Citing Civil RICO’s Breadth, Sixth Circuit Finds, as a Matter of First Impression, Civil RICO Claims Based on Predicate Activity Distinct From Unpaid Wages Not Precluded by the FLSA

Torres v. Vitale, __ F.3d ___, 2020 WL 152289 (6th Cir., Mar. 31, 2020)

Citing Civil RICO’s Breadth, Sixth Circuit Finds, as a Matter of First Impression, Civil RICO Claims Based on Predicate Activity Distinct From Unpaid Wages Not Precluded by the FLSA

Emilio Torres, Plaintiff, was a long-time employee at several locations of Vitale’s Italian Restaurant Inc. and alleged employees were deprived of overtime pay.  Torres filed suit, seeking damages under RICO but the district court dismissed his complaint, holding that the remedial scheme of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., precluded the RICO claim.

The Court of Appeals reversed, and remanded, finding that although it agreed with the district court that Torres could not proceed on his claims based on lost wages from the alleged “wage theft scheme” he could recover because the FLSA does not preclude RICO claims when a defendant commits a RICO-predicate offense giving rise to damages distinct from the lost wages available under the FLSA.

The Court construed RICO broadly explained that contrast with the FLSA’s “unusually elaborate enforcement scheme,” Kendall, 174 F.3d at 443, to remedy a particular type of misconduct, RICO has a “virtually unlimited sweep,” providing a remedy for the broad range of wrongdoing that fits within its scope.  The Supreme Court has reaffirmed RICO’s breadth time and time againSee, e.g.Sedima S.R.P.L. v. Imrex Co., 473 U.S. 479, 499, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (“[T]he fact that RICO has been applied in situations not expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth.”) (alteration in original) (quoting Haroco, Inc. v. Am. Nat’l Bank & Tr. Co. of Chi., 747 F.2d 384, 398 (7th Cir. 1984)).

The Court stated that even though district courts have dismissed duplicative FLSA-based RICO claims as precluded by the FLSA because the FLSA provides the exclusive remedy for wage and overtime disputes, other courts have held that the FLSA’s savings clause suggests that Congress did not intend for the FLSA to provide the exclusive remedy for the violations of its provisions and therefore does not preclude even duplicative claims.

The Court held that the FLSA precluded RICO claims to the extent that the damages sought were  for unpaid minimum or overtime wages. However, when a RICO claim that is based on a dispute between an employer and an employee alleges damages that are distinct from unpaid wages, even if the RICO-predicate act arises from conduct that also violates the FLSA, then the RICO remedies do not fall within the ambit of the FLSA’s remedial scheme and are therefore not precluded.

Ed. Note:   It is important to not merely allege injury caused by unpaid minimum or overtime wages in a civil RICO suit.  If so, the action will be precluded.  Injury based on commission of racketeering predicates distinct from the unpaid wages are actionable, at least in the Sixth Circuit.

 

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