954 F.3d 866
6th Cir.2020Background
- Vitale’s restaurant instructed employees to keep two timecards: one for the first 40 hours (paid by check) and one for overtime hours (paid in cash at straight time), allegedly to avoid overtime pay and tax withholdings.
- Emilio Torres worked at multiple Vitale’s locations and filed an earlier FLSA collective suit; this case asserts civil RICO claims based on the same facts.
- Torres’s RICO complaint alleged three schemes: (1) tax evasion (underreporting hours/pay and failing to withhold taxes), (2) wage theft (two-timecard scheme to deprive overtime pay), and (3) workers’-compensation insurance fraud (underreporting wages to reduce premiums).
- The district court dismissed the RICO suit as precluded by the FLSA, holding the FLSA’s remedial scheme was the exclusive remedy for the alleged misconduct.
- The Sixth Circuit held the FLSA precludes RICO only to the extent a plaintiff seeks unpaid minimum or overtime wages; it affirmed dismissal of the wage-theft and insurance-based RICO claims but reversed and remanded as to the tax-evasion theory to determine whether Torres pleaded damages distinct from lost wages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FLSA precludes a civil RICO claim grounded in the same conduct | Torres: FLSA does not bar RICO; RICO provides distinct remedies for fraud and injury | Vitale’s: FLSA’s detailed remedial scheme for wage/hour violations precludes duplicative RICO suits | FLSA precludes RICO only when the damages sought are unpaid minimum or overtime wages; otherwise RICO may proceed for distinct harms |
| RICO claim based on wage-theft (overtime underpayment) | Torres: RICO remedies available for scheme that deprived overtime pay | Vitale’s: Wage claims fall squarely within FLSA exclusive remedies | Dismissed as precluded (seeking same remedy as FLSA) |
| RICO claim based on workers’‑compensation insurance fraud (reduced premiums) | Torres: Scheme reduced premiums and harmed employees indirectly | Vitale’s: Any injury was to insurer; Torres lacks injury to business or property | Dismissed for lack of cognizable RICO injury (no direct injury to Torres’s business or property) |
| RICO claim based on tax-evasion (failure to withhold/employer SS contributions; tax exposure) | Torres: Tax scheme caused distinct harms (tax liabilities, lost Social Security credits, deprivation of employer contributions) | Vitale’s: (Implicit) these harms may be duplicative of wage losses or not cognizable under RICO | Reversed/dismissal vacated as to this theory; remanded for district court to determine whether Torres pleaded distinct, compensable RICO damages beyond lost wages |
Key Cases Cited
- EC Term of Years Trust v. United States, 550 U.S. 429 (2007) (a precisely drawn, detailed statutory remedy can preclude more general remedies)
- Sedima S.R.P.L. v. Imrex Co., 473 U.S. 479 (1985) (RICO’s broad scope and civil remedies)
- Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258 (1992) (RICO requires proximate causation and limits indirect injuries)
- Michigan Corr. Org. v. Mich. Dep’t of Corr., 774 F.3d 895 (6th Cir. 2014) (FLSA’s remedial scheme can preclude alternative statutory remedies like § 1983)
- Norman v. Niagara Mohawk Power Corp., 873 F.2d 634 (2d Cir. 1989) (statutory remedial scheme may preclude RICO where suit merely vindicates rights provided by that statute)
- Williamson v. Gen. Dynamics Corp., 208 F.3d 1144 (9th Cir. 2000) (fraud claims distinct from wage claims are not precluded by the FLSA)