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Hire at Your Own Risk

By Megan Kinneyn | Nov. 2, 2006

Law Office Management

Nov. 2, 2006

Hire at Your Own Risk

Illegal immigration may be one of the hottest issues around. But what happens when a lawyer starts going after the companies that hire undocumented workers? By Nina Schuyler

By Nina Schuyler
      An Orange County attorney devises a new way to attack companies that illegally employ workers.
      While members of Congress continue to contemplate immigration reform legislation, lawyers in California are zeroing in on an existing law—the state's antitrust law—to help companies go after competitors that hire undocumented workers. It's a novel strategy, and if successful it could have a nationwide impact because many other states have similar statutes.
      One suit has already been filed in Kern County—pitting Santa Monica based Global Horizons, a temporary-employment agency that supplies farmworkers, against Munger Brothers, Ayala Agricultural Services, and J&A Contractors. Attorney David Klehm, a sole practitioner in Santa Ana, represents Global Horizons. He alleges that Munger Brothers, a commercial farmer, breached its contract when it reneged on an agreement for his client to provide blueberry pickers and instead hired undocumented workers from Ayala Agricultural Services and J&A Contractors. Klehm alleges that the defendants engaged in an illegal trust to restrict trade and conspired to restrain commerce and lessen competition by using illegal immigrant labor, in violation of California wage and hour laws. The lawsuit also claims that Ayala and J&A intended to disrupt the previous relationship between Global and Munger Brothers by offering Munger undocumented farm laborers, who would work for much less than the approximate $14 per hour that Global pays its laborers. Klehm is asking for injunctive relief, and treble and punitive damages.
      The case represents a significant departure from past lawsuits, which have relied on the federal Racketeering Influenced and Corrupt Organizations Act (RICO) to obtain damages from employers who hire undocumented workers. "RICO is complicated," says Michael Hethmon, general counsel of the Immigration Reform Law Institute, the public law affiliate of the Federation for American Immigration Reform (FAIR), which has provided both legal advice and financial support to Klehm for this case. "You have to prove both the commission of the underlying predicate crime and all the elements of the RICO statute." (The most successful RICO case has been Mendoza v. Zirkle Fruit Company. In January, Zirkle agreed to pay a $1.3 million settlement.) But, Hethmon adds, "if you combine statutory and tort claims as Klehm is doing, you can obtain almost the same level of financial and injunctive remedies as RICO, without having to deal with the problems of the federal statute."
      "What Klehm is doing is brilliant," says Jim Gilchrist, who in 2004 founded the Minuteman Project in California. That organization, best known for deploying its members along the U.S.-Mexican border to counter illegal crossings, recently has also gotten into the business of reporting the names of employers hiring undocumented workers to the local offices of the Immigration and Customs Enforcement.
      In addition to representing Global Horizons, Klehm is planning to file other suits. Moreover, he's considering using the state's Unfair Competition Law (UCL) in situations where no labor contractors are involved. And he's received hundreds of emails from attorneys across the country either offering their services or asking him for help in filing their own UCL suits.
      "I'm representing businesses that can show actual monetary damages—loss of a contract bid, loss of customers, loss of profits—because of the defendants' illegal hiring practices," Klehm says, adding: "What could be more ideal than to have a labor pool that never asks for a raise or overtime pay or an extra week off? The problem is, it's illegal."

Megan Kinneyn

Daily Journal Staff Writer

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