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The Supreme Court appeared sympathetic to pleas by business advocates not to “RICO-ize” all types of business relationships, as Justice Stephen Breyer put it, during oral arguments Wednesday. The Court heard debate in Mohawk Industries v. Williams, a class action brought against Georgia carpet manufacturer Mohawk Industries under the civil portion of RICO, the Racketeer Influenced and Corrupt Organizations Act. Current and former employees of Mohawk claimed that its hiring of illegal aliens — in concert with outside recruiting and temp agencies — depressed wages and amounted to racketeering as defined under RICO. If the suit fits under RICO and the plaintiffs prevail, Mohawk would be exposed to treble damages and could be forced to pay plaintiffs’ attorney fees. “These are enormous penalties that are imposed,” Mohawk’s lawyer, Carter Phillips, told the justices. Congress passed RICO to target organized crime, he asserted, not ordinary dealings between businesses and their agents and contractors. “It is not free for the government or anyone else” to broaden the law unilaterally, said Phillips, a partner in the D.C. office of Sidley Austin. In advance billing it appeared that the Mohawk case would draw the high court into some of the immigration issues causing controversy across the nation, including the contention that the corporate hiring of illegal aliens has had the indirect effect of keeping wages low for American citizens. Instead immigration was barely mentioned, as oral arguments devolved quickly into a dense debate over the ambiguous wording of the RICO statute and whether a corporation like Mohawk can be part of a separate “enterprise” covered by the law. The tedium left at least two justices, Ruth Bader Ginsburg and Clarence Thomas, struggling to stay awake, with mixed success. That is not rare for Thomas, but it is not as common for Ginsburg, 73 — though in recent months she has often appeared fatigued on the bench. Responding to a Legal Times inquiry about the episode late Wednesday, Justice Ginsburg said, through Court spokeswoman Kathy Arberg, that she “experienced an eye irritation during oral argument that was probably exacerbated by allergies.” Though originally aimed at organized crime, the RICO law was amended by Congress in 1996 to include the hiring of illegal aliens among the “predicate acts” that can trigger a RICO claim. So the employees asserted that Mohawk, by associating with outside recruiters to hire the illegal aliens, fit the requirements to make out a civil RICO claim. The U. S. Court of Appeals for the 11th Circuit held that the employees had stated a valid RICO claim. The Bush administration has also sided with the plaintiffs in favor of a broad view of RICO’s scope. Phillips, in a brief for Mohawk, said the circuit’s definition of a RICO enterprise “would allow virtually every alleged corporate conspiracy, including most fraud claims and other business torts, to be pled as civil RICO claims.” Breyer appeared to agree, expressing concern that “vast amounts of ordinary activity” by companies would come under the law, even though the companies have nothing to do with organized crime. Howard Foster of Johnson & Bell in Chicago, representing the plaintiffs, told the Court that Mohawk committed hundreds if not thousands of immigration-related felonies “in very close cooperation” with outside recruiters, all of which are well within the scope of RICO. Foster also told the justices that all circuit courts that have ruled on the issue have adopted the broader scope of RICO that would include corporations like Mohawk. “There is no dispute in the lower courts that a corporation can be part of an enterprise,” said Foster. Business lawyers warn that if the Court rules against Mohawk, RICO will become another tool for attacking employers. “Employers located in areas with a large immigrant-worker population may be potential targets for civil RICO class actions,” says Steptoe & Johnson partner Lynda Zengerle, who recommends that employers use hiring methods that clearly document efforts by companies and their recruiters to abide by immigration laws. But some business advocates have sounded a broader alarm about the case. “If the Supreme Court sides with the plaintiffs in this case, there is no doubt that we will see many more civil RICO cases filed on a broad range of subject matters, not just immigration,” says Karen Hirschman, a partner at Vinson & Elkins.
Tony Mauro can be contacted at [email protected].

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