Relocation Expenses Incurred In Mexico And Loss Of Income From Mexican Job Cannot Be Recovered In Private Civil RICO Suit

The World in U.S. Courts: Winter 2018 - Racketeer Influenced and Corrupt Organizations Act (RICO)

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Castellanos v. Worldwide Distribution Systems USA, LLC, US District Court for the Eastern District of Michigan, November 16, 2017

Castellanos is a Mexican Citizen and computer analyst who contracted with Worldwide, an IT staffing firm, for placements with Worldwide clients in the US. He gave up a job in Mexico and incurred costs in Mexico and the US in connection with his move to the US to perform under the contract. After five months in the US Castellanos had received no placements and no salary from Worldwide, and he returned to Mexico. He then filed suit against Worldwide, claiming that he was entitled to that salary, his lost salary in Mexico, and the reimbursement of his expenses. As relevant here, his claims included a violation of the civil RICO provision, 18 USC 1964(c), based on underlying violations of the substantive RICO provisions, 18 USC 1962(c) and (d).

The Court preliminarily observed that while underlying violations may be based on conduct occurring outside the US, private civil actions under Section 1964(c) only reach US “domestic” injuries. The Court found that this standard had not been satisfied as to the elements of damages claimed by Castellanos. Specifically, the salary from the job Castellanos left in Mexico as well as his unreimbursed expenses incurred in Mexico in connection with travel to the US could only constitute an “injury” that occurred in Mexico. The Court noted that a failure to make a promised reimbursement in the US could be a US injury, but concluded that no such fact had been properly alleged. The Court also found that Castellanos had no right to recover his allegedly unpaid US salary, but only because his “at will” contract—pursuant to which his employment could be freely terminated by Worldwide—created no “property” interest, as required for a civil RICO claim.

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