Rotella v. Wood

PETITIONER: Rotella
RESPONDENT: Wood
LOCATION: Nebraska General Assembly

DOCKET NO.: 98-896
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 528 US 549 (2000)
ARGUED: Nov 03, 1999
DECIDED: Feb 23, 2000

ADVOCATES:
Charles T. Frazier, Jr. - Argued the cause for the respondents
Richard P. Hogan, Jr. - Argued the cause for the petitioner

Facts of the case

Mark Rotella was admitted to a Brookhaven Psychiatric Pavilion in 1985 and discharged in 1986 after Brookhaven allegedly coerced him to stay longer than he intended. In 1994, the facility's parent company pleaded guilty to charges of fraud, conspiracy and violations of RICO, for giving physicians monetary incentives to needlessly admit, treat and retain patients at their hospitals. Rotella learned of the plea that same year, and in 1997 he filed a civil damages action under the Racketeer Influenced and Corrupt Organizations Act (RICO), claiming that the Brookhaven doctors and related business entities, had conspired to keep him hospitalized to maximize their profits. RICO makes it criminal "to conduct" an "enterprise's affairs through a pattern of racketeering activity." A "pattern" requires at least two acts of racketeering activity, the last of which occurred within 10 years after the commission of a prior act. Brookhaven countered that the statute of limitations under RICO had run on the charge. The District Court granted Brookhaven summary judgment on the ground that the 4-year limitation period for civil RICO claims had expired in 1990, four years after Rotella admitted discovering his injury. In affirming, the Court of Appeals rejected Rotella's argument that the limitations period does not begin to run until a plaintiff discovers (or should have discovered) both the injury and the pattern of racketeering activity.

Question

Does the four year statute of limitations on claims under the Racketeer Influenced and Corrupt Organizations Act begin to run before a claimant actually discovers that a defendant's racketeering activity caused the harm?

Media for Rotella v. Wood

Audio Transcription for Oral Argument - November 03, 1999 in Rotella v. Wood

Audio Transcription for Opinion Announcement - February 23, 2000 in Rotella v. Wood

William H. Rehnquist:

The opinion of the Court in No. 98-896, Rotella against Wood will be announced by Justice Souter.

David H. Souter:

This case comes to us on writ of certiorari to the United States Court of Appeals for the Fifth Circuit.

Petitioner Mark Rotella claimed that the respondents, the doctors and related companies had conspired to keep him hospitalized in order to maximize their profits back in 1985 and 1986.

Rotella discovered his injury in 1986.

In 1994, Rotella learned that the hospital’s parent company and one of its directors had pleaded guilty that he had a criminal fraud.

That fraud related to illegal agreements and improper relationships between the company and its doctors.

In 1997, Rotella filed a civil claim under the Racketeer Influenced and Corrupt Organizations Act known as RICO.

The District Court granted the respondents summary judgment on the ground that the four-year statute of limitations period for civil RICO claims had expired in 1990, four years after Rotella admitted discovery of his injury.

The Fifth Circuit affirmed.

In the unanimous opinion filed today with the Clerk of the Court, we affirm the judgment of the Fifth Circuit.

RICO makes it wrongful to conduct an enterprise’s affairs through a pattern of racketeering activity.

A pattern consists of at least two acts, the last of which occurred within ten years of a prior act.

In agency holding company against Malley-Duff & Associates, we adopted a four-year statute of limitations for civil RICO.

Rotella argues that the four-year period should start to run only when a plaintiff like him discovers both the injury and the pattern of racketeering activity, but we declined to adopt Rotella’s proposed injury and patterned discover rule.

To do that would extend the limitations period well beyond the time when a cause of action is complete and it would undermine the policies of repose and elimination of stale claims and the promotion of certainty.

It would also clash with the limitations imposed and anti-trust suits under the Clayton Act, which Congress relied on as an analogy when RICO was under consideration.

Both the Clayton Act and RICO share the objective of encouraging civil litigation not merely to compensate victims, but deterring the victims themselves into private attorney’s general undertaking litigation in the public good.

Such a benefit is better obtained sooner rather than later.

The Clayton Act analogy reflects Congress’ clear intent to reject a longer rule under RICO.

The fact that a RICO pattern maybe difficult to discover and often involves fraud is not enough to support the adoption of the rule that Rotella seeks.