Chappell v. Robbins

• Decision Date: 04 January 1996
• Docket Number: No. 93-17063,93-17063
• Parties: , RICO Bus.Disp.Guide 8960, 96 Cal. Daily Op. Serv. 126, 96 Daily Journal D.A.R. 197 Edward A. CHAPPELL, Plaintiff-Appellant, v. Alan ROBBINS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 918

73 F.3d 918

64 USLW 2442, RICO Bus.Disp.Guide 8960,

96 Cal. Daily Op. Serv. 126,

96 Daily Journal D.A.R. 197

Edward A. CHAPPELL, Plaintiff-Appellant, v. Alan ROBBINS, Defendant-Appellee.

No. 93-17063.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 8, 1995.

Decided Jan. 4, 1996.

Eric A. Isaacson, Milberg Weiss Bershad Hynes & Lerach, San Diego, California, for plaintiff-appellant.

Michael L. Lipman, Coughlan, Semmer & Lipman, San Diego, California, for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before: POOLE and KLEINFELD, Circuit Judges, and GONZALEZ, District Judge. ^*

POOLE, Circuit Judge:

In passing the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sec. 1961 et seq., Congress created a wide array of novel civil and criminal weapons to use against crime and corruption. We must decide whether in doing so, Congress expressed a clear intent to abrogate legislators' common-law immunity. We hold that it did not.

I

This appeal involves a civil RICO suit by an aggrieved citizen, Edward Chappell, against a former California State Senator, Alan Robbins. Because this is an appeal from a Rule 12(b)(6) dismissal, we take as true all material allegations in Chappell's complaint. Everest and Jennings, Inc. v. American Motorists Ins. Co., 23 F.3d 226, 229 (9th Cir.1994).

The suit arises from a scheme to allow increases in premium rates and commissions garnered from the sale of credit life and credit disability insurance. In California, prior to 1985, such rates and commissions were subject to regulation by the California Insurance Commissioner.

From 1978 to 1985, Robbins was the Chairman of the Senate Insurance Committee. During that time, he admits that he took bribes from the president of a credit life and disability insurance company in exchange for legislative activity to help the company.

In 1978, after receiving insurance industry bribes, Robbins sponsored bills to strip the Insurance Commissioner of the power to regulate credit insurance and repeal certain new Insurance Commissioner regulations. Although these bills were passed by the legislature, they were vetoed by Governor Jerry Brown. Robbins received additional bribes, and in 1985, he sponsored and voted for another bill ("the Robbins Bill") which again sought to strip the Insurance Commissioner of regulatory authority over credit insurance and repeal certain new regulations. This bill became law. As a result, the insurance industry obtained excess profits from credit insurance buyers like Chappell.

Robbins was charged with criminal RICO and tax evasion violations under 18 U.S.C. Sec. 1962(c) and 26 U.S.C. Sec. 7206(1). He pled guilty and admitted to accepting bribes on numerous occasions, including bribes for his work on the Robbins Bill.

Chappell filed a class action suit against Robbins and other members of the conspiracy. He alleged that Robbins operated his office as a racketeering enterprise, that the defendants conspired to engage in bribery, mail fraud, and wire fraud, and as a proximate result, that Chappell and others were injured by being forced to pay excessive insurance premiums. Based on these alleged violations of RICO's Sec. 1962, Chappell asserted a right to recover for his injuries under Sec. 1964(c). ¹ Chappell also included various supplemental state claims against defendants other than Robbins.

Robbins brought a Rule 12(b)(6) motion to dismiss the lone cause of action against him, the civil RICO claim. The district court granted the motion with prejudice, concluding that Robbins was entitled to absolute legislative immunity. Chappell then filed a Rule 41(a)(1) voluntary dismissal of all remaining claims and defendants. Chappell has timely appealed. We review de novo the district court's Rule 12(b)(6) dismissal. Id. at 228.

II

We must first determine whether legislative immunity even applies to the actions upon which suit is based. Chappell attempts to rest civil RICO liability on Robbins' sponsoring and obtaining passage of legislation in exchange for bribes. We conclude that such actions implicate Robbins' immunity.

Legislators have an absolute common-law immunity against civil suit for their legislative acts. Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 404-05, 99 S.Ct. 1171, 1178-79, 59 L.Ed.2d 401 (1979); Trevino v. Gates, 23 F.3d 1480, 1482 (9th Cir.), cert. denied sub nom. Wachs v. Trevino, --- U.S. ----, 115 S.Ct. 327, 130 L.Ed.2d 286 (1994). This immunity extends to those actions falling within "the sphere of legitimate legislative activity." Tenney v. Brandhove, 341 U.S. 367, 376, 71 S.Ct. 783, 788, 95 L.Ed. 1019 (1951). In this circuit, we determine whether a particular action is legislative by considering two primary factors. First, does the act involve ad hoc decisionmaking, or the formulation of policy? Trevino, 23 F.3d at 1482; Cinevision Corp. v. City of Burbank, 745 F.2d 560, 580 (9th Cir.1984), cert. denied, 471 U.S. 1054, 105 S.Ct. 2115, 85 L.Ed.2d 480 (1985). Second, does the act apply to a few individuals, or the public at large? Trevino, 23 F.3d at 1482; Bateson v. Geisse, 857 F.2d 1300, 1304 (9th Cir.1988). While the question is necessarily one of degree, the more an action involves policymaking and applies to the entire community, the more likely it is to be classified legislative.

Robbins' efforts in sponsoring and pushing for passage of legislation concerning statewide insurance regulation fall squarely within the class of legislative acts. They involve policymaking for the community at large and are, if anything, the quintessential legislative acts. See Yeldell v. Cooper Green Hosp., Inc., 956 F.2d 1056, 1063 (11th Cir.1992).

Chappell argues that protecting Robbins from liability for sponsoring legislation in return for bribes does nothing to promote the integrity of the legislative process, and such conduct cannot fairly be called "legitimate legislative activity." He also contends that his allegation about Robbins' motive should allow him to survive a motion to dismiss. Chappell misconstrues the nature of the immunity. The immunity serves a prophylactic function central to the proper functioning of a democratic government, making representatives answerable to the entire electorate rather than a select few. "For our founding fathers ... the growth of democracy and the right of the nation's legislators to be free from civil suit went hand-in-hand. It was well understood that for a democratic government to function democratically, our elected officials, when acting in their legislative capacity, must answer only to their constituents and only on election day." Id. at 1063. In order to serve its protective function, the immunity must apply without regard to any allegations of improper motive:

The claim of an unworthy purpose does not destroy the privilege. Legislators are immune from deterrents to the uninhibited discharge of their legislative duty, not for their private indulgence but for the public good. One must not expect uncommon courage even in legislators. The privilege would be of little value if they could be subjected to the cost and inconvenience and distractions of a trial upon a conclusion of the pleader, or to the hazard of a judgment against them based on a jury's speculation as to motives....

... In times of political passion, dishonest or vindictive motives are readily attributed to legislative conduct and as readily believed. Courts are not the place for such controversies.

Tenney, 341 U.S. at 377-78, 71 S.Ct. at 788-89 (footnote omitted); see also Cinevision Corp., 745 F.2d at 577-580 (9th Cir.1984) (distinguishing qualified executive immunity, which allows liability for voting in bad faith, from absolute legislative immunity). Because legislative immunity hinges on the character of the action taken, not the motives behind it, it applies with full force to Robbins' voting and bill sponsorship.

Chappell's attempt to base liability on Robbins' acceptance of bribes raises different problems. "Taking a bribe is, obviously, no part of the legislative process or function; it is not a legislative act." United States v. Brewster, 408 U.S. 501, 526, 92 S.Ct. 2531, 2544, 33 L.Ed.2d 507 (1972). Legislative immunity does not directly bar a suit based on bribe-taking. However, it does prevent Chappell from proving his case. To make out a civil RICO claim, a plaintiff must be able to show that the RICO violations proximately caused her injury. Holmes v. Sec. Investor Protection Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 1317, 117 L.Ed.2d 532 (1992). In this case, Robbins' acceptance of bribes caused no injury to Chappell. Only when Robbins acted on those bribes and pushed legislation through could Chappell have suffered any injury. In order to show proximate cause, therefore, Chappell would at a minimum have to demonstrate that the bribes were a factor in the passage of the legislation which injured him. Proof would thus depend on establishing that the legislative acts of writing a bill, voting for it, and persuading others to vote for it, are what harmed plaintiffs. These legislative acts cannot, under Tenney, give rise to liability for damages. This is not a problem of proof. Plaintiff could not state a claim upon which relief could be granted because the conduct by which the bribe proximately caused his injury was legislative, and therefore immune. See Thillens, Inc. v. Community Currency Exch. Ass'n of Illinois, Inc., 729 F.2d 1128, 1131 (7th Cir.), cert. dismissed sub nom. Thillens, Inc. v. Wall, 469 U.S. 976, 105 S.Ct. 375, 83 L.Ed.2d 342 (1984). Consequently, legislative immunity bars any RICO claim by Chappell based on Robbins' acceptance of bribes.

In reaching this conclusion, we find the reasoning of the Seventh Circuit's decision in Thillens persuasive. Thillens involved a suit alleging a conspiracy to bribe state...