New Jersey Judge’s Ruling Paves Way for Lawsuit


7/2/10

Milberg LLP attorneys obtained a key court victory on behalf of the New Jersey Regional Council of Carpenters, in its landmark RICO case against D.R. Horton Inc.  On June 30th, U.S. District Judge Katharine Hayden denied Horton’s motion for summary judgment on jurisdictional grounds, paving the way for the lawsuit against the largest homebuilder in the nation.

The litigation is the first to seek enforcement of New Jersey’s Construction Industry Independent Contractor Act, a statute passed to prevent employers from avoiding taxes and other obligations by misclassifying workers.  The amended complaint alleges that the defendants participated in a scheme to knowingly hire undocumented workers for the purpose of lowering wages, decreasing costs, and avoiding the payment of employee benefits and payroll taxes.  The class action seeks treble damages and back pay on behalf of the class for Horton’s alleged violation of federal and state racketeering statutes.

After almost two years of discovery and extensive briefing, Milberg’s efforts produced a favorable ruling for the plaintiffs on the issue of whether Horton, a Texas-based publicly-traded company, is subject to the New Jersey court’s jurisdiction.  Horton claimed that it does not conduct business in New Jersey, except through its wholly-owned subsidiary.  Ruling in favor of the plaintiffs, the court held that it has both general and specific jurisdiction over Horton and pierced the “corporate veil” between Horton and its New Jersey subsidiary.  This significant victory demonstrates that parent corporations cannot use subsidiaries to shield themselves from liability for misconduct.  

"This ruling goes to the heart of our issues, because payroll fraud conspiracies have so many victims,” said Michael Capelli, Executive Secretary-Treasurer of the New Jersey Regional Council of Carpenters. “By evading taxes, insurance, and fair wages, these employers cheat not only decent workers and honest employers, but every American citizen who pays taxes and abides by the law. We are pleased that the court recognized a giant corporation like D.R. Horton trying to hide behind one of its local subsidiaries to avoid its legal and ethical responsibilities to the communities where they build.”

Milberg’s legal team includes partners Anita Kartalopoulos, Benjamin Kaufman, Carla Fredericks, and Jennifer Young; and firm in-house investigators Steve Bursey and Mark Crowley.  Albert Kroll, the former New Jersey Commissioner of Labor, is co-counsel with Milberg in this lawsuit.

About Milberg

Milberg LLP is widely recognized as the premier class action and complex litigation firm representing individual and institutional investors, pension funds, hedge funds, unions, and consumers.  Founded in 1965, Milberg has offices in New York, Los Angeles, Tampa, and Detroit.  The Firm has taken the lead in landmark cases that have set groundbreaking legal precedents and prompted changes in corporate governance benefitting shareholders in North America and abroad.  Please visit the Milberg website (www.milberg.com) for more information about the Firm.

 

^{Attorney Advertising.  Prior Results Do Not Guarantee A Similar Outcome.}