Williams v. Mohawk Industries, Inc., No. 04-13740.

• Decision Date: 27 September 2006
• Docket Number: No. 04-13740.
• Citation: 465 F.3d 1277
• Parties: Shirley WILLIAMS, Gale Pelfrey, Bonnie Jones, Lora Sisson, individually and on behalf of a class, Plaintiffs-Appellees, v. MOHAWK INDUSTRIES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

465 F.3d 1277

Shirley WILLIAMS, Gale Pelfrey, Bonnie Jones, Lora Sisson, individually and on behalf of a class, Plaintiffs-Appellees, v. MOHAWK INDUSTRIES, INC., Defendant-Appellant.

No. 04-13740.

United States Court of Appeals, Eleventh Circuit.

September 27, 2006.

Steven T. Cottreau, Juan P. Morillo, Virginia A. Seitz, Carter G. Phillips, Brandi Feingold, Sidley, Austin, Brown & Wood LLP, Washington, DC, R. Carl Cannon, Rosemary C. Lumpkins, Constangy, Brooks & Smith, Atlanta, GA, for Defendant-Appellant.

Howard W. Foster, Johnson & Bell, Ltd., Chicago, IL, Bobby Lee Cook, Cook & Connelly, Summerville, GA, John E. Floyd, Joshua F. Thorpe, Nicole G. Iannarone, Ronan P. Doherty, Bondurant, Mixson & Elmore, Atlanta, GA, Matthew D. Thames, Goddard, Thames, Hammontree & Bolding, Dalton, GA, for Plaintiffs-Appellees.

Appeal from the United States District Court for the Northern District of Georgia.

ON REMAND FROM THE UNITED STATES SUPREME COURT

Before ANDERSON, HULL and GIBSON,^* Circuit Judges.

PER CURIAM:

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. 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." Mohawk Indus., Inc. v. Williams, ___ U.S. ___, 126 S.Ct. 830, 163 L.Ed.2d 705 (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, 164 L.Ed.2d 720 (2006)." Mohawk Indus., Inc. v. Williams, ___ U.S. ___, 126 S.Ct. 2016, 164 L.Ed.2d 776 (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

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.

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 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, 87 L.Ed.2d 346 (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 "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 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).

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. §...