Mohawk Industries’ recent $18 million settlement to end a lawsuit brought by current and former employees accusing it of hiring illegal workers probably will result in similar filings across the country, lawyers say.
Such lawsuits are particularly likely in states with large immigrant populations such as Georgia, where immigration remains a contentious issue, they say.
Labor-intensive industries such as agriculture, poultry processing and manufacturing -- all large parts of Georgia’s economy outside metro Atlanta -- could be the key targets.
“It could bring about more lawsuits in industries that have a lot of illegal workers,” said Howard W. Foster, a Chicago-based attorney and one of the lawyers representing the class of 48,000 former and current Mohawk employees. “I’m certainly doing more. We’ve been asked to do dozens of lawsuits across the country.”
Still, some legal experts argue that while more lawsuits could come as a result, they could be harder to win because of a U.S. Supreme Court ruling last year that raised the benchmark for plaintiffs in proving the allegations they make in lawsuits.
The lawsuit against Calhoun-based Mohawk drew national headlines because attorneys for the plaintiffs went after the carpet and flooring giant using the federal and Georgia Racketeer Influenced and Corrupt Organizations acts.
The key allegation was that company officials knowingly sought and hired illegal immigrants, resulting in depressed wages for workers who were here legally.
Traditionally, RICO laws had been used to go after organized crime. Then prosecutors began using them in lawsuits against tobacco companies. And at the start of the decade lawyers began using state and federal RICO statutes in labor-related lawsuits against large employers.
Using RICO “was an interesting strategy,” said Jessica Gabel, an assistant law professor at Georgia State University. “Because federal employment laws are limited to wrongful termination or bad practices, they were really trying to capture what they perceived to be this corrupt practice within Mohawk that we can get cheap labor by hiring illegal workers.”
The Mohawk case was noteworthy for another reason, she said: Its outcome was different than similar cases filed elsewhere in the country and suggests that certain courts, particularly those in U.S. border states and the South, tend to be more conservative on issues like immigration.
That underscores the impact that the location of a filing could have in the eventual outcome of future lawsuits.
Indeed, in an earlier suit against American meat packing company IBP Inc., employees argued IBP violated RICO by knowingly recruiting and hiring illegal workers at its Joslin, Ill., meat-processing facility, resulting in lower wages for legal employees. But the U.S. Court of Appeals for the 7th Circuit, which includes Illinois, Wisconsin and Indiana, dismissed the case, ruling it didn’t meet the standard for a RICO violation.
The Mohawk case went through a round of appeals, too, but in the 11th Circuit, which includes Georgia, Florida and Alabama, the judges signaled they were more inclined to agree with the depressed wages argument.
Mohawk's Washington attorney in the case, Juan P. Morillo, did not return telephone calls and an e-mail seeking comment.
Two of the four original plaintiffs in the case, Shirley Williams and Lora Sisson, died before the settlement. A third, Bonnie Jones, remains a Mohawk employee and the fourth, Gale Pelfrey, no longer works for the company.
The settlement terms prohibit Jones and Pelfrey from discussing the case.
In announcing the settlement on April 9, the company admitted to no wrongdoing in the case, as is common practice in such settlements.
But Mohawk said it has been committed to following the law.
"Mohawk has always trained its employees to comply with the immigration and workplace laws, and this settlement affirms the company's commitment to a continued culture of compliance," Morillo said in a company statement.
Mohawk also agreed to implement training procedures and best practices for verifying employment eligibility.
That Mohawk's insurer, Zurich American Insurance Co., agreed to pay most of the $18 million suggests the insurer may not have found cause to believe Mohawk did anything wrong, said Gabel, the Georgia State law professor. Such policies generally have clauses that allow an insurer to deny coverage on a judgment if it can prove the company knew it did something wrong, she said.
After six years, Mohawk may have decided it would be cheaper to settle the case than to continue litigation, Gabel said.
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