R. Abcarian v. Meldon Levine

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

R. ABCARIAN; R. REYES; H. REYES; No. 19-55129

J. PETRIE,

Plaintiffs-Appellants, D.C. No.

2:16-cv-07106-

v. FMO-JPR

MELDON EDISES LEVINE; WILLIAM

WATSON FUNDERBURK, JR.; JILL OPINION

BANKS BARAD; MICHAEL F.

FLEMING; CHRISTINA E. NOONAN;

DAVID H. WRIGHT; MARCIE L.

JAMES-KIRBY EDWARDS; JOSEPH A.

BRAJEVICH; ERIC GARCETTI;

GILBERT CEDILLO; PAUL

KREKORIAN; BOB BLUMENFIELD;

DAVID E. RYU; PAUL KORETZ; NURY

MARTINEZ; FELIPE FUENTES;

MARQUEECE HARRIS-DAWSON;

CURREN D. PRICE; HERB J. WESSON,

JR.; MIKE BONIN; MITCHELL

ENGLANDER; MITCH O’FARRELL;

JOSE HUIZAR; JOE BUSCAINO;

MICHAEL NELSON FEUER; AND

JAMES PATRICK CLARK,

Defendants-Appellees.

Appeal from the United States District Court

for the Central District of California

Fernando M. Olguin, District Judge, Presiding

2 ABCARIAN V. LEVINE

Argued and Submitted October 15, 2019

Pasadena, California

Filed August 25, 2020

Before: Kim McLane Wardlaw and Daniel P. Collins,

Circuit Judges, and Benjamin H. Settle, * District Judge.

Opinion by Judge Collins

SUMMARY **

Hobbs Act / RICO / Johnson Act

The panel affirmed the district court’s dismissal of an

action in which customers claimed that the Los Angeles

Department of Water and Power overcharged for electric

power and then transferred the surplus funds to the City of

Los Angeles, thereby allowing the City to receive what

amounted to an unlawful tax under California law.

The panel affirmed the district court’s dismissal of

plaintiffs’ claim under the Hobbs Act, which imposes

criminal punishment for the taking of property by extortion.

Agreeing with other circuits, the panel held that the Hobbs

Act does not create a civil cause of action.

*

The Honorable Benjamin H. Settle, United States District Judge

for the Western District of Washington, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

ABCARIAN V. LEVINE 3

The panel affirmed the dismissal of plaintiffs’ RICO

claim for reasons different from those given by the district

court. The panel held that municipal entities are not subject

to liability under RICO when sued in their official capacities,

but here the RICO claims were asserted against the

defendant City and DWP officials in their personal

capacities. Nonetheless, the RICO claim failed as a matter

of law because it did not adequately allege a predicate act in

extortion under California law or the Hobbs Act, mail and

wire fraud, or obstruction of justice.

The panel affirmed the dismissal of plaintiffs’ claims

under 42 U.S.C. § 1983 on the ground that under the Johnson

Act, the district court lacked jurisdiction over those claims

because the rate-setting ordinances at issue were orders

affecting rates chargeable by a public utility and were made

by a rule-making body of a State political subdivision.

Agreeing with the Second Circuit, the panel held that, at least

where all other federal statutory claims have been dismissed,

the Johnson Act does not permit a plaintiff to pursue a

constitutionally based § 1983 claim challenging state or

local rate orders. In addition, the DPW’s rates did not

interfere with interstate commerce and were made after

reasonable notice and hearing, and a plain, speedy and

efficient remedy could be had in the courts of California.

COUNSEL

Marion R. Yagman (argued) and Joseph Reichmann,

Yagman & Reichmann, Venice Beach, California, for

Plaintiffs-Appellants.

Michael Martin Walsh (argued), Deputy City Attorney;

Blithe S. Bock, Managing Assistant City Attorney; Michael

4 ABCARIAN V. LEVINE

N. Feuer, City Attorney; Office of the City Attorney, Los

Angeles, California; for Defendants-Appellees.

OPINION

COLLINS, Circuit Judge:

Plaintiffs are customers of the Los Angeles Department

of Water and Power (“DWP”) who claim that DWP

overcharged for electric power and then transferred the

surplus funds to the City of Los Angeles (“City”), thereby

allowing the City to receive what amounts to an unlawful tax

under California law. 1 Plaintiffs brought suit in federal

court, asserting claims under the Hobbs Act, the Racketeer

Influenced and Corrupt Organizations Act (“RICO”), and

42 U.S.C. § 1983, as well as claims under state law. The

district court dismissed Plaintiffs’ federal causes of action

for failure to state a claim, and it declined to retain

jurisdiction over the remaining state-law claims. We affirm.

I

In reviewing the district court’s dismissal under Federal

Rule of Civil Procedure 12(b)(6), we may consider only “the

complaint, materials incorporated into the complaint by

reference, and matters of which the court may take judicial

notice.” Metzler Inv. GMBH v. Corinthian Colls., Inc.,

540 F.3d 1049, 1061 (9th Cir. 2008). “[W]e take all well-

pleaded factual allegations in the complaint as true,

1

Although Plaintiffs allege that DWP overcharged for both water

and electric power, the operative complaint contains no allegations about

any comparable transfers involving excess water revenues. Accordingly,

the claims before us involve only electric power.

ABCARIAN V. LEVINE 5

construing them ‘in the light most favorable to the

nonmoving party.’” Keates v. Koile, 883 F.3d 1228, 1234

(9th Cir. 2018) (quoting Silvas v. E*Trade Mortg. Corp.,

514 F.3d 1001, 1003 (9th Cir. 2008)). We review de novo

whether these allegations “‘plausibly give rise to an

entitlement to relief.’” Id. (quoting Ashcroft v. Iqbal,

556 U.S. 662, 679 (2009)).

A

DWP is governed by a Board of Water and Power

Commissioners composed of five members who are

ordinarily appointed by the Mayor with the approval of the

City Council. See L.A. City Charter §§ 502(a), 670. Under

the City Charter, the Board fixes the rates to be charged to

DWP customers for electric power, “[s]ubject to approval by

ordinance” of the City Council. See id. § 676(a); see also id.

§ 675(b)(3). Any city ordinance, including one approving

DWP rates, must “be presented to the Mayor for approval

and signature,” and if the Mayor vetoes the ordinance, the

Council may override the veto by a prescribed

supermajority. Id. § 250(b), (c). The Charter provides that

all revenues collected from the provision of electric power

service shall be deposited in a “Power Revenue Fund” in the

City Treasury. Id. § 679(b). These funds may be used only

for specified purposes, such as costs of operation and

maintenance, employee benefits, and business promotion.

Id. § 679(c).

The Charter provides, however, that if there is a

“surplus” in the Power Revenue Fund at the end of the City’s

fiscal year on June 30, then the City Council, acting by

ordinance and with the consent of the Board, may direct that

the surplus be transferred to the City Treasury’s Reserve

Fund. Id. § 344(a), (b); see also id. § 310 (City’s fiscal year

runs from July 1 through June 30 of the following year). The

6 ABCARIAN V. LEVINE

Reserve Fund may be used for “unanticipated expenditures

and revenue shortfalls in the City’s General Fund,” id.

§ 302(b); however, with the Mayor’s consent (or a two-

thirds vote), the City Council may approve a transfer of

funds from the Reserve Fund to the City’s General Fund, id.

§ 341. See also id. § 679(c)(9) (expressly authorizing

transfers, under these procedures, from the Power Revenue

Fund “to the City General Fund”). For purposes of a

potential transfer, a “surplus” is defined as “the amount

remaining in the . . . Power Revenue Fund, less outstanding

demands and liabilities payable out of the fund . . . as shown

by audited financial statements.” Id. § 344(b)(1). However,

if the Board concludes that such a transfer would have “a

material negative impact on [DWP’s] financial condition in

the year in which the transfer is to be made,” then the Board

can approve or disapprove the proposed transfer in whole or

in part. Id. § 344(b)(2), (3).

At the time that the district court ruled in this case, the

applicable rates for DWP electric power services were set by

a combination of two City ordinances, one of which had

been adopted in 2008, and the other in 2016. The 2016

ordinance, in turn, completely superseded a prior 2012

ordinance. All three ordinances were adopted by the City

Council, and approved by the Mayor, after a series of at least

three public meetings—one before the Council’s Energy and

Environment Committee to consider the rates, another

before the full Council to consider the rates, and a final

Council meeting to formally approve the ordinance setting

the rates. 2

2

We grant the City’s motion to take judicial notice of the 2008 and

2016 ordinances and of the official Council File for the 2008, 2012, and

2016 ordinances. Tollis, Inc. v. County of San Diego, 505 F.3d 935, 938

ABCARIAN V. LEVINE 7

Since at least 2010, the rates that DWP has charged its

utility customers for electric power have exceed DWP’s

costs for providing that service, thereby yielding a surplus at

the end of the fiscal year. Accordingly, each year over the

same time period, the City Council, with the approval of the

Board, has approved a transfer of surplus moneys from the

Power Revenue Fund to the City’s General Fund. The

amounts transferred from the Power Revenue Fund have

ranged from $254 million to $300 million.

B

Plaintiffs R. Abcarian, R. Reyes, H. Reyes, and J. Petrie 3

are individuals who have public utility accounts with DWP

for the provision of electric power. According to Plaintiffs,

DWP’s ability to make annual transfers from the Power

Revenue Fund to the City’s General Fund indicates that the

electric power rates charged by DWP have consistently

exceeded its reasonable costs of providing those services.

Plaintiffs allege that, as a result, the above-cost utility rates

constituted a “tax” within the meaning of Article XIII C of

the California Constitution and are therefore subject to the

voter-approval requirements established in that article. In

defining what counts as a “tax” that must be approved by

voters, Article XIII C broadly covers “any levy, charge, or

n.1 (9th Cir. 2007); Chaker v. Crogan, 428 F.3d 1215, 1223 n.8 (9th Cir.

2005); Rabkin v. Dean, 856 F. Supp. 543, 546 (N.D. Cal. 1994). We

otherwise deny the motion.

3

Neither the initial complaint nor any other document in the record

sets forth the full names of the Plaintiffs. Because J. Petrie was not added

as a plaintiff until the filing of the First Amended Complaint, the term

“Plaintiffs,” as used in this opinion, does not include Petrie when

referencing procedural actions taken prior to the filing of that amended

complaint.

8 ABCARIAN V. LEVINE

exaction of any kind imposed by a local government,” except

for, inter alia, a “charge imposed for a specific government

service or product provided directly to the payor that is not

provided to those not charged, and which does not exceed

the reasonable costs to the local government of providing the

service or product.” See Cal. Const. art. XIII C, § 1(e)(2)

(emphasis added). It is undisputed that the City has not

submitted the relevant electric power rates to the electorate

for its approval.

On September 21, 2016, Plaintiffs filed a putative class

action complaint against various City and DWP officials,

alleging that DWP “illegally overcharges its customers” for

electric service and that the defendants were liable to rate-

payers on a variety of federal and state-law grounds.

Plaintiffs sought a preliminary injunction shortly thereafter,

and Defendants opposed that motion and moved to dismiss

or stay the action. Defendants’ motion argued, among other

grounds, that the case should be stayed or dismissed under

Colorado River Conservation District v. United States,

424 U.S. 800 (1976), in light of a parallel state court class

action challenging the legality of the City’s electric rates

under Article XIII C, see Eck v. City of Los Angeles, No.

BC577028 (L.A. Super. Ct.). On November 28, 2016, the

district court stayed this case pending resolution of Eck,

concluding that Plaintiffs’ action “is essentially a dressed-up

version of the Eck complaints.” In light of the stay, the

district court denied Plaintiffs’ request for a preliminary

injunction. Shortly thereafter, the district court denied

Plaintiffs’ separate motion to enjoin the Eck action. Plaintiff

appealed these orders, and we affirmed. See Abcarian v.

Levine, 693 F. App’x 487 (9th Cir. 2017). Our memorandum

affirming the district court’s orders expressed no view of the

underlying merits of Plaintiffs’ claims.

ABCARIAN V. LEVINE 9

After the state court subsequently granted preliminary

approval for a class action settlement in the Eck litigation,

Plaintiffs successfully moved to lift the stay of this action.

Plaintiffs thereafter filed the operative First Amended

Complaint (“FAC”) against the following 27 City officers

and employees (“Defendants”): the five members of the

DWP Board; three “operating head[s] of DWP”; DWP’s in-

house legal counsel; the fifteen members of the City

Council; the Mayor; and the City Attorney and his chief

deputy. The FAC asserts nine claims, three of which

expressly arise under federal law. 4

First, Plaintiffs allege that Defendants are personally

liable under 42 U.S.C. § 1983 in their individual capacities,

on the theory that the City’s unlawful overcharges deprived

Plaintiffs of property without due process of law. Second,

Plaintiffs allege that Defendants are liable for these same due

process violations under 42 U.S.C. § 1983 in their official

capacities “pursuant to the principles set forth in Monell v.

Dep’t of Social Services,” 436 U.S. 658 (1978). Third,

Plaintiffs assert a claim under the civil action provision of

RICO, 18 U.S.C. § 1964. Specifically, Plaintiffs allege that,

by overcharging for electric power services and threatening

to terminate service for customers who did not pay,

Defendants committed multiple “civil RICO predicates,

including at least fraud, wire fraud, mail fraud, extortion, and

obstruction of justice.”

The FAC alleged six additional claims, five of which

(fraud, conspiracy, conversion, breach of contract, and

interference with economic relations) rested solely on state

4

The FAC actually contains two versions of these nine claims,

depending upon whether or not Plaintiffs’ challenges to the overcharges

are found to constitute a challenge to a “rate” order for utility services.

10 ABCARIAN V. LEVINE

law. The last claim, for “extortion,” was expressly “charged

both as a tort, as a violation of the Hobbs Act, [18 U.S.C.

§ 1951,] and as a RICO predicate” (emphasis added). The

district court and the parties construed this claim as alleging

not only a state-law tort claim and a RICO predicate but also

a direct federal cause of action for a violation of the Hobbs

Act.

The district court dismissed the four federal claims with

prejudice and the state law claims without prejudice.

Plaintiffs timely appealed.

II

We first address Plaintiffs’ assertion of a direct cause of

action under the Hobbs Act, 18 U.S.C. § 1951. That statute

imposes criminal punishment on:

Whoever in any way or degree obstructs,

delays, or affects commerce or the movement

of any article or commodity in commerce, by

robbery or extortion or attempts or conspires

so to do, or commits or threatens physical

violence to any person or property in

furtherance of a plan or purpose to do

anything in violation of this section . . . .

18 U.S.C. § 1951(a). Plaintiffs contend that this criminal

statute creates a private civil right of action in favor of those

persons from whom property is taken by extortion, and they

allege that by threatening to turn off Plaintiffs’ utility

services unless they paid DWP’s unlawful utility rates,

Defendants have obtained money from Plaintiffs by

“extortion.” The district court properly dismissed this claim.

ABCARIAN V. LEVINE 11

Prior to its decision in Alexander v. Sandoval, 532 U.S.

275 (2001), the Supreme Court “followed a different

approach to recognizing implied causes of action than it

follows now.” Ziglar v. Abbasi, 137 S. Ct. 1843, 1855

(2017). Under this “‘ancien regime,’ the Court assumed it

to be a proper judicial function to ‘provide such remedies as

are necessary to make effective’ a statute’s purpose,” and the

Court routinely implied causes of action “not explicit in the

statutory text itself.” Id. (citations omitted). But the Court

has now clarified that, “when deciding whether to recognize

an implied cause of action, the ‘determinative’ question is

one of statutory intent.” Id. at 1855–56 (quoting Sandoval,

532 U.S. at 286). That is, a cause of action may now be

recognized under a statute only where the language Congress

used “displays an intent to create not just a private right but

also a private remedy.” Sandoval, 532 U.S. at 286. This

“interpretive inquiry begins with the text and structure of the

statute and ends once it has become clear that Congress did

not provide a cause of action.” Id. at 288 n.7 (citation

omitted); see also Northstar Fin. Advisors, Inc. v. Schwab

Invs., 615 F.3d 1106, 1115 (9th Cir. 2010). Thus, if the

statutory language “itself does not ‘display an intent’ to

create ‘a private remedy,’ then ‘a cause of action does not

exist and courts may not create one, no matter how desirable

that might be as a policy matter, or how compatible with the

statute.’” Ziglar, 137 S. Ct. at 1856 (quoting Sandoval,

532 U.S. at 286–87) (alteration marks omitted) (emphasis

added).

Here, the text of the Hobbs Act merely defines a criminal

offense and the prescribed punishment for that offense, and

it contains no “‘rights-creating’ language” manifesting an

intent to create an accompanying civil private right of action

for victims of extortion (or anyone else, for that matter).

Sandoval, 532 U.S. at 288 (citing Cannon v. University of

12 ABCARIAN V. LEVINE

Chicago, 441 U.S. 677, 690 n.13 (1979)). Indeed, even prior

to Sandoval, the Supreme Court noted that it “has rarely

implied a private right of action under a criminal statute, and

where it has done so ‘there was at least a statutory basis for

inferring that a civil cause of action of some sort lay in favor

of someone.’” Chrysler Corp. v. Brown, 441 U.S. 281, 316

(1979) (quoting Cort v. Ash, 422 U.S. 66, 79 (1975))

(emphasis added).

Plaintiffs nonetheless argue that, as alleged victims of

Hobbs Act extortion, they are “members of the class for

whose especial benefit the statute was enacted,” and a cause

of action in their favor should therefore be implied. But the

fact that a federal criminal statute protects victims of the

offense defined by that statute does not, without more, make

such victims the sort of “‘especial’ beneficiary” who may

assert an implied private civil cause of action. Logan v. U.S.

Bank N.A., 722 F.3d 1163, 1171 (9th Cir. 2013) (quoting

California v. Sierra Club, 451 U.S. 287, 294 (1981)). As we

explained in Logan, if being a victim of the offense

described in a criminal statute were sufficient to assert an

implied cause of action, then “the victim of any crime would

be an especial beneficiary of the criminal statute’s

proscription” who could then assert a civil claim. Id.

(emphasis added). The Supreme Court has emphatically

rejected that sweeping view, which “would work a

significant shift in settled interpretive principles regarding

implied causes of action.” Central Bank of Denver, N.A. v.

First Interstate Bank of Denver, N.A., 511 U.S. 164, 191

(1994); see also id. at 190–91 (“There would be no logical

stopping point to this line of reasoning: Every criminal

statute passed for the benefit of some particular class of

persons would carry with it a concomitant civil damages

cause of action.”).

ABCARIAN V. LEVINE 13

Plaintiffs also contend that Congress’s intent to allow

civil actions under the Hobbs Act is confirmed by the fact

that Congress expressly included violations of the Hobbs Act

within the definition of “racketeering activity” for purposes

of a civil RICO claim. 18 U.S.C. § 1961(1). On the

contrary, this fact negates any intention to create a civil

cause of action directly under the Hobbs Act. The inclusion

of Hobbs Act violations as predicates for a civil RICO Act

claim confirms that “when Congress wished to provide a

private damages remedy, it knew how to do so and did so

expressly.” Touche Ross & Co. v. Redington, 442 U.S. 560,

572 (1979). Congress’s failure to include any comparable

language in the Hobbs Act itself “indicates a deliberate

congressional choice with which the courts should not

interfere.” Central Bank, 511 U.S. at 184.

We thus agree with our sister circuits that the Hobbs Act

does not support a private civil right of action, see Eliahu v.

Jewish Agency for Israel, 919 F.3d 709, 713 (2d Cir. 2019);

Wisdom v. First Midwest Bank, of Poplar Bluff, 167 F.3d

402, 408–09 (8th Cir. 1999), and we affirm the dismissal of

Plaintiffs’ Hobbs Act claim. 5

III

We likewise affirm the dismissal of Plaintiffs’ RICO

claim, but we do so for reasons different from those given by

the district court.

5

Moreover, as we later explain in connection with Plaintiffs’ RICO

claim, Plaintiffs have failed to allege “extortion” within the meaning of

the Hobbs Act. See infra section III(B). Thus, even if the Hobbs Act did

provide a private right of action, any claim by Plaintiffs under that statute

would still fail as a matter of law.

14 ABCARIAN V. LEVINE

A

In dismissing the RICO claim, the district court relied

primarily on Ninth Circuit precedent holding that municipal

entities are not subject to liability under RICO. See Pedrina

v. Chun, 97 F.3d 1296, 1300 (9th Cir. 1996); Lancaster

Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397,

404 (9th Cir. 1991). While the district court was correct in

concluding that this rule would necessarily extend to a suit

against municipal officers in their official capacities, see

Center for Bio-Ethical Reform, Inc. v. Los Angeles County

Sheriff Dep’t, 533 F.3d 780, 799 (9th Cir. 2008) (“An official

capacity suit against a municipal officer is equivalent to a

suit against the entity.”), the rule has no application here,

because Plaintiffs’ RICO claims are asserted against

Defendants in their personal capacities. The district court

thought it was sufficient that the FAC relies upon actions that

Defendants performed within the scope of their official

duties, but that is wrong. In the context of § 1983 actions,

for example, the Supreme Court has expressly rejected the

view that a suit against state officials “in their personal

capacity for actions they take in their official capacity” is

equivalent to a suit against the state itself. Hafer v. Melo,

502 U.S. 21, 27 (1991). We see no reason why a similar

distinction would not apply here.

Indeed, our rationale for concluding that civil RICO does

not apply to municipal entities—that “government entities

are incapable of forming a malicious intent,” see Lancaster

Cmty. Hosp., 940 F.2d at 404—is obviously inapplicable to

natural persons. In invoking this rationale with respect to

RICO, Lancaster Community Hospital relied heavily on City

of Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981),

which rejected punitive damages against municipalities

under § 1983 based in part on contemporaneous

ABCARIAN V. LEVINE 15

“‘respectable authority’ to the effect that municipal

corporations ‘can not, as such, do a criminal act or a willful

and malicious wrong and they cannot therefore be made

liable for exemplary damages.’” City of Newport, 453 U.S.

at 261 (quoting Hunt v. City of Boonville, 65 Mo. 620, 624

(1877)). Importantly, however, City of Newport emphasized

that this rationale did not apply to personal-capacity suits

against municipal officials and that “juries and courts” are

allowed “to assess punitive damages in appropriate

circumstances against the offending official, based on his

personal financial resources.” Id. at 269. The express

distinction drawn by City of Newport further confirms that

our rule categorically exempting municipalities from civil

RICO liability does not extend to personal-capacity suits

against municipal officials acting in their official capacities.

The district court erred in concluding otherwise.

B

Although we thus agree with Plaintiffs that the district

court’s rationale was legally flawed, we nonetheless

conclude that the RICO claim was properly dismissed. See

Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th

Cir. 1998) (“If support exists in the record, the dismissal may

be affirmed on any proper ground, even if the district court

did not reach the issue or relied on different grounds or

reasoning.”). In our view, Plaintiffs’ RICO claim fails as a

matter of law because it does not adequately allege a

cognizable predicate act.

To state a civil RICO claim under 18 U.S.C. § 1964(c),

a plaintiff must allege “(1) conduct (2) of an enterprise

(3) through a pattern (4) of racketeering activity (known as

‘predicate acts’) (5) causing injury to the plaintiff’s ‘business

or property.’” Grimmett v. Brown, 75 F.3d 506, 510 (9th

Cir. 1996) (citations omitted). Plaintiffs’ FAC relies on four

16 ABCARIAN V. LEVINE

specific crimes that fall within the definition of “racketeering

activity,” namely, extortion under California law, see

18 U.S.C. § 1961(1)(A); extortion under the Hobbs Act, id.

§ 1961(1)(B) (citing 18 U.S.C. § 1951); mail fraud and wire

fraud, id. (citing 18 U.S.C. §§ 1341, 1343); and obstruction

of justice, id. (citing 18 U.S.C. § 1503). The latter two can

be readily dismissed. Plaintiffs’ allegations of mail and wire

fraud rest on the theory that Defendants caused DWP to send

electric bills that falsely implied that the charges were

consistent with California law. But especially given the

open and public process by which the electric rates were set

and the later transfers were made, Plaintiffs cannot

repackage the underlying legal dispute under Article XIII C

of the California Constitution as mail fraud or wire fraud.

See Miller v. Yokohama Tire Corp., 358 F.3d 616, 620–22

(9th Cir. 2004). As for obstruction of justice, the FAC

contains only a conclusory assertion devoid of factual

enhancement, which is plainly inadequate. Iqbal, 556 U.S.

at 678.

Plaintiffs’ remaining theory—that Defendants’

collection of unlawfully high charges for DWP electric

service amounted to extortion under the Hobbs Act or

California law—fails as a matter of law under Wilkie v.

Robbins, 551 U.S. 537 (2007). In Wilkie, the Supreme Court

held that the Hobbs Act incorporates “the common law

conception of ‘extortion,’” which drew a sharp “line

between public and private beneficiaries” in defining what

counts as “extortion.” Id. at 563–64. Because extortion at

common law “focused on the harm of public corruption, by

the sale of public favors for private gain,” and “not on the

harm caused by overzealous efforts to obtain property on

behalf of the Government,” id. at 564, the Court rejected the

plaintiff’s effort in that case to assert extortion-based civil

RICO claims against government officials who aggressively

ABCARIAN V. LEVINE 17

sought to obtain an easement for the government from the

plaintiff, id. at 541, 567. Plaintiffs’ RICO claim here

likewise rests on the theory that Defendants wrongfully

sought to obtain money for DWP and the City from DWP

customers, and it therefore fails as a matter of law under

Wilkie.

Plaintiffs’ three arguments for evading Wilkie all fail.

First, Plaintiffs’ theory that Defendants’ ordinary municipal

compensation supplies the necessary private gain would

apply to any government official (who is likewise paid by

the government for which he or she acts) and would simply

obliterate Wilkie’s clear “line between public and private

beneficiaries.” 551 U.S. at 564. Second, Plaintiffs argue

that, because Wilkie involved federal officials and the federal

government, its holding does not apply to extortion-based

civil RICO claims against state and local officials. This

ignores the Court’s reasoning in Wilkie, which was based on

the widely accepted common-law understanding of extortion

by officials generally, and not merely by federal officials.

Id. at 564–67. Third, Plaintiffs are wrong in contending that

Wilkie does not preclude their reliance on California-law

extortion; on the contrary, Wilkie rejected a similar effort to

invoke a Wyoming-law predicate in that case. Id. at 567. As

the Court explained, even if the conduct in question is a

crime punishable by more than one year in prison under state

law, it cannot serve as a RICO extortion predicate unless it

satisfies the generic federal definition of extortion. Id.

(citing Scheidler v. National Org. for Women, Inc., 537 U.S.

393, 409–10 (2003)). Here, as in Wilkie, “the conduct

alleged does not fit the traditional definition of extortion, so

[Plaintiffs’] RICO claim does not survive on a theory of

state-law derivation.” Id.

18 ABCARIAN V. LEVINE

IV

We also agree with the dismissal of Plaintiffs’ § 1983

claims, but our reasoning again differs from the district

court’s. See Steckman, 143 F.3d at 1295. The district court

held that these claims failed as a matter of law on their

merits, but we do not reach that issue because we conclude

that, under the Johnson Act, 28 U.S.C. § 1342, the court

lacked jurisdiction over these claims. 6

The Johnson Act provides, in full:

The district courts shall not enjoin,

suspend or restrain the operation of, or

compliance with, any order affecting rates

chargeable by a public utility and made by a

State administrative agency or a rate-making

body of a State political subdivision, where:

(1) Jurisdiction is based solely on

diversity of citizenship or repugnance of

the order to the Federal Constitution; and,

6

We reject Plaintiffs’ contention that, having lost on this

jurisdictional issue below and not having filed a cross-appeal,

Defendants cannot raise the Johnson Act in this court. Because that Act

goes to the subject matter jurisdiction of the court, see US West, Inc. v.

Nelson, 146 F.3d 718, 721–22 (9th Cir. 1998), it can be raised at any

stage of the case, and we have an independent obligation to consider it,

see Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). We review this

issue de novo, considering not just the complaint, but also the evidence

submitted by the parties in connection with the motion to dismiss under

Federal Rule of Civil Procedure 12(b)(1). See US West, 146 F.3d at 721,

724.

ABCARIAN V. LEVINE 19

(2) The order does not interfere with

interstate commerce; and,

(3) The order has been made after

reasonable notice and hearing; and,

(4) A plain, speedy and efficient

remedy may be had in the courts of such

State.

28 U.S.C. § 1342. Even if Plaintiffs are correct that the three

rate-setting ordinances at issue here violate the California

Constitution, those ordinances on their face are still “order[s]

affecting rates chargeable by a public utility” and they were

“made by . . . a rate-making body of a State political

subdivision.” Id. 7 And although the text of the Johnson Act

mentions only injunctive relief, we have broadly construed

the statute as “preclud[ing] federal court jurisdiction over all

suits affecting state-approved utility rates, including actions

seeking declaratory relief and compensatory damages.”

Brooks v. Sulphur Springs Valley Elec. Coop., 951 F.2d

1050, 1054 (9th Cir. 1991); see also Miller v. N.Y. State Pub.

Serv. Comm’n, 807 F.2d 28, 33 (2d Cir. 1986); Tennyson v.

Gas Serv. Co., 506 F.2d 1135, 1139 (10th Cir. 1974).

Accordingly, the Johnson Act deprived the district court of

subject matter jurisdiction if each of these four conditions is

7

Plaintiffs argued below that this aspect of the Johnson Act was not

satisfied here, because they assertedly challenge only the transfer of the

surplus funds and not the underlying ordinances setting the electric rates.

This argument cannot be squared with Plaintiffs’ theory as to the

underlying illegality of Defendants’ actions, which is that the “charge[s]

imposed” for electric service “exceed the reasonable costs to the local

government of providing the service.” CAL. CONST. art. XIII C, § 1(e)(2)

(emphasis added).

20 ABCARIAN V. LEVINE

satisfied here. We hold that they are with respect to

Plaintiffs’ remaining § 1983 claims.

A

In light of the dismissal of all of Plaintiffs’ federal

statutory claims, see supra sections II and III, we conclude

that jurisdiction here “is based solely on . . . repugnance of

the order[s] to the Federal Constitution.” 28 U.S.C.

§ 1342(1).

As an initial matter, there is no question that Plaintiffs’

§ 1983 claims rest solely on the assertion that Defendants

have deprived Plaintiffs of property without due process of

law in violation of the Fourteenth Amendment. See US

West, 146 F.3d at 723 & n.4 (holding that a § 1983 action

resting solely on constitutional violations satisfies

§ 1342(1)). Although Plaintiffs’ § 1983 claims are thus

“based solely on . . . repugnance of the order[s] to the

Federal Constitution,” 28 U.S.C. § 1342(1), the district court

nonetheless held that the Johnson Act did not apply because,

in light of the two other federal statutory claims asserted in

the FAC, jurisdiction over the action did not rest “solely” on

repugnance to the federal Constitution. In so concluding, the

district court erred.

In barring federal courts from exercising “[j]urisdiction”

to interfere with state rate orders in specified circumstances,

the text of the Johnson Act necessarily focuses on the

jurisdictional basis on which the court is asked to grant such

relief. The happenstance that there may or may not be other

claims in the case is irrelevant—especially given the fact

that, in light of the generous rules governing joinder of

claims, the additional claims asserted in the action may have

nothing to do with state rate orders at all. See Fed. R. Civ.

P. 18; id. advisory committee’s note to 1937 adoption

ABCARIAN V. LEVINE 21

(noting that Rule 18 was “patterned upon [former] Equity

Rule 26”). Indeed, the Johnson Act would be a nullity if it

could be evaded through the simple artifice of adding some

other federal claim to the complaint.

But even if the inquiry under the Johnson Act focuses on

the bases for asserting jurisdiction to grant relief concerning

the rate orders and not on the complaint as a whole, the fact

remains that, alongside their constitutionally-based § 1983

claims, Plaintiffs here did assert federal statutory claims as

a basis for challenging the rates collected by DWP—namely,

their Hobbs Act and RICO claims. Although these latter

claims fail on their merits, jurisdiction over them is not

barred by the Johnson Act, which “does not apply to claims

based upon a congressional statute or federal administrative

rulings, even though these commands are ultimately backed

up by the Supremacy Clause (and are therefore arguably

‘constitutional’ claims).” Public Serv. Co. of N.H. v. Patch,

167 F.3d 15, 25 (1st Cir. 1998); see also International Bhd.

of Elec. Workers v. Public Serv. Comm’n (IBEW), 614 F.2d

206, 209–11 (9th Cir. 1980) (same). Had those federal

statutory claims survived, we would then have to confront

the question whether the Johnson Act should be applied on

a claim-by-claim basis, such that Plaintiffs’ challenge to the

rates could proceed with respect to those statutory claims but

not with respect to the constitutional claims asserted under

§ 1983. Cf. Patch, 167 F.3d at 25 (declining to decide

whether “the statute permits relief based on constitutional

claims, even though other claims may support jurisdiction”).

As explained above, however, those statutory claims have

not survived. As the case is now configured, the sole

remaining federal basis for challenging the rate orders is the

asserted “repugnance of the order[s] to the Federal

Constitution.” 28 U.S.C. § 1342(1). Were the district court

now to exercise jurisdiction to enjoin or otherwise interfere

22 ABCARIAN V. LEVINE

with the rate orders, it would be doing precisely what the

Johnson Act forbids it to do. See IBEW, 614 F.2d at 211

(stating that the purpose of the Johnson Act was to stop

federal courts from interfering in state rate challenges,

“‘usually on substantive due process grounds’” (quoting

Swift & Co. v. Wickham, 382 U.S. 111, 127 (1965))).

Accordingly, we agree with the Second Circuit that, at

least where all other federal statutory claims have been

dismissed, the Johnson Act does not permit a plaintiff to

pursue a constitutionally based § 1983 claim challenging

state or local rate orders. See Evans v. N.Y. State Pub. Serv.

Comm’n, 287 F.3d 43, 46–47 (2d Cir. 2002); 8 cf. Hill v.

Kansas Gas Serv. Co., 323 F.3d 858, 868–69 (10th Cir.

2003) (dismissing remaining § 1983 claim on Johnson Act

grounds after dismissing all other federal claims as “wholly

insubstantial and frivolous” (citation and internal quotation

marks omitted)).

We disagree with the district court’s suggestion that this

approach to the Johnson Act would contravene our

observation that “[w]e have construed the term ‘solely’ in

§ 1342(1) narrowly.” Hawaiian Tel. Co. v. Public Utils.

Comm’n, 827 F.2d 1264, 1273 (9th Cir. 1987) (citing IBEW,

614 F.2d at 210–11). In Hawaiian Telephone and IBEW, the

defendants sought to bar a federal statutory challenge to state

rates in federal court on the theory that, because the statute’s

8

Because the Second Circuit’s opinion in Evans affirmed the

Johnson-Act-based dismissal of the § 1983 claims before affirming the

dismissal of the remaining claims on the merits, see 287 F.3d at 46–47,

it is arguable that Evans implicitly endorsed the claim-by-claim approach

to the Johnson Act—i.e., that a constitutional challenge to rates may not

go forward in federal court even if there are other meritorious federal

claims. But the Second Circuit ultimately was not presented with the

latter scenario, and any such implicit view would at best be dicta.

ABCARIAN V. LEVINE 23

preemptive effect ultimately rested on the Supremacy

Clause, the claim was actually a constitutional one for

purposes of § 1342(1). Hawaiian Tel., 827 F.2d at 1273;

IBEW, 614 F.2d at 210–11. We concluded that any such

implicit constitutional underpinning did not detract from the

fundamentally statutory nature of the challenge and

therefore that the challenge was not based “solely” on

repugnance to the federal Constitution. See IBEW, 614 F.2d

at 210–11; see also Hawaiian Tel., 827 F.2d at 1273.

Because these decisions addressed only the proper

jurisdictional characterization of a federal statutory claim,

they had no occasion to address the question whether an

indisputably constitutional claim may go forward even when

it is the “sole” claim remaining in the case. Even under a

narrow construction of “solely,” the solitary federal claim

remaining in this case is “based solely on . . . repugnance of

the order[s] to the Federal Constitution.” 28 U.S.C.

§ 1342(1). See US West, 146 F.3d at 723 & n.4.

B

The remaining three enumerated requirements under the

Johnson Act are all likewise satisfied here.

Although the DWP’s rates for electrical service to its

customers may have an effect on interstate commerce, we

have held that “it is not enough that an intrastate rate-making

policy merely ‘affect[s]’ interstate commerce.” US West,

146 F.3d at 724. Rather, the Johnson Act bars jurisdiction

unless the challenged orders “interfere with interstate

commerce.” 28 U.S.C. § 1342(2) (emphasis added).

Defendants presented evidence confirming that the rates

here are all for intrastate service, and as a general matter,

such state or local “orders setting intrastate [utility] rates do

not interfere with interstate commerce.” US West, 146 F.3d

at 724. In US West, we placed the burden on the plaintiffs to

24 ABCARIAN V. LEVINE

rebut this general presumption that intrastate rate orders do

not interfere with interstate commerce, and we found that the

plaintiffs there failed to carry that burden. Id. Plaintiffs here

relied below on evidence showing that DWP obtains

electricity from out of state and that higher electric rates lead

to “out-of-state tourists” being “charged higher prices by the

businesses they patronize,” but these considerations merely

establish an effect on interstate commerce, not interference.

Consequently, the Johnson Act’s requirement that the orders

must not interfere with interstate commerce is satisfied here.

The official records of the City Council confirm that the

three rate-setting ordinances at issue were indisputably

“made after reasonable notice and hearing.” 28 U.S.C.

§ 1342(3); see supra section I(A). Plaintiffs below made no

effort to show otherwise.

Finally, we conclude that a “plain, speedy and efficient

remedy may be had in the courts” of California. 28 U.S.C.

§ 1342(4). In US West, we described this element as

follows:

Succinctly put, the state remedy is “plain” as

long as the remedy is not uncertain or unclear

from the outset; “speedy” if it does not entail

a significantly greater delay than a

corresponding federal procedure; and

“efficient” if the pursuit of it does not

generate ineffectual activity or unnecessary

expenditures of time or energy.

146 F.3d at 724–25. Given that other DWP customers have

challenged the same ordinances under Article XIII C in state

court through the Eck litigation, see supra section I(B), the

California courts clearly provide for a plain, speedy, and

ABCARIAN V. LEVINE 25

efficient remedy under these standards. US West, 146 F.3d

at 725.

Because all of the elements of the Johnson Act are

satisfied here, the district court lacked jurisdiction over

Plaintiffs’ § 1983 claims.

V

Plaintiffs have provided no basis for concluding that any

of these deficiencies could be cured by an amendment of the

complaint, and based upon our own thorough review of the

record, we agree that amendment would be futile. The

district court therefore did not err in denying leave to amend

and in dismissing Plaintiffs’ federal claims with prejudice.

See Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc.,

368 F.3d 1053, 1061 (9th Cir. 2004).

The judgment of the district court is AFFIRMED.