Rotella v. Wood

Citation145 L.Ed.2d 1047,120 S.Ct. 1075,528 U.S. 549
Decision Date23 February 2000
Docket Number98896
PartiesSyllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337. SUPREME COURT OF THE UNITED STATES ROTELLA v. WOOD et al. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT896
CourtU.S. Supreme Court
Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.

SUPREME COURT OF THE UNITED STATES

ROTELLA

v.

WOOD et al.

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

No. 98 896.

Argued November 3, 1999

Decided February 23, 2000

Petitioner Rotella was admitted to a private psychiatric facility in 1985 and discharged in 1986. In 1994, the facility's parent company and one of its directors pleaded guilty to criminal fraud related to improper relationships and illegal agreements between the company and its doctors. Rotella learned of the plea that same year, and in 1997 he filed a civil damages action under the Racketeer Influenced and Corrupt Organizations Act (RICO), claiming that respondents, doctors and related business entities, had conspired to keep him hospitalized to maximize their profits. RICO makes it criminal "to conduct" an "enterprise's affairs through a pattern of racketeering activity," 18 U.S. C. §1962(c). A "pattern" requires at least two acts of racketeering activity, the last of which occurred within 10 years after the commission of a prior act. §1961(5). A person injured by a RICO violation may bring a civil RICO action. §1964(c). The District Court granted respondents summary judgment on the ground that the 4-year limitations period for civil RICO claims, see Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 156, had expired in 1990, four years after Rotella admitted discovering his injury. In affirming, the Fifth Circuit rejected Rotella's argument that the limitations period does not begin to run until a plaintiff discovers (or should have discovered) both the injury and the pattern of racketeering activity.

Held: The "injury and pattern discovery rule" invoked by Rotella does not govern the start of the limitations period for civil RICO claims. Pp. 3 11.

(a) In Malley-Duff, this Court based its choice of a uniform 4-year statute of limitations period for civil RICO on a Clayton Act analogy, but did not decide when the period began to run. In Malley-Duff's wake, some Circuits, like the Fifth, applied an injury discovery accrual rule starting the clock when a plaintiff knew or should have known of his injury, while others applied the injury and pattern discovery rule that Rotella seeks. This Court has rejected the Third Circuit's "last predicate act" rule, Klehr v. A. O. Smith Corp., 521 U.S. 179, and now eliminates another possibility. Pp. 3 4.

(b) The injury and pattern discovery rule is unsound for a number of reasons. It would extend the potential limitations period for most civil RICO cases well beyond the time when a plaintiff's cause of action is complete. Under a provision recognizing the possibility of predicate acts 10 years apart, even an injury occurrence rule unsoftened by a discovery feature could in theory open the door to proof of predicate acts occurring 10 years before injury and 14 years before commencement of suit. A pattern discovery rule would allow proof even more remote from time of trial and, hence, litigation even more at odds with the basic policies of all limitations provisions: repose, elimination of stale claims, and certainty about a plaintiff's opportunity for recovery and a defendant's potential liabilities. See, e.g., Klehr, supra, at 187. In the circumstance of medical malpractice, where the cry for a discovery rule is loudest, the Court has been emphatic that the justification for such a rule does not extend beyond the injury. United States v. Kubrick, 444 U.S. 111, 122. A person suffering from inadequate treatment is thus responsible for determining within the limitations period then running whether the inadequacy was malpractice. There is no good reason for accepting a lesser degree of responsibility on a RICO plaintiff's part. The fact, as Rotella notes, that identifying a pattern in civil RICO may require considerable effort does not place a RICO plaintiff in a significantly different position from the malpractice victim, who may be thwarted by ignorance of the details of treatment decisions or of prevailing medical practice standards. This Court has also recognized that the connection between fraud and civil RICO is an insufficient ground for recognizing a limitations period beyond four years, Malley-Duff, supra, at 149, and adopting Rotella's lenient rule would amount to backtracking from Malley-Duff. Rotella's less demanding discovery rule would also clash with the limitations imposed on Clayton Act suits. There is a clear legislative record of congressional reliance on the Clayton Act when RICO was under consideration, and the Clayton Act's injury-focused accrual rule was well established by the time civil RICO was enacted. Both statutes share a common congressional objective of encouraging civil litigation not merely to compensate victims but also to turn them into private attorneys general,supplementing Government efforts by undertaking litigation in the public good. The Clayton Act analogy reflects Congress's clear intent to reject a potentially longer basic rule under RICO. Neither of Rotella's two remaining points that this Court itself has undercut the Clayton Act analogy; and that without a pattern discovery rule, some plaintiffs will be barred from suit by Federal Rule of Civil Procedure 9(b), which requires that fraud be pleaded with particularity supports adoption of a more protracted basic limitations period. Pp. 5 11.

147 F.3d 438, affirmed.

Souter, J., delivered the opinion for a unanimous Court.

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 98 896

MARK ROTELLA, PETITIONER

v.

ANGELA M. WOOD et al.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

February 23, 2000

Justice Souter delivered the opinion of the Court.

The commencement of petitioner's civil treble-damages action under the Racketeer Influenced and Corrupt Organizations Act (RICO) was timely only if the so-called "injury and pattern discovery" rule governs the start of the 4-year limitations period. We hold that it does not.

I

In February 1985, petitioner, Mark Rotella, was admitted to the Brookhaven Psychiatric Pavilion with a diagnosis of major depression. Rotella v. Pederson, 144 F.3d 892, 894 (CA5 1998). He was discharged in 1986. In 1994, Brookhaven's parent company and one of its directors pleaded guilty to charges of criminal fraud perpetrated through improper relationships and illegal agreements between the company and its doctors. Rotella learned of the plea agreement that same year, and in 1997 he filed a civil RICO claim against respondents, a group of doctors and related business entities, in Federal District Court.1

RICO, 18 U.S.C. § 1961 1968 (1994 ed. and Supp. III), makes it criminal "to conduct" an "enterprise's affairs through a pattern of racketeering activity," 18 U.S.C. § 1962(c), defined as behavior that violates certain other laws, either enumerated federal statutes or state laws addressing specified topics and bearing specified penalties, 18 U.S.C. § 1961(1) (Supp. III). "Pattern" is also a defined term requiring "at least two acts of racketeering activity , the last of which occurred within ten years after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5).

RICO provides for civil actions (like this one) by which "[a]ny person injured in his business or property" by a RICO violation may seek treble damages and attorney's fees. 18 U.S.C. § 1964(c) (Supp. III). Rotella alleged such injury, in that respondents had conspired to admit, treat, and retain him at Brookhaven not for any medical reason but simply to maximize their profits. Respondents raised the statute of limitations as a defense and sought summary judgment on the ground that the period for bringing the civil action had expired before Rotella sued.

Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 156 (1987), established a 4-year limitations period for civil RICO claims. The District Court held that the period began when Rotella discovered his injury, which he concedes he did in 1986 at the latest. 147 F.3d 438, 439 (CA5 1998). Under this "injury discovery" rule, the limitations period expired in 1990, and the District Court accordingly ordered summary judgment for respondents. Rotella appealed to the Fifth Circuit, arguing that the RICO limitations period does not begin to run until the plaintiff discovers (or should have discovered) both the injury and the pattern of racketeering activity. After the Fifth Circuit ruled against him, ibid., we granted certiorari to address a split of authority among the Courts of Appeals, on whether the limitations period is triggered in accordance with the "injury and pattern discovery" rule invoked by Rotella. 526 U.S. 1003 (1999). We now affirm.

II

Given civil RICO's want of any express limitations provision for civil enforcement actions, in Malley-Duff we undertook to derive one and determined that the limitations period should take no account of differences among the multifarious predicate acts of racketeering activity covered by the statute. Although we chose a uniform 4-year period on a Clayton Act analogy, §4b, as added, 69 Stat. 283, 15 U.S.C. § 15b we did...

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