Metropolitan News-Enterprise


Monday, March 24, 2008


Page 1


Court Rejects RICO Suit Over Hiring of Illegal Aliens




Public officials cannot use the federal Racketeer Influenced and Corrupt Organizations Act to sue employers of illegal aliens to recover the costs of public services provided to undocumented immigrants, the Ninth U.S. Circuit Court of Appeals ruled Friday.

The court affirmed an order by U.S. District Judge Edward J. Lodge of the District of Idaho, who dismissed Canyon County’s suit against several agribusiness companies accused by the county of hiring undocumented workers. The county claimed that the companies and the labor contractors they worked with knew the workers had no legal right to work in the United States.

The county also sued the former director of a social services agency, claiming that he and his subordinates fraudulently assisted undocumented aliens in applying for public benefits for which they were not eligible.

The county sought to recover “millions of dollars for health care services and criminal justice services for the illegal immigrants.”

Lodge said the county lacked standing under RICO, which says that a plaintiff must have been “injured in his business or property” to recover damages.

Senior Judge A. Wallace Tashima, writing for the Ninth Circuit, said the district judge was correct. The county did not allege injury to business or property within the meaning of the RICO Act, Tashima said, nor could it prove that its alleged losses were caused by the conduct of the employers.

Government expenditures, Tashima explained, do not ordinarily qualify as injury to property.

A public entity may sue if it has been overcharged in a commercial transaction, the judge acknowledged. “But the law commonly distinguishes between the status of a governmental entity acting to enforce the laws or promote the general welfare and that of a governmental entity acting as a consumer or other type of market participant,” Tashima said.

Nor does the cost of public services constitute injury to property, Tashima wrote, since the county has no “property interest” in the services it provides to the general public. He cited Hawaii v. Standard Oil Co., 405 U.S. 251 (1972), in which the court held that the state could not sue under the Clayton Act, which has similar language limiting the types of injuries for which damages are recoverable, for generalized injury to its economy and loss of tax revenue resulting from alleged monopolization by petroleum suppliers.

The judge went on to say that the county’s claimed injury was “speculative in the extreme” because it could not show with any certainty how much money it would have saved had the corporate defendants hired legal workers instead of the allegedly illegal ones.

Tashima cited Anza v. Ideal Steel Supply Corp., 126 S. Ct. 1991 (2006), in which the high court said that a business could not recover RICO damages from a competitor who allegedly underpaid sales taxes, in part because the court would have to speculate as to how much this unfair method of competition cost the plaintiff.

“Here, just as in Anza, the cause of the plaintiff’s asserted harms is a set of actions (increased demand by people within Canyon County for public health care and law enforcement services) entirely distinct from the alleged RICO violation (the defendants’ knowing hiring of undocumented workers),” the judge wrote. The asserted link between the two, Tashima said, “is far too attenuated.”

Anza similarly bars the claim against Albert Pacheco, the former director of the Idaho Migrant Council, Tashima said.

The judge explained:

“The causal chain between the RICO violation and the plaintiff’s harm is dubious for any number of reasons: for example, the immigrants might have secured public housing without Pacheco’s staff’s assistance, and the immigrants might have remained in the County even without being able to occupy public housing,” the judge wrote. “It is even more attenuated to postulate that having the benefit of public housing made the immigrants more prone to commit crimes, require health care, or otherwise increase their use of County services. Given the speculative nature of the causal links between the alleged harm and Pacheco’s actions, a court attempting to identify the specific portion of the County’s financial loss caused by Pacheco’s actions would be sorely pressed to do so.”

Senior Judge William C. Canby Jr. and Judge Consuelo Callahan concurred in the opinion.

The case is Canyon County v. Syngenta Seeds, Inc.,  06-35112.


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