Commercial Litigation and Arbitration

RICO — § 1962(d) Requires Conspiracy to Violate RICO, Not Merely Conspiracy to Commit Predicate Acts

Zavala v. Wal-Mart Stores, Inc., 2012 U.S. App. LEXIS 16610 (3d Cir. Aug. 9, 2012):

This suit was brought in the U.S. District Court for the District of New Jersey by Wal-Mart cleaning crew members who are seeking compensation for unpaid overtime and certification of a collective action under the Fair Labor Standards Act (FLSA), civil damages under RICO, and damages for false imprisonment. The workers -- illegal immigrants who took jobs with contractors and subcontractors Wal-Mart engaged to clean its stores -- allege: (1) Wal-Mart had hiring and firing authority over them and closely directed their actions such that Wal-Mart was their employer under the FLSA; (2) Wal-Mart took part in a RICO enterprise with predicate acts of transporting illegal immigrants, harboring illegal immigrants, encouraging illegal immigration, conspiracy to commit money laundering, and involuntary servitude; (3) Wal-Mart's practice of locking some stores at night and on weekends -- without always having a manager available with a key -- constituted false imprisonment.

Over the course of eight years and a minimum of four opinions, the District Court rejected final certification of an FLSA class, rejected the RICO claim on several grounds, and rejected the false imprisonment claim on the merits. We will affirm. ***


Plaintiffs allege that Wal-Mart paid its contractors with full knowledge that the contractors were hiring illegal immigrants to work in Wal-Mart's stores. Plaintiffs support this contention with further allegations that two senior Wal-Mart executives made comments that could be understood as acknowledging that the contractors had hired and would continue to hire illegal immigrants. In addition, Plaintiffs allege that Wal-Mart managers and executives were regularly informed that their contractors were employing illegal immigrants.

In support of their RICO transporting predicate, Plaintiffs allege that contractors would sometimes pick workers up from the airport and transport them across state lines for work. They also allege that when a work crew was arrested by federal authorities, fired / ejected by the store manager, or otherwise unavailable to work, another work crew would be brought in within hours, often from out of state. In support of their RICO harboring predicate, Plaintiffs allege at least one instance in which work crews were permitted to sleep in the store and keep their personal belongings there with the knowledge of store management. In support of their RICO encouraging predicate, Plaintiffs allege that contractors advertised for Wal-Mart cleaning jobs in the Czech Republic and elsewhere. In support of their RICO involuntary servitude predicate, Plaintiffs allege that they were coerced into working by threats to report their immigration status to authorities. Plaintiffs also use the facts supporting their false imprisonment claims to support their involuntary servitude claims. Those facts will be discussed below.

The record indicates that Plaintiffs did not work exclusively for Wal-Mart, nor did Wal-Mart hire its cleaners exclusively from the pool of illegal immigrants it allegedly transported, harbored, and encouraged. For example, documents and deposition testimony provided by Plaintiffs demonstrate that they held a variety of jobs, including work at a Marriott hotel, work at a movie theater, and work remodeling homes. And the record indicates that Wal-Mart often used store associates (regular, non-contract employees) to clean its stores.

1. Pleading of the RICO Conspiracy Claim

In addition to their RICO claim, Plaintiffs also claim conspiracy to violate RICO under 18 U.S.C. § 1962(d) ("It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section."). RICO conspiracy is not a mere conspiracy to commit the underlying predicate acts. It is a conspiracy to violate RICO — that is, to conduct or participate in the activities of a corrupt enterprise. See Salinas v. United States, 522 U.S. 52, 62 (1997) ("Before turning to RICO's conspiracy provision, we note the substantive RICO offense, which was the goal of the conspiracy[.]" (emphasis added)); Banks v. Wolk, 918 F.2d 418, 421 (3d Cir. 1990) ("[A] defendant can be liable under RICO's conspiracy provision for agreeing to the commission of a pattern of racketeering activity." (emphasis added)); United States v. Elliott, 571 F.2d 880, 902 (5th Cir. 1978) ("[T]he object of a RICO conspiracy is to violate a substantive RICO provision here, to conduct or participate in the affairs of an enterprise through a pattern of racketeering activity and not merely to commit each of the predicate crimes necessary to demonstrate a pattern of racketeering activity."). Plaintiffs fail to plead facts supporting a conclusion that this was the object of the alleged conspiracy. Accordingly, the dismissal of Plaintiffs' claim under Section 1962(d) was not error. It is an entirely separate question whether Plaintiffs allege a conspiracy to commit money laundering or immigration violations, which would then constitute predicate acts for a traditional RICO claim under 18 U.S.C. § 1962(c). We will turn to that contention later in this opinion.

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