Opinion ID: 76990
Heading Depth: 2
Heading Rank: 4

Heading: By Reason Of the Substantive RICO Violations

Text: 32 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, whereby the wrongful conduct is shown to be a substantial cause of the alleged injury and the causal connection is foreseeable and not speculative. 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 and Co., 341 F.3d 1292, 1307 (11th Cir.2003), cert. denied, 541 U.S. 1037, 124 S.Ct. 2094, 158 L.Ed.2d 723 (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 standing requirements of RICO); see also Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268-69, 112 S.Ct. 1311, 1318, 117 L.Ed.2d 532 (1992) (stating in a RICO case that a plaintiff who complain[s] of harm flowing merely from the misfortunes visited upon a third person by the defendant's acts was generally said to stand at too remote a distance to recover (citations omitted)). Despite some significant overlap, we address the proximate cause and standing concepts separately. 4 33 (i) Proximate Cause 34 It is well-established that RICO plaintiffs must prove proximate causation in order to recover. Cox, 17 F.3d at 1399 (citations omitted). A proximate cause is not, however, the same thing as a sole cause. Instead, a factor is a proximate cause if it is a substantial factor in the sequence of responsible causation. Id. (internal quotation marks and citation omitted). 35 In this case, the plaintiffs have alleged sufficient proximate cause to withstand defendant Mohawk's motion to dismiss. 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. 36 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 properly alleged proximate cause. According to the complaint, Mohawk's widespread scheme of hiring and harboring of illegal workers has the purpose and direct result of depressing the wages paid to the plaintiffs. This is all that is needed to establish proximate cause. 37 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. 38 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 proceedings it could not conclude that there was no likelihood of success on the merits. Trollinger, 370 F.3d at 619. The Sixth Circuit explained that it remained possible that the legal-worker plaintiffs might prove the following allegations in their complaint: 39 (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. 40 One other circuit has reached the same result on somewhat similar facts ... Mendoza .... Id. . 5 41 Although the plaintiffs in this case may not ultimately satisfy the proximate-cause requirement, we conclude it remains possible that plaintiffs may prove their allegations, and we cannot say at this Rule 12(b)(6) stage that there is no possibility of such proof. Consequently, we join the Sixth and Ninth Circuits in concluding that employees such as the ones in this case have alleged sufficient proximate cause to proceed with their RICO claims. 42 (ii) Statutory Standing 43 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 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 RICO standing if he shows a causal connection between his injury and a predicate act). 6 Thus, we must evaluate whether the plaintiffs' injury is sufficiently direct to give plaintiffs standing to sue for Mohawk's alleged RICO violations. 44 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 615-618; Mendoza, 301 F.3d at 1170. The Ninth Circuit's Mendoza decision is particularly well-reasoned and instructive on the statutory standing issue. 45 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: 46 The documented employees here do not complain of a passed-on harm. They allege that the scheme had the purpose and direct result of 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. 47 ... 48 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. 49 Id. (internal citations omitted). The Ninth Circuit further stated that 50 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. 51 Id. at 1171. 52 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 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.