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Chaidez v. Hemphill

United States District Court, E.D. Pennsylvania

November 15, 2019



          Gerald Austin McHugh, United States District Judge.

         This is a case rooted in allegations of labor trafficking where the issue presently before the Court is whether a release between the parties bars the Plaintiff's claims, or is unenforceable on grounds of unconscionability. Plaintiff Jose Enrique Castillo Chaidez, a Mexican national, has sued under the Trafficking Victims Protection Act (TVPA), 18 U.S.C. §§ 1581-97, and the corresponding Pennsylvania anti-human trafficking law, known as Act 105, 18 Pa. C.S. §§ 3001-72.[1] He was recruited by Defendant Carl Hemphill to work for his trucking company through the H-2B temporary guest-worker visa program. Castillo alleges that, in the course of his employment, Defendants Carl and Mariana Hemphill mistreated him by directing him to undertake activities that went well beyond the scope of his agreed upon job responsibilities, wrongfully withholding money that he was entitled to, lodging him in overcrowded and unsanitary housing, and threatening him with arrest and permanent expulsion from the H-2B program if he refused to acquiesce to these conditions. In their Motion for Summary Judgment, Defendants do not address the merits of Castillo's allegations, but rather make two threshold arguments: (1) that Castillo's claims against Carl Hemphill and KAH Transportes are barred by a mutual release agreement signed by Castillo and Carl Hemphill months after the end of their employment relationship, and (2) that Castillo has not demonstrated a sufficient factual basis to support a finding of liability for Mariana Hemphill or the other Hemphill business entities.

         Looking at the record in the light most favorable to Castillo, the non-moving party, I find that there are genuine disputes of material fact as to whether the mutual release agreement is enforceable because of unconscionability. Furthermore, there are genuine disputes of material fact as to whether the related Hemphill and corporate Defendants may be liable for the harms alleged by Castillo. Defendants' Motion will be denied accordingly.

         I. Relevant Background

         Carl Hemphill exercises control over a number of companies involved in landscaping, with an emphasis on the sale and transportation of mulch. These companies all operate out of one shared address, 1720 South State Road, Upper Darby, PA. Carl Hemphill is the sole owner of KAH Transportes, President of Operations of Three Seasons, and an officer at Delco Mulch and Supply and MJC Labor Solutions. C. Hemphill Dep. I at 29:13-17, 30:2-6, 33:15-23, Pl.'s Ex. 3, ECF 29-3. Mariana Hemphill is the owner of Three Seasons but does budget reconciliations for all of the above companies. C. Hemphill Dep. I at 30:7-10; Ma. Hemphill Dep. 58:19-59:4, Pl.'s Ex. 11, ECF 29-3. Gabriela Orozco is employed by all four companies as an office manager, and all four companies use the same phone number and credit card. Orozco Dep. 34:3-13, 115:19-24, 123:10-22, Pl.'s Ex. 9, ECF 29-3. One of those companies, KAH Transportes, hauls mulch on behalf of its customers, which include some of the other companies managed by Carl Hemphill, such as Delco Mulch. C. Hemphill Dep. I at 37:10-39:16.

         In 2015, Carl Hemphill successfully applied for three H-2B visas in order to hire temporary guest workers to be employed at KAH. C. Hemphill Dep. I at 126:7-10. Carl Hemphill travelled to Culiacan in Sinaloa, Mexico in early 2015 to recruit workers to fill the positions. C. Hemphill Dep. I at 126:19-127:3. While in Sinaloa, Carl Hemphill met Castillo at a job fair and offered him one of the open positions at KAH, which Castillo accepted. C. Hemphill Dep. I at 126:16-17; Pl.'s Dep. 11:17-22, Pl.'s Ex. 1, ECF 29-3.

         Tensions between the parties began shortly after Castillo was hired at the fair. Castillo's purported understanding after the job fair was that he would be flown by the Defendants to the United States shortly after he received his visa, which he was able to obtain on March 10, 2015, and that his contract would begin on March 5, 2015. Compl. ¶ 93, ECF 2; C. Hemphill Dep. I at 136:20-137:7, 140:24-141:13; Pl.'s Ex. 4, ECF 29-3. There was ultimately over a month-long gap between Castillo securing his visa, however, and Defendants' arranging his flight to the United States, leading Castillo to take out loans to cover his living expenses for the interim period.[2] Defendants ultimately secured a flight for Mr. Castillo into the United States arriving on April 19, 2015. Pl.'s Ex. 10, ECF 29-3.

         Upon arriving at Philadelphia International Airport, Castillo was picked up by Carl Hemphill and taken to KAH's headquarters at 1720 South State Road. Castillo alleges that Mariana Hemphill was there and confiscated his passport; when his Social Security card arrived days later, the Employer Defendants allegedly held on to that as well.[3] Pl.'s Dep. 84:6-19, 85:2-9. Castillo did not receive his first paycheck for nearly a month into the job, further placing him in debt.[4] When he finally did receive his initial paycheck, Castillo alleges that he was not compensated for his first three days of work while he was being trained on his driving routes. Pl.'s Dep. 19:7-23; Asencio Dep. 18:7-19:3, Pl.'s Ex. 19, ECF 29-4. In his complaint and deposition, Castillo details long work days, in which he was not only required to haul materials for KAH but engage in other kinds of manual labor for Defendants and their business interests without compensation, such as cleaning trash in the yard, laying concrete, and building furniture for Defendants. Pl.'s Dep. 43:19-45:12, 47:12-25. Carl Hemphill contends that Castillo's responsibilities were limited to truck transportation. C. Hemphill Dep. I at 179:23-180:12.

         Castillo was also distressed by his housing conditions. As a part of their contractual agreement, Carl Hemphill had agreed to provide housing for Castillo, with rent being deducted directly from Castillo's wages. Pl.'s Dep. 38:21-39:4; Pl.'s Ex. 6 at ¶ B, ECF 29-3. According to Castillo, the house that Carl Hemphill provided to him was in bad enough shape to appear “abandoned.” Pl.'s Dep. 111:25. More specifically, Castillo alleges that there was sufficient mold and dirt in the bathroom that he put plastic over his feet when showering to avoid infection; the apartment was overcrowded; Castillo's mattress was overrun with bedbugs; and there were rats and cockroaches in the kitchen. Pl.'s Dep. 111:23-112:14. Castillo reportedly complained to Carl and Mariana Hemphill about the conditions multiple times throughout the course of his employment, but according to him no remedial action was taken by the Defendants. Pl.'s Dep. 22:4-7.

         Finding himself subject to significantly more difficult living, working, and financial conditions than he had anticipated, Castillo decided it would be best to return to Mexico. Castillo expressed this desire to return to the Defendants but was allegedly warned that he would suffer negative consequences if he chose to leave. For instance, Mariana Hemphill reportedly told Castillo that he “could get in trouble with the police” if he did not remain for the duration of his contract, which was supposed to last through December 2015. Pl.'s Dep. 113:24-114:7. She also allegedly stated she would “close the door” to his participation in the H-2B visa program in the future. Pl.'s Dep. 61:4-20. Castillo contends he took these threats seriously, particularly since his coworkers informed him that Mariana Hemphill had previously worked at the Mexican consulate and continued to have influence with them. Pl.'s Dep. 61:22-62:3. Castillo was also told that other employees had been arrested when they tried to leave. Pl.'s Dep. 62:8-63:9.[5]

         Castillo maintains that he continued to work for Defendants due to his fear of reprisals, but eventually found the situation untenable. On July 9, 2015, Castillo called the Human Trafficking Hotline for help. Pl.'s Ex. 23, ECF 29-4. The following day, Castillo went to the office to pick up what would be his last paycheck. What happened next is hotly disputed by the parties. Castillo says he was given his passport and Social Security card by Gabriela Orozco, the office manager, and instructed to wait for Carl Hemphill in order to receive his paycheck. Answer ¶¶ 233-35, ECF 5; Pl.'s Dep. 115:3-17. When Carl Hemphill arrived, he refused to provide Castillo his paycheck and then called the police on Castillo. Answer ¶ 247; C. Hemphill Dep. I at 226:9-229:5. Carl Hemphill testified that, to the contrary, Castillo became aggressive toward him and told him that he would “pay in blood” for his failure to produce the paycheck. C. Hemphill Dep. I at 228:7-229:5. Regardless of which version of events one adopts, it is undisputed that the police eventually arrived and arrested Castillo, charging him with trespass and terroristic threats. Pl.'s Exs. 24-25, ECF 29-4, ECF 29-5; Pl.'s Ex. 20 at ¶ 20, ECF 29-4.

         The affidavit of probable cause from the arresting officer reflects that when he arrived, he understood that Castillo was on the premises to collect his last paycheck, and there was a disagreement over whether he still had company property. According to Hemphill, Castillo still had access to a company truck and equipment. When the officer advised him that he must leave or be arrested, Castillo put out his arms and surrendered to the officer. Pl.'s Ex. 25. The affidavit further reflects that the officer personally witnessed no threat, and that Hemphill later went to the police to state Hemphill interpreted a Spanish expression Castillo had used as a threat on his life. A coworker helped to pay Castillo's $500 bail to release him from jail. Pl.'s Ex. 20 at ¶ 21.

         Castillo did not return to Mexico upon being released, because he was still waiting on the final paychecks owed to him by Defendants and had been relying on that income to purchase his transportation. Pl.'s Dep. 114:8-12. He also wanted to resolve the criminal charges pending against him. If he left the country before the completion of the criminal process, Castillo was afraid he would not be able to participate in the H-2B program going forward nor resume his prior cross-border trucking work in Mexico. Pl.'s Dep. 114:8-115:2. It seems clear that Castillo did not receive the money owed to him by Defendants until October 14, 2015, the day of his criminal hearing, when he signed the release agreement with Carl Hemphill. Ex. 8 to Def.'s MSJ at ¶¶ 1, 4, ECF 27; C. Hemphill Dep. I at 264:16-266:14. In the interim period, Castillo had left 6335 Vine Street and moved in with a member of the community, collecting scrap metal in order to make ends meet. Pl.'s Dep. 88:4-7, 116:9-18.

         The release was prepared by Hemphill's counsel. C. Hemphill Dep. I at 264:6-11. It required Castillo to agree that he had “voluntarily” withdrawn from employment and could not claim unemployment compensation or sue for wrongful termination. Hemphill agreed to pay the wages he owed. Hemphill agreed to advise the District Attorney that he “had no interest” in seeing Castillo prosecuted, with the understanding that only the District Attorney could drop the charges. And Hemphill tendered formal notification to the Department of Labor that because Castillo was no longer employed, he must leave the United States.

         After entering into the agreement with Hemphill, Castillo's terroristic threat charge was withdrawn. But to avoid a conviction on the trespass charge, Castillo entered the Court's Accelerated Rehabilitative Disposition (ARD) Program. He was required to complete 12 months of probation (including monthly probation fees), 32 hours of community service, pay $1532 in court costs and $200 in restitution. Pl.'s Ex. 26, ECF 29-5; C. Hemphill Dep. I at 279:7-280:17; Pl.'s Dep. 117:11-118:3. Castillo claims that Carl Hemphill continued to harass and intimidate him after the agreement was signed, asking co-workers about his whereabouts; requesting and receiving confidential information from the Mexican Consulate about his passport renewal; contacting law and immigration enforcement regarding Castillo; and monitoring a witness's house and taking photos to forward to immigration authorities. Asencio Dep. 10:19-20, 11:7-17, 54:22-55:20; Pl.'s Ex. 27 at No. 6, ECF 29-7; C. Hemphill Dep. I at 258:20-260:11; C. Hemphill Dep. II at 95:11-98:15, 76:9-83:9, Pl.'s Ex. 16, ECF 29-4. Castillo applied for and received a T-visa, available to certain categories of trafficking victims. See INA § 101 (a)(15)(T); 8 U.S.C. § 1101 (a)(15)(T); 8 C.F.R. § 214.11. Castillo brings this action to remedy the alleged harms caused by Defendants' behavior.

         II. Standard of Review

         This Motion is governed by the well-established standard for summary judgment set forth in Fed.R.Civ.P. 56(a), as amplified by Celotex Corporation v. Catrett, 477 U.S. 317, 322-23 (1986).

         III. Discussion

         A. Enforceability of the Contract

         Defendants assert that the October 14 mutual release agreement between Castillo and Carl Hemphill bars this suit. The release agreement provides in relevant part that “[n]o claims will be brought by either Employer or Employee, against the other party, ” referring to Carl Hemphill and Castillo, respectively. Ex. 8 to Def's MSJ at ¶ 4. In reply, Castillo contends that the mutual release agreement is unenforceable because (1) it is unconscionable and (2) against public policy.[6]

         Pennsylvania law governs Plaintiffs state law claims, Livingstone v. N. Belle Vernon Borough, 91 F.3d 515, 523-24 (3d Cir. 1996) (Livingstone II). As a threshold matter, the Defendants argue that it would be inappropriate for me to consider evidence extrinsic to the terms of the agreement. But the Pennsylvania Supreme Court has held that “[t]he rule which forbids the introduction of parol evidence to contradict, add to, or vary a written instrument does not extend to evidence offered to show that the contract was made in furtherance of objects forbidden by statute, by the common law, or by the general policy of the law.” Bokser v. Lewis, 119 A.2d 67, 70 (Pa. 1956) (citation omitted); see also Kuhn v. Buhl, 96 A. 977, 985 (Pa. 1916) (“Where a written instrument is attacked upon the ground that the contract is offensive to law and violative of public policy, the whole transaction should be inquired into, and the court will not suffer itself to be embarrassed by any technical rules regarding the admissibility of evidence” (citation omitted)). Pennsylvania's approach to unconscionability is “largely consonant” with the Second Restatement of Contracts. Salley v. Option One Mortg. Corp., 925 A.2d 115, 119 (Pa. 2007). Under the Restatement approach, although the unconscionability determination is made as a matter of law, it is made in “the light of all the material facts, ” and “the parties are to be afforded an opportunity to present evidence as to commercial setting, purpose and effect to aid the court in its determination.” Restatement (Second) of Contracts § 208 cmt. f (1981).

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