Supreme Court of the United States
AGENCY HOLDING CORPORATION
MALLEY-DUFF & ASSOCIATES, INC.
Decided June 22, 1987
Justice O’Connor, For the Court
|Topic: Criminal Procedure*||Court vote: 9–0|
Click any Justice for detailJoining O'Connor opinion: Justice BLACKMUN Justice BRENNAN Justice MARSHALL Justice POWELL Chief Justice REHNQUIST Justice STEVENS Justice WHITE
|Citation: 483 U.S. 143||Docket: 86–497||Audio: Listen to this case's oral arguments at Oyez|
* As categorized by the Washington University Law Supreme Court Database
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JUSTICE O'CONNOR delivered the opinion of the Court.
At issue in these consolidated cases is the appropriate statute of limitations for civil enforcement actions under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964 (1982 ed. and Supp. III).
Petitioner Crown Life Insurance Company (Crown Life) is a Canadian corporation engaged in the business of selling life, health, and casualty insurance policies. Respondent Malley-Duff & Associates, Inc. (Malley-Duff), was an agent of Crown Life for a territory in the Pittsburgh area. Crown Life terminated Malley-Duff's agency on February 13, 1978, after Malley-Duff failed to satisfy a production quota. This case is the second of two actions brought by Malley-Duff following that termination.
In April, 1978, Malley-Duff filed its first suit ( Malley-Duff I ) against the petitioners in the United States District Court for the Western District of Pennsylvania, alleging violations of the federal antitrust laws and a state law claim for tortious interference with contract. See 734 F.2d 133 (CA3 1984). Before the antitrust action was brought to trial, however, on March 20, 1981, Malley-Duff brought this action ( Malley-Duff II ) in the same court, alleging causes of action under RICO, 42 U.S.C. § 1985, and state civil conspiracy law. Initially, Malley-Duff II was consolidated with Malley-Duff I, but the two cases were severed before trial. Only the RICO claim of Malley-Duff II is at issue before this Court.
The RICO claim arose out of two alleged incidents. First, Malley-Duff alleges that Crown Life, together with several Crown Life employees and petitioner Agency Holding Corporation, formed an enterprise whose purpose was to acquire by false and fraudulent means and pretenses various Crown Life agencies that had lucrative territories. This enterprise allegedly acquired Malley-Duff's agency by imposing an impossibly high annual production quota on Malley-Duff nine months into fiscal year 1977 and then terminating the agency when Malley-Duff failed to meet this quota. Malley-Duff further alleges that the petitioners used a similar scheme to acquire Crown Life agencies in other cities. Second, Malley-Duff alleges that the petitioners obstructed justice during the course of discovery in Malley-Duff I.
On July 29, 1982, the petitioners filed a motion for summary judgment. The District Court granted this motion and entered judgment for the petitioners on all counts. The District Court dismissed Malley-Duff's RICO claims on the ground that they were barred by Pennsylvania's 2-year statute of limitations period for fraud, 42 Pa.Cons.Stat. § 5524(7) (1982), concluding that this was the best state law analogy for Malley-Duff's claims. The Court of Appeals for the Third Circuit reversed. In its view, under Wilson v. Garcia, 471 U. S. 261 (1985), Pennsylvania's "catchall" 6-year residual statute of limitations, § 5527, was the appropriate statute of limitations for all RICO claims arising in Pennsylvania. 792 F.2d 341 (1986). We granted certiorari, 479 U.S. 983 (1986), to resolve the important question of the appropriate statute of limitations for civil enforcement actions brought under RICO.
As is sometimes the case with federal statutes, RICO does not provide an express statute of limitations for actions brought under its civil enforcement provision. Although it has been suggested that federal courts always should apply the state statute of limitations most analogous to each individual case whenever a federal statute is silent on the proper limitations period, see Wilson v. Garcia, supra, at 471 U. S. 280 (dissent); DelCostello v. Teamsters, 462 U. S. 151, 462 U. S. 174 (1983) (O'CONNOR, J., dissenting), a clear majority of the Court rejected such a single path. Instead, the Court has stated:
In such situations, we do not ordinarily assume that Congress intended that there be no time limit on actions at all; rather, our task is to 'borrow' the most suitable statute or other rule of timeliness from some other source. We have generally concluded that Congress intended that the courts apply the most closely analogous statute of limitations under state law. The implied absorption of State statutes of limitation within the interstices of the federal enactments is a phase of fashioning remedial details where Congress has not spoken, but left matters for judicial determination within the general framework of familiar legal principles.
DelCostello v. Teamsters, supra, at 462 U. S. 158 -159, quoting Holmberg v. Armbrecht, 327 U. S. 392, 327 U. S. 395 (1946).
The characterization of a federal claim for purposes of selecting the appropriate statute of limitations is generally a question of federal law, Wilson v. Garcia, supra, at 471 U. S. 269 -270, and in determining the appropriate statute of limitations, the initial inquiry is whether all claims arising out of the federal statute
should be characterized in the same way, or whether they should be evaluated differently depending upon the varying factual circumstances and legal theories presented in each individual case.
471 U.S. at 471 U. S. 268. Once this characterization is made, the next inquiry is whether a federal or state statute of limitations should be used. We have held that the Rules of Decision Act, 28 U.S.C. § 1652, requires application of state statutes of limitations unless "a timeliness rule drawn from elsewhere in federal law should be applied." DelCostello v. Teamsters, 462 U.S. at 462 U. S. 159, n. 13; see also id. at 462 U. S. 174, n. 1 (O'CONNOR, J., dissenting). Given our longstanding practice of borrowing state law, and the congressional awareness of this practice, we can generally assume that Congress intends by its silence that we borrow state law. In some limited circumstances, however, our characterization of a federal claim has led the Court to conclude that
state statutes of limitations can be unsatisfactory vehicles for the enforcement of federal law. In those instances, it may be inappropriate to conclude that Congress would choose to adopt state rules at odds with the purpose or operation of federal substantive law.
DelCostello v. Teamsters, supra, at 462 U. S. 161. While the mere fact that state law fails to provide a perfect analogy to the federal cause of action is never itself sufficient to justify the use of a federal statute of limitations, in some circumstances the Court has found it more appropriate to borrow limitation periods found in other federal, rather than state, statutes:
[A]s the courts have often discovered, there is not always an obvious state law choice for application to a given federal cause of action; yet resort to state law remains the norm for borrowing of limitations periods. Nevertheless, when a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and when the federal policies at stake and the practicalities of litigation make that rule a significantly more appropriate vehicle for interstitial lawmaking, we have not hesitated to turn away from state law.
DelCostello v. Teamsters, supra, at 462 U. S. 171 -172. See also Occidental Life Ins. Co. of Cal. v. EEOC, 432 U. S. 355 (1977) (adopting federal statute of limitations for Equal Employment Opportunity Commission enforcement actions); McAllister v. Magnolia Petroleum Co., 357 U. S. 221 (1958) (federal limitations period applied to unseaworthiness action under general admiralty law); Holmberg v. Armbrecht, supra, (refusing to apply state limitations period to action to enforce federally created equitable right).
Federal courts have not adopted a consistent approach to the problem of selecting the most appropriate statute of limitations for civil RICO claims. Indeed, an American Bar Association task force described the current state of the law regarding the applicable statute of limitations for civil RICO claims as "confused, inconsistent, and unpredictable." Report of the Ad Hoc Civil RICO Task Force of the ABA Section of Corporation, Banking and Business Law 391 (1985) (hereinafter ABA Report). Some courts have simply used the state limitations period most similar to the predicate offenses alleged in the particular RICO claim. See, e.g., Silverberg v. Thomson McKinnon Securities, Inc., 787 F.2d 1079 (CA6 1986); Burns v. Ersek, 591 F.Supp. 837 (Minn.1984). Others, such as the Court of Appeals in this case, have chosen a uniform statute of limitations applicable to all civil RICO actions brought within a given State. See, e.g., Tellis v. United States Fidelity & Guaranty Co., 805 F.2d 741 (CA7 1986); Compton v. Ide, 732 F.2d 1429 (CA9 1984); Teltronics Services, Inc. v. Anaconda-Ericsson, Inc., 587 F.Supp. 724 (EDNY 1984). The courts, however, have uniformly looked to state statutes of limitations, rather than a federal uniform statute of limitations. See ABA Report 387.
We agree with the Court of Appeals that, for reasons similar to those expressed in Wilson v. Garcia, 471 U.S. at 471 U. S. 272 -275, a uniform statute of limitations should be selected in RICO cases. As Judge Sloviter aptly observed:
RICO is similar to [42 U.S.C.] § 1983 in that both 'encompass numerous and diverse topics and subtopics.' [ Wilson v. Garcia, supra, at 471 U. S. 273.] Many civil RICO actions have alleged wire and mail fraud as predicate acts, but 18 U.S.C. § 1961 defines 'racketeering activity' to include nine state law felonies and violations of over 25 federal statutes, including those prohibiting bribery, counterfeiting, embezzlement of pension funds, gambling offenses, obstruction of justice, interstate transportation of stolen property, and labor crimes.
A. J. Cunningham Packing Corp. v. Congress Financial Corp., 792 F.2d 330, 337 (CA3 1986) (concurring in judgment). Although the large majority of civil RICO complaints use mail fraud, wire fraud or securities fraud as the required predicate offenses, a not insignificant number of complaints allege criminal activity of a type generally associated with professional criminals such as arson, bribery, theft and political corruption. ABA Report 56-57. As the Court of Appeals noted,
[e]ven RICO claims based on 'garden variety' business disputes might be analogized to breach of contract, fraud, conversion, tortious interference with business relations, misappropriation of trade secrets, unfair competition, usury, disparagement, etc., with a multiplicity of applicable limitations periods.
792 F.2d at 348. Moreover, RICO is designed to remedy injury caused by a pattern of racketeering, and "[c]oncepts such as RICO "enterprise" and "pattern of racketeering activity" were simply unknown to common law." Ibid.
Under these circumstances, therefore, as with § 1983, a uniform statute of limitations is required to avoid intolerable "uncertainty and time-consuming litigation." Wilson v. Garcia, 471 U.S. at 471 U. S. 272. This uncertainty has real-world consequences to both plaintiffs and defendants in RICO actions.
Plaintiffs may be denied their just remedy if they delay in filing their claims, having wrongly postulated that the courts would apply a longer statute. Defendants cannot calculate their contingent liabilities, not knowing with confidence when their delicts lie in repose.
Id. at 471 U. S. 275, n. 34. It is not surprising, therefore, that the petitioners no less than the respondent support the adoption of a uniform statute of limitations. See Brief for Petitioners in No. 86-497, p. 17; Brief for Petitioners in No. 86-531, p. 12.
Unlike § 1983, however, we believe that it is a federal statute that offers the closest analogy to civil RICO. The Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 15, offers a far closer analogy to RICO than any state law alternative. Even a cursory comparison of the two statutes reveals that the civil action provision of RICO was patterned after the Clayton Act. The Clayton Act provides:
Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States... and shall recover threefold the damages by him sustained, and the cost of suit including a reasonable attorney's fee.
15 U.S.C. § 15(a).
RICO's civil enforcement provision provides:
Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.
18 U.S.C. § 1964(c).
Both RICO and the Clayton Act are designed to remedy economic injury by providing for the recovery of treble damages, costs, and attorney's fees. Both statutes bring to bear the pressure of "private attorneys general" on a serious national problem for which public prosecutorial resources are deemed inadequate; the mechanism chosen to reach the objective in both the Clayton Act and RICO is the carrot of treble damages. Moreover, both statutes aim to compensate the same type of injury; each requires that a plaintiff show injury "in his business or property by reason of" a violation.
The close similarity of the two provisions is no accident. The "clearest current" in the legislative history of RICO "is the reliance on the Clayton Act model." Sedima, S. P. R. L. v. Imrex Co., 473 U. S. 479, 473 U. S. 489 (1985). As early as 1967, Senator Hruska had proposed bills that would use "the novel approach of adapting antitrust concepts to thwart organized crime." ABA Report 78. As Senator Hruska explained:
The antitrust laws now provide a well established vehicle for attacking anticompetitive activity of all kinds. They contain broad discovery provisions, as well as civil and criminal sanctions. These extraordinarily broad and flexible remedies ought to be used more extensively against the 'legitimate' business activities of organized crime.
113 Cong.Rec. 17999 (1967). The American Bar Association's Antitrust Section agreed that
[t]he time tested machinery of the antitrust laws contains several useful and workable features which are appropriate for use against organized crime,
including the use of treble damages remedies. 115 Cong.Rec. 6995 (1969).
The use of an antitrust model for the development of remedies against organized crime was unquestionably at work when Congress later considered the bill that eventually became RICO. That bill, introduced by Senators McClellan and Hruska in 1969, did not, in its initial form, include a private civil enforcement provision. Representative Steiger, however, proposed the addition of a private treble damages action "similar to the private damage remedy found in the antitrust laws." Hearings on S. 30, and Related Proposals, before Subcommittee No. 5 of the House Committee on the Judiciary, 91st Cong., 2d Sess., 520 (1970). During these same hearings, the American Bar Association proposed an amendment "to include the additional civil remedy of authorizing private damage suits based upon the concept of Section 4 of the Clayton Act" that would adopt a treble damages civil remedy. Id. at 543-544. The Committee approved the amendment, and the full House approved a bill that included the civil enforcement remedy. During the House debates, the bill's sponsor described the civil enforcement remedy as "another example of the antitrust remedy being adapted for use against organized criminality," 116 Cong.Rec. 35295 (1970), and Representative Steiger stated that he viewed the RICO civil enforcement remedy as a "parallel private... remed[y]" to the Clayton Act. Id. at 27739 (letter to House Judiciary Committee).
Together with the similarities in purpose and structure between RICO and the Clayton Act, the clear legislative intent to pattern RICO's civil enforcement provision on the Clayton Act strongly counsels in favor of application of the 4-year statute of limitations used for Clayton Act claims. 15 U.S.C. § 15b. This is especially true given the lack of any satisfactory state law analogue to RICO. While "[t]he atrocities" that led Congress to enact 42 U.S.C. § 1983 "plainly sounded in tort," Wilson v. Garcia, 471 U.S. at 471 U. S. 277, there is no comparable single state law analogue to RICO. As noted above, the predicate acts that may establish racketeering activity under RICO are far-ranging, and unlike § 1983, cannot be reduced to a single generic characterization. The Court of Appeals, therefore, selected Pennsylvania's "catchall" statute of limitations. In Wilson v. Garcia, supra, at 471 U. S. 278, we rejected the use of a "catchall" statute of limitations because we concluded that it was unlikely that Congress would have intended such a statute of limitations to apply. Furthermore, not all States have a "catchall" statute of limitations, see ABA Report 391, and the absence of such a statute in some States "distinguishes the RICO choice from the § 1983 choice made in Wilson v. Garcia. " A. J. Cunningham Packing Corp. v. Congress Financial Corp., 792 F.2d at 339 (Sloviter, J., concurring in judgment). While we concluded in Wilson v. Garcia that characterization of all § 1983 actions as personal injury claims minimized the risk that the choice of a state limitations period "would not fairly serve the federal interests vindicated by § 1983," 471 U.S. at 471 U. S. 279, "a similar statement could not be made with confidence about RICO and state statutory catchalls.'" A. J. Cunningham Packing Corp. v. Congress Financial Corp., 792 F.2d at 339. Any selection of a state statute of limitations in those States without a catchall statute would be wholly at odds with the Court of Appeals' recognition of the sui generis nature of RICO. Ibid.
The federal policies at stake and the practicalities of litigation strongly suggest that the limitations period of the Clayton Act is a significantly more appropriate statute of limitations than any state limitations period. JUSTICE SCALIA recognizes that, under his preferred approach to the question before us, a federal statute
may be sufficient to preempt a state statute that discriminates against federal rights or is too short to permit the federal right to be vindicated.
Post at 483 U. S. 162. In our view, the practicaIities of RICO litigation present equally compelling reasons for federal preemption of otherwise available state statutes of limitations even under JUSTICE SCALIA's approach. As this case itself illustrates, RICO cases commonly involve interstate transactions, and conceivably the statute of limitations of several States could govern any given RICO claim. Indeed, some nexus to interstate or foreign commerce is required as a jurisdictional element of a civil RICO claim, 18 U.S.C. §§ 1962(b) and (c), and the heart of any RICO complaint is the allegation of a pattern of racketeering. Thus, predicate acts will often occur in several States. This is in marked contrast to the typical § 1983 suit, in which there need not be any nexus to interstate commerce, and which most commonly involves a dispute wholly within one State. The multistate nature of RICO indicates the desirability of a uniform federal statute of limitations. With the possibility of multiple state limitations, the use of state statutes would present the danger of forum-shopping and, at the very least, would "virtually guarante[e]... complex and expensive litigation over what should be a straightforward matter." ABA Report 392. Moreover, application of a uniform federal limitations period avoids the possibility of the application of unduly short state statutes of limitations that would thwart the legislative purpose of creating an effective remedy. Ibid.; see also DelCostello v. Teamsters, 462 U.S. at 462 U. S. 166, 462 U. S. 167 -168 (concluding that the federal statute of limitations was appropriate because state limitation periods were too short).
The petitioners, however, suggest that the legislative history reveals that Congress specifically considered and rejected a uniform federal limitations period. The petitioners note that Representative Steiger offered a comprehensive amendment that, together with six other provisions, included a proposed 5-year statute of limitations. 116 Cong.Rec. 35346 (1970). Congress did not "reject" this proposal, however. Instead, Representative Steiger voluntarily withdrew the proposed amendment immediately after it was introduced, so that it could be referred to the House Judiciary Committee for study. Id. at 35346-35347. The reason for the reference to the House Judiciary Committee had absolutely nothing to do with the proposed statute of limitations. Instead, the amendment had included yet another civil remedy, and Representative Poff observed that "prudence would dictate that the Judiciary Committee very carefully explore the potential consequences that this new remedy might have." Id. at 35346. Under these circumstances, we are unable to find any congressional intent opposing a uniform federal statute of limitations. The petitioners also point to the fact that a predecessor bill to RICO introduced by Senator Hruska, S. 1623, included a 4-year statute of limitations. 115 Cong.Rec. 6996 (1969). Senator Hruska, however, dropped his support for this bill in order to introduce with Senator McClellan the bill that eventually became RICO. See ABA Report 87. The reason that this new bill did not include a statute of limitations is simple, and in no way even remotely suggests the rejection of a uniform federal statute of limitations: the new bill included no private treble damages remedy, and thus obviously had no need for a limitations period. Id. at 88. Finally, the petitioners cite the inclusion of a statute of limitations provision in S. 16, the Civil Remedies for Victims of Racketeering Activity and Theft Act of 1972, which would have amended § 1964 of RICO, but was not enacted. 118 Cong.Rec. 29368 (1972). This proposed bill, however, was not focused on the addition of a statute of limitations. Instead, the purpose of the bill was to broaden even further the remedies available under RICO. In particular, it would have authorized the United States itself to sue for damages and to intervene in private damages actions, and it would have further permitted private actions for injunctive relief. Congress' failure to enact this proposal, therefore, cannot be read as a rejection of a uniform federal statute of limitations.
We recognize that there is also available the 5-year statute of limitations for criminal prosecutions under RICO. See 18 U.S.C. § 3282. This statute of limitations, however, is the general "catchall" federal criminal statute of limitations. RICO itself includes no express statute of limitations for either civil or criminal remedies, and the 5-year statute of limitations applies to criminal RICO prosecutions only because Congress has provided such a criminal limitations period when no other period is specified. Thus, the 5-year statute of limitations for criminal RICO actions does not reflect any congressional balancing of the competing equities unique to civil RICO actions or, indeed, any other federal civil remedy. In our view, therefore, the Clayton Act offers the better federal law analogy.
JUSTICE SCALIA accepts our conclusion that state statutes of limitations are inappropriate for civil RICO claims, but concludes that, if state codes fail to furnish an appropriate limitations period, there is none to apply. Post at 483 U. S. 170. As this Court observed in Wilson v. Garcia, 471 U.S. at 471 U. S. 271, however:
A federal cause of action 'brought at any distance of time' would be 'utterly repugnant to the genius of our laws.' Adams v. Woods, 2 Cranch 336, 6 U. S. 342 (1805). Just determinations of fact cannot be made when, because of the passage of time, the memories of witnesses have faded or evidence is lost. In compelling circumstances, even wrongdoers are entitled to assume that their sins may be forgotten.
In sum, we conclude that there is a need for a uniform statute of limitations for civil RICO, that the Clayton Act clearly provides a far closer analogy than any available state statute, and that the federal policies that lie behind RICO and the practicalities of RICO litigation make the selection of the 4-year statute of limitations for Clayton Act actions, 15 U.S.C. § 15b, the most appropriate limitations period for RICO actions.
This litigation was filed on March 20, 1981, less than four years after the earliest time Malley-Duff's RICO action could have accrued - i.e., the date of Malley-Duff's termination on February 13, 1978. Accordingly the litigation was timely brought. Because it is clear that Malley-Duff's RICO claims accrued within four years of the time the complaint was filed, we have no occasion to decide the appropriate time of accrual for a RICO claim.
The judgment of the Court of Appeals is
* Together with No. 86-531, Crown Life Insurance Co., et al. v. Malley-Duff & Associates, Inc., also on certiorari to the same court.
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