This case is part of the series of
Signal International cases. It is stayed during defendant's bankruptcy and settlement proceedings.
On May 21, 2013, 33 Indian guestworkers filed this lawsuit in the U.S. District Court for the Eastern District of Texas for harm suffered as a result of an allegedly fraudulent and coercive employment recruitment scheme. Plaintiffs filed this suit after District Judge Jay Zainey
denied class certification on January 3, 2012 in a related case,
David v. Signal International.
Plaintiffs were allegedly brought into the United States to provide labor and services to Defendant Signal International at its Orange, Texas site. Signal is based in Pascagoula, Mississippi and is in the business of providing repairs to offshore oil rigs in the Gulf Coast region. The complaint alleges that plaintiffs paid defendant Signal's recruiters as much as $25,000 for travel, visa, and recruitment fees, but upon arrival in the United States found out they would not receive the green cards promised to them. Instead, plaintiffs were forced to pay additional fees to live in racially segregated labor camps ($1050 per month), and were subject to squalid living conditions and threats of both legal and physical harm if they complained about the conditions or decided not to provide labor. Plaintiffs also alleged that the fear and coercion plaintiffs they experienced were exacerbated upon learning of abuses occurring at Signal's Pascagoula, Mississippi site.
The amended complaint, filed on behalf of 47 individuals, asserted claims under the Trafficking Victims Protection Act (18 U.S.C. §1589 (forced labor) and 18 U.S.C. §1590 (trafficking)), the Racketeer Influenced Corrupt Organizations Act (18 U.S.C. §1962), the Civil Rights Act of 1866 (42 U.S.C. §1981), the Ku Klux Klan Act of 1871 (42 U.S.C. §1985), the Thirteenth Amendment, as well as claims of fraud, negligent misrepresentation, and breach of contract. Plaintiffs were represented by a private law firm.
In February 2014, Magistrate Judge Zack Hawthorn denied Signal's motion to transfer this case to the Eastern District of Louisiana. The plaintiffs in this case only overlapped with the
David case insofar as their FLSA claims in the
David case were concerned. Additionally, the plaintiffs in this case sued based on events at Signal's Orange, Texas site, whereas plaintiffs in cases pending in the Eastern District of Louisiana sued based on events at Signal's Pascagoula, Mississippi site. Although the Court declined to transfer this case, in May 2014, Magistrate Judge Hawthorn entered a consent order that discovery from the cases in the Eastern District of Louisiana would be allowed to be used here. Additionally, in Dec. 2014, Magistrate Judge Hawthorn severed and transferred Signal's cross-claims against co-defendants (immigration attorneys, recruiters, and labor brokers) to the Eastern District of Louisiana.
In Oct. 2014, Magistrate Judge Hawthorn granted Signal's motion to compel production of plaintiffs' T- and U-visas and applications for such visas. Although a similar motion had already been denied for the cases pending in the Eastern District of Louisiana, the court found that the materials' relevance outweighed any potential in terrorem effect. The Court warned that it would reconsider if Signal sought discovery that was clearly aimed at harassment. Plaintiffs did not comply with this order until Mar. 4, 2015, but the court denied Signal's motion for sanctions, saying its lack of diligence in pursuing the documents rendered it ineligible for relief.
In March 2015, the Court held that Texas laws should apply in the breach of contract and fraud claims, because it did not find that a true conflict existed between Texas and other jurisdictions.
In July 2015, the court stayed the case after Signal filed for bankruptcy.
In re Signal Int’l, Inc, et al., No. 15-11498 (Bankr. D. Del. July 12, 2015). As a part of the bankruptcy filings, the plaintiffs entered into a plan support agreement (PSA) which contemplated a settlement of the claims of this lawsuit against Signal entities through a consensual Chapter 11 plan proposed by Signal. The PSA, with a liquidation trust for distribution of settlement proceeds, became effective on Dec. 14, 2015.
In Dec. 2015, in the
related EEOC case, the EEOC announced that the parties had reached a
settlement for all cases, approved by the bankruptcy court. Signal would pay $5 million to 476 guestworkers through a claims process. All aggrieved individuals included in the litigation could receive relief in spite of the bankruptcy proceedings. Signal's CEO also issued an apology for its conduct.
In this case,
Joseph, the parties are updating the court every 120 days as to the status of the bankruptcy proceedings. As of the parties' most recent Nov. 6, 2017 update to the Court, this settlement process remains ongoing.
The stay remains effective in light of Signal's ongoing bankruptcy case.
Anna Dimon - 05/14/2015
Soojin Cha - 11/20/2016
Ava Morgenstern - 12/02/2017
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