Tafflin v. Levitt
Encyclopedia
Tafflin v. Levitt, 493 U.S. 455
(1990), is a United States Supreme Court case holding that state courts have concurrent jurisdiction
to decide civil claims brought under the Racketeer Influenced and Corrupt Organizations Act
(RICO).
for acts performed as part of an ongoing criminal organization. Following its enactment in 1970, there had been a disagreement in federal and state court decisions as to whether state courts had jurisdiction to decide claims filed under this federal statute.
In 1962 Maryland established a quasi-public non-profit
corporation, the Maryland Savings-Share Insurance Corporation (MSSIC), to insure accounts held in state chartered savings and loan association
s. In May 1985, rumors of financial instability in two thrifts
, Old Court Savings and Loans
and Merritt Commercial Savings and Loan, led to depositors questioning whether MSSIC was financially able to guarantee all of the deposits, resulting in a run
on all state savings and loan associations. This led to the withdrawal of deposits, the failure of Old Court and the subsequent collapse of MSSIC. The Maryland General Assembly
during special session
s in 1985 established the Maryland Deposit Insurance Fund (MDIF) to replace the MSSIC.
Nonresident holders of certificates of deposit
issued by Old Court in federal district court sued Jeffrey Levitt, the former president of Old Court, the other officers and directors of Old Court and of the MSSIC, Old Court's law and accounting firms, and MDIF, asserting various state law causes of action and claims under the Securities Exchange Act of 1934
and RICO. The district court determined that the plaintiff
s failed to state a claim under the Securities Exchange Act, and, since the state courts had concurrent jurisdiction over the RICO claim, ruled that federal abstention
over the case was appropriate for the remaining state and RICO claims. On appeal, the Court of Appeals for the Fourth Circuit affirmed and also held that certificates of deposit were not "securities" under the Securities Exchange Act.
The Supreme Court granted certiorari
limited to the legal question of whether state courts have concurrent jurisdiction over RICO claims.
, the Supreme Court noted that under the dual American system of state and federal sovereignty, state courts have inherent authority to adjudicate claims under federal law subject only to the limits of the Supremacy Clause
of the United States Constitution
. Thus, state courts are presumed under the Court's Gulf Offshore Co. v. Mobil Oil Corp.
decision to have concurrent jurisdiction over a claim under federal law unless there is a provision in the statute expressly or implicitly limiting jurisdiction to federal courts. There was nothing in the RICO statute explicitly or implicitly preventing state courts from considering civil RICO claims.
Justice White
issued a concurring opinion
stating that any concern that the concurrent authority of state courts to decide RICO claims would lead to disruptive constructions of federal criminal was not dispositive since state criminal law is similar to federal criminal law. In addition, any incorrect state decisions could be corrected by the Supreme Court.
Justice Scalia
also wrote a concurring opinion to address dicta from the Gulf Offshore that had been included in the Tafflin majority opinion that suggested that implications from legislative history could be used to imply that state courts lacked concurrent jurisdiction over federal claims. His view was that Congress
must make an affirmative clear statement in the statutory text to deprive a state court of jurisdiction of claims for that federal statute.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1990), is a United States Supreme Court case holding that state courts have concurrent jurisdiction
Concurrent jurisdiction
Concurrent jurisdiction exists where two or more courts from different systems simultaneously have jurisdiction over a specific case. This situation leads to forum shopping, as parties will try to have their civil or criminal case heard in the court that they perceive will be most favorable to...
to decide civil claims brought under the Racketeer Influenced and Corrupt Organizations Act
Racketeer Influenced and Corrupt Organizations Act
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization...
(RICO).
Background
RICO is a United States federal law that provides for extended criminal penalties and a civil cause of actionCause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
for acts performed as part of an ongoing criminal organization. Following its enactment in 1970, there had been a disagreement in federal and state court decisions as to whether state courts had jurisdiction to decide claims filed under this federal statute.
In 1962 Maryland established a quasi-public non-profit
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
corporation, the Maryland Savings-Share Insurance Corporation (MSSIC), to insure accounts held in state chartered savings and loan association
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...
s. In May 1985, rumors of financial instability in two thrifts
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...
, Old Court Savings and Loans
Old Court Savings and Loans
Old Court Savings and Loans was a state bank headquartered in Pikesville, Maryland, United States, that failed due to embezzlement by its president, Jeffrey Levitt.-Collapse of state deposit insurance corporation:...
and Merritt Commercial Savings and Loan, led to depositors questioning whether MSSIC was financially able to guarantee all of the deposits, resulting in a run
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...
on all state savings and loan associations. This led to the withdrawal of deposits, the failure of Old Court and the subsequent collapse of MSSIC. The Maryland General Assembly
Maryland General Assembly
The Maryland General Assembly is the state legislature of the U.S. state of Maryland. It is a bicameral body. The upper chamber, the Maryland State Senate, has 47 representatives and the lower chamber, the Maryland House of Delegates, has 141 representatives...
during special session
Special session
In a legislature, a special session is a period when the body convenes outside of the normal legislative session. This most frequently occurs in order to complete unfinished tasks for the year , such as outlining the government's budget for the next fiscal year, biennium, or other period...
s in 1985 established the Maryland Deposit Insurance Fund (MDIF) to replace the MSSIC.
Nonresident holders of certificates of deposit
Certificate of deposit
A certificate of Deposit is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions....
issued by Old Court in federal district court sued Jeffrey Levitt, the former president of Old Court, the other officers and directors of Old Court and of the MSSIC, Old Court's law and accounting firms, and MDIF, asserting various state law causes of action and claims under the Securities Exchange Act of 1934
Securities Exchange Act of 1934
The Securities Exchange Act of 1934 , , codified at et seq., is a law governing the secondary trading of securities in the United States of America. It was a sweeping piece of legislation...
and RICO. The district court determined that the plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
s failed to state a claim under the Securities Exchange Act, and, since the state courts had concurrent jurisdiction over the RICO claim, ruled that federal abstention
Abstention doctrine
An abstention doctrine is any of several doctrines that a court of law in the United States of America might apply to refuse to hear a case, when hearing the case would potentially intrude upon the powers of another court...
over the case was appropriate for the remaining state and RICO claims. On appeal, the Court of Appeals for the Fourth Circuit affirmed and also held that certificates of deposit were not "securities" under the Securities Exchange Act.
The Supreme Court granted certiorari
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
limited to the legal question of whether state courts have concurrent jurisdiction over RICO claims.
Court's decision
In a unanimous opinion written by Justice O'ConnorSandra Day O'Connor
Sandra Day O'Connor is an American jurist who was the first female member of the Supreme Court of the United States. She served as an Associate Justice from 1981 until her retirement from the Court in 2006. O'Connor was appointed by President Ronald Reagan in 1981...
, the Supreme Court noted that under the dual American system of state and federal sovereignty, state courts have inherent authority to adjudicate claims under federal law subject only to the limits of the Supremacy Clause
Supremacy Clause
Article VI, Clause 2 of the United States Constitution, known as the Supremacy Clause, establishes the U.S. Constitution, U.S. Treaties, and Federal Statutes as "the supreme law of the land." The text decrees these to be the highest form of law in the U.S...
of the United States Constitution
United States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...
. Thus, state courts are presumed under the Court's Gulf Offshore Co. v. Mobil Oil Corp.
decision to have concurrent jurisdiction over a claim under federal law unless there is a provision in the statute expressly or implicitly limiting jurisdiction to federal courts. There was nothing in the RICO statute explicitly or implicitly preventing state courts from considering civil RICO claims.
Justice White
Byron White
Byron Raymond "Whizzer" White won fame both as a football halfback and as an associate justice of the Supreme Court of the United States. Appointed to the court by President John F. Kennedy in 1962, he served until his retirement in 1993...
issued a concurring opinion
Concurring opinion
In law, a concurring opinion is a written opinion by one or more judges of a court which agrees with the decision made by the majority of the court, but states different reasons as the basis for his or her decision...
stating that any concern that the concurrent authority of state courts to decide RICO claims would lead to disruptive constructions of federal criminal was not dispositive since state criminal law is similar to federal criminal law. In addition, any incorrect state decisions could be corrected by the Supreme Court.
Justice Scalia
Antonin Scalia
Antonin Gregory Scalia is an American jurist who serves as an Associate Justice of the Supreme Court of the United States. As the longest-serving justice on the Court, Scalia is the Senior Associate Justice...
also wrote a concurring opinion to address dicta from the Gulf Offshore that had been included in the Tafflin majority opinion that suggested that implications from legislative history could be used to imply that state courts lacked concurrent jurisdiction over federal claims. His view was that Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
must make an affirmative clear statement in the statutory text to deprive a state court of jurisdiction of claims for that federal statute.
See also
- List of United States Supreme Court cases, volume 493
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court
- Savings and loan crisisSavings and Loan crisisThe savings and loan crisis of the 1980s and 1990s was the failure of about 747 out of the 3,234 savings and loan associations in the United States...