Cianci v. Superior Court

LUCAS, J., Concurring and Dissenting.

I concur in the majority’s conclusion that the Cartwright Act (Bus. & Prof. Code, § 16700 et seq.) applies to the medical profession.

I respectfully dissent, however, to the majority’s holding that state courts have concurrent jurisdiction with federal courts over civil claims under the Racketeer Influenced and Corrupt Practices Act (RICO). ( 18 U.S.C. § 1961 et seq.) I would hold not only that the legislative history of RICO establishes exclusive federal jurisdiction, but also that concurrent jurisdiction is clearly incompatible with the federal interests RICO is intended to advance.

The majority correctly observes that the issue of RICO jurisdiction is one of first impression in this state. Four other courts have addressed this issue, however, and three of them, after examining RICO’s legislative history and compatibility with federal interests, have concluded that federal courts have exclusive jurisdiction over civil RICO claims. 1 The fourth court stated that jurisdiction is presumptively concurrent, but did so without any analysis of the relevant factors. 2 After analyzing the statute as a whole, its language, *926 legislative history, and compatibility with federal interests, I, too, conclude that civil RICO claims may be heard only in federal courts.

Although there is no express provision in RICO conferring exclusive federal jurisdiction over civil claims, 18 United States Code section 1964 (c), establishing a civil cause of action under RICO, 3 tracks virtually word-for-word section 4 of the Clayton Act ( 15 U.S.C. § 15 ), 4 which creates a civil cause of action under federal antitrust laws. As the majority notes in its review of RICO’s legislative history, both the American Bar Association and Representative Steiger proposed to the House Judiciary Committee the addition to RICO of a private treble damages action similar to that found in antitrust laws. (Ante, p. 912.) The treble damages provision which was added to RICO was described by RICO’s sponsor as providing that “private persons injured by reason of a violation of the title may recover treble damages in Federal courts—another example of the antitrust remedy being adapted for use against organized criminality.” (Remarks of Congressman Poff, 116 Cong.Rec. 35295 (1970).) Thus, RICO’s legislative history demonstrates how Congress purposefully modeled section 1964(c) after the antitrust treble damages provision. Courts uniformly have held that this latter provision confers exclusive federal jurisdiction. This interpretation is significant because “it is well established that the identity in language between 18 U.S.C. § 1964 (c) and 15 U.S.C. § 15 is not a mere happenstance; Congress consciously patterned the RICO section after the antitrust prototype. See, e.g., 115 Cong. Rec. 6992, 6993 (1969) (statement of Sen. Hruska). Legislators must have known that courts have construed virtually identical language as giving federal courts exclusive jurisdiction over antitrust claims.” (County of Cook v. Midcon Corp., supra, 574 F.Supp. at p. 912; see also, Greenview Trading v. Hershman & Leicher, P.C., supra, 489 N.Y.S.2d at pp. 504-505.) As have the only other courts analyzing the matter, I find this identity in language between RICO and its antitrust prototype provides an inescapable implication that Congress intended that federal courts have exclusive jurisdiction over civil RICO claims.

In addition to the specific language of 18 United States Code section 1964 (c), examination of RICO as a complete statutory scheme further demonstrates Congress’ intent to restrict jurisdiction. RICO provides federal *927 courts with expanded ability to compel parties and witnesses from other jurisdictions to appear ( 18 U.S.C. §§ 1965 (b), (c)) and the power to compel forfeiture and divestment {id., § 1964(a)). Under the scheme a number of predicate acts are defined in terms of substantive federal crimes. {Id., § 1961.) Thus in formulating the overall approach, Congress made use of peculiarly federal powers and definitions. As the court in Kinsey v. Nestor Exploration Ltd.-1981 A, supra, 604 F.Supp. 1365 , explained, “where overall congressional intent is patently obvious; viz., to halt expansion of organized racketeering activities, it would seem more desirable, if not jurisprudentially required, to read all RICO provisions in pari materia, and to conclude that Congress could not have intended the untoward result of creating a wholly new cause of action triable in state courts across the country, while at the same time mandating that federal substantive law governs such actions, and at the same time reserving exclusively to the federal government the procedural power necessary to implement the underlying objective.” (P. 1371, fns. omitted.) The Kinsey court’s analysis makes sense. By extending the federal court’s venue and process powers as well as by utilizing federal definitions as a substantive part of RICO, Congress must have regarded RICO as creating a cause of action triable exclusively in federal courts. The expanded powers provide federal courts with expanded ability to attack both the individuals and the organizations involved in racketeering activities.

As real parties urged, exclusive federal jurisdiction over civil RICO claims is analytically appropriate because RICO addresses a national problem and deals with uniquely federal issues. The majority’s response to this argument falls short. The comment that, except when acting as the Legislature of the District of Columbia, Congress always addresses what it perceives to be a national problem, begs the question. (Ante, p. 915.)

Looking back to the original purpose of RICO is instructive. As one federal court has observed, “It is clear that the civil provisions of RICO were not enacted for the purpose of imposing federal liability for state business fraud claims. The primary intent of Congress in enacting 18 U.S.C. § 1962 was to combat the infiltration of organized crime into legitimate businesses operating in interstate commerce. [Citation omitted.]” {Seville Indus. Mach. v. Southmost Mach. Corp. (D.C.N.J. 1983) 567 F.Supp. 1146, 1157 .) In enacting RICO, Congress intended to do more than describe just another violation. Its intentions were broad in sweep: to find a method of attacking criminal schemes on an overall basis rather than case-by-case or crime-by-crime. As the Supreme Court recently observed, “RICO was an aggressive initiative to supplement old remedies and develop new methods for fighting crime.” (Sedima, S.P.R.L. v. Imrex Co. (1985) — U.S. — *928 [ 87 L.Ed.2d 346, 360 , 105 S.Ct. 3275 ].) This interest is reflected not only in the concentration on interstate commerce and the effects of the proscribed conduct on such commerce, but also in the broad procedural and jurisdictional powers awarded federal district courts by RICO itself.

The majority’s reliance on a comparison of RICO’s enforcement scheme to that of the Securities Act of 1933 (15 U.S.C. § 77a et seq.) is inapposite. (Ante, p. 915.) The sections cited by the majority refer to an enforcement scheme that can be carried out only by the Securities and Exchange Commission rather than by the courts. RICO’s enforcement scheme includes grants of enlarged procedural powers to federal courts—powers that can assist individuals bringing civil RICO actions. The existence of RICO’s enforcement scheme invokes the need for exclusive federal jurisdiction because the broader jurisdictional and subpoena powers provided are available to the plaintiff only in a federal RICO action.

My colleagues also point out that RICO predicate offenses include violations of state law. Their focus, however, is on the trees and they have missed the forest. While particular state and federal crimes may provide the predicate offenses for finding a RICO violation, they are not, in and of themselves, a sufficient basis for finding a RICO-defined violation has occurred. In order to do that, a “pattern” as described in the act must be established. Thus, the particular origins of the underlying individual crimes are not significant. 5 The purpose of RICO is to prevent and punish wide-reaching criminal schemes. To this end Congress has provided to the federal courts broader jurisdictional and subpoena powers which cross normal jurisdictional boundaries. Congress has no ability similarly to extend the reach of state courts. By permitting state courts, with more truncated powers, to attempt to act in concert with the federal court, the majority may well be defeating the purpose of RICO. For example, two simultaneous actions could take place against the same defendant—one state, one federal. If the state action with its narrower reach and focus ends first, will it preclude those elements used for the state court’s RICO finding being used in the federal action charging a more comprehensive and interstate scheme? The majority does not even approach a discussion of such questions.

It is true that a presumption of concurrent jurisdiction can be rebutted by “unmistakable implication from legislative history.” (Gulf Offshore Co. v. Mobil Oil Corp. (1981) 453 U.S. 473, 478 [ 69 L.Ed.2d 784, 791 , 101 S.Ct. *929 2870 ].) Unlike my colleagues, however, I find such an “unmistakable” indication of Congress’ intent to confine jurisdiction to the federal courts in the purposeful patterning of the RICO statute after the antitrust statute, convincing evidence that is buttressed by examining the statute as a whole with its federal definitions and exclusively federal procedural powers designed to attack a national problem. As Professor G. Robert Blakey, chief counsel to the Senate subcommittee which proposed RICO, stated, “[Cjourts can infer from the statute that if Congress had thought about it, they would have made jurisdiction exclusive.” (Flaherty, Two States Lay Claim to RICO (May 7, 1984) Nat. L.J. at p. 10, col. 2, quoting Professor Blakey.) While Professor Blakey’s comments are not binding, they bear analytic force which I find persuasive.

In addition to factors inherent in the fashioning of the legislation itself, several relevant policy considerations also favor finding exclusive jurisdiction. For example, as the majority correctly notes, one factor to be considered in deciding whether concurrent jurisdiction is incompatible with federal interests is the likelihood of uniform interpretation of the statute by state and federal courts. (Ante, p. 914.) The majority rejects the idea that RICO requires exclusive federal jurisdiction to ensure uniformity in interpretation and application, claiming instead that the statute is sufficiently clear and detailed to “limit the scope of judicial gloss.” {Ibid.) In actuality, just the opposite is true. As one court has observed, RICO “is constructed on the model of a treasure hunt.” (Sutliff, Inc. v. Donovan Companies, Inc. (7th Cir. 1984) 727 F.2d 648, 652 .) My colleagues completely ignore the existing ample evidence that this statute is far from crystal clear. RICO is an extremely complex statute which has already produced significant conflicting opinions in numerous areas in federal courts. 6 Referring to the large number of civil RICO actions against legitimate businesses, and the much smaller number of civil RICO actions against professional criminals, Justice White very recently observed, “The ‘extraordinary’ uses to which civil RICO has been put appear to be primarily the result of the breadth of the *930 predicate offenses, in particular the inclusion of wire, mail, and securities fraud, and the failure of Congress and the courts to develop a meaningful concept of ‘pattern’ [of racketeering activity].” (Sedima, S.P.R.L. v. Imrex Co., supra, — U.S. —, — [ 87 L.Ed.2d 346, 361 ], italics added.) The court in Sedima noted that three members of the House Judiciary Committee dissented to the private treble damages provision amendment to RICO because they “feared the treble damages would be used for malicious harassment of business competitors.” (Id., at p. — [ 87 L.Ed.2d at p. 353 ].) These fears appear to have come true—the court in Sedima observed that private civil RICO actions are being brought almost solely against legitimate businesses, rather than the archetypal mobster. (Id., at p. — [ 87 L.Ed.2d at p. 361 ].) These businesses, facing ruinous financial exposure, have a strong interest in settling even meritless cases. Thus RICO may be used for the same sort of extortive purposes it was designed to attack. (Report of the Ad Hoc Civil RICO Task Force of the ABA Section of Corporation, Banking and Business Law 69 (1985).) The failure of Congress and the courts to develop a meaningful concept of “pattern” has allowed civil RICO to be used in ways Congress never intended. Concurrent jurisdiction over civil RICO claims would bring state courts into the already divided arena of RICO interpretation, producing even more discordant interpretations and unintended uses of the statute.

Not only does adjudication of RICO claims involve interpretation of the RICO statute itself, but often it will also necessitate interpretation of other federal statutes which constitute predicate offenses. (Flaherty, supra, at p. 3, col. 2.) This requirement further supports the need for exclusive federal jurisdiction to ensure uniform interpretation and application. I concur with the court in Greenview Trading v. Hershman & Leicher, P. C., supra, 489 N.Y.S.2d at page 506, which concluded, “What quickly emerges from a study of the statute is that the adjudication of civil RICO claims involves not just the interpretation of a single Federal statute, however complicated, but rather the interpretation and application of a number of Federal statutes that constitute predicate offenses, statutes with which the Federal courts are obviously far more familiar from ongoing experience than State courts. . . . [1] We are in agreement with Professor Blakey that Congress did not intend to involve State courts so deeply in the interpretation of a host of Federal statutes, and we are persuaded that the better conceptual analysis of the problem points against concurrent jurisdiction for the State courts.”

This is, undoubtedly, an interesting area. RICO provides an additional weapon in the armament for attacking significant and complex criminal activities. Nonetheless, seductive as it may seem to join in the RICO fray, the majority fails to demonstrate that state courts are so permitted. For the *931 foregoing reasons, I would hold that federal courts have exclusive jurisdiction over civil RICO claims.

Grodin, J., concurred.

The three cases holding that the presumption of concurrent jurisdiction over civil RICO claims was rebutted are County of Cook v. Midcon Corp. (N.D.Ill. 1983) 574 F.Supp. 902, 909-912 ; Greenview Trading v. Hershman & Leicher, P.C. (1985) 108 App.Div.2d 468 [ 489 N.Y.S.2d 502 ]; and Kinsey v. Nestor Exploration Ltd.-1981A (E.D.Wash. 1985) 604 F.Supp. 1365, 1370-1371 .

See Luebke v. Marine Nat. Bank of Neenah (E.D.Wis. 1983) 567 F.Supp. 1460 .

Section 1964(c) states: “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.”

Section 15 states: “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 in the district ,in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of the suit, including a reasonable attorney’s fee.”

This conclusion is highlighted by the Supreme Court’s recent holding in Sedima that the “racketeering injury” required by the act is satisfied by the harm caused by the predicate acts. As Justice White expressly commented: “Conducting an enterprise that affects interstate commerce is obviously not in itself a violation of § 1962, nor is mere commission of the predicate offenses.” (— U.S. at p. — [ 87 L.Ed.2d at p. 359 ].)

In interpreting RICO as applied to private rights of action, federal courts have reached different results on numerous questions such as: Must a plaintiff in a civil RICO action show injury by at least two acts of racketeering to be able to recover? (Compare Econo-Car Intern. v. Agency Rent-A-Car (D.C.Mass. 1984) 589 F.Supp. 1368, 1374 [yes] with Haroco v. American Nat. B. & T. Co. of Chicago (7th Cir. 1984) 747 F.2d 384, 397-398 [no].) Is freezing of assets available as preliminary injunctive relief in a civil RICO action? (Compare USACO Coal Co. v. Carbomin Energy, Inc. (6th Cir. 1982) 689 F.2d 94, 96-98 [yes] with Ashland Oil, Inc. v. Gleave (W.D.N.Y. 1982) 540 F.Supp. 81, 82-85 [no].) Do treble damages survive the death of the alleged wrongdoer in civil RICO action? (Compare State Farm Fire and Cas. Co. v. Estate of Caton (N.D.Ind. 1982) 540 F.Supp. 673, 677-682 [because they are remedial in nature, treble damages survive] with Summers v. Federal Deposit Ins. Corp. (W.D.Okla. 1984) 592 F.Supp. 1240, 1243 [because they are essentially penal here, they do not survive].)