Tafflin et al. v. Levitt et al.
493 U.S. 455 (1990)
Rule of Law:
State courts have concurrent jurisdiction over civil claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), as the presumption of concurrent jurisdiction is not rebutted by any explicit statutory directive, unmistakable implication from legislative history, or clear incompatibility with federal interests.
Facts:
- Old Court Savings & Loan, Inc. (Old Court), a Maryland savings and loan association, failed financially.
- The Maryland Savings-Share Insurance Corp. (MSSIC), a state-chartered corporation that insured accounts at Old Court, also collapsed.
- Petitioners are nonresidents of Maryland who held unpaid certificates of deposit that had been issued by Old Court.
- Respondents include the former officers and directors of both Old Court and MSSIC, as well as the law and accounting firms that had provided services to them.
- Petitioners alleged that the respondents' actions, which led to the institutional failures, constituted a pattern of racketeering activity in violation of RICO.
Procedural Posture:
- Petitioners filed suit against Respondents in the U.S. District Court for the District of Maryland, asserting claims under RICO and the Securities Exchange Act, along with various state law claims.
- The District Court granted Respondents' motion to dismiss, concluding that because state courts have concurrent jurisdiction over civil RICO claims, federal abstention was appropriate due to pending litigation in state court.
- Petitioners, as appellants, appealed the dismissal to the U.S. Court of Appeals for the Fourth Circuit.
- The Court of Appeals affirmed the District Court's judgment, holding that RICO actions could be instituted in state court.
- The U.S. Supreme Court granted certiorari limited to the question of whether state courts have concurrent jurisdiction over civil RICO claims, in order to resolve a conflict among the courts.
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Issue:
Does the Racketeer Influenced and Corrupt Organizations Act (RICO) grant federal courts exclusive jurisdiction over civil claims brought under the Act, thereby divesting state courts of their presumptive concurrent jurisdiction?
Opinions:
Majority - Justice O’Connor
No. The Racketeer Influenced and Corrupt Organizations Act (RICO) does not grant federal courts exclusive jurisdiction over civil claims; therefore, state courts retain their presumptive concurrent jurisdiction to adjudicate such claims. The Court begins with the foundational principle that state courts are presumptively competent to adjudicate claims arising under federal law. This presumption can be rebutted only by: 1) an explicit statutory directive, 2) an unmistakable implication from legislative history, or 3) a clear incompatibility between state-court jurisdiction and federal interests. First, RICO’s jurisdictional provision, 18 U.S.C. § 1964(c), states that a person 'may' sue in federal court, which is permissive, not mandatory, and does not explicitly oust state courts. Second, the legislative history is silent on the issue of jurisdiction, meaning there is no 'unmistakable implication' that Congress intended to confer exclusive jurisdiction. Third, there is no 'clear incompatibility' with federal interests. State courts are competent to handle complex RICO claims, which often involve predicate acts based on state law, and state court adjudication will not jeopardize the uniform interpretation of federal criminal law, as federal courts retain exclusive jurisdiction over federal criminal prosecutions and the Supreme Court can review state court judgments.
Concurring - Justice White
No. While concurring with the majority, Justice White writes to emphasize the need for caution when considering concurrent jurisdiction over civil actions based on federal criminal statutes. The interest in uniform construction of federal criminal law is significant, which is why jurisdiction over federal criminal cases is exclusive. However, RICO is an unusual statute that heavily incorporates state-law offenses as predicate acts. The danger of non-uniform construction is therefore minimal and not significant enough to overcome the presumption of concurrent jurisdiction.
Concurring - Justice Scalia
No. While joining the Court's opinion, Justice Scalia writes to critique the three-part test from Gulf Offshore. He argues that state courts have jurisdiction over federal causes of action not because Congress 'confers' it, but because federal laws are the law of the land in every state. To oust state courts of this inherent authority requires an affirmative act of Congress, which should ideally be an express statutory provision. He specifically objects to relying on 'unmistakable implication from legislative history,' arguing that congressional discussion is not the same as congressional action (i.e., a statute). He also narrowly construes the 'clear incompatibility' prong to mean an incompatibility implied by the statutory scheme itself, not a free-floating judicial assessment of federal policy.
Analysis:
This decision strongly reinforces the deep-seated presumption that state and federal courts share concurrent jurisdiction over federal causes of action. It establishes a high threshold for finding exclusive federal jurisdiction, demanding clear congressional intent rather than judicial inference based on policy or complexity. By allowing civil RICO claims to be brought in state courts, the ruling expanded the forums available to plaintiffs and facilitated the combination of RICO claims with related state-law actions in a single proceeding. The concurrences, particularly Justice Scalia's textualist critique of the established test, foreshadowed future debates on statutory interpretation and the proper methodology for determining federal jurisdiction.
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