Thread: Illegal worker case OK'd at carpet giant

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Illegal worker case OK'd at carpet giant


By Ryan Mahoney
Atlanta Business Chronicle
Updated: 8:00 p.m. ET July 3, 2005


A federal appeals court has cleared the way for an employee lawsuit against Calhoun, Ga.-based Mohawk Industries Inc. that claims the nation's No. 2 carpet and rug manufacturer hired illegal immigrants instead of legal workers to cut labor costs.

Led by Chairman, President and CEO Jeffrey Lorberbaum, Mohawk employed about 34,300 people as of March 7 and posted 2004 revenue of $5.9 billion. Second in size only to Dalton, Ga.-based Shaw Industries Inc., its carpet brands include Karastan, Ralph Lauren and Aladdin. The company also claims the top market position in ceramic floor tile and stone flooring.

According to the original complaint filed 18 months ago in U.S. District Court in Rome by four current and former Mohawk workers, the company (NYSE: MHK) sent its employees "to the United States border, including areas near Brownsville, Texas, to recruit undocumented aliens that recently [had] entered the United States in violation of federal law" and transport them to North Georgia.

The suit alleges Mohawk employees and other recruiters provided these illegal immigrants with housing and found them jobs with the company. Although some of the illegal workers were arrested, Mohawk's supervisors helped others evade detection, the suit charges.

In addition, even though Mohawk fired several illegal immigrants after discovering them among its work force during internal audits, the company soon rehired them under different names, according to the suit. The suit also claims Mohawk destroyed documents in an effort to conceal the fact that it employed illegal workers.

One of Mohawk's objectives, according to the suit, was to inflate the size of the pool from which it hires hourly workers, thereby depressing wages. Another was to reduce the number and expense of workers' compensation claims, since "illegal employees are unlikely to file," the suit states.

Randall Patton, a history professor at Kennesaw State University and author of the 1999 book "Carpet Capital: The Rise of a New South Industry," said more than half the workers in many North Georgia carpet mills are Hispanic, and their widespread use, while credited with saving the industry, also has produced a few well-publicized government raids.

"There was a noticeable public backlash," Patton said. "It's settled down, though. I don't know if folks are looking the other way because the mill owners want the labor ... but I don't doubt that there's lingering ill feelings."

The plaintiffs' legal team, which includes Atlanta's Bondurant Mixson & Elmore LLP and noted North Georgia defense attorney Bobby Lee Cook, argued the bulk of their case under the state and federal Racketeer Influenced and Corrupt Organizations (RICO) acts.

RICO primarily is used to prosecute tax evaders and organized crime, but it also permits civil suits against those who break immigration law, and the damages awarded can be triple the norm. Chicago attorney Howard Foster, co-lead counsel for the plaintiffs, has had success with this legal theory in other jurisdictions -- including a case against poultry processor Tyson Foods Inc. (NYSE: TSN) -- by drawing comparisons to antitrust violators.

In April 2004, district judge Harold Murphy shot down a request by Mohawk to throw out the RICO claims. The company, which has denied all charges, took the unusual step of appealing the case to the 11th Circuit Court of Appeals before legal proceedings went any further.

On June 9, an appeals court panel finally ruled that the RICO case could proceed. Carl Cannon, a partner with Constangy Brooks & Smith LLC, the Atlanta-based law firm representing Mohawk, said the defense will ask the entire 12-member appeals court to review the decision and could consider taking things all the way to the U.S. Supreme Court.

If the district court is given the case again, the plaintiffs' team will try to get it certified as a class action, said Bondurant Mixson partner Joshua Thorpe. He put the number of people working for the company in Georgia at more than 20,000, spread across about two dozen facilities.

I think I will stick with natural wood floors.

I believe Mohawk Industries would be the perfect company to go after. I'm not well informed on how to boycott a company but I'd love to see this one go down. To deliberately send people south to engage illegals to work for them with the intention to put Americans out of work and/or drive average Americans to poverty. Shameful!

I know there are probably also many other companies that do this which is why I'd love to be involved in spreading the word about these companies. I'm sorry to see that local merchants may be affected by association and hope they will be able to get another supplier but this is totally horrendous.