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Work for Family Business Not ‘Peonage’

A plaintiff who claims he emigrated from Japan with his family based on an offer to work for his sister and her husband in their company, Advanced Systems Technology and Management Inc., but was forced to sign a noncompete agreement, regularly return a portion of his salary to the husband and threatened with the loss of sponsorship for his H1-B visa, has not stated a claim that he was held in “peonage” in violation of the Victims of Trafficking Violence Protection Act of 2003; the Alexandria U.S. District Court dismisses plaintiff’s claims against the individual defendants and their company.

Condition of peonage

Plaintiff’s claims under the TVPA fall into two categories: 1) plaintiff’s claim that he was “held to” a condition of peonage in violation of 18 U.S.C. § 1581(a); and 2) plaintiff’s claims alleging defendants benefitted financially from peonage or trafficking under § 1593A and committed trafficking under § 1590, both of which depend on defendants’ alleged violations under § 1581a. Plaintiff also includes a request for declaratory relief regarding his noncompete agreement with AdSTM and a state law claim for unjust enrichment.

Defendant AdSTM argues the alleged misconduct took place prior to Congress providing a civil remedy for peonage via the TVPA. It was not until Dec. 23, 2008, that Congress expanded the TVPA’s civil remedy provision to all violations of any section of Chapter 77, including plaintiff’s peonage claims here. Because plaintiff made his first payment to defendant Ran in October 2008, defendant argues that the nucleus of facts giving rise to his allegations predates the December 2008 civil remedy expansion, and the TVPA is not retroactive.

Defendant AdSTM also contends plaintiff fails to allege the requisite indebtedness and fails to show that plaintiff was forced to work for AdSTM against his will.

TVPA’s December 2008 expansion only serves to limit plaintiff’s complaint to those events that allegedly took place after its passage on Dec. 23, 2008. However, the court finds plaintiff has failed to state a claim upon which relief can be granted. Although plaintiff has included sufficient facts to suggest the existence of an imagined debt, plaintiff has failed to sufficient allege that he was forced to work at AdSTM against his will. In fact, he continues to work there today.


The only threats in his amended complaint came from his sister, and included warnings about the likelihood of losing his employment with AdSTM and his H-1B visa if he failed to make the payments to defendant Ran each month. There is no violation of the TVPA if an employer merely informs an employee about legitimate immigration consequences that may arise from that employee’s termination. Also, plaintiff is a highly educated employee who has earned and continues to earn, a healthy salary at AdSTM. He certainly has the resources to investigate whether his noncompete agreement  — which his complaint holds out as additional proof of his psychological coercion – was legally enforceable, as well as to inquire about the possibility of pursuing employment elsewhere. The court dismisses the peonage claim against all three defendants.

Plaintiff’s additional TVPA claims also are dismissed, as they depend upon a violation of § 1581(a). The court also dismisses plaintiff’s request for a declaratory judgment that the noncompete agreement he signed before beginning his employment with AdSTM is unenforceable. Plaintiff fails to satisfy the Article III case of controversy requirement due to lack of immediacy. AdSTM has never sought to enforce the noncompete agreement against plaintiff, and it appears that AdSTM has no intention of doing so and would be more than happy to oblige plaintiff’s potential desire to seek employment elsewhere.

Finally, the court declines to exercise supplemental jurisdiction over plaintiff’s Virginia state law claim for unjust enrichment, as the court has dismissed all of plaintiff’s federal claims.

Guan v. Ran (Cacheris) No. 1:17cv332, July 6, 2017; USDC at Alexandria, Va.; Joshua H. Erlich for plaintiff; James B. Kinsel for defendant. VLW 017-3-353, 20 pp.

VLW 017-3-353

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