for the liquidated damages, but rather sets forth a list of

expenses and potential lost profit items that both parties agree will be used to

determine the liquidated damages amount in a given case.2 And rather than provide

a precise computation, the term merely states, if the nurse breaches the Employment

Contract, the nurse “shall pay the liquidated damages to be agreed upon and shall be

settled amicably by the parties without prejudice of filing the case in the proper

court.” (Id.).

But the Employment Contract at issue here also includes an Addendum that

further amends the Breach Obligation provision. Through the Addendum, the parties

agree to a range of specifically identified liquidated damages figures. The applicable

figure in each case depends on when the breach occurs in relation to the progress on

the nurse’s visa application. More specifically, the liquidated damages are set at:

$1,000 if the breach occurs before Health Carousel filed for the visa; $10,000 if the

breach occurs after filing but before issuance of the visa; and finally, $20,000 if the

breach occurs after the issuance of the visa but before the end of the “Commitment

Period.” (Addendum to Emp. Cont., Doc. 1-2, #29). The Complaint further alleges that

Health Carousel amended the Addendum over time to increase the liquidated

damages figures for nurses who were recruited later—for example, raising the top

amount from $20,000 to $35,000. (Compl. at ¶ 38, #140).

2 Those factors include “(i) exam review, testing and travel expenses; (ii) attorney fees,

document filing fees and other miscellaneous fees associated with such visa petition; (iii) pre-

employment costs and expenses such as those related to cash or salary advances, relocation

and housing arrangements; (iv) the loss of placement income that Health Carousel would

have received from its Client(s) for the duration of this Agreement as well as other lost income

and revenue resulting from your early termination of employment; (v) the substantial

amount of time, effort, and cost that Health Carousel likely would incur in order to recruit,

hire, train, and develop a replacement employee; and (vi) other factors relating to Health

Carousel’s goodwill and the relationship between Health Carousel and its Clients.” (Emp.

Cont., Doc. 1-2, #32).

Upon arrival in the United States, a nurse receives and signs various

agreements that, together, form a 183-page “Employee Handbook.” (Employee

Handbook, (“Handbook”), Doc. 12-1). The Handbook mostly consists of Health

Carousel’s workplace policies and employee benefits information. Some of these

policies simply notify Health Carousel employees of standard safety practices, like

how to react in the case of a fire or how to safely transport a patient. Other policies

provide rules that govern the nurse’s workplace behaviors. For example, the

Handbook prevents nurses from discussing the terms and conditions of their

employment and prohibits “gossip” at work. (Id. at #316). Still other policies further

describe the relationship between Health Carousel and the nurses. The Handbook,

for instance, explains that “[a]s long as [a nurse] remain[s] in good standing with

Health Carousel, we will continue to be [that nurse’s] advocate for immigration

purposes.” (Id. at #213).

The Handbook also revises some provisions in a nurse’s earlier Employment

Contract. Two of those revisions are relevant to Health Carousel’s Motion. First,

while the Employment Contract provides that a nurse’s “Commitment Period” does

not begin until the nurse obtains full licensure, the Handbook explains that

“[s]ecuring and maintaining [a] licensure or certification is each [nurse’s]

responsibility.” (Id. at § 9.2, #340). Second, the Handbook tweaks the Breach

Obligation provision from the Employment Contract. The Handbook does not alter

the liquidated damages figures, but it does use different language when describing

other consequences that flow from a breach. Specifically, while the Employment

Contract provides that the liquidated damages shall be “settled amicably,” the

Handbook drops that language and states only that any liquidated damages amount

will be “due immediately and in full on or before the last day” of the nurse’s

employment. (Id. at #282). Further, the Handbook indicates that Health Carousel

will file suit and seek damages from any nurse who breaches the Employment

Contract and fails to pay liquidated damages. (Id.). The Handbook then warns nurses

that if they “leave the country, Health Carousel can still obtain a judgment that will

be enforceable abroad.” (Id.).

B. Health Carousel Employs Carmen.

Carmen is a citizen of the Republic of the Philippines. She worked there as an

emergency-room nurse from approximately 2014 to 2018. (Compl., ¶¶ 8, 18, #135,

137). “Lured” by the opportunity to come to the United States, in late-2014, Carmen

contacted Health Carousel about its Passport USA programs. (Id. at ¶¶ 19, 20, #137).

A few months later, on April 6, 2015, Carmen and Health Carousel executed an

Employment Contract. Under the terms of that Contract, Carmen joined Health

Carousel’s Global Express Program. (Id. at ¶ 20, #137).

In her Employment Contract, Carmen agreed to the (1) non-compete

agreement; (2) Breach Obligation provision; and (3) Commitment Period. The

Addendum in her agreement specified that Carmen would owe $20,000 in liquidated

damages if “[e]arly termination occurs after the issuance of [her] visa but prior to

completing [her] Commitment Period.” (Emp. Cont., Doc. 1-2, #29).

After Carmen executed her Employment Contract, nearly three years passed

before she received the visa that she needed to enter the United States. Carmen

arrived in this country on January 17, 2018. (Id. at ¶ 23, #138). The day after her

arrival, Health Carousel presented Carmen with the Handbook, and required her to

sign it at the time that she received it. (Compl., ¶ 26, #138). Carmen alleges that

many of the terms in the Handbook “surprised” her, including, for example, the

Handbook’s threat to litigate if Carmen breached the agreement. (Id.). In any event,

Carmen signed the Handbook and began working at The University of Pittsburgh

Medical Center (“UPMC”) in Muncy, Pennsylvania, less than a month later, i.e., the

second week of February 2018. (Id. at ¶ 27, #138). Carmen officially became a Health

Carousel employee on her first day of work with UPMC Muncy. (Emp. Cont., Doc. 1-

2, #35).

When Carmen began at UPMC, she had not yet obtained her permanent

nursing license from Pennsylvania, but instead was working under a temporary

license. (Id. at ¶ 33, #139). According to Carmen, from May to August 2018, Health

Carousel communicated with Pennsylvania’s licensing agency without including

Carmen in those communications. (Id. at ¶ 33, #139). Carmen claims that Health

Carousel strategically left her out of the loop so that it could delay the licensing

process in an effort to “extract as much work as possible from Carmen.” (Id. at ¶ 34,

#139). Pennsylvania officially awarded Carmen her full and permanent nursing

license in August 2018. (Id.). Given that the Commitment Period provision in her

Employment Contract only began to run when Carmen was fully licensed, Carmen’s

work before August 2018 did not count against her Commitment Period, although it

did benefit Health Carousel. (Id. at ¶¶ 32, 33, #139).

C. Carmen Leaves Health Carousel.

Not long after Carmen began working for Health Carousel, she learned that

her colleagues who were working directly for UMPC (i.e., not through Health

Carousel) were earning more than her. (Compl., ¶¶ 26, 27, #147). Her salary, among

other factors, led Carmen to conclude that she wished to terminate her employment

with Health Carousel.

Carmen claims that the terms in Health Carousel’s contracts, however, forced

her to continue working. Her first, and apparently most pressing, concern was that

Health Carousel would sue her for $20,000 in liquidated damages under the Breach

Obligation provision of her Employment Contract if she left her position before the

expiration of the Commitment Period. (Id. at ¶¶ 52, 54, #143). Second, Carmen

alleges that she felt forced to continue working for Health Carousel because the non-

compete in her Employment Contract limited her employment options. (Id. at ¶¶ 55,

56, 61, #143–44).

Finally, Carmen claims that she hesitated to terminate her employment

because the Handbook “implies” that any nurse who leaves before the end of the

Commitment Period will suffer adverse immigration consequences. (Id. at ¶¶ 72–75,

#146–47). The relevant section of the Handbook states “[a]s long as you remain in

good standing with Health Carousel, we will continue to be your advocate for

immigration purposes.” (Handbook at #213). Carmen reasons that the opposite is also

true: that if she leaves early, Health Carousel will try to send her back to the

Philippines.

Despite her claimed fears, Carmen terminated her employment with Health

Carousel in November 2019. (Id. at ¶ 82, #148). At the time she quit, Carmen had

worked for Heath Carousel for 22 months—i.e., since February 2018. As Carmen did

not gain her full license until August 2018, only about sixteen of those months

counted toward Carmen’s three-year Commitment Period. When Carmen left, she

borrowed $20,000 from her boyfriend to pay Health Carousel the liquidated damages

for her early termination due under both the Employment Contract and the

Handbook. (Id. at ¶ 82, #148). Carmen alleges that she has experienced hardship,

stress, anxiety, guilt, and depression as a result of having to borrow this money from

her boyfriend. (Id. at ¶ 83, #148). At some point after paying Health Carousel,

Carmen moved to Hershey, Pennsylvania, where she found a nursing job that pays

more than her old position at Health Carousel. (Id. at ¶ 87, #149).

D. Carmen Brings This Putative Class Action, And Health Carousel

Moves Both To Dismiss The Action And To Strike The Class

Allegations.

Carmen brings this action against Health Carousel alleging that Health

Carousel violated the Trafficking Victims Protection Act (“TVPA”), 18 U.S.C. § 1589,

et seq., and Ohio’s human trafficking law, Ohio Revised Code § 2905.32. In addition

to her own claims, she sues on behalf of a putative class that she defines as “[a]ll

nurses [who] entered the United States through [Health Carousel]’s Passport USA

program and paid a financial penalty within the ten years prior to the filing of this

action in order to be released from their employment with or through [Health

Carousel].” (Compl., ¶ 91, #149).

Carmen originally sued in the Hamilton County Court of Common Pleas.

Health Carousel then removed the case to this Court on April 20, 2020, and

immediately filed a Motion to Dismiss the Complaint and Strike the Class

Allegations. (Doc. 5). About two weeks later, on May 6, 2020, Carmen filed an

Amended Complaint. (Doc. 11). Two weeks after that, on May 20, 2020, Health

Carousel filed its Motion to Dismiss the Amended Complaint and to Strike the Class

Allegations. (Doc. 12). The Court held oral argument on the later Motions to Dismiss

and Strike on August 7, 2020. (Doc. 18). Those Motions are now fully briefed and ripe

for resolution.

DISCUSSION

A. Carmen Has Plausibly Alleged That Health Carousel Violated The

Trafficking Victims Protection Act.

The Trafficking Victims Protection Act (“TVPA”) provides both criminal and

civil liability to anyone who “knowingly … obtains the labor or services of a person by

… threats of serious harm … or by means of the abuse or threatened abuse of law or

legal process.” 18 U.S.C. § 1589 (a)(2)–(3). The TVPA broadly defines “serious harm”

as “any harm, whether physical or nonphysical, including psychological, financial, or

reputational harm, that is sufficiently serious, under all the surrounding

circumstances, to compel a reasonable person of the same background and in the

same circumstances to perform or to continue performing labor or services in order to

avoid incurring that harm.” § 1589(c)(2). The Act also defines “abuse of law” as “the

use or threatened use of a law or legal process … in any manner or for any purpose

for which the law was not designed, in order to exert pressure on another person.”

§ 1589(c)(1). In short, the TVPA makes it illegal for a company like Health Carousel

to leverage serious financial pressure or threats of inappropriate legal action against

Carmen in a way that would press a reasonable nurse in her position into its service.

The TVPA casts a wide net, criminalizing and providing civil penalties even

for those who merely associate, or attempt to associate, with human trafficking as

defined above. For example, the TVPA prohibits anyone from “knowingly benefit[ing],

financially or by receiving anything of value, from participation in a venture” which

is illegal under the statute. § 1589(b). Similarly, the TVPA makes it illegal to

“knowingly recruit … or obtain[] by any means, any person for labor or services in

violation” of the Act. § 1590(a). Any person who attempts to violate any of these

prohibitions is also liable as though he or she had actually violated that section.

§ 1594(a).

Carmen’s Complaint sets fourth four counts under the TVPA. Count I, which

forms the basis of Carmen’s claim, is that, through abuse of legal process and threats

of non-physical harm, Health Carousel compelled Carmen to provide nursing services

against her will in violation of 18 U.S.C. § 1589(a). (Compl., ¶¶ 101–08, #152–53).

The other three counts stem from this first count: Count II alleges that Health

Carousel knowingly benefited from a violation of the TVPA (id. at ¶¶ 109–14, #153–

54); Count III alleges that Health Carousel knowingly recruited Carmen in violation

of the TVPA (id. at ¶¶ 115–19, #154); and Count IV alleges that Health Carousel

attempted to violate the TVPA (id. at ¶¶ 120–24, #155). All four claims turn on

whether the conditions of Carmen’s employment violated the TVPA.

At this stage of the litigation, of course, Carmen does not need to prove that

Health Carousel employed unlawful financial or legal pressure. Rather, under

Federal Rule of Civil Procedure 8(a)(2), Carmen need only make a “short and plain

statement of the claim showing that [she] is entitled to relief.” This “short and plain

statement” requirement, in part, serves a notice function, alerting Health Carousel

not only to the nature of the claim against it, but also to the “grounds upon which

[the claim] rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley

v. Gibson, 355 U.S. 41, 47 (1957)). As part of Carmen’s obligation to provide notice of

the “grounds” for relief, her Complaint must include “[f]actual allegations” that are

“enough to raise a right to relief above the speculative level.” Id. These factual

allegations must support a claim that is “plausible on its face.” Id. at 570. In sum,

then, Carmen must provide sufficient facts to make out a plausible claim that Health

Carousel obtained her services in violation of the TVPA.

Carmen presents several facts in an attempt to establish plausibility. For

example, she points to: (1) the $20,000 liquidated damages provision; (2) the non-

compete agreement; (3) Health Carousel’s policy of retracting temporary housing

within 48 hours of a nurse’s last shift; (4) the disputed clarity of the Commitment

Period; (5) Health Carousel’s allegedly purposeful delay in obtaining Carmen’s

permanent license; (6) Health Carousel’s allegedly hidden litigious nature; (7) Health

Carousel’s “isolating” no-gossip policy; and (8) the “implied threat” that Health

Carousel would advocate for negative immigration outcomes if Carmen left. For her

Complaint to move forward, Carmen must show that these facts, considered either

separately or in combination, suffice to plausibly show that a reasonable immigrant

in Carmen’s position would feel a threat of “serious harm” if she were to leave Health

Carousel. United States v. Dann, 652 F.3d 1160, 1171 (9th Cir. 2011); see also 18

U.S.C. § 1589 (c)(2) (requiring courts to consider “all the surrounding circumstances”

in evaluating serious harm).

In terms of that assessment, there are certain things on which the parties

agree. For example, no party disputes that financial pressure, including the threat of

financial harm, could constitute “serious harm” within the meaning of the TVPA. 18

U.S.C. § 1589 (c)(2); (Oral Arg. Tr., Doc. 18, #515). That being said, there are all sorts

of financial pressures that can arise in the employment setting, and not all of them

serve to establish a TVPA violation. Start with the easy example—if a person leaves

a job, the employer typically stops paying that person. That is a “financial harm” to

the (now-former) employee in some sense. And it may well be that the threat of losing

one’s paycheck is “sufficiently serious” to “compel a reasonable person” to keep

working a job that she does not like. See 18 U.S.C. § 1589(c)(2). But no one would

suggest—or at least no one should suggest—that an employer violates the TVPA

simply by refusing to continue paying employees who have quit. Rather, to constitute

“financial harm” under the TVPA, the threatened harm must be in some way

improper or illicit.

Employment contracts can complicate, rather than simplify, the analysis. As a

general matter, “involuntary servitude” refers to situations where an employee is not

free to leave her employment. But all contracts—at least all contracts with a stated

duration—have that effect to some extent. When an employee signs a contract, the

employee undertakes various obligations, including promissory obligations that may

make it difficult for the employee to later leave that job. To be sure, the employee also

receives benefits (including promises of future benefits) in exchange, but no one can

dispute that a contract may make it more difficult for an employee to leave a position.

Still, reading the TVPA as prohibiting any contractual limitations that might impact

an employee’s ability to leave her job would be absurd. For example, it is difficult to

conceive that a corporate CEO who has a $10 million annual salary under an

employment contract that forbids her from taking employment with a competitor in

the industry for some period of time after leaving her current employer, thereby

arguably “capturing” her in her current role, would constitute a human trafficking

victim.

At the same time, Health Carousel’s argument—that a freely entered contract,

because it is voluntary, can never serve as the basis for a TVPA claim—also seems

wrong. Contracts sometimes contain exit terms that are so one-sided or egregious

that a reasonable person may feel compelled to remain in a position out of a fear of

the consequences that will follow if the employee leaves. Imagine, for example, if the

contract at issue here contained a $500,000 liquidated damages provision. To be sure,

such a provision, or sufficiently egregious provisions of any type, may well be

unenforceable as a matter of contract law. But a foreign citizen recruited to a job

opportunity in this country may not have a deep (or any) understanding of the legal

system or their rights under that system, and thus might not anticipate that

unenforceability. As a result, the in terrorem effect of such a provision may well

provide a form of “compulsion” for that foreign citizen to remain in their job, no matter

how distasteful that job has become to them.

As this discussion suggests, distinguishing between contract provisions that

merely impose a hardship on an employee, on the one hand, versus those that may

constitute “compulsion” under the TVPA, on the other, can lead to difficult line

drawing exercises. To be sure, in many cases a financial consequence spelled out in a

contract will not violate the TVPA. Take, for example, Panwar v. Access Therapies,

Inc., No. 1:12-cv-00619, 2015 WL 1396599 (S.D. Ind. Mar. 25, 2015). In Panwar, two

foreign physical therapists alleged that a $15,000–$20,0000 liquidated damages

clause in their employment contract was a financial harm that violated the TVPA.

Id. at *3. The court disagreed (although it is perhaps worth noting that it did so on a

motion for summary judgment). In doing so, the court highlighted the tension

between the plaintiff’s claim of a “forced labor scheme” under the TVPA, and the fact

that the therapists “voluntarily entered into the employment contracts.” Id. “The

contract terms were plainly written, … the liquidated damages provision was …

conspicuous … and [the therapists] understood the agreements and their obligations

under the agreements, including the consequences of early termination.” Id.

Therefore, the Panwar Court concluded, the “bona fide liquidated damages provision”

did not violate the TVPA. Id. at *4.

But it would overread Panwar to suggest that the court’s conclusion there

means that, as a matter of law, a liquidated damages provision can never violate the

TVPA. To the contrary, the court’s observation that it was a “bona fide liquidated

damages provision” mattered. Indeed, the court specifically noted that the liquidated

damages provision at issue was “lawful under both the H-1B [immigration]

regulations and under Indiana law.” Id. Further, both Panwar employees fully

“understood … their obligations under the [legal] agreements,” and the employer had

itself acted in accordance with the terms of the agreement. Id. at *3.

Where those characteristics are not present, courts have found that the

financial consequences a contract imposes on leaving can be so egregious that they

run afoul of the TVPA. In Carter v. Paschall Truck Lines, Inc., 324 F. Supp. 3d 900

(W.D. Ky. 2018), for example, the employees at issue leased their trucks from Paschall

Truck Lines. The terms of employment required that each truck driver work only for

Paschall, and if the employee violated that agreement, Paschall required the

employee to immediately pay the entire remaining balance of the lease, which could

amount to over $100,000. Id. at 903–04. The Court denied a motion to dismiss, finding

that this potential financial harm was “sufficiently serious” to state a plausible TVPA

claim. Id. at 915–16.

Other courts have held that even smaller financial consequences can constitute

“serious harm” for TVPA purposes. For example, in Javier v. Beck, the Southern

District of New York held that a complaint alleged a plausible TVPA violation when

an employer “threatened to enforce a $15,000 confession of judgment if [the employee]

left,” and the $15,000 damages figure “represented six months’ gross wages at [the

employee’s] … pay rate.” No. 13cv2926, 2014 WL 3058456, at *6 (S.D.N.Y. July 3,

2014). The Eastern District of New York came to a similar conclusion in Paguirigan

v. Prompt Nursing Employment Agency, LLC, 286 F. Supp. 3d 430, 438–39 (E.D.N.Y.

2017). There, the Court held that the defendant’s attempt to enforce a $25,000

contract termination fee, even though the New York state court had found that fee

unenforceable, might violate the TVPA. Id. These cases suggest that it is not the

amount of liquidated damages, per se, that controls the analysis. Rather, what

matters is whether the specified liquidated damages in a given case rise to the level

of serious harm considering all of the surrounding circumstances—such as the

enforceability of the term, or the employee’s pay rate, or other aspects of the

arrangement. See id. at 439 (considering the enforceability of the damages); see also

Javier, 2014 WL 3058456, at *6 (considering the employee’s pay rate).

Beyond cases where the employment contract expressly imposes financial

consequences for leaving employment, courts have also found that TVPA violations

can arise when the financial consequences that the employer seeks to impose, or other

aspects of the employment, are not as described in the contract—what one might refer

to as bait-and-switch situations. For example, in Dann, the defendant brought a

Peruvian national to the United States to serve as a nanny and housekeeper,

promising to pay her $600 per month. 652 F.3d at 1163. Although the nanny worked

continuously caring for the defendant’s home and her three children, the defendant

never made good on her promise to pay. The nanny worked for a year and a half

without pay until she announced that she wanted to return to Peru. Id. at 1165. After

a “heated argument,” the defendant agreed to send the nanny back to Peru, but only

after the nanny paid her $8,000 for the nanny’s food, room, and clothes. Id. To avoid

this harm, the nanny agreed to stay in the defendant’s household. The court held that

this unexpected bill was “financial harm” within the meaning of the TVPA. Id. at

1171.

The Central District of California found that a similar bait-and-switch tactic

violated the TVPA in Nunag-Tanedo v. East Baton Rouge Parish School Board, 790

F. Supp. 2d 1134 (C.D. Cal. 2011). There, two Filipino math teachers paid a non-

refundable recruitment fee of $5,000 to have the defendant bring them to the United

States for work. Id. at 1138. Once the teachers had received their visas, the defendant

announced to the teachers for the first time that they would have to pay $10,000 in

additional fees or they would both forfeit their original fee and not get to come to the

United States. Id. This put the teachers in a difficult situation: either take on

additional debt or absorb the $5,000 in sunk costs. As $5,000 is over 1.5 times the

average household income in the Philippines, the teachers had only one tenable way

out: to agree to the additional fees and come to work for the defendant to pay off the

debt. Id. at 1144. This labor practice violated the TVPA, the court concluded, because

it “created a situation where ceasing labor would cause [the teachers] serious harm.”

Id. at 1145.

In short, it is not the existence or non-existence of an employment contract that

controls. Rather, the key questions relate to the substantive terms of the alleged

contract (e.g., are they too one-sided?), as well as the parties’ conduct in the formation

and performance of the agreement. Indeed, in some ways, it is not unlike the

contractual unconscionability framework, which also has both a substantive and

procedural component. Whirlpool Corp. v. Grigoleit Co., 713 F.3d 316, 321 (6th Cir.

2013) (Michigan law); AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 340 (2011)

(California law); Eastham v. Chesapeake Appalachia, LLC, 754 F.3d 356, 365 (6th

Cir. 2014) (Ohio law). But unlike the unconscionability analysis, in which a plaintiff

is typically required to show both procedural and substantive unconscionability to

obtain unenforceability, case law suggests that either substantive or procedural

shortcomings may be enough to satisfy the standard for “serious harm” for TVPA

purposes, at least if those shortcomings are sufficiently egregious.

Carmen alleges both forms of harm here. Let’s start with alleged procedural

shortcomings. Carmen alleges that Health Carousel engaged in several types of bait-

and-switch behavior. Of particular importance to this Motion, Carmen alleges that

Health Carousel misrepresented information concerning the start and scope of her

Commitment Period. The Employment Contract states that the Commitment Period

does not start until “the completion of [the nurse’s] orientation … and [the date that

nurse] becom[es] fully licensed.” (Emp. Cont., Doc. 1-2, #31; id., Exs. A & B, #35, 38).

The Employment Contract also specifies that only “regular-time work hours” count

against the Commitment Period clock. (Id.). Later, the Handbook explains that

“[s]ecuring and maintaining [a] licensure or certification is each [nurse’s]

responsibility.” (Handbook, §9.2, #340).

Carmen says that, when she arrived in the United States, Health Carousel

began to impose additional, and importantly, previously undiscussed, conditions onto

her obligations during this Commitment Period. First, Carmen claims that, contrary

to the Handbook’s admonition that obtaining a license would be Carmen’s

responsibility, Health Carousel in fact took control of the licensing process, and then

purposefully delayed the process in an effort to “extract as much work as possible

from Carmen that would not count toward her” Commitment Period. (Id. at ¶¶ 32–

34, #139). Specifically, Carmen alleges that, in May 2018, she “learned that [Health

Carousel] has been communicating about [her] full license with the licensing agency

without including Carmen in those communications.” (Id. at ¶ 33, #139). Further,

“[t]hough [Health Carousel] was in contact with the licensing agency, it had not

sought or obtained Carmen’s full license.” (Id.). Carmen then says that she tried to

intervene to expedite the process, but Health Carousel ignored her and “continued to

delay the process.” (Id. at ¶ 34, #139). Second, and relatedly, Carmen alleges that

Health Carousel never indicated that she would be required to work significant

overtime (recall that this overtime creates a benefit for Health Carousel, but does not

count toward Carmen’s Commitment Period). (Compl., ¶ 30, #139).

These facts, if true, bear at least some resemblance to the bait-and-switch

tactics in Dann and Nunag-Tanedo, both of which involved a plausible claim under

the TVPA. The nanny in Dann came to the United States to work for $600 per month,

but, later, the employer not only refused to pay, but also demanded an unexpected

$8,000 from the nanny before she could leave. 652 F.3d at 1171. Similarly, the

employer in Nunag-Tanedo forced the foreign teachers to take on additional debt,

which the teachers “could not possibly repay absent continued employment by the

school districts.” 790 F. Supp. 2d at 1144. The common denominator in these cases is

that an employer cannot create ever-evolving obligations in an effort to trap an

employee into providing additional services to the employer. Carmen alleges that

Health Carousel did that by creating additional hurdles to prevent her from

completing her Commitment Period, while at the same time reconfiguring the job

(through compelled overtime) to increase the benefit that Health Carousel would

receive during the pendency of that Commitment Period.

It bears noting, of course, that this Court is not saying that Health Carousel in

fact did delay Carmen’s licensing process, or even that Health Carousel controlled

that process in any way. Nor has Carmen established that Heath Carousel did in fact

mislead her about overtime, or that she was even forced to work such overtime. But

discovery and a factual record, not argument in a motion to dismiss, is the proper

means to address such factual uncertainties.

The same is true of Carmen’s allegations of substantive egregiousness. On that

front, Carmen points to the liquidated damages provision, claiming that it is a

“penalty” designed to compel nurses to stay for the entire Commitment Period.

(Compl., ¶ 38, #140). Health Carousel claims that the liquidated damages provision

cannot serve as the basis for Carmen’s TVPA claim because it is “enforceable, and

Carmen freely consented to that provision when she entered the Contract.” (Mot. to

Dismiss, Doc. 12, #184). But as Paguirigan, Javier, and Carter illustrate, an employer

cannot escape TVPA liability merely because the employee “agreed” to the term in

their employment contract. Rather, the Court must evaluate the effect of the damages

provision in the context of “all the surrounding circumstances,” as applied to a

reasonable person in the plaintiff’s position. 18 U.S.C. §1589. At this point, it is

unclear whether Health Carousel’s $20,000 liquidated damages provision is akin to

the permissible financial consequence in Panwar, or more like the problematic

penalties in Paguirigan, Javier, and Carter.

The parties dispute, for example, whether the liquidated damages provision is

valid under Ohio law. (See, e.g., Compl., ¶ 47, #142 (asserting that the term “is not a

valid liquidated damages provision under Ohio law”)). The answer to that question

may impact the TVPA analysis. Compare Panwar, 2015 WL 1396599, at *4 (finding

that a liquidated damages provision did not violate the TVPA when it was “lawful …

under Indiana law”), with Paguirigan, 286 F. Supp. 3d at 439 (finding a plausible

TVPA claim when an employer attempted to enforce a liquidated damages provision

against an employee “even after the New York Supreme Court found the fee

unenforceable”). But, under Ohio law, the answer to that question depends heavily

on the facts surrounding a given contract. Samson Sales, Inc. v. Honeywell, Inc., 465

N.E. 2d 392, 394 (Ohio 1984) (“Whether a particular sum specified in a contract is

intended as a[n unenforceable] penalty or as [an enforceable] liquidated damages

[provision] depends upon the operative facts and circumstances surrounding each

particular case.”). And discovery is necessary to assess those facts.

In sum, the Court concludes that Carmen has alleged enough to get past the

motion to dismiss stage in this case. Whether she can prevail on her TVPA claim is

an entirely different question, but not one the Court is currently in a position to

answer, absent a more well-developed factual record.

B. Carmen Has Plausibly Alleged That Health Carousel Violated The

Ohio Human Trafficking Statute.

Ohio’s human trafficking law prohibits both sex trafficking and labor

trafficking. Ohio v. Brown, 134 N.E.3d 783, 795 (Ohio Ct. App. 2019). On the labor

trafficking front, the statute makes it unlawful for any person to “knowingly recruit,

lure, entice, isolate … or maintain, or knowingly attempt [any of those actions] … if

… [t]he offender knows that the other person will be subjected to involuntary

servitude.” O.R.C. § 2905.32(A)(1). Like the TVPA, Ohio’s human trafficking law is

primarily a criminal statute that also provides for civil liability. See O.R.C.

§ 2307.51(A) (creating a private right of action for victims of trafficking for “harm that

resulted from the violation of section 2905.32 of the Revised Code”).

The Ohio human trafficking law requires a showing that the offender pressed

the victim into “involuntary servitude,” which the statute defines as a situation where

the victim is “compelled to perform labor or services for another against one's will.”

O.R.C. § 2905.31(A). The “compulsion” element does not require an express or

executed threat. O.R.C. § 2905.32(B). Rather, a plaintiff can establish “compulsion”

with evidence that “the victim’s will was overcome by force, fear, duress, intimidation,

or fraud.” Id.

As relevant here, Ohio’s human trafficking law expressly contemplates that

“fraud,” which leads to “compelled … labor,” could establish a claim. Carmen’s

Complaint satisfies both the fraud and compelled labor elements. On the fraud front,

Carmen alleges that Health Carousel purposefully delayed her full licensure despite

its representations in the Handbook that Carmen, as the employee, would get to

control the licensing process. (Handbook, #340 (“[s]ecuring and maintaining [a]

licensure or certification is each [nurse’s] responsibility”)). Not only that, but Carmen

also alleges that Health Carousel attempted to deceive her throughout the licensing

process. In May 2018, Carmen says that she “learned that [Health Carousel] had been

communicating about Carmen’s full license with the licensing agency without

including Carmen in those communications.” (Compl., ¶ 33, #139). According to the

Complaint, when Carmen tried to intercede to “expedite the process,” Health

Carousel ignored her, and continued to control the licensing procedure behind

Carmen’s back. (Id. at ¶ 34, #139). As for the “compulsion” point, Carmen claims that

Health Carousel delayed her licensure with the intent to obtain additional months of

service (by expanding the Commitment Period). These allegations create a plausible

violation of the Ohio human trafficking law.

Health Carousel’s arguments to the contrary focus primarily on the compulsion

argument. Specifically, Health Carousel claims that Carmen cannot show compulsion

because she “concedes that she both freely entered and freely terminated the

employment relationship with Health Carousel.” (Mot. to Dismiss, Doc. 12, #200). As

support, Health Carousel cites Ross v. Jenkins, a rare case interpreting Ohio’s human

trafficking law in the civil context. 325 F. Supp. 3d 1141, 1161 (D. Kan. 2018). Ross

involved egregious levels of coercion. The offender in that case forcibly transported

the victim to the United States, and then forced her to work long hours both as a

waitress and as a housekeeper for no pay. Id. at 1166.

Health Carousel contends that Carmen’s employment cannot be coercive

under the Ohio human trafficking law because it “bears no resemblance” to the

employment situation at issue in Ross. The problem with that argument is that Ross

merely provides an example of conduct that violates Ohio’s human trafficking law;

the case does not purport to set the minimum level of coercion necessary to state a

claim.

In short, while Health Carousel is correct that the alleged facts arguably

appear to show that Carmen voluntarily chose to join, and then voluntarily chose to

leave, her employment with Health Carousel, those facts do not render her claim

invalid as a matter of law. Rather, the issue at this stage of the proceedings is whether

Health Carousel attempted, or succeeded, to use fraudulent means to compel Carmen

into extending the length of her employment. She has plausibly alleged that Health

Carousel did. Whether that is in fact true is once again a question better answered

after discovery.

C. The Court Denies Health Carousel’s Motion To Strike Carmen’s Class

Allegations.

To obtain class certification in federal court, claimants must satisfy three

requirements. The first, and threshold requirement, is that claimants provide

a class definition that is “sufficiently definite so that it is administratively feasible

for the court to determine whether a particular individual is a member of the

proposed class.” Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 537–38 (6th Cir.

2012) (quotation omitted). Next, the claimant must meet the dual requirements of

Fed. R. Civ. P. 23, the federal rule which governs class actions. Specifically, the

claimant must show “(1) each of the four prerequisites under Rule 23(a), and (2) the

prerequisites of one of the three types of class actions provided for by Rule 23(b).”

Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 945–46 (6th Cir. 2001). A

failure on any of these fronts “dooms the class.” Id. at 946.

Before considering those issues, though, there is the threshold matter of

timing. Rule 23 requires the Court to determine “whether to certify the action as a

class action” at “an early practicable time after a person sues or is sued as a class

representative.” Fed R. Civ. P. 23(c)(1)(A). Federal Rule of Civil Procedure 12(f),

meanwhile, authorizes the Court to “strike from a pleading ... any redundant,

immaterial, impertinent, or scandalous matter.” “The function of the motion [to

strike] is to ‘avoid the expenditure of time and money that must arise from litigating

spurious issues by dispensing with’ them early in the case.” Fishon v. Mars Petcare

US, Inc., 501 F. Supp. 3d 555, 575 (M.D. Tenn. 2020) (quoting Operating Eng'rs Local

324 Health Care Plan v. G&W Constr. Co., 783 F.3d 1045, 1050 (6th Cir. 2015)).

Parties can use a Rule 12(f) motion to attack class certification. But a movant

who moves to strike class allegations bears the burden of demonstrating that, “from

the face of the ... complaint[,] … it will be impossible to certify the class as alleged,

regardless of the facts plaintiffs may be able to prove.” Id. (quoting Schilling v. Kenton

Cnty, Ky., No. 10-143-DLB, 2011 WL 293759, at *4 (E.D. Ky. Jan. 27, 2011)). In other

words, the Court may decide the issue before discovery only if the Court is “‘convinced

that any questions of law are clear and not in dispute, and that under no set of

circumstances could the claims’ succeed in class action form.” Id. (quoting Sanders v.

Apple Inc., 672 F. Supp. 2d 978, 990 (N.D. Cal. 2009)). In all other cases, “[t]he court

should defer decision on certification pending discovery.” Id. (quoting Am. Med.

Sys., 75 F.3d 1069, 1086 (6th Cir. 1996) (brackets omitted)).

With that in mind, let’s turn to Health Carousel’s specific challenges to class

certification here. That analysis starts with Carmen’s proposed class definition:

All nurses that entered the United States through Defendant’s Passport

USA program and paid a financial penalty within the ten years prior to

the filing of this action in order to be released from their employment

with or through Defendant.

(Compl., ¶ 91, #149). Health Carousel argues that this definition is “overbroad,” and

thus fails to adequately identify the class. (Mot. to Dismiss, Doc. 12, #201–03). A

proposed class is overbroad, and thus not adequately defined, “if it ‘would include

members who have not suffered harm at the hands of the defendant and are not at

risk to suffer such harm.’” Chaz Concrete Co. v. Codell, No. 3:03-52-KKC, 2006 WL

2453302, at *6 (E.D. Ky. Aug. 23, 2006) (quoting McGee v. East Ohio Gas

Company, 200 F.R.D. 382, 388 (S.D. Ohio 2001)).

Health Carousel claims that Carmen’s proposed class definition is overbroad

because it will include those nurses who “did not hesitate to pay the liquidated

damages and terminate their employment with Health Carousel before their

Commitment Period ended.” (Mot. to Dismiss, Doc. 12, #203). The nurses who readily

paid the liquidated damages, Health Carousel reasons, did not experience coercion,

and thus cannot properly be part of a proposed class in a TVPA action.

But that argument fails to contemplate the TVPA’s full breadth. Recall first

that the standard under the TVPA is not subjective. The question is whether the

conduct at issue would compel a reasonable person of the plaintiff’s background to

continue working. And second, under 18 U.S.C. § 1594(a), an attempt is sufficient to

establish a TVPA claim. Putting those together, so long as the liquidated damages

provision meets the objective compulsion standard, it does not matter if a given nurse

did not in fact feel compelled to continue working. And, even if the nurse quit—and

thus Health Carousel did not actually obtain any additional labor—that would not

necessarily preclude a finding that Health Carousel attempted to do so. Therefore,

Carmen’s proposed class is not necessarily overbroad, as it includes all nurses in the

class who were subject to the potentially coercive measure.

If anything, Carmen’s proposed class is potentially underinclusive because it

excludes a number of Health Carousel employees who may have experienced coercion

for reasons other than the liquidated damages clause. For example, Carmen’s

proposed class does not mention employees who, like Carmen, allegedly felt compelled

to remain with Health Carousel while it purposefully delayed their permanent

licensure. Carmen’s exclusion of these nurses, however, might have been a conscious

choice designed to avoid the difficulties involved in ascertaining which nurses

allegedly experience delays in licensing as a result of Health Carousel’s interference

in the licensing process.

While ascertainability is met, Carmen also must meet Federal Rule of Civil

Procedure 23(a)’s specified prerequisites of numerosity, commonality, typicality, and

adequacy of representation. Fed. R. Civ. P. 23(a). In its Motion to Strike, Health

Carousel zeros in on the commonality requirement. The commonality element

requires that the proposed class members share “questions of law or fact.” Id.

“Although Rule 23(a)(2) speaks of ‘questions’ in the plural,” “there need only be one

question common to the class.” Sprague v. Gen. Motors Corp., 133 F.3d 388, 397 (6th

Cir. 1998) (citing Am. Med. Sys., 75 F.3d at 1080). That said, the commonality

requirement demands more than just any shared issue. “[A]t a sufficiently abstract

level of generalization, almost any set of claims can be said to display commonality.”

Id. Instead, the commonality requirement looks only for important questions, the

answer of which “will advance the litigation.” Id.

Here, the proposed class members do share at least some common issues of fact

and law. Perhaps most notably, the question of whether the liquidated damages

provision in the nurses’ respective contracts is coercive within the meaning of the

TVPA is likely a common issue. The question, after all, is not the actual impact of

that term on Carmen, but rather the impact of such a term on a “reasonable person

of the same background and in the same circumstances,” and it appears likely that

the nurses here may well have similar backgrounds and circumstances. But the

existence of one such shared issue is not necessarily dispositive on this element, as

Federal Rule of Civil Procedure 23(b)(3) adds an additional wrinkle to the

commonality requirement. Specifically, Rule 23(b)(3) requires that, before a court can

certify a class under that subsection, the district court must find both (1) that common

issues of law or fact “predominate over any questions affecting only individual

members”; and (2) that “a class action is superior to other available methods for fairly

and efficiently adjudicating the controversy.”

The Court is not in a position to conclude that these latter two elements are

met here. The definition of “serious harm” under the TPVA highlights the problem.

Under the statute, the Court must analyze “all [of] the surrounding circumstances”

in determining whether a reasonable person would feel compelled to perform labor.

18 U.S.C. §1589(c)(2). Here, at least some of those “surrounding circumstances” could

vary, at least as to some aspects of Carmen’s claim. For example, Carmen alleges that

Health Carousel’s policy of retracting temporary housing within 48 hours of a nurse’s

last shift is financially coercive. (Compl., ¶ 72, #146). But that policy is relevant only

if the nurse was living in Health Carousel-provided housing at the time of her

termination. (Id. (noting that a nurse is forced to vacate her home only “if housing

has been provided by Defendant.”)). Each nurse’s living situation may have been

different. In fact, Carmen’s Complaint suggests that she did not share that

experience, because she is “renting” an apartment with her boyfriend. (Id. at ¶ 84,

#148).

That being said, some aspects of Carmen’s allegations may be more easily

generalizable. She claims, for example, that Health Carousel had a policy of acting to

delay licensing, thereby purposefully extending a nurse’s Commitment Period. If

Health Carousel in fact had such a policy, the TVPA implications of that policy would

likely be the same across putative class members, even if the actual amount of delay

varied among nurses.

Carmen’s allegations of forced overtime likewise fall into this camp. To be sure,

in her Complaint, Carmen alleges that her hospital, not Health Carousel, forced her

to work overtime (Id. at ¶ 78, #147). But Carmen also intimates that such overtime

was financially beneficial to Health Carousel (which apparently received a premium

for each hour she worked). Thus, it is plausible that Health Carousel had a policy of

seeking to place nurses with facilities where extensive overtime was expected,

thereby maximizing Health Carousel’s return during the Commitment Period (and,

as those overtime hours did not count toward satisfying that period, any such

overtime premium merely increased the margin that Health Carousel earned on a

given nurse placement). Again, the Court notes that, in offering this observation, the

Court is not finding that Health Carousel in fact had any such policy, or indeed that

Health Carousel did anything that violated the law. At this stage, the Court’s job is

to assess predominance against the backdrop of the potential legal issues at stake.

At bottom, the Court concludes that Carmen may, or may not, be able to make

the requisite showings to establish that class certification is appropriate. But Health

Carousel is preemptively seeking to prevent her from even attempting to do so. And

on that front, Health Carousel has not met its burden of showing, as a matter of law,

that Carmen will be unable to make the necessary showings. Thus, the Court

concludes that the matter of class certification is better resolved on full briefing on

the issue after further record development.

* * *

The Court’s hesitance to grant dismissal, or reach certification, based solely on

the pleadings should not be read as suggesting that wholesale discovery on every

aspect of this case is necessary, or even appropriate. The parties may well wish to

consider the possibility of early motions for summary judgment, or motions opposing

class certification, supported by affidavits or documents, as appropriate. But pending

further factual information, the Court declines to foreclose further discovery and

development of class issues at this juncture.

CONCLUSION

For the reasons discussed above, the Court DENIES Health Carousel’s Motion

to Dismiss, and DENIES Health Carousel’s Motion to Strike. (Doc. 12). The Court

also DENIES AS MOOT Health Carousel’s earlier Motions to Dismiss and to Strike

Carmen’s Original Complaint. (Doc. 5).

SO ORDERED.

June 17, 2021 ;

DATE DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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