InsideCounsel » June 2008
County Can’t Sue Employers of Illegal Aliens
The recent crackdown on illegal aliens has left companies coast-to-coast reeling from new laws, criminal investigations and lawsuits that target the hiring of undocumented workers.
But the news isn’t all bad for employers. Before a closely watched test case could go to trial, the 9th Circuit threw it out, thus deterring a potential flood of litigation against American business.
The court ruled that municipalities, counties and other government entities cannot use the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO) to sue employers to recover the costs of providing public safety, indigent health care and other government services to the companies’ illegally hired workers.
The appeals court rejected the bid of Canyon County, Idaho, to recover treble damages under the civil RICO provisions from four local agribusinesses the county accuses of hiring hundreds of illegal migrant workers.
The county’s suit claims that because of the undocumented workers, it shelled out millions of dollars it would not otherwise have spent on health care and law enforcement services.
But in a March 21 decision experts predict will discourage similar suits nationwide, the 9th Circuit ruled that government entities don’t have standing under RICO to sue to recover funds expended on public services for undocumented workers. Nor can government agencies prove that their increased expenditures were directly caused by illegal hiring rather than by myriad other possible causes, the court ruled.
“It is a significant victory for employers,” says Donald Benson, a Littler Mendelson shareholder.
Canyon County is the first government body to try to use RICO—originally enacted to attack criminal organizations—to recover damages for alleged illegal hiring. But with an estimated 6 million to 7 million undocumented workers composing about 5 percent of the U.S. labor force, a green light to sue from the 9th Circuit would have created a strong incentive for other local and state governments to follow suit, says Marie Yeates, counsel for one of the defendant companies, Swift Beef Co.
“Imagine all the governmental entities across the country that have significant numbers of illegal aliens in their jurisdictions,” notes Yeates, a partner with Vinson & Elkins in Houston. “Had [the plaintiff’s] notion been adopted, it could have had widespread implications.”
Brakes on Litigation
But employers can take comfort that the 9th Circuit applied the brakes on immigration-related RICO suits from governmental units by affirming the 2005 decision of the U.S. District Court for the District of Idaho to dismiss the case at the pleading stage.
