Agency Holding Corp. v. Malley-Duff & Associates
In Agency Holding Corp. v. Malley-Duff & Associates, 483 U.S. 143 (1987) the Court considered the appropriate statute of limitations for civil enforcement actions under the Racketeer Influenced and Corrupt Organizations Act (RICO).
The Court began by noting that in the past, it had "generally concluded that Congress intended that the courts apply the most closely analogous statute of limitations under state law," but that courts are not always required to apply a state statute of limitations whenever a federal statute is silent on the question of limitations. (Agency Holding, 483 U.S. at 146.)
The Court then articulated the initial inquiry in determining the appropriate limitations period: "whether all claims arising out of the federal statute 'should be characterized in the same way, or whether they should be evaluated differently depending upon the varying factual circumstances and legal theories presented in each individual case,'" that is, whether one uniform limitations period should be applied to all claims that arise out of the statute.
Once the court has made this determination, the court must decide whether a federal or state limitations period should apply to such claims.
The federal Rules of Decisions Act generally requires the application of a state limitations statute, but in some limited circumstances, "'state statutes of limitations can be unsatisfactory vehicles for the enforcement of federal law,'" and in those circumstances, "'it may be inappropriate to conclude that Congress would choose to adopt state rules at odds with the purpose or operation of federal substantive law.'" (Agency Holding, 483 U.S. at 147.)
The Court stated that "the mere fact that state law fails to provide a perfect analogy to the federal cause of action is never itself sufficient to justify the use of a federal statute of limitations."
But it may be appropriate to borrow a limitations period from another federal statute "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."
Due to the nature of RICO claims, the federal courts had been inconsistent in how they approached selecting a statute of limitations to apply.
To be liable under 1962 of RICO, a person has to have engaged in a "pattern of racketeering," meaning at least two acts of racketeering activity.
The term "racketeering activity" encompasses numerous and diverse topics, across many areas of law, including nine state law felonies and over twenty-five federal statutes.
The types of acts constituting "racketeering activity" range from actions such as mail fraud and embezzlement to acts "generally associated with professional criminals such as arson, bribery, theft, and political corruption."
Thus, in trying to determine which state limitations period applies, a court could analogize a RICO claim to numerous causes of action with a multiplicity of applicable limitations periods.
The Court therefore needed to set a uniform statute of limitations for RICO claims to avoid "intolerable 'uncertainty and time-consuming litigation.'"
After determining that it needed to set one uniform limitations period to apply to all claims arising out of RICO, the Court ultimately concluded that the applicable limitations period should come from the federal Clayton Act 25 rather than from state law.
The Court placed particular importance on the "similarities in purpose and structure between RICO and the Clayton Act" and "the clear legislative intent to pattern RICO's civil enforcement provision on the Clayton Act," which the Court stated "strongly counseled in favor of" applying the Clayton Act's limitations period. (Id. at 150-52.)
The Court remarked that "this was especially true given the lack of any satisfactory state law analogue to RICO."
Unlike, for example, a claim under 42 U.S.C. 1983--the predicate acts of which "plainly sound in tort," making claims under that statute amenable to the application of a state's statute of limitations for tort claims--the predicate acts that give rise to a racketeering claim under RICO "cannot be reduced to a single generic characterization."
The Court also observed that because of the multi-jurisdictional nature of RICO cases, the practicalities of litigation provided an additional compelling reason for applying a federal statute of limitations.
Not only could a single claim be subject to multiple limitations periods within a jurisdiction, but because RICO cases are commonly based on interstate transactions, any one RICO claim could also be governed by the statute of limitations for multiple states.
In summary, because a claim under RICO could encompass numerous acts that would be subject to different statutes of limitations within a jurisdiction, the Court needed to establish a uniform limitations period to apply to all RICO claims.
Because a claim could be based on predicate acts that occurred in multiple jurisdictions, and because the statute itself was clearly patterned on a federal statute, the limitations period for that federal statute should apply to RICO claims.