Mendoza v. Zirkle Fruit Co.: 9th Circuit Allows Work-Authorized Employees to Proceed with RICO Lawsuit...

IMMIGRANTS & EMPLOYMENT

Immigrants' Employment Rights and Remedies

MENDOZA ET AL., V. ZIRKLE FRUIT CO., ET AL.: 9TH CIRCUIT ALLOWS WORK-AUTHORIZED EMPLOYEES TO PROCEED WITH RICO LAWSUIT AGAINST AGRICULTURAL EMPLOYERS
Immigrants' Rights Update, Vol. 16, No. 6, October 21, 2002

In the second case of this type brought in federal court, the U.S. Court of Appeals for the Ninth Circuit has reversed a district court decision dismissing a class action by lawfully documented farm workers against their agricultural employers under the Racketeer Influenced and Corrupt Organizations Act (RICO). The workers alleged that the growers depressed their wages by conspiring to hire undocumented workers at below-market wages through an "illegal immigrant hiring scheme."

According to the documented workers, the two growers named in the suit knowingly hired undocumented workers because they were willing to accept significantly lower wages due to their economic situation and reluctance to assert their workplace rights. The plaintiffs claimed that the defendants hired undocumented workers—who can easily be exploited—in order to depress all workers' wages. The plaintiffs also pointed to investigations by the Immigration and Naturalization Service finding that half of the growers' workforce is undocumented. They further alleged that the defendants have been the target of INS raids and worksite enforcement operations. The complaint also alleged that the defendants used a temporary agency, the Selective Employment Agency, Inc., as a front to knowingly hire the undocumented workers and then "loan" them to the growers. The district court found that the plaintiffs lacked standing to bring the RICO suit and that it lacked jurisdiction over the temporary agency.

In reversing the district court's decision, the Ninth Circuit stated that in order to bring a RICO claim, an individual must show that his or her business or property were injured because of the defendant's RICO violations. In the present case, the plaintiffs argued that they suffered injury to their property-namely, their wages-because of the growers' scheme to hire undocumented workers to depress the plaintiffs' wages. The court relied heavily on two cases that were decided after the district court's decision to dismiss the complaint: Knevelbaard Dairies v. Kraft Foods, Inc., 232 F. 3d 979 (9th Cir. 2000) (holding that the plaintiffs, who were milk producers, had standing to sue defendant cheese producers who had illegally fixed the price of cheese, thereby artificially lowering the price of milk), and Commercial Cleaning Servs. v. Colin Serv. Sys., Inc., 271 F.3d 374 (2d Cir. 2001) (holding that documented workers had standing to sue under RICO for allegations that the defendants hired undocumented workers in order to undercut their business rivals and gain an economic advantage).

The court focused on three factors to determine whether the alleged actions were the "cause" of injury to the plaintiffs' property. First, the court considered whether there were other, more direct victims of the alleged wrongful conduct who could bring a lawsuit against the defendants. The court found that these plaintiffs were indeed direct victims of the alleged wrongdoing and that they were the appropriate parties to bring the suit. "[U]ndocumented workers cannot 'be counted on to bring suit for the law's vindication,'" it noted.

Second, the court assessed whether it would be difficult to ascertain the amount of damages attributable to the defendants' wrongful actions, distinguishing between the uncertainty of the fact of damage and the uncertainty in the amount of the damage. Specifically, the court found that the plaintiffs had stated a plausible claim that their wages were indeed lowered because of the defendants' scheme, and that they should be given a chance to make their case by presenting expert testimony and other relevant evidence.

Third, the Ninth Circuit considered whether complicated rules would have to be adopted to apportion the damages in order to avoid the risk of multiple recoveries against defendants. It determined that there did not seem to be such a risk, since no other potential plaintiffs had been identified and the defendants did not appear to argue that such risk exists. Finally, because the plaintiffs had filed suit against the temporary employment agency in state court, the Ninth Circuit remanded the case. The remand gives the plaintiffs the chance to show that the allegations of wrongdoing formulated against the agency under state conspiracy theories are part of the same case as the federal RICO claims, and that they arose out of a "common nucleus of operative fact." With such a showing, the federal court could then decide whether it has supplemental jurisdiction over claims against that defendant.

Mendoza et al., v. Zirkle Fruit Co., et al., 301 F. 3d 1163 (9th Cir. 2002).