Rotella v. Wood
2000 U.S. LEXIS 1537, 528 US 549, 145 L. Ed. 2d 1047 (2000)
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Rule of Law:
The 4-year statute of limitations for a civil claim under the Racketeer Influenced and Corrupt Organizations Act (RICO) begins to run when a plaintiff knows or reasonably should have known of their injury, not when they later discover the pattern of racketeering activity that caused the injury.
Facts:
- In February 1985, Mark Rotella was admitted to the Brookhaven Psychiatric Pavilion with a diagnosis of major depression.
- Rotella was discharged from the facility in 1986.
- Rotella alleged that he was injured by the treatment he received, which he claimed involved being improperly confined for an excessive period and fraudulently charged for unnecessary treatment.
- In 1994, Brookhaven's parent company and one of its directors pleaded guilty to criminal fraud charges.
- The fraud involved improper relationships and illegal agreements between the company and its doctors, designed to maximize profits.
- Rotella learned of this guilty plea and the underlying fraudulent scheme in 1994.
Procedural Posture:
- In 1997, Mark Rotella filed a civil RICO action against the respondents in the United States District Court.
- Respondents moved for summary judgment, arguing the claim was barred by the 4-year statute of limitations.
- The District Court applied an 'injury discovery' rule, held that the limitations period expired in 1990, and granted summary judgment for the respondents.
- Rotella (appellant) appealed to the U.S. Court of Appeals for the Fifth Circuit, arguing for an 'injury and pattern discovery' rule.
- The Fifth Circuit affirmed the District Court's judgment in favor of the respondents (appellees).
- The U.S. Supreme Court granted Rotella's petition for a writ of certiorari to resolve a split of authority among the Courts of Appeals.
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Issue:
Does the 4-year statute of limitations for a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim begin to run only when the plaintiff discovers both the injury and the pattern of racketeering activity?
Opinions:
Majority - Justice Souter
No. The 4-year statute of limitations for a civil RICO claim begins when a plaintiff discovers or should have discovered their injury, not when they also discover the pattern of racketeering activity. The traditional federal discovery accrual rule holds that the limitations period starts upon discovery of the injury, not discovery of all the other elements of a claim. The Court analogized to medical malpractice cases, where a patient who knows they have been hurt is responsible for investigating whether the harm constituted malpractice. A RICO plaintiff is in a similar position and cannot wait until they have uncovered the entire complex pattern before the clock starts running. This 'injury discovery' rule aligns with the Clayton Act, which Congress used as a model for civil RICO, and promotes the policy of encouraging plaintiffs to act as 'private attorneys general' to promptly combat racketeering, thereby preventing stale claims and promoting repose.
Analysis:
This decision resolved a significant circuit split by establishing a uniform 'injury discovery' rule for the accrual of civil RICO claims. By rejecting the more plaintiff-friendly 'injury and pattern discovery' rule, the Court prioritized the legal principles of repose and prompt litigation over accommodating the difficulties plaintiffs face in uncovering complex racketeering schemes. The ruling strengthens the burden on potential plaintiffs to exercise diligence in investigating the causes of their injuries once they are aware of them. While the Court acknowledged that equitable tolling might apply in cases of 'blameless ignorance,' it firmly established this as a rare exception, not the general rule, solidifying a stricter standard for the timeliness of RICO actions.
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