Mohawk Industries v. Williams - Oral Argument

Argument of Carter G. Phillips

Chief Justice Roberts: We'll hear argument next in Mohawk Industries v. Williams.

Mr. Phillips.

Mr. Phillips: Thank you, Mr. Chief Justice, and may it please the Court--

This case involves the somewhat murky concept of an association in fact enterprise within the meaning of section 1961(4) of title 18, which is the RICO statute, and actually the specific language in this case, which is reproduced in the petitioner's brief at page 2, is a group of individuals associated in fact.

In this case, there are two fairly obvious enterprises that one might have expected plaintiff to identify in this... in its... in their complaint.

The first one is Mohawk Industries, which is their employer.

That is a corporation, clearly eligible to serve as an enterprise.

But, of course, the problem is if you identify Mohawk as the... as the enterprise, you then cannot sue Mohawk as the person under this Court's decision in Kushner.

And so Mohawk was an unattractive enterprise under... on that... because of that reason.

Second, there are the recruiting and temporary agencies which are likely corporations and certainly are legal entities and, again, are eligible to be enterprises within the meaning of the statute.

But, again, here the problem is that there is no indication that Mohawk in any way directs or conducts the affairs of those agencies, and therefore, under this Court's explicit holding in Reves, there would no... there would be no basis for liability.

And so the plaintiffs have attempted to sort of move around those two substantial obstacles to stating a claim by laying the claim to what is called an association in fact enterprise.

Their complaint at paragraph 76, which is on page 23 of the joint appendix, states this fairly broadly.

Mohawk has participated in an association in fact enterprise with third party employment agencies and other recruiters.

The question is what is this enterprise and does it have legs for purposes of bringing a RICO action.

In analyzing that question, it seems to me there are two subissues within that.

The first one is whether or not the language of section 1961(4) precludes using the corporation as part of an association in fact enterprise because 1961(4) explicitly... or specifically refers to individuals, and everyone has recognized, including I think the respondents and the United States, that if... if it were clear that association in fact enterprises or that enterprises limited to individuals under these circumstances, given the structure of the statute, the corporation would not be permissibly brought in on this particular theory.

So you have to get past whether or not that is a limiting principle under this definition.

Justice Kennedy: If we were--

Justice Scalia: Before you get to your second point, why is that first point before us?

You... you didn't raise it in the courts below.

You didn't raise it in your petition here.

Your question presented it... I'd like to stretch to reach it, but I don't even find it necessarily included within the question presented.

The question presented is whether a defendant corporation and its agents engaged in ordinary, arms length dealings can constitute an enterprise in light of the settled rule that a RICO defendant must conduct or participate in the affairs of some distinct enterprise and not just its own affairs.

It seems to me it's only question two you put before us.

Mr. Phillips: Justice Scalia, the... the answer... a couple answers.

First of all, obviously, we could not have raised this before the... either the district court or the court of appeals because the law was absolutely settled in the Eleventh Circuit.

Justice Scalia: As it is in nine other circuits.

Mr. Phillips: As it is in nine other circuits.

Justice Scalia: And all circuits against you.

Mr. Phillips: To be sure.

Justice Scalia: And we would have been unlikely to accept cert on... on point one alone I think.

Mr. Phillips: Right.

But the second... but the question is not... the question is whether or not that issue is fairly subsumed within the question that was actually presented, and that--

Justice Ginsburg: I think it's... it's a little more difficult in your case because you're pursuing an interlocutory appeal, which you were allowed to do only because you've got double certification and you got certification on the questions that the district court addressed.

You can't expand a 1292(b) order to include things that were not decided below.

Mr. Phillips: --The... the question presented in this case... and it's the same question that was presented below... is whether the defendant corporation and its agents under these circumstances can constitute an enterprise.

Justice Scalia: In light of the settled rule that a defendant must conduct or participate in the affairs of some distinct enterprise and not just its own affairs.

Mr. Phillips: To be sure.

But the--

Justice Scalia: If you hadn't included that last part, in light of, but it seems to me you're focusing on the... on the particular claim that you're making.

Mr. Phillips: --But, Justice Scalia, the in light of certainly raises the secondary issue, but it's still... I mean, the rule is whether it's fairly subsumed within the question.

And it is a logically prior question whether or not the statute extends to this particular situation.

Justice Scalia: It is logically prior, and I hate to go through all the trouble of figuring out this case if, indeed, corporations are ineligible anyway.

I mean, you know, we're... we're answering a totally hypothetical, nonexistent question.

Mr. Phillips: But the situation that's presented here is identical to the situation that existed in McNally v. United States, Justice Scalia.

In that case, the question was whether or not an intangible rights theory of mail fraud could be extended to include nongovernment officials.

That was the specific question presented in that case, and that's the... the question the Court granted.

And every court of appeals had interpreted that statute to say that intangible rights theories are valid under that statute.

And... and that issue was not adverted to in the petition, and it was briefed in this Court--

Justice Ginsburg: And they weren't--

Mr. Phillips: --and it was regarded as fairly subsumed just as--

Justice Ginsburg: --they weren't--

Mr. Phillips: --I'm sorry, Justice Ginsburg.

Justice Ginsburg: --they weren't... your problem is you don't have a final judgment.

The only way that you can get even to the court of appeals is on that 1292(b) order.

And I thought that the function of 1292(b) was to say specify the questions that are so important that they have to be decided and appealed before there's a final judgment.

And whatever there might have... whatever one might read into a question presented, I don't think that 1292(b) orders have ever been treated that way.

Mr. Phillips: I... I don't have any specific authority to the contrary, although the other side didn't argue 1292(b) as in some sense a limitation here.

And I don't see anything in this Court's rules which broadly authorize the Court to grant certiorari to any question that's fairly subsumed within the question presented.

And it is a totally artificial inquiry to sit here and say, you know, how are we going to analyze what is--

Justice Breyer: Suppose we get through that.

I see the artificial part.

Just what is it?

Piling Pelion on something or other.

Mountains that you pile one on top of the other.

But your opponents have cited in your brief... in the brief on page 12 that counsel for Mohawk said to the court, specifically, Mohawk agrees that a corporation can be both a RICO person and part of an association in fact enterprise.

Now, if we can overcome all these other problems--

Mr. Phillips: --Right.

Justice Breyer: --what do we do about that particular concession?

Mr. Phillips: The... the clause that introduces that is under current law, and that's absolutely true in the Eleventh Circuit.

Under current law, as it existed in the Eleventh Circuit when we wrote that, there was no question that a corporation can be included within an association in fact enterprise.

Therefore, all we were doing was conceding what the state of the law was in the Eleventh Circuit and not questioning that, as... as, candidly, we had no ability to do that.

It would have been an utterly futile gesture to have raised this issue at any point prior to.

We could have raised it in the petition for certiorari, to be sure.

We... we think it is fairly subsumed within the question presented, and we also think it would be an... an utterly artificial exercise to try to analyze what is an association in fact enterprise without first deciding whether or not a corporation could be included in the first instance because, as Justice Scalia says, if they can't, then it seems to me this is a substantially easier question, and also it is an extraordinarily important one.

It is true that the courts of appeals have lined up consistently on the other side of this issue, but it is equally true that none of them has analyzed this issue with anything near the kind of care that would at least give me comfort that they've finally and fully resolved the issue.

And we're not going to get a more thorough vetting of it at this point because the circuits are... are at this... at this stage essentially lined up.

So the right time and opportunity for the Court is here.

Chief Justice Roberts: Well, unless somebody raises it.

Unless somebody raises it below to preserve it for the hearing en banc or... or some other way.

Mr. Phillips: But all of those courts are going to say the same thing, which is that this issue has been resolved.

It's possible, presumably, you might get an en banc review on it, but again, you don't have the question... you don't have a split anywhere other than some district court decisions that have... that have recognized our interpretation.

The issue is squarely posed here at this point.

It's been fully briefed for this Court.

Justice Breyer: Well, what... what sense would it make on the merits to get your interpretation on the merits, which would mean, I guess, that five individuals could be an enterprise because that's a group of individuals.

Mr. Phillips: Yes, that's true.

Justice Breyer: Five labor unions couldn't.

Five corporations couldn't.

One individual and four labor unions couldn't.

One individual and four corporations couldn't.

One individual and three partnerships couldn't.

And... but what... what sense would that make?

Mr. Phillips: Because all of those various combinations can still be attacked under the theory of RICO by just simply structuring your... your enterprise in the proper way.

It is true you can't broaden it.

You can't expand the enterprise definition in order to include a variety of different elements, but there's no way... I mean, in this case, for instance, they could have named Mohawk as the enterprise.

They could have named the... the recruiting agencies as the enterprise.

They could have named the corporate officers as the enterprise, and they could have dealt with all of them as a conspiracy.

And all of those are ways to get at precisely the issues that you identify, Justice Breyer.

Justice Ginsburg: If... if--

Mr. Phillips: And the answer--

Justice Ginsburg: --if Mohawk were a partnership instead of a corporation--

Mr. Phillips: --Yes.

Justice Ginsburg: --the partnership is an association of individuals.

Mr. Phillips: Well, a partnership is identified specifically under the statute as a... as a... as an enterprise... as eligible for an enterprise.

Justice Ginsburg: So if the answer is yes, if Mohawk had been a partnership, you would not have this particular objection.

Mr. Phillips: That's correct.

That wouldn't be this particular--

Justice Ginsburg: So it's only the corporate form.

Mr. Phillips: --Well, no.

If we were a partnership, it couldn't be in an enterprise with... with an association of individuals.

The question is--

Justice Ginsburg: That's--

Mr. Phillips: --does... can you have an associational enterprise that extends beyond individuals, that gets... that goes beyond the gangs and their family.

Justice Ginsburg: --Well, that's why I'm asking you about the partnership because it is an association of individuals.

So I'm not clear on what your answer is.

No partnership could be treated just like a corporation.

They're not an individual?

Or partnerships are okay because there's not a separate entity.

It's a... it's a association of individuals.

Mr. Phillips: Yes, let me be clear on this, that if... if you just bring an action against the partnership qua partnership you could clearly do that because that's defined as a... as a legal entity--

Justice Ginsburg: No.

It would--

Mr. Phillips: --for purposes... if you're trying to take the partnership and tag it to another group of rag tag individuals, that would not be an enterprise in fact because that's not an... an association of individuals.

It's a partnership which has an entity apart from the individuals.

Now, if you disaggregated all of the individuals within the partnership and called them individuals and said that they group with another group of individuals, then, yes.

I think if you could demonstrate that there is the loose organization, common purpose, and all of the requirements for having an association in fact available, sure, that wouldn't be any problem.

Justice Scalia: If this provision is exclusive, as you claim it is... it's intended to be an exclusive definition, why... why would they include union, just union and individuals?

What's magic about a union that--

Mr. Phillips: Because--

Justice Scalia: --that is not equally magic about a partnership or a corporation?

Mr. Phillips: --No.

Well, because what they have... you have to go back to the original list.

The list starts off with individuals, corporations, partnerships, associations, and other legal entities, unions, which is in addition to that because it's not a legal entity, or at least there was case law at the time--

Justice Scalia: Oh, I see.

Mr. Phillips: --that it's not a legal entity.

And then other associations.

Justice Scalia: This refers to a union that is not... is not an association.

Mr. Phillips: Right.

This is just a union.

Justice Scalia: Or any legal entity.

Mr. Phillips: Right.

Justice Scalia: A union that is not--

Mr. Phillips: It's just an additional item in the list.

Justice Scalia: --not a legal entity.

I see.

Justice Alito: But why would they use includes in that provision and means in other provisions?

Mr. Phillips: Because I think they viewed those as absolutely synonymous, Justice Alito, and... and the reason I think that is because we know that in some instances they use including but not limited to, which reflects that Congress recognized that includes in some contexts is an exhaustive listing, and I think they thought in some contexts, meaning 1961(4), that it was an exhaustive listing.

And also, it's important to look at the other definitions of 1961(4), and I think this is the most important element of the other side's submission in this case because they do no business with any of the other definitions.

The Attorney General, the definition of property for forfeiture purposes, those are unquestionably exhaustive lists.

At least, that's the way I... we argued it.

They didn't respond to that.

And yet, those are introduced with the term includes.

So it strikes me that the best contextual evidence of what Congress intended here was that includes would be used exhaustively and that the use of individuals of associated in fact would be used as a limiting principle, not as part of an exhaustive principle that expands the scope of this beyond... beyond... into a realm where it becomes nothing but a mere conspiracy statute, which is what it is today under this... under this particular theory.

That's... unless there are further questions about the straight statutory interpretation question, then I would go to the second issue, which is assuming that corporations can, nevertheless, be involved in association in fact enterprises, does this state such a thing.

And here, you have to go back to the Court's opinion in Reves, and in Reves, what the Court held is that liability depends on showing that the defendants conducted or participated in the conduct of the enterprise's affairs, not just their own affairs.

Okay?

So it is an element of RICO liability that you have to distinguish the... the corporate defendant's affairs in that case and... and the affairs of the... of the enterprise in this case.

Justice Souter: And don't they do that by... don't the allegations do that here by claiming that the corporation was manufacturing or providing false Social Security cards and was giving aid to the immigrants if the... the law got too close to them?

I mean, that is not merely the conduct by a corporation of the normal business of hiring and employing people.

Isn't that the sort of extra that is alleged that takes this out simply of the... of the category of the... of the corporation conducting its own affairs?

Mr. Phillips: Justice Souter, that is the only allegation that comes remotely close to suggesting anything along those lines, but I... my submission to you is that it doesn't get you there because what it says is that the recruiters are sometimes assisted... it does say the recruiters... by Mohawk employees who carry Social Security cards which they use for prospective or existing employees' needs to assume a new identity.

That's when they come to Mohawk as applicants or as employees, Mohawk provides them with this identification.

That's the allegation.

That's simply Mohawk conducting its own affairs.

That's not conducting or directing the affairs.

Justice Souter: Well, maybe I misunderstood the thrust of the allegation.

I thought the thrust of the allegation was that Mohawk was acting illegally in providing phony Social Security cards.

Mr. Phillips: Well, I don't doubt that there's a claim that... that there's illegality.

All of this is permeated with claims of illegality.

Justice Souter: Doesn't... doesn't that get them at least to... through the motion to dismiss, and doesn't it at least get them to summary judgment?

Mr. Phillips: I don't think so because even in Reves, the... Ernst & Young had been found to have engaged in illegality, that there was... that there was securities fraud involved there.

So that's... that doesn't distinguish it.

The fact of illegality would make it a conspiracy, but it doesn't demonstrate either what the... what the association in fact enterprise is and what are its affairs that are distinguished from the affairs of the corporation.

Justice Souter: But in... in Reves... and if... and... and you... you may well correct me on this because I'm... I'm... my memory is not precise.

But I thought in Reves, in effect, what they did was to lie in the course of doing the sort of the thing that they normally do.

Here, the allegation is that they were doing something, providing phony ID's, that employers don't normally do.

Isn't... and, you know, maybe that's a fine line, but is... is it not a fine enough line to get it out of Reves and get it beyond the motion to dismiss?

Mr. Phillips: I don't think so, Justice Souter, because... because the... it's a question I think of abstraction.

What we normally do is hire employees and review their applications.

Now, in that process, we've been alleged to engage in illegal acts by providing them with false identifications.

But I don't see how that's any different from the Reves situation where the claim is that you're providing ordinary auditing advice, but in the process you're lying.

You're engaged in illegal activities.

It seems to me it is precisely the same problem in both situations.

Justice Souter: Well, there is... there is a common element of illegality, but the distinction is that in Reves, you're supposed to be providing these services, making out statements, et cetera, and you put the wrong numbers in them.

Mr. Phillips: Intentionally.

Justice Souter: Whereas in... in this case, an employer does not normally go about providing phony ID's or any ID's for the people it hires.

It says, who are you?

What's your Social Security number?

And... and there's... there's an affirmative act here.

Mr. Phillips: Right.

Justice Souter, I don't doubt that, but the question is what is the legal standard in Reves.

And Reves doesn't say, did you engage in illegality, and Reves doesn't say, can we make out a claim of conspiracy.

Reves says what you have to demonstrate is that you are conducting or directing the operations or affairs of some entity, apart from yourself.

And here, all we're doing is giving ID cards to our either actual or potential employees.

Justice Souter: In... in... yes, but you're doing it in connection with a... a joint recruitment activity.

In other words, the... the agencies that you hire to get the workers up to the door are not going to succeed very well if... if all the workers are going to arrive without any papers and without any... any indication like a Social Security card and so on that they can be part of... of the legal work force.

So there's... there's something extra being done both by the... the recruiters and by you, and the extra, in effect, is a... a scheme to provide phony ID's that suggest that these people are... are lawful rather than... than unlawful immigrants.

Mr. Phillips: But that still doesn't seem to me, Justice Souter, to satisfy the Reves standard, which is not just that there has to be something more than conducting your own affairs immediately, although that's important, and I don't think that... I don't think you can show that... either that we went beyond conducting our affairs or that the recruiters went beyond conducting their affairs.

All of these allegations break out that way.

But what Reves says you have to do is demonstrate that you conducted or directed the affairs of whatever this association in fact entity is.

Chief Justice Roberts: So... so that if you charged--

Mr. Phillips: And that's the part that's missing.

I'm sorry.

Chief Justice Roberts: --So that if you charged the workers, you know, $10 for their fake ID cards, you think that would be a different case.

Mr. Phillips: No, I don't think either of those--

Chief Justice Roberts: Because there, that's... there, you... you... there's a separate enterprise basically selling ID cards, and that's not part of Mohawk's business.

But if you're just hiring them the way you hire other employees, illegally as it's alleged, that's Mohawk's enterprise if there's some separate illegal activity?

Mr. Phillips: --Well, see, under those circumstances, I wouldn't have any problem calling Mohawk the enterprise.

I mean, that's the whole point of this.

The... the logical enterprise here is the corporation.

The question is do you go beyond that to create these completely artificial entities.

I mean, you know, this... this associational enterprise doesn't exist except in the minds of the plaintiffs.

Justice Scalia: Mr. Phillips, I... I tend to agree with that, but I... I just hate to get the lower courts into this business of determining when a corporation is going beyond its business.

Your... your discussion with Justice Souter I think indicates how... how hard that is, or some of the examples that the Government brings up, such as a drug company that... that sells drugs illegally, violating the drug laws.

Is that part of its business or not part of its business?

I... I really don't... don't want to buy into that.

Mr. Phillips: Well, I think it's a little late in the day, Justice Scalia, because that is precisely the standard the Court articulated in Reves.

It said the question is not do you... are you... are you conducting the affairs of your own operation, however that's defined.

But I'm not sure whether you need to... you need to define.

I mean, you know, in some ways, this also goes to why it... it's a mistake to get into this in the first place because if you just said it has to be individuals associated in fact, you don't have to get into any of this inquiry.

You could obviate the need to evaluate all of these problems in one fell swoop.

But even assuming that you still want to live in this world, you still... it seems to me you've got to identify what it is... what... what is the nature, what is the loose organization of this separate enterprise, and then what are its functions.

And then you have to evaluate how it is that the defendant is, in fact, operating or conducting or directing the affairs of that enterprise.

And that's what's missing, Justice Souter, in... in footnote... or excuse me... in paragraph 76 because while it goes to... you know, it says we paid for illegal aliens to be employed.

Okay, well, that... that's clearly hiring.

That's the first one.

The second one is they have temp agencies and they pool their employees and they loan them to us for a fee.

Well, that's the business of temp agencies.

That's what they do.

They transport employees to... so they'll have them available in their pool.

That's not... we don't direct any of that.

We... we are their... we are... it's an arms length deal.

Justice Souter: Okay, but I still think sooner or later we have to come back to something that you and I went over a moment ago, and that is the... one function, maybe the function, of... of the... of the... the entity claimed here is... is providing cover for the illegal status of the aliens.

And it seems to me that there is at least a bare claim here that Mohawk is directing the affairs or the business of... of this third entity--

Mr. Phillips: Well, the... the--

Justice Souter: --by... by the way that it is... allegedly provides phony Social Security cards.

Mr. Phillips: --Well, according to the allegation in paragraph 77, it just says obtaining illegal workers.

It doesn't say anything about providing them with cover, that the common purpose of this enterprise--

Justice Souter: Where... where do we... you're going to have to help me out then.

Where... where in the... the pleadings or the... the papers do we get into the Social... do we get the allegations of the Social Security card?

Mr. Phillips: --That's paragraph 76.

Justice Souter: Okay.

Mr. Phillips: And that's a factual allegation.

But... but it... but all I'm saying is--

Justice Souter: But isn't that factual allegation, as a bare matter, sufficient to satisfy the objection that you raise, that something more than merely the activity... the conduct of... of their separate business is going on?

Mr. Phillips: --No, because what you still need... there's still a higher... it's not just the higher threshold that it's got to be something that moves beyond what the corporation does.

It has to involve the direction or the conduct of the operation of a separate entity.

Justice Souter: Well, if... if, in fact, it is the case that Mohawk is... is providing the Social Security cards, isn't it directing the means by which the third... the third entity is, in effect, illegally... or supplying illegal workers in... in this... this joint enterprise?

Mr. Phillips: Well, obviously, we're going to disagree about this I think, but at the end of the day, I think the bottom line is what we're doing is when the applicant shows up at our doorstep or when they have, in fact, been hired, if for... and this is the allegation.

Obviously, none of this is true.

But this is the allegation.

That we then... we then supply those employees... our employees and our applicants with these false ID's.

That's part of the process of our own hiring.

Justice Souter: Is it reasonable... is it reasonable to suppose, on the basis of reading the allegations as they have to be read at this stage of the proceeding... is it reasonable to infer that... from the allegation that there is an understanding between Mohawk and the employment agencies that Mohawk will provide this documentation and therefore make the scheme work?

Mr. Phillips: Well, it... the allegation certainly doesn't say that.

Justice Souter: It doesn't say that in any... any black letter statement.

Mr. Phillips: There is only one sentence in the allegation that even remotely says anything about this.

And again, Justice Souter, the... the fundamental assumption here is that if there's something that goes anywhere beyond our affairs, that that by itself is sufficient to take you out of Reves.

And what I would argue strenuously is that what Reves says is you have to be conducting or directing the operations of the other entity's affairs.

And providing this doesn't conduct or direct anything.

It may... it may be conspiracy.

It may satisfy some interrelationship, but I don't see how it gets you to the point of an existing enterprise.

If there are no further questions, I'd reserve the balance of my time, Mr. Chief Justice.

Argument of Howard W. Foster

Chief Justice Roberts: Thank you, Mr. Phillips.

Mr. Foster.

Mr. Foster: Yes.

Thank you, Mr. Chief Justice, and may it please the Court--

As Mr. Phillips makes quite clear, Mohawk does not like the way the plaintiffs have written their complaint in this case.

He would prefer... they would prefer that the enterprise be Mohawk Industries and certain individuals within the corporation being named as the RICO persons.

But the plaintiffs write their complaint and the plaintiffs are the master of their complaint, and at this stage, as far as the case has proceeded, which is only up to a motion to dismiss, that's what we are to deal with, whether this states a cause of action under RICO.

There seems to be no dispute in the lower courts that corporations can form associations of fact with other entities and that a corporation can be a person conducting the affairs of such an entity.

We have alleged that here.

Chief Justice Roberts: There may be no dispute about it, but it does seem kind of strange to encompass them under the term individuals when the same statute uses individuals and corporations separately.

Mr. Foster: Yes, Mr. Chief Justice.

But actually the term... the definition of enterprise in RICO starts with the word includes and it also states any union or group of individuals associated in fact, though not a legal entity.

The word union is not defined.

According to Mohawk, union should be interpreted to mean a labor union, but that makes no sense structurally because the first part of that definition includes legal entities, and if reference were being made by Congress to a labor union, then the union would have been inserted in that part of it because at the time RICO was written in 1970, Congress had already enacted the Labor Management Relations Act of 1946, which made labor unions suable entities.

Justice Alito: Well, do you agree that that's an exhaustive list in subsection (4)?

Mr. Foster: I don't think it's an exhaustive list, Justice Alito.

It... the Court has held in previous cases that RICO used concepts and terms of breadth.

This would appear to be that, as the Court said in both H.J. v. Northwestern, Russello, and Turkette.

Justice Alito: Well, would you agree that includes is meant to be exhaustive in many of the other... in a number of the other subsections of this definitional provision?

Mr. Foster: I... I don't think so.

I believe that the way includes is actually used, for example, in the definition of Attorney General, opens a long definition which is itself exhaustive, but leaves room for change.

Attorney General was written in a way that allowed any official to be designated by the Attorney General to fall within that description.

There's room for designations and there's room for change in the Justice Department as it occurs over time.

Justice Scalia: I don't see how your point regarding union helps you any because if... if you... if you win the point that union doesn't mean a labor union, you still have, as... as the end of this definition, any union or group of individuals.

Mr. Foster: Yes.

Justice Scalia: A union of individuals or a group of individuals.

You're still stuck with individuals.

Mr. Foster: Well, I think union is... it says union or group of individuals.

I think union is something--

Justice Scalia: Either union means labor union or it means a union or group of individuals.

Mr. Foster: --I would... Justice Scalia, I don't believe that union means labor union because--

Justice Scalia: Okay.

Mr. Foster: --if it meant a labor union there--

Justice Scalia: I'll give you that.

Then... then it means a union or group of individuals.

Mr. Foster: --A union or group of individuals.

Justice Scalia: Right.

So, you know, you're just as bad off.

Mr. Foster: Well, the word individual is not defined in the statute either, and--

Chief Justice Roberts: Well, it's not defined in the statute, but the prior list in the same sentence says individual, partnership, corporation.

So you assume whatever an individual is it's different than a corporation or they wouldn't have had to say corporation again.

Mr. Foster: --The enterprise alleged here, Mr. Chief Justice, is actually not a single corporation.

That first list would not encompass a group of corporations.

A group of corporations is actually not a single legal entity.

It's a group of legal entities that have combined to commit a pattern of racketeering activity.

It doesn't neatly fit into the first definition, which seems to encompass only single entities.

And so every single circuit court in the... in the country to examine this question has held that Congress didn't expect, anticipate, or intend to exclude groups of legal entities from being... being a... a RICO enterprise.

They were captured by the second part of the definition.

Justice Breyer: There is--

Justice Kennedy: Still, it... it... you know, we usually talk about person can mean a corporation.

This says individual.

A person is defined in... in sub (3) just above it.

A person includes any individual or entity.

Then the next thing says individual.

So it's not a... it doesn't sound like a corporation.

Mr. Foster: Well, the use of the word union or group of individuals seems to broaden it.

The word includes at the beginning of the definitional section broadens it even further.

As this Court held in footnote 14 of the... in the Sedima decision, the use of the word requires in that definitional section was key to understanding what it meant, and it said requires, in terms of pattern, meant more than simply two predicate acts.

The word requires had to mean more, and it had to be read in context.

We think that this should read in context.

Justice Ginsburg: I thought your position was it shouldn't be read at all because--

Mr. Foster: Yes.

Justice Ginsburg: --this... this Court is a court of review, and to take a question that was never certified, even to the court of appeals, to have this Court address it seems to me very strange.

It seems to me to erode rather starkly the final judgment rule, which we don't have here.

Mr. Foster: Well, I agree with that, Justice Ginsburg.

I don't think the Court should entertain the question at all.

And--

Justice Kennedy: Well, what we're reviewing is a ruling, not a question.

You certify a ruling.

Now, it's usually set out for the court of appeals so they know what the question is.

Mr. Foster: --We are reviewing a ruling--

Justice Kennedy: What you're reviewing here is a ruling.

Mr. Foster: --It's a ruling.

We're not reviewing a final judgment.

All it is is a ruling.

It came to this Court and the question that this Court accepted for certiorari has actually been... all but abandoned.

Mr. Phillips hardly used the word agent at all, if at all.

He doesn't argue why his rule about distinctness should be applied here.

There is no allegation or he doesn't make any legal argument that the members of this association in fact enterprise should be deemed to be agents of Mohawk.

That's not alleged in the complaint.

That's not the way the complaint was written.

They're all alleged to be separate legal entities.

They're... for the motion to dismiss stage, that is enough to satisfy this Court's requirement in Cedric Kushner that the members of an enterprise be distinct from--

Chief Justice Roberts: What is there different about your proceeding to treat this as a RICO enterprise that isn't covered by normal corporate criminal conspiracy law?

What does RICO add here?

Mr. Foster: --RICO does add more.

It can't be a mere criminal conspiracy to commit a single crime.

There needs to be an association of entities that associate over a considerable period of time to meet either closed ended continuity or open ended and commit a pattern of criminal acts that are related to each other, that go on for--

Chief Justice Roberts: So they hire more than one person.

Mr. Foster: --They hired... and the association itself, Mr. Chief Justice, would have to exist over a... a significant period of time.

There would have to be... there's this durational element--

Chief Justice Roberts: How is that different than a normal contractual relationship that a corporation is going to have with any number of suppliers, vendors, agents?

Mr. Foster: --Yes.

Normal contractual relationship is not to commit a felony, and if--

Chief Justice Roberts: No, but I'm trying to see what RICO adds to the normal conspiracy law--

Mr. Foster: --Yes.

Chief Justice Roberts: --that would otherwise be applicable.

So we're assuming that the arrangement is there and that they're engaging in illegal activity.

Mr. Foster: And then we have the pattern and the durational aspect of it.

And it has to affect interstate commerce... the enterprise does... and in order to have a civil cause of action--

Chief Justice Roberts: But Congress didn't... to be fair, Congress did not enact RICO because it was concerned that criminal conspiracy law, applied to corporations, didn't adequately touch interstate commerce.

The whole point is that they had something significantly different in mind, and your allegations in the complaint seem to be fully met by application of criminal conspiracy law.

Mr. Foster: --Well, Mr. Chief Justice, a RICO enterprise among... is a conspiracy to commit crime, but it's conspiracy plus.

The plus is--

Justice Souter: But isn't... isn't the plus simply more than one act?

Mr. Foster: --The plus is more than one act.

There has to be a pattern.

Justice Souter: So... so... no, but I mean literally.

As... as long as... as two illegal workers are going to be hired, isn't that sufficient to convert... to go from conspiracy to... to RICO on your analysis?

Mr. Foster: There would have to be at least two, and there would... it would have to go on to meet the Court's pattern requirement.

Two generally is held not to be enough if it's a closed period of time that's over.

But this complaint alleges an open period, and two would be enough, coupled with the allegation that this is the normal way for the company to conduct its business.

Chief Justice Roberts: I'm trying to give you a chance to explain why this looks like RICO rather than just criminal conspiracy.

And you've come up and you said interstate commerce.

There's got to be more than one.

Well, none of that really suggests a distinction.

What... what is it that makes this a RICO case rather than just a criminal conspiracy case?

Mr. Foster: It's because we have a joint venture of entities operating over a long period of time that have victimized a large number of people, and there's a pattern of racketeering activity.

And--

Chief Justice Roberts: There's a pattern because they hired more than one.

Mr. Foster: --They hired more than one.

In fact, the statute requires 10 in a 12-month period.

So there would actually have to be 10 for at least 2 years.

So that would mean at least 20 illegal aliens have to have been hired under the 1324 section that's alleged in this complaint.

And probably for more than 2 years or an ongoing pattern of racketeering activity, and a person has to have been proximately harmed by a predicate act in order to assert a civil cause of action.

Beyond that, there is the... of course, the requirement of Reves that the person... and here the corporation is participating in the affairs or conducting the affairs of an enterprise.

And--

Justice Scalia: Yes, but Reves demonstrates that... that your statement earlier that since it was fraudulent action, it couldn't have been the business of the corporation is simply false.

We... we haven't held that whenever a corporation violates the law, it goes beyond its business, although in a sense it does.

In Reves, we... we said it didn't.

Mr. Foster: --Here, Justice Scalia, there is, as was pointed out earlier in the dialogue with Justice Souter, a very close cooperation among Mohawk and these third parties to get workers, to bring them from--

Justice Scalia: I understand that, but that's... we have to get into that is my point.

We can't just say since providing them with... with phony ID's is unlawful, it can't be the business of the corporation.

Mr. Foster: --Yes, I agree.

And I would contend that there is enough factual detail and a description of the claim asserted in this complaint to satisfy rule 8 to state a claim.

And the type of factual inquiry that Mohawk has suggested, that Mr. Phillips has suggested, saying, for example, their test that Mohawk cannot be participating in the affairs of an enterprise that involves hiring because it itself involves hiring would dramatically change the interpretation of RICO.

It would mean that, for example, a drug dealer could not participate in a drug enterprise because he does what the enterprise does.

Since all corporations are engaged in hiring activities, therefore, then no corporation or other business entity could ever be prosecuted or sued under RICO because that... there is overlap between what they do and what an enterprise does, the... if the enterprise is devoted to recruiting illegal workers for a business.

That just can't be what Congress had in mind, and it's not consistent with what this Court held in Turkette that a common purpose is required for there to be a RICO enterprise.

In conclusion, I do not believe that the Court should address Mohawk's first point.

I thought it was startling to return to that issue, that Mr. Phillips stated the reason that it was not raised below was because he knew that they would lose and Eleventh Circuit would rule against them.

But, nevertheless, he wishes it to be addressed by this Court and simply bypass the court of appeal in the Eleventh Circuit.

If there's no split below, then the question would not have been accepted for cert presumably, as has been pointed out, and it should not be entertained now.

For the reasons stated, I believe that the judgment of the Eleventh Circuit Court of Appeals should be affirmed.

Thank you.

Argument of Malcolm L. Stewart

Chief Justice Roberts: Thank you, counsel.

And Mr. Stewart.

Mr. Stewart: Thank you, Mr. Chief Justice, and may it please the Court--

Respondents' complaint alleges that petitioner has entered into a long term, collaborative venture with outside recruiters in order to perpetrate hundreds, if not thousands of violations of Federal immigration law.

That sort of concerted, ongoing racketeering activity alleged in the complaint is encompassed by the text of 18 U.S.C. 1962(c) and it directly implicates section 1962(c)'s core purpose.

The judgment of the court of appeals should be affirmed.

Now, with respect to the textual question, our argument is not that the collaborative venture alleged in this complaint falls within the terms of section 1961(4).

Our argument is that it falls within the usual background understanding of the term enterprise and that it's not excluded from the statute by operation of 1961(4).

To take the first point first, if Congress had not defined the term enterprise at all, but had used the term enterprise in 1962(c), this... the courts construing the provision would have had to determine whether the term enterprise was naturally encompassed... was naturally construed to encompass not simply discrete legal entities but collaborations between discrete actors.

And I think it's pretty clear that the term would have been construed to include such ventures.

That is, the... RICO was enacted against the backdrop of the Travel Act which prevented the use of business enterprises to perpetrate particular crimes and it was well established that a business enterprise meant not simply a corporation or similar discrete legal entity--

Justice Alito: Why shouldn't includes here be read to mean means when that seems to be the way it's used in other subsections of this provision and when the only thing that seems to be... if this is not an exhaustive list, the only thing that seems possibly to be omitted from the list is what's involved here, which is a group consisting of a corporation or other legal... other legal entity and... and natural persons.

Mr. Stewart: --I think there are several reasons.

First, this Court's decisions make clear that while includes may be construed as exclusive, if it appears alone, when Congress employs the means/includes structures... structure and introduces some definitions with the word means and others with the word includes, that choice of verb should be taken as advertent, and the Court shouldn't likely conclude that Congress simply used the terms as interchangeable.

Second--

Justice Scalia: Do... do any of those cases that you allude to that have means in some sections and includes in others... do any of them have in third sections, includes, comma, without limitation, comma?

Mr. Stewart: --No, but the... the includes--

Justice Scalia: Well, I think that's a big difference.

Mr. Stewart: --I think it would be a big difference if the phrase, including but not limited to, appeared in another provision of 1961, but that's not where the phrase appears.

The phrase appears in, I believe it's, 1964(c) which deals with the... the civil remedies provision, and where--

Justice Scalia: Close enough.

Mr. Stewart: --where the word includes stood alone within that section, it was natural for Congress to use what we call a... a belt and suspenders approach, making it clear that the word includes shouldn't be taken as exclusive.

The second point I'd make is that the last of... I believe it's the last provision of 1961(4) is the definition of pattern of racketeering activity.

And that definition is introduced by the word requires.

The term pattern of racketeering activity requires at least two racketeering acts committed not more than 10 years apart.

And this Court in Sedima and then in H.J., Incorporated has attached significance to that choice of verbs and has explained that Congress' use of the word requires, rather than the verb means, implies that two are necessary but not necessarily sufficient.

So when we're construing a provision in which the Court has already recognized that, at least in some instances, Congress' use of varying verbs to introduce the different subsections will be taken as significant--

Justice Breyer: Yes, but if we're trying to think of what they were getting at, it's possible that Congress was worried about organized crime taking over the pizza parlor or taking over a trades union or taking over a similar kind of enterprise.

So that's what they're thinking about.

Now, if we're thinking about that, they put in the word groups of individuals because they understand that organized crime could take over a group of individuals.

Now, once you do that, you RICOize vast amounts of conspiracy law.

Mr. Stewart: --Well, I don't think--

Justice Souter: But... but they had no reason whatsoever for doing the same thing for what we have are associations of trade unions with each other or associations of... of corporations with each other.

And to do that, adding that in when it doesn't say that, would RICOize, with its treble damages and private plaintiffs and everything, vast amounts of ordinary commercial activity, not ordinary only in that, but importantly, a certain amount of criminal activity like passing bad checks or fraudulent behavior is involved.

But Congress wouldn't have wanted to... that has not to do with organized crime.

That does not have to do with taking over legitimate enterprises.

So read this, I think he's saying, to mean what it says most naturally.

They're worried about groups of individuals.

They're not worried about groups of corporations or groups of trade unions interacting with each other.

And I'm trying to put the argument the other way, and I wanted see what you respond.

Mr. Stewart: --I mean, in terms of speculation about Congress's motive, I think you're very likely right that the reason Congress added a specific reference to groups of individuals was that they were thinking in terms of mob families or syndicates, criminal gangs that had no discrete status as a legal entity.

They're not incorporated, but they function as unit.

And they had those in mind, and they intended... they wanted to make sure those were covered even though they were not discrete legal entities.

And I think you're likely right that the reason they didn't specifically include groups of corporations is that they didn't have them in mind as likely sources of trouble at the time.

But that doesn't answer the question whether they intended to exclude the coverage of those alliances if they would otherwise be encompassed by the normal meaning of the term enterprise.

And if it came to cause the--

Justice Breyer: You're... you're willing to go this far with them.

You say take those words, groups of individuals, and throw them away.

And you're saying after we throw them away, they're still covered, and the reason that they're still covered is even though the word enterprise includes any individual, partnership, corporation, the word enterprise also includes groups of legal entities, groups of trades unions, groups of associations, even without that word group of individuals.

Mr. Stewart: --Exactly.

If... if the term enterprise appeared in 1962(c) but were an undefined term--

Justice Breyer: All right.

Now, is there any indication in the legislative history or anywhere else in the statute that this meaning of the word enterprise is what is intended, that is, that this meaning of the word enterprise went beyond what it says here, excluding group of individuals?

Mr. Stewart: --There... there is in the legislative history.

That is, the legislative history describes the coverage of the term enterprise as encompassing any associative group.

Now, we don't contend from that stray reference that Congress specifically had in mind alliances between corporations and specifically intended to include them.

What we do contend is that that legislative history is inconsistent with the hypothesis that Congress anticipated the problem of alliances of corporations and carefully--

Justice Scalia: Mr. Stewart, this... this thing is at least... at least... ambiguous.

Why shouldn't we apply the rule that we normally apply with regard to criminal statutes that where there is an ambiguity, the rule of lenity applies and we shouldn't give the... the Government license to... to ride closer herd than... than is clear in the statute?

Why isn't... why isn't that an easy way to--

Mr. Stewart: --First, I--

Justice Scalia: --resolve this question?

Mr. Stewart: --I don't think that at the end of the day, after all the tools of statutory construction are applied, there is a genuine and certainly not a grievous ambiguity.

That is, there... there are two potential sources of ambiguity.

One could simply be there's uncertainty about whether the word enterprise, taken alone, would typically be construed... nobody is contending--

Justice Scalia: That's irrelevant because it's not taken alone.

It is defined.

So the only... the only question is what this... what this definition means.

Is it exclusive or not exclusive?

That's really the only issue.

Mr. Stewart: --The... the only question is whether this list should be taken to exclude things that are not on the list even though they would otherwise be encompassed by the normal meaning of the word enterprise.

And this Court in many decisions has given Congress a template.

It said if you use the means/includes dichotomy, we will take that choice to be advertent and we will assume that when you use means that's intended to be exclusive; when you use includes, that's intended to be not exclusive.

Justice Scalia: Even... even when it's absolutely clear and... and as pointed out by... by your friend, you... you did not refute the point that in other sections where it says includes, it is unquestionable that it is exclusive.

Mr. Stewart: That... that was part of Justice Alito's question, and I think there are two different senses in which a statutory list could be considered exclusive or comprehensive.

That is, one would be legal exclusivity.

For instance, the definition of racketeering activity says racketeering activity means acts indictable under the following statutes.

That definition is legally exclusive in the sense that if... if Congress enacted a new statute and it prohibited conduct that was classic mob activity, but it wasn't on the list of RICO predicates, we would say that's out, it's not racketeering within the meaning of the statute even though it would be racketeering activity within a common understanding.

I think with the definition of Attorney General, what we have is a different sort of comprehensiveness.

That is, it may well be that the definition of Attorney General is comprehensive in the sense of actually listing all the people who could otherwise plausibly be regarded as standing in the shoes of the Attorney General.

It may be that Congress, when it promulgated the list, got everything that would have been covered anyway.

It's not legally comprehensive or legally exclusive in the sense of directing courts that even an official who would otherwise be regarded as an appropriate surrogate for the Attorney General is not to be so regarded if he's off... off the list.

Justice Alito: Well, a State attorney... a State attorney general wouldn't fall within subsection 10.

Would... would that be the case?

Mr. Stewart: I... I agree with that, but I don't think that in the context of a Federal statute referring to the Attorney General, a State attorney general would typically be encompassed within the meaning of that provision even if that provision were undefined, whereas I think because executive power is... is generally deemed to be delegable, subordinate officials standing in the shoes of a cabinet officer would usually be thought to be encompassed by the reference to the cabinet officer alone.

The other thing we would say, of course, on the... the statutory point is that there have... there has been a unanimous pattern of court of appeals decisions in this area.

Congress has not acted to contract the definition of enterprise, but instead has added new predicate acts.

Justice Scalia: What's the best court of appeals opinion, the most thoroughly considered?

I haven't read any of them.

Tell me... tell me the best one.

I'd like to read it.

Mr. Stewart: I've looked at them and... I would agree with Mr. Phillips that the analysis doesn't tend to be lengthy, but I think Feldman would be one.

By and large, the... the courts adopt the... the reasoning that we've adopted here, namely that because the word includes signals an intent to be nonexhaustive or to admit of other things being covered even if they're not on the list, then they should be covered.

The--

Justice Breyer: Are there any dissents in any of those cases?

Mr. Stewart: --I don't recall any dissents at least on the point.

I... I don't want to represent that there have never been any.

I don't recall any dissents at least on the... the pure question of whether an association in fact comprised in part of artificial legal entities can ever be covered.

Justice Souter: Do any of the court of appeals opinions deal specifically with the peculiarity of this definition in which, although it starts out with the word includes, then follows a... a listing, A, B, C, and D, and then it repeats one, but only one, of the items on the list and says groups of these items, i.e., individuals, are included?

That's the peculiarity of the definition.

Do any of the courts of appeals come to grips with that?

Mr. Stewart: I don't know of any court of appeals opinion that really focus on that... focuses on that aspect of the question.

But... but, again, we can accept kind of the factual premises about what led Congress to draft the legislation as it did, namely that it anticipated the problem of groups of individuals banding together to commit criminal acts and didn't anticipate the problem of groups of corporations banding together for like purposes.

But I think the whole point of having a template, having an established rule that means and includes, when they're used in the same statutory provision will be taken as meaning different things, as to give Congress a clue that if you've tried to list everything but you're not sure that you've got it all, here's the way that you can ensure that some new arrangement that would otherwise fall within the defined term is not going to be knocked out, and if you want it to be knocked out, use the words means.

With respect to the second argument, that the... the core of petitioner's position is that it can't be held liable under RICO because it's simply conducting its own business, and I think that's wrong for two reasons.

First, there's no rule that says a corporation can't simultaneously in a single act be conducting its own business and the business of a separate enterprise, and I think H.J., Incorporated is an example of that.

The allegation in that case was that a utility corporation and its officers had engaged in a systematic pattern of bribing the members of a public utility commission to allow the corporation to charge higher rates.

And the suit was allowed to go forward on the theory that through the pattern of bribery, the utility was, in practical terms, participating in the conduct of the public utility commission's affairs.

Now, clearly in attempting to bribe the utility commission members, the utility was, in a sense, conducting its own business.

That is, viewed at a high level of generality, efforts to persuade rate setting bodies to allow a utility to charge higher rates are an integral part of the utility's own business.

That didn't prevent it from simultaneously being a means of participating in the conduct of a different entity's business.

And second, there's more alleged in this complaint, and I think some of the questions brought this out.

May I finish my sentence?

There's more alleged in the complaint than simply the unlawful hiring of illegal aliens.

There are hiring inducement and transporting offenses that would constitute separate violations that are antecedent to but not part of Mohawk's business.

Rebuttal of Carter G. Phillips

Chief Justice Roberts: Thank you, counsel.

Mr. Phillips, you have 4 minutes remaining.

Mr. Phillips: Thank you, Mr. Chief Justice.

Justice Ginsburg, let me... let me try to justify having this issue before the Court.

First of all, 1292(b) has never been as narrowly confined as you suggest, and indeed, in this case, you know, what you're entitled to do is to bring up any issues related to the challenged order.

And in this case we not only raise the RICO issue, but we also raised State law issues in the... in the Eleventh Circuit which were not within the specific grant and were entertained by the Eleventh Circuit because that's the standard.

And then once you get past that, Justice Kennedy is absolutely right.

The issue is whether there's an order to be reviewed.

There is no final judgment rule on claims coming out of the Federal courts of appeals, and therefore, it's... it's absolutely fair game.

And the issue is I... I submit, fairly subsumed within the question presented.

Justice Souter, you know, with respect to the ID cards, I think it's very important to recognize that for us to do our business, we have to have an ID card in order to fill out the forms necessary to satisfy the immigration laws.

So that... you know, those ID cards add nothing to the... to the conduct of our business.

And, you know, Mr. Stewart just suggested that, well, but you know, we do go beyond that and that H.J. allows some a... a different analysis of this particular point.

But H.J. preceded Reves.

This Court held in Reves that you have to distinguish between the activities of the enterprise and the activities of the defendant and... and they've never made any effort to do that.

All they do is suggest we've engaged in wrongdoing, that our third party recruiters engaged in wrongdoing, and that we're a conspiracy.

There's nothing in there that remotely suggests that there is an existing enterprise.

With respect to the question of how to interpret this particular statute, Justice Scalia is absolutely correct that at the end of the day, this is at most an ambiguous provision, and if it's an ambiguous provision, we ought to be entitled to the rule of lenity.

I didn't hear any adequate answer to Justice Kennedy's specific question about why do they use person in the subsection just ahead of it, if they really meant to embrace everything here.

And it's no answer to say, well, enterprise is a term that could be... that has a general background.

Enterprise is the linchpin of this statute.

The notion that Congress didn't mean to very specifically and explicitly define enterprise here is absurd.

Of course, it defined it, and it provided a very specific and detailed definition.

And it's not free for the Government or for anyone else then to come here and shunt aside that definition and say, well, we're just going to deal with background principles.

The truth is they're trying to write out of it groups of individuals acting in association.

That language is there.

It was put there for a reason.

The Government concedes that it didn't... that it never... that Congress never had this issue in mind.

How it can be then that this is not at least sufficiently ambiguous that you should construe it in our favor strikes me as... as very difficult to understand.

And finally, I don't... I've never heard the expression RICOize before, Justice Breyer, but I... I embrace it wholeheartedly because that is precisely what we're talking about here.

These are enormous penalties that are imposed, and it's a statute that this Court has recognized in the past, even on its own terms, is very broad.

Certainly there is no reason to take those terms and RICOize the... the breadth of corporate activity that the plaintiffs' complaint in this case would... would allow.

The Court should reverse the decision below and dismiss this complaint, just as the Seventh Circuit did.

If there are no further questions, thank you, Your Honors.

Chief Justice Roberts: Thank you, Mr. Phillips.

The case is submitted.