Cianci v. Superior Court

Decision Date31 December 1985
Docket NumberS.F. 24893
CourtCalifornia Supreme Court
Parties, 710 P.2d 375, 54 USLW 2363, 1986-1 Trade Cases P 66,916, RICO Bus.Disp.Guide 6139 Paul CIANCI, Petitioner, v. The SUPERIOR COURT of Contra Costa County, Respondent; John POPPINGO et al., Real Parties in Interest.

Bolton & Cornblum, Marshall Cornblum and Jennifer Sobol, Oakland, for petitioner.

No appearance for respondent.

Berger & Taggart, Brian Connors, Gary D. Berger, Peter Desler, San Francisco, George J. Ziser, Carol A. Clifford, Moore, Clifford, Wolfe, Larson & Trutner, McShane & Felson and Kathleen T. Gunn, Oakland, for real parties in interest.

Horvitz & Levy, Barry R. Levy, Michael R. Tyler, Encino, Hassard, Bonnington, Rogers & Huber and David E. Willett, San Francisco, as amici curiae on behalf of real parties in interest.

MOSK, Justice.

We granted review to resolve two important questions: (1) whether state courts have jurisdiction concurrently with federal courts over alleged violations of the civil provisions of the Racketeer Influenced and Corrupt Practices Act (RICO) (18 U.S.C. § 1961 et seq.); and (2) whether the Cartwright Act (Bus. & Prof.Code, § 16700 et seq.) applies to the medical profession. We answer each question in the affirmative.


The action underlying this proceeding arises, in brief, out of a dispute among several medical doctors over the establishment, funding, and operation of a hyperbaric medicine department at Brookside Hospital in San Pablo. 1 Robert W. Burns, M.D., Joseph D. Sabella, M.D., Burton F. Simmons, M.D., William C. Lyon, M.D., Morris B. Aron, M.D., Stuart I. Gourlay, M.D., Robert H. Herrick, M.D., Carol W. Kassell, and Joseph R. Marriotti, M.D. (hereafter the Burns group) filed a complaint against Paul Cianci, M.D., John Poppingo, M.D., and Ventox, Inc., seeking dissolution of a limited partnership, accounting, damages, and impressing of a constructive trust.

In response to the complaint, Cianci (petitioner here) answered and filed a cross-complaint against real parties in interest Poppingo, his attorneys Gary D. Berger, Berger & Taggart, Gary D. Berger Law Corporation, and William E. Taggart, Jr., Professional Corporation, and the Burns group. The cross-complaint alleges intentional and negligent interference, and conspiracy to interfere, with the right to practice hyperbaric medicine (the first through sixth causes of action); violation of, and conspiracy to violate, RICO (the seventh and eighth causes of action); and conspiracy to violate the Cartwright Act (the ninth cause of action). Real parties demurred to the seventh and eighth causes of action on the ground that federal courts have exclusive jurisdiction over RICO claims, and to the ninth cause of action on the ground that the Cartwright Act does not apply to the medical profession. The trial court sustained the demurrers on these grounds.

Petitioner now seeks to review these rulings by prerogative writ. We issued an alternative writ: the RICO issue is of first impression and of significant importance to the profession and the general public because of its impact on the interests of those whose businesses suffer injury through racketeering activity; the Cartwright Act issue is of similar importance because of its impact on the interests of the consumers of this state. (E.g., Daly v. Superior Court (1977) 19 Cal.3d 132, 140, 137 Cal.Rptr. 14, 560 P.2d 1193; Babb v. Superior Court (1971) 3 Cal.3d 841, 851, 92 Cal.Rptr. 179, 479 P.2d 379.) 2


Although the question is not without difficulty, we conclude for the reasons given below that state courts have concurrent jurisdiction over RICO claims. In sustaining the demurrers of real parties to petitioner's seventh and eighth causes of action on the ground state courts lack jurisdiction, the trial court erred.

The object of RICO, which is a part of the Organized Crime Control Act of 1970, is to prevent and punish "racketeering activity" broadly defined. See, e.g., Sedima, S.P.R.L. v. Imrex Co., Inc. (1985) --- U.S. ----, ----, 105 S.Ct. 3275, 3278-3279, 87 L.Ed.2d 346.) Although the sources from which it sprang took aim against the infiltration of legitimate businesses by organized crime, the statute as enacted is intended to ensure integrity in the marketplace and to that end strikes against all who would threaten it--at one end of the spectrum "mobsters and organized criminals" and their " 'illegitimate' enterprises," at the opposite pole otherwise law-abiding businessmen and their " 'respected and legitimate "enterprises." ' " (Id. at pp. ---- - ----, 105 S.Ct. at pp. 3280-3288.) Indeed, "private civil actions under the statute are being brought almost solely against such ['legitimate'] defendants, rather than against the archetypal, intimidating mobster." (Id. at p. ----, 105 S.Ct. at p. 3287.)

Under the statute, it is unlawful (1) to use income derived from a pattern of "racketeering activity" to acquire an interest in or to establish or operate an enterprise engaged in or affecting interstate commerce; (2) to acquire or maintain an interest in such an enterprise through a pattern of racketeering activity; (3) to conduct or participate in the conducting of such an enterprise through a pattern of racketeering activity; and (4) to conspire to do any of the foregoing proscribed acts. (18 U.S.C. § 1962.)

"Racketeering activity" is defined as any act in violation of several classes of state criminal laws or of several specified federal criminal provisions. (Id., § 1961(1).) Consonant with the statute's underlying purpose, the effective scope of the term is broad: it includes not only the actions of mobsters but also the conduct of "legitimate" businessmen who engage in "garden variety" commercial fraud. (See Sedima, supra, 473 U.S. at pp. ---- - ----, 105 S.Ct. at pp. 3280-3288.)

A criminal enforcement scheme, which includes imprisonment, fines, and forfeiture, is established. (18 U.S.C. § 1963.) Also established is a civil enforcement scheme (id., § 1964), which includes a private right of action: "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 his suit, including a reasonable attorney's fee." (Id., § 1964(c).) Implicit in the private right of action is a grant of jurisdiction to federal courts.

Our analysis of the question of jurisdiction proceeds from a well-defined doctrinal base fashioned by the United States Supreme Court in decisions stretching from the landmark case of Claflin v. Houseman (1876) 93 U.S. 130, 3 Otto 130, 23 L.Ed. 833, through Charles Dowd Box Co. v. Courtney (1962) 368 U.S. 502, 82 S.Ct. 519, 7 L.Ed.2d 483, to Gulf Offshore Co. v. Mobil Oil Corp. (1981) 453 U.S. 473, 101 S.Ct. 2870, 69 L.Ed.2d 784.

"The general principle of state court jurisdiction over cases arising under federal laws is straightforward: state courts may assume subject-matter jurisdiction over a federal cause of action absent provision by Congress to the contrary or disabling incompatibility between the federal claim and state-court adjudication." (Gulf Offshore Co., supra, 453 U.S. at pp. 477-478, 101 S.Ct. at p. 2875; accord, Charles Dowd Box Co., supra, 368 U.S. at pp. 507-508, 82 S.Ct. at pp. 522-523; Claflin, supra, 93 U.S. at p. 136.) "This rule is premised on the relation between the States and the National Government within our federal system. [Citation.] The two exercise concurrent sovereignty.... Federal law confers rights binding on state courts, the subject-matter jurisdiction of which is governed in the first instance by state laws." (Gulf Offshore Co., supra, 453 U.S. at p. 478, 101 S.Ct. at p. 2875; see Redish & Muench, Adjudication of Federal Causes of Action in State Court (1976) 75 Mich.L.Rev. 311, 314 [hereafter Redish & Muench].) Practice has followed theory. "Concurrent jurisdiction has been a common phenomenon in our judicial history, and exclusive federal court jurisdiction over cases arising under federal law has been the exception rather than the rule." (Charles Dowd Box Co., supra, 368 U.S. at pp. 507-508, 82 S.Ct. at p. 523.)

Accordingly, "[i]n considering the propriety of state-court jurisdiction over any particular federal claim, [we] begin[ ] with the presumption that state courts enjoy concurrent jurisdiction. [Citations.] Congress, however, may confine jurisdiction to the federal courts either explicitly or implicitly. Thus, the presumption of concurrent jurisdiction can be rebutted by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests." (Gulf Offshore Co., supra, 453 U.S. at p. 478, 101 S.Ct. at p. 2875.) Put otherwise, "the presumption is that jurisdiction is concurrent, and some strong showing of need for exclusive jurisdiction is required to overcome that presumption." (Redish & Muench, supra, 75 Mich.L.Rev. at p. 325, fn. 63.)

It is not argued, nor could it be, that the provision creating a private right of action (18 U.S.C. § 1964(c)) expressly confines jurisdiction over RICO claims to the federal courts. "On its face [section 1964(c) ] simply gives the federal district courts jurisdiction over suits for violation of [RICO]. The statute does not state nor even suggest that such jurisdiction shall be exclusive. It provides that suits of the kind described 'may' be brought in the federal district courts, not that they must be." (Charles Dowd Box Co., supra, 368 U.S. at p. 506, 82 S.Ct. at p. 522.) Indeed, "[i]t is black letter law ... that the mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction over the cause of action." (Gulf Offshore Co., supra, 453 U.S. at p. 479, 101S.Ct. at p. 2875; accord, United States v. Bank of New York & Trust...

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