Tafflin v. Levitt
107 L. Ed. 2d 887 · Supreme Court of the United States · 1990
Facts
Old Court Savings & Loan, Inc., a Maryland savings and loan association, failed, leading to the collapse of the Maryland Savings-Share Insurance Corp. (MSSIC), which insured Old Court accounts. Petitioners are nonresidents of Maryland who hold unpaid certificates of deposit issued by Old Court. Respondents include former officers and directors of Old Court and MSSIC, their law firm, their accounting firm, and the State of Maryland Deposit Insurance Fund Corp., the successor to MSSIC. Petitioners alleged various state law causes of action, as well as claims under the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Act (RICO).
Procedural history
Petitioners initially filed their claims in District Court. The District Court granted respondents’ motions to dismiss, concluding that petitioners failed to state a claim under the Exchange Act and that federal abstention was appropriate for other causes of action due to pending state court litigation, as state courts have concurrent jurisdiction over civil RICO claims. The Court of Appeals for the Fourth Circuit affirmed this decision. The Supreme Court granted certiorari to resolve a conflict among federal appellate courts and state supreme courts regarding concurrent jurisdiction over civil RICO claims.
Issue
The central legal question is whether state courts possess concurrent jurisdiction over civil actions brought under the Racketeer Influenced and Corrupt Organizations Act (RICO). This Court granted certiorari to resolve this specific question.
Holding
The Court held that state courts do have concurrent jurisdiction over civil RICO claims. Accordingly, the judgment of the Court of Appeals was affirmed.
Rule
Under the federal system, state courts have inherent authority and are presumptively competent to adjudicate claims arising under federal law, possessing concurrent jurisdiction. This presumption can only be rebutted by an explicit statutory directive, an unmistakable implication from legislative history, or a clear incompatibility between state-court jurisdiction and federal interests. The mere grant of jurisdiction to a federal court, as in RICO's § 1964(c), is permissive and does not automatically oust state courts. Legislative history for RICO shows no intent to divest state courts of jurisdiction, and borrowing language from the Clayton Act does not imply incorporating its jurisdictional implications. Concurrent jurisdiction is not incompatible with federal interests, as federal courts retain authority over federal criminal law interpretation, and state courts are guided by federal interpretations, with Supreme Court review available.
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