California temp agency sues grower for hiring illegals and gaining ‘unfair competitive advantage’

August 23, 2006

A California temporary employment agency which supplies legal workers to farms has files a suit against a California blueberry grower and two other companies, alleging they hire illegal workers to gain an unfair competitive advantage.

It contends that the grower hired illegal workers, violating a contract to use the agency's employees.

The lawsuit is believed to be the first based on California’s unfair-competition law. It may be a difficult case to win, but it will highlight widespread criticisms that the federal government is ineffective in enforcing laws barring the hiring of illegal workers.

Companies that follow the law can't compete because their labor costs are so much higher than those using illegal workers, said David Klehm, the attorney who filed the suit. Klehm said he was readying similar claims on behalf of roofers, framers, metal shop owners and other small-business owners.

Santa Monica-based Global Horizons Inc. claimed in the lawsuit, filed in Superior Court, that blueberry grower Munger Bros. hired illegal immigrant workers from Ayala Agricultural Services and J & A Contractors.

'People have been turning their back on the reality that 95% of the agricultural industry uses illegals,' Global Horizons President Mordechai Orian said. 'We just got hurt with what's out there. We bring in legals. This is just unfair.'

Global Horizons sued under the Cartwright Act, California's version of U.S. antitrust laws.

Klehm, Global Horizons' lawyer, said the defendants 'conspired to use undocumented workers' who earn lower wages. 'By engaging in this conduct of illegal behavior, it lessens competition,' he said.

Klehm opened his practice two months ago, after 13 years representing hospitals and doctors, to focus on companies that have lost business because their competitors are hiring illegal immigrants.

Under California statutes, plaintiffs must prove that a competitor directly harmed their business.

'The suit reflects a real anger that's out there, but it's unlikely to change much on a firm-by-firm or case-by-case basis,' said a legal analyst. Only Congress can change the nation's immigration laws, and 'Congress is unable to act.'

In January, a Washington state class-action lawsuit was settled involving employees of a grower who sued their employer for driving down wages by hiring undocumented workers. The grower settled the case, based on federal anti-racketeering laws, for $1.3 million.