On 6/5/06, the Supreme Court, in a one-paragraph order, dismissed as improvidently granted a writ of certiorari limited to the question of whether a corporation acting with its own agents can be an “enterprise” for purposes of the RICO statute. The Court sent the case back to the Eleventh Circuit for reconsideration in light of the same day’s decision in Anza. In originally granting certiorari in Mohawk, the Court had declined to review a proximate causation issue similar to the question presented in Anza. The causation issue is critical, since the claim in Mohawk was by employees who alleged that their wages were depressed by the alleged hiring of illegal aliens. Lower courts may determine that wages are affected by too many factors to identify one as sufficient to show causation of injury.
On remand, the 11th Circuit ruled on 9/27/2006, that "it has long been recognized that hiring illegal workers on substandard wage terms depresses the wage scales of legal workers," and allowed the case to proceed to trial.
The NAM filed an amicus brief in this case on the enterprise issue. There is a circuit split over whether a corporation conducts or participates in the affairs of a distinct “enterprise,” within the meaning of the RICO statute, when the only members of the alleged enterprise are the corporation itself and third parties paid by the corporation to conduct business on its behalf. The Supreme Court has previously established that a RICO defendant must have participated in or conducted the affairs of a distinct enterprise, and not simply the defendant’s own affairs, in order to be found liable under RICO. The Eleventh Circuit held that a corporation and third-party employment agencies and other recruiters are “distinct entities” with a “common purpose,” and can qualify as an “enterprise” under RICO. The Eleventh Circuit’s definition of a RICO enterprise accords with that of the Sixth Circuit and conflicts with that of the Second, Third, and Seventh Circuits, which have held instead that third parties that simply perform corporate tasks are, like corporate employees, indistinct from the corporation for RICO purposes; to hold otherwise would discourage corporations from outsourcing corporate functions to third parties. This issue continues to be important to every business that pays third parties to perform corporate functions.
Decision Below: 411 F.3d 1252 (11th Cir. 2005).