FORTUNE Small Business) – TO SEE THE LATEST FRONT IN THE WAR OVER illegal immigration, take a look at Mordechai Orian. The 41-year-old owns Global Horizons, a Los Angeles–based service that supplies seasonal agricultural workers to apple, blueberry, and potato growers across the country. In May, Orian lost one of his biggest clients: Munger Bros., a Delano, Calif., blueberry farm, which decided to use a rival labor supplier, J&A Contracting of Bakers-field, Calif. Munger Bros. executives say they switched suppliers when Global Horizons failed to live up to its contract, but Orian suspects a different motive. J&A, he says, provides cheaper, illegal workers, scooping workers up on street corners by the vanload and delivering them to farms. He says he has evidence of falsified Social Security cards to prove his assertions. And rather than filing a complaint with the federal government, Orian is taking both Munger and J&A to court. (A copy of Orian's complaint can be downloaded at fearnotlaw.com/gallery/download.php?id=34.)

J&A's lawyer, Steven Geringer, denies that his client hires illegal workers. Theodore Hoppe, the attorney for Munger Bros., says the blueberry farm switched suppliers because Global Horizons' workers weren't as reliable or experienced as advertised. But Orian is unconvinced. "You have a guy who wants to break the law, and when you call the government you run into a brick wall," Orian says. "Enough is enough."

That's a sentiment that most entrepreneurs can share: 70% of small-business owners declare illegal immigration a "very serious" or "serious" problem, according to a survey by the National Federation of Independent Business. But solutions are trickier to agree upon. Politicians have become mired in a morass of proposals for immigration reforms, guest-worker agreements, and border fences. Some business owners balk at any plan that would punish them for unknowingly hiring illegal workers. Meanwhile, entrepreneurs who scrupulously follow the law are routinely victimized by competitors who hire cheap, illegal labor—a breach that routinely goes unpunished by the federal government. "Our members are pretty frustrated," says Todd McCracken, president of the National Small Business Association (nsba.biz), an advocacy group based in Washington, D.C.

NOW, TIRED OF WAITING FOR THE LEGISLATIVE branch to solve the problem, entrepreneurs are turning to the courts. Their actions have put corner cutters on notice: Break the immigration laws and you have not only the government to fear, but your fellow business owners as well. David Klehm, Orian's lawyer, says that his suit is the first of its kind, but experts say it presages a new era. "The government's policy of benign neglect over the past few years has really stirred things up," says Eli Kantor, a Los Angeles labor attorney.

(Global Horizons has faced its own brand of legal troubles; the California labor commissioner recently found that the company had neglected to pay its workers all they were due.)

But it is not only rival companies that are going after outfits that hire illegal immigrants. The Global Horizons case follows a $1.3 million settlement in a Washington State class-action suit involving employees of Zirkle Fruit who sued their employer, claiming that it drove down wages by hiring undocumented workers. That suit was based on federal RICO—or anti-racketeering—laws, and was settled after a federal appeals court overturned a lower-court decision to dismiss it. Employees have also filed an ongoing suit against Mohawk Industries, a carpet manufacturer in Dalton, Ga. "They are frustrated with illegals dragging down their wages," says Chicago attorney Howard Foster, who filed the suit on behalf of the employees. (Mohawk denies knowingly hiring illegal workers.) Both Foster and Klehm say that their suits have drawn interest from several other would-be plaintiffs.

Some observers see the recent lawsuits as pointing to a potential solution to the country's immigration issue. If enough entrepreneurs and employees hold illegal employers accountable through the courts, says Vernon Briggs Jr., professor of industrial and labor relations at Cornell University, fewer illegal immigrants will be able to find jobs here. "They will deport themselves if they can't find employment," he concludes.

But for Orian, whose case is expected to be decided this spring, the battle is a matter of pride as well as price. He's an immigrant himself—he arrived from Israel in 1997—and while he has yet to become an American citizen, he is the proud holder of a green card. His example, he says, proves that immigrants can be successful in business while staying on the right side of the law. "I'm not against anyone trying to make a better life," he says. "But after doing it myself, it hurts to see people using shortcuts, and other people taking advantage.

http://money.cnn.com/2007/01/23/magazines/fsb/immigration.fsb/