A federal appeals court has denied efforts by carpet and flooring giant Mohawk Industries Inc. to kill a racketeering class action. The suit claims the Calhoun, Ga., company recruited and employed illegal aliens in order to depress wages of legitimate employees.
The June 9 per curiam decision of an 11th U.S. Circuit Court of Appeals panel upheld key elements of a ruling by U.S. District Senior Judge Harold L. Murphy that allowed the case to proceed.
While the decision comes at an early stage in the case, the matter could be headed to the U.S. Supreme Court because the 11th Circuit’s reasoning splits with another circuit’s.
The four plaintiffs, who are current and former Mohawk employees, are alleging federal and state violations of the Racketeer Influenced and Corrupt Organizations Act. They accuse the company of working with employee recruiters who hired illegal workers in Texas and Georgia, often providing them with phony Social Security cards. The suit also alleges that Mohawk hid illegal workers during law enforcement inspections.
The judges noted that their decision put the 11th Circuit in conflict with the 7th Circuit’s decision last year in Baker v. IBP, 357 F.3d 685, in which that court refused to allow a RICO case to go forward. The 11th Circuit judges pointed out that “the Supreme Court had yet to delineate the exact boundaries” of some of the RICO tests—an indication that the case could get attention from the U.S. Supreme Court, which often accepts cases in order to resolve a split among the circuits.
While noting that state RICO standards do not allow a corporation to be prosecuted, the appellate panel cited the Georgia law in observing that 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 duties.
“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,” said the judges. “Consequently, the plaintiffs have alleged sufficient conduct that, if proven, would allow them to hold Mohawk liable under state law.”