Eleventh Circuit Affirms Dismissal Of RICO Claims

Is there a statute with a better acronym than RICO?

The Racketeer Influenced and Corrupt Organizations Act, apart from its great acronym, has been both a great success and a tool for misuse. We don't often see RICO claims in the employment context, let alone employment class actions, and we can't resist commenting on a recent Eleventh Circuit case addressing a claim that an employer violated RICO by depressing wages though the hiring of illegal aliens.

First, a history lesson. RICO was passed to combat organized crime and, more particularly, the intersection of organized criminal activity and legitimate businesses. The key to understanding RICO is that intersection, and the use of what it describes as "a pattern of racketeering activity" to acquire or run a legitimate business or to laundry money.

Still too abstract? There are four flavors. Think about the stereotypical mob and we'll use the waste removal business as an example. If they go around and acquire all the local small trash hauling companies through subtle or less subtle threats that bad things might happen if they don't sell, that might very well fit within RICO's definition of "acquiring" an enterprise through a pattern of racketeering activity. Once they acquire it, if they go around telling others that unless they use their garbage business, as opposed to someone else's, something bad might happen, then they fit within RICO's definition of conducting the affairs of an enterprise through a pattern of racketeering activity. If they launder money through the business, then they are "investing the proceeds of a pattern of racketeering activity." Lastly, like many statutes, they can also "conspire" to do any of the above.

RICO was an early success when applied to genuine organized crime and has been credited with many successes. In the 1980s, however, plaintiffs' attorneys began to try to use RICO in routine business disputes. This effort was aided by RICO's deliberately broad definition of the so-called "predicate acts," the criminal actions used to exploit or dominate legitimate business. These included mail fraud (basically a fraud where the U.S. mails are used) or wire fraud (once the telephone and faxes, and now the internet).

Courts quickly became fed up with the misuse of the statute in garden variety business disputes and particularly in the late '80s and early '90s is was not uncommon to see courts with standing "RICO" orders that required explicit details regarding the...