Exactly, this lawsuit will go nowhere. It is the equivalent of having work done at your house, you pay the contractor, but he doesn't pay the sub contractor (who you never had contact or agreements with) and now the sub is trying to get you to pay again.
Not to mention, if the contracting agency is being investigated on visa's and other matters, are these foreign workers even legally permitted to work in the US and are they potentially opening their own can of worms.