ARTICLES
WILLAMETTE LAW REVIEW
21:4
Fall 1985
CIVIL RICO - LIMITATIONS IN LIMBO
By
ROBERT E. WOOD·
INTRODUCTION
The ninety-first Congress passed the Racketeer Influenced
Corrupt Organization Act (RICO)! as Title IX of the Organized
Crime Control Act of 1970. 2 The purpose of RICO was to provide
"enhanced sanctions and new remedies to deal with the unlawful
activities of those engaged in organized crime."3 Although essentially a criminal statute, RICO also contains numerous civil remedies for the government,4 and remedies for private civil actions,
including recovery of treble damages and attorneys' fees. 5
• Professor of Law, Texas Tech University School of Law. Member Texas and Florida Bars; B.A., 1965, Texas Technological College; J.D., 1968, Vanderbilt University.
1. 18 U.S.C. §§ 1961-68 (1982). For an excellent discussion of legislative history of
RICO, see Blakey, The RICO Civil Fraud Action in Context: Reflections on Bennett v. Berg,
58 NOTRE DAME LAW. 237 (1982) and Blakey and Gettings, Racketeer Influenced and
Corrupt Organizations (RICO): Basic Concepts· Criminal & Civil Remedies. 53 TEMP. L.
Q. 1009 (1980).
2. Title IX is one of twelve substantive titles of the Organized Crime Control Act of
1970.
3. Pub. L. No. 91·452, 84 Stat. 922, 923 (1970) (Statement of Findings and Purpose).
4. 18 U.S.C. § 1964(a)-(b), (d). Civil remedies available to the government include .
divestiture, restrictions on future activities or investments, and dissolution or reorganization of an enterprise.
5. 18 U.S.c. § 1964(c), states:
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In the first ten years of its existence, RICO was virtually overlooked by private litigants, possibly because it was considered a
criminal statute. 6 The decade of the 1980s, however, has seen a
virtual explosion of civil RICO cases,? and it promises to grow in
importance as courts struggle to establish the boundaries and limitations on this cause of action.
A civil RICO plaintiff must plead and prove a violation of section 1962, which requires that (1) the defendant (2) through the
commission of two or more acts (3) constituting a "pattern" (4) of
"racketeering activity" or through the collection of unlawful debt
(5) directly or indirectly invests in, acquires, or maintains an interest in, or conducts the affairs of (6) an "enterprise" (7) the activities
of which affect interstate commerce. 8 To recover treble damages,
section 1964(c) requires additional proof that (I) by reason of the
section 1962 violation (2) injury to the business or property was
sustained. 9
The definition of "racketeering activity" recites a laundry list
of state and federal criminal offenses. 1O The racketeering activities
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 damage he sustains and the cost of the suit,
including a reasonable attorney's fee.
6. Only two reported civil RICO cases appeared before 1979. Farmers Bank v. Bell
Mortgage Corp., 452 F. Supp. 1278 (D. Del. 1978); Barr v. WUI/TAS, Inc., 66 F.R.D. 109
(S.D.N.Y. 1975).
7. As of June I, 1984, there were over 150 reported civil RICO cases.
8. Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir. 1983), cert. denied sub nom.
Moss v. Newman, 104 S. Ct. 1280 (1984).
9. 28 U.S.C. § I964(c).
10. 18 U.S.c. § 1961(1) provides:
As used in this chapter (I) "racketeering activity" means (A) any act or threat involving murder, kidnaping, gambling, arson, robbery, bribery, extortion, or dealing in narcotic or
other dangerous drugs, which is chargeable under State law and punishable by
imprisonment for more than one year; (B) any act which is indictable under any
of the following provisions of title 18, United States Code: Section 201 (relating
to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473
(relating to counterfeiting), section 659 (relating to theft from interstate ship.
ment) if the act indictable under section 659 is felonious, section 664 (relating to
embezzlement from pension and welfare funds), sections 891-894 (relating to extortionate credit transactions), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to
wire fraud), section 1503 (relating to obstruction ofjustice), section 1510 (relating
to obstruction of criminal investigations), section 1511 (relating to the obstruction
of State or local law enforcement), section 1951 (relating to interference with
commerce, robbery, or extortion), section 1952 (relating to racketeering), section
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that constitute the requisite predicate acts for most civil RICO
cases are likely to be bribery, mail fraud, wire fraud, bankruptcy
fraud, or securities fraud. II
One area of concern for civil RICO litigants is the absence of
an applicable statute of limitations. Although Congress had several
opportunities to prescribe a limitations period for civil RICO
claims, it declined to do SO.12 As a consequence, RICO litigants
find themselves in federal courts 13 litigating an explicit federal
cause of action without a prescribed federal statute of limitations. 14
This article establishes a frame of reference through which the necessary federal common law can establish the proper period of limitations for civil RICO claims in an orderly and logical way, rather
than by the "dint of repeated application"15 of precedent.
1953 (relating to interstate transportation of wagering paraphernalia), section
1954 (relating to unlawful welfare fund payments), section 1955 (relating to the
prohibition of illegal gambling business), sections 2314 and 2315 (relating to interstate transportation of stolen property), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-24 (relating to white slave traffic), (C)
any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section
501(c) (relating to embezzlement from union funds), or (D) any offense involving
fraud connected with a case under title 11, fraud in the sale of securities, or the
felonious manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in narcotic or other dangerous drugs, punishable under any law
of the United States; . . . .
1I. The bill that added bribery, mail fraud, and securites fraud to the list of offenses
constituting "racketeering activity" also deleted the private treble damages cause of action.
S. 1861, 91st Cong., 1st Sess., 115 CONGo REC. 9569 (1969). Bankruptcy fraud was added
by Senate bill 1623. S. 1623, 9lst Cong., 1st Sess., 115 CONGo REC. 6925 (1969). See infra
notes 139-144 and accompanying text.
12. See infra notes 140-145 and accompanying text. One temporal concept is contained within the statute. A pattern of racketeering activity requires at least two acts of
racketeering activity, one of which occurred after 1970 and the last of which occurred
within ten years after the commission of a prior act of racketeering activity. 18 U.S.C.
1962(5).
13. See infra note 42 and accompanying text.
14. It is not uncommon for federal statutes to create a federal right of action without
providing a statute of limitations. Examples are found in the federal securities laws, civil
rights, labor and antitrust. See infra note 28. For a comprehensive study of the principles
involved in choosing an appropriate time limitation in such federal suits, see Special Project
- Time Bars In Specialized Federal Common Law: Federal Rights of Action and State
Statutes ofLimitations, 65 CORNELL L. REV. 1011 (1980) [hereinafter cited as Time Bars].
15. McNeal v. Paine, Webber, Jackson & Curtis, 598 F.2d 888 (5th Cir. 1979). The
Fifth Circuit, in a federal securities law case, felt compelled by prior practice to search for
an appropriate state analogy rather than follow "the logically appealing course of applying
the period of limitations expressly provided in the federal securities laws." Id. at 892.
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CHOOSING LIMITATION PERIODS FOR A FEDERAL
CAUSE OF ACTION
Determining a limitations period in a federal action, where
Congress has not provided one, implicates a wide range of federalism issues. 16 The federal court must ascertain and apply the most
suitable statute or other rule of timeliness. Although, in some instances, Congressional intent may best be carried out by imposing
no predefined limitations period,17 ordinarily the initial choice is
between state and federal periods of limitation.
A number of Supreme Court cases decided prior to Erie Railroad Co. v. Tompkins,18 suggest that the Rules of Decision Act l9
compels the application of state periods of limitations. 20 According
to those cases, that the Rules of Decision Act "embraces the statutes of limitations of the several States has been decided by [the
Supreme Court] in a large number of cases, which are collated in its
opinion in Bauserman v. Blunt,21 . . . . Ind~ed, to no class of
state legislation has the [Rules of Decision Act] been more steadfastly and consistently applied than to statutes prescribing the time
within which actions shall be brought within its jurisdiction."22
The Supreme Court now recognizes, however, that it is not
compelled by the Rules of Decision Act to apply state periods of
limitation. 23 Nonetheless, federal courts continue t1Jeir longstanding practice of resorting to state law when determining appropriate
limitation periods. 24
Early cases often chose the state limitations period because it
was the only one available. As Justice Brennan observed in his
16. See generally Mishkin, The Variousness of "Federal Law" Competence and Discretion in the Choice of National and State Rules for Decision, 105 U. PA. L. REV. 797 (1957)
(choice-of-Iaw problems play an important role in determining power in a federal system).
17. Occidental Life Ins. Co. v. EEOC, 432 U.S. 358 (1977); Holmberg v. Armbrecht,
327 U.S. 392 (1946).
18. 304 U.S. 64 (1938).
19. 28 U.S.c. § 1652.
20. O'Sullivan v. Felix, 233 U.S. 318 (1914); McClaine v. Rankin, 197 U.S. 154
(1905); Campbell v. Haverhill, 155 U.S. 610 (1895); McCluny v. Silliman, 28 U.S. (3 Pet.)
270 (1830).
21. 147 U.S. 647 (1893).
22. Campbell, 155 U.S. at 614.
23. Del Costello v. International Bhd. of Teamsters, 462 U.S. 151, 159 n.13 (1983).
Justices Stevens and O'Connor dissented. Justice O'Connor, however, agreed with the majority that the Rules of Decision Act does not mandate application of state law. Id. at 174
(O'Connor, J., dissenting).
24. See Ingram v. Steven Robert Corp., 547 F.2d 1260, 1261 (5th Cir. 1977).
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concurring opinion in McAllister v. Magnolia Petroleum Co. :25
Those cases represented intensely practical solutions to a practical problem in the administration of justice. In the absence of
any comparable federal statute of limitations which might be
applied, the court had four choices: (1) No period of limitations
at all; (2) an arbitrary period applicable in all like cases; (3) the
flexible but uncertain doctrine oflaches; and (4) state statutes of
limitations. The state statutes were chosen by default. 26
Even though it is now clear that state statutes are chosen as models for
the federal common law, state statutes often represent the only available choice. After consideration of appropriate federal analogies,27
one must give early and careful consideration to state limitations periods. The use of state law to suggest time limitations is widespread in
federal causes of action.2 8 Other timeliness factors, however, such as
accrual,29 tolling,3° survival,31 and revivaP2 of a cause of action are
25. 357 U.S. 221 (1958).
26. [d. at 229 (Brennan, J., concurring). Cf Moviecolor Ltd. v. Eastman Kodak Co.,
288 F.2d 80, 83 (2d Cir.), cert. denied, 368 U.S. 821 (1961).
27. Although logically first, the consideration of federal analogies is subordinated in
discussion here because of the infrequency of its utility. For a full discussion, see infra
notes 128-154 and accompanying text.
28. Federal statutory causes of action without limitation periods include but are not
limited to: civil rights statutes, e.g., 42 U.S.C. §§ 1981, 1983, 1985 (1982); antitrust statutes, 15 U.S.C. § 15 (prior to 1955); labor statutes, e.g., 29 U.S.C. §§ 141-87 (1982); securities statutes, e.g., 15 U.S.C. § 78 (1982); Military Selective Service Act of 1967, 45 U.S.C.
§ 459(b) (1972) (repealed by Pub. L. No. 93-508 and substantially recodified under 38
U.S.C. § 2021(a) (1979». See generally Time Bars. supra note 14.
29. See generally Keating v. Carey, 706 F.2d 377 (2d Cir. 1983) (civil rights claim);
Cox v. Stanton, 529 F.2d 47 (4th Cir. 1975) (civil rights claim); Newman v. Prior, 518 F.2d
97 (4th Cir. 1975) (federal accrual rule in lOb-5 suit); Sargent v. Genesco, Inc., 492 F.2d
750 (5th Cir. 1974) (federal securities law).
30. Moviecolor Ltd., 288 F.2d 80 (adopted a uniform federal tolling doctrine in a
Clayton Act suit to protect the federal interest of uniform administration of rights). Tolling of the statute of limitations may involve fraudulent concealment regardless of whether
the underlying cause is fraud. Compare Janigan v. Taylor, 344 F.2d 781 (1st Cir. 1965)
(securities fraud) with Compton v. Ide, 732 F.2d 1429 (9th Cir. 1984) (civil rights claim).
Additional nuances include whether the concealment was active or passive, see McConnell
v. Frank Howard Allen & Co., [1983-84 Transfer Binder] PED. SEC. L. REP. (CCH)
~ 99,538, and whether discovery of the cause of action is governed by an objective or a
subjective approach. See Azalea Meats, Inc. v. Muscat, 386 F.2d 5 (5th Cir. 1967).
31. See generally Carlson v. Green, 446 U.S. 14 (1980) (survival, tolling, and accrual
are federai questions); State Farm Fire & Cas. Co. v. Estate of Caton, S40 F. Supp. 673
(N.D. Ind. 1982) (RICO-survival governed by federal law); Layne v. International Bhd. of
Elec. Workers, 418 F. Supp. 964 (D.S.C. 1976) (federal law determines survivability of
labor law cause of action).
32. Estate of Caton, 540 F. Supp. 673.
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determined exclusively by federallaw. 33
STATE STATUTES OF LIMITATION -
WHICH STATE?
Civil RICO frequently affects more than one state because it is
a cause of action predicated upon multiple parties34 and multiple
acts. 35 If a state limitations statute is to be used, an initial choiceof-law decision must be made to identify which state will supply the
limitations period.
State choice-of-law rules commonly characterize statutes of
limitation as procedural and therefore apply the law of the forum
state. 36 This raises the specter of interstate forum shopping. 37
Many states, however, have borrowing provisions in their choiceof-law rules which incorporate the limitations period of the state in
which the cause of action arose. 38 Nonetheless, the patchwork
existence of borrowing provisions still permits an almost chaotic
application of state statutes of limitation.
This inconsistency and diversity of state statutes of limitation
and choice-of-law rules creates two problems. First, it encourages
forum shopping. 39 Second, it inhibits uniform access to a RICO
cause of action. As one commentator has pointed out, there is no
independent state interest that would justify this lack of uniformity.40 Another commentor has noted:
33. In Wolfv. Frank, 477 F.2d 467, 475 (5th Cir.), cert. denied, 414 U.S. 1104 (1973),
Judge Goldberg stated, "[w]hen applying the forum's statute of limitations to the actions
brought under federal securities laws, federal courts borrow only the chronometric aspects
and not the procedural or substantive nuances of the law of the forum."
34. Under RICO, an "enterprise" "includes any individual, partnership, corporation,
association, or other legal entity, and any union or group of individuals associated in fact
although not a legal entity." 18 U.S.C. § 1961(4). The enterprise requirement, although it
encompasses an individual, generally contemplates group activity.
35. At least two predicate acts are necessary to constitute a pattern of racketeering
activity. 18 U.S.C. § 1961(5).
36. H. GOODRICH & E. SCOLES, CONFLICT OF LAWS § 85 (4th Ed. 1964); R. LEFLAR, AMERICAN CONFLICTS OF LAW § 127 (3d Ed. 1977); R. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS 48 (1971); Grossman, Statutes of Limitations and the
Conflict of Laws: Modern Analysis, 1980 ARIZ. ST. L.J. I; Comment, The Statute of Limitations and the Conflict of Laws, 28 YALE L.J. 492 (1919).
37. See Note, Federal Statutes Without Limitations Provisions, 53 COLUM. L. REV. 68
(1953).
38. Not all states have borrowing provisions and the varying terms and interpretations of the borrowing statutes that exist impede the predictable application of a particular
statute of limitations.
39. See Note, supra note 37.
40. Note, Treble Damage Time Limitations: Federalism Rampant, 60 YALE L.J. 553
(1951).
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To permit the result of the litigation to vary from one federal court to another, on the basis of the accident of venue in a
state which has no interest whatever in the subject matter of the
controversy, can be justified only by a clear congressional directive, which is of course lacking. This argument has a fortiori
bearing when a state statute of limitations is applied although
the action is upon a federally-cre~ted right and state interests
are entirely non-existent,4l
Although nationwide service of process and broadened concepts
of jurisdiction inhibit forum shopping by defendants, varying state
statutes of limitation encourage forum shopping by plaintiffs. If the
federal courts have exclusive jurisdiction over civil RICO actions,42
there is no federal-state forum shopping. This presents a persuasive
argument for the adoption of aftderal choice-of-Iaw rule. A comprehensive federal choice-of-Iaw rule would produce a consistent source
for a statute of limitations for all civil RICO cases. The federal rule,
like many current state rules, migh~ prefer the statute of limitations of
the forum state. Modem interest analysis,43 however, could be
brought to bear to choose the most appropriate law. 44 Although uni41. Hill, State Procedural Law in Federal Nondiversity Litigation, 69 HARV. L. REV.
66, 102 (1955).
42. Whether federal courts have exclusive jurisdiction over civil RICO actions is disputed. Federal jurisdiction is generally not exclusive unless Congress chooses to make it so,
either expressly or by fair implication. Claflin v. Houseman, 93 U.S. 130, 136-37 (1876).
One court, utilizing an antitrust analogy, concluded that exclusive federal jurisdiction was
intended. See Cook County v. Midcon Corp., 574 F. Supp. 902 (N.D. 111. 1983). Other
courts, however, have concluded that concurrent jurisdiction exists. See Luebke v. Marine
Nat'l Bank of Neenah, 567 F. Supp. 1460 (E.D. Wisc. 1983) (dictum noting probable concurrent jurisdiction); Greenview Trading Co. v. Hershman Leicher, P.C., 123 Misc. 2d 152,
473 N.Y.S.2d 722 (N.Y. Sup. Ct. 1984) (holding that concurrent jurisdiction exists based
on findings that neither explicit statutory direction, unmistakable implication from statutory history, nor clear incompatibility between state-court jurisdiction and federal interests
were present). Regardless of incidental federal-state forum shopping, a federal choice of
laws principle for RICO causes of action would promote the neutrality and certainty necessary to foster predictable and stable transactions.
43. Modem interest analysis is premised on the theory that the "central problem of
conflict of laws [is] that of determining the appropriate rule of decision when the interests
of two or more states are in conflict - in other words, of determining which interest shall
yield." Currie, Notes on Methods and Objectives in the Conflict of Laws, 1959 DUKE L.J.
171, 173. Interest analysis focuses on the interest of each governmental unit in the application of its law. R. WElNTRAUB, supra, note 36, at 234-36.
44. See generally Hill, supra note 41 (when a federal court sits in a case not based on
diversity jurisdiction in a state other than the one where the right arose, federal interest in
the outcome may provide a basis for reference to the law of the locus of the right); Grossman, supra note 36 (modem interest analysis can properly be invoked to determine conflict
of laws questions involving statutes of limitatipn~).
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formity of a federal choice-of-Iaw rule uninfluenced by local considerations may undermine the alleged certainty of the traditional/ex fori
rule,4s there is no compelling reason to permit plaintiffs to unilaterally
benefit from forum shopping or even from the fortuity of self-interested choice. Interests that suggest a state choice-of-Iaw rule in a diversity cause of action46 do not exist when the cause of action is
strictly federal. A federal choice-of-Iaw rule would therefore appear
warranted.
The question whether the choice of law rule is federal or state is
one that has never been answered (or even properly asked).47 Such
issues will continue to arise as modem choice-of-Iaw concepts develop.
STATE LIMITAnONS
-
WHICH STATUTE?
Regardless of the source of the choice-of-Iaw rule, focusing on
one state's period of limitations does not end the inquiry. The
court still must decide which of the state's statutes of limitation
applies to a civil RICO cause of action. In making this decision,
the court must characterize the essential nature of the federal cause
of action and identify the appropriate state statute.
This, however, raises another federalism question: Is the characterization process itself a matter of federal or state law? Cases in
the areas of civil rights, labor law and securities law indicate that
the process is federal. 48 The Supreme Court, in UAW v. Hoosier
Cardinal Corporation,49 held that although characterizing the essential nature of a federal cause of action is a matter of federal law,
federal courts could adopt the characterization that state law would
impose "unless that characterization is unreasonable or otherwise
inconsistent with national labor policy."sO
In this area, Hoosier and its equally ambiguous predecessor,
45. Lexfori refers to the application of the law of the forum in a situation with multistate contacts. It has been decribed as the basic rule in the conflict of laws. See
Ehrenzweig, The Lex Fori - Basic Ru/e in the Conflict of Laws, 58 MICH. L. REV. 637
(1960).
46. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). See generally
Hill, supra note 41.
47. See United Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696 (1966); see
a/so Estate of Caton, 540 F. Supp. at 684 (discussing factors involved in selecting proper
limitations period).
48. See infra note 54 and accompanying text.
49. 383 U.S. 696 (1966).
50. [d. at 706.
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Chattanooga Foundry & Pipe Works v. City of Atlanta,S I have created "the confusion that often results when a federal court wanders
about in alien state territory."S2 Characterizing the cause of action
for purposes of developing analogies to state law is a process used
to identify limitations periods in civil rights cases, labor cases, securities law cases, and antitrust cases. 53 Even the broader aspects
of the process have not developed consensus. Some courts look to
the purpose and policy of the underlying federal cause of action and
seek to apply the statute of limitations which best effectuates that
policy;S4 other courts look only to the substantive nature of the
cause of action and seek to establish an analogy to a state cause of
action. 55 Variations in the approach taken exist even within cir51. 203 U.S. 390 (1906). In Chattanooga Foundry, a treble damage antitrust action,
Justice Holmes characterized the nature of the antitrust statute as remedial or compensatory rather than penal. Id. at 398-99. This characterization seems inconsistent with the
rationale of the case that the question was "left to the local law by the silence of the United
States." Id. at 397. Courts have subsequently divided over whether weight should be given
to the local characterization of "penalty." For federal characterizations of "penalty" see
Norman Tabacco & Candy Co. v. Gillette Safety Razor Co., 295 F.2d 362 (5th Cir. 1961);
Fulton v. Loew's Inc., 114 F. Supp. 676 (D. Kan. 1953); Electric Theater Co. v. Twentieth
Century-Fox Film Corp., 113 F. Supp. 937 (W.D. Mo. 1953). For state characterizations,
see Leh v. General Petroleum Corp., 330 F.2d 288 (9th Cir. 1964), rev'd, 382 U.S. 54
(1965); Baldwin v. Loew's Inc., 312 F.2d 387 (7th Cir. 1963); Englander Motors Inc., v.
Ford Motor Co., 293 F.2d 802 (6th Cir. 1961); North Carolina Theatres, Inc. v. Thompson, 277 F.2d 673 (4th Cir. 1960); Powell v. St. Louis Dairy Co., 276 F.2d 464 (8th Cir.
1960); Shapiro v. Paramount Film Distrib. Corp., 274 F.2d 743 (3d Cir. 1960); Bertha
Bldg. Corp. v. National Theatres Corp., 269 F.2d 785 (2d Cir. 1959), cert. denied, 361 U.S.
960 (1960); Momand v. Universal Film Exchanges, Inc., 172 F.2d 37 (1st Cir. 1948), cert.
denied, 336 U.S. 967 (1949);
52. Ingram, 547 F.2d at 1263.
53. The use of this process in antitrust cases predates the enactment of a limitations
period for private treble damage actions in 1955. For a discussion of the early cases, see
Note, supra note 40. The confusing experience of the courts dealing with limitations in
antitrust treble damages suits and the increasing use of civil RICO suggest that the cases
should not be allowed to develop haphazardly.
54. See. e.g., Beard V. Robinson, 563 F.2d 331 (7th Cir. 1977), cert. denied sub nom.
Mitchell V. Beard, 438 U.S. 907 (1978) (civil rights); Shouse v. Pierce County, 559 F.2d
1142 (9th Cir. 1977) (civil rights); Regan v. Sullivan, 557 F.2d 300 (2d Cir. 1977) (civil
rights); Forrestal Village, Inc. v. Graham, 551 F.2d 411 (D.C. Cir. 1977) (securities law);
Butler V. Local 823, 514 F.2d 442 (8th Cir.), cert. denied, 423 U.S. 924 (1975) (labor law);
Almond V. Kent, 459 F.2d 200 (4th Cir. 1972) (civil rights); Abrams V. Carrier Corp., 434
F.2d 1234 (2d Cir. 1970), cert. denied sub nom. United Steel Workers V. Abrams, 401 U.S.
1009 (1971) (labor law); Charney v. Thomas, 372 F.2d 97 (6th Cir. 1967) (securities law);
Grant V. Mulvihill Bros. Motor Serv., Inc., 428 F. Supp. 45 (N.D. Ill. 1976) (labor law).
55. Meyers V. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894 (3d Cir.
1977) (civil rights); La Rosa Bldg. Corp. V. Equitable Life Assurance Soc'y, 542 F.2d 990
(7th Cir. 1976) (securities law); Dantagnan V. I. L.A. Local 1418, 496 F.2d 400 (5th Cir.
1974) (labor law); Jones V. Trans World Airlines, Inc., 495 F.2d 790 (2d Cir. 1974) (labor
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cuits when different federal statutory schemes are addressed.56
Some courts use a two-step process. First, the court makes a federallaw determination of the essential nature of the federal claim.
The court then makes a state law determination of which state limitation period would be applicable to that claim.57 Still other courts
proceed more simply by asking which state limitation period the
state itself would have enforced had plaintiff brought an action for
similar relief in a court of that state,58 if such relief were available.
Fortunately the policies and purposes of RICO are articulated
and documented in the preamble of the statute.59 The statute was
meant to be "liberally construed to effectuate its remedial purposes."60 The substantive nature is harder to identify. A private
civil action for treble damages couJd be characterized as a statutory
law); In re U.S.A. Motel Corp., 450 F.2d 499 (9th Cir. 1971), appeal after remand, 521
F.2d 117 (9th Cir. 1975) (securities law).
56. Compare Shaw v. McCorkle, 537 F.2d 1289 (5th Cir. 1976) (civil rights law state characterization) with Hudak v. Economic Research Analysts, Inc., 499 F.2d 996 (5th
Cir. 1974), cert. denied, 419 U.S. 1:122 (1975) (federal securites law - federal
characterization).
57. See, e.g., Shaw, 537 F.2d· 12.89 and cases cited therein.
58. Id. at 1292.
59. The Statement of Finding and P~rpose of-Pub. L. No. 91-452, 84 Stat. 960, provides that:
The Congress finds that (I) otganized crime in the United States is a highly sophisticated, diversified, and widespread activity that annually drains billions of
dollars from America's economy by unlawful conduct and the illegal use of force,
fraud, and corruption; (2) organized crime derives a major portion of its power
through money obtained from such illegal endeavors as syndicated gambling, loan
sharking, the theft and fencing of property, the importation and distribution of
narcotics and other dangerous drugs, and other forms of social exploitation; (3)
this money and power are increasingly used to infiltrate and corrupt legitimate
business and labor unions and to subvert and corrupt our democratic processes;
(4) organized crime activities in the United States weaken the stability of the Nation's economic system, harm innocent investors and competing organizations,
interfere with free competition, seriously burden interstate and foreign commerce,
threaten the domestic security, and undermine the general welfare of the Nation
and its citizens; and (5) organized crime continues to grow because of defects in
the evidence-gathering process of the law inhibiting the development of the legally admissible evidence necessary to bring criminal and other sanctions or remedies to bear on the unlawful activities of those engaged in organized crime and
because the sanctions and remedies available to the Government are unnecessarily limited in scope and impact.
It is the purpose of this Act . . . to seek the eradication of organized crime
in the United States by strengthening the legal tools in the evidence-gathering
process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in
organized crime.
60. Pub. L. No. 91-452, § 904(a), 84 Stat. 947 (1970). "So far as we have been made
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cause of action, an antitrust cause of action, a fraud cause of action,
or a penalty. In order to best serve the articulated policies and
purposes, federal courts should attempt to identify a single uniform
characterization describing the essential nature underlying all civil
RICO claims. 61 Relying upon courts to describe the cause of action
in state law terms does not promote settled expectations and repose, but instead encourages litigation collateral to the merits of the
case.
FEDERAL LIMITATIONS PERIODS
In the abstract, it would seem that federal law should supply
the statute of limitations in federal causes of actions. Three factors,
however, have combined to make the application of a federallimitations period the exception rather than the rule. First, borrowing
state limitations periods is a traditional process that is familiar to
federal judges. Arguably it has even become a matter of judicial
compulsion62 through stare decisis. 63 Second, judges are reluctant
to create judge-made limitation periods, preferring instead to perform the unwieldy task of interpreting and applying existing limitation periods. 64 Third, analagous federal limitation periods are
scarce and unsatisfactory. More than any other factor, the absence
aware, this is the only substantive federal criminal statute that contains such a directive
. . . ." Russello v. United States, 464 U.S. 16, 27 (1983).
61. See, e.g., Garcia v. Wilson, 731 F.2d 640 (10th Cir. 1984), affd, 105 S. Ct. 1938
(1985) (civil rights); Beard, 563 F.2d at 337 ("By ... applying a uniform statute of limitations, we avoid the often strained process of characterizing civil rights claims as common
law torts, and the '[i]nconsistency and confusion [that] would result if the single cause of
action created by Congress were fragmented in accordance with analogies drawn to rights
created by state law and the several different periods of limitation applicable to each statecreated right were applied to the single federal cause of action.''') (quoting Smith v.
Cremins, 308 F.2d 187 (9th Cir. 1962) (brackets in original); Regan, 557 F.2d 300.
62. This statement may exaggerate the weight of precedent; the tendency of courts to
choose state limitation periods may more appropriately be attributed to tradition or familiarity with the process of choosing state statutes of limitation.
63. "Were we in the beginning, we might for the sake of uniformity argue for a federal common law limitation. We are not writing on a tabula rasa, however, but are the
heirs of precedent. The precedent is clear. Absent a common law limitation concept the
federal courts were adrift. They found refuge in analogous state limitations provisons,
there being no other place to go. The conclusion we must bear is neither rational nor
historical, but purely precedential." Ingram, 547 F.2d at 1263; accord McNeal, 598 F.2d
888.
64. Miskin, supra note 16, at 803-04 ("[T]here may be situations where state law is
chosen only because of special difficulty in the judicial framing of a definite federal rule in a
specific issue in an area otherwise totally national"). See Moviecolor Ltd., 288 F.2d at 83
("selection of a period of years [is] not . . . the kind of thing judges do. . . .").
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of a general or "catch-all" federal limitation period is the primary
source of this entire segment of federal jurisprudence.
Nevertheless, circumstances occasionally cause a court to vary
from the norm and not apply a state statute of limitations. 65 The
Supreme Court, in recent years, has chosen analogous federal time
limitations66 or abolished time limits entirely where it found that
using a state statute of limitations interfered with federal policy.67
The use of state limitations statutes was virtually by default68 when,
in 1966, the Court admonished lower federal courts that "the silence of Congress is not to be read as automaticaiIy putting an imprimatur on state law. Rather, state law is applied only because it
supplements and fulfills federal policy, and the ultimate question is
what federal policy requires."69
A more recent United States Supreme Court case, Del Costello
v. International Brotherhood of Teamsters,70 should have substantial impact on the choice of limitation periods by federal courts for
federal causes of action. 71 In Del Costello, two cases were consolidated in which employees claimed that their employers had
breached a provision of a collective bargaining agreement and that
their union had breached its duty of fair representation by mishandling the ensuing grievance proceedings. Actions against both an
employer and a union, typically called Vaca-Hines actions,72 are
difficult to characterize for limitations purposes because they involve different types of claims. 73
Not surprisingly, the circuits have differed over how to handle
this problem. Some circuits have applied the same limitations period to both the contract action against the employer and the unfair
representation claim against the union. 74 Other circuits have held
that different statutes of limitation apply to the two claims involved
65. See generally Del Costello, 462 U.S. 151.
66. Id. at 171-72; McAllister v. Magnolia Petroleum Co., 357 U.S. 221.
67. Occidental Life Ins. Co. v. EEOC, 432 U.S. 355.
68. See McAllister, 357 U.S. at 229 (Brennan, J., concurring).
69. Hoosier, 383 U.S. 709 (White, J. dissenting).
70. 462 U.S. 151 (1983).
71. Interestingly, however, Del Costello has not been mentioned in any of the civil
RICO cases that have dealt with the limitations issue.
72. These suits arose under section 301 of the National Labor-Management Relations
Act of 1947, 29 U.S.C. § 185(a) (1982). The term "Vaca-Hines" is derived from Vaca v.
Sipes, 386 U.S. 171 (1967) and Hines v. Anchor Motor Freight, 424 U.S. 554 (1976).
73. Del Costello, 462 U.S. at 164-65.
74. See Smart v. Ellis Trucking Co., 580 F.2d 215, 217-19 (6th Cir. 1978), cert. denied, 440 U.S. 958 (1979); Butler, 514 F.2d at 447-48; Kennedy v. Wheeling-Pittsburg Steel
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in such suits.75
The diverse nature of the claims has sparked equally diverse
analogies. In United Parcel Service v. Mitchell,76 the Supreme
Court analogized an employee's claim against his employer to an
action to vacate an arbitration award. Accordingly, the Court applied a 90 day statue of limitations. 77 Concurring in Mitchell, Justice Stevens suggested that the employee's unfair representation
claim was properly analogized to a legal malpractice action. 78 Such
actions generally have longer limitation periods. 79 The disparity
between the limitation periods has created problems "peculiar to
the realities of labor relations and litigation."80
In Del Costello, the Supreme Court resolved this conflict by
analogizing Vaca-Hines cases to unfair labor practice actions. 8I
The Court consequently adopted the six-month statute of limitations of section 10(b) of the National Labor Relations Act. 82 The
Court explained:
.
We stress that our holding today should not be taken as a
departure from prior practice in borrowing limitations periods
for federal causes of action, in labor law or elsewhere. We do
not mean to suggest that federal courts should eschew use of
state limitations periods anytime state law fails to provide a perCorp., 81 L.R.R.M. (BNA) 2349, 69 Lab. Cas. (CCH) ~ 12,980 (4th Cir. 1972); see also
Abrams, 434 F.2d at 1252 (applying same limitations period).
75. See Sanderson v. Ford Motor Co., 483 F.2d 102, 114 (5th Cir. 1973); De Arroyo
v. Sindicato de Trabajadores Packinghouse, 425 F.2d 281, 285-87 (1st Cir.), cert. denied sub
nom. Puerto Rico Telephone Co. v. Arroyo, 400 U.S. 877 (1970).
76. 451 U.S. 56 (1981). In Mitchell, only the employee-employer dispute was at issue
and only state law analogies were argued.
77. [d. at 63-64 (applying New York's 90 day statute of limitations for an action to
vacate an arbitration award).
78. [d. at 74. Justice O'Connor adopted this reasoning in her dissent in Del Costello.
462 U.S. at 175 (O'Connor, J., dissenting). Justice Stewart also concurred in Mitchell. He
argued that the appropriate limitations period for an employee's claim against an employer
was six months in accordance with § 1O(b) of the National Labor Relations Act, 29 U.S.c.
§ 160(b) (1982). 451 U.S. at 65 (Stewart, J., concurring).
79. See, e.g., CAL. CIV. PROC. CODE § 340.6(a) (West 1982) (one year); N.Y. CIV.
PRAC. LAW § 214(6) (McKinney 1972) (three years); NEV. REV. STAT. § 11.207 (1983)
(four years).
80. Del Costello, 462 U.S. at 167. One of these problems is that the employee has
insufficient time to sue the employer, because this time is, in a sense, incorporated into the
time for suing the union. [d. at 167-68; see Bowen v. United States Postal Serv., 459 U.S.
212 (1983). Another is an unnecessarily long period for the employee to sue the union
which precludes the relatively rapid resolution of labor disputes favored by federal law. Del
Costello, 462 U.S. at 168.
81. Del Costello, 462 U.S. at 169-72.
82. [d. at 172.
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fect analogy . . . . On the contrary, as the courts have often
discovered, there is not aIways an obvious state-law choice for
application to a given federal cause of action; yet resort to state
law remains the norm for borrowing of limitations period. Nevertheless, when a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and when the
federal policies at stake and the practicalities of litigation make
that rule a significantly more appropriate vehicle for interstitial
lawmaking, we have not hesitiated to tum away from state
law. 83
In Del Costello, the Supreme Court clarified the lawmaking pro84
cess and, in general, rejected the judicial compulsion to choose state
limitation periods. 85 Del Costello should embolden federal courts to
adopt federal limitations periods where appropriate and to apply
them, if not to older statutory schemes,86 then at least to newer statutory schemes and to schemes where courts have had substantial
problems choosing limitations periods.
RICO CASE DEVELOPMENT
An interesting disarray has developed among the few reported
civil RICO cases deciding the limitation period issue. 8? All courts
seem to agree that analogies must be dt:awn to state law to provide
83. Id. at 171-72 (citations omitted).
84. In deciding whether to apply Del Costello retroactively, courts, applying the test
of Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), have generally concluded that the case
does not overrule or represent a break with clear precedent. Rather, it represents a classification - an attempt to create a uniform rule in a chaotic area. Murray v. Branch Motor
Express Co., 723 F.2d 1146 (4th Cir. 1983), cert. denied, 105 S. Ct. 292 (1984); Edwards v.
Sea-Land Serv., Inc., 720 F.2d 857 (5th Cir. 1983); see Perez v. Dana Corp., 718 F.2d 581
(3d Cir. 1983). But see, McNaughton v. Dillingham Corp., 722 F.2d 1459 (9th Cir. 1984);
See also Barina v. Gulf Trading & Transp. Co., 726 F.2d 560, 563 (9th Cir. 1984) ("Del
Costello establishes a new principle" because it shortened the limitations eightfold and "deviated from the Supreme Court's prior direction in UAW v. Hoosier Cardinal Corp
. .").
85. See supra, note 62 and accompanying text.
86. See McNeal, 598 F.2d 888; Ingram, 547 F.2d 1260. For years Professor Louis
Loss advocated that the most reasonable and appropriate analogy for federal courts to
adopt with respect to the statute of limitations in actions under Rule IOb-5, is the limitation
period expressly provided in the federal securities laws. See, L. Loss, SECOND ANNUAL
INSTITUTE ON SECURITIES REGULATION 14 (1971).
87. To demonstrate the confusion in this area, consider a case in which the court
recognized civil RICO as a new legal wrong, borrowed seventh amendment analysis, held
the closest analogy was that of tortious interference with economic relations, and then applied the statute of limitations for fraud in order to effectuate the policies of RICO because
mail and wire fraud depend upon artifice to defraud. Eisenberg v. Gagnon, 564 F. Supp.
1347 (E.D. Pa. 1983).
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appropriate statutes of limitations. The fundamental problem in
selecting an appropriate state limitation period in civil RICO actions is deciding whether such actions should be characterized in
terms of the specific underlying predicate acts. or whether a more
general characterization of such actions should be applied. regardless of the discrete facts involved. 88 Most of the early cases developed analogies based upon the predicate acts or offenses pleaded
rather than upon RICO violations as a generic cause of action. Indeed. seven of the first eleven reported cases dealing with limitations in civil RICO actions applied the state statute of limitations
for fraud. 89 Although in some instances there were other persuasive factors which validated the choice. 90 focusing on the predicate
.
acts involves potential dangers. 91
The first reported case to deal with Ilmitation periods in the
context of civil RICO Was a bid-rigging antitrust case. 92 The court
disposed of the RICO limitation issue in a footnote. choosing a oneyear statute that also applied to state antitrust claims. 93 The court
did not describe the process of choosing the limitation statute. but
it is interesting to note that the alleged R~CO predicate acts were
mail fraud and wire fraud.
88. See Garcia, 731 F.2d 640 (examining the process of characterizing civil rights
actions for purposes of choosing an appropriate statute of limitations).
89. Burns v. Ersek, 591 F. Supp. 837 (D. Minn. 1984) (three year blue sky fraud);
Kirschner v. Cableffel Corp., 576 F. Supp. 234 (1983) (fraud statute); Eisenberg, 564 F.
Supp. 1347 (six year fraud statute); Estee Lauder, Inc. v. Harco Graphics, Inc., No. 828188, Slip op. (S.D.N.Y. Mar.21, 1984) (available on LEXIS, Genfed Library, Dist.File)
(six year fraud statute); D'Iorio v. Adonizio, 554 F. Supp. 222 (M.D. Pa. 1982) (six year
fraud or residual statute); Estate of Caton, 540 F. Supp. 673 (six year fraud statute); Willcutts v. Jefferson Trust & Savings, No. 81-1153, Slip op. at 6 (D.C. 111. Apr. 21, 1982) (five
year fraud statute); Prudential Lines, Inc., v. McKeon, No. 80 Civ. 5853, Slip op.
(S.D.N.Y. Apr. 21, 1982) (available on LEXIS, Genfed Library, Dist. File) (six year fraud
statute); Gilbert v. Bagley, 492 F. Supp. 714 (M.D.N.C. 1980) (state blue sky statute); see
also NSC Int'I Corp. v. Ryan, 531 F. Supp. 362 (N.D. 111. 1981) (choosing fraud as closest
analogy for seventh amendment analysis). In a case that involved a separate aspect of
RICO - collecting an unlawful debt - that does not require a pattern of racketeering
activity or multiple predicate acts, the court may choose not to apply fraud limitations. See
Durante Bros. & Sons, Inc. v. Flushing Nat'l Bank, 571 F. Supp. 489 (E.D.N.Y. 1983).
90. See D'Iorio, 554 F. Supp. 222 (six year statute chosen was also a residual statute).
91. Because multiple predicate acts are a prerequisite to RICO liability, difficulties
abound when diverse predicate acts are asserted in a single case. See infra notes 99-105 and
accompanying text.
92. Ingram Corp. v. J. Ray McDermott & Co., 495 F. Supp. 1321 (E.D. La. 1980).
93. "The RICO statute does not specify a limitations period, and therefore the analogous one year [statute of limitations period] applies. This one-year period also applies to
the state antitrust claims." Id. at 1324 n.4.
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In contrast, the next reported case demonstrated a careful and
thoughtful approach. State Farm Fire & Casualty Co. v. Estate of
Caton 94 involved an elaborate arson-for-profit scheme. In searching for an appropriate limitations period, the court first considered
a federal limitation:
The better approach would seem to be to apply the nearest
analogous federal statute because it would promote predictability and uniformity. Such application would also avoid encumbering the remedial purposes of RICO with an unworkable body
of law on the question of which state statute of limitations to
apply.9s
The court, however, noted that Congress had failed to enact a statute
of limitations when it enacted RICO. Thus, the court concluded that
Congress intended the courts to apply state law. 96
Turning next to state law, the court rejected the characterization
of RICO as a claim for "forfeiture of a penalty given by statute" in
favor of likening the "underlying claim" to one of fraud. 97 Thus, the
court applied the "six year statute of limitations for fraud, which is the
underlying substantive claim . . . . "98
Unfortunately, attention to predicate acts in a RICO claim has
great potential for creating unnecessary conflict and confusion where
there are multiple predicate acts of different natures. This will often be
the case where the predicate acts are a combination of mail fraud, wire
fraud, and securities fraud. Two cases in point are Eisenberg v. Gagnon 99 and Gilbert v. Bagley.1°O The predicate acts in both cases consisted of securities, 101 mail,102 and wire fraud. 103 In Eisenberg, the
court chose the statute of limitations for fraud on the ground that the
RICO cause of action could be sustained on the basis of the wire and
mail frauds alone. 104 The court in Gilbert, on the other hand, chose to
apply the state blue sky statute of limitations on the ground that the
wire and mail fraud claims were perfunctory and peripheral to the
94. 540 F. Supp. 673 (N.D. Ind. 1982).
95. Id. at 684.
96. Id. But see infra notes 140-146 and accompanying text.
97. Estate of Caton, 540 F. Supp. at 685; accord, Estee Lauder, Inc., v. Harco Graphics, Inc., 558 F. Supp. 83, 84 (S.D.N.Y. 1983).
98. Estate of Caton, 540 F. Supp. at 685 (emphasis added).
99. 564 F. Supp. 1347.
100. [1982-83 Transfer Binder], FED. SEC. L. REP. (CCH) ~ 99, 483.
101. 18 U.S.C. § 1961(1)(0).
102. 18 U.S.C. § 1341.
103. 18 U.S.C. § 1343.
104. 564 F. Supp. at 1354.
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alleged stock scheme. 105
This ad hoc application of state limitations periods based upon
analogies focusing on the predicate act ignores the fact that, no matter
what the predicate act, the treble damage civil suit is a federally created right. The essential nature of the RICO offense is distinguishable
from that of the underlying predicate acts because, by themselves, the
acts do not constitute a RICO violation. There must be two acts, the
last of which must occur within ten years of the first. 106
Because most limitations periods are less than ten years,107 this
subsection makes it clear that a viable federal cause of action is created
by the second of two predicate acts even though the appropriate limitations period may have run on the first. To require that each predicate act be within the appropriate limiations period would impair or
restrict the ten-year provision of section 1961(5).108 On the other
hand, if a limitation period is significant only from the date of the last
predicate act, this implicitly recognizes that the occurrence of the second act gives rise to a new and separate federal cause of action under
RICO. 109
Statutes of limitation protect the societal values of predictability
and stability within the judicial system. 110 In seeking to characterize
state causes of action for the purpose of determining statutes of limita105. Gilbert at P. 96, 796. See also Burns, 591 F. Supp. 837 (court used specific,
rather than general, fraud statute); Kirschner, 576 F. Supp. 234 (gravamen of suit is fraud).
106. 18 U.S.C. § 1961(5).
107. For example, the federal general criminal limitations period is five years. 18
U.S.C. § 3282 (1982). The most common predicate acts in civil RICO are mail, wire and
securities fraud. The typical fraud and securities fraud limitations periods are three to six
years. See generally Note, Statutes of Limitations in JOb-5 Actions - A Proposal for Congressional Legislation, 24 SYRACUSE L. REV. 1154 (1973) (concludes that Congress should
provide a federal statute of limitations for IOb-5 actions so the availability of this federal
right will no longer depend on state statutes of limitation).
108. For a similar argument see Bradley, Racketeers. Congress. and the Courts: An
Analysis of RICO, 65 IOWA L. REV. 837, 847-51 (1980). Bradley suggests that the terms
"indictable" and "chargeable" used in the definition of racketeering activity have no reference to statutes of limitation. Interestingly, section 1961(d) uses neither of these terms but
merely speaks of "any offense." Presumably the same arguments apply.
109. Like the statute of limitations for conspiracies, which runs from the date of the
last overt act, Grunewald v. United States, 353 U.S. 391 (1957), the statute of limitations
for violations of RICO runs from the date of the last alleged act of racketeering activity,
United States v. Field, 432 F. Supp. 55, 57 (S.D.N.Y. 1977), affd, 578 F.2d 1371 (2d Cir.),
cert. denied, 439 U.S. 801 (1978).
110. See Allen v. United States, 542 F.2d 176, 179 (3d Cir. 1976) (limitations "serve
to strike a balance between the need for certainty and predictability in legal relationships
and the role of the courts in resolving private disputes"); Gates Rubber Co. v. USM Corp.,
508 F.2d 603, 611 (7th Cir. 1975) ("the interest in certainty and finality in the adminstra-
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tion in other areas, courts have begun to develop broader approaches
to promote and protect these values. III This approach argues for a
generic view of RICO violations, so that these values may also be protected in the RICO context.
Construction of RICO in other contexts also points to a generic
approach. For example, doctrines that would limit criminal prosecution of the underlying predicate acts are not viewed as restricting the
application of RICO. These doctrines include acquittal of the underlying criminal activity,112 failure to indict,113 the nonsurvivability of
the predicate act under state law, I 14 and even the running of statutes
of limitation on the criminal predicate act. 115 Indeed, criminal RICO
is regarded as governed by federal rather than state limitation periOdS. 116 Courts seeking to characterize RICO violations for civil action
limitations periods would do well to consider the words of the third
circuit in a criminal RICO case:
RICO is a federal law proscribing various racketeering acts
which have an effect on interstate or foreign commerce. Certain
of those racketeering, or predicate acts violate state law and
RICO incorporates the elements of those state offenses for definitional purposes. State law offenses are not the gravamen of
RICO offenses. RICO was not designed to punish state law violations; it was designed to punish the impact on commerce
caused by conduct which meets the statute's definition of racketeering activity. To interpret state law offenses to have more
than a definitional purpose would be contrary to the legislative
intent of Congress and existing state law. 1l7
tion of our affairs, especially in commercial transactions, makes it desirable to terminate
contingent liabilities at specific points in time").
111. See Garcia, 731 F.2d 640; Garmon v. Foust, 668 F.2d 400 (8th Cir. 1982).
112. United States v. Frumento, 563 F.2d 1083 (3d Cir. 1977), cert. denied sub nom.
Millhouse v. United States, 434 U.S. 1072 (1978); United States v. Licavoli, 725 F.2d 1040
(6th Cir.), cert. denied, 104 S. Ct. 3535 (1984). c.j Sedima v. Imrex Co., 105 S. Ct. 3275,
3281-84 (1985) (conviction for predicate act not a prerequisite to private civil action).
113. See USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94 (6th Cir. 1982);
United States v. Malatesta, 583 F.2d 748 (5th Cir. 1978); United States v. Davis, 576 F.2d
1065 (3d Cir.), (defendant charged and convicted of RICO violation even though never
charged with predicate acts of bribery or extortion) cert. denied, 439 U.S. 836 (1978). Accord United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974) (the United States can use
RICO civil remedies in absence of prior conviction) cert. denied, 420 U.S. 925 (1975).
114. Estate of Caton, 540 F. Supp. 673.
115. United States v. Forsythe. 560 F.2d 1127 (3d Cir. 1977), see also United States v.
Brown, 555 F.2d 407 (5th Cir. 1977), cert. denied, 435 U.S. 904 (1978); Bache Halsey
Stuart Shields Inc. v. Tracy Collins Bank & Trust Co., 558 F. Supp. 1042 (D. Utah 1983).
116. Forsythe, 560 F.2d 1127.
117. Id. at 1135.
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Civil RICO remedies are separate and distinct from the constituent
predicate offenses. 118 Thus, the focus should be on the RICO cause of
action rather than on the nature of the underlying predicate acts.
Defendants often characterize a civil RICO cause of action more
broadly by calling it a "penalty."U9 However, because of the rather
specific language expounding the remedial aspects of RICO,120 and in
deference to a difficu,lt history of construing treble damages under the
antitrust laws,121 it is unlikely that a federal court would agree with
this characterization. In fact, in every instance thus far, courts have
rejected such characterizations. 122 Other cases have utilized additional broad analogies, including "liability created by statute,123 either
state or federal," 124 and state civil RICO limitations. 125 Not all states
have specific alternatives, but many have a catch-all or residual statute
which could be applied when no apt analogy is present. 126 One court
has applied its residual statute of limitations in a RICO case stating:
the rights protected (and perhaps created) by RICO are not easily characterized. Because a RICO claimant must prove "racketeering" activity as part of its claim, RICO could be regarded as
an attempt to provide a civil remedy to victims of a newly-defined sort of economic crime. On the other hand, if the actual
118. See In re Longhorn Sec. Litigation, 573 F. Supp. 255 (W.D. Okla. 1983) (the
remedy is separate and distinct from the constituent predicate acts). But see Harco Graphics, No. 82-8188, Slip op. (RICO is merely a new way to enforce old statutes).
119. See Estate of Caton, 540 F. Supp. at 685.
120. "The provisions of this title . . . shall be liberally construed to effectuate its
remedial purposes." Pub. L. No. 91-452, § 904(a), 84 Stat. 947 (1970). See generally Note,
RICO and the Liberal Construction Clause, 66 CORNELL L. REV. 167 (1980) (Congress has
mandated that courts construe RICO broadly); Note, Civil RICO: The Temptation and
Impropriety of Judicial Restriction, 95 HARV. L. REV. 1101 (1982) (RICO offers plaintiffs
an expansive remedy due, in part, to Congress' expressed intent to create a powerful tool).
121. See generally Note, supra note 37, at 68; Note, supra note 40.
122. See Estate of Caton, 540 F. Supp. 673; D'/orio, 554 F. Supp. 222; Prudential
Lines, No. 80 Civ. 5853, Slip op. But see Summers v. FDIC., 592 F. Supp. 1240 (W.D.
Okla. 1984) (treble damages under RICO cannot be assessed against the FDIC).
123. Compton v. Ide, 732 F.2d 1429 (9th Cir. 1984).
124. Seawell v. Miller Brewing Co., 576 F. Supp. 424, 427 (M.D.N.C. 1983).
125. Delta Coal Program v. Libman, 554 F. Supp. 684 (N.D. Ga. 1982). Contra
D'Iorio, 554 F. Supp. 222 (rejecting state RICO which had no private civil cause of action).
126. For a general discussion of available limitations statutes, see Smith, Flanagan,
and Pastuszinski, The Statute of Limitations in a Civil RICO Suit for Treble Damages,
Techniques in the Investigation and Prosecution of Organized Crime: Materials on RICO, 2
PUBLICATION OF CORNELL INST. ON ORGANIZED CRIME 974, 1004 (G.R. Blakey ed.
1980); Note, supra note 37, at 69. One court has explicitly rejected such a broad or generic
approach to civil RICO, suggesting that "imposition of a single statute of limitations for all
RICO offenses would ignore considerable differences in the severity of various patterns of
racketeering activity." Harco Graphics, No. 82-8188, Slip op. at 9.
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injury becomes the focus of the characterization, RICO claims
could be treated as a special class of property damage or economic damage claims. The search for a precise definition may
be futile .... I must determine [which] common law pigeonhole would most nearly fit a RICO claim. 127
THE FEDERAL ALTERNATIVE
There is one solution that cannot be ignored. The courts are
not confined to choosing state statutes of limitation if an appropriate federal statute is available that is "actually designed to accommodate a balance of interests very similar to that at stake here."128
As discussed previously, the courts in criminal RICO have readily
adopted the federal criminal limitations period. 129 Prior to Erie
Railroad Co. v. Tompkins,130 federal courts felt compelled to apply
state statutes of limitation to federal claims. 131 Once freed from
this compulsion, courts focused on congressional intent with respect to limitations. 132 The general assumption giving rise to the
normative approach is that when Congress is silent about limitations in creating a federal cause of action, it intends that the courts
apply the most closely analogous statute of limitations under state
law. Although the extensive legislative history of RICO contains
interesting references to statutes of limitation, 133 it is devoid of indications that the absence of an explicit federal limitation period represents a conscious preference for borrowing state limitation
periods.
In Del Costello, the United States Supreme Court confirmed
that the search for a limitation period in a federal cause of action
that does not provide one is a federal process and that, under certain circumstances, federal law can provide a source for that limitation period. 134 Those circumstances include state law hostility to
the federal policy,135 interference with the efficient functioning of
federal litigation, 136 and the availability of a federal statute of limi127.
128.
129.
130.
131.
132.
133.
134.
135.
136.
Victoria Oil Co. v. Lancaster Corp., 587 F. Supp. 429, 431 (D. Colo. 1984).
Del Costello, 462 U.S. at 169.
See supra notes 116-117 and accompanying text.
304 U.S. 64 (1938).
See McClaine, 197 U.S. 154; Campbell, 155 U.S. 610; McCluny, 28 U.S. 270.
Del Costello, 462 U.S. at 159-61 n.13.
See infra notes 139-145 and accompanying text.
Del Costello, 462 U.S. 151.
Holmberg, 327 U.S. 392; Occidental Life Ins. Co., 432 U.S. 355.
McAllister, 357 U.S. 221.
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tations that presents a better analogy than any of the suggested
state law parallels. 137
The early cases focused on the predicate acts, rather than upon
the sui generis nature of civil RICO. In so doing, these courts mischaracterized the cause of action and failed to recognize a federal
limitation statute that stands as an apt analogy - the limitations
period for private antitrust treble damages actions. 138
Two factors support the use of the federal antitrust statute of
limitations as a limitation period for civil RICO actions. First,
RICO was originally proposed as part of the antitrust laws. 139
Under this proposal, RICO would have explicitly utilized the fouryear statute of limitations enacted as part of the antitrust laws in
1955. RICO legislation, however, developed independently of the
antitrust laws. 14O RICO originally contained a statute of limitations, but the 91st Congress deleted it along with all the private
civil remedies. 141 Although the private civil remedies were reincor137. Del Costello, 462 U.S. 151.
138. 15 U.S.C. § 15b (1982). One commentator has suggested that the appropriate
federal analogy is to the five-year statute of limitations governing the prosecution of noncapital criminal offenses, 18 U.S.C. § 3282 (1982). Note, Civil RICO: Searching for the
Appropriate Statute of Limitations in Actions Under Section 1964(c) 14 Loy. U. CHI. L.J.
765, 792 (1983). This approach also seems to mischaracterize the private treble damages
suit. It is not a criminal sanction, but a private remedy.
139. The original proposals of RICO-type legislation were Senate bills 2048 and 2049
in the 90th Congress. S. 2048, 90th Cong., 1st Sess. (1967); S. 2049, 90th Cong., 1st Sess.
(1967). These bills would have amended the Sherman Act to prohibit the investment of
unreported income in interstate business, and prohibited acquisition of a business affecting
interstate commerce with income derived from listed criminal activities. Companion bills
H.R. 11766 and H.R. 11268 were introduced in the House. H.R. 11766, 90th Cong., 1st
Sess., 113 CONGo REC 17976 (1967); H.R. 11268, 90th Cong., 1st Sess., 113 CONGo REC.
17976 (1967). For a comprehensive legislative history of RICO, see, Blakey, supra note 1;
Blakey & Gettings, supra note I.
140. Following a study by the Section of Antitrust Law of the ABA, a recommendation was made to separate the organized crime legislation from the antitrust statutes:
The Section of Antitrust Law recommends that the House of Delegates adopt the
attached resolution endorsing the principles and objectives ofS. 2048 and S. 2049,
and all similar legislation having the purpose of adapting the machinery of the
antitrust laws to the prosecution of organized crime, but recommending that any
such legislation be enacted as an independent statute and not be included in the
Sherman Act, or any other antitrust law.
Organized Crime Control Hearings on S.30 Before Subcommittee No.5. House Committee
on the Judiciary, 91st Cong., 1st Sess. 538 (1970).
141. Senate bill 1861, S. 1861, 91st Cong., 1st Sess. (1969), was introduced after initial committee hearings on its predecessor Senate bill 1623, S. 1623, 91st Cong., 1st Sess.
(1969). Senate bill S. 1861 deleted the provision for private civil remedies as did Senate bill
30, S. 30, 91st Cong., 1st Sess. (1969), which was the Organized Crime Control bill and
which contained Senate bills 1623 and 1861 as Title IX. The limitations period was four
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porated into the statute, this was accomplished in a bill that contained no statute of limitations. 142 A floor amendment was offered
to rectify the omission, but the amendment was later withdrawn
after a promise that the omission would be addressed. 143 The Senate subsequently passed two bills providing for a statute of limitations,l44 but the House never considered either bill. Given such an
inconclusive legislative history, it would be difficult to draw a reasoned inference from the non-existence of a specific limitation period in civil RICO actions. Accordingly, courts are left to the
"interstitial federal lawmaking [that] is a basic responsibility of the
federal courtS.,,14S
The second factor supporting the application of the federal antitrust statute of limitations to RICO is that they share the extraordinary remedy of treble damages. There is no question that
the private treble damages provision under RICO was modeled on
section 4 of the Clayton Act. 146 Although RICO was enacted apart
from the antitrust laws in order to avoid restrictive antitrust precedent, it seems compelling that a search for gap-filling in the remedial scheme should focus upon the statutory framework of the
antitrust treble damage action, including the statute of limitations.
The analogy of a civil RICO treble damage action to a private
antitrust treble damage action is better than almost any analogy to
state law. As multiple damage actions, both represent federal statutory causes of action which trace their origin to the Seventeenth
Century British Statute of Monopolies. 147 The federal limitations
statute was "actually designed to accommodate a balance of interyears in the original Senate bill 2049 and in Senate bill 1623. As proposed by Rep. Steiger
from the floor, House bill 19215, H.R. 19215, 91st Cong., 2d Sess., 116 CONGo REC. 31914
(1970), provided for a five-year statute of limitations. No explanation for this discrepancy
is apparent in the legislative history.
142. House bill 19586, H.R. 19586, 91st Cong., 2d Sess., 116 CONGo REC. 35242
(1970), was identical to Senate bill 30 except it contained provisions for private civil actions. It did not, however, contain specific provisions for a statute of limitations.
143. "I would hope that the gentleman might agree to ask unanimous consent to
withdraw his amendment from consideration with the understanding that it might properly
be considered by the Judiciary Committee when Congress reconvenes following elections or
some other appropriate time." 116 CONGo REC. 35346 (1970) (Statement of Representative
Polf).
144. S. 16, 92nd Cong., 2d Sess. (1972); S. 13, 93rd Cong., 1st Sess. (1973).
145. United States V. Little Lake Misere Land Co., 412 U.S. 580, 593 (1973).
146. Clayton Act, ch. 323, § 4,38 Stat. 731 (codified at 15 U.S.c. § 15(a) (1982».
147. The treble damages statutory remedy for undesirable economic activity can be
traced to a statute concerning monopolies passed by Parliament in 1623. It provided that
an individual injured in his business or property by a restraint of trade could bring suit and,
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ests very similar to [those] at stake"148 in a civil RICO action. Furthermore, the purposes of the antitrust treble damage action, to
compensate victims and to deter and deprive violators of the fruits
of their illegality,'49 are consistent with the purposes of RICO.
Enforcement under the private treble damages provision of the
antitrust laws was plagued by an inadequate legislative history concerning what statute of limitations to apply. ISO Courts were forced,
by Congressional default, to apply state statutes of limitations.
This created confusion, complication and conflict. 151 Using various
periods of limitation drawn from state law encourages forum shopping and inhibits enforcement of a uniform federal policy.1S2 To
put an end to the confusion and discrimination in antitrust litigation, Congress established a uniform statute of limitations "applicable to all private treble damages actions."ls3 In the process,
Congress considered the wide variance of state limitations available
for application and sought to balance the interests of plaintiffs, defendants, and the courts in the context of treble damages. The confusion, discrimination and lack of uniformity in RICO could just as
easily be resolved by applying the antitrust limitation statute to
RICO actions.
State law has served as a source of limitations because it always provides some analogy, no matter how inexact. Every state
has a limitations statute explicitly addressing statutory liability or
causes of action not otherwise covered. These statutes are, in fact,
the best state analogies to civil RICO claims, and a measure of staif successful, collect treble the amount of his damages from the perpetrator of the competitive activity. 21 JAC I c.3 (1623).
148. Del Costello, 462 U.S. at 169.
149. Montreal Trading Ltd. v. Amax, Inc., 661 F.2d 864 (10th Cir. 1981). "We need
a law upon this subject that will punish every man engaged in this business and that will
give an adequate remedy in a convenient jurisdiction to every person who is damaged by
these associations." THE LEGISLATIVE HISTORY OF THE ANTITRUST LAWS AND RELATED STATUTES 167 (E. Kintner, ed. 1978) (Statement of Senator Reagan).
150. See generally Note, supra note 37; Note, supra note 40.
151. S. REP. No. 619, 84th Cong., 1st Sess., reprinted in 1955 U.S. CODE CONGo &
AD. NEWS 2328, 2331.
152. Letter from Attorney General Herbert Brownell to Senator Harley M. Kilgore
(June 16, 1955), reprinted in 1955 U.S. CODE CONGo & AD. NEWS 2328, 2333.
153. S. REP. No. 619, supra note 151, at 2331:
It is one of the primary purposes of this bill to put an end to the confusion and
discrimination present under existing law where local statutes of limitations are
made applicable to rights granted under our Federal laws. This will be accomplished by establishing a uniform statute of limitations applicable to all private
treble damage actions as well as Government damage actions, of 4 years.
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bility could be gained by uniform characterization of civil RICO as
analogous to one of these. These statutes, however, are conceived
without consideration of national interests in mind. Additionally,
they constitute a reflection of only the most general repose policy of
the individual state. There is no compelling reason that they
should be preferred to an appropriate federal analogy. The unique
nature and purpose of the federal remedy and its breadth creates an
overriding interest in uniformity that demands application of federallaw to the question of limitations. 154
Stability and predictablility are goals of statutes of limitation.
The lack of an explicit limitation period for civil RICO action gives
rise to distracting disputes collateral to the merits. Congress
should move to settle this troublesome area before it becomes more
muddled and unmanageable. In the meantime, courts have the
flexibility, consistent with precedent and logic, to adopt the fouryear limitation period of the antitrust laws and to continue to develop federal theories of tolling, accrual, commencement, and
survival.
154. Cf Estate of Caton, 540 F. Supp. 673 (question of survival of cause of action).
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