Opinion · Court of Appeals for the Eleventh Circuit
Shirley Williams v. Mohawk Industries, Inc.
411 F.3d 1252
- Type
- Opinion
- Court
- Court of Appeals for the Eleventh Circuit
- Jurisdiction
- Federal
- Date
- 2005-06-09
- Topic
- litigation
[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.
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 04-13740 ELEVENTH CIRCUIT
SEPTEMBER 27, 2006
________________________
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
_________________________
(September 27, 2006)
ON REMAND FROM THE
UNITED STATES SUPREME COURT
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-appellees Shirley Williams, Gale Pelfrey, Bonnie
Jones, and Lora Sisson are current or former hourly employees of defendant-
appellant Mohawk Industries, Inc. (“Mohawk”). 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 discouraging 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, this Court affirmed in part and reversed in
part. Williams v. Mohawk Indus., Inc., 411 F.3d 1252
(11th Cir. 2005). Appellant
Mohawk then filed an application for writ of certiorari on two questions:
1. Whether a defendant corporation and its agents can constitute
an “enterprise” under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. §§ 1961-1968
(“RICO”), in light of the
settled rule that a RICO defendant must “conduct” or “participate in” the
affairs of some larger enterprise and not just its own affairs.
2
2. Whether plaintiffs state proximately caused injuries to business
or property by alleging that the hourly wages they voluntarily accepted
were too low.
The United States Supreme Court granted the appellant’s petition for writ of
certiorari “limited to Question 1 presented by the petition.” Williams v. Mohawk
Indus., Inc., 546 U.S. __
,126 S. Ct. 830
(2005).
After oral argument, however, the Supreme Court entered a summary, three-
sentence order that (1) dismissed the writ as improvidently granted as to Question
1, and (2) vacated the judgment of our prior opinion and remanded the case to this
Court “for further consideration in light of Anza v. Ideal Steel Supply Corp., ___
U.S., 126 S. Ct. 1991
(2006).” Williams v. Mohawk Industries, Inc., ___ U.S. ___,126 S. Ct. 2016
(2006).
This case is now before the Court on remand from the Supreme Court.
After the remand, this Court ordered supplemental briefing as to not only Anza,
but also the intervening decision by the Georgia Supreme Court in Williams
General Corp. v. Stone, 280 Ga. 631
,632 S.E.2d 376
(2006). After further
consideration, this Court now reinstates its prior opinion in part and modifies it in
part as follows.
I. BACKGROUND
3
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
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.
1
At this point in the litigation, we must assume the facts set forth in the plaintiffs’
complaint are true. See Anza, __ U.S. __, 126 S. Ct. at 1994
(stating that on a motion to dismiss, the court must “accept as true the factual allegations in the amended complaint”); 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.
4
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
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
5
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
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.
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).
6
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 “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. Adm’r U.S. Steel &
Carnegie, 17 F.3d 1386, 1397
(11th Cir. 1994), modified on other grounds by30 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
7
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).
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.”
8
According to the plaintiffs’ complaint, Mohawk has committed hundreds, even
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 Industries, Inc.,219 F.3d 1271, 1275
(11th Cir. 2000), “the
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)).
9
existence of an enterprise is proved by evidence of an ongoing organization,
formal or 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
10
never required anything other than a “loose or informal” association of distinct
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
11
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
12
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); Mendoza 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 Servs. 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.
13
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 14
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
15
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
16
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. 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 & 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 had satisfied both “statutory” and “constitutional”
17
standing requirements of RICO). 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. Anza v. Ideal Steel Supply Corp., __ U.S. __, 126 S. Ct. 1991
(2006); Holmes v. Sec. Investor Prot. Corp.,503 U.S. 258
,112 S. Ct. 1311
(1992); Cox,17 F.3d at 1399
(citations omitted). Anza makes clear that courts should
scrutinize proximate causation at the pleading stage and carefully evaluate
whether the injury pled was proximately caused by the claimed RICO violations.
See Anza, __ U.S. at __, 126 S. Ct. at 1997.
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
.
18
More importantly, in Anza, the United States Supreme Court instructed that
“[w]hen a court evaluates a RICO claim for proximate causation, the central
question it must ask is whether the alleged violation led directly to the plaintiff’s
injuries.” Anza, __ U.S. at __, 126 S. Ct. at 1998. This central question stems
from the Supreme Court’s earlier decision in Holmes, which examined “the
common-law foundations of the proximate-cause requirement” and specifically the
“demand for some direct relation between the injury asserted and the injurious
conduct alleged.” Anza, __ U.S. at __, 126 S. Ct. at 1996 (quoting Holmes, 503 U.S. at 269
,112 S. Ct. at 1318
). Although Anza does not require plaintiffs to
show that the injurious conduct is the sole cause of the injury asserted, Anza does
emphasize that in RICO cases there must be “some direct relation” between the
injury alleged and the injurious conduct in order to show proximate cause. Id.5
In evaluating whether the requisite causal connection exists, Anza also
instructs that courts should consider the “motivating principle[s]” behind the
directness component of the proximate-cause standard in RICO cases. “One
5
Anza also explains that “Congress modeled § 1964(c) [in the RICO statute] on the civil-
action provision of the federal antitrust laws, § 4 of the Clayton Act.” __ U.S. at __, 126 S. Ct. at
1996 (quotation marks and citation omitted). In both federal RICO and federal antitrust cases,
“proximate cause is not . . . the same thing as a sole cause,” and it is enough for the plaintiff to
plead and prove that the defendant’s tortious or injurious conduct was a “substantial factor in the
sequence of responsible causation.” Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1399
(11th Cir. 1994) (RICO), modified on other grounds by30 F.3d 1347
(11th Cir. 1994).
19
motivating principle is the difficulty that can arise when a court attempts to
ascertain the damages caused by some remote action.” Anza, __ U.S. at __, 126 S.
Ct. at 1997. Stated another way, “the less direct an injury is, the more difficult it
becomes to ascertain the amount of plaintiff’s damages attributable to the
violation, as distinct from other, independent factors.” Holmes, 503 U.S. at 269
,112 S. Ct. at 1318
. This remoteness concern is heightened when RICO suits are
brought by economic competitors seeking damages for lost sales because those
types of claims, “if left unchecked, could blur the line between RICO and the
antitrust laws.” Anza, __ U.S. at __, 126 S. Ct. at 1998.
Another consideration is the risk of duplicative recoveries. “The
requirement of a direct causal connection is especially warranted where the
immediate victims of an alleged RICO violation can be expected to vindicate the
laws by pursuing their own claims.” Anza, __ U.S. at __, 126 S. Ct. at 1998. As
also aptly expressed in Holmes, “directly injured victims can generally be counted
on to vindicate the law as private attorneys general, without any of the problems
attendant upon suits by plaintiffs injured more remotely.” Holmes, 503 U.S. at 269-70
,112 S. Ct. at 1318
.
Turning back to this case, we conclude that the plaintiffs have alleged
sufficient proximate cause to withstand defendant Mohawk’s motion to dismiss.
20
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.”
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 alleged a
sufficiently direct relation between their claimed injury and the alleged RICO
violations. In short, according to the complaint, Mohawk’s widespread scheme of
knowingly hiring and harboring illegal workers has the purpose and direct result
21
of depressing the wages paid to the plaintiffs. Simply put, wholesale illegal hiring
depresses wages for the legal workers in north Georgia where Mohawk is located.
According to plaintiffs, Mohawk’s illegal conduct had a substantial and direct
effect on wages that Mohawk pays to legal workers. See DeCanas v. Bica, 424 U.S. 351, 356-57
,96 S. Ct. 933, 937
(1976) (explaining that “acceptance by illegal
aliens of jobs on substandard terms as to wages and working conditions can
seriously depress wage scales and working conditions of citizens and legally
admitted aliens”).6 While DeCanas is not a RICO case, plaintiffs point out that the
Supreme Court has already recognized a direct correlation between illegal hiring
and lower wages.
In response, Mohawk asserts that other economic factors contribute to the
plaintiffs’ wages, that illegal hiring is just one of myriad factors affecting wages,
and that therefore plaintiffs have not satisfied Anza’s proximate-cause
requirements. However, plaintiffs persuasively reply that Mohawk’s argument
ignores that Mohawk’s conduct has grossly distorted those normal market forces
by employing literally thousands of illegal, undocumented aliens at its
6
The Supreme Court quoted this same point in Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 892-93
,104 S. Ct. 2803, 2809
(1984) (quoting same, and adding that a “primary purpose in
restricting immigration is to preserve jobs for American workers; immigrant aliens are therefore
admitted to work in this country only if they ‘will not adversely affect the wages and working
conditions of the workers in the United States similarly employed.’” (citation omitted)).
22
manufacturing facilities in north Georgia, thus depriving plaintiffs of “business
relations unhampered by schemes prohibited by the RICO predicate statutes.”
Plaintiffs submit that their complaint focuses on only what is happening in the
particular narrow labor market that Mohawk dominates in north Georgia. We
agree with plaintiffs that their complaint alleges a sufficiently direct injury to
satisfy Anza and Holmes, especially given the recognition of a direct correlation
between illegal hiring and lower wages.
More importantly, as plaintiffs point out, in both Holmes and Anza, the
Supreme Court emphasized that dismissal was appropriate because a more direct
victim could bring suit. For example, the Anza plaintiff alleged that National
Steel Supply, a competitor, had stopped paying sales taxes to the New York tax
authority, submitted fraudulent documents to the tax authority, and used its tax
savings to lower prices. The plaintiff sued for treble damages for sales lost to
National. The Supreme Court concluded that New York, which lost the tax
revenue due to National’s fraudulent conduct, was the direct victim who could
bring suit and not the plaintiff. Anza, __ U.S. at __, 126 S. Ct. at 1997. Indeed,
the state of New York could “be expected to pursue appropriate remedies.” Id. at
__, 126 S. Ct. at 1998. National’s decision to lower prices to its customers and
win sales from the plaintiff was “entirely distinct from the alleged RICO
23
violation” of mail and wire fraud as to taxes owed to the New York tax authority.
Id. at __, 126 S. Ct. at 1997.
Likewise, in Holmes, the plaintiff’s injury was merely derivative of a prior
injury to third parties (broker dealers) who had filed their own suit. Holmes, 503 U.S. at 271, 273
,112 S. Ct. at 1319-20
; see also Associated Contractors v. Cal. State Council of Carpenters,459 U.S. 519, 541
,103 S. Ct. 897, 910
(1983)
(identifying alternative plaintiffs with more direct claims).
The concerns expressed in Anza and Holmes are not present in this case.
There is no more direct injured party who could bring suit. Mohawk posits the
United States as the only other victim because of its interest in enforcing
immigration laws. But as plaintiffs aptly point out, the United States is
responsible for all federal criminal laws which includes RICO’s other predicate
acts. Under Mohawk’s theory, the United States would arguably be the most
direct victim of all RICO predicate, criminal acts. Congress, however,
criminalized the employment of illegal workers in part to protect legal workers. It
is consistent with civil RICO’s purposes — to expand enforcement beyond federal
prosecutors with limited public resources — to turn victims (here, Mohawk’s legal
workers) into prosecutors as private attorneys general seeking to eliminate illegal
hiring activity by their own employer. See Rotella v. Wood, 528 U.S. 549, 557
,
24
120 S. Ct. 1075, 1082
(2000) (acknowledging that the very “object of civil RICO is . . . to turn [victims] into prosecutors, private attorneys general dedicated to eliminating racketeering activity” (quotation marks and citation omitted)); see also Reiter v. Sonotone Corp.,442 U.S. 330, 344
,99 S. Ct. 2326, 2333
(1979) (private
antitrust suits “provide a significant supplement to the limited resources available
at the Department of Justice”).
Anza’s concern about speculative damages, “intricate, uncertain injuries,”
and unwieldy apportionment are not implicated in this case because plaintiffs
allege an injury fundamentally different from that in Anza. The plaintiff in Anza
was a competitor suing for damages for lost opportunity or lost sales. In contrast,
plaintiffs are Mohawk’s own employees who seek to recover the diminution in
wages they receive directly from Mohawk. Further, Anza’s concern about
blurring the line between RICO and antitrust laws is wholly missing here.
We also recognize that Mohawk asserts that the cause of plaintiffs’ alleged
harms is a set of actions (paying lower wages) “entirely distinct” from the alleged
RICO violation (hiring illegal workers). We disagree. As noted earlier, it has
long been recognized that hiring illegal workers on substandard wage terms
depresses the wage scales of legal workers. Moreover, plaintiffs are not suing
about the hiring of illegal workers on the west coast depressing the wages of legal
25
workers on the east coast. Rather, plaintiffs’ complaint is a narrow one about a
single employer’s – Mohawk’s – hiring of thousands of illegal workers at its
manufacturing facilities in north Georgia depressing the wages of legal workers of
the same employer, Mohawk, at the same manufacturing facilities in the same
limited geographical area. Accordingly, under the particular factual circumstances
of this case, we conclude that plaintiffs’ complaint satisfies the direct relationship
requirement imposed by Holmes and Anza’s interpretation of the “by reason of”
language in the federal RICO statute.
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
; Mendoza,301 F.3d at 1171-72
.
In Trollinger, the Sixth Circuit considered a situation in which former Tyson
employees at a 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
proceeding” it could not conclude that there was no likelihood of success on the
26
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:
(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
.7
Although the plaintiffs’ evidence in this case may not ultimately prove the
proximate-cause requirement, we conclude that the plaintiffs’ complaint states a
sufficiently direct relation between their alleged injury and Mohawk’s alleged
unlawful predicate acts to withstand Mohawk’s motion to dismiss. Consequently,
we join the Sixth and Ninth Circuits in concluding that employees such as the ones
7
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
.
27
in this case have alleged sufficient proximate cause to proceed with their RICO
claims.
(ii) Statutory Standing
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 also 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
28
RICO standing if he shows “a causal connection between his injury and a
predicate act”).8 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 615-18
; 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
8
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.
29
depressing the wages paid to them by the growers. Thus, as the district
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
30
workforce.” Furthermore, the plaintiffs “were injured by direct and proximate
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
31
their predicate offenses.9 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 a corporation is a “person” who may be sued for
purposes of the Georgia RICO statute; 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
The Georgia Supreme Court recently answered the precise question of
whether a corporation may be sued under the Georgia RICO statute. See Williams
Gen. Corp. v. Stone, 280 Ga. 631
,632 S.E.2d 376
(2006). The Georgia Supreme
Court noted that the prohibitions in the Georgia RICO Act apply to “any person”
9
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 in18 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” in18 U.S.C. § 1961
(1)(F), and not in
subsections (A), (B), (C), or (D).
32
under O.C.G.A. § 16-14-4. Williams, 280 Ga. at 631
,632 S.E.2d at 377
. The term “person,” however, is not defined in the definition section of the Georgia RICO Act. See O.C.G.A. § 16-14-3 (definition section). The Georgia Supreme Court pointed out that, nonetheless, the Georgia legislature had “set forth the desired application of the term [person] in the definition section promulgated for use in the title [Title 16] which includes the Georgia RICO Act.” Williams,280 Ga. at 631
,632 S.E.2d at 377
. The Georgia Supreme Court explained that the definition section for use in Title 16 of the Georgia Code is O.C.G.A. § 16-1- 3(12). Id. The Georgia Supreme Court then quoted § 16-1-3(12), which provides that “person” includes an individual, a public or private corporation, an incorporated association, government, government agency, partnership, or unincorporated association. Id. at 632,632 S.E.2d at 377
. Additionally, the Georgia Supreme Court observed that “the definition section of the entire Georgia Code notes that ‘person’ includes a corporation,” citing O.C.G.A. § 1-3-3(14). Id. at 632,632 S.E.2d at 378
(quotation marks omitted). Accordingly, the Georgia Supreme Court concluded that a corporation is subject to and may be sued under Georgia’s RICO Act.Id. at 631
,632 S.E.2d at 377
.
The Georgia Supreme Court in Williams also expressly rejected the
argument, which Mohawk makes here, that O.C.G.A. § 16-2-22, which places
33
limits on corporate criminal liability, should apply to civil suits which stem from
criminal law violations. Id. at 632-33, 632 S.E.2d at 378
. Instead, the Georgia
Supreme Court expressly held that “O.C.G.A. § 16-2-22 does not pertain to civil
suits brought under the Georgia civil RICO Act.” Id. In light of Williams, we
conclude that Mohawk, a corporation, may be sued under the Georgia RICO
statute.10 We now turn to the next question of standing.
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) (emphasis added). “[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. Eng’g 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 RICO claims, and accordingly, we conclude that they have alleged a
sufficient injury to pursue their state RICO claims as well. Although under
10
In interpreting a state law, federal courts apply the decisions of that state’s highest
court. See CSX Transp., Inc. v. Trism Specialized Carriers, Inc., 182 F.3d 788, 789
(11th Cir.
1999).
34
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 indirect nor too remote 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)).11
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.
11
Plaintiffs also seek injunctive relief under the Georgia RICO Act which allows any
“aggrieved person” to sue for injunctive relief, without requiring an injury “by reason of” the
illegal conduct. Compare O.C.G.A. § 16-14-6(b) with O.C.G.A. § 16-14-6(c). Thus, we need
not discuss Anza and Mohawk’s proximate-cause arguments as to plaintiffs’ claims for
injunctive relief under the Georgia RICO Act.
35
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
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 Ga., 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
36
the plaintiffs. Consequently, the district court correctly determined that the
plaintiffs did not have standing to assert this claim.
V. CONCLUSION
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.
37