Supreme Court Hears Mohawk/RICO Detail

Washington, DC, April 27, 2006--Yesterday the Supreme Court heard the Mohawk Industries case, probing whether federal racketeering laws, originally enacted to combat organized crime, can apply to corporations alleged to have engaged in a conspiracy, according to a report from Dow Jones. According to the news service, extending civil racketeering lawsuits to companies could have a significant impact on the types of lawsuits businesses face. Several of the justices were resistant to the idea that Congress meant to include companies when it passed the Racketeer Influenced and Corrupt Organizations, or RICO, Act. The appeal before the court tests whether Mohawk can face a civil racketeering lawsuit brought by employees alleging the Calhoun, Ga., company hired illegal immigrants with the aid of an outside personnel company. Attorneys for the employees want the RICO statute to apply, giving them the chance to win bigger penalties against Mohawk Industries. The company argued that applying racketeering laws to it in these circumstances was an inappropriately broad interpretation of RICO. "There are enormous penalties that are imposed," said Carter Phillips, a Washington attorney who represented Mohawk Industries. "Certainly there is no reason to take those terms and 'Rico-ize' corporate activity." Chief Justice John Roberts Jr. and at least three other justices appeared resistant to applying racketeering laws more broadly to corporate activities. "I'm trying to give you a chance to explain why this looks like RICO rather than just a criminal conspiracy case," Roberts said, pressing Howard Foster, a Chicago attorney representing Mohawk employees. Justice Antonin Scalia, addressing Malcolm Stewart from the U.S. Solicitor General's office, noted that the statute "is at least ambiguous" but added "we should not give the government license to ride closer herd than what is clear in the statute." At least two justices--Justice Ruth Bader Ginsburg and Scalia--wondered whether the case had reached the Supreme Court prematurely and whether the justices should reach conclusions on all the legal issues presented by the case. The U.S. government appeared before the high court to argue in favor of a broader reading of RICO laws, saying the text of the statute leaves open the possibility that corporations working with a third-party entity could be engaged in a conspiracy covered by federal racketeering laws. The appeal before the Supreme Court will decide whether the employee lawsuit can continue in federal court against Mohawk Industries. The 11th U.S. Circuit Court of Appeals in Atlanta ruled the case could proceed in federal court. In court filings, Mohawk employees have argued the company has hired workers "that it knew or had reason to know were not authorized to work in the U.S," by hiring individuals who had false worker documentation. The lawsuit also alleges Mohawk has actively recruited undocumented aliens to work for it. The case is Mohawk Industries v. Williams, 05-465. A decision is expected by July 2006.