A new legal tactic against illegal workers in California

The Wall Street Journal (subscription required) reports that a temporary employment agency has sued an erstwhile client under California’s unfair competition laws that it took business away from it by hiring illegal workers. the plaintiff,
Global Horizons, was itself a defendant in a Washington state case of cheating immigrant labor it recruited, and settled with a fine.

Frustrated businesses took their fight against illegal immigration to a Los Angeles court Tuesday, filing the first in a series of lawsuits accusing competitors of hiring illegal workers to achieve an unfair advantage. “We see the legal profession bringing to this issue the kind of effect it’s had on consumer product safety,” said Mike Hethmon of the Immigration Reform Law Institute, a Washington D.C.-based group backing the California cases.

In the complaint filed Tuesday, a temporary employment agency that supplies farm workers sued a grower and a two competing companies. Similar cases claiming violations of federal anti-racketeering laws have yielded mixed results. The California lawsuits are believed to be the first based on a state’s unfair-competition laws, legal experts said. Santa Monica-based Global Horizons claimed in the lawsuit that Munger Brothers, a grower, hired illegal immigrant workers from Ayala Agricultural Services and J&A Contractors. All the defendants are based in California’s farm-rich Central Valley.

The suit alleges that Munger Brothers had a contract with Global Horizons to provide more than 600 blueberry pickers this spring, but nixed the agreement so it could hire illegal immigrants. “Competitors hiring illegal immigrants is hurting our business badly,” Global Horizons President Mordechai Orian said. “It’s to the point that doing business legally isn’t worth it.” To prove competitors hire illegal immigrants, businesses could use public records involving prior violations, testimony from former employees who have worked alongside illegal immigrants, and recovered W-2 tax forms that show people working under fake names and Social Security numbers, said David Klehm, the lead lawyer for cases in Southern California.

Legal experts said the cases could be difficult to win. Under the California statutes, plaintiffs must prove a competitor directly harmed their business. “Unless you’ve got smoking gun evidence, it’s hard to tie economic loss of one business to another’s practices,” said Niels Frenzen, a law professor at the University of Southern California.