Several RICO claims have been filed in recent years by U.S.-born workers alleging employers have conspired with labor agencies to hire undocumented workers in a scheme to drive wages down. Last month, the Fifth Circuit ruled on a RICO claim raised, instead, by undocumented workers. The appeals court ruled that some 40 Indian nationals who were recruited under false pretenses for work in the United States could bring a RICO claim against a "steel company," its president, and the labor agency that recruited them (Abraham v Singh, 5thCir, February 26, 2007).
The facts alleged were fairly unsavory: According to the complaint, the plaintiffs were recruited between November 2000 and December 2002 to come to the U.S. and work for a steel company. The defendants told the workers they would have two years of guaranteed employment at the steel company and they would be eligible for permanent residency status in the U.S. The defendant obtained H2B visas for the plaintiffs and arranged their route to Louisiana. For these services, the plaintiffs paid between $7,000 and $20,000.
The plaintiffs arrived to discover the steel company was no such thing, and there were no jobs available there. Their passports were confiscated; they were given substandard housing and minimal food. Because of their limited-purposes visas, other work was hard to come by. Even inquiries about finding other work were met with threats of jail or deportation. Some of the workers were farmed out to other jobs--jobs from which their wages were skimmed and for which they were charged arbitrary fees.
The plaintiffs filed suit, alleging RICO violations in addition to human trafficking, fraudulent inducement, and other claims. The district court dismissed, concluding that, while the workers sufficiently showed the alleged criminal acts were related, they had not adequately pled a pattern of continuing racketeering activity--both of which are essential elements of a RICO claim. To satisfy this "continuity prong," plaintiffs must establish that the criminal activity alleged raised a "specific threat of repetition extending indefinitely into the future," or that the predicate acts "are a regular way of conducting the defendant's ongoing legitimate business." To the district court, the predicate acts were short-lived, a single transaction, which took place in the past: the workers' recruitment and entry into the country. As such, they did not threaten long-term criminal activity, nor was it the defendants' regular course of conduct in their business.
The appeals court saw it differently. The plaintiffs' pleadings were sufficient to satisfy this element of a RICO claim, the appeals court concluded. The plaintiffs had "alleged that the Defendants engaged in at least a two-year scheme involving repeated international travel to convince up to 200 or more Indian citizens to borrow thousands of dollars to travel to the United States only to find upon their arrival that things were not as they had been promised." The Fifth Circuit noted that the actionable conduct did not end in India; it continued well into the plaintiffs' time in the United States. This was no single illegal transaction, the Fifth Circuit noted. Moreover, there were multiple victims here. And finally, "there is no reason to suppose that this systematic victimization allegedly begun in November 2000 would not have continued indefinitely had the Plaintiffs not filed this lawsuit," the appeals court added.
Ultimately, the appeals court ruled the plaintiffs raised sufficient allegations to support an "enterprise" claim, under 18 U.S.C. Section 1962(c), that the RICO person, the president of the company, is distinct from the RICO enterprise, the company itself. (There is a split in the circuits on the enterprise issue. Most recently, the Eleventh Circuit held that a "loose or informal association of distinct entities" was all that was required to satisfy RICO's "enterprise" requirement at the pleading stage. (Williams v Mohawk Indus Inc, 153 LC ¶10,735 (11th Cir. 2006), cert denied, February 26, 2007, Mohawk Indus Inc v Williams, Dkt No 06-873.)
The plaintiffs also asserted with enough specificity that the defendants had entered into an agreement to commit the acts of racketeering alleged, pursuant to 18 U.S.C. Section 1962(d). Thus, it reversed the lower court's dismissal of two of their four RICO claims.
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