Masters assignment 602

FAIR LABOR FRAUD: THE PECULIAR INTERPLAY OF CIVIL RICO AND THE FEDERAL MINIMUM WAGE ACT

Jam^s W. Crooks*'

This Note examines the interaction between the Fair Labor Standards Act (FLSA), which guarantees a minimum wage and over- time pay to most categories of employees, and the civil remsdies of the Racketeer Influenced and Corrupt Organizations Act (RICO). In the past few years, plaintiffs have argued that employers commit mail fraud by mailing inadequate paychecks to employees, a predicate act that these plaintiffs argue creates civil RICO liability. Most courts confronted with these FLSA-based RICO claims have dismissed them, arguing that the FLSA's detailed remedial scheme precludes a RICO remedy for this con- duct. This Note examines the text and history of the two statutes, as well as case law on analogous interactions between RICO, the FLSA, and other employment laws, and determines that courts should not categori- cally dismiss FLSA-based RICO claims. Rather, judges should examine the conduct underlying the claims in each case to determine whether the defendant in fact committed mail fraud. If so, the judge should allow the claim to proceed as a RICO action, as nothing in either statute pre- cludes such a result. By focusing on the conduct underlying the claim, judges can best carry out Congress's intent to guarantee a fair wage for a fair day's work.

INTRODUCTION

Croup lawsuits brought by underpaid and overworked employees are the most common type of group action brought in federal court, ac- counting for nearly twenty percent of all such lawsuits.' These suits focus primarily on violations of minimum wage and overtime laws prescribed by statute.^ Since its passage in 1938, the Fair Labor Standards Act

* J.D. Candidate 2013, Columbia Law School. 1. Marc H. Harwell & Mary DeCamp, Class Action Litigation Issues in a Wage and

Hour Discrimination Context, 58 Fed'n Def & Corp. Couns. Q. 269, 270 (2008). 2. This Note focuses on suits under the Fair Labor Standards Act See infra note 3.

However, suits are often brought (in both federal and state court) under state minimum wage statutes. For examples of state wage statutes that create a private right of action for employees, see Conn. Gen. Stat Ann. §§ 31-58 to 31-76m (West 2011); IUinois Minimum Wage Law, 820 111. Gomp. Stat Ann. 105/1-/15 (West 2009); Pennsylvania Wage Payment & Collection Law, 43 Pa. Cons. Stat Ann. §§ 260.1-.45 (West 2009). For examples of law- suits under these respective state laws, see Neary v. Metro. Prop. & Cas. Ins. Co., 472 F. Supp. 2d 247 (D. Conn. 2007); Mitchell v. JCG Indus., 792 F. Supp. 2d 1005 (N.D. 111. 2011); De Asencio v. Tyson Foods, Inc., 500 F.3d 361 (3d Gir. 2007).

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(FLSA)* has set these wage and hour standards at the federal level. Despite the ubiquity of such lawsuits, however, the FLSA's substan-

dve guarantees are chronically underenforced.* One plausible explana- don for this undexenforcement is that FLSA plaintiffs are not permitted to sue in a typical class acdon under Federal Rule of Civil Procedure 23, which allows individuals' rights to be lidgated in a class acdon without their actual consent^ if other requirements are met.® By contrast, the stat- utory language of the FLSA has an explicit "opt-in" requirement: In or- der to join a group acdon, a putadve plaindff must give her "consent in

3. Pub. L. No. 75-718, 52 Stat 1060 (1938) (codified as amended at 29 U.S.C. §§ 201- 219).

4. See Craig Becker & Paul Strauss, Represendng Low-Wage Workers in the Absence of a Class: The Peculiar Case of Secdon 16 of the Fair Labor Standards Act and the Un- derenforcement of Minimum Labor Standards, 92 Minn. L. Rev. 1317, 1318 (2008) (not- ing "shocking rates cf noncompliance vnth [FLSA], pardcularly in low-wage industries such as the Janitorial, food service, garment, and hospitality industries"); David Weil & Amanda Pyles, Why Complain? Complaints, Compliance, and the Problem of Enforce- ment in die U.S. Workplace, 27 Comp. Lab. L. & Pol'y J. 59, 62 (2005) (finding odds of employer being inspected by Department of Labor for wage violadons to be well below . 1 % in a given year); s-ee also Nat'l Emp t Law Project Holding the Wage Floor: Enforce- ment of Wage and Hour Standards for Low-Wage Workers in an Era of Government Inac- don and Employer Ur.accountability 3-7 (2006), available at hup://nelp.3cdn.net/95b39 fc0al2a8d8a34_iwm6bihbv2.pdf (on file with the Columbia Law Review) (documendng la- bor violadons in certain industries, including esdmates that over 70% of garment employ- ers in Southern Galifomia and 100% of poultry processing plants are in violadon of wage and hour laws).

5. Fed. R. Civ. P. 23(c)(3) (making judgment binding on all members of class "who have not requested exclusion, and whom the court finds to be members of the class").

6. Rule 23(a) has threshold requirements that (1) the class is sc numerous that joinder of all members is impracdcable ['nu- merosity']; (2) there are quesdons of law or fact common to the class ['com- monality']; (3) the claims or defenses of the representadve pardes are typical of the claims or defenses of the class ['typicality']; and (4) the representadve par- des will fairly and adequately protect the interests of the class ['adequacy'].

Fed. R. Civ. P. 23(a). Further, Rule 23(b) lays out the requirements for pardcular types of class acdons. Most class acdons for wage and hour lawsuits are maintained under Rule 23(b)(3). See Daniel C. Lopez, Note, Collecdve Confusion: FLSA Collective Acdons, Rule 23 Class Acdons, and aie Rules Enabling Act 61 Hasdngs LJ. 275, 287 n.lO6 (2009) (not- ing Rule 23(b)(3) class acdons are most common in employment law because "nearly all [acdons for recovery imder wage and hour statutes] demand exclusively monetary relief). Rule 23(b) (3) requires that "quesdons of law or fact common to members of the class predominate over any quesdons affecdng only individual members, and that a class acdon is superior to other available methods for the fair and efficient adjudicadon of the contro- versy." Fed. R. Civ. P. 23(b)(3). For a more in-depth discussion of the procedural require- ments of Rule 23 class acdons, see generally Manual for Complex Lidgadon (Fourth) § 21 (2004); 5 James Wm. Moore et al., Moore's Federal Pracdce (3d ed. 2010); Stuart T. Rossman et al., Nat'l Consumer Law Ctr., Consumer Class Acdons (7th ed. 2010); 4 William Rubenstein et al., Newberg on Class Acdons (4th ed. 2002 & Supp. 2010); 7A-7B Charies Alan Wright ei al.. Federal Pracdce and Procedure (3d ed. 2005 & Supp. 2012).

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writing."' This statutory requirement cannot be waived by a rule of proce- dure;^ thus, groups seeking recovery under the ELSA for being over- worked or underpaid cannot use Rule 23, under which a plaintiff meet- ing the Rule's requirements is considered a class member unless she opts out. ELSA plaintiffs must instead proceed in what has been termed a "col- lective action," in which each individual seeking recovery must affirma- tively opt in as required by the ELSA.̂

This opt-in requirement has a significant impact. Commentators es- timate that ELSA collective actions have seventy to eighty-five percent fewer members than would a class under Rule 23.'" The primary cause of this stark difference in class size is likely "inertia": "[N]otice received in the mail is just another piece of junk that the recipient has neither the time nor the interest to read, let alone act on."" It is likely that this same inertia leads to larger classes in Rule 23 class actions, as individuals often do not take the time or effort to opt out.'^ Whatever its cause, this inertia

7. 29 U.S.C. § 216(b) (2006). While § 216(b) is the only federal statute to explicitiy require consent in writing, see 7B Wright et al., supra note 6, § 1807, its opt-in require- ment is expressly referenced and incorporated into the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 626(b), and the Equal Pay Act (EPA), id. § 206(d)(3). Thus, suits for recovery under these statutes are similarly governed by the FLSA's collective action procedure. See generally Elizabeth K. Spahn, Resurrecting the Spurious Class: Opting-In to the Age Discrimination Employment Act and the Equal Pay Act Through tiie Fair Labor Standards Act, 71 Geo. LJ. 119, 120 (1982) (noting ADEA and EPA "were grafted onto the FLSA").

8. The Federal Rules of Civil Procedure are passed under authority delegated by Congress to the Supreme Court under the Rules Enabling Act (REA), 28 U.S.C. § 2072 (2006). The REA states that "[s]uch rules shall not abridge, enlarge, or modify any sub- stantive right." Id. § 2072 (b). Thus, Rule 23's opt-out requirements cannot be interpreted to supersede § 216(b)'s opt-in requirement with respect to suits under the FLSA. See, e.g., Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 165 (S.D.N.Y. 2008) (finding § 216(b) confers on defendants "the right to be free of the burden of representative actions . . . for violations of the FLSA" and thus may not be abrogated by Rule 23).

9. 7B Wright et al., supra note 6, § 1807 ("Collective actions under the [FLSA] are a unique species of group litigation."). The history behind the FLSA's opt-in provision is discussed infra notes 49-57 and accompanying text.

10. Matthew W. Lampe & E. Michael Rossman, Procedural Approaches for Counter- ing the Dual-Filed FLSA Collective Action and State-Law Wage Class Action, 20 Lab. Law. 311,313 (2005) [hereinafter Lampe & Rossman, Procedural Approaches] (estimating only 15% to 30% of similarly situated putative plaintiffs opt in to such collective actions); see also Becker & Strauss, supra note 4, at 1317-18 (noting practical effect of FLSA opt-in requirement is reduced class size because fewer people opt in, lowering available damages for class, and thus reducing plaintiffs' lawyers' incentive to sue).

11. Ellis V. Edward D.Jones & Co., 527 F. Supp. 2d 439, 444 (W.D. Pa. 2007) (citing Noah A. Finkel, State Wage-and-Hour Law Class Actions: The Real Wave of "FLSA" Litiga- tions?, 7 Emp. Rts. & Emp. Pol'y J. 159, 161, 174 (2003)).

12. Id. at 445. For an in-depth discussion of the importance of default rules and their so-called "stickiness" vritii respect to class actions, see Richard A. Nagareda, The Préexist- ence Principle and the Structure of the Class Action, 103 Colum. L. Rev. 149, 224 (2003) (arguing necessary action required by opt-in or opt-out rules vnll impose transaction costs the individual does not want to bear). For a discussion of this and similar economic effects

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is undoubtedly a powerful force: For similar causes of action. Rule 23 classes are much larger than the corresponding FLSA collective action groups, and they may even be "exponentially greater" and "number [] in the millions."" Because they would greatiy multiply the number of plain- tiffs in any suit—and thus the eventual damage exposure to defendants— the threat of opt-out class action lawsuits would likely be an effective de- terrent against employers violating the FLSA. Thus, in the hope of skirt- ing the FLSA's opt-in requirement, employees' lawyers have attempted to use the (much more generous) Rule 23 class action in a number of ways.''*

One such nascent strategy is to couple an FLSA suit with an allega- tion that the defendant violated the Racketeer Influenced and Corrupt Organizations Act (RICO)'^ by fraudulendy depriving employees of wages to which they were entitied under the FLSA.'® The RICO statute lists a number of extant state and federal criminal offenses and provides additional criminal and civil punishments for violations of these laws." Successful civil RICO lawsuits grant plaintiffs access to two powerful de- terrent and remunerative devices: the right to treble damages'* and ac- cess to Rule 23 of the Federal Rules of Civil Procedure—that is, an opt- out class action.'^

But the path to RICO recovery is not straightforward for the under- paid employee. The statute lists over fifty crimes as "predicate acts" that may expose a defendant to RICO liability.^" The list is exhaustive,^' and

of class actions, see generally Richard A. Posner, Economic Analysis of the Law § 21.12 (8th ed. 2011).

13. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 310 (3d Cir. 2003); see also Noah A. Finkel, State Wage-and-Hour Law Class Actions: The Real Wave of "FLSA" Litigations?, 7 Emp. Rts. & Emp. Pol'y J. 159, 161, 174 (2003) (observing Rule 23 classes may be larger than FLSA groups, but arguing Rule 23 is value-neutral).

14. For a discussion of various strategies used by plaintiffs, see infra Part II.B. 15. 18 U.S.C. §§ 1961-1968 (2006). RICO provides both civil and criminal remedies.

This Note focuses on RlCO's civil remedies, as detailed in § 1964. However, civil RICO suits still deal in criminal law: To obtain a civil remedy under RICO, a plaintiff must prove by a preponderance of the evidence that the defendant(s) engaged in criminal conduct that is prohibited by RICO's substantive provisions. The interplay of the criminal and civil aspects of RICO are detailed infra Part I.B. For a thorough treatment of civil RICO, see generally Gregory P.Joseph, Civil RICO: A Definitive Guide (2010).

16. The earliest case involving an FLSA-based RICO claim that could be found was Choimbol V. Fairfield Resorts, Inc., in which the court noted neither the parties nor its own research found any such prior cases. No. 2:05CV463, 2006 WL 2631791, at *6 (E.D. Va. Sept 11,2006).

17. See infra Part I.B (discussing RICO in more detail). 18. 18U.S.C. §1964(c). 19. While the RICO statute itself does not explicitiy mention class actions, RICO class

actions may proceed under Rule 23. See, e.g., Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 254 (1994) (RICO class action).

20. 18 U.S.C. §1961(1).

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violadon of the FLSA is not included. Thus, FLSA-based RICO claims usually run as follows: When an employer mails its employee a paycheck that it knows contains less pay per hour than required by the FLSA, it not only violates that statute but it also profits by lying (by keeping for itself money to which the employee is endded) and thus commits fraud.̂ ^ Ac- cording to plaindffs, this acdvity consdtutes mail fraud^* because mailing the paycheck was necessary to carry out the fraudulent scheme.^'' Mail fraud is listed in RICO as a predicate act̂ ^ and thus, these plaindffs ar- gue, these employers are subject to civil RICO liability.̂ ®

These clainis produce a fundamental difficulty. Congress intended RICO's civil provisions to (1) supplement its criminal sancdons to deter organizadons frorn engaging in, among other things, fraud and theft and (2) provide a remedy to persons injured by enterprises engaged in a pat- tern of criminal acdvity.^' Organizadons that fraudulendy deprive em- ployees of wages seem to fall well within the ambit of these goals. How- ever, Congress did not include the FLSA in its exhausdve list of RICO predicate acts,̂ * and thus it did not intend straightforward FLSA viola- dons to be enforced via RICO. Congress did include mail fraud in the list of RICO predicate acts, which the Supreme Court has noted brings un- der RICP's proscripdons a broad swath of conduct that Congress may

21. Id.; see also United States v. Phillip Morris USA, Inc., 566 F.3d 1095, 1115 (D.C. Cir. 2009) (noting Congress intended § 1961(1) to be exhaustive list because it used the word "means" instead of "includes").

22. See Second Amended Complaint—Class Action and Demand for Jury Trial \ 6, Cavallaro v. UMass Mem'l Health Care, Inc., No. 09-CV-40152-FDS, 2011 WL 2295023 (D. Mass. June 8, 2011), 2011 WL 585138 1 6 [hereinafter Sample Complaint] (noting "de- fendants' scheme to cheat employees out of their property and to convert the employees' property, including their wages and/or overtime pay, by misleading employees about their rights under the FLSA"); id. 1 111 ("Through the paystubs and payroll information it pro- vided to employees, [Defendant] deliberately concealed from its employees that they did not receive compensation for all the work they performed and misled them into believing they were being paid properly.").

23. 18 U.S.C. §1341. 24. Sample Complaint, supra note 22, 1 127 ("Defendants' predicate acts of mailing

the misleading payroll checks in furtherance of their Scheme constitute a pattern of con- duct unlawful pursuant to [RICO] . . . .").

25. 18 U.S.C §1961(1). 26. Of course, a plaintiff must prove more than just that the defendant committed

mail fraud and the plaintiff suffered an injury. For example, a plaintiff must also prove that her injury was proximately caused by the defendant's mailing. Holmes v. Sec. Investor Prot Corp., 503 U.S. 258, 268 (1992). For a discussion of this and odier elements of a civil RICO claim, see generally Joseph, supra note 15.

27. See Gerard E. Lynch, RIGO: The Crime of Being a Criminal, Parts I & II, 87 Colum. L. Rev. 661, (iTl-1?, (1987) [hereinafter Lynch, Parts I & II] (describing goals of RICO).

28. See 18 U.S.C § 1961(1) (defining "racketeering activity" in exhaustive list). Note also that some other labor laws are included in this list such as 29 U.S.C § 501 (c) (2006) (prohibiting embezzlement of union funds).

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not have had in mind when it wrote the statute.^^ Moreover, civil RICO's powerful remedies may be able to do more than the FLSA to deter the rampant wage and hour violations that currentiy plague the U.S. labor market.*"

This Note seeks to address this conflict and provide guidance to judges faced witii FLSA-based RICO claims. Part I reviews both the FLSA and RICO, including their statutory language, remedial structures, and legislative histories, as well as key Supreme Court decisions defining their outer limits. Part II focuses on FLSA-based RICO claims, with particular focus on the differing approaches district courts have taken to a recent spate of such suits. Specifically, Part ILA analyzes the two primary hurdles these claims face: (1) whether the mailing of a deficient paycheck may constitute mail firaud, and (2) if so, whether Congress nonetheless in- tended the FLSA to be the exclusive remedy for such underpayment. Be- cause of the novelty of FLSA-based RICO claims, in answering tiiese ques- tions many courts have looked to case law addressing similar overlap in- volving other statutes. Part II.B examines those comparator cases that district courts have relied on to dismiss FLSA-based RICO claims. While these analogous lawsuits may shed light on the conflict between the FLSA and RICO, Part II concludes by noting the limitations of such compari- sons and arguing that FLSA-based RICO claims must be addressed on their own terms.

Part n i suggests that the FLSA should not always preclude a RICO remedy for lost wages. District courts faced with FLSA-based RICO claims have suggested that the FLSA provides tiie exclusive remedy for lost or stolen wages, but this automatic preclusion collides with one of RICO's purposes: punishing fraudulent conduct. While not every FLSA violation amounts to fraud, RICO remedies should be available to plaintiffs whose wages were stolen via a scheme that would be indictable as mail fraud. Thus, courts must look at defendants' underlying conduct to determine whether fraud occurred. If it did, allowing an FLSA-based RICO claim to proceed is not contrary to either statute's language or goals. Indeed, it may be the best way to deter and punish behavior that both statutes pro- hibit.

I. T H E STATUTES, THEIR HISTORY, AND THEIR LIMITS

This Part introduces the two statutes at issue: the FLSA in Part LA and RICO in Part I.B. These sections discuss the statutory text in the con- text of the Acts' passages so as to shed light on the conduct Congress

29. See, e.g., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 500 (1985) (noting that, while inclusion of mail fraud as predicate act evidences congressional intent that RICO prohibit broad swath of activity, "RICO is evolving into something quite different from the original conception of its enactors").

30. See supra note 4 and accompanying text (discussing extent of FLSA under- enforcement).

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sought to prevent and the remedies it meant to provide for violadons of the Acts' substandve provisions. This Part also considers important case law regarding these statutes' remedies.

A. The FLSA: Guaranteeing a Fair Day's Pay for a Fair Day's Work

The text of the Fair Labor Standards Act of 1938*' makes fairly clear what Congress intended in passing the statute. The FLSA's purpose pro- vision states that two primary goals of the Act are (1) to improve the condidon of workers and (2) to reduce "unfair method[s] of comped- don in commerce" created by substandard labor condidons.*^ Congress further noted in the Act's introducdon that, in passing the FLSA, it in- tended to "correct and as rapidly as pracdcable to eliminate [detrimental labor condidons] . . . without substandally curtailing employment or earning power."**

This purpose is carried out via the substandve provisions of the Act, which provide two basic guarantees to employees: (1) a minimum wage, which ensures that employees are paid at minimum á set dollar-per-hour rate;** and (2) an overdme provision, requiring employers to pay employ- ees an increased wage (at least one-and-one-half dmes base pay) for each hour worked in excess of forty hours per week.*^ These guarantees ex- tend only to individuals who qualify as "employees,"*® which is defined by the FLSA as "any indi'vidual employed by an employer."*' This circular definidon is helped only slighdy by the definidon of "employ" as "to suf- fer or permit to work."** Several types of employees, such as agricultural

31. Pub. L. No. 75-718, 52 Stat 1060 (codified as amended at 29 U.S.C. §§ 201-219). 32. 29 U.S.C. § 202(a). The statute also notes the existence of "labor condidons detri-

mental to the maintenance of the minimum standard of living necessary for health, effi- ciency, and general well-being of workers." Id.

33. Id. §202 (b). 34. Id. § 206(a)(l). The current minimum wage for employees covered by the FLSA

is $7.25 per hour. Fair Minimum Wage Act of 2007, Pub. L. No. 110-28, § 8102, 121 Stat 112,188 (to be codified at 29 U.S.C. § 206(a)(l)).

35. 29 U.S.C. § 207(a)(l) ("[N]o employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensadon for his employment in excess of the hours above specified at a rate not less than one and one-half dmes the regular rate at which he is employed.").

36. See id. § 206 ("Every employer shall pay to each of his employees [a minimum wage]."); id. § 207 ("No employer shall employ any of his employees . . . for a workweek longer than forty hours . . . .").

37. Id. § 203(e)(l). Somewhat circularly, the Act defines "employer" as "any person acdng direcdy or indirecdy in the interest of an employer in reladon to an employee." Id. §203(d).

38. Id. § 203(g). The Supreme Court, because of this definidon, held diat the FLSA covers a broader swath of conduct than other employment statutes, which do not define the term "employ" and thus embody the common law definidon of the term. See Nadonwide Mut Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (nodng "striking breadth" of FLSA definidon of "employ" causes it to "cover some pardes who might not qualify as such

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workers, are expressly exempted by the Act.̂ " In addition to providing these "wage and hour" guarantees to eligible employees, the Act also contains an express prohibition on certain types of child labor.*" Despite subsequent amendments to the law, these core pro\isions have remained largely untouched since 1938, and thus the ELSA has always been in- tended to remedy labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.*'

To effectuate this purpose. Congress provided broad remedies, both civil and criminal, for violation of the ELSA's substantive guarantees. In cases where an employer willfully violates the minimum wage or overtime requirements, the Secretary of Labor may recommend that the Department of Justice pursue criminal penalties,*^ although such prose- cutions are rare.*^ Civil suits under tiie Act are far more common.

under a strict application of traditional agency law principles" used under other employ- ment statutes).

39. 29 U.S.C. § 213(a) (6). For the entire list of industries that are exempted from the FLSA's substantive provisions, see id. § 213(a)(l)-(17) (minimum wage exemptions); id. § 213(b)(l)-(30) (overtime exemptions).

40. See id. § 203(1) (defining "oppressive child labor" as including most forms of em- ployment for sixteen-year-olds or as occupations deemed to be "particularly hazardous" for children between ages of sixteen and eighteen); id. § 212(a) (forbidding entry into inter- state commerce aray product produced by "oppressive child labor").

41. The history surrounding the Act's passage confirms this. Three years prior, the Supreme Court in A.L.A. Schechter Poultry Corp. v. United States struck down Congress's pre- vious attempt to regulate wages in the National Industrial Relations Act of 1933 (NIRA). 295 U.S. 495, 550 (1935); see also Adkins v. Children's Hosp., 261 U.S. 525, 562 (1923) (invalidating District of Columbia's minimum wage law), overruled by W. Coast Hotel Co. V. Parrish, 300 U.S. 379 (1937). President Roosevelt publicly bemoaned this decision be- cause he had personally advocated for the wage provisions of the NIRA. John S. Forsythe, Legislative History of the Fair Labor Standards Act, 6 Law &: Contemp. Probs. 464, 464 (1939). The Court proceeded the following year to rebuke similar efforts at wage regula- tion by the states. See Morehead v. New York ex rel. Tipaldo, 298 U.S. 587, 618 (1936) (striking dovm New York wage and hour statute), overruled in part by Olsen v. Nebraska ex rel. W. Reference & Bond Ass'n, 313 U.S. 236 (1941). In tiie wake of tiie Morehead deci- sion. Democrats in Congress saw a "chance for a bold declaration." Forsythe, supra, at 464. Taking advantage of the harsh public response to these rulings, they campaigned for a constitutional amendment that would address poor working conditions and child labor. This played a major role in their landslide victory in 1936, which helped embolden President Rooseveit and congressional Democrats into introducing the infamous "Court- packing plan" on February 5, 1937. Id. at 464-65. Ultimately, the Supreme Court relented by approving state wage and hour regulation in West Coast Hotel Co. v. Parrish, hence signal- ing its acquiescence to congressional power in the realm of federal labor standards. 300 U.S. 379, 400 (1937); see also Forsythe, supra, at 465.

42. 29 U.S.C. § 2]6(a) (subjecting employers who vrillfully violate wage and hour or child labor requirements to fine of not more than $10,000, or to imprisonment for not more than six months, or to both).

43. See Lisa Morowitz, Government Contracts, Social Legislation, and Prevailing Woes: Enforcing the Davis Bacon Act, 9 In Pub. Interest 29, 35 (1989) ("A study by the [General Accounting Office] of [the Department of Labor's] Fair Labor Standards Act (FLSA) enforcement practices . . . indicates that regional directors in at least four regions

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Section 216(b) makes any employer who violates either the minimum wage or overtime provision civilly liable.'*'* Employees suing under § 216(b) may recover their lost wages—that is, what the employer should have paid them under the Act—as well as "an additional equal amount," or so-called "liquidated damages," if the violation was willi'ul.'*^ In addi- tion to these (double) damages, an employee may recover from the de- fendant reasonable attorneys' fees and the costs of litigation.'*® This gen- erous remedial structure*' is further augmented by the broad jurisdiction the statute provides: Civil actions brought under § 216(b) may be heard by "any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated."** .

Despite the generous remedial provisions provided by the Act, it also contains a key restriction relevant to the analysis of FLSA's interaction with RICO.'*^ Section 216(b) requires that any individual give her "con- sent in writing" before she be allowed to join a group action for FLSA remedies.^" For virtually every other type of claim in federal court, this is not the case: A plaintiff can bring an action on behalf of a class if she meets the standards of Federal Rule of Civil Procedure 23.^' However, this powerful litigation tooP^ is unavailable to employees seeking to re- cover wages that the FLSA guarantees them.

could not recall having filed a criminal suit under the Act in more than ten years."). For courts' treatment of criminal cases brought under the FLSA, see, for example. Meek v. United States, 136 F.2d 679, 679-80 (6th Cir. 1943) (upholding conviction under FLSA after employer fired employee who complained about possible FLSA violations) ; United States V. Ewald Iron Co., 67 F. Supp. 67, 75-76 (W.D. Ky. 1946) (acquitting criminal de- fendant due to prosecution's inability to prove sufficient "willfulness" under Act).

44. 29 U.S.C. §216(b). 45. Id. 46. Id. 47. Compared to most state wage and hour statutes, for example, the liquidated dam-

ages scheme of the FLSA provides significantly more generous relief. See Finkel, supra note 13, at 181-82; see also Pennsylvania Labor Law, 43 Pa. Cons. Stat Ann. § 260.10 (West 2009) (capping liquidated damages at 25% of "wages due, or five hundred dollars ($500), whichever is greater"); Ellis v. Edward D.Jones & Co., 527 F. Supp. 2d 439, 453 (W.D. Pa. 2007) ("[D]ue to the FLSA's more generous liquidated damages scheme, actual recovery under the state law might well be less.").

48. 29 U.S.C. §216(b). 49. See infra Part ILA (discussing how limitations on FLSA remedies relate to argu-

ments for and against use of RICO to recover for FLSA violations). 50. 29 U.S.C. §216(b). 51. For a discussion of the requirements for a class action under Federal Rule of Civil

Procedure 23, see supra note 6; see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 606-08 (1997) (discussing individual requirements in context of asbestos litigation).

52. See Posner, supra note 12, § 21.11 (discussing income and deterrent effects of class actions).

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Suits under the Act must be carried out under a unique procedure called a "collecdve acdon,"^^ rather than zs, Rule 23 class acdons. This restricdon on group acdons dates back to an amendment to the FLSA called die Portal-to-Portal Act of 1947.̂ * The Portal-to-Portal Act added important procedural restrictions to the FLSA. It limited the statute of limitadons to two years (unless a violadon was in bad faith, in which case it was extended to three),^^ and it allowed liquidated damages only in cases in which the plaindff could prove bad faith.̂ ® But most importandy, the Act forbade opt-out representadve acdons—such as those permitted in modern class acdons under Rule 23. While the primary purpose of the 1938 enactment of the FLSA was to protect workers' rights, the 1947 Amendments had employers' interests in mind, limidng plaindffs' groups to the "opt-in" collecdve acdon.^'

The limitadons contained in the Portal-to-Portal amendments con- tribute significandy to the well-documented underenforcement of the FLSA's substandve guarantees. Compliance with minimum wage and overdme provisions is shockingly low, "pardcularly in low-wage industries such as the janitorial, food service, garment, and hospitality industries."^* The Department of Labor has been unable to conduct inspecdons at the necessary rates to ensure higher levels of compliance;^" therefore, the more viable threat of civil liability under a Rule 23 opt-out class acdon

53. 7B Wright et al., supra note 6, § 1807 ("Collective actions under the [FLSA] are a unique species of group litigation.").

54. Pub. L. No. 80-49, 61 Stat 84 (codified at 29 U.S.C §§ 251-262). The Portal-to- Portal Act was, in part, a response to pressure from employers to limit FLSA liabilities. The primary purpose of this bill was to prevent so-called "portal-to-portal" suits—actions by plaintiffs to recover compensation for time spent traveling to and from work—as nearly 2,000 such suits had been filed in a six-month time span. See Lopez, supra note 6, at 281- 84 (discussing genesis of Portal-to-Portal Act). These suits were by no means trivial: It was estimated that over $6 billion of liability would result from them. See Daniel V. Dorris, Comment, Fair Labor Standards Act Preemption of State Wage-and-Hour Law Claims, 76 U. Chi. L. Rev. 1251, 1256 (2009) (discussing vrave of "portal-to-portal" suits in years pre- ceding Act's passage).

55. 29 U.S.C §255. 56. Id. §260. ' 57. Dorris, supra note 54, at 1256. 58. Becker & Strauss, supra note 4, at 1318; see also Nat'l Emp't Law Project supra

note 4, at 4-6 (estimating over 70% of garment employers in southern California and 100% of poultry processing plants are in violation of wage and hour laws).

59. See Weil & Pyles, supra note 4, at 62 (estimating annual probability of Department of Labor inspection of one of seven million workplaces covered by FLSA is well below .1%). This underenforcement did not begin in the 2000s, but was almost cer- tainly exacerbated by the Bush Administration's hands-o£f approach to labor standard enforcement. Michael A. Fletcher, Labor Department Accused of Straying from Enforcement, Wash. Post, Dec. 1, 2008, at A2; see also Letter from Sen. Barack Obama to Elaine Chao, Labor Sec'y (Jul. 25, 2008) (on file with the Columbia Law Review) (citing two Government Accountability Office studies indicating Bush Labor Department was "not fulfilling its mission to prevent and remedy violations of federal minimum wage and over- time laws").

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could potentially provide an important deterrent mechanism®" necessary to fulfill the FLSA's guarantee of "a fair day's pay for a fair day's work."®' It is no surprise, then, that employment advocates have looked to more generous remedial statutes such as RICO to recover FLSA remedies.

B. RICO: The "Broadest of the Federal Criminal Statutes'^^

The Racketeer Infiuenced and Corrupt Organizations Act®* was de- signed with the primary purpose of combating organized crime. The Senate Judiciary Committee's report on the bill explicitiy described RICO's purpose as "the elimination of the infiltration of organized crime and racketeering into legitimate operations in interstate commerce."®* But RICO's statutory language does not reflect this discrete, narrow goal. Rather than enact a statute that targets only the organized criminals that were at the forefront of its mind (such as the Mafia® )̂, Congress passed

60. Becker & Strauss, supra note 4, at 1318-19 (arguing strict adherence to § 216(b) requirement of opt-in class actions "has failed to respect the nation's minimum labor standards" and is "unjust [and] unwise public policy").

61. 6 Franklin D. Roosevelt, The Public Papers and Addresses of Franklin D. Roosevelt: The Gonstitution Prevails, 1937, at 210 (1941).

62. Jeff Atkinson, "Racketeer Infiuenced and Gorrupt Organizations," 18 U.S.C. §§ 1961-68: Broadest of die Federal Criminal Statutes, 69 J. Crim. L. & Criminology 1, 1 (1978).

63. Organized Crime Conti-ol Act of 1970,18 U.S.C. §§ 1961-1968 (2006). 64. Senate Comm. on the Judiciary, Report on Organized Crime Control Act of 1969,

S. Rep. No. 91-617, at 76 (1969). Similarly, much of the fioor debate regarding die bill discussed organized crime as a specific target of the bill. See, e.g., 116 Cong. Rec. 602 (1970) (statement of Sen. Ralph Yarborough) (calling RICO "a full-scale attack on orga- nized crime"); id. at 819 (statement of Sen. Hugh Scott) (stating bill's "purpose is to erad- icate organized crime in the United States"); id. at 35,199 (statement of Rep. Peter Rodino) (describing bill as "a truly full-scale commitment to destroy the insidious power of organized crime groups"). Furthermore, each of the five purposes listed in the statement of findings associated with the bill references organized crime either explicidy or implic- itiy. See Pub. L. No. 91-452, 84 Stat 922, 922-23 (1970).

Several commentators discussing RICO's broad scope have noted this fact. See, e.g.. Lynch, Parts I & II, supra note 27, at 662 ("Congress viewed RICO principally as a tool for attacking the specific problem of infiltration of legitimate business by organized criminal syndicates."); Daniel Z. Herbst, Comment, Injunctive Relief and Civil RICO: After Scheidler V. National Organization for Women, Inc., RICO's Scope and Remedies Require Réévaluation, 53 Cath. U. L. Rev. 1125, 1125 (2004) ("Congress enacted the RICO . . . in response to public outcry and several government studies revealing pervasive infiltration of the legiti- mate business community by the mafia and other organized crime syndicates."); Adam B. Weiss, Note, From the Bonannos to the Bin Ladens: The Reves Operation or Management Test and the Viability of Civil RICO Suits Against Financial Supporters of Terrorism, 110 Colum. L. Rev. 1123, 1127 (2010) (noting statute "was enacted at the height of the Mafia's strength in America" and "was created with the major American crime families in mind"); cf Nixon Signs Bill to Combat Crime, N.Y. Times, Oct. 16, 1970, at A18 (noting President Nixon's advocacy of bill as "major tool in the fight against organized crime").

65. These particular groups are noted specifically several times in the Act's legislative history. See Barr v. WUI/TAS, Inc., 66 F.R.D. 109, 113 (S.D.N.Y. 1975) (discussing fre- quent references in legislative history to "'racketeers,' 'organized crime' and 'organized

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instead what has been called the "broadest of the federal criminal stat- utes."®® RICO's-breadth is primarily due to two factors: (1) the wide- ranging list of predicate offenses for which a defendant may be eligible under the statute; and (2) the statute's provisions for harsh criminal pun- ishments and civil remedies for violadons of its prohibidons.

RICO prohibits three broad types of conduct: (1) the use or invest- ment of racketeering-derived funds in an enterprise that affects interstate commerce;®' (2) the acquisidon of an interest in or control over any such enterprise through a pattern of racketeering acdvity;®* and (3) any con- duct or pardcipadon in the affairs of such an enterprise through a pat- tern of racketeering acdvity.®" The first two of these prohibidons focus on "act[s] of infiltradng legidmate business by investment of illicit profits or by illegidmate tacdcs."'" The third category criminalizes the broadest range of conduct. It has "virtually unlimited sweep" as an "expansive prohibidon of the operadon of an enterprise through a pattern of rack- eteering acdvity.""

Each of thèse categories incorporates the definition of a "pattern of racketeering" found in § 1961(1) of the statute. That secdon lists a bevy of state and federal crimes. Violadon of any of the crimes in the list con- sdtutes "racketeering acdvity."'^ To consdtute a "pattern" of such acdvity.

crime families,' as well as the 'syndicate,' 'Mafia' and 'Gosa Nostra"'); see also Weiss, supra note 64, at 1128 n.26 ("There is litde dispute that Congress was focused primarily on orga- nized crime [such as the Mafia and La Cosa Nostra] when considering RICO.").

66. Atkinson, supra note 62, at 1 (acknowledging RICO as "most sweeping criminal statute ever passed by Congress"). For an oft-cited discussion of RICO's breadth, see gen- erally Lynch, Parts I & II, supra note 27 (discussing broad interpretadon given to RICO by federal courts); Gerard E. Lynch, RICO: The Crime of Being a Criminal, Parts III & IV, 87 Colum. L. Rev. 920 (1987) [hereinafter Lynch, Parts III & rV] (discussing desirability of such breadth).

67. 18 U.S.C. §1962(a). 68. Id. § 1962(b); see also id. § 1961(5) (defining "pattern of racketeering acdvity" as

"at least two acts of racketeering acdvity, [the second of which must occur] within ten years (excluding any period of imprisonment) after the commission of a prior act of rack- eteering acdvity").

69. Id. § 1962 (c). The statute also makes it a crime to conspire to violate subsecdons (a), (b),or (c).Id. § 1962(d).

70. Lynch, Parts I & II, supra note 27, at 662. 71. Id. Judge Lynch notes that, in seeking criminal prosecudons under RICO, pros-

ecutors have used this provision to strike at those who commit crimes in the course of otherwise lawful business, "whether or not they fit any ordinary definidon of 'racketeer' or 'organized criminal.'" Id.

72. 18 U.S.C. § 1961(1) (including in definidon of "racketeering acdvity" such state crimes as murder, arson, and robbery). The inclusion of state crimes as predicates was purposeful and designed to broaden the scope of federal criminal law. See United States v. Turkette, 452 U.S. 576, 586 (1981) ("[T]he language of die statute and its legisladve his- tory indicate that Congress was well aware that it was entering a new domain of federal involvement"); see also 116 Cong. Rec. 35,217 (1970) (statement of Rep. Robert Eckhardt) (stadng RICO would "mov[e] large substandve areas formerly totally within the police power of the State into the Federal realm"). While this was an unusual foray of the

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a defendant must commit at least two of these so-called "predicate acts" within ten years of each other.'^ While violation of the ELSA is not listed as a predicate act, § 1961(1) does include mail fraud,'* which one com- mentator noted "drastically increas[ed] the potential penalties facing many [nonviolent] criminals."'^

In addition to this expansive definition of "racketeering," the Act's broad definition of a criminal "enterprise"'^ subjects a whole host of leg- itimate and illegitimate organizations to its prohibitions. The breadth of conduct and organizations that these definitions of racketeering and en- terprise cover led one commentator to conclude famously that RICO could be fairly characterized as the "crime of being a criminal.""

Enforcement of these expansive prohibitions may come in the form of either criminal penalties'* or civil liability.'" This Note focuses on the latter, which is defined in § 1964(c).®" That section provides that "[a]ny

federal government into areas traditionally covered by state criminal law, the Supreme Court noted that "[t]here is no argument that Congress acted beyond its power in so do- ing." Turkette, 452 U.S. at 587. For a discussion of the trend of federal expansion into areas of criminal law traditionally relegated to state enforcement, see generally Thane Rehn, Note, RICO and the Commerce Clause: A Reconsideration of the Scope of Federal Crimi- nal Law, 108 Colum. L. Rev. 1991 (2008). For further discussion, see also Weiss, supra note 64, a t l l 2 6 n . l 5 .

73. 18 U.S.C. § 1961(5); see also HJ. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989) (noting Congress intended fairly fiexible definition of "pattern" under RICO). To constitute a pattern, predicate acts must be related, that is, they must have the same or similar purposes, results, participants, victims, or metiiods of commission, or otherwise be interrelated by distinguishing characteristics, and they must not be isolated events. Id. (identifying "'continuity plus relationship'" as pattern requirements (quoting 116 Cong. Rec. 18,940 (1970) (statement of Sen. John McClellan))).

74. See 18 U.S.C. § 1961(1) (including as predicate act violation of 18 U.S.C. § 1341, the federal mail fraud statute). For a discussion of the elements of mail fraud, see infra notes 102-103 and accompanying text.

75. Lynch, Parts I Sc II, supra note 27, at 684. 76. 18 U.S.C. § 1961(4) (defining "enterprise" as including "any individual, partner-

ship, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity").

77. Lynch, Parts I & II, supra note 27, at 661; see also Ross Bagley, Dorian Hurley & Peter Mancuso, Racketeer Infiuenced and Corrupt Organizations, 44 Am. Crim. L. Rev. 901, 905-07 (2007) ("[T]he term 'racketeering activity' includes a broad assortment of state and federal crimes.").

78. 18 U.S.C. § 1963(a). Because this Note focuses primarily on RICO's civil reme- dies, it does not treat in depth the criminal sanctions available to prosecutors under § 1963(a). For a discussion of̂ RICO's criminal penalties and the evolution of RICO into an all-purpose prosecutorial tool, see generally Lynch, Parts I Sc II, supra note 27; Lynch, Parts III & IV, supra note 66.

79. 18 U.S.C. §1964(c). 80. Equitable relief is also available. Id. § 1962(a). Such relief may include divestiture

of an interest in the criminal enterprise, restrictions on future activities or investments, and dissolution or reorganization of the enterprise. Id.; see also G. Robert Blakely & Brian Gettings, Racketeer Infiuenced and Gorrupt Organizations (RICO): Basic Concepts— Criminal and Civil Remedies, 53 Temp. L.Q. 1009, 1037-38 (1980) (discussing equitable

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person injured in his business or property by reason of a violation of sec- tion 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee."*' That is, an individual who could be prosecuted under RICO's criminal provisions could also (or instead) be sued by a plaintiff injured by the defendant's indictable conduct.

By allowing private plaintiffs to sue for RICO violations, RICO's civil remedies were designed to supplement its criminal provisions. The main goal of both was to deter and punish infiltration into legitimate business by organized crime syndicates.*^ Yet both the criminal and the civil provi- sions have been used widely in contexts bearing litde resemblance to that of organized crime. In fact, RICO is used in other contexts far more of- ten than it is used to prosecute or sue criminal organizations such as the Mafia.*' The inclusion of mail fraud*'* and wire fraud*^ makes nearly any

relief available for civil RICO plaintiffs). However, because most FLSA plaintiffs seek dam- ages—in the form of back pay, liquidated damages, or, in the case of the FLSA-RICO suits that are the focus of this Note, treble damages—this Note focuses primarily on § 1964 (c) and the damages remedy.

81. 18 U.S.C. § 1964(c). Despite this language regarding federal jurisdiction (and the absence of corresponding language granting state courts similar jurisdiction), the Supreme Court has held that state courts do have concurrent jurisdiction to hear civil RICO claims. Tafflin v. Levitt, 493 U.S. 455, 467 (1990). In Tafflin, the Court held that the permissive language of § 1964(c), stating plaintiffs "may" sue in United States district court, should not be read as implying that Congress intended to overcome the presump- tion in favor of concurrent state court jurisdiction. Id. at 460-61. The Court emphasized that states could very well have particularized expertise in such suits, given RICO's defini- tion of "racketeering activity" as including a host of state crimes. Id. at 465-66 (" [W] e have full faith in the ability of state courts to handle the complexities of civil RICO actions, par- ticularly since many RICO cases involve asserted violations of state law . . . over which state courts presumably have greater expertise."); see also § 1961(1) (defining "racketeering activity" as including, inter alia, a bevy of state crimes such as murder, arson, and kidnap- ping). A plaintiff suing for recovery under RICO may of course have her case removed to federal court by a defendant based on federal question jurisdiction, as RICO is a federal statute. 28 U.S.C. § 1331 (2006); see also Carisbad Tech., Inc. v. HIF Bio, Inc., 129 S. Ct 1862, 1867 (2009) (noting for RICO suit initially brought in state court "[i]t is undisputed that when this case was removed to federal court, the District Court had original jurisdic- tion over the federal RICO claim pursuant to 28 U.S.C. § 1331"); Joseph, supra note 15, at 18-19 (detailing removal procedure for civil RICO actions).

82. Weiss, supra note 64, at 1128-29 (noting RICO's "espoused goal of disrupting il- licit infiltration of legitimate businesses").

83. See Lynch, Parts I & II, supra note 27, at 662 (noting that when article was pub- lished in 1987, RICO had been used predominantiy in prosecutions outside of context of organized crime). Judge Lynch cites examples of the types of prosecutions brought under § 1962(a) and (b)—including garden-variety crimes such as typical business fraud and bribery—and notes that "[i]n none of these cases can it be said that organized criminals were penetrating the legitimate economy," and that "only a handful of cases . . . appear to have involved defendants who had 'infiltrated' legitimate enterprises in the manner con- sidered a national problem." Id. at 727-28; see also Weiss, supra note 64, at 1128 n.24.

84. 18 U.S.C. § 1341 (criminalizing fraudulent schemes involving use of mails).

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fraudulent scheme by any organizadon to defraud a person of business or property a violadon of RICO.*®

The Supreme Court has repeatedly affirmed the breadth of RICO, acknowledging that it is most often used in contexts far removed from what Congress may have envisioned. For example, when the First Circuit attempted to limit RICO's applicadon to run-of-the-mill business fraud by legidmate organizadons, the Supreme Court rejected this judicially man- ufactured limitadon, stadng that the First Circuit had "clearly departed from and limited the statutory language" and had reached an impermis- sible "conclusion . . . based on a faulty premise."*' Four years later, when the Second Circuit attempted to limit civil RICO claims to defendants who previously had been convicted of racketeering acdvity, the Supreme Court again emphadcally disagreed. It found "no room in the statutory language for an addidonal, amorphous . . . requirement" and noted "a less restricdve reading is amply supported by . . . the general principles surrounding this statute."** Not surprisingly, the Court cited the legisla- dve history of the Act to defend this broad interpretadon.*"

In the mail fraud context, a unanimous Court recendy affirmed the statute's breadth by declaring that a plaindff need not prove that she herself detrimentally relied on a defendant's fraudulent misrepresenta- dons—a requirement for civil fraud claims at common law."" Because the statute allows a civil remedy for conduct that is "indictable" as mail fraud—and prosecutors need not show any reliance whatsoever when bringing a mail fraud charge—a plaindff need not show that she herself relied on the misrepresentadons, only that the defendant's misrepresen- tadons proximately caused her injury."'

Such decisions support the Supreme Court's conclusion that "'the fact that RICO has been applied in situadons not expressly andcipated by Congress does not demonstrate ambiguity. It demonstrates breadth.'""^ This history provides a framework through which to view the viability of RICO suits that are predicated on FLSA violadons.

85. Id. § 1343 (criminalizing fraudulent schemes' use of communication systems, such as telephone or email, that cross state lines).

86. Lynch, Parts I &: II, supra note 27, at 684. 87. United States v. Turkette, 452 U.S. 576, 581-83 (1981). 88. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 495, 497 (1985). 89. See id. at 498 (citing multiple congressional statements indicating "RICO was an

aggressive initiative to supplement old remedies and develop new methods for fighting crime").

90. Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct 2131, 2145 (2008). 91. Id. at 647-48. 92. Sedima, 473 U.S. at 499 (quoting Haroco, Inc. v. Am. Nat'l Bank & Trust Co. of

Chi., 747 F.2d 384, 398 (7th Cir. 1984)). The Court had similarly directed lower courts to follow this language. See id. :

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II. EVALUATING THE FLSA-BASED RICO CLAIM

With this statutory and historical framework as a foundation. Part II examines the FLSA-based RICO claims themselves. Part ILA discusses recent cases involving such claims and the varying ways in which they have been handled by district courts. Most courts dismiss these claims, finding them precluded by the FLSA. In doing so, these courts repeat- edly rely on a number of comparator cases involving similar statutory overlap. Part II.B discusses these cases, concluding that key differences between them and FLSA-RICO claims prevent a simple application of their logic to this context. Thus, courts have erred insofar as they have cited these cases as commanding dismissal of the FLSA-based RICO complaint.

A. Recent FLSA-RICO Cases: Bootstrapping Claims with Boilerplate Complaints

The differing approaches to FLSA-RICO complaints stem largely from a recent spaie of lawsuits by hospital workers against their employ- ers. These lawsuits use a "boilerplate" RICO complaint^^ that states the hospitals committed mail fraud when they sent paychecks to their em- ployees that did not adequately compensate them for overtime.^'' The complaint alleges not that the hospitals lied about the amount of time worked, but rather that they misrepresented the amount of pay that the employees were owed under the FLSA.̂ ^ By one court's estimate, "at least twenty-nine strikingly similar versions of the complaint at issue" have been filed since 2009,"® and various federal district courts in different circuits have rendered at least eleven decisions."' In many of these deci-

93. For an examp.e of such a complaint, see Sample Gomplaint, supra note 22. 94. Id. 1 127. 95. Id. 1 121. 96. Gavallaro v. JMass Mem'l Health Care, Inc., No. 09-40152-FDS, 2011 WL

2295023, at *6 (D. Mas;:. June 8, 2011), vacated, 678 F.3d 1 (1st Cir. 2012). 97. See, e.g., Davjs v. Abington Mem'l Hosp., 817 F. Supp. 2d 556 (E.D. Pa. 2011);

DeSilva v. N. Shore-Lcng Island Jewish Healdi Sys., Inc., 770 F. Supp. 2d 497 (E.D.N.Y. 2011); Manning v. Bos. Med. Corp., No. 09-11463-RWZ, 2011 WL 796505 (D. Mass. Feb. 28, 2011); Sampson v. Medisys Healtii Network Inc., No. lO-CV-1342 (SJF) (.'VRL), 2011 WL 579155 (E.D.N.Y. Feb. 5, 2011); Nakahata v. N.Y.-Presbyterian Healthcare Sys., Inc., Nos. 10 Civ. 2661(PAC), 10 Civ. 2662(PAC), 10 Civ. 2683(PAC), 10 Civ. 3247(PAC), 2011 WL 321186 (S.D.N.Y. Jan. 28, 2011); Wolman v. Catholic Health Sys. of Long Island, No. 10- CV-1326 (JS)(ETB), 2G10 WL 5491182 (E.D.N.Y. Dec. 30, 2010); Pruell v. Caritas Christi, No. 09-11466-GAO, 2010 WL 3789318 (D. Mass. Sept 27, 2010); Gavallaro v. UMass Mem'l Healdi Gare, Inc., No. D9-40152-FDS, 2010 WL 3609535 (D. Mass. July 2, 2010); Gamesi v. Univ. of Pittsburgh Msd. Cti-., No. 09-85J, 2010 WL 235123 (W.D. Pa. Jan. 11, 2010); Taylor v. Pittsburgh Mercy Healthcare Sys., Inc., No. 09-377, 2009 WL 2992606 (W.D. Pa. Sept 17, 2009); Kuznyetsov v. W. Penn Allegheny Healdi Sys., Inc., No. 09-379, 2009 WL 2175585 (W.D. Pa. July20, 2009).

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sions, the court admonished the plaindffs for using a standardized com- plaint."*

Courts have dealt with these FLSA-RICO claims in three general ways: (1) dismissing the claims because mailing inaccurate paychecks cannot consdtute mail fraud;"" (2) determining that plaindffs' FLSA- based RICO claims may proceed;'"" and (3) dismissing the claims be- cause the FLSA is intended to be the sole remedy for violadons of its sub- standve provisions.'"' Each will be examined in turn.

1. Decisions Dismissing FLSA-Based RICO Claims for Lack of Mail Fraud, — To plead mail fraud under RICO,'"^ a plaindff must allege (1) a scheme to defraud based on false pretenses, misrepresentadons, or promises; (2) the defendant's knowing and willing pardcipadon in the scheme with the specific intent to defraud; (3) the use of interstate mail communicadon in furtherance of that scheme; and (4) an injury to the plaindff proximately caused by this scheme.'"* In these cases, plaindffs' claims of mail fraud run as follows: Defendants devised a fraudulent scheme intended to deprive plaindffs of their wages, and defendants fur- thered this scheme by maihng insufficient paychecks to the plaindffs.'"* Several courts have taken issue with this claim, holding that, even assum- ing plaintiffs' allegadons of fraud to be true, the mailing of a paycheck did not "further" the defendants' fraudulent scheme.'"^

98. See, e.g., Nakahata, 2011 WL 321186, at *6 ("The very fact diat diis boilerplate complaint has been used, with idendcally vague and conclusory allegadons, in more than a dozen acdons in New York and elsewhere is a vivid demonstradve of how not to plead.").

99. See, e.g., Cavallaro, 2010 WL 3609535, at '*2-*5 ("[T]he use of die mail was not in furtherance of the allegedly fraudulent scheme" as mailing of paychecks made detecdon of scheme more likely).

100. See, e.g., Kuznyetsov, 2009 WL 2175585, at '*2-'*4. 101. See, e.g., DeSilva, 770 F. Supp. 2d at 512-19 (finding "FLSA sets fordi . . . de-

tailed statutory scheme that . . . provides the exclusive remedy for wage and hour viola- dons that fall within the FLSA's scope").

102. 18 U.S.C. § 1341 (2006); see also id. § 1961(1) (lisdng mail fraud under § 1341 as RICO predicate act).

103. See, e.g.. United States v. Cheal, 389 F.3d 35, 41 (1st Cir. 2004) (lisdng elements of mail fraud violadon).

104. See, e.g.. Sample Complaint, supra note 22, 1 6 (alleging defendants schemed "to cheat employees out of their property and to convert the employees' property, includ- ing their wages and/or overdme pay, by misleading employees about their rights under the FLSA"); id. 1 126 ("The payroll checks were false and decepdve because they misled Plaindffs and Class Members about the amount of wages to which they were endded, as well as their status and rights under the FLSA."); id. 1 127 ("Defendants' predicate acts of mailing the misleading payroll checks in furtherance of their Scheme consdtute a pattern of conduct unlawful pursuant to [RICO].").

105. See Cavallaro v. UMass Mem'l Health Care, Inc., No. 09-40152-FDS, 2010 WL 3609535, at *3 (D. Mass. July 2, 2010); see also DeSilva, 770 F. Supp. 2d at 527 (cidng Cavallaro approvingly in dismissing RICO claim); Sampson v. Medisys Health Network Inc., No. lO-CV-1342 (SJF)(ARL), 2011 WL 579155, at *6 (E.D.N.Y. Feb. 8, 2011) (same); Nakahata v. N.Y.-Presbyterian Healdicare Sys., Inc., Nos. 10 Civ. 2661 (PAC), 10 Civ. 2662(PAC), 10 Civ. 2683(PAC), 10 Civ. 3247(PAC), 2011 WL 321186, at *5 (S.D.N.Y. Jan.

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A recent case from the District Court of Massachusetts lays out the logic of these dismissals in the most depth. In Cavallaro v. UMass Memorial Health Care, Inc., the court disagreed with the plaintiffs' contention that an inaccurate paycheck "furthered" a fraudulent scheme.'"® On the con- trary, the court found "these paychecks made [any allegedly fraudulent] scheme's discovery more likely."'"' The court gave an example of a mini- mum wage employee who is required by her employer to work through what ordinarily would be her unpaid lunch break. Even if the employer secretiy has schemed to defraud her out of compensation, she will be "alerted to the problem" when she receives her paycheck because she is now "on notice of the alleged fraud."'"*

To support this logic, the Cavallaro court cited United States v. Maze,^°^ a Supreme Court decision reversing the mail fraud conviction of a defendant who had stolen a roommate's credit card. In Maze, the mail- ings involved were the invoices sent to the issuing bank by each vendor Maze had visited."" The Court found that he had caused the invoices to be mailed'" but found "the more difficult question [to be] whether these mailings were sufficientiy closely related to respondent's scheme to bring his conduct within the statute.""^ The Court found they were not, be- cause the mails involved were not "for the purpose of executing [the fraudulent] scheme or artifice.""^ Relying on this logic, the district court in Cavallaro dismissed the ELSA-based RICO complaint, finding the in- volved mailings to be similarly unconnected to the alleged scheme."* Both Maze and Cavallaro are discussed below in Part III.A, which exam- ines the "use of the mails" requirement in more depth.

2. Decisions Allowing ELSA-Based RICO Claims To Proceed. — Only o n e district court, the Western District of Pennsylvania, has explicitiy consid- ered ELSA-based RICO claims and allowed them to proceed."^ It did so

28, 2011) (same); Wolman v. Catiiolic Healtii Sys. of Long Island, No. lO-CV-1326 (JS)(ETB), 2010 WL 5491182, at *5-*6 (E.D.N.Y. Dec. 30, 2010) (same).

106. 2010 WL 3609535, at *2-*5. 107. Id. at*6. 108. Id. at *3. 109. 414 U.S. 395(1974). 110. Id. at 396. 111. The Court found that Maze had "caused" the mailings because he could reason-

ably foresee that the invoices he signed would be sent to the bank. Id. at 399 (citing Pereira v. United States, 347 U.S. 1, 8-9 (1954)); see also supra noie 26 and accompanying text (discussing causation with respect to mail fraud and RICO).

112. Maze, 414 U.S. at 399. 113. Id. at 405 ("Congress could have drafted the mail fraud statute so as to require

only that the mails be in fact used as a result of the fraudulent scheme. But it did not do this . . . ." (footnote omitted)).

114. Cavallaro v. UMass Mem'l Health Care, Inc., No. 09-40152-FDS, 2010 WL 3609535, at *4-*6 (D. Mass. July 2, 2010).

115. At least one other district court has signaled that an FLSA-based RICO claim may proceed. See Montize v. Pittman Props. Ltd. P'ship, 719 F. Supp. 2d 1052, 1056 (W.D.

2012] FAIR LABOR FRAUD 2171

in three separate cases,"® although only one opinion contains a thor- ough analysis of the issue.'" The defendants in Kuznyetsov v. West Penn Allegheny Health Systems offered two arguments for the incompatibility of FLSA and RICO claims: (1) Congress intended the FLSA to be the sole remedy for violations of its wage and hour provisions;"* and (2) the opt- in procedure of the FLSA class action is incompatible with the opt-out procedure allowed for in RICO class actions under Federal Rule of Civil Procedure 23."^ The court considered and rejected both of these argu- ments in tum, ruling that the RICO claim could proceed.'^"

In a sense, the court in Kuznyetsov did not address the preclusion is- sue because it viewed FLSA-based RICO claims as wholly distinct from pure FLSA claims:

Plaintiffs advanced a civil RICO claim to punish Defendants for purportedly creating, devising and carrying out a scheme to de- prive Plaintiffs of their property (i.e. their wages) via illegal ac- tivities. This contrasts to Plaintiffs' FLSA claim which simply protects employees from receiving substandard, wages and pun- ishes the employers for failing to appropriately pay their work- ers . . . . [B] ecause I find the general goals of RICO and the FLSA vary, I do not find that the FLSA can preempt the RICO claim in this case.'^'

Ark. 2010) (finding "the FLSA does not provide an exclusive remedy for violations of its provisions" but dismissing for other reasons). Another district court decided to hold plain- tiffs' FLSA-based RICO claims in abeyance until it ruled on the FLSA claims themselves. Stickle V. SCI W. Mkt. Support Ctr., L.P., No. CV 08-083-PHX-MHM, 2008 WL 4446539, at *20 (D. Ariz. Sept 30, 2008). At the time of this writing, the FLSA claim had not yet been adjudicated. The RICO and ERISA claims are being held in abeyance until the plaintiffs' FLSA claims are resolved. Stickle v. SCI W. Mkt. Support Ctr., L.P., No. 2:08-cv-00083 JWS, 2012 WL 245087 (D. Ariz. Jan. 25, 2012).

116. Kuznyetsov v. W. Penn Allegheny Health Sys., Inc., No. 09-379, 2009 WL 2175585, at *2-*4 (W.D. Pa. July 20, 2009) (analyzing compatibility of RICO and FLSA from both substantive and procedural perspective, and determining such actions may proceed); see also Taylor v. Pittsburgh Mercy Health Sys., Inc., No. 09-377, 2009 WL 2992606, at *1 (W.D. Pa. Sept 17, 2009) (citing Kuznyetsov approvingly on this issue); Camesi v. Univ. of Pittsburgh Med. Ctr., No. 09-85J, 2009 WL 2940067, at *1 (W.D. Pa. Sept 11,2009) (same).

117. The opinions in Taylor and Camesi were written by the same judge within six days of each other, and each defers to Kuznyetsov on the FLSA-RICO issue, using identical lan- guage. See Taylcrr, 2009 WL 2992606, at *1 ("Plaintiffs' claims, which are substantially simi- lar to those in Kuznyetsov, do not reach the Court in a vacuum." (citation omitted)); Camesi, 2009 WL 2940067, at *1 (using same langtiage in allowing claims to proceed).

118. Defendants' Memorandum of Law in Support of Their Motion to Dismiss at 4-6, Kuznyetsov, 2009 WL 2175585 (No. 09-CV-379), 2009 WL 2408096, at *4-*6 (arguing FLSA "preempts" RICO claims); id. at 7 (arguing RICO and FLSA remedies are incompatible).

119. Id. at 6-9 (arguing FLSA and RICO class actions are incompatible). 120. 2009 WL 2175585, at *2-*4. The RICO claims in Kuznyetsov were dismissed in a

later action due to RICO's statute of limitations. Kuznyetsov v. W. Penn Allegheny Health Sys., Inc., No. 9-379, 2010 WL 597475, at *5 (W.D. Pa. Feb. 16, 2010).

121. 2009 WL 2175585, at *3.

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For purposes of this analysis, the court seemed to treat state wage and hour claims and federal RICO claims the same—neither was preempted.'^^ The court noted the absence of cases on point'^^ and stated simply that because of the "variance with respect to the goals of RICO and die FLSA," the RICO claim could proceed '̂ ''

With respect to the conflicdng procedures for, group acdons under the statutes, the court disdnguished FLSA-based RICO claims from state wage and hour claims that are duplicadve of the FLS.\.'^^ First, the court noted that both the RICO and FLSA claims came to it based on its origi- nal jurisdicdon to hear federal question cases.'^* Thus, there were no problems regarding supplemental jurisdicdon and therefore no danger that the RICO issues would "substandctlly predominate" over the FLSA issues.'^' Second, unlike with state wage and hour claims, which are in many ways substandvely duplicadve of the FLSA, the Kuznyetsov court saw no frustradon of congressional purpose in allowing RICO and FLSA claims to proceed concurrendy: With the FLSA, Congress sought to regu- late wages, whereas with RICO, it sought to prevent criminal acdvity, such as fraud.''*

3. Decisions Dismissing ELSA-Based RICO Claims due to FLSA's Exclusivity. — Unlike in Kuznyetsov, most courts have not been persuaded that FLSA claims and RICO claims founded upon FLSA violadons are in fact disdnct. Indeed, most have found that allowing FLSA-based RICO

122. See id. (addressing state claims in same section as federal RICO claims without giving any indication that they should be treated in categorically afferent manner).

123. Ic. In the RICO context the court discussed only one precedent, Choimbol v. Fairfield Resorts, Inc., No. 2:05CV463, 2006 WL 2631791 (E.D. Va. Sept 11, 2006), and dismissed it as unpersuasive. 2009 WL 2175585, at *3 ("When addressing the RICO claim, the [Choimbol] court noted that there was no case 'direcdy on point with respect to the FLSA's preclusion of RJCO claims specifically."' (quoting Choimtol, 2006 WL 2631791, at *6)). It noted that the defendants had failed to cite any Third Circuit precedent and simply chose to disregard Choimbol. Id.

124. 2009 WL 2175585, at *3. 125. Id. at *4. Indeed, the Kuznyetsov court would have had to distinguish FLSA-RICO

overlap fron FLSA-state claim overlap if it were to allow the RICO claims to proceed: In 2003, the T.aird Circuit decided that state wage and hour claims could not proceed in a class action under Rule 23 alongside FLSA opt-in class actions. De Asencio v. Tyson Foods, Inc., 342 F.Sd 301, 312 {3d Cir. 2003) (holding district court abused its discretion when it exercised supplemental jurisdiction over state wage and hour claims in FLSA action). The overlap betvzeen the FLSA and state wage and hour claims is disciBsed infra Part II.B.l.

126. 2009 WL 2175585, at *4 ("Plaintiffs have asserted this court has subject matter jurisdiction—not supplemental jurisdiction—under 28 U.S.C. § | 1341, 1343 and § 1337 over all of the federal claims raised by Plaintiffs (including the FLSA and RICO claims).").

127. Id.; see also 28 U.S.C. § 1367(c) (2006) (allowing distii-t court to decline to ex- ercise supplemental jurisdiction if state claim "substantially predominates" over federal claim).

128. See 2009 WL 2175585, at *3 (noting RICO claim was "to punish Defendants for purportedly creating" fraudulent scheme, while FLSA claim "simply protects employees from receiving substandard wages").

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claims to proceed "would thwart the careful and comprehensive scheme established by Congress to remedy wage and hour violations falling un- der the FLSA's scope."'^^ For these courts, the "FLSA provides a suffi- cientiy punitive scheme to address" the misconduct alleged.'^" These courts argue that two sources support preclusion: (1) the FLSA itself, with its detailed and "comprehensive remedies";'^' and (2) judicial deci- sions from similar cases of statutory overlap involving either the FLSA or

According to these opinions, specific language in the FLSA suggests that it should serve as the exclusive remedy for wage and hour violations. First, the statute's remedial provisions are comprehensive.'^* For exam- ple, the Act empowers the Secretary of Labor to supervise payment of unpaid compensation due under the Act, and also to bring actions for compensatory and injunctive relief for violations of the Act's minimum wage and overtime provisions.'*'' For these courts, this '"unusually elabo- rate enforcement scheme'"'*^ represents a "'careful blend of administra- tive and judicial enforcement powers'" that Congress intended to be ex- clusive.'*®

129. DeSilva v. N. Shore-Long Island Jewish Healdi Sys., Inc., 770 F. Supp. 2d 497, 515 (E.D.N.Y. 2011); see also Nakahata v. N.Y.-Presbyterian Healdicare Sys., Inc., No. 10 Civ. 2661 (PAC), 2011 WL 321186, at *3 (S.D.N.Y. Jan. 28, 2011) (finding FLSA "preempts" RICO claim); Eldred v. Comforce Corp., No. 3:08-CV-1171 (LEK/DEP), 2010 WL 812698, at *10-*13 (N.D.N.Y. Mar. 2, 2010) (dismissing civil RICO claims so as to prevent "'[a]rtful invocation of controversial civil RICO'" from endangering "the uniform administration of core concerns of the [FLSA's] primary enforcement scheme" (first alteration in original) (quoting Norman v. Niagara Mohawk Power Corp., 873 F.2d 634, 637 (2d Cir. 1989))); Choimbol V. Fairfield Resorts, Inc., No. 2:05cv463, 2006 WL 2631791, at *7 (E.D. Va. Sept 11, 2006) ("The FLSA provides direct relief for such violations [of its minimum wage and overtime requirements]. Accordingly, the Court finds that the FLSA preempts the asser- tion of RICO claims.").

130. Choimbol, 2006 WL 2631791, at *7. 131. Etdred, 2010 WL 812698, at *10; see also DeSilva, 770 F. Supp. 2d at 517-19 (dis-

cussing provisions of FLSA that suggest Congress intended statute's remedies to be exclu- sive); Chmmbol, 2006 WL 2631791, at *4-*5 (same).

132. See DeSilva, 770 F. Supp. 2d at 515-17 (discussing past'cases involving overlap between FLSA and other state and federal remedies, as well as cases involving overlap be- tween RICO and other labor laws); Eldred, 2010 WL 812698, at *10-*ll (same); Choimbol, 2006 WL 2631791, at *6-*7 (same); see also infra Part II.B (discussing ti-eatinent of prece- dents in these three FLSA-RICO cases).

133. These remedies include criminal penalties for willful violations and a private right of action allowing aggrieved employees to sue in state or federal court to recover unpaid wages, liquidated damages, attorney's fees, and costs. 29 U.S.C. § 216(a)-(b) (2006); see also Choimbol, 2006 WL 2631791, at *7 (discussing breaddi of remedies); supra Part LA (discussing FLSA's statutory language and remedial structure).

134. 29 U.S.C. §216(c). 135. DeSilva, 770 F. Supp. 2d. at 513 (quoting Anderson v. Sara Lee Corp., 508 F.3d

181, 192 (4th Cir. 2007)). 136. Id. at 512 (quoting Brown v. Gen. Servs. Admin., 425 U.S. 820, 833 (1976)); see

also Choimbol, 2006 WL 2631791, at *7 (noting FLSA is "sufficientiy punitive" and compre-

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In addidon to the statute's general breadth, courts have pointed to two specific secdons in the statute that, in their opinion, command dis- missal of FLSA-based RICO claims. The first is the FLSA's savings clause, which provides that "[n]o provision of this chapter . . . shall excuse non- compliance with any Federal or State law . . . establishing a minimum wage higher than . . . or a maximum workweek lower than . . . [those] established under this chapter."'*' While some plaintiffs have claimed this language shows the nonexclusive nature of the FLSA,'** at least one court held just the opposite: The savings clause—^which is expressly lim- ited to federal and state labor laws that are stricter than the FLSA—indi- cates that "Congress knew how to define the boundaries of a savings clause when it so desired."'*" Thus, only those laws the savings clause ex- pressly exempts from FLSA preclusion should be allowed to supplant the statute.'*"

Secondly, in a case before the Eastern District of New York, the court looked closely at § 216, which allows the Labor Secretary to bring an ac- don on behalf of an employee'*' and provides that, when she does so, that employee's private right of acdon terminates.'*^ If civil RICO cases were allowed to proceed, the court reasoned, it "would render meaning- less the Secretary of Labor's right to terminate any private party's suit should the Secretary decide to file a complaint."'** In order to avoid this "illogical result," the court dismissed the RICO claim.'**

hensive to cover typical wage deprivadon case). Interesdngly, in discussing the remedies provided by the FLSA, none of these opinions mendon the provision that likely has the biggest economic impact on wage and hour lidgadon: the opt-in requirement of § 216(b), which creates the unique procedural framework of the FLSA collecdve acdon. See supra notes 49-61 and accompanying text (discussing impact of § 216(b) on wage and hour suits).

137. 29 U.S.C. §218(a). 138. DeSilva, 770 F. Supp. 2d at 517 ("Plaindffs, in opposidon, point to the FLSA's

savings clause as evidence that die FLSA provides 'a non-exclusive remedy [that] . . . allows for similar claims under both federal and state law.'" (alteradon in original) (citadon omitted)).

139. Id. at 519 ("[T]he fact that [Congress] chose to specifically limit die applicabil- ity of Secdon 218(a) to [more protecdve state wage and hour statutes] indicates that the savings clause . . . was not meant to allow plaintiffs to seek protecdon for FLSA violadons under statutes that have no specific relevance to the labor law context").

140. Id. 141. 29 U.S.G § 216(c) ("The Secretary may bring an acdon in any court of compe-

tent jurisdicdon to recover the amount of unpaid minimum wages or overdme compensa- don and an equal amount as liquidated damages.").

142. Id. § 216(b) ("The right provided by this subsecdon to bring an acdon by or on behalf of any employee . . . shall terminate upon the filing of a complaint by the Secretary of Labor . . . . " ) .

143. DeSilva, 770 F. Supp. 2d at 515; see also id. at 532 (dismissing duplicadve state common law claim for same reason so as to avoid "thwart[ing] Congress' preiference . . . to have FLSA violadons be prosecuted by the Department of Labor, if and when die Secre- tary determines that such acdon is appropriate"). Interesdngly, the Supreme Court has indicated the Secretary might not actually have this power—to terminate an ongoing pri-

2012] FAIR LABOR FRAUD 2175

In addition to statutory arguments for dismissal, these courts also rely on judicial precedent to support their finding that ELSA-based RICO claims are altogether precluded. However, because no circuit court has ruled on these novel claims, the dismissing courts look instead to judicial decisions involving either the ELSA or RICO and other statutes that over- lap with their remedial structures.'*^ These decisions are of two general types: (1) cases in which ELSA claims were found to preclude'*^ wage and hour claims brought under another statute or under common law;'*' and (2) cases in which RICO was found to be unavailable due to the exclusive remedy offered by another statute.'*® Many courts faced with an ELSA- RICO claim have found these comparator cases highly probative.'*^ The following section examines these groups of relevant precedent in turn to determine how close an analogy can be drawn between the ELSA-RICO plaintiffs claim and those of plaintiffs in these various types of litigation.

vate action by intervening—but might rather have only the power to terminate an em- ployee's right to bring a ̂ i u r e action. See Breuer v. Jim's Concrete of Brevard, Inc., 538 U.S. 691, 695 n.l (2003) ("Congressional reports [from the time the Act was amended to include this provision] suggest that although an employee may no longer initiate a new action once the Secretary has sued, an employee may continue to litigate, i.e., 'maintain,' an action already pending.") (citing H.R. Rep. No. 87-327, at 20 (1961) (Conf. Rep.)). Of course, even if this is true the court's logic in DeSilva still carries weight: Allovvfing FLSA- based RICO claims would render nugatory the Secretary's ability to terminate future suits by an employee and would thus frustrate Congress's intent in giving her that power.

144. DeSilva, 770 F. Supp. 2d at 518. 145. These relevant precedents are discussed infra Part II.B.l (discussing FLSA's in-

teraction with state wage and hour claims). Part n.B.2 (discussing FLSA's interaction with 42 U.S.C. § 1983 (2006)), and Part n.B.3 (discussing RICO's interaction witii federal labor laws including National Labor Relations Act, Service Contract Act, and Energy Reorganiza- tion Act).

146. Or, in the case of state wage and hour laws, to preempt. For a discussion of preemption, see infra Part II.B.l.

147. For discussions of confiict between the FLSA and state wage and hour laws, see, for example, DeSilva, 770 F. Supp. 2d at 513-15 (discussing Anderson v. Sara Lee Corp., 508 F.3d 181 (4tii Cir. 2007); Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d Cir. 1999), modified by Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003); Roman v. Maietta Constr., Inc., 147 F.3d 71 (1st Cir. 1998)). For its discussion of conflict between tiie FLSA and other federal statutes, see DeSilva, 770 F. Supp. 2d at 513 (discussing Kendall v. City of Chesapeake, 174 F.3d 437 (4tii Cir. 1999)). These cases are discussed infra Part ILB.1-.2.

148. For its discussion of confiicts between RICO and other federal statutes, see DeSitva, 770 F. Supp. 2d at 516-17 (discussing Norman v. Niagara Mohawk Power Corp., 873 F.2d 634 (2nd Cir. 1989) (Energy Reorganization Act); Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 746 F. Supp. 170 (D.D.C. 1990) (Service Contract Act), affd, 941 F.2d 1220 (D.C. Cir. 1991); Brown v. Keystone Consol. Indus., Inc., 680 F. Supp. 1212 (N.D. 111. 1988) (National Labor Relations Act)). These and other similar cases are dis- cussed infra Part II.B.3.

149. See, e.g., DeSilva, 770 F. Supp. 2d at 515 (noting persuasiveness of comparator cases).

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B. Comparator Cases and Their Limited Applicability to the FLSA-RICO Problem

This section discusses related cases that have been cited to support dismissal of FLSA-based RICO claims. For reasons discussed below, while they are informative to the FLSA-RICO context, these comparators are not dispositive, and judges have erred insofar as they have read these cases as counseling automatic dismissal of such clciims.

I. ELSA Preemption of State Wage and Hour Laws. — While using RICO to recover remedies for FLSA violations is a new strategy, plaintiffs have in the past used alternative statutes in similar attempts to circumvent the FLSA's opt-in requirement for group actions. The most common method has been to bring suits under state wage and hour statutes concurrentiy with FLSA claims. Such suits have been referred to as "hybrid" actions,'^" and courts have handled them in varying ways.'^' Because of their preva- lence in recent years'^^ and the disparity in how courts handle them, sev- eral recent articles have addressed the substantive and procedural con- flicts inherent in these suits to determine whether they should be allowed to proceed.'^'

There are three general types of state law claims in hybrid actions. First, employees have sued under state wage and hour statutes that are more generous than the FLSA;'̂ * because the FLSA's savings clause ex-

150. See, e.g.. Lampe & Rossman, Procedural Approaches, supra note 10, at 315-16 (describing hybrid actions).

151. See, e.g., Damassia v. Duane Reade, Inc., 250 F.R.D. 152, 165 (S.D.N.Y. 2008) (finding FLSA's opt-in provision is procedural right which applies only to federal wage and hour litigation and allowing state law class action to proceed); Ellis v. Edward D. Jones & Co., 527 F. Supp. 2d 439, 460-61 (W.D. Pa. 2007) (finding state wage class action may not proceed, as to do so would cause Federal Rule of Civil Procedure 23 to modify opt-in pro- vision of FLSA and would thus violate Rules Enabling Act); cf. Anderson, 508 F.3d at 187 (concluding FLSA preempts duplicative state law remedies); Williamson v. Gen. Dynamics Gorp., 208 F.3d 1144, 1154 (9tii Gir. 2000) (finding duplicative state claims not preempted because such claims "do not confiict with the FLSA").

152. See Dorris, supra note 54, at 1251 (noting hybrid actions may be most common class actions in federal court).

153. See, e.g., Rachel K. Alexander, Federal Tails and State Puppy Dogs: Preempting Parallel State Wage Claims To Preserve the Integrity of Federal Group Wage Actions, 58 Am. U. L. Rev. 515, 538 (2009) (arguing against allowing duplicative state claims to pro- ceed, as to do so "effectively eliminates the FLSA"); Dorris, supra note 54, at 1284-85 (ar- guing conflicts between state law and FLSA are best resolved "by a presumption against preemption"); Lopez, supra note 6, at 302-09 (arguing Rules Enabling Act prohibits hy- brid actions from proceeding and calling on Gongress to eliminate § 216(b)'s opt-in re- quirement); see also Becker & Strauss, supra note 4, at 1317-19 (discussing underenforce- ment of FLSA and hybrid actions as possible enforcement mechanism); Lampe & Rossman, Procedural Approaches, supra note 10, at 337 (discussing options for employers facing "dual-filed" state law and FLSA claims and determining employers "may actually be able to use plaintiffs' dual-filing strategy to [their] own advantage").

154. See, e.g.. Pac. Merch. Shipping Ass'n v. Aubry, 918 F.2d 1409, 1420 (9th Cir. 1990) (upholding California law extending overtime to seamen, who are exempted from FLSA).

2012] FAIR LABOR FRAUD 2\11

plicidy allows for such acdons,'^^ "[e]very court that has addressed this scenario direcdy has held that [such] state enforcement provisions are not preempted."'^® Second, claims have been brought under state wage and hour statutes that are coextensive with the FLSA.'" Finally, some plaindffs have tried to collect unpaid wages via state common law claims (for example, fraud).'^* This last category of cases resembles FLSA-based RICO claims in some respects—because they are based on fraud, not on failure to pay a minimum wage per se—and two circuits have adopted differing approaches that are relevant to the RICO context.

In Williamson v. General Dynamics Corp., four employees brought suit against General Dynamics for unpaid wages.'*" These employees had been eligible to join an earlier class acdon setdement for unpaid wages, but had declined when their employer advised them that this would be "career suicide."'®" When the employees lost their jobs a year later, they sued under state common law claims of fraud.'®' General Dynamics ar- gued that this fraud claim was essendally an FLSA claim (under its and- retaliadon provision) and thus preempted.'®^

The court disagreed, finding the fraud claims at issue were not equivalent to FLSA violadons, stadng that "[f]raud claims by employees do not conflict with the FLSA any more than claims for wrongful death, assault, or murder."'®^ In so holding, the court rejected General Dynamics's argument that the Portal-to-Portal Act amendments to the FLSA in 1947 indicate that the statute's purpose is, in part, to protect employers from lidgadon.'®* Instead, the court emphasized that "the Supreme Court and the Ninth Circuit have consistendy found that the

155. See 29 U.S.C § 218(a) (2006); see also supra notes 136-139 and accompanying text (discussing FLSA's savings clause).

156. Dorris, supra note 54, at 1262. 157. Currentiy, twenty-three states have minimum wages equal to the federal mini-

mum wage of $7.25 per hour. See Minimum Wage Laws in the States—January 1, 2012, Wage and Hour Division, Dep't of Labor, http://www.dol.gov/whd/minwage/ america.htm (on file with the Columbia Law Review) (last visited Sept 13, 2012) (displaying interactive map and table indicating state minimum wages). For an example of such a law, see Del. Code Ann. tit. 19, § 902 (2010) (setting state minimum wage at federal rate).

158. See, e.g., Anderson v. Sara Lee Corp., 508 F.3d 182, 193-94 (4tii Cir. 2007) (em- ployees suing for negligence, claiming inaccurate timekeeping system deprived them of wages due under FLSA); Wilhamson v. Gen. Dynamics Gorp., 208 F.3d 1144, 1147-50 (9tii Gir. 2000) (employees suing to recover unpaid wages based on allegations of fraud for employer behavior prohibited by FLSA's anti-retaliation provision).

159. 2 0 8 F . 3 d a t l l 4 8 . 160. Id. at 1147. 161. See id. at 1148 (indicating plaintiffs had filed state common law fraud claims of

"wage and career fraud"). 162. Id. at 1152. 163. Id. at 1154. 164. Id. at 1153-54 ("GD argues that the purpose of the FLSA was to protect employ-

ers as well as employees, and therefore the appellants' fraud claims would upset the care- ful balance established by the statute.").

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central purpose of the FLSA is to enact minimum wage and maximum hour provisions designed to protect employees."'®^

On its face, the court's decision in Williamson provides persuasive support to FLSA-RICO claims: Fraud claims to recover unpaid wages do not "conflict with [the] purpose of the FLSA of protecting employees."'®® However, the court in Williamson noted that the plaintiffs were not "avoiding the FLSA in order to seek a more favorable remedy"'®' and that "[c]laims that are direcdy covered by the FLSA . . . must be brought un- der the FLSA."'®^ It did not elaborate on what "direct coverage" means— that is, whether the FLSA would "directiy cover" the mailing of paychecks containing insufficient wages—nor did it state how it would treat a fraud claim that offered plaintiffs a more generous remedy (such as under RICO).'®^ Thus, while informative, Williamson does not dictate a particu- lar result in the FLSA-RICO context.

Further, even in this state-federal hybrid context, other circuits have declined to follow the Ninth Circuit's ruling in Williamson. In Anderson v. Sara Lee Corp., for example, the Fourth Circuit held that common law claims cannot be used to enforce the FLSA's wage and hour guaran- tees."" In that case, more than one thousand workers at a factory filed a class action to recover unpaid wages."' Instead of filing an FLSA claim, the plaintiffs filed state common law claims, alleging breach of contract, negligence, fraud, conversion, and unfair trade practices."^ The court dismissed the claims as precluded by the FLSA, finding that "Congress prescribed exclusive remedies in the FLSA for violations of its man- dates.""* It emphasized the "unusually elaborate enforcement scheme" contained in the FLSA,"'' as well as the fact that its savings clause permits stricter state laws but "does not explicitiy authorize states to create alter- native remedies for FLSA violations.""^

165. Id. at 1154. 166. Id. 167. Id. at 1153. 168. Id. at 1154. 169. At least one federal district court has extended Williamson'^ analysis to situations

involving more generous remedies. In 2008, the Northern District of Iowa allowed a Rule 23 class action based on state common law claims similar to those in Williamson to proceed. Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d 870, 885-89 (N.D. Iowa 2008). Indeed, it found that the greater remedies provided by Rule 23 did not frustrate the FLSA's goal of eliminating detrimental labor conditions. Id. at 885. For a more in-depth analysis of Bouaphakeo, see Dorris, supra note 54, at 1269-70 (explaining use of Williamson by court in Bouaphakeo to guide its decision).

170. 508 F.3d 181, 195 (4th Gir. 2007). 171. Id. at 182. 172. Id. 173. Id. at 194. 174. Id. at 192. 175. Id. at 193 (emphasis added).

2012] FAIR LABOR FRAUD 2179

The viability of hybrid acdons remains unsetded"®—and, in any event, state-federal preempdon analysis does not apply- directly to the FLSA-RICO context, in which two federal statutes are at issue.'" But these opinions may nonetheless assist judges faced with an FLSA-based RICO claim in determining, for a given type of conduct, whether Congress intended the FLSA to be the sole remedy for violadons of its substandve provisions.

2. FLSA Preclusion of Suits Under 42 U.S.C. § 1983, — Several courts faced with FLSA-based RICO claims have cited a comparator case in which the Fourth Circuit held that the FLSA precludes remedies under another federal statute, 42 U.S.C. § 1983."* In Kendall v. City of Chesapeake, plaindffs had entered into a settlement with the city (their employer) regarding violadons of the FLSA's overdme provisions."" However, two years later they discovered that the setdement did not in- clude, among other things, liquidated damages, and thus they sued un- der § 1983, claiming that the city had fraudulendy deprived them of rights to which they were endtled by law.'*" t

The Fourth Circuit affirmed the district court's dismissal of the claim. It began by nodng that a plaindff can bring suit under § 1983 only if "Congress has not foreclosed recourse to that statute."'*' Congress can do so either expressly '"or impliedly, by creadng a comprehensive en- forcement scheme that is incompadble with individual enforcement un- der § 1983.'"'*2 The court found that Congress had done so vwth the FLSA, creadng an "unusually elaborate" enforcement scheme of carefully delineated judicial and administradve remedies.'** Thus, suits under

176. Compare, e.g., Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d 870, 885-88 (N.D. Iowa 2008) (following Williamson and allowing hybrid class acdon to proceed), with Woodward v. FedEx Freight E., Inc., 250 F.R.D. 178, 189 (M.D. Pa. 2008) (dismissing state common law claims that were duplicadve of FLSA claims).

177. See supra note 147 and accompanying text (idendfying disdnct treatment be- tween federal preempdon of state wage and hour laws versus two conflicdng federal laws).

178. See, e.g.. Walker v. Serv. Corp. Int'l, No. 4:10CV00048, 2 0 i r W L 1370575, at *5 (W.D. Va. Apr. 12, 2011) (finding FLSA precludes RICO claims (cidng Kendall v. City of Chesapeake, 174 F.3d 437 (4di Cir. 1999))); DeSilva v. N. Shore-Long Island Jewish Healdi Sys., Inc., 770 F. Supp. 2d 497, 513 (E.D.N.Y. 2011) (cidng Kendall for proposidon that "FLSA's broad remedial scheme is exclusive and can preclude parallel acdons brought under federal . . . law"); Choimbol v. Fairfield Resorts, Inc., No. 2:05CV463, 2006 WL 2631791, at *1 (E.D. Va. Sept 11, 2006) (cidng Kendallin support of FLSA-RICO dismis- sal).

179. 174 F.3d 437, 439 (4th Cir. 1999). 180. Id. at 440 ("[Plaindffs'] complaint alleges that the City's fraudulent conduct vio-

lates . . . § 1983 . . . . [Plaindfis] maintain that the City . . . acted to disregard, dishonor, and defeat their rights under the FLSA." (internal quotadon marks omitted)).

181. Id. (cidng Blessing V. Freestone, 520 U.S. 329 (1997)). 182. Id. (quodng Blessing, 520 U.S. at 341). 183. Id. at 443.

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§ 1983 were unavailable to plaintiffs who could alternatively recover un- der the ELSA.'«*

While Kendall held that § 1983 claims for wage and hour violations are precluded by the ELSA's elaborate enforcement scheme, it should not be cited for the principle that all alternative federal remedies are un- available when a more detailed enforcement mechanism exists. Kendall was decided in the unique context of § 1983, and thus it is not directiy applicable to the ELSA-RICO context. Eor instance, one basis for the court's dismissal was that the plaintiffs had claimed an "independent right under § 1983" not to be defrauded;'®^ yet Supreme Court precedent had expressly foreclosed liability under such a theory, since "in order to state a claim under § 1983, a plaintiff must allege the violation of a right preserved by another federal law or by the Constitution."'^^ RICO, by contrast, expressly allows suits for fraud.'«' Eurthermore, whereas both § 1983 and RICO contain general substantive provisions that could be read expansively, the Supreme Court has significantiy cabined § 1983 liability,'«« while, it has repeatedly endorsed the breadth of RICO.'«"

Thus, while it contains an informative analysis of the ELSA's interac- tion vÁth an alternate federal remedial statute, Kendall should not be read, as it has been by some courts, to stand for the proposition that the ELSA's remedial scheme preempts other federal remedies.'"" Courts con- fronted with ELSA-based RICO claims should consider the contours of the RICO statute itself. The following section seeks to aid them in doing so by analyzing decisions involving RICO's interaction with other federal labor laws.

184. Id. 185. Id. at 440-41. 186. Id. at 440 (citing Baker v. McCoUan, 443 U.S. 137, 140, 144 n.3 (1979)). 187. See 18 U.S.C. S 1961(1) (2006) (hsting 18 U.S.C. §§ 1341 and 1343, federal mail

and wire fraud, as RICO predicates). 188. For example, a pbintiff suing an individual defendant under § 1983 must gener-

ally overcome the defense of qualified immunity. See, e.g., Anderson v. Creighton, 483 U.S. 635, 638-39 (1987) (discussing qualified immunity's protections for "government officials performing discretionary functions"); Harlow v. Fitzgerald, 457 U.S. 800, 806-07 (1982) (noting degree of immunity is linked to discretionary functions). Also, a plaintiff suing a municipality must satisfy the Court's requirement that the injury be inflicted pur- suant to a municipal policy or custom. See, e.g., Bd. of Cnty. Comm'rs v. Brown, 520 U.S. 397, 403 (1997); Monell v. Dep't of Soc. Servs., 436 U.S. 658, 690-91 (1978). For a discus- sion of immunity and the policy or custom requirement, see Barbara Kritchevsky, Civil Rights Liability of Private Entities, 26 Cardozo L. Rev. 35, 35-36 (2004) (citing tiiese rules as "hurdles" to § 1983 recovery).

189. See supra Part I.B (discussing Supreme Court cases emphasizing RICO's breadth).

190. See, e.g., DeSilva v. N. Shore-Long Island Jewish Healtii Sys., Inc., 770 F. Supp. 2d 497, 513-15 (E.D.N.Y. 2911) (relying extensively on Kendall in dismissing FLSA-based RICO complaint).

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3. Preclusion of RICO by NLRA and Other Federal Labor Statutes. — In 1935, Congress passed the National Labor Relations 'Act (NLRA),'^' which guarantees the basic rights of workers to organize into labor un- ions.'^^ In short, the NLRA is a "comprehensive code passed by Congress to regulate labor relations in activities affecting interstate and foreign commerce."'^' Specifically, section 7 of the NLRA protects the right of employees "to engage in . . . concerted activities for . . . mutual aid or protection,'^'* and section 8 makes it an "unfair labor practice" for an em- ployer to interfere with the rights guaranteed to employees under section 7.'̂ ^ Section 8 also prohibits a host of other activities, such as discriminat- ing in hiring based on union activities.'̂ ® The NLRA also created the National Labor Relations Board (NLRB), which has authority to decide whether an employer has engaged in unfair labor practices under section 8.'9'

In San Diego Building Trades Council v. Garmon, the Supreme Court held that the NLRB's jurisdiction over disputes arising under the NLRA is exclusive.'^* Thus, state law claims relating to similar activities are preempted due to Congress's desire to create a comprehensive, uniform scheme of labor regulations.'^^ Furthermore, federal courts are also pre- cluded from hearing claims under the NLRA, as Congress intended the NLRB to be the sole adjudicator of such claims.^"" Thus, the "exclusive

191. Pub. L. No. 74-198, 49 Stat 449 (1935) (codified as amended at 29 U.S.C. §§ 151-169).

192. In the NLRA, Congress protected at the federal level "the right to self-organiza- tion." 29 U.S.C. § 157 (2006). It also declared illegal certain employer acts that interfered with the exercise of these rights. Id. § 158. The Supreme Court upheld the NLRA as a constitutional exercise of Congress's power under the Commerce Clause in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 30-31 (1937). Notably, the Court heard arguments in the case a mere five days after President Roosevelt's "Court-packing" plan was unveiled. See id. at 1 (reporting February 10, 1937, as first day of arguments) ; Forsythe, supra note 41, at 464-65 (noting introduction of "Court-packing" plan on February 5, 1937); see also Robert L. Stern, Supreme Court Historical Soc'y, The Court-Packing Plan and the Commerce Clause, http://holtz.org/Library/Social%20Science/History/Machine% 20Age/Court-Packing%20and%20the%20Commerce%20Clause.htm (on file with the Columbia Law Revieiu) (last visited Sept. 13, 2012) (discussing changed votes of Chief Justice Hughes and Justice Roberts on Congress's power to regulate labor relations).

193. Nash v. Fla. Indus. Comm'n, 389 U.S. 235, 238 (1967). 194. 29 U.S.C. § 157. This section is referred to as "section 7" because it corresponds

to section 7 of the NLRA as originally passed in 1935. 195. Id. §158(a)(l). 196. Id. §158(a)(3). 197. Id. § 160(a). 198. 359U.S. 236, 246(1959). 199. Id. at 244 ("When . . . activities which a State purports to regulate are protected

by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8, due regard for the federal enactment requires that state jurisdiction must yield.").

200. Id. at 245 ("When an activity is arguably subject to § 7 or § 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board . . . ." (emphasis added)). The Court acknowledged that in certain

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primary competence of the Board" prevents states from reguladng labor acdvides and all courts from hearing NLRA claims in the first instance.^"'

A broad reading of the Garmon rule seems to preclude federal courts from hearing civil RICO suits that rely on unfair labor pracdces as predi- cate acts^" :̂ Such acdvity is regulated by the NLRA, and Congress in- tended the NLRB to be the sole adjudicator of suits alleging unfair labor pracdces. However, the Supreme Court has recognized several excep- dons to the general rule announced in Garmon. These are of three gen- eral types. First, Congress has expressly carved out exceptions to the Board's exclusive jurisdicdon for certain acdvity that may \iolate the NLRA.̂ "̂ Second, Garmon itself noted that states may regulate labor "in- terests so deeply rooted in local feeling and responsibility that, in the ab- sence of compelling congressional direcdon," courts "could not infer that Congress had deprived the States of the power to act."^"* Finally, if the acdvity in quesdon is merely a peripheral or collateral concern of the labor laws, states may regulate it.̂ "̂ By the same logic, federal courts may "decide labor quesdons that emerge as collateral issues in suits brought under statutes providing for independent/eíferaZ remedies."^"®

This last excepdon pertains to civil RICO claims involving acdvity regulated by the NLRA. Under this excepdon to Garmon, the NLRA pre- cludes a civil RICO charge "only when the Court would be forced to de- termine whether some pordon of the defendant's conduct violated [the

instances it might be unclear whether the activity in question is in fact protected or pro- hibited by the NLRA. Id. at 244. But die Court held that Congress's decision to grant ad- ministrative authority over sections 7 and 8 to the NLRB required that "these determina- tions be left in the first Instance to the National Labor Relations Board." Id. at 244-45.

201. Id. at 245. 202. For example, under the NLRA, it is an unfair labor practice for an employer to

demote or fire an employee to discourage her from participating in a union. 29 U.S.C. § 158 (a) (3). Such behavior by an employer could also be characterized as a RICO predi- cate—namely, extortion. See 18 U.S.C. § 1951 (b) (2) (2006) (defining "extortion" as "ob- taining of property from another, with his consent induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right"); see also id. § 1961(1) (listing extortion as a predicate act).

203. See, e.g., 29 U.S.C § 187 (allowing individuals injured in business or property by NLRA violation to sue for recovery in federal district court); id. § 185(a) (allowing suit in federal court for violation of collective bargaining agreement); see also Vaca v. Sipes, 386 U.S. 171, 179 (1967) (recognizing these and other such exceptions "carved out" of Garmon rule).

204. 359 U.S. at 244; see also Sears, Roebuck & Co. v. San Diego Cnty. Dist Council of Carpenters, 436 U.S. 180, 198 (1978) (holding state may exercise jurisdiction over tres- pass claims even if trespass occurs due to or during violation of NLRA).

205. Garmon, 359 U.S. at 243; see also Vaca, 386 U.S. at 179-83 (holding preemption "not applicable to cases involving alleged breaches of the union's duty of fair representa- tion" because NLRA only tangentially related and "it can be doubted whether the Board brings substantially greater expertise to bear on these problems than do the courts").

206. Tamburello v. Comm-Tract Corp., 67 F.3d 973, 977 (1st Cir. 1995) (emphasis added).

2012] FAIR LABOR FRAUD 2183

NLRA] before a RICO predicate act would be established."^*" By contrast, courts have allowed civil RICO lawsuits to proceed if the right or duty involved is derived from law independent of the NLRA or if the court can decide the RICO claim without determining whether an NLRA violation occurred.^"* In other words, "ci-vil RICO charges may survive Garmon preemption if the predicate acts are violative of federal law independent of the NLRA. However, if the predicate acts are only illegal because of the proscriptions of the NLRA, then tiie civil RICO charge must fail."̂ *'̂

A direct transcription of this logic to the FLSA-RICO context dooms such claims: Because the mail fraud complained of depends on a viola- tion of the FLSA,̂ '" under Garmon and its progeny a RICO suit could not proceed.^" However, a key difference between the NLRA and the FLSA tempers the applicability of the Garmon analysis. In addition to creating new federal labor rights, the NLRA also created an agency charged with

207. Id. at 978 (quoting MHC v. Int'l Union, United Mine Workers of Am., 685 F. Supp. 1370, 1376 (E.D. Ky. 1988)); see also Brennan v. Chestiiut, 973 F.2d 644, 646 (8di Cir. 1992) ("If the court must look to the [NLRA] to define die fraud, then preemption applies.").

208. See, e.g.. United States v. Palumbo Bros., 145 F.3d 850, 871-76 (7th Cir. 1998) (finding RICO predicate acts of mail fraud based upon employers' scheme to defraud employees of monetary benefits obtained through NLRA-regulated collective bargaining were not precluded since unlawfulness of charged conduct is determined by "the scope of die mail fraud statute"); United States v. Boffa, 688 F.2d 919, 930 (3d Cir. 1982) (holding defendant could be convicted under RICO for conduct that, while arguably an unfair la- bor practice, involved deprivation of economic benefits contained in collective bargaining agreement); United States v. Thordarson, 646 F.2d 1323, 1330-31 (9th Cir. 1981) (finding NLRA did not "preempt" RICO predicate acts involving union violence because charged conduct was made unlavrful by criminal statutes independent of NLRA) ; Mariah Boat, Inc. V. Laborers Int'l Union, 19 F. Supp. 2d 893, 899 (S.D. 111. 1998) (allowing RICO suit to proceed where mail and wire fraud predicate acts injured plaintiffs apart from violations of NLRA); A. Terzi Prods., Inc. v. Theatrical Protective Union, Local No. One, 2 F. Supp. 2d 485, 502-04 (S.D.N.Y. 1998) (holding same as to extortion predicate acts); Teamsters Local 372 v. Deti-oit Newspapers, 956 F. Supp. 753, 761 (E.D. Mich. 1997) (noting "predi- cate acts alleging robbery, arson, destruction of property . . . do not require an interpreta- tion of labor law" and are thus allowed); Nat'l Elec. Benefit Fund v. Heary Bros. Lightning Prot Co., 931 F. Supp. 169, 185 (W.D.N.Y. 1995) ("[W]hile these allegations also describe conduct proscribed by the NLRA as unfair labor practices, they are not pre-empted by the NLRA because they state RICO claims which do not require the resolution of labor law questions within the exclusive jurisdiction of the NLRB." (citation omitted)).

209. Mariah Boat, 19 F. Supp. 2d at 899. 210. See, e.g.. Sample Complaint, supra note 22, 1 126 ("The payroll checks were

false and deceptive [and thus constituted mail fraud under 18 U.S.C. § 1341] because they misled Plaintiffs and Class Members about the amount of wages to which they were enti- ded, as well as their status and rights under the FLSA.").

211. Indeed, some courts seem to have adopted just such an approach in dismissing FLSA-RICO complaints. See, e.g., DeSilva v. N. Shore-Long Island Jewish Health Sys., Inc., 770 F. Supp. 2d 497, 515 (E.D.N.Y. 2011) ("Accordingly, to the extent that plaintiffs' civil RICO claims stem from defendants' failure to pay overtime due under the FLSA, and from their concealment thereof, the Court finds that the civil RICO claims are precluded under the exclusive remedial scheme set forth in the FLSA.").

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the enforcement of those rights. By contrast, there is no independent board charged with overseeing the implementadon of the FLSA; rather, complaints are heard in federal courts, along with the vast majority of other civil acdons (including RICO).^'^ Twelve years after it was decided, the Supreme Court explained the logic of Garmon preempdon: ^

The radonale for pre-emption, then, rests in large measure upon our determinadon that when it set down a federal labor policy [in the NLRA] Congress plainly meant to do more than simply to alter the then-prevailing substandve law. It sought as well to restructure fundamentally the processes for effectuadng that policy, deliberately placing the responsibility for applying and de- veloping this comprehensive legal system in the hands of an expert ad- ministrative body rather than the federalized judicial system. '̂*

Thus, Garmon and its progeny are based in significant part on the juris- dicdonal command of the NLRA—that is. Congress's intent to vest au- thority in the NLRB to make decisions regarding its substandve provi- sions.^'* This is not the case with the FLSA, and so the comparison is of limited value.

Likewise, decisions finding RICO remedies precluded by other fed- eral labor laws all contain this (perhaps disposidve) jurisdicdonal ele- ment. For example, the D.C. Circuit found that the Service Contract Act (SCA) '̂̂ precluded RICO remedies for violadon of its substandve provi- sions because "it is well-established that the SCA does not confer a private right of acdon, but rather provides for exclusive administradve enforce- ment with the Secretary of Labor." '̂® Similarly, in Norman v. Niagara Mohawk Power Corp., the Second Circuit found that the Energy Reorganizadon Act^" "provides a comprehensive administradve proce- dure under the auspices of the Secretary of Labor which cannot be cir- cumvented by resort to [federal courts] in the first instance."-"* All other

212. Compare 29 U.S.C. § 160(a) (2006) (grandng NLRB jurisdicdon to enforce sub- standve provisions of the NLRA), and San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244 (1959) (determining this jurisdicdon to be exclusive as a general matter), with 29 U.S.C. § 216(b) ("An acdon to recover [damages under the FLSA] may be main- tained against any employer . . . in any Federal or State court of competent jurisdicdon . . . . " ) .

213. Amalgamated Ass'n of St, Elec. Ry. & Motor Coach Emps. v. Lockridge, 403 U.S. 274,288 (1971) (emphasis added).

214. For a more detailed discussion of Garmon and its progeny, see generally Harry G. Hutchison, Liberty, Liberalism, and Neutrality: Labor Preempdon and First Amendment Values, 39 Seton Hall L. Rev. 779 (2009).

215. 41 U.S.C. §§ 351-358 (2006). 216. Danielsen v. Bumside-Ott Aviadon Training Ctr., Inc., 746 F. Supp. 170, 175

(D.D.C. 1990), affd, 941 F.2d 1220 (D.C. Cir. 1991). 217. 42 U.S.C. § 5801 (2006). 218. 873 F.2d 634, 635-36 (2d Cir. 1989); see also id. at 637 ("In a field as specialized

and technical as that of nuclear energy, the importance of this interplay between the two agencies cannot be overemphasized.").

2012] FAIR LABOR FRAUD 2185

cases cited by courts as persuasive authority to dismiss ELSA-based RICO complaints contain similar logic.^'"

Therefore, while these comparator cases are informative, they do not command dismissal of RICO complaints predicated on ELSA viola- tions. The ELSA does not "preempt" RICO in the same way it may preempt state wage and hour laws, as both are federal statutes,^^" and key differences between RICO and § 1983 lawsuits counsel against a direct comparison of how those two statutes interact with the ELSA.̂ '̂ Eurther- more, while there are many cases finding that RICO claims based on vio- lation of other labor statutes are precluded, these decisions were based in large part on the exclusive jurisdiction these statutes granted to adminis- trative agencies to hear such claims. By contrast, ELSA claims are heard in federal court and therefore no jurisdictional conflict exists in allowing a federal district judge to adjudicate an ELSA-based RICO claim.̂ ^^ Upon closer examination, therefore, these seemingly analogous cases do not provide a simple answer to the ELSA-RICO problem, and courts have erred insofar as they read these comparators as dictating ELSA preclu- sion of RICO. Rather than focus on these comparators, courts faced with an ELSA-RICO claim should look instead at the defendant's alleged con- duct to determine whether, in that particular instance, the RICO claim is precluded. Part III offers guidance to courts making such determina- tions.

III. Eocus ON THE ERAUD

This Part seeks to provide guidance to a judge facing the ELSA-based RICO complaint. Eor the reasons discussed in Part II.B, comparator cases do not provide an easy answer because the interplay of these two statutes is unique. Instead, courts should focus on the manner in which the em- ployer achieved its goal, namely, keeping for itself wages that it knows rightfully belong to its employee. Part III.A discusses the jurisdictional requirement of mail fraud and concludes that, given die Supreme

219. See, e.g., Choimbol v. Fairfield Resorts, Inc., No. 2:05cv463, 2006 WL 2631791, at *7 (E.D. Va. Sept. 11, 2006) (citing as persuasive authority Danielsen, 746 F. Supp. 170; Norman, 873 F.2d 634; Bodimetric Healtii Servs., Inc. v. Aetna Life & Cas., 903 F.2d 480, 486-87 (7tii Cir. 1990); Butchers' Union, Local No. 498 v. SDC Inv., Inc., 631 F. Supp. 1001 (E.D. Cal. 1986)). Bodimstric íouná tiiat RICO was precluded as a remedy for alleged violations of the Medicare Act, due to that Act's "exclusive review provisions." 903 F.2d at 487; see also 42 U.S.C. § 1395ff(a)(l) (providing Secretary of Health and Human Services shall make "initial determinations" With respect to benefits under the Act). Butchers' Union involved alleged violations of tiie NLRA. 631 F. Supp. at 1005; see also supra notes 197- 208 and accompanying text (discussing exclusive jurisdiction of NLRB).

220. See supra Part II.B.l (discussing FLSA preemption of state wage and hour laws). 221. See supra Part II.B.2 (discussing limited applicabihty of Kendall v. City of

Chesapeake, 174 F.3d 437 (4tii Cir. 1999), to tiie FLSA-RICO context). 222. See supra notes 191-219 and accompanying text (discussing preclusion of RICO

claims based on NLRA and other federal labor statutes).

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Court's broad interpretation of this element, the mailing of a paycheck almost certainly satisfies this element. However, this does not end the inquiry: The mailings must be in furtherance of a fraudulent scheme. Part III.B discusses this issue, advising courts to closely examine the al- leged conduct of the defendant. Not every failure to pay wages is a legit- imate basis for a RICO claim; mistaken violations of the FLSA lack the intent to defraud, and even willful violations may not be fraudulent. However, in those cases in which the employer's deceitful conduct con- stitutes a "scheme or artifice to defraud"^^' the employee of her wages, judges should allow FLSA-based RICO claims to proceed. By doing so, courts will keep plaintiffs from using artful pleading to circumvent the FLSA's detailed remedial scheme, while at the same time punishing fraudulent conduct that falls clearly within the ambit of RICO.

A. Use of the Mails: The Automatic Element'?

As discussed in Part II, some courts have found that deficient paychecks—even if devised with fraudulent intent—can never constitute mail fraud because the use of the mails alerted the plaintiffs to the al- leged fraud.̂ "̂* In Cavallaro v. UMass Memorial Health Care, Inc., the District Court of Massachusetts relied heavily on the Supreme Court's decision in United States v. Mazê^^ to find that the paychecks could not have furthered the allegedly fraudulent scheme, '̂® particularly emphasiz- ing the Court's observation that the "successful completion of the [credit card invoice] mailings . . . increased the probability that [Maze] would be detected and apprehended."^^' The court in Cavallaro read this quote as foreclosing plaintiffs' FLSA-RICO claims, because the paychecks similarly should have alerted plaintiffs to the scheme.^^*

While the court may ultimately be correct in finding that no mail fraud occurred, it placed too much emphasis on the mailing element, in particular the "increased probability" phrase in Maze. This language was a response to an alternative theory advanced by the Government that, while the mailings were not instrumental to the theft itself (which the Government conceded), they nonetheless furthered the scheme because they delayed the inevitable detection of Maze's activity by "lulling [the plaintiffs with] assurances that the promised services would be per-

223. 18 U.S.C. §1341 (2006). 224. See supra Part II.A.l (discussing cases dismissing FLSA-based RICO complaints

for lack of mail fraud). 225. 414 U.S. 395 (1974). 226. Cavallaro v. UMass Mem'l Health Care, Inc., No. 09-40152-FDS, 2010 WL

3609535, at*4 (D. Mass. July 2, 2010). 227. Maze, 414 U.S. at 403. 228. 2010 WL 3609535, at *4 ("The reasoning of Maze applies here . . . . [If] the

paychecks did not accurately refiect the number of hours worked . . . [this] would alert the plaintiffs to the fraudulent scheme, not conceal it").

2012] FAIR LABOR FRAUD 2187

formed."^^" The Court responded by emphasizing that mailings that in- creased the probability of detecdon could not have served to lull the plaindffs.^^" In Cavallaro, by contrast, the plaintiffs alleged that the mail- ings were instrumental to the scheme itself.̂ '̂ Thus, even under the logic of Maze, the fact that the paychecks in Cavallaro may have increased the probability of detecdon is not alone enough to merit dismissal of these complaints; after all, in every fraud case, every potendal evidendary trace left by a fraudulent scheme increases the likelihood of detecdon.

Moreover, fifteen years after Maze was decided, the Supreme Court significandy relaxed the "in furtherance" requirement for mail fraud. In Schmuck V. United States, the defendant was a used car salesman who tampered with odometers before selling his cars to dealers.^^^ He was found to have "used the mails" based on the fact that those dealers subsequendy mailed the dde applicadons to the state Department of Transportadon. In affirming his convicdon, the Supreme Court took an expansive view of the mail fraud statute's jurisdicdonal element: "To be part of the execudon of the fraud . . . the use of the mails need not be an essendal element of the scheme. It is sufficient for the mailing to be 'incident to an essendal part of the scheme,' or 'a step in the plot.'"^^^ Although the mailings did not contribute to the decepdon, "they were necessary to the passage of dde, which in turn was essendal to the perpetuadon of Schmuck's scheme."2^* The language in Schmuck indicates that the issue is not whether the mailing involved was essendal itself to the scheme (or contributed to the decepdon); rather, "[t]he relevant quesdon at all dmes is whether the mailing is part of the execudon of the scheme as conceived by the perpetrator at the dme."^^^

The mailing of paychecks in the FLSA-RICO context seems to meet this requirement easily. If the defendants were engaged in a fraudulent scheme to steal wages, sending deficient paychecks in the mail was a part of the scheme and certainly in the minds of the perpetrators when they conceived of the plot. Thus, the Cavallaro court should not have dis-

229. Brief for die United States at 29, Maze, 414 U.S. 395 (No. 72-1168). The Government cited united States v. Sampson for the proposition that mailings which lull or delay detection of a fraudulent scheme are themselves in furtherance of that scheme. Id. at 28-29 (citing 371 U.S. 75, 81 (1962)).

230. See Maze, 414 U.S. at 403 ("The [mailings in Sampson] were designed to lull the victims into a false sense of security . . . and therefore make the apprehension of the de- fendants less likely . . . . But die successful completion of the mailings [in Maze] increased the probabihty that respondent would be detected . . . .").

231. See Sample Complaint, supra note 22,1 125 ("In executing or attempting to ex- ecute the Scheme and to receive the finanäal benefits of the Scheme, defendants repeatedly mailed payroll checks . . . ." (emphasis added)).

232. 489 U.S. 705, 707 (1989). 233. Id. at 710-11 (quoting Badders v. United States, 240 U.S. 391, 394 (1916)) (cit-

ing Pereira v. United States, 347 U.S. 1, 8 (1954)). 234. Id. at 712. 235. Id. at 715 (emphasis added).

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missed the claim on* this basis. However, § 1341 does not criminalize use of the mails for any illegal purpose, but rather only for the purpose of furthering a "scheme or artifice to defraud."̂ *® The following section dis- cusses this element and concludes that—rather than focusing on the ju- risdictional element of mailing, which Schmuck expanded to an almost limitiess extent^*'—judges faced with the FLSA-based RICO complaint should look instead to the underlying conduct to determine whether fraud in fact occurred at all.

B. Finding the Fraud: Intent Makes the Difference

Courts dismissing FLSA-based RICO claims on the theory that the FLSA "'is the exclusive remedy for enforcing rights created under the FLSA'"̂ *^ dov«iplay the legal significance of the manner in which the wages were taken. Bad actors often deprive indi-viduals of money or property that is protected by civil law (such as contract or labor law); while plaintiffs may use these laws to make themselves whole, they may also have a RICO action if their injury was caused by a predicate crime. For instance, courts have found that plaintiffs who might otherwise have remedies for breach of contract or NLRA remedies may nonetheless bring a RICO suit under a mail fraud theory for the same conduct, pro- vided the defendant profited -via a misrepresentation that injured the plaintiff.̂ -''̂ Likewise, a defendant who enriches himself by threatening an individual with violence will be liable for extortion (also a RICO predi- cate act̂ '"') even if a contract remedy could make the plaintiff whole.^'"

236. 18U.S.G. §1341 (2006). 237. See Jack E. Robinson, The Federal Mail and Wire Fraud Statutes: Gorrect Stand-

ards for Determining Jurisdiction and Venue, 44 Willamette L. Rev. 479, 500 (2008) ("The unfortunate result [of Schmuck] has been to give the mail and wire fraud statutes virtually unlimited application, since in today's economy it is virtually impossible to engage in a business or financial transaction that . . . does not involve a mailing or wire transmis- sion.").

238. DeSilva v. N. Shore-Long Island Jewish Healdi Sys., Inc., 770 F. Supp. 2d 497, 514 (E.D.N.Y. 2011) (quoting Peti-as v. Johnson, No. 92 Giv. 8298 (GSH), 1993 WL 228014, at*2 (S.D.N.Y. June 22, 1993)).

239. See, e.g.. United States v. Bronston, 658 F.2d 920, 926-27 (2d Cir. 1981) ("Alt- hough a mere breach of fiduciary duty, standing alone, may not necessarily constitute a mail fraud, the concealment by a fiduciary of material information . . . where the non- disclosure could or does result in harm to the other is a violation of the statute."); see also United States v. Boffa, 688 F.2d 919, 930 (3d Cir. 1982) (holding defendant could be con- victed under RICO for conduct that, while arguably also unfair labor practice, involved deprivation of economic benefits contained in collective bargaining agreement). Note that Boffa does not run into a problem of Garmon preemption, discussed supra Part II.B.3, because the mail fraud statute provided an independent basis for the conviction. See supra notes 207-209 and accompanying text.

240. 18 U.S.C. § 1961(1) (listing both state and federal crimes of extortion in defini- tion of "racketeering activity").

241. See, e.g.. All World Profl Travel Servs. v. Am. Airlines, Inc., 282 F. Supp. 2d 1161, 1174 (CD. Cal. 2003) (noting "it is well settied diat facts surrounding contractual

2012] FAIR LABOR FRAUD 2189

Thus, the fact that a plaintiff was deprived of wages should not cause courts to automadcally prescribe an FLSA remedy; rather, courts should look at the defendant's conduct.

A recent decision of the Sixth Circuit involving RICO claims based on violadon of 5iate worker's compensadon laws took just this approach. In Brown v, Cassens Transport Co,, the plaindffs alleged that the defend- ants fraudulently deprived them of the worker's compensadon to which they were endded under IVIichigan law.̂ *̂ The defendants' argument sounded in the language of Garmon preempdon: Because under state law such claims had to be filed with an administradve agency, the plaindffs should not be able to bring this suit in federal court for conduct that vio- lated the worker's compensadon laws. The court resoundingly rejected this argument, stadng that "[t]he fiaw with the defendants' argument is that the predicate offense for the RICO acdon is mail fraud, not the de- nial of worker's compensadon."^** The court acknowledged that the fraud claim related to the putadve state claim insofar as the state law was the source of the property right that was allegedly irifringed, but it noted that "this fact shows an overlap in sancdoned conduct, not a dependency reladonship . . . . A federal civil RICO claim and a state claim for worker's comperisadon are legally disdnct, even though they share factual under- pinnings."^** Of course, there was a Supremacy Clause issue involved in Brown that is not present in the FLSA-RICO context: The court was not 'willing to have its jurisdicdon over civil RICO claims be determined by state law.̂ *̂ However, the disdncdon between the violadon of an employ- ment law and mail fraud that deprives a plaindff of property guaranteed to him by that law is fully applicable to the FLSA-RICO context.

Two hypothedcal examples demonstrate this point. First, consider a "simple" FLSA violadon, in which a corporadon decides not to pay its employee the minimum wage and mails her a paycheck for half of what the FLSA requires. When the employee confronts her boss, he answers, "We understand that this wage does not comply with the FLSA. Because we disagree with the purposes of that Act, we are paying you what we feel is a fair market wage." If the plaindff then sues, she will be endded to back pay under the FLSA and probably liquidated (that is, double) dam- ages, as the 'violadon seems to be willful.̂ ''® However, she will almost cer- tainly not have a RICO claim, as the defendant's conduct does not seem to amount to any of RICO's predicate acts. There is no fraud, for exam- disputes may support a RICO claim" and allowing extordon-based RICO claim to pro-

ceed).

242. 675 F.3d 946, 951 (6di Cir. 2012). 243. Id. at 954-55. 244. Id. 245. See id. at 951 ("We hold that the Supremacy Clause prevents the Michigan legis-

lature from preempdng a RICO remedy by declaring its worker's compensadon scheme to be exclusive of federal remedies.").

246. 29 U.S.C. § 216(b) (2006).

2190 COLUMBIA LAW REVIEW [Vol. 112:2153

pie, as tiie corporation never sought to conceal its decision to keep her wages for itself. Neither does there seem to be extortion, as the plaintiff was able to vindicate her ELSA right free from threats or fear. Thus, an ELSA-based RICO claim alleging diese facts should fail, because all tiiat has occurred is an ELSA violation.

However, consider a hypothetical example from the opposite end of the "bad actor" spectrum. Like the defendant in the previous example, this employer pays its employees half of what they are owed under the ELSA. But when this company's unfortunate employees complain, a hu- man resources officer hits them in the stomach with a baseball bat. These employees undoubtedly have a claim for back pay and liquidated dam- ages under the ELSA. At the same time, they have a straightforward path to RICO recovery: The defendants' repeated acts of extortion^*' consti- tute a pattern of' racketeering activity that injured the plaintiffs in (at least) the amount of their wages, for which the employees would be enti- ded to treble damages."̂ *« Indeed, criminal behavior of" this sort by an or- ganization seems to be exactiy what Congress sought to address with RICO,̂ *" and it is difficult to imagine a judge withholding a RICO rem- edy in this case on the theory that the ELSA "'provides the sole means of recovery'" for a wage and hour violation.^^"

Allegations of fraud will almost never present 2& simple a case as these two polar examples, and they will require a more detailed factual inquiry. Eraud is generally defined as an intentional misrepresentation of a material existing fact made with knowledge of its falsity and for the purpose of inducing another person to act.^ '̂ In the civil context, the plaintiff must generally prove that she actually relied on this misrepre- sentation and suffered an injury because of it.̂ ^̂ Thus, it is clearly possi- ble for an employer to use a paycheck to defraud his employee out of wages. Eor example, in the time between receiving a paycheck and de- positing it, an employee generally believes she has been paid; she relies on the check's veracity and thus ceases to demand payment from her employer. If the check turns out to be a fake, and this window grants the fraudster enough time to defund the underlying corporate account, the

247. 18 U.S.C. § 1951 (2006). 248. For an example of a RICO case in which plaintiffs recovered treble damages

based on wages lost due to extortion, see Aguilar v. Mega Lighting, Inc., No. CV 08-07313 DDP QTLx), 2009 WL 940941 (CD. Cal. Apr. 6, 2009).

249. See supra Part I.B (discussing Congress's intent in passing RICO). 250. DeSilva v. N. Shore-Long Island Jewish Healtii Sys., Inc., 770 F. Supp. 2d 497,

531 (E.D.N.Y. 2011) (quoting Peti-as v. Johnson, No. 92-cv-8298 (CSH), 1993 WL 228014, at*2 (S.D.N.Y. June 22,1993)).

251. Black's Law Dictionary 731 (9tii ed. 2009). 252. Neder v. United States, 527 U.S. 1, 24-25 (1999). An exception, discussed supra

note 91 and accompanying text, is the sort of situation involved in Bridge v. Phoenix Bond & Indemnity Co., 128 S. Ct. 2131 (2008), in which a third party relied on the fraud in a way that injured the plaintiff. However, this would seem to be a rare situation and is in any event inapplicable to the employment compensation context.

2012] FAIR LABOR FRAUD 2191

employee's reliance on this misrepresentation has caused her injury. In a perhaps more common example, consider an employer that knows its employees are unable or unlikely to verify the wages contained in a paycheck and sends a deficient check to an employee (for half of what the employee actually deserves, for instance) with the expectation that the employee will rely on this check. When the employee in fact does so and continues to work at a sub-minimum wage, a fraud has been commit- ted.

The hard cases are those in which it is difficult or impossible to know the employer's intent, both in making a misrepresentation and in intending the plaintiff to rely on it. From the facts alleged in the "boiler- plate" complaints discussed above,^*' for example, it is unclear (1) whether the hospitals knew they were underpaying the plaintiffs in viola- tion of the FLSA (if they were in fact underpaying at all); and (2) whether the hospitals actually believed that the plaintiffs would take these checks as factual assertions about what wages they were owed. Federal Rule of Civil Procedure 9(b) ameliorates these difficulties by re- quiring heightened specificity in pleading fraud, particularly with respect to the facts of the misrepresentation, although it allows fraudulent intent to be alleged generally.̂ *"* But if such complaints meet the specificity re- quirements of Rule 9 (b), it necessarily falls to the judge to determine whether the defendant intentionally made a misrepresentation on which the plaintiffs detrimentally relied.

While such judgments are more difficult than a simple, mathemati- cal determination of whether the FLSA has been violated, this difficulty does not counsel a blanket mandate of FLSA preclusion. Judges are often asked to make rulings on issues such as fraud, which inevitably involve reconstructing the mental state of a defendant based on limited infor- mation. Congress made clear in both the mail fraud statute and in RICO that it is better to put such decisions in the hands of judges than to let such fraudulent conduct go unchecked and unpunished.

CONCLUSION

For the judge deciding whether or not to dismiss an adequately pled FLSA-based RICO claim, no simple solution presents itself. Neither stat- ute mentions the other, and each has been interpreted to have a broad remedial purpose.^^^ Further, because these claims emerged relatively

253. See supra Part ILA. (discussing recent spate of litigation involving "boilerplate" complaints containing FLSA-based RICO claims); see also Sample Complaint, supra note 22.

254. Fed. R. Civ.P.9(b). 255. See, e.g., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 498 (1985) ("RICO is to

be 'liberally construed to efiectuate its remedial purposes'" which are "nowhere more evident than in the provision of a private action for those injured by racketeering activity." (quoting Organized Crime Control Act of 1970, Pub. L. No. 91-452 § 904(a), 84 Stat 922,

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® diere is litde precedendal guidance. No circuit court has ruled on this exact issue, and while there are seemingly applicable prec- edents, caution is necessary: Upon closer examinadon, the outcomes of these cases turned in significant part on consideradons that are unwar- ranted in die FLSA-RICO context.^"

Rather than relying, as most judges have, on a hard and fast rule that the FLSA precludes RICO claims brought for wage and hour violadons, judges should instead look at the alleged conduct to determine whether the defendant was in fact engaged in a fraudulent scheme. Simple fail- ures to pay the minimum wage should not proceed as RICO claims, as Congress set forth in the FLSA a detailed remedial scheme to address such behavior. At the same dme, with RICO Congress sought to severely punish organizadons that engage in fraud, and thus RICO's remedies should not be withheld from a plaindff who can prove she was injured by her reliance on an employer's intendonal misrepresentadons simply be- cause she could also have sued under the FLSA.

This individualized approach to FLSA-based RICO claims may create difficuldes for judges, as it will require them to answer quesdons about the intendons and beliefs of a given defendant. However, judges must frequendy engage in such fact-finding and should not shy away from do- ing so in the wage and hour context simply because an alternadve rem- edy exists. When fraud has been adequately pled, allowing FLSA-based RICO claims to proceed will serve the purposes of both statutes by help- ing to maintain a fair and honest reladonship between employer and employee.

947)); Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983) ("The definition of 'employer' under the ELSA is not limited by the common law concept of 'employer', and is to be given an expansive interpretation in order to effectuate the FLSA's broad remedial purposes." (citing Real v. Driscoll Strawberry Assocs., 603 F.2d 748, 754 (9th Cir. 1979))).

256. As discussed supra note 16, the first case found involving a ruling on such a claim was decided in 2006. See Choimbol v. Fairfield Resorts, Inc., No. 2:05CV463, 2006 WL 2631791, at *7 (E.D. Va. Sept 11, 2006) (finding RICO claim precluded by FLSA).

257. See supra Part II.B.l (discussing differences between FLSA preemption of state common law claims and FLSA preclusion of federal remedy); supra Part II.B.2 (discussing Kendallhut noting § 1983 operates differendy than RICO and thus KendaWs applicability is questionable); supra Part II.B.3 (noting jurisdictional issues present in RICO claims involv- ing NLRA and other federal labor laws that do not exist with respect to FLSA).

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