Rice v. Janovich

• Decision Date: 24 September 1987
• Docket Number: 53729-1,Nos. 53666-0,s. 53666-0
• Citation: 109 Wn.2d 48,742 P.2d 1230
• Court: Washington Supreme Court
• Parties: , 56 USLW 2192, RICO Bus.Disp.Guide 6769 Donald RICE, Respondent, v. George JANOVICH and Jane Doe Janovich, his wife, and their marital community; John Joseph Carbone and Jane Doe Carbone, his wife, and their marital community; Joseph M. Carbone and Jane Doe Carbone, his wife, and their marital community; Ronald John Williams and Jane Doe Williams, his wife, and their marital community; and Pierce County, Washington, a municipal corporation, Appellants. Wallace AUTY and Betty Auty, husband and wife; Dean T. Bergstrom, a single man; Richard W. Bergstrom and Joyce M. Rogers Bergstrom, formerly Joyce M. Rogers, husband and wife; Glen Danielson and Lois Danielson, husband and wife; Edward Fisher and Donna Fisher, husband and wife; Richard Haaland and Dianne Haaland, husband and wife; Kenneth Hacker and Maxine Hacker, husband and wife; Ramona Harcus and Ramona Harcus as successor and sole heir in the estate of Alan Harcus; Irene M. Hill, a single woman; Michael Lawler and Rua Lawler, husband and wife; James Nunn and Joann Nunn, husband and wife; Donald Peterson and Lorayne Peterson, husband and wife; Michael Rhode and Pamela Rhode, husband and wife; James Rhodes and Betty Rhodes, husband and wife; Gardenia Williams, a single person; and Donald Wilson and Karen Wilson, husband and wife, Appellants, v. "John Doe" BALLARD and "Jane Doe" Ballard, husband and wife; Paul Broten and Hilda Broten, husband and wife; Circle Farms, Inc., a Washington corporation; Frank Early and "Jane Doe" Early, husband and wife; Farm Management Services, Inc., a Washington corporation; Danny Neil Gwyn and Susan R. Gwyn, husband and wife; Donald Raymond Gwyn and Lynn J. Gwyn, husband and wife; Thomas Neil Gwyn and Helen M. Gwyn, husband and wife, d/b/a Gwyn Partnership; Gwyn Farms, Inc., a Washington corporation; Income Development, Inc., a Washington corporation; Terry M. Ludwig, a single man, d/b/a Terry M. Ludwig & Associates; Graham W. McDonald and Blodwyn McDonald, husband and wife; Patrick M

Page 48

109 Wn.2d 48

742 P.2d 1230, 56 USLW 2192, RICO

Bus.Disp.Guide 6769

Donald RICE, Respondent, v.George JANOVICH and Jane Doe Janovich, his wife, and their

marital community; John Joseph Carbone and Jane Doe

Carbone, his wife, and their marital community; Joseph M.

Carbone and Jane Doe Carbone, his wife, and their marital

community; Ronald John Williams and Jane Doe Williams, his

wife, and their marital community; and Pierce County,

Washington, a municipal corporation, Appellants.

Wallace AUTY and Betty Auty, husband and wife; Dean T.

Bergstrom, a single man; Richard W. Bergstrom and Joyce M.

Rogers Bergstrom, formerly Joyce M. Rogers, husband and

wife; Glen Danielson and Lois Danielson, husband and wife;

Edward Fisher and Donna Fisher, husband and wife; Richard

Haaland and Dianne Haaland, husband and wife; Kenneth

Hacker and Maxine Hacker, husband and wife; Ramona Harcus

and Ramona Harcus as successor and sole heir in the estate

of Alan Harcus; Irene M. Hill, a single woman; Michael

Lawler and Rua Lawler, husband and wife; James Nunn and

Joann Nunn, husband and wife; Donald Peterson and Lorayne

Peterson, husband and wife; Michael Rhode and Pamela Rhode,

husband and wife; James Rhodes and Betty Rhodes, husband

and wife; Gardenia Williams, a single person; and Donald

Wilson and Karen Wilson, husband and wife, Appellants, v."John Doe" BALLARD and "Jane Doe" Ballard, husband and wife;

Paul Broten and Hilda Broten, husband and wife; Circle

Farms, Inc., a Washington corporation; Frank Early and

"Jane Doe" Early, husband and wife; Farm Management

Services, Inc., a Washington corporation; Danny Neil Gwyn

and Susan R. Gwyn, husband and wife; Donald Raymond Gwyn

and Lynn J. Gwyn, husband and wife; Thomas Neil Gwyn and

Helen M. Gwyn, husband and wife, d/b/a Gwyn Partnership;

Gwyn Farms, Inc., a Washington corporation; Income

Development, Inc., a Washington corporation; Terry M.

Ludwig, a single man, d/b/a Terry M. Ludwig & Associates;

Graham W. McDonald and Blodwyn McDonald, husband and wife;

Patrick McGuire and "Jane Doe" McGuire, husband and wife;

Jack Pray and "Jane Doe" Pray, husband and wife;

Professional Financial Services, a Washington corporation;

Darrell E. Ries and "Jane Doe" Ries, husband and wife;

James W. Sheppard and the estate of Barbara Sheppard,

husband and wife; John B. Somogyi and "Jane Doe" Somogyi,

husband and wife; Jerry Swartout and "Jane Doe" Swartout,

husband and wife; Washington Remco, Inc., a Washington

corporation; Peter E. Winetraub and "Jane Doe" Winetraub,

husband and wife; and Donald Worley and "Jane Doe" Worley,

husband and wife, Respondents.

Nos. 53666-0, 53729-1.

Supreme Court of Washington En Banc.

Sept. 24, 1987.

Woodring, Bateman & WestbrookDavid A. Bateman, Spec. Pros.Atty., Olympia, for appellantGeorge Janovich, et ux.

Smith & Hansen, David Hansen, Bellevue, for appellantJohn Carbone, et ux.

Escure & Abolofia, P.S., John Abolofia, Robert Wilson, Tacoma, for appellantRonald Williams, et ux.

William Bauman, Seattle, for respondentDonald Rice.

McCarthy, Holum, Golob & Casseaux Inc., P.S., Patricia Rourke, Tacoma, for appellantWallace Auty, et al.

Houger, Miller & Stein, Bruce Spanner, Richland, for respondent Ballard et ux., Circle Farms and Farm Managing Services.

Houger, Miller & Stein, P.S.C., Robert Stein, Seattle, for respondent Ballard, et ux.

Law Offices of Monte Hester, Monte Hester, Wayne Fricke, Tacoma, for respondentIncome Development, Inc., Graham Development, Blodwyn McDonald, Jack Pray, et ux. and Donald Worley, et ux.

DOLLIVER, Justice.

In these two consolidated cases, the initial issue to be determined on review is whether state courts have concurrent jurisdiction over civil actions arising under the racketeer influenced and corrupt organizations provisions, 18 U.S.C. § 1964(1976)(RICO).

Rice v. Janovich

PlaintiffDonald Rice brought this action against defendantsGeorge Janovich, John Joseph Carbone, Joseph M. Carbone, and Ronald John Williams, for injuries resulting from the fire bombing of the Night Moves Tavern in Pierce County, where he was employed as janitor and night watchman.On February 5, 1978, while at work Rice was approached by masked, armed assailants who grabbed him, held a gun to his head and told him they were going to "[b]low [his] head off ..."They bound his hands and ankles and taped his mouth shut, then dragged him by the ankles, face down, through the tavern and down a staircase to the kitchen.The tavern was then fire bombed.Rice yelled for help and was eventually rescued from the tavern.

Rice sued under theories of assault, outrage, and violation of the RICO provisions (18 U.S.C. § 1964(1976)).The jury returned a verdict in favor of the plaintiff for $500,000 and specifically apportioned liability between the defendants, attributing $150,000 liability to John Joseph Carbone, $150,000 to Joseph M. Carbone, $150,000 to Ronald J. Williams, and $50,000 to George Janovich.The trial court, relying on the provisions of RICO, trebled the amount for a total judgment of $1,500,000, plus $500,000 attorney fees and $1,304.30 costs.

Defendants Janovich, Joseph M. Carbone, and Williams appealed from the judgment to the Court of Appeals.After all the briefs had been filed, the defendants filed a motion to dismiss all claims based on RICO for lack of subject matter jurisdiction.The Court of Appeals then certified the case to this court for resolution of the motion and the remaining issues forming the basis for the appeal.

Auty v. Ballard

The plaintiffs brought this civil action for damages against a number of defendants, alleging violations of the state securities laws, the state consumer protection act, and common law fraud.The plaintiffs later amended the complaint, adding a cause of action under RICO.The trial court granted the defendants' motion to dismiss the RICO claim for lack of subject matter jurisdiction.

The plaintiffs appealed to the Court of Appeals.The defendants' motion for direct review by this court and consolidation with the Rice case was granted pursuant to RAP 4.2 and 4.3.

I

DO STATE COURTS HAVE CONCURRENT SUBJECT MATTER JURISDICTION

OVER ACTIONS BROUGHT UNDER 18 U.S.C. § 1964

(c)(CIVIL RICO)?

The defendants from both consolidated cases challenge the jurisdiction of a state court over federal civil RICO actions.The settled test for determining whether state courts have jurisdiction over a federal cause of action was set forth in Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 477-78, 101 S.Ct. 2870, 2874-75, 69 L.Ed.2d 784(1981).There the court stated:

[S]tate 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.

Beginning with "the presumption that state courts enjoy concurrent jurisdiction"the court then specified:

[T]he 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., at 478, 101 S.Ct. at 2875.See alsoPioneer First Fed. Sav. & Loan Ass'n v. Pioneer Nat'l Bank, 98 Wash.2d 853, 863, 659 P.2d 481(1983)(finding concurrent jurisdiction over claims arising under the Federal Trademark Act;"[e]xclusive jurisdiction should not be presumed");Redish & Muench, Adjudication of Federal Causes of Action in State Court, 75 Mich.L.Rev. 311, 314(1976)(presumption of concurrent jurisdiction reflects the understanding of the framers of the constitution).

Section 1964(c) of 18 U.S.C., creating the federal cause of action at issue here, provides:

Any person injured in his business or property by reason of a violation of [18 U.S.C. § 1962, the criminal RICOstatute] may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.

This statute contains no "explicit statutory directive" overcoming the presumption of concurrent jurisdiction.The grant of jurisdiction to federal courts does not by itself make federal jurisdiction exclusive.Gulf Offshore Co., 453 U.S. at 479, 101 S.Ct. at 2875("[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");see alsoCharles Dowd Box Co. v. Courtney, 368 U.S. 502, 506, 82 S.Ct. 519, 522, 7 L.Ed.2d 483(1962)(holding similar language grants federal jurisdiction but "does not state nor even suggest that such jurisdiction shall be exclusive").

The issue, then, is whether the concurrent jurisdiction presumption has been overcome by either an "unmistakable implication" in the legislative history intending exclusive jurisdiction, or a "clear incompatibility" making state courts an improper forum for RICO actions.The United States Supreme Court has not yet decided this issue.The only federal court of appeals which has discussed the issue strongly suggested it would find concurrent jurisdiction, but did not decide the issue.County of Cook v. Midcon Corp., 773 F.2d 892, 905 n. 4(7th Cir.1985).

Other courts, including federal district courts and state courts, have divided on this issue.Courts finding exclusive federal jurisdiction have relied primarily on three factors.First, Congress patterned section 1964(c) after the private remedy provision of the Clayton Act,15 U.S.C. § 15(1976), which courts have long interpreted as giving exclusive federal jurisdiction.See e.g., General Inv. Co. v. Lake Shore & M.S. Ry. Co., 260 U.S. 261, 43 S.Ct. 106, 67[742 P.2d 1234] L.Ed. 244, (1922);but seeRedish & Muench, 75 Mich.L.Rev.at 316-17;Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150, 1152(7th Cir.1984), rev'd on other grounds, 470 U.S. 373, ...