Supreme Court of the United States
TAFFLIN et al.
LEVITT et al.
Decided January 22, 1990
Justice O’Connor, For the Court
Tafflin v. Levitt, 493 U.S. 455 (1990), was a United States Supreme Court case in which the Court held that state courts have concurrent jurisdiction to decide civil claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO).
|Topic: Federalism*||Court vote: 9–0|
Click any Justice for detailJoining O'Connor opinion: Justice BLACKMUN Justice BRENNAN Justice KENNEDY Justice MARSHALL Chief Justice REHNQUIST Justice SCALIA Justice STEVENS Justice WHITE
|Holding: “State courts have concurrent jurisdiction to decide civil claims brought under the Racketeer Influenced and Corrupt Organizations Act.”|
|Citation: 493 U.S. 455||Docket: 88–1650||Audio: Listen to this case's oral arguments at Oyez|
* As categorized by the Washington University Law Supreme Court Database
DISCLAIMER: Only United States Reports are legally valid sources for Supreme Court opinions. The text below is provided for ease of access only. If you need to cite the exact text of this opinion or if you would like to view the opinions of the other Justices in this case, please view the original United States Report at the Library of Congress or Justia. The Sandra Day O'Connor Institute does not in any way represent, warrant, or guarantee that the text below is accurate."
Justice O'CONNOR delivered the opinion of the Court.
This case requires us to decide whether state courts have concurrent jurisdiction over civil actions brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), Pub.L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U.S.C. §§ 1961-1968.
The underlying litigation arises from the failure of Old Court Savings & Loan, Inc. (Old Court), a Maryland savings and loan association, and the attendant collapse of the Maryland Savings-Share Insurance Corp. (MSSIC), a state-chartered nonprofit corporation created to insure accounts in Maryland savings and loan associations that were not federally insured. See Brandenburg v. Seidel, 859 F.2d 1179, 1181-1183 (CA4 1988) (reviewing history of Maryland's savings and loan crisis). Petitioners are nonresidents of Maryland who hold unpaid certificates of deposit issued by Old Court. Respondents are the former officers and directors of Old Court, the former officers and directors of MSSIC, the law firm of Old Court and MSSIC, the accounting firm of Old Court, and the State of Maryland Deposit Insurance Fund Corp., the state-created successor to MSSIC. Petitioners allege various state law causes of action as well as claims under the Securities Exchange Act of 1934 (Exchange Act), 48 Stat. 881, 15 U.S.C. § 78a et seq., and RICO.
The District Court granted respondents' motions to dismiss, concluding that petitioners had failed to state a claim under the Exchange Act and that, because state courts have concurrent jurisdiction over civil RICO claims, federal abstention was appropriate for the other causes of action because they had been raised in pending litigation in state court. The Court of Appeals for the Fourth Circuit affirmed. 865 F.2d 595 (1989). The Court of Appeals agreed with the district Court that the Old Court certificates of deposit were not "securities" within the meaning of the Exchange Act, see 15 U.S.C. § 78c(a)(10), and that petitioners' Exchange Act claims were therefore properly dismissed. 865 F.2d at 598-599. The Court of Appeals further held, in reliance on its prior decision in Brandenburg v. Seidel, supra, that
a RICO action could be instituted in a state court and that Maryland's 'comprehensive scheme for the rehabilitation and liquidation of insolvent state-chartered savings and loan associations,' 859 F.2d at 1191, provided a proper basis for the district court to abstain under the authority of Burford v. Sun Oil Co., 319 U. S. 315 (1943).
865 F.2d at 600 (citations omitted).
To resolve a conflict among the federal appellate courts and state supreme courts, [ Footnote 1 ] we granted certiorari limited to the question whether state courts have concurrent jurisdiction over civil RICO claims. 490 U.S. 1089 (1989). We hold that they do, and accordingly affirm the judgment of the Court of Appeals.
We begin with the axiom that, under our federal system, the States possess sovereignty concurrent with that of the Federal Government, subject only to limitations imposed by the Supremacy Clause. Under this system of dual sovereignty, we have consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States. See, e.g., 18 U. S. Moore, 5 Wheat. 1, 18 U. S. 25 -26 (1820); Claflin v. Houseman, 93 U. S. 130, 93 U. S. 136 -137 (1876); Plaquemines Tropical Fruit Co. v. Henderson, 170 U. S. 511, 170 U. S. 517 (1898); Charles Dowd Box Co. v. Courtney, 368 U. S. 502, 368 U. S. 507 -508 (1962); Gulf Offshore Co. v. Mobil Oil Corp., 453 U. S. 473, 453 U. S. 477 -478 (1981). As we noted in Claflin,
if exclusive jurisdiction be neither express nor implied, the State courts have concurrent jurisdiction whenever, by their own constitution, they are competent to take it.
93 U.S. at 93 U. S. 136 ; see also Dowd Box, supra, 368 U.S. at 368 U. S. 507 -508 ("We start with the premise that nothing in the concept of our federal system prevents state courts from enforcing rights created by federal law. Concurrent jurisdiction has been a common phenomenon in our judicial history, and exclusive federal court jurisdiction over cases arising under federal law has been the exception rather than the rule"). See generally 1 J. Kent, Commentaries on American Law *400; The Federalist No. 82 (A. Hamilton); F. Frankfurter & J. Landis, The Business of the Supreme Court 5-12 (1927); H. Friendly, Federal Jurisdiction: A General View 8-11 (1973)
This deeply rooted presumption in favor of concurrent state court jurisdiction is, of course, rebutted if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim. See, e.g., Claflin, supra, 93 U.S. at 93 U. S. 137 ("Congress may, if it see[s] fit, give to the Federal courts exclusive jurisdiction") (citations omitted); see also Houston, supra, 5 Wheat. at 18 U. S. 25 -26. As we stated in Gulf Offshore:
In considering the propriety of state court jurisdiction over any particular federal claim, the Court begins with the presumption that state courts enjoy concurrent jurisdiction. Congress, however, may confine jurisdiction to the federal courts either explicitly or implicitly. Thus, the presumption of concurrent jurisdiction can be rebutted by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state court jurisdiction and federal interests.
453 U.S. at 453 U. S. 478 (citations omitted). See also Claflin, supra, 93 U.S. at 93 U. S. 136 (state courts have concurrent jurisdiction "where it is not excluded by express provision, or by incompatibility in its exercise arising from the nature of the particular case"). The parties agree that these principles, which have "remained unmodified through the years," Dowd Box, supra, 368 U.S. at 368 U. S. 508, provide the analytical framework for resolving this case.
The precise question presented, therefore, is whether state courts have been divested.of jurisdiction to hear civil RICO claims
by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state court jurisdiction and federal interests.
Gulf Offshore, supra, 453 U.S. at 453 U. S. 478. Because we find none of these factors present with respect to civil claims arising under RICO, we hold that state courts retain their presumptive authority to adjudicate such claims.
At the outset, petitioners concede that there is nothing in the language of RICO -much less an "explicit statutory directive" -to suggest that Congress has, by affirmative enactment, divested the state courts of jurisdiction to hear civil RICO claims. The statutory provision authorizing civil RICO claims provides in full:
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) (emphasis added). This grant of federal jurisdiction is plainly permissive, not mandatory, for
[t]he statute does not state nor even suggest that such jurisdiction shall be exclusive. It provides that suits of the kind described 'may' be brought in the federal district courts, not that they must be.
Dowd Box, supra, 368 U.S. at 368 U. S. 506. Indeed,
[i]t is black letter law... that the mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction over the cause of action.
Gulf Offshore, supra, 153 U.S. at 153 U. S. 479 (citing United States v. Bank of New York & Trust Co., 296 U. S. 463, 296 U. S. 479 (1936)).
Petitioners thus rely solely on the second and third factors suggested in Gulf Offshore, arguing that exclusive federal jurisdiction over civil RICO actions is established "by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests," 453 U.S. at 453 U. S. 478.
Our review of the legislative history, however, reveals no evidence that Congress even considered the question of concurrent state court jurisdiction over RICO claims, much less any suggestion that Congress affirmatively intended to confer exclusive jurisdiction over such claims on the federal courts. As the Courts of Appeals that have considered the question have concluded,
[t]he legislative history contains no indication that Congress ever expressly considered the question of concurrent jurisdiction; indeed, as the principal draftsman of RICO has remarked, 'no one even thought of the issue.'
Brandenburg, 859 F.2d at 1193 (quoting Flaherty, Two States Lay Claim to RICO, Nat.L.J., May 7, 1984, p. 10, col. 2); see also Lou v. Belzberg, 834 F.2d 730, 736 (CA9 1987) ("The legislative history provides no evidence that Congress ever expressly considered the question of jurisdiction; indeed, the evidence establishes that its attention was focused solely on whether to provide a private right of action'") (citation omitted), cert. denied, 485 U.S. 993 (1988); Chivas Products Ltd. v. Owen, 864 F.2d 1280, 1283 (CA6 1988) ("There is no `smoking gun' legislative history in which RICO sponsors indicated an express intention to commit civil RICO to the federal courts"). Petitioners nonetheless insist that, if Congress had considered the issue, it would have granted federal courts exclusive jurisdiction over civil RICO claims. This argument, however, is misplaced, for even if we could reliably discern what Congress' intent might have been had it considered the question, we are not at liberty to so speculate; the fact that Congress did not even consider the issue readily disposes of any argument that Congress unmistakably intended to divest state courts of concurrent jurisdiction.
Sensing this void in the legislative history, petitioners rely, in the alternative, on our decisions in Sedima, S.P.R.L. v. Imrex Co., 473 U. S. 479 (1985), and Agency Holding Corp. v. Malley-Duff & Assocs., 483 U. S. 143 (1987), in which we noted that Congress modeled § 1964(c) after § 4 of the Clayton Act, 15 U.S.C. § 15(a). See Sedima, supra, 473 U.S. at 473 U. S. 489 ; Agency Holding, supra, 483 U.S. at 483 U. S. 151 -152. Petitioners assert that, because we have interpreted § 4 of the Clayton Act to confer exclusive jurisdiction on the federal courts, see, e.g., General Investment Co. v. Lake Shore & M.S.R. Co., 260 U. S. 261, 260 U. S. 286 -288 (1922), and because Congress may be presumed to have been aware of and incorporated those interpretations when it used similar language in RICO, cf. Cannon v. University of Chicago, 441 U. S. 677, 441 U. S. 694 -699 (1979), Congress intended, by implication, to grant exclusive federal jurisdiction over claims arising under § 1964(c).
This argument is also flawed. To rebut the presumption of concurrent jurisdiction, the question is not whether any intent at all may be divined from legislative silence on the issue, but whether Congress in its deliberations may be said to have affirmatively or unmistakably intended jurisdiction to be exclusively federal. In the instant case, the lack of any indication in RICO's legislative history that Congress either considered or assumed that the importing of remedial language from the Clayton Act into RICO had any jurisdictional implications is dispositive. The "mere borrowing of statutory language does not imply that Congress also intended to incorporate all of the baggage that may be attached to the borrowed language." Lou, supra, at 737. Indeed, to the extent we impute to Congress knowledge of our Clayton Act precedents, it makes no less sense to impute to Congress knowledge of Claflin and Dowd Box, under which Congress, had it sought to confer exclusive jurisdiction over civil RICO claims, would have had every incentive to do so expressly.
Sedima and Agency Holding are not to the contrary. Although we observed in Sedima that "[t]he clearest current in [the legislative] history [of § 1964(c)] is the reliance on the Clayton Act model," 473 U.S. at 473 U. S. 489, that statement was made in the context of noting the distinction between "private and governmental actions" under the Clayton Act. Ibid. We intimated nothing as to whether Congress' reliance on the Clayton Act implied any intention to establish exclusive federal jurisdiction for civil RICO claims, and in Sedima itself we rejected any requirement of proving "racketeering injury," noting that to borrow the "antitrust injury" requirement from antitrust law would "creat[e] exactly the problems Congress sought to avoid." Id., 473 U.S. at 473 U. S. 498 -499. Likewise, in Agency Holding we were concerned with "borrowing," in light of legislative silence on the issue, an appropriate statute of limitations period from an "analogous" statute. 483 U.S. at 483 U. S. 146. Under such circumstances, we found it appropriate to borrow the statute of limitations from the Clayton Act. Id. at 483 U. S. 152. In this case, by contrast, where the issue is whether jurisdiction is exclusive or concurrent, we are not free to add content to a statute via analogies to other statutes unless the legislature has specifically endorsed such action. Under Gulf Offshore, legislative silence counsels, if not compels, us to enforce the presumption of concurrent jurisdiction. In short, in both Sedima and Agency Holding we looked to the Clayton Act in interpreting RICO without the benefit of a background juridical presumption of the type present in this case. Thus, to whatever extent the Clayton Act analogy may be relevant to our interpretation of RICO generally, it has no place in our inquiry into the jurisdiction of state courts.
Petitioners finally urge that state court jurisdiction over civil RICO claims would be clearly incompatible with federal interests. We noted in Gulf Offshore that factors indicating clear incompatibility
include the desirability of uniform interpretation, the expertise of federal judges in federal law, and the assumed greater hospitality of federal courts to peculiarly federal claims.
453 U.S. at 453 U. S. 483 -484 (citation and footnote omitted). Petitioners' primary contention is that concurrent jurisdiction is clearly incompatible with the federal interest in uniform interpretation of federal criminal laws, see 18 U.S.C. § 3231, [ Footnote 2 ] because state courts would be required to construe the federal crimes that constitute predicate acts defined as "racketeering activity," see 18 U.S.C. §§ 1961(1)(B), (C), and (D). Petitioners predict that if state courts are permitted to interpret federal criminal statutes, they will create a body of precedent relating to those statutes and that the federal courts will consequently lose control over the orderly and uniform development of federal criminal law.
We perceive no "clear incompatibility" between state court jurisdiction over civil RICO actions and federal interests. As a preliminary matter, concurrent jurisdiction over § 1964(c) suits is clearly not incompatible with § 3231 itself, for civil RICO claims are not "offenses against the laws of the United States," § 3231, and do not result in the imposition of criminal sanctions -uniform or otherwise. See Shearson/American Express Inc. v. McMahon, 482 U. S. 220, 482 U. S. 240 -241 (1987) (civil RICO intended to be primarily remedial rather than punitive).
More to the point, however, our decision today creates no significant danger of inconsistent application of federal criminal law. Although petitioners' concern with the need for uniformity and consistency of federal criminal law is well-taken, see Ableman v. Booth, 62 U. S. 506, 62 U. S. 517 -518 (1859); cf. Musser v. Utah, 333 U. S. 95, 333 U. S. 97 (1948) (vague criminal statutes may violate the Due Process Clause), federal courts, pursuant to § 3231, would retain full authority and responsibility for the interpretation and application of federal criminal laws, for they would not be bound by state court interpretations of the federal offenses constituting RICO's predicate acts. State courts adjudicating civil RICO claims will, in addition, be guided by federal court interpretations of the relevant federal criminal statutes, just as federal courts sitting in diversity are guided by state court interpretations of state law, see, e.g., Commissioner v. Estate of Bosch, 387 U. S. 456, 387 U. S. 465 (1967). State court judgments misinterpreting federal criminal law would, of course, also be subject to direct review by this Court. Thus, we think that state court adjudication of civil RICO actions will, in practice, have at most a negligible effect on the uniform interpretation and application of federal criminal law, cf. Pan-American Petroleum Corp. v. Superior Court of Delaware, Newcastle County, 366 U. S. 656, 366 U. S. 665 -666 (1961) (rejecting claim that uniform interpretation of the Natural Gas Act will be jeopardized by concurrent jurisdiction), and will not, in any event, result in any more inconsistency than that which a multi-membered, multi-tiered federal judicial system already creates, cf. H.J. Inc. v. Northwestern Bell Telephone Co., 492 U. S. 229, 492 U. S. 235, n. 2 (1989) (surveying conflict among federal appellate courts over RICO's "pattern of racketeering activity" requirement).
Moreover, contrary to petitioners' fears, we have full faith in the ability of state courts to handle the complexities of civil RICO actions, particularly since many RICO cases involve asserted violations of state law, such as state fraud claims, over which state courts presumably have greater expertise. See 18 U.S.C. § 1961(1)(A) (listing state law offenses constituting predicate acts); Gulf Offshore, 453 U.S. at 453 U. S. 484 ("State judges have greater expertise in applying" laws "whose governing rules are borrowed from state law"); see also Sedima, 473 U.S. at 499 (RICO "has become a tool for everyday fraud cases"); BNA, Civil RICO Report, Vol. 2, No. 44, p. 7 (Apr. 14, 1987) (54.9% of all RICO cases after Sedima involved "common law fraud" and another 18.0% involved either "nonsecurities fraud" or "theft or conversion"). To hold otherwise would not only denigrate the respect accorded co-equal sovereigns, but would also ignore our "consistent history of hospitable acceptance of concurrent jurisdiction," Dowd Box, 368 U.S. at 368 U. S. 508. Indeed, it would seem anomalous to rule that state courts are incompetent to adjudicate civil RICO suits when we have recently found no inconsistency in subjecting civil RICO claims to adjudication by arbitration. See Shearson/American Express, 482 U.S. at 482 U. S. 239 (rejecting argument that "RICO claims are too complex to be subject to arbitration" and that "there is an irreconcilable conflict between arbitration and RICO's underlying purposes").
Petitioners further note, as evidence of incompatibility, that RICO's procedural mechanisms include extended venue and service-of-process provisions that are applicable only in federal court, see 18 U.S.C. § 1965. We think it sufficient, however, to observe that we have previously found concurrent state court jurisdiction even where federal law provided for special procedural mechanisms similar to those found in RICO. See, e.g., Dowd Box, supra, (finding concurrent jurisdiction over Labor Management Relations Act § 301(a) suits, despite federal enforcement and venue provisions); Maine v. Thiboutot, 448 U. S. 1, 448 U. S. 3, n. 1 (1980) (finding concurrent jurisdiction over 42 U.S.C. § 1983 suits, despite federal procedural provisions in § 1988); cf. Hathorn v. Lovorn, 457 U. S. 255, 457 U. S. 269 (1982) (finding concurrent jurisdiction over disputes regarding the applicability of § 5 of the Voting Rights Act of 1965, 42 U.S.C. § 1973c, despite provision for a three-judge panel). Although congressional specification of procedural mechanisms applicable only in federal court may tend to suggest that Congress intended exclusive federal jurisdiction, it does not by itself suffice to create a "clear incompatibility" with federal interests.
Finally, we note that, far from disabling or frustrating federal interests, "[p]ermitting state courts to entertain federal causes of action facilitates the enforcement of federal rights." Gulf Offshore, 453 U.S. at 453 U. S. 478, n. 4; see also Dowd Box, supra, 368 U.S. at 368 U. S. 514 (conflicts deriving from concurrent jurisdiction are "not necessarily unhealthy"). Thus, to the extent that Congress intended RICO to serve broad remedial purposes, see, e.g., Pub.L. 91-452, § 904(a), 84 Stat. 947 (RICO must "be liberally construed to effectuate its remedial purposes"); Sedima, 473 U.S. at 473 U. S. 492, n. 10. ("[I]f Congress' liberal construction mandate is to be applied anywhere, it is in § 1964, where RICO's remedial purposes are most evident"), concurrent state court jurisdiction over civil RICO claims will advance rather than jeopardize federal policies underlying the statute.
For all of the above reasons, we hold that state courts have concurrent jurisdiction to consider civil claims arising under RICO. Nothing in the language, structure, legislative history, or underlying policies of RICO suggests that Congress intended otherwise. The judgment of the Court of Appeals is accordingly
[ Footnote 1 ]
Compare McCarter v. Mitcham, 883 F.2d 196, 201 (CA3 1989) (concurrent jurisdiction); Brandenburg v. Seidel, 859 F.2d 1179, 1193-1195 (CA4 1988) (same); Lou v. Belzberg, 834 F.2d 730, 738-739 (CA9 1987) (same), cert. denied, 485 U.S. 993 (1988); Simpson Elec. Corp. v. Leucadia, Inc., 72 N.Y.2d 450, 534 N.Y.S.2d 152, 530 N.E.2d 860 (1988) (same); Rice v. Ianovich, 109 Wash.2d 48, 742 P.2d 1230 (1987) (same); Cianci v. Superior Court, 40 Cal.3d 903, 221 Cal.Rptr. 575, 710 P.2d 375 (1985) (same); County of Cook v. MidCon Corp., 773 F.2d 892, 905, n. 4 (CA7 1985) (dictum); Dubroff v. Dubroff, 833 F.2d 557, 562 (CA5 1987) (civil RICO claims can "probably" be brought in state court), with Chivas Products Ltd. v. Owen, 864 F.2d 1280, 1286 (CA6 198) (exclusive jurisdiction); VanderWeyst v. First State Bank of Benson, 425 N.W.2d 803, 812 (Minn.) (expressing "serious reservations" about assuming concurrent RICO jurisdiction), cert. denied, 488 U.S. ___ (1988). See generally Note, 57 Ford L.Rev. 271, 271, n. 9 (1988) (listing federal and state courts in conflict); Note, 73 Cornell L.Rev. 1047, 1047, n. 5 (1988) (same); Note, 62 St. John's L.Rev. 301, 303, n. 7 (1988) (same).
[ Footnote 2 ]
Title 18 U.S.C. § 3231 provides in full:
The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States. Nothing in this title shall be held to take away or impair the jurisdiction of the courts of the several States under the laws thereof.
Header photo: United States Supreme Court. Credit: Patrick McKay / Flickr - CC.