Class Action Defense Cases–Williams v. Mohawk Industries: Eleventh Circuit Reverses Denial Of Class Action Treatment Of RICO Complaint And Remands For Further Consideration Of Class Action Certification

Jun 3, 2009 | By: Michael J. Hassen

Class Action Complaint Alleging Violations of State and Federal RICO laws based on Employer’s Conspiracy to Hire Illegal Workers and Depress Wages of Legal Workers Satisfied Rule 23(a)’s Commonality and Typicality Class Action Requirements, and Requires Further Analysis by District Court as to Whether Rule 23(b)(3)’s Class Action Requirements had been Met Eleventh Circuit Holds

Plaintiffs filed a class action against their employer, Mohawk Industries, alleging labor law violations; specifically, the class action complaint asserted that defendant conspired with various temporary employment agencies to hire illegal aliens and depress wages. Williams v. Mohawk Industries, Inc., ___ F.3d ___ (11th Cir. May 28, 2009) [Slip Opn., at 2-3]. According to the allegations underlying the class action, defendant’s activities violated state and federal racketeering laws, and defendant was “unjustly enriched by its criminal activities,” id., at 3. Defense attorneys moved to dismiss the class action, ultimately resulting in a circuit court opinion that held the class action’s unjust enrichment claims failed but the class actions state and federal racketeering claims survived. Id., at 3-4. Plaintiffs’ lawyers moved to certify the litigation as a class action, id., at 5; the district court denied class action treatment because it found that the commonality and typicality requirements for class action certification had not been met, id., at 7. The district court also denied plaintiffs’ motion because it found that Rule 23(b)’s requirements for class action certification had not been met. See id., at 8-9. Plaintiffs’ appealed and the Eleventh Circuit reversed.

In denying class action certification, the district court found that commonality did not exist because defendant’s operations were “extremely decentralized,” contradicting the idea of “one grand conspiracy to employ illegal workers.” Williams, at 8. Also, plaintiffs claims were not typical because one of them never worked at a facility that used with temporary workers and because each of them “worked at only a handful” of defendant’s locations. Id. As for Rule 23(b)(2), the federal court found that the prayer for monetary relief was not merely incidental to their demand for injunctive relief, id., and that Rule 23(b)(3) had not been met because common issues did not predominate and because a class action was not the superior means of redress, in part because class action treatment would present an “unmanageable number of individual legal and factual issues,” id., at 8-9.

The Eleventh Circuit reversed. First, it concluded that commonality existed because the putative class action presented “two overarching questions that are common to all members of the class” – whether defendant violated the federal RICO statute, and whether defendant violated the state RICO statute. Williams, at 11. Each member of the class would have to prove the same common elements of these statutes in order to prevail on these claims, id., at 12. Similarly, plaintiffs’ claims were typical of other members of the putative class “because the claims are based on the same legal theory,” id., at 14-15. More specifically, the Circuit Court held at page 15, “Because the employees’ claim is that the hiring of illegal aliens by Mohawk depressed wages of all legal hourly workers regardless of location, whether the two class representatives worked at a few locations is irrelevant.” And finally, the Eleventh Circuit found that “[t]he district court failed to conduct a rigorous analysis of predominance and superiority,” relying instead on its “erroneous determination about a lack of common issues.” Id., at 18-19. Accordingly, the Circuit Court reversed the district court order denying class action treatment, and remanded “for the district court to conduct a pragmatic assessment of whether common issues predominate over individual issues and whether a class action is superior to other forms of relief under Rule 23(b)(3).” Id., at 19.

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