Court Opinion

ID: 8966878
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:08:15.056517+00
Date Added: 2024-06-11T17:10:20.172596
License: Public Domain

KRUPANSKY, Circuit Judge,
dissenting.
Because I believe that the majority has incorrectly concluded that jurisdiction over civil RICO cases lies exclusively with the federal courts, I must respectfully dissent.
Although the majority’s opinion in the case at bar applies the correct standard, namely that the presumption of concurrent state court jurisdiction can be overcome if the Congress has confined jurisdiction to the federal courts by, inter alia, either “unmistakable implication from legislative history or by a clear incompatibility between state court jurisdiction and federal interests,” Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478-79, 101 S.Ct. 2870, 2875, 69 L.Ed.2d 784 (1981), it has incorrectly applied this standard in the case at bar. Disregarding the precedent of the four circuits which have considered this precise issue,1 the majority has elected, without benefit of “unmistakable legislative history” or “clear incompatibility” to override the well-established presumption of concurrent jurisdiction.
The legislative history of RICO does not provide the “unmistakable implication” that jurisdiction was intended to be exclusive. In contrast to the clear support for exclusive jurisdiction found in the Clayton Act’s legislative history, the majority readily concedes that none of the drafters of RICO “even thought of the issue” of concurrent jurisdiction. Nonetheless, the majority maintains that since the jurisdiction *1288clause of RICO incorporates language similar to the corresponding Clayton Act clause, jurisdiction over RICO actions, like that over the Clayton Act, should be exclusively federal.
Although Congress patterned the civil RICO damages action on Section 4 of the Clayton Act, there is no indication that Congress intended to impress civil RICO plaintiffs with all of the requirements for a Clayton Act action. Other circuits have uniformly rejected the view that “RICO should be viewed as an extension of antitrust law in all respects.” Bennett v. Berg, 685 F.2d 1053, 1059 (8th Cir.1982) (Clayton Act requirement of “competitive injury” should not be extended to the RICO context), aff'd, 710 F.2d 1361 (en banc), cert. denied, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983). See also Schacht v. Brown, 711 F.2d 1343, 1357-58 (7th Cir.) (the notion that the objectives of RICO and the antitrust laws were identical is unsupported by legislative history), cert. denied, 464 U.S. 1002, 104 S.Ct. 508, 78 L.Ed.2d 698 (1983).2
In Sedima S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 485, 498-99, 105 S.Ct. 3275, 3279, 3285-86, 87 L.Ed.2d 346 (1985), the Supreme Court specifically cautioned courts against employing analogies to the Clayton Act that limit the scope or availability of RICO claims.3 See also Lou v. Belzberg, 834 F.2d at 737. Congress has mandated that “[t]he provisions of [RICO] shall be liberally construed to effectuate its remedial purposes.” Pub.L. No. 91-452, § 904(a), 84 Stat. 941, 947 (1970). “Rejecting an alternative legislative course which would have involved simply amending the antitrust laws to provide remedies for competitive harm caused by racketeering infiltration, Congress instead enacted RICO as a separate tool in the fight against organized crime.” Schacht, 711 F.2d at 1357. RICO was not intended to be identical to the Clayton Act, but is to be construed more liberally than that act.4 As the Lou court decided, “this requirement of liberal construction ‘strongly counsels us not to read the obstacle of exclusive jurisdiction into section 1954(c) on the sole basis of its similarity to Section 4 of the Clayton Act.’ ” Id.
The decision in Agency Holding Corp. v. Malley-Duff & Associates, 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987), is of no assistance to the majority. The Court’s inquiry in Agency Holding is easily distinguishable from that faced by this court. In a statute of limitations inquiry, whenever the legislative history is silent, the court is free to “borrow” a limitations period from an “analogous” statute such as the Clayton Act. Agency Holding, 107 S.Ct. at 2762. However, in contrast to the statute of limitations analysis, in the concurrent jurisdiction setting, courts are not free to draw analogies to other statutes unless the legislature has specifically endorsed such action. In the event of legislative silence, courts are constrained to enforce the pre-sumpiion of concurrent jurisdiction and the exclusive jurisdiction provisions of the Clayton Act may not be “borrowed” for civil RICO. See Lou, 834 F.2d at 737.
In short, while it is appropriate to consult the Clayton Act model in determining the limitations period for civil RICO, the pronouncements of Sedima, 473 U.S. at 498-99, 105 S.Ct. at 3285-86, instruct that the Clayton Act model may not be borrowed in *1289cases like the one at bar in which such “borrowing” would unduly limit the availability of RICO claims. Accordingly, the legislative history provides no “unmistakable implication” that the Congress intended to foreclose state court jurisdiction over civil RICO cases.
The majority’s alternative argument is that concurrent jurisdiction is precluded because there is a “clear incompatibility between state-court jurisdiction and federal interests.” Gulf Offshore, 453 U.S. at 488-89, 101 S.Ct. at 2880-81. The majority rationalizes that: (1) most predicate offenses implicit to RICO come within the exclusive jurisdiction of federal courts; (2) predicate acts may occur in several different states; and (3) the elaborate venue and process provisions of RICO are unique to the federal courts and would militate against concurrent state court jurisdiction. These arguments are contrary to existing precedent.
First, the majority’s conclusion that most RICO predicate offenses are exclusively federal in nature is misplaced. It is true that a number of predicate offenses to RICO prosecutions are identified as mail fraud, securities fraud, or other similar types of offenses generally characterized as federal crimes; however, they are generally only nominally “federal.” As one commentator has noted, “RICO lets civil plaintiffs sue in federal court for treble damages based on conduct that historically had been within the exclusive jurisdiction of state courts under common law principles of tort or contract law.” Cole & McNamara, 12 Litig. 24, 25 (Spring, 1986) “If anything, RICO involves federal courts in the adjudication of state law claims rather than the other way around.” Lou, 834 F.2d at 738. See also United States v. Turkette, 452 U.S. 576, 586-87, 101 S.Ct. 2524, 2530, 69 L.Ed.2d 246 (1981) (criminal RICO moves “large substantive areas formerly totally within the police power of the State into the Federal realm.”). RICO “has become a tool for everyday fraud cases.” Sedima, 105 S.Ct. at 3286 (emphasis added). In Sedima, the court found that fully 37% of civil RICO cases prior to 1985 involved “common law fraud in a commercial or business setting.” Sedima, 105 S.Ct. at 3286 n. 16. A more recent study was even more dramatic. The study disclosed that 54.9% of all RICO cases after Sedima involved “common law fraud” and another 13.1% involved either “nonsecurities fraud” or “theft or conversion.” See 62 Civil RICO Report, No. 44 at 7 (April 14, 1987); Blakey & Cessar, Equitable Relief Under Civil RICO: Reflections on Religious Technology Center v. Woller-sheim: Will Civil RICO Be Effective Only Against White-Collar Crime? 62 Notre Dame L.Rev. 526, 619-22 (1987) (App. B). “In 1985-86, 41.4% of all RICO filings contained no grounds for federal jurisdiction other than section 1962.” Note — Clarifying a “Pattern” Of Confusion: A Multi-Factor Approach to Civil Rico’s Pattern Requirement, 86 Mich.L.Rev. 1745, 1771 (1988). In short, a majority of all RICO cases involve claims similar in nature to state law fraud, theft, or contract claims and, accordingly, there is no meaningful support for the majority’s position that state courts should be considered incompetent to judge such charges. The Supreme Court has recently rejected an argument that RICO claims are “too complex to be subject to arbitration.” Shearson American/Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 2344, 96 L.Ed.2d 185 (1987). If arbitrators are capable of adjudicating RICO claims, there is no reason why state courts cannot hear such claims.5
The majority next urges that the interstate character of RICO precludes concurrent state jurisdiction and that exclusive jurisdiction is necessary to decrease the risk of “inconsistent decisions.”
It is, however, well-established that states have the authority to adjudicate *1290cases “arising from events in other states.” Gulf Offshore, 101 S.Ct. at 2877. The judicial authority of the government looks beyond its own locality even “though the causes of dispute are relative to the laws of the most distant part of the globe.” Id. The majority’s argument, taken to its ultimate conclusion, would justify the elimination of concurrent jurisdiction in virtually all federal cases. Given the strong presumption in favor of concurrent jurisdiction, such an argument is untenable.
Neither would the majority’s position eliminate the risk of inconsistent decisions. As the Supreme Court has noted, “even a finding of exclusive jurisdiction over claims arising under a federal statute usually will not prevent a state court from deciding a question collaterally.” Hathorn v. Lovorn, 457 U.S. 255, 102 S.Ct. 2421, 2428-29, 72 L.Ed.2d 824 (1982). State courts may, for example, adjudicate federal affirmative defenses to a cause of action even if they cannot decide the exclusively federal cause of action itself. See generally, Note, Exclusive Jurisdiction of the Federal Courts in Private Civil Actions, 70 Harv.L.Rev. 509, 510-11 (1957).
For the foregoing reasons, the Supreme Court has specifically rejected the premise that concurrent jurisdiction would produce unworkable conflict and inconsistent decisions. Such conflicts are “not necessarily unhealthy,” the court has reasoned, and are not a significant factor in the exclusive jurisdiction inquiry:
It is implicit in the choice Congress has made that “diversities and conflicts” may occur, no less among the courts of the eleven federal circuits, than among the courts of the several States, as there evolves in this field of labor management relations that body of federal common law of which [Textile Workers Union of America v.] Lincoln Mills [, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972] spoke. But this not necessarily unhealthy prospect is no more than the usual consequence of the historic acceptance of concurrent state and federal jurisdiction over cases arising under federal law. To resolve and accommodate such diversities and conflicts is one of the traditional functions of this Court.
Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 82 S.Ct. 519, 526, 7 L.Ed.2d 483 (1962).
Similarly, in Hathorn, 102 S.Ct. at 2430 n. 23, the court rejected respondents’ claim that concurrent state jurisdiction would frustrate federal enforcement of the federal statute in question. The court concluded that “[c]ommon notions of collateral estop-pel suggest that the state proceedings ... would not bind other interested persons who did not participate in them_ Persons dissatisfied with a state court’s collateral resolution ... are likely to be able to litigate the issue anew in federal court.” Id. The court thus recognized the possibility that federal courts would render decisions inconsistent with state verdicts. Indeed, the court welcomed federal intervention to correct state verdicts with which other interested parties were dissatisfied. Accordingly, the court found jurisdiction over the Voting Rights Act to be concurrent, notwithstanding the possibility of conflict. Id.
In view of the Supreme Court’s unambiguous pronouncements concerning the uniformity issue, it should be clear that “the need for uniformity in the application of federal standards is not alone a sufficient basis on which federal courts may determine that their jurisdiction is exclusive.” See Nordlicht v. New York Telephone Co., 799 F.2d 859, 864 (2d Cir.1986) (deciding that jurisdiction over federal claim involving Communications Act of 1934 was concurrent despite the international character of the claim in question), cert. denied 479 U.S. 1055, 107 S.Ct. 929, 93 L.Ed.2d 981 (1987).6
The majority’s final charge that the procedural apparatus, particularly the venue and process service provisions, of RICO *1291“seems inconsistent with concurrent state court adjudication” is equally misplaced. The majority reasons that the act contains so many incentives to litigate in federal court that concurrent jurisdiction would have little practical importance and the Congress must have intended federal jurisdiction to be exclusive.
However, in other contexts, the courts have found jurisdiction to be concurrent even though concurrent jurisdiction would be of little practical importance. In the civil rights context, for example, the Supreme Court has held that state courts may entertain 42 U.S.C. § 1983 claims7 even though the drafters of the law probably thought concurrent jurisdiction to be “of little practical importance.” See Nichol, Federalism, State Courts, and Section 1983, 73 Va.L.Rev. 959, 983 n. 144 (1987); Theis, Res Judicata in Civil Rights Act Cases: An Introduction to the Problem, 70 NW.U.L.Rev. 859, 868 (1976).
Nor do the federal venue and service provisions incorporated into the RICO statute afford a persuasive reason to support exclusive federal jurisdiction. The Supreme Court has decided that concurrent jurisdiction exists over Labor Management Relations Act § 301(a) suits8 despite the LMRA’s procedural requirements, which includes venue and process sections like the RICO provisions upon which the majority relies. Most recently, the Supreme Court has also decided that concurrent jurisdiction exists over cases to enforce the Voting Rights Act, 42 U.S.C. § 1973c9 despite the fact that 42 U.S.C. § 1973c specifies procedural requirements for actions arising under § 1973c. Additionally, the Eleventh Circuit has found that concurrent jurisdiction exists for actions under the Anti-tying Provisions of the Bank Holding Company Act even though that act contains enforcement and venue provisions similar to those in the civil RICO statute. Lane, 756 F.2d at 817.
From my review of the record, herein, none of the majority’s proffered rationales persuasively supports the requisite “clear incompatibility between state court jurisdiction and federal interests.” Gulf Offshore, 453 U.S. at 478-79, 101 S.Ct. at 2875. Concurrent jurisdiction “encourage[s] enforcement of RICO and provides an appropriate role for state courts in cases involving essentially state law.” Lou, 834 F.2d at 739. Until Congress manifests a contrary intent, “the judiciary should not restrict a statute whose plain language directs a sweeping attack at deeply entrenched economic and social ills.” Note, The Conflict Over RICO’s Private Treble Damages Action, 70 Cornell L.Rev. 902, 939 (1985). Accordingly, I would join the Fourth, Fifth, Seventh and Ninth Circuits in their approval of concurrent state and federal jurisdiction and respectfully enter my dissent to the majority opinion.

. See Bradenburg v. Md. Savings & Loan Depositors Comm., 859 F.2d 1179 (4th Cir.1988); Crotty v. City of Chicago Heights, 857 F.2d 1170, 1172 n. 6 (7th Cir.1988) ("We have expressed doubt that federal courts have exclusive jurisdiction over RICO claims”); Emrich v. Touche-Ross & Co., 846 F.2d 1190 (9th Cir.1988); Lou v. Belzberg, 834 F.2d 730 (9th Cir.1987), cert. denied, — U.S. —, 108 S.Ct. 1302, 99 L.Ed.2d 512 (1988); County of Cook v. Midcon Corp., 773 F.2d 892, 905 n. 4 (7th Cir.1985) (dicta that normal presumption of concurrent jurisdiction applies to RICO claims); Dubroff v. Dubroff, 833 F.2d 557, 562 (5th Cir.1987) (RICO claims can "probably” be brought in state court).

. Cf. Lane v. Central Bank of Alabama, 756 F.2d 814, 817 (11th Cir.1985) (even though Bank Holding Co. Act contains treble damages provision which was seen as a "supplement to the antitrust laws,” state courts were found to have concurrent jurisdiction).

. In Sedima, the RICO defendants argued that “just as a Clayton Act plaintiff must allege an ‘antitrust injury,’ so a RICO plaintiff must allege a ‘racketeering injury,’ ” Sedima, 473 U.S. at 485, 105 S.Ct. at 3279. The Supreme Court rejected this contention, stating that borrowing from antitrust principles would "create [] exactly the problems Congress sought to avoid.” Id. at 498-99, 105 S.Ct. at 3285-86.

.Various statements made on the floor of the Senate support this position. Senator Hruska rejected antitrust standing parallels and called for a broad interpretation of RICO. See 115 Cong.Rec. 6992 (1969). Senator McClellan similarly noted "there is ... no intention here of importing the great complexity of antitrust law enforcement into this field.” Id, at 9567. See also 116 Cong.Rec. 607 (1970) (statement of Sen. Byrd).

. The Supreme Court’s analysis in McMahon is instructive. The court specifically decided that there was no "irreconcilable conflict between arbitration and RICO’s underlying purposes.” 107 S.Ct. at 2344. Since no conflict exists between arbitration and RICO’s purposes, the majority must bear a heavy burden to show why there is such conflict between state court jurisdiction and RICO.

. The Nordlicht court relied on the Supreme Court’s decisions in Pan American Petroleum Corp. v. Superior Court, 366 U.S. 656, 665-66, 81 S.Ct. 1303, 1308-09, 6 L.Ed.2d 584 (1961) and Great Northern Railway Co. v. Merchants’Elevator Co., 259 U.S. 285, 290-91, 42 S.Ct. 477, 478-79, 66 L.Ed. 943 (1922).

. Maine v. Thiboutot, 448 U.S. 1, 3 n. 1, 100 S.Ct. 2502, 2503 n. 1, 65 L.Ed.2d 555 (1980).

. See Dowd, 82 S.Ct. at 526; Harris v. Edward Hyman Co., 664 F.2d 943, 944 n. 2 (5th Cir.1981).

. Hathorn, 102 S.Ct. at 2430.