Full Disclosure

A Conspiracy So Immense
     
      By Thomas Brom
     
      The day after immigration agents raided 45 workplaces of a wooden pallet supplier, Homeland Security Secretary Michael Chertoff announced that he would "uproot the infrastructure" of illegal employment in the United States. In late April Chertoff promised more raids, asset forfeitures, criminal charges, and a request for authority to mine Social Security records for false documents. "Nothing," he said, "is off limits."
     
      A week later Chertoff's quarry gave themselves up all over America. More than a million immigrants and supporters, dressed in white and marching under the Stars and Stripes, paraded through the streets of Los Angeles, New York, San Francisco, Chicago, and other cities. Reacting to a bill that would make felons of anyone who assists them, the immigrants demanded amnesty for a workforce Bear Stearns estimates might be as large as 20 million people.
     
      In between the two events, the U.S. Supreme Court heard oral arguments in a civil RICO case that targeted an employer of undocumented workers. (Mohawk Indus. v. Williams, 126 S.Ct. 830 (2005).) In 2004 several Mohawk employees alleged that the carpet manufacturer had conspired to hire and transport illegal immigrants from the Mexican border to Georgia, where the company hired them at depressed wages. The district court dismissed one claim of unjust enrichment; on appeal, the Eleventh Circuit dismissed another such claim but affirmed the plaintiffs' RICO claim. Mohawk appealed, and the Supreme Court granted cert to determine whether Mohawk and its labor recruiters constituted an "enterprise" within the meaning of the Racketeer Influenced and Corrupt Organizations Act (RICO). (18 U.S.C. §§ 196168.)
     
      Carter G. Phillips, for the petitioner Mohawk, argued that a corporation could not be a constituent of an association-in-fact enterprise under RICO. Howard W. Foster, for the respondents, replied that the combination of Mohawk and the recruiters was actually a separate RICO enterprise-an association in fact. Arguing for the government, Solicitor General Malcolm L. Stewart urged an expansive reading of the statute, relying on congressional intent that included adding the hiring of illegal aliens as a "predicate act" under RICO (18 U.S.C. § 1961(1)(F)) in 1996.
     
      In oral argument the justices asked few questions about immigration law. "The Court treated this as a straight statutory construction case," says Michael J. Mueller, attorney of record for corporate amici in Mohawk and a partner at the Washington, D.C., office of Akin Gump Strauss Hauer & Feld. "The solicitor general argued that a restrictive ruling would hobble the government's ability to prosecute other cases under RICO."
     
      But from the respondent's side, Mohawk is all about using RICO to enforce immigration laws. Foster, chair of the complex/class litigation group at Johnson & Bell in Chicago, has filed RICO claims that allege illegal hiring in at least four federal circuits since 2000. Each case has been dismissed for failure to support a claim that employers violated RICO section 1962 (c). On appeal, the Second, Ninth, and Eleventh circuits reversed and remanded; in 2004, the Seventh Circuit affirmed in Baker v. IBP, Inc. (357 F.3d 685). To date, none of the remanded cases has gotten past discovery, but in January 2006 the defendant fruit grower in Mendoza v. Zirkle Fruit Co. (301 F.3d 1163 (9th Cir. Wash., 2002)) settled for more than $1 million in payments and legal fees.
     
      "Howard's just being creative," says Jeffrey E. Grell, a sole practitioner in Edina, Minnesota, who prosecutes and defends civil RICO claims and has collaborated with Foster. "Under this administration, the immigration laws are not being enforced. So private claims are the only threat to businesses that hire illegal aliens. It took Howard two or three cases to produce a conflict in the circuits that the court would be interested in."
     
      Grell says that Foster's litigation "is getting closer and closer to the bone." But he also worries that the pleading hurdles in civil RICO cases are very high, making it difficult to establish that hiring undocumented workers depresses wage rates for other employees. "You can set a trap for yourself if you don't know what you're doing," Grell says. "My concern expressed to Howard is, 'How are you ever going to prove causation in an immigration case?' "
     
      Mark A. Carter, a labor lawyer and partner at Dinsmore & Shohl in Charleston, West Virginia, has the same concerns. "You have to show that the employer has hired enough illegal workers to impact the wages of the legal hires," says Carter, who outlined the issues last year in a paper for the ABA's Labor and Employment Section. "It's a very, very difficult standard of proof. Where are the cutoffs? How many [illegal] workers does it take to have an effect? In what proportion? How do you show a detriment as a result of each additional illegal hire? The problem for plaintiffs in these cases is getting past a motion for summary judgment."
     
      In early June the Supreme Court apparently agreed. The court remanded Mohawk in light of a second civil RICO case it had reversed and remanded the same day for failing to show a proximate cause between alleged illegal acts and damages to plaintiffs. (Anza v. Ideal Steel Supply Corp., 2006 U.S. LEXIS 4510.) "There is no need to broaden the universe of actionable harms to permit RICO suits by parties who have been injured only indirectly," wrote Justice Anthony M. Kennedy for the majority.
     
      Still, Foster and others may continue to bring RICO claims against employers to gain leverage. "The language of RICO is breathtakingly broad," says David L. Anderson, a partner at Pillsbury Winthrop in San Francisco and a former federal prosecutor. "Plaintiffs have the potential of winning treble damages, costs, and attorneys fees. Plus, you get to call your opponent a 'racketeer.' And that's a huge advantage."
     
      "Plaintiffs count on getting past the motion to dismiss and then negotiating," says Mary E. Pivec, a partner in the Washington, D.C., office of Sheppard, Mullin, Richter & Hampton. "It's an opportunity for plaintiffs to hit the lottery."
     
      Anderson says RICO claims invariably generate passions, and they put employers under increased pressure to settle. But he says it's "awfully showy" to use the statute in immigration cases. "As a legal strategy," he says, "it's all splash and no ripple."
     

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