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Mohawk v. Williams: RICO meets employment law
April 03, 2006 by Ross Runkel at LawMemo
Employees of Mohawk Industries, Inc. sued claiming a RICO violation. The case is in the US Supreme Court, set for argument on April 26.
The Court will decide whether the employees' complaint states a claim. Mohawk denies any illegality, and none has been proved. It's just a question of whether the allegations, if true, would make out a RICO violation.
The employees' complaint alleges:
- Mohawk entered into contracts with outside recruiters with the purpose of violating the Immigration and Nationality Act.
- The Mohawk-recruiter combination is a separate RICO "enterprise." Specifically, it is an "association-in-fact."
- Mohawk participated in the affairs of the enterprise.
Mohawk's response is:
- A corporation cannot be part of an association-in-fact enterprise.
- The enterprise is not "separate" because Mohawk was simply performing internal functions (hiring employees) through the use of an agent.
- Mohawk was conducting its own affairs, not the affairs of the separate enterprise.
Both the trial court and the 11th Circuit ruled in favor of the employees, and that ruling is contrary to a similar case from the 7th Circuit: Baker v. IBP, Inc., 357 F.3d 685 (7th Cir.), cert. denied, 125 S. Ct. 412 (2004).
The most interesting question raised in this case is whether a corporation can be part of an association-in-fact. The statutory definition of a RICO enterprise goes like this:
"enterprise" includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity;
Let your eyes rest on the phrase "individuals associated in fact," and consider the fact that an "individual" clearly means a natural person (a human being) and does not mean a corporation.
So how can the employees succeed in arguing that a corporation can be one of these? And why is the United States government backing them up (via an amicus brief and a short oral argument)?
The employees say that "individuals associated in fact" is just an example, and that Congress did not write out a complete and exclusive list. To demonstrate this, they focus on the word "includes" in the definition. Lots of other definitions use the word "means." The employees say that "means" signals a complete list and "includes" signals a list of examples.
Mohawk points out one definition that uses the phrase "including, but not limited to," which demonstrates that Congress knew how to make it clear that a definition was just a list of examples. Mohawk also points out a few RICO definitions that use the word "includes" but obviously contain exclusive lists.
Interesting argument on how to read a statute.
The employees' Supreme Court brief makes the fascinating claim that Mohawk should not be allowed to argue the point about corporations being part of an association-in-fact, claiming that Mohawk conceded this point in the trial court and did not properly raise it in the petition for certiorari.
Mohawk has a couple of other arguments that sound less promising.
One is that the combination of Mohawk plus the recruiters is not a separate enterprise because the recruiters are simply Mohawk's agents. That argument probably fails for lack of statutory support and lack of support in the cases.
Another is that Mohawk wasn't conducting the affairs of the separate enterprise; it was conducting its own internal affairs (hiring employees).
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