Tribune Co. v. Abiola

• Decision Date: 11 September 1995
• Docket Number: No. 1915,D,1915
• Citation: 66 F.3d 12
• Parties: RICO Bus.Disp.Guide 8891 TRIBUNE COMPANY; Tribune New York Holdings, Inc., now merged with WPIX Inc., Plaintiffs-Appellees, v. Hamid ABIOLA et al., Defendants-Appellants. ocket 95-7088.
• Court: U.S. Court of Appeals — Second Circuit

Page 12

66 F.3d 12

RICO Bus.Disp.Guide 8891

TRIBUNE COMPANY; Tribune New York Holdings, Inc., now merged with WPIX Inc., Plaintiffs-Appellees, v. Hamid ABIOLA et al., Defendants-Appellants.

No. 1915, Docket 95-7088.

United States Court of Appeals Second Circuit.

Argued July 19, 1995.

Decided Sept. 11, 1995.

Michael M. Connery, Skadden, Arps, Slate, Meagher & Flom, New York City (Julie B. Carlin-Sasaki, Skadden, Arps, Slate, Meagher

& Flom, of counsel), for defendant-appellant New York newspaper Printing Pressmen's Union No. 2.

Kenneth Gordon, Steven J. Saltiel, Gordon & Gordon, P.C., New York City, for defendants-appellants Robert P. Allen, Jr., George Baltzer, et al.

William G. O'Donnell, O'Donnell & Fox, P.C., New York City, for defendants-appellants Robert A. Purcigliotti and Cascione, Chechanover & Purcigliotti.

Raymond A. Levites, Diane Britton, Pavelic & Levites, New York City, for defendant-appellant Newspaper and Mail Deliverers' Union, New York and Vicinity.

Garbrielle Semel, Weissman & Mintz, New York City, and Richard Rosenblatt, Boyle, Tyburski, Toll & Rosenblatt, Englewood, Colo., for defendant-appellant New York Mailers' Union No. 6, Printing Publishing and Media Workers Sector of the Communications Workers of America.

David S. Frankel, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, New York City, for defendant-appellant Dr. Walter Stingle.

Andrew S. Hoffman, Wiseman, Hoffman & Walzer, New York City, for defendants-appellants William Adam, Louis Adesso, et al.

Mitchell Segal, Mitchell Segal, P.C., Great Neck, NY, for defendants-appellants Carmine Bucco, Jr., Carmine Bucco, Sr., et al.

M. Patricia Smith, Assistant Attorney General, State of New York, New York City, N.Y. (Dennis C. Vacco, Attorney General, Jane Lauer Barker, Assistant Attorney General in Charge of Labor Bureau, New York City, of counsel), for intervenor-appellant NYS Workers' Compensation Board.

Steven M. Bierman, Sidley & Austin, New York City (Alan M. Unger, Sidley & Austin, New York City, Richard S. Busch, King & Ballow, Nashville, Tenn., of counsel), for plaintiffs-appellees.

Before: WINTER, CALABRESI and CABRANES, Circuit Judges.

JOSE A. CABRANES, Circuit Judge:

We are asked to decide whether a district court may abstain from exercising its jurisdiction pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), when a plaintiff asserts claims only for money damages.

The Tribune Company and its parent corporation, former owners of the New York Daily News, filed an action against numerous defendants: several hundred union workers at the News, three of their unions, the workers' law firm, an individual lawyer, and a doctor who examined those workers--all of whom had purportedly engaged in a conspiracy to file fraudulent claims for workers' compensation benefits against the plaintiffs. The United States District Court for the Southern District of New York (Loretta A. Preska, Judge ) denied the defendants' motion to dismiss the complaint on grounds of Burford abstention. 869 F.Supp. 1076 (S.D.N.Y.1994). In light of the Supreme Court's decision in New Orleans Public Service, Inc. v. Council of the City of New Orleans, 491 U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("NOPSI "), we hold that it is generally appropriate for a district court to abstain on Burford grounds only when asked to provide equitable relief. Alternatively, we hold that even if Burford abstention would be available when a district court is not asked to grant equitable relief, the district court in this case did not abuse its discretion when it declined to abstain on Burford grounds. We therefore affirm.

I. BACKGROUND

Because we are reviewing the district court's denial of a motion to dismiss, we must accept as true the allegations of the complaint. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993) (reviewing grant of motion to dismiss under Fed.R.Civ.P. 12(b)(6)); see also Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (holding that dismissal is proper only if "it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief"). We accordingly relate the plaintiffs' version of the facts.

From 1990 to 1991, unionized workers engaged in a bitter strike at the New York Daily News--a strike that ultimately led the Tribune Company, then owner of the News and now one of the plaintiffs, to sell the newspaper to Robert Maxwell. In what the plaintiffs describe as a final act of vengeance, the various defendants conspired to arrange for each of the several hundred union member defendants to file a fraudulent workers' compensation claim against the Tribune Company, based on hearing loss allegedly caused by exposure to excessive noise at Daily News facilities.

This scheme had two essential components. First, each of the defendant workers submitted falsified medical evidence of hearing loss to the New York State Workers' Compensation Board. The unions directed the workers to retain the legal services of the defendant law firm Cascione, Chechanover & Purcigliotti. Robert A. Purcigliotti, a member of the firm and also a defendant, was primarily responsible for preparing, filing, prosecuting, and settling the fraudulent claims. Purcigliotti also directed the workers to obtain hearing examinations from the defendant Dr. Walter Stingle. Although Dr. Stingle knew that the workers had been coached to exaggerate their hearing loss during these examinations, he nevertheless certified that their audiograms were accurate. Second, the defendants conspired to attribute liability for their false hearing loss claims to the Tribune Company under the "last employer" doctrine, which provides that the last employer who exposes an employee to harmful noise is liable in full for the employee's occupationally related hearing loss. N.Y.WORK.COMP.LAW Sec. 49-ee (McKinney 1993); see also id. Sec. 49-bb (providing that compensation for hearing loss is due and payable after three months from employee's removal from exposure to harmful noise). At the instigation of Purcigliotti and his law firm, the individual workers falsely stated on their workers' compensation applications that they had last been exposed to harmful noise on the date that the strike began, and that the new owner of the News gave them hearing protectors after the strike ended--facts that, if true, would make the Tribune Company liable for the workers' hearing loss. Faced with these claims, the Tribune Company settled approximately three hundred claims over three years--until it uncovered evidence of the fraudulent scheme.

The plaintiffs filed suit in the United States District Court for the Southern District of New York. Their amended complaint asserts claims for fraud, negligent misrepresentation, and unjust enrichment, as well as violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962. Although their original complaint sought an injunction barring the defendants from participating in any further proceedings before the Workers' Compensation Board, the amended complaint seeks only monetary damages, including treble damages under RICO.

The defendants moved to dismiss the amended complaint on several grounds, including abstention under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). The New York State Workers' Compensation Board intervened and also moved to dismiss on abstention grounds. In a published opinion, the district court rejected the defendants' arguments that Burford abstention was appropriate. 869 F.Supp. at 1083-87. More specifically, the district court found that its exercise of jurisdiction over the plaintiffs' claims would not disrupt New York's effort to create a coherent workers' compensation system, id. at 1085-86, and that the plaintiffs could not obtain relief from the Workers' Compensation Board that would adequately substitute for their federal remedies under RICO, id. at 1086-87. Taking note of the Supreme Court's admonition that "the obligation of the federal court to adjudicate claims within its jurisdiction is 'virtually unflagging,' " id. at 1087 (quoting NOPSI, 491 U.S. at 359, 109 S.Ct. at 2513 (internal quotation marks and citation omitted)), the district court denied the motion to dismiss on Burford grounds. ¹ Id. The defendants and the Workers' Compensation Board obtained an order from the district court certifying for immediate appeal only that portion of the ruling that addressed the Burford abstention issue. See 28 U.S.C. Sec. 1292(b) (authorizing discretionary interlocutory appeals upon certification of district court and acceptance by court of appeals). In an order dated January 31, 1995, we granted defendants' and intervenor's petition to hear this interlocutory appeal.

II. DISCUSSION

We review a district court's abstention decision for abuse of discretion. Bethphage Lutheran Serv., Inc. v. Weicker, 965 F.2d 1239, 1244 (2d Cir.1992). We have observed that when a district court decides to abstain from exercising its jurisdiction, our "review is somewhat rigorous in view of the fact that we are considering an exception to a court's normal duty to adjudicate a controversy properly before it." Id. Because the district court in the present case rejected the defendants' request to abstain on Burford grounds, we review the district court's decision in light of its considerably broader discretion to retain jurisdiction over the complaint.

In Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), "a Federal District Court sitting in equity was confronted with a Fourteenth Amendment challenge to the reasonableness of the Texas Railroad Commission's grant of an oil drilling permit." NOPSI, 491 U.S. at 360, 109 S.Ct. at 2514. The challenge involved predominantly state law claims, and "[t]he constitutional challenge was of minimal federal importance,...