[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
June 9, 2005
No. 04-13740 THOMAS K. KAHN
________________________ CLERK
D.C. Docket No. 04-00003-CV-HLM-4
SHIRLEY WILLIAMS, GALE PELFREY,
BONNIE JONES, LORA SISSON,
individually and on behalf of a class,
Plaintiffs-Appellees,
versus
MOHAWK INDUSTRIES, INC.,
Defendant-Appellant.
__________________________
Appeal from the United States District Court for the
Northern District of Georgia
_________________________
(June 9, 2005)
Before ANDERSON, HULL and GIBSON*, Circuit Judges.
PER CURIAM:
*
Honorable John R. Gibson, United States Circuit Judge for the Eighth Circuit, sitting by
designation.
In this case, Plaintiffs Shirley Williams, Gale Pelfrey, Bonnie Jones, and
Lora Sisson are current or former hourly employees of Defendant Mohawk
Industries, Inc. The plaintiffs filed this class-action complaint alleging that
Mohawk’s widespread and knowing employment and harboring of illegal workers
allowed Mohawk to reduce labor costs by depressing wages for its legal hourly
employees and discourage worker’s-compensation claims, in violation of federal
and state RICO statutes. The plaintiffs also alleged that Mohawk was unjustly
enriched by the lower wages it paid, as well as the reduced number of worker’s-
compensation claims it paid. The district court denied in part and granted in part
Mohawk’s 12(b)(6) motion, and this interlocutory appeal followed. After review
and oral argument, we affirm in part and reverse in part.
I. BACKGROUND
Mohawk is the second largest carpet and rug manufacturer in the United
States and has over 30,000 employees. According to the plaintiffs, Mohawk has
conspired with recruiting agencies to hire and harbor illegal workers in an effort to
2
keep labor costs as low as possible.1 For example, according to the plaintiffs’
complaint
Mohawk employees have traveled to the United States Border, including
areas near Brownsville, Texas, to recruit undocumented aliens that
recently have entered the United States in violation of federal law.
These employees and other persons have transported undocumented
aliens from these border towns to North Georgia so that those aliens may
procure employment at Mohawk. Mohawk has made various incentive
payments to employees and other recruiters for locating workers that
Mohawk eventually employs and harbors.
Furthermore, “[v]arious recruiters, including Mohawk employees, have provided
housing to these illegal workers upon their arrival in North Georgia and have
helped them find illegal employment with Mohawk.” Additionally, Mohawk
knowingly or recklessly accepts fraudulent documentation from the illegal aliens.
The plaintiffs further allege that Mohawk has concealed its efforts to hire
and harbor illegal aliens by destroying documents and assisting illegal workers in
evading detection by law enforcement. According to plaintiffs’ complaint,
Mohawk takes steps to shield those illegal aliens from detection by, among other
1
At this point in the litigation, we must assume the facts set forth in the plaintiffs’
complaint are true. See Marsh v. Butler County, 268 F.3d 1014, 1023 (11th Cir. 2001) (en banc)
(setting forth the facts in the case by “[a]ccepting all well-pleaded factual allegations (with
reasonable inferences drawn favorably to Plaintiffs) in the complaint as true”). Because we must
accept the allegations of plaintiffs’ complaint as true, what we set out in this opinion as “the
facts” for Rule 12(b)(6) purposes may not be the actual facts.
3
things, helping them evade detection during law enforcement searches and
inspections at Mohawk’s facilities.
According to the complaint, Mohawk’s widespread and knowing
employment and harboring of illegal workers has permitted Mohawk to reduce
labor costs. Mohawk has done so by reducing the number of legal workers it must
hire and, thereby, increasing the labor pool of legal workers from which Mohawk
hires. This practice permits Mohawk to depress the wages it pays its legal hourly
workers.
Finally, the plaintiffs allege that Mohawk is “able to save substantial sums
of money” by paying its workers reduced wages. Furthermore, Mohawk knows
that illegal workers are less likely to file worker’s-compensation claims, and,
therefore, Mohawk is able to save additional monies. According to the plaintiffs,
these benefits constitute unjust enrichment under state law.
Mohawk filed a Rule 12(b)(6) motion to dismiss the plaintiffs’ complaint
for failure to state a claim. The district court determined that the plaintiffs had
stated a claim under both federal and state RICO statutes, as well as a claim for
unjust enrichment under state law for paying legal workers lower wages because
of the illegal workers Mohawk employed. However, the district court dismissed
4
the plaintiffs’ unjust-enrichment claim insofar as it was based on the reduced
number of worker’s-compensation claims Mohawk was forced to pay.2
II. FEDERAL RICO CLAIMS
Pursuant to 18 U.S.C. § 1962(c), it is illegal “for any person employed by or
associated with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise’s affairs through a pattern of racketeering activity . .
. .” 18 U.S.C. § 1962(c). Thus, in order to establish a federal civil RICO violation
under § 1962(c), the plaintiffs “must satisfy four elements of proof: ‘(1) conduct
(2) of an enterprise (3) through a pattern (4) of racketeering activity.’” Jones v.
Childers, 18 F.3d 899, 910 (11th Cir. 1994) (quoting Sedima, S.P.R.L. v. Imrex
Co., 473 U.S. 479, 496, 105 S. Ct. 3275, 3285 (1985)). These requirements apply
whether the RICO claim is civil or criminal in nature.
In civil cases, however, RICO plaintiffs must also satisfy the requirements
of 18 U.S.C. § 1964(c). Section 1964(c) states that “[a]ny person injured in his
business or property by reason of” RICO’s substantive provisions has the right to
2
This Court reviews the denial of a Rule 12(b)(6) motion “de novo, applying the same
standard as the district court did.” Hoffman-Pugh v. Ramsey, 312 F.3d 1222, 1225 (11th Cir.
2002). A complaint should not be dismissed pursuant to Rule 12(b)(6) “unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of his claim.” Beck v. Deloitte &
Touche, 144 F.3d 732, 735 (11th Cir. 1998) (internal quotation marks and citation omitted).
5
“recover threefold the damages he sustains . . . .” 18 U.S.C. § 1964(c). Thus,
under § 1964(c), civil RICO claimants, such as the plaintiffs here, must show (1)
the requisite injury to “business or property,” and (2) that such injury was “by
reason of” the substantive RICO violation. We discuss each of these requirements
in turn.
A. Pattern of Racketeering Activity
As mentioned above, there are four requirements under § 1962(c). Because
elements (3) and (4) – a pattern of racketeering activity – are easily met in this
case (at least at the motion-to-dismiss stage), we address them first.
“A ‘pattern of racketeering activity,’ for purposes of the RICO Act,
‘requires at least two acts of racketeering activity.’” Cox v. Administrator U.S.
Steel & Carnegie, 17 F.3d 1386, 1397 (11th Cir. 1994), modified on other grounds
by 30 F.3d 1347 (11th Cir. 1994). “An act of racketeering is commonly referred to
as a ‘predicate act.’ A ‘pattern’ of racketeering activity is shown when a racketeer
commits at least two distinct but related predicate acts.” Maiz v. Virani, 253 F.3d
641, 671 (11th Cir. 2001) (quotation marks, citations, and brackets omitted). “If
distinct statutory violations are found, the predicate acts will be considered to be
distinct irrespective of the circumstances under which they arose.” Cox, 17 F.3d
at 1397 (quotation marks, citations, and emphasis omitted).
6
According to 18 U.S.C. § 1961(1)(F), “‘racketeering activity’ means any act
which is indictable under the Immigration and Nationality Act, section 274
(relating to bringing in and harboring certain aliens), . . . if the act indictable under
such section of such Act was committed for the purpose of financial gain.” In this
case, the plaintiffs have alleged that the defendant has engaged in an open and
ongoing pattern of violations of section 274 of the Immigration and Nationality
Act. In particular, plaintiffs allege that Mohawk has violated and continues to
violate: (1) 8 U.S.C. § 1324(a)(3)(A), which makes it a federal crime to
“knowingly hire[] for employment at least 10 individuals with actual knowledge
that the individuals are aliens” during a twelve-month period; (2) 8 U.S.C. §
1324(a)(1)(A)(iii), which makes it a federal crime to “conceal[], harbor[], or shield
from detection, or attempt[] to conceal, harbor or shield from detection” aliens that
have illegally entered the United States; and (3) 8 U.S.C. § 1324(a)(1)(A)(iv),
which makes it a federal crime to “encourage[] or induce[] an alien to come to,
enter, or reside in the United States, knowing or in reckless disregard of the fact
that such coming to, entry, or residence is or will be in violation of law.”
According to the plaintiffs’ complaint, Mohawk has committed hundreds, even
7
thousands, of violations of federal immigration laws. Consequently, we conclude
that the plaintiffs have properly alleged a “pattern of racketeering activity.”3
B. Conduct of an Enterprise
With regard to elements (1) and (2) of the four-part test under § 1962(c), the
plaintiffs must establish “conduct of an enterprise” and that the enterprise had a
common goal. See United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524,
2528-29 (1981) (“The enterprise is an entity, for present purposes a group of
persons associated together for a common purpose of engaging in a course of
conduct.”). Furthermore, Mohawk “must participate in the operation or
management of the enterprise itself.” Reves v. Ernst & Young, 507 U.S. 170, 185,
113 S. Ct. 1163, 1173 (1993).
An 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.” 18 U.S.C. § 1961(4). As stated in United
States v. Goldin Indus., Inc., 219 F.3d 1271, 1275 (11th Cir. 2000), “the existence
of an enterprise is proved by evidence of an ongoing organization, formal or
3
There is no dispute that these predicate acts, if they occurred, are related. See Pelletier v.
Zweifel, 921 F.2d 1465, 1496-97 (11th Cir. 1991) (“Predicate acts are related if they have the
same or similar purposes, results, participants, victims, or methods of commission, or otherwise
are interrelated by distinguishing characteristics and are not isolated events.” (internal quotation
marks and citation omitted)).
8
informal, and by evidence that the various associates function as a continuing
unit.” (internal quotation marks and citation omitted). Furthermore, “the definitive
factor in determining the existence of a RICO enterprise is the existence of an
association of individual entities, however loose or informal, that furnishes a
vehicle for the commission of two or more predicate crimes, that is, the pattern of
racketeering activity requisite to the RICO violation.” Id.
In this case, the plaintiffs have alleged that Mohawk and third-party temp
agencies/recruiters have conspired to violate federal immigration laws, destroy
documentation, and harbor illegal workers. Specifically, the plaintiffs allege that
[e]ach recruiter is paid a fee for each worker it supplies to Mohawk, and
some of those recruiters work closely with Mohawk to meet its
employment need by offering a pool of illegal workers who can be
dispatched to a particular Mohawk facility on short notice as the need
arises. Some recruiters find workers in the Brownsville, Texas area and
transport them to Georgia. Others, like TPS, have relatively formal
relationships with the company in which they employ illegal workers
and then loan or otherwise provide them to Mohawk for a fee. These
recruiters are sometimes assisted by Mohawk employees who carry a
supply of social security cards for use when a prospective or existing
employee needs to assume a new identity.
Given the Rule 12(b)(6) stage of the litigation, the plaintiffs’ complaint must be
taken as true, and it has sufficiently alleged an “enterprise” under RICO; that is an
association-in-fact between Mohawk and third-party recruiters. This Court has
never required anything other than a “loose or informal” association of distinct
9
entities. Mohawk and the third-party recruiters are distinct entities that, at least
according to the complaint, are engaged in a conspiracy to bring illegal workers
into this country for Mohawk’s benefit. As such, the complaint sufficiently
alleges an “enterprise” under RICO.
As for the common purpose, the plaintiffs’ complaint alleges that “[t]he
recruiters and Mohawk share the common purpose of obtaining illegal workers for
employment by Mohawk.” The complaint further alleges that “[e]ach recruiter is
paid a fee for each worker it supplies to Mohawk” and that “Mohawk has made
various incentive payments to employees and other recruiters for locating workers
that Mohawk eventually employs and harbors.” Furthermore, “[t]he acts of
racketeering activity committed by Mohawk have the same or similar objective:
the reduction of wages paid to Mohawk’s hourly workforce.” What is clear from
the complaint is that each member of the enterprise is allegedly reaping a large
economic benefit from Mohawk’s employment of illegal workers.
In United States v. Church, 955 F.2d 688, 698 (11th Cir. 1992), this Court
concluded that the common purpose of making money was sufficient under RICO.
Because the complaint clearly alleges that the members of the enterprise stand to
gain sufficient financial benefits from Mohawk’s widespread employment and
10
harboring of illegal workers, the plaintiffs have properly alleged a “common
purpose” for the purposes of RICO.
Furthermore, Mohawk “must participate in the operation or management of
the enterprise itself.” Reves, 507 U.S. at 185, 113 S. Ct. at 1173. That is,
Mohawk “must have some part in directing” the affairs of the enterprise. Id. at
179, 113 S. Ct. at 1170. However, the Supreme Court has cautioned that “RICO
liability is not limited to those with primary responsibility for the enterprise’s
affairs . . . .” Id. In their complaint, the plaintiffs allege that “Mohawk
participates in the operation and management of the affairs of the enterprise . . . ,”
which includes some direction over the recruiters. Whatever difficulties the
plaintiffs may have in proving such an allegation, they have sufficiently alleged
that Mohawk is engaged in the operation or management of the enterprise. Again,
at this stage in the litigation, we simply cannot say whether the plaintiffs will be
able to establish that Mohawk had “some part in directing” the affairs of the
enterprise. However, they have alleged sufficient acts to survive a Rule 12(b)(6)
motion.
Accordingly, we conclude that the plaintiffs’ complaint states a claim that is
cognizable under § 1962(c). In so doing, we note that the allegations in this case
are similar to those in cases recently decided by the Second, Sixth, and Ninth
11
Circuits. See Trollinger v. Tyson Foods, 370 F.3d 602 (6th Cir. 2004) (former
employees alleging employer used illegal immigrants in order to depress wages);
Medoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002) (legally documented
workers alleging that employers leveraged hiring of undocumented workers in
order to depress wages); Commercial Cleaning Servs., L.L.C. v. Colin Services
Sys., Inc., 271 F.3d 374 (2d Cir. 2001) (company alleging competitor hired
undocumented workers in order to underbid competing firms). In each of these
decisions, the circuit court determined that, at the Rule 12(b)(6) stage, the
plaintiffs had alleged sufficient damages to be permitted to pursue their RICO
claims. Although none of the opinions specifically addressed § 1962(c)’s
requirements, each of these cases has essentially the same factual basis for RICO
liability as the complaint before this Court.
We recognize that the above conclusion puts our circuit in conflict with the
Seventh Circuit’s decision in Baker v. IBP, Inc., 357 F.3d 685 (7th Cir. 2004), cert.
denied, 125 S. Ct. 412 (2004). In Baker, an employees’ class-action lawsuit
alleged that a meat-processing facility conspired with recruiters (and a Chinese aid
group), and violated RICO by employing undocumented, illegal workers in an
effort to drive down employee wages. The Seventh Circuit concluded that the
employees’ union was a necessary party to the lawsuit. Id. at 690-91.
12
However, the Seventh Circuit in Baker also concluded that there was
“another fatal problem” with the complaint. Id. at 691. Although stating that an
“enterprise” arguably existed, the Seventh Circuit determined that there was not a
common purpose among the entities in the enterprise. Id. at 691. Specifically, the
Seventh Circuit stated that the employer “wants to pay lower wages; the recruiters
want to be paid more for services rendered (though [the employer] would like to
pay them less); the Chinese Mutual Aid Association wants to assist members of its
ethnic group. These are divergent goals.” Id. at 691.
In our circuit, however, there has never been any requirement that the
“common purpose” of the enterprise be the sole purpose of each and every
member of the enterprise. In fact, it may often be the case that different members
of a RICO enterprise will enjoy different benefits from the commission of
predicate acts. This fact, however, is insufficient to defeat a civil RICO claim.
Rather, all that is required is that the enterprise have a common purpose. In this
case, the complaint alleges that Mohawk and the recruiters, under Mohawk’s
direction, worked together to recruit illegal workers to come to Georgia and that
they had the common purpose of providing illegal workers to Mohawk so that
Mohawk could reduce its labor costs and the recruiters could get paid. This
commonality is all that this circuit’s case law requires. See Church, 955 F.2d at
13
698. Again, while the plaintiffs may be unable to prove such allegations at trial,
we cannot say at this 12(b)(6) stage of the litigation that they have failed to
properly allege a common purpose.
We recognize that the Baker Court also concluded that there was no way to
establish that the employer “operate[d] or manage[d] th[e] enterprise through a
pattern of racketeering activity.” Baker, 357 F.3d at 691 (emphasis omitted).
However, as this Court has noted, “the Supreme Court has yet to delineate the
exact boundaries of the operation or management test.” United States v. Starrett,
55 F.3d 1525, 1546 (11th Cir. 1995). Although the exact boundaries have not been
established, it is possible that the plaintiffs will be able to establish that Mohawk
played some part in directing the affairs of the enterprise. Whether the plaintiffs
ultimately establish sufficient evidence to meet the boundaries of the operation-or-
management test is a question best answered at the summary-judgment stage or at
trial. Accordingly, we conclude that the plaintiffs have sufficiently alleged
conduct that may potentially satisfy the operation-or-management test. As such,
the plaintiffs are entitled to continue with their claims at this juncture.
Having reviewed the four elements of § 1962(c), we turn to § 1964(c).
C. Injury to “Business or Property” Interest Under RICO
14
As indicated above, RICO’s civil-suit provision states that “[a]ny person
injured in his business or property by reason of” RICO’s substantive provisions
has the right to “recover threefold the damages he sustains . . . .” 18 U.S.C. §
1964(c). “The terms ‘business or property’ are, of course, words of limitation
which preclude [certain forms of] recovery.” Doe v. Roe, 958 F.2d 763, 767 (7th
Cir. 1992). However, RICO is to be “liberally construed,” Sedima, 473 U.S. at
497-98, 105 S. Ct. at 3285-86 (1985). Accordingly, we must determine whether
the plaintiffs have a “business or property” interest that could be injured under
RICO. We need not reach whether plaintiffs have a property interest because
plaintiffs clearly have alleged a business interest affected by Mohawk’s alleged
RICO violations.
Indeed, this case is similar to the Ninth Circuit’s Mendoza decision, where
legally documented agricultural workers sued fruit growers under RICO alleging
that the growers depressed wages by hiring illegal workers. In Mendoza, the
defendant claimed that the employees would have to show a “‘property right’ in
the lost wages[] by showing that they were promised or contracted for higher
wages.” Mendoza, 301 F.3d at 1168 n.4. The Ninth Circuit concluded that this
argument was misplaced, pointing out that the plaintiffs’ claim did not implicate
procedural due process. Id. Rather, the Ninth Circuit concluded that “what is
15
required is precisely what the employees allege here: a legal entitlement to
business relations unhampered by schemes prohibited by the RICO predicate
statutes.” Id. (citations omitted). Given that a relationship clearly exists between
plaintiff workers and their employer, Mohawk, we conclude that a similar business
interest exists in this case, and that the employees’ alleged injury to their business
interests satisfies the business-interest requirement. Consequently, the plaintiffs
have alleged a sufficient injury to a business interest to pursue their RICO claims.
D. “By Reason Of” the Substantive RICO Violations
We now turn to the “by reason of” requirement contained in § 1964(c). The
“by reason of” requirement implicates two concepts: (1) a sufficiently direct injury
so that a plaintiff has standing to sue; and (2) proximate cause, whereby the
wrongful conduct is shown to be a substantial cause of the alleged injury and
causal connection is foreseeable and not speculative. See Trollinger, 370 F.3d at
612 (“RICO’s civil-suit provision imposes two distinct but overlapping limitations
on claimants – standing and proximate cause.”); Green Leaf Nursery v. E.I.
Dupont De Nemours and Co., 341 F.3d 1292, 1307 (11th Cir. 2003), cert. denied,
124 S. Ct. 2094 (2004) (“[O]ne or more of the predicate acts [in a RICO claim]
must not only be the ‘but for’ cause of the injury, but the proximate cause as well.”
(citations omitted)); Mendoza, 301 F.3d at 1168-72 (concluding that the plaintiffs
16
had satisfied both “statutory” and “constitutional” standing requirements of
RICO); see also Holmes v. Securities Investor Protection Corp., 503 U.S. 258,
268-69, 112 S. Ct. 1311, 1318 (1992) (stating in a RICO case that “a plaintiff who
complain[s] of harm flowing merely from the misfortunes visited upon a third
person by the defendant’s acts was generally said to stand at too remote a distance
to recover” (citations omitted)). Despite some significant overlap, we address the
proximate cause and standing concepts separately.4
(i) Proximate Cause
“It is well-established that RICO plaintiffs must prove proximate causation
in order to recover.” Cox, 17 F.3d at 1399 (citations omitted). “A proximate
cause is not, however, the same thing as a sole cause. Instead, a factor is a
4
As the Sixth Circuit aptly explained,
the two concepts overlap and that is particularly true in the context of civil RICO
claims. As a general matter, they overlap because a plaintiff who lacks standing
to vindicate a derivative injury also will be unable to show proximate cause. And
as a matter of RICO law, the two concepts overlap because they both grow out of
the “by reason of” limitation in RICO – namely, the requirement that claimants
establish that their injury was “by reason of” a RICO predicate act violation. The
“by reason of” limitation, in other words, bundles together a variety of “judicial
tools,” some of which are traditionally employed to decide causation questions
and some of which are employed to decide standing questions. Holmes, 503 U.S.
at 268, 112 S. Ct. [at 1318] (“Here we use ‘proximate cause’ to label generically
the judicial tools used to limit a person's responsibility for the consequences of
that person's own acts. At bottom, the notion of proximate cause reflects ideas of
what justice demands, or of what is administratively possible and convenient.”)
(quotation omitted) . . . .
Trollinger, 370 F.3d at 613.
17
proximate cause if it is a substantial factor in the sequence of responsible
causation.” Id. (internal quotation marks and citation omitted).
In this case, the plaintiffs have alleged sufficient proximate cause to
withstand defendant Mohawk’s motion to dismiss. According to their complaint,
Mohawk has hired illegal workers “[i]n an effort to keep labor costs as low as
possible.” Furthermore, “Mohawk’s employment and harboring of large numbers
of illegal workers has enabled Mohawk to depress wages and thereby pay all of its
hourly employees, including legally employed workers who are members of the
class, wages that are lower than they would be if Mohawk did not engage in this
illegal conduct.” Again, the complaint alleges that “Mohawk’s widespread
employment and harboring of illegal workers has substantially and unlawfully
increased the supply of workers from which Mohawk makes up its hourly
workforce. This unlawful expansion of the labor pool has permitted Mohawk to
depress the wages that it pays all its hourly employees . . . .” The plaintiffs also
allege that “[o]ne purpose and intended effect of Mohawk’s widespread
employment and harboring of illegal workers is to deprive Mohawk’s hourly
workforce of any individual or collective bargaining power” and that they “were
injured by direct and proximate reason of Mohawk’s illegal conduct.”
18
Given these allegations, which we must assume are true at this Rule
12(b)(6) stage of the litigation, it is clear that the plaintiffs have properly alleged
proximate cause. According to the complaint, Mohawk’s widespread scheme of
hiring and harboring of illegal workers has the purpose and direct result of
depressing the wages paid to the plaintiffs. This is all that is needed to establish
proximate cause.
Our conclusion is consistent with the two other circuits to have addressed
this proximate cause issue in RICO decisions involving schemes to depress wages
of legal workers by widespread hiring of illegal workers. See Trollinger, 370 F.3d
at 619; Medoza, 301 F.3d at 1171-72.
In Trollinger, the Sixth Circuit considered a situation in which former Tyson
employees at poultry processing plant sued their former employer under RICO,
alleging that the use of illegal workers permitted the employer to lower wages via
the collective-bargaining agreement with the union representing the employees.
The Sixth Circuit, reviewing the district court’s dismissal of the employees’
complaint under Rule 12(b)(6), determined that “at this preliminary stage in the
proceedings” it could not conclude that there was no likelihood of success on the
merits. Id. at 619. The Sixth Circuit explained that it remained possible that the
legal-worker plaintiffs might prove the following allegations in their complaint:
19
(1) that Tyson hired sufficient numbers of illegal aliens to impact the
legal employees’ wages; (2) that each additional illegal worker hired
into the bargaining unit by Tyson has a measurable impact on the
bargained-for wage-scale; (3) that the illegal immigrants allegedly
brought into this country through Tyson’s efforts allowed Tyson not to
compete with other businesses for unskilled labor; and (4) that Tyson’s
legal workers did not “choose” to remain at Tyson for less money than
other businesses offered, but had no choice in the matter given the hiring
needs of the other businesses in the area and the influx of illegal
immigrants at Tyson’s facilities. While Tyson’s proximate-cause
argument may well carry the day at the summary-judgment stage, it
requires more assistance than the complaint alone provides.
One other circuit has reached the same result on somewhat similar
facts . . . Mendoza . . . .
Trollinger, 370 F.3d at 619.5
Although the plaintiffs in this case may not ultimately satisfy the proximate-
cause requirement, we conclude it remains possible that plaintiffs may prove their
allegations, and we cannot say at this Rule 12(b)(6) stage that there is no
possibility of such proof. Consequently, we join the Sixth and Ninth Circuits in
concluding that employees such as the ones in this case have alleged sufficient
proximate cause to proceed with their RICO claims.
(ii) Statutory Standing
5
As noted earlier, in Mendoza, the Ninth Circuit was faced with a similar suit in which
legally documented agricultural workers sued fruit growers under RICO alleging that the growers
depressed wages by hiring illegal-immigrant workers. 301 F.3d at 1166. Under almost the exact
same legal theory as advanced in this case, the Mendoza Court concluded that the plaintiffs’
“causation allegations are sufficient at this stage.” Id. at 1172.
20
Lastly, we address RICO’s statutory standing limitation that also grows out
of the “by reason of” limitation in § 1964(c). “[T]he test for RICO standing is
whether the alleged injury was directly caused by the RICO violation, not whether
such harm was reasonably foreseeable.” Bivens Gardens Office Bldg., Inc. v.
Barnett Banks of Fla., Inc., 140 F.3d 898, 908 (11th Cir. 1998); see Sedima, 473
U.S. at 496-97, 105 S. Ct. at 3285 (“[T]he plaintiff only has standing if, and can
only recover to the extent that, he has been injured in his business or property by
the conduct constituting the violation” and the plaintiff’s damages must “flow
from the commission of the predicate acts.”); Green Leaf Nursery , 341 F.3d at
1307 (stating that plaintiffs must show a “direct relation between the injury
asserted and the injurious conduct” and that we ask “whether the alleged conduct
was ‘aimed primarily’ at a third party” (quotation marks and citations omitted));
Bivens, 140 F.3d at 906 (concluding that a party whose alleged injuries result from
“the misfortunes visited upon a third person by the defendant’s acts lacks standing
to pursue a claim under RICO” (quotation marks and citation omitted)); Pelletier
v. Zweifel, 921 F.2d 1465, 1497 (11th Cir. 1991) (stating that the plaintiff has
RICO standing if he shows “a causal connection between his injury and a
21
predicate act”).6 Thus, we must evaluate whether the plaintiffs’ injury is
sufficiently direct to give plaintiffs standing to sue for Mohawk’s alleged RICO
violations.
Both the Sixth and Ninth Circuits have expressly concluded that legal
workers have sufficiently direct injuries for RICO standing in similar cases.
Trollinger, 370 F.3d at 615-618; Mendoza, 301 F.3d at 1170. The Ninth Circuit’s
Mendoza decision is particularly well-reasoned and instructive on the statutory
standing issue.
As mentioned earlier, the Mendoza plaintiffs were legal workers who
claimed that the purpose and result of the defendants’ scheme of hiring
undocumented immigrants was to depress the wages of legally documented
employees. The Ninth Circuit concluded that the plaintiffs had statutory standing
because “we are unable to discern a more direct victim of the illegal conduct.”
Mendoza, 301 F.3d at 1170. The Ninth Circuit explained:
The documented employees here do not complain of a passed-on harm.
They allege that the scheme had the purpose and direct result of
depressing the wages paid to them by the growers. Thus, as the district
6
This Court has more often evaluated the “by reason of” requirement primarily as part of
its proximate-cause analysis, as opposed to the distinct concept of standing. However, despite
significant overlap, we must also examine whether the plaintiffs’ injury is sufficiently direct to
permit standing.
22
court correctly determined, “plaintiffs have stated a claim that they are
the direct victims of the illegal hiring scheme.”
...
We also note that the undocumented workers cannot “be counted
on to bring suit for the law’s vindication.” As the district court noted,
the fact that RICO specifically provides that illegal hiring is a predicate
offense indicates that Congress contemplated the enforcement of the
immigration laws through lawsuits like this one.
Id. (internal citations omitted). The Ninth Circuit further stated that
the workers must be allowed to make their case through presentation of
evidence, including experts who will testify about the labor market, the
geographic market, and the effects of the illegal scheme. Questions
regarding the relevant labor market and the growers’ power within that
market are exceedingly complex and best addressed by economic
experts and other evidence at a later stage in the proceedings.
Id. at 1171.
Plaintiffs’ complaint clearly alleges that Mohawk has engaged in
widespread and knowing hiring and harboring of illegal aliens with the express
purpose and direct result of lowering the wages of legal workers. For example, the
complaint alleges that “[o]ne purpose and intended effect of Mohawk’s
widespread employment and harboring of illegal workers is to deprive Mohawk’s
hourly workforce of any individual or collective bargaining power.” The plaintiffs
also allege that “[t]he acts of racketeering activity committed by Mohawk have the
same or similar objective: the reduction of wages paid to Mohawk’s hourly
workforce.” Furthermore, the plaintiffs “were injured by direct and proximate
23
reason of Mohawk’s illegal conduct.” Given this stage of the litigation, we
conclude that the plaintiffs have sufficiently alleged that Mohawk’s illegal
conduct was aimed primarily at them. Consequently, the district court correctly
denied Mohawk’s 12(b)(6) motion as it relates to the plaintiffs’ federal civil RICO
claim.
III. STATE LAW RICO
Under the Georgia RICO statute, “[i]t is unlawful for any person, through a
pattern of racketeering activity or proceeds derived therefrom, to acquire or
maintain, directly or indirectly, any interest in or control of any enterprise, real
property, or personal property of any nature, including money.” O.C.G.A. 16-14-
4(a). Unlike federal civil RICO, the Georgia RICO statute does not require proof
of an “enterprise.” Cobb County v. Jones Group, P.L.C., 460 S.E. 2d 516, 520-21
(Ga. Ct. App. 1995). Rather, under Georgia RICO, the plaintiffs need only
establish racketeering activity; that is, “a plaintiff must show that the defendant
committed predicate offenses (set forth in O.C.G.A. § 16-14-3(9)) at least twice.”
Id. at 521 (quotation marks and citation omitted).
With regard to their state-law RICO claim, the plaintiffs rely on 18 U.S.C. §
1546 (relating to the fraud and misuse of visas, permits, and other documents) for
24
their predicate offenses.7 Despite being limited to § 1546, the plaintiffs have
alleged sufficiently numerous violations to satisfy the racketeering activity
requirement under Georgia state law. In fact, according to the complaint,
“Mohawk has committed hundreds, probably thousands, of violations of . . . 18
U.S.C. § 1546 as part of its pattern of racketeering activity.”
There are, however, two issues under the Georgia RICO statute that warrant
further discussion: (1) whether, under the Georgia RICO statute, a corporation
may be sued; and (2) whether the plaintiffs have sufficiently alleged proximate
cause to have standing to bring a Georgia RICO suit.
A. Whether Corporations May be Sued Under Georgia RICO
“Although this is a civil suit, RICO predicate acts are criminal offenses.”
Cobb County, 460 S.E. 2d at 521 (quotation marks omitted). Therefore, in order
to determine whether a corporation may be held liable under RICO, Georgia courts
look to O.C.G.A. § 16-2-22. See Cobb County, 460 S.E. 2d at 521.
7
According to O.C.G.A. § 16-14-3(9)(A)(xxix), “racketeering activity” is defined as
“conduct defined as ‘racketeering activity’ under 18 U.S.C. Section 1961(1)(A), (B), (C), and
(D).” The only “racketeering activity” contained in 18 U.S.C. § 1961(1)(A), (B), (C), or (D) on
which the plaintiffs rely is § 1546. To the extent the plaintiffs attempt to rely on § 1324, as they
do with their federal civil RICO claims, such a claim is barred under the Georgia RICO statute
because § 1324 is listed as a “racketeering offense” in 18 U.S.C. § 1961(1)(F), and not in
subsections (A), (B), (C), or (D).
25
There are two means by which a corporation may be held liable: (1) directly
(under O.C.G.A. § 16-2-22(a)(1)); and (2) through its agents and employees under
certain situations (under O.C.G.A. § 16-2-22(a)(2)). The Georgia Supreme Court
already has concluded that corporations may not be sued directly under RICO.
Clark v. Security Life Ins. Co. of America, 509 S.E. 2d 602, 604 n.11 (Ga. 1998)
(“A corporation may also face prosecution under O.C.G.A. § 16-2-22(a)(1) for a
crime if the statute defining the crime clearly indicates a legislative purpose to
impose liability on a corporation. RICO, however, is not such a statute . . . .”).
Although a corporation cannot be prosecuted directly under RICO, a
corporation will be liable under Georgia RICO “if the ‘crime is authorized,
requested, commanded, performed, or recklessly tolerated by the board of
directors or by a managerial official who is acting within the scope of his
employment.’” Clark, 509 S.E. 2d at 604 (quoting § 16-2-22(a)(2)). Whether the
acts were performed at the request, command, or authorization of the board of
directors or other managers is a question of proof at trial, not a sufficiency-of-the-
pleading issue. See State v. Military Circle Pet Center, No. 94, Inc., 360 S.E. 2d
248, 249 (Ga. 1987) (“Although the state must prove the applicable provisions of
[§ 16-2-22(a)(2)] at trial against a criminal defendant, it is not necessary that the
state allege these provisions in the accusation.”).
26
In this case, the plaintiffs’ complaint alleges that “Mohawk supervisors have
encouraged these [illegal-immigrant] employees to return to the United States and
reapply for work at Mohawk in violation of United States law.” Furthermore,
“Mohawk also has knowingly and recklessly accepted proof of eligibility for
employment documents that reflect successive different names for a single
person.” The plaintiffs’ complaint is rife with allegations that supervisors and
managers at Mohawk were either aware of, or in reckless disregard of, the misuse
of various work-related documents. Consequently, the plaintiffs have alleged
sufficient conduct that, if proven, would allow them to hold Mohawk liable under
state law.
B. Standing to Pursue State-Law RICO Claims
As with Federal RICO claims, under Georgia’s RICO statute, “[a]ny person
who is injured by reason of any violation of” Georgia’s RICO statute “shall have a
cause of action for three times the actual damages sustained . . . .” O.C.G.A. § 16-
14-6(c). “[B]ecause the state RICO act is modeled upon and closely analogous to
the federal RICO statute,” Georgia courts “look to federal authority” in
determining RICO standing. Maddox v. So. Engineering Co., 500 S.E. 2d 591,
594 (Ga. Ct. App. 1998) (quotation marks and citation omitted). We already have
concluded that the plaintiffs have alleged sufficient injury to pursue their federal
27
RICO claims, and accordingly, we conclude that they have alleged a sufficient
injury to pursue their state RICO claims as well. Although under Georgia law the
plaintiffs are limited to predicate acts arising out of 18 U.S.C. § 1546, we conclude
that the plaintiffs’ allegations are neither too remote nor too indirect to satisfy
Georgia’s proximate-cause requirement under state-law RICO. See Maddox, 500
S.E.2d at 594 (“In short, the language ‘by reason of’ imposes a proximate
causation requirement on the plaintiff.” (citation omitted)); id. (A plaintiff “must
show a causal connection between his injury and a predicate act.” (citation
omitted)).
IV. UNJUST ENRICHMENT
The plaintiffs’ complaint claims that Mohawk’s illegal conduct permits it
“to reap substantial wage savings” because Mohawk pays plaintiffs lower wages
than it would otherwise be forced to pay. Therefore, according to the plaintiffs’
complaint, Mohawk has been unjustly enriched under state law. Plaintiffs also
claim that Mohawk has been unjustly enriched because the hiring of illegal aliens
has led to a reduced number of worker’s-compensation claims. Both of plaintiffs’
state-law unjust-enrichment claims fail.
Here, the plaintiffs were all paid an agreed-upon wage. In essence, the
plaintiffs have a contract to work for the defendant and were paid the agreed-upon
28
wage. In Georgia, “[u]njust enrichment is an equitable concept and applies when
as a matter of fact there is no legal contract . . . .” St. Paul Mercury Ins. Co. v.
Meeks, 508 S.E. 2d 646, 648 (Ga. 1998) (quotation marks and citation omitted);
see Bonem v. Golf Club of Georgia, Inc., 591 S.E. 2d 462, 467-68 (Ga. Ct. App.
2003). In this case, there was a legal contract as a matter of fact (i.e., if the
plaintiffs were not paid, they could sue for breach of the employment contract).
See, e.g., SurgiJet, Inc. v. Hicks, 511 S.E. 2d 194, 195 (Ga. Ct. App. 1999);
Brazzeal v. Commercial Cas. Ins. Co., 180 S.E. 853, 853 (Ga. Ct. App. 1935).
Therefore, there can be no unjust enrichment. Consequently, the plaintiffs’ unjust-
enrichment claim as it related to Mohawk’s purported savings from lower wages
should have been dismissed.
As for plaintiffs’ claims that hiring illegal workers resulted in fewer
worker’s-compensation claims, there is no reasonable allegation that this fact,
even if true, is connected to the plaintiffs receiving lower wages. To put it another
way, the fact that Mohawk may have increased profits by lowering the number of
worker’s-compensation claims it paid is not related to what wages Mohawk paid
the plaintiffs. Consequently, the district court correctly determined that the
plaintiffs did not have standing to assert this claim.
V. CONCLUSION
29
For all the above reasons, we conclude that the district court properly denied
Mohawk’s Rule 12(b)(6) motion as it related to both the plaintiffs’ federal and
state RICO claims. Furthermore, the district court properly dismissed the
plaintiffs’ unjust-enrichment claim as it related to worker’s compensation.
However, the district court should have also dismissed the plaintiffs’ unjust-
enrichment claim as it related to the agreed-upon wages that plaintiffs received.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR
FURTHER PROCEEDINGS.
30