Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


July 18, 1986


The opinion of the court was delivered by: LASKER


This lawsuit arises out of the events in the silver market during the 1970s and early 1980, including the dramatic rise in the price of silver in 1979 and the collapse of the market in March 1980, which have been the subject of detailed press coverage, books, congressional investigations, and much litigation. Rochelle Grosser, on behalf of herself and each person who held a long silver futures position between January 8, 1980 and March 27, 1980 (and who suffered a loss therefrom) *fn1" sues several commodities exchanges and clearinghouses as well as numerous firms and individuals for violations of various provisions of the Commodities Exchange Act ("CEA"), the antitrust laws, and the Racketeer Influenced and Corrupt Organizations Act ("RICO").

 The defendants, all but five of whom move to dismiss the claims against them in whole or in part, are: Commodity Exchange, Inc. ("Comex"), Comex Clearing Association, Inc. ("Comex Clearing"), Board of Trade of the City of Chicago ("CBOT"), Board of Trade of the City of Chicago Clearing Corporation ("CBOT Clearing") (collectively referred to as "the exchange defendants"); MidAmerica Commodity Exchange ("MACE"); *fn2" Nelson Bunker Hunt, William Herbert Hunt, Lamar Hunt, International Metals Investment Co., Ltd., Bache Group, Inc., Prudential-Bache Securities, Inc., Alvin Brodsky, Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch"), Melvin Schnell (collectively referred to as "the non-exchange defendants"); Sheik Mohammed Al Amoudi, Sheik Ali Bin Mussalem, Naji Nahas, Gilion Financial, Inc., and Banque Populaire Suisse. *fn3"

 The allegations of the amended complaint are accepted as true for the purposes of considering these motions to dismiss. See Cruz v. Beto, 405 U.S. 319, 322, 31 L. Ed. 2d 263, 92 S. Ct. 1079 (1972) (per curiam). The amended complaint asserts that the defendants, other than the exchanges and clearinghouses named in the complaint, engaged in a conspiracy to artificially increase the price of refined silver and silver futures contracts by

 purchas[ing] large amounts of silver futures contracts in the United States market, ... seiz[ing] control of suppliers of refined silver in the United States and of vault receipts relating to triple nine bars in the licensed depositories of the Comex and CBOT and thereby . . . prevent[ing] persons needing to liquidate silver futures contracts from doing so except at artificially inflated prices.

 Compl. P 38(c). According to the amended complaint, as a result of actions and transactions engaged in by these defendants, who held substantial "long positions" -- or commitments to take delivery -- and therefore stood to benefit from increases in the price of silver, the price of physical silver rose from $11 per ounce in September 1979 to $50 per ounce in mid-January 1980. Compl. PP 42-45.

 The amended complaint also alleges that the named exchanges

 negligently, willfully or in bad faith, and in concert, failed to take effective action to control rapidly rising silver prices even though they knew or recklessly ignored the fact that these prices were not the result of natural market forces, but were being caused by the unlawful scheme and conspiracy of the other Defendants.

 ... [T]he Exchanges continued to allow these other Defendants to use the facilities of the Exchanges without effecting regulatory controls, even though they were under a statutory duty to Plaintiff and other members of the investing public to prevent the manipulation.

 Compl. PP 63-64. The governing boards of the exchanges, according to the amended complaint, did not take decisive action until January 1980, when they instituted position limits and "liquidation only" rules which had the effect of causing the price of silver to fall precipitously, destroying the liquidity of the market, and allowing those holding "short positions" -- or commitments to make delivery -- to dictate the price of silver futures contracts. Compl. PP 67-69. It is alleged that certain members of the governing boards of the exchanges

 held short positions at times relevant to this action, and having been damaged by the rise in the price of silver futures contracts through January 20, 1980, individually and in concert, acting through the Exchanges, [by participating in and/or influencing such rule changes] sought to reverse such rise and cause the price of silver futures contracts to drop, to allow them to realize substantial profits and prevent them from facing impending bankruptcy.

 Compl. PP 70-71. The clearinghouses named as defendants in the complaint are alleged to have participated, individually and in concert, with the exchanges both in the failure to take action to maintain an orderly market prior to January 1980 and in the institution of the manipulative rule changes adopted in January 1980. Compl. P 77.

 Grosser, the representative of the proposed class and a resident of New Jersey, purchased two futures contracts on the MACE through her broker, Merrill Lynch: one contract of April 1980 silver on January 8, 1980, and one contract of June 1980 silver on January 28, 1980. Compl. § 37. Grosser's long silver positions were liquidated at losses of $16,030 and $23,870 on March 17 and May 14, 1980 respectively. Compl. PP 83-84.

 The amended complaint presents six claims. Compl. PP 85-99. The first asserts that all defendants other than the exchanges and clearinghouses named in the complaint conspired to manipulate and manipulated silver contract prices in violation of Section 9(b) of the CEA, 7 U.S.C. 13(b)(1982). The second alleges that all defendants, acting in concert, defrauded plaintiff and the silver and silver futures markets and deceived plaintiff in connection with the making of silver futures contracts in violation of Sections 4b and 4c of the CEA, 7 U.S.C. §§ 6b (1982) & 6c (1976 & Supp. V 1981). The third claim charges all defendants with engaging in a conspiracy to unreasonably restrain interstate trade in silver and silver futures contracts with the intention and effect of raising and fixing the price of silver in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (1982). The fourth charges all defendants with attempting to monopolize trade in silver in violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. The fifth claim alleges that the exchanges and clearinghouses named as defendants in the complaint willfully in bad faith and/or recklessly violated Sections 5(d) and 5a(8) of the CEA, 7 U.S.C. §§ 7(d) (1982) & 7a(8) (1976), which concern the requirement that the governing board of an exchange provide for the prevention of the manipulation of prices and the cornering of any commodity, and the obligation of an exchange to properly enforce trading rules. The sixth asserts that all defendants other than the exchanges and clearinghouses engaged in a pattern of racketeering activity comprised of acts of mail and wire fraud in violation of the RICO statute, 18 U.S.C. § 1962 (1982).

 The amended complaint seeks treble damages under the third and fourth claims pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15(a) (1982), and under the sixth claim pursuant toRICO, 18 U.S.C. § 1964(c).

 A number of motions to dismiss the amended complaint based on a variety of theories are now before the court. A resume of the various motions by the several groups of moving defendants is set out in the margin. *fn4" At this time we reach only those issues which are dispositive of the pending claims.

 Statute of Limitations

 1. CEA Claims

 All moving defendants contend that plaintiff's CEA claims are time-barred. Defendants argue that in selecting a limitations period applicable to the claims brought under the CEA -- which at the time Grosser traded provided no statute of limitations -- the court should apply either the two-year period found in other sections of the CEA or, in the alternative, the two and three-year statutes of limitations provided by the blue sky laws of New Jersey and Illinois respectively. Grosser contends that the applicable limitations period is New York's six-year statute of limitations for common law fraud.

 The amended complaint alleges that Grosser liquidated the later of her two long silver positions on the MACE at a loss on May 14, 1980. Compl. P 84. The complaint was filed on January 18, 1984. It follows, and the parties agree, that the CEA claims would be time-barred under defendants' suggested two and three-year limitations periods but would survive under plaintiff's proffered six-year period.

 Where a federal cause of action is not governed by any expressly applicable statute of limitations, a federal court must "'borrow' the most suitable statute or other rule of timeliness from some other source." DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 158, 76 L. Ed. 2d 476, 103 S. Ct. 2281 (1983). Although federal courts in such a situation have generally "looked to the limitation periods of their forum states governing the most nearly analogous cause of action," Bache Halsey Stuart, Inc. v. Namm, 446 F. Supp. 692, 693 (S.D.N.Y. 1978) (implied right of action under the CEA), the Supreme Court has stated:

 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 hesitated to turn away from state law.

 DelCostello, 462 U.S. at 171-72.

 The exchange defendants argue that the most suitable rule of limitations for a private right of action under the CEA is the two-year period already embodied in the regulatory scheme in CEA Section 14(a), 7 U.S.C. 18(a)(1982), governing administrative reparations proceedings, and Section 22(c), 7 U.S.C. § 25(c) (1982), governing express private rights of action created by the 1982 amendments to the CEA.

 We recently had occasion to consider this very argument in Fustok v. ContiCommodity Services, Inc., 618 F. Supp. 1076, 1078-80 (S.D.N.Y. 1985). In Fustok we noted the defendants' contention that the administrative reparations proceeding provided by Section 14(a) is a closely related form of relief under the CEA but found that no reported decision had apparently ever applied the two-year limitation period from Section 14(a) to an implied private right of action, even though the provision had been in existence since 1974. Rather, courts had consistently adhered to the practice of borrowing state statutes of limitation to implied rights of action brought under the CEA, before and after the Supreme Court's decision in DelCostello and the passage of the 1982 amendment to the CEA creating an express private right of action with a two-year statute of limitations.

 Moreover, although we recognized in Fustok that it might be permissible to consider the 1982 amendment in attempting to divine the pre-1982 intent of Congress as to the appropriate limitations period for an earlier-accruing implied right of action, *fn5" we held that the controlling law of the circuit precluded the application of the new two-year federal limitations period to a pre-amendment cause of action. We noted that the Court of Appeals for the Second Circuit in EEOC v. Enterprise Association Steamfitters Local 638, 542 F.2d 579 (2d. Cir., 1976), cert. denied, 430 U.S. 911, 51 L. Ed. 2d 588, 97 S. Ct. 1186 (1977), reversed the application of a statute of limitations which was enacted by Congress after the plaintiffs in that case had initiated their actions, holding that "the subsequent enactment cannot be indicative of prior congressional intent," id. at 590, and applied instead the most analogous state statute of limitations.

 Defendants in this case have presented no reason to depart from the decision reached in Fustok not to borrow the two-year limitations period from federal law. Accord Bartels v. Clayton Brokerage Co., 631 F. Supp. 442, 447-48 (S.D.N.Y. 1986). Furthermore, this is not in our view a case in which "[s]tate limitations periods [should] not be borrowed [because] their application would be inconsistent with the underlying policies of the federal statute," Occidental Life Insurance Co. v. EEOC, 432 U.S. 355, 367, 53 L. Ed. 2d 402, 97 S. Ct. 2447 (1977), at least as to its statute of limitations. Indeed, the limitations periods that defendants themselves suggest be borrowed from analogous state statutes are equivalent to or only slightly longer than the two-year limitations period Congress has expressly approved for post-enactment private rights of action under the CEA.

 In contrast to Fustok, however, where the parties appeared to agree that New York statutes of limitations should provide the time periods if state law were to be consulted, the parties in this case disagree about the state from which a rule of limitation should be borrowed. A federal court in such a situation must look to the law of the state in which it sits, Hollander v. Brezenoff, 787 F.2d 834, 837 (2d Cir. 1986), and that law includes the forum state's borrowing statute if one exists, see Cope v. Anderson, 331 U.S. 461, 91 L. Ed. 1602, 67 S. Ct. 1340 (1947).

 New York's borrowing statute provides:

 An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.

 N.Y. Civ. Prac. Law § 202 (McKinney 1972). Since Grosser is a nonresident, the borrowing statute's final exception clause does not apply in this case. The question presented is whether plaintiff's causes of action under the CEA accrued outside of New York. If they did, the court must determine, both for the foreign state and New York, the limitations period governing the state cause of action most analogous to the federal claim and then apply the shorter of the two. If, on the other hand, plaintiff's causes of action accrued in New York, the court simply applies the most appropriate New York limitations period.

 The Court of Appeals for the Second Circuit has consistently held that for purposes of applying the New York borrowing statute, a cause of action in tort accrues at the "place of injury." See Stafford v. International Harvester Co., 668 F.2d 142, 148-50 (2d Cir. 1981) (negligence and strict liability); Industrial Consultants, Inc. v. H.S. Equities, Inc., 646 F.2d 746, 747 (2d Cir.) (securities fraud), cert. denied, 454 U.S. 838, 70 L. Ed. 2d 120, 102 S. Ct. 145 (1981); Arneil v. Ramsey, 550 F.2d 774, 779-80 (2d Cir. 1977) (securities fraud); Sack v. Low, 478 F.2d 360, 365-68 (2d Cir. 1973) (Friendly, C.J.) (violations of federal securities laws). Under the "place of injury" rule, a cause of action for fraud *fn6" is considered accrue to where the loss is sustained, and the loss "is deemed to be suffered where its economic impact is felt, normally the plaintiff's residence." Sack v. Low, 478 F.2d at 366. It has been recognized, however, that "the plaintiff's residence need not necessarily be the situs of the economic impact of the fraud, and the court can properly consider all relevant factors in determining where the loss is felt." Lang v. Paine, Webber, Jackson & Curtis, Inc., 582 F. Supp. 1421, 1425 (S.D.N.Y. 1984). A court in a case such as this can consider how and where plaintiff paid for the securities, where plaintiff maintained the trading account in which the loss was reflected, and the manner in which the securities were handled in determining where the cause of action accrued. See Sack v. Low, 478 F.2d at 367-68.

 Defendants suggest that in this case there are only two states in which the cause of action can be said to have accrued under the "place of injury" test: New Jersey and Illinois. Defendants' position has merit. Grosser is a resident of New Jersey, and to the extent she suffered a financial loss as a result of her futures transactions, she suffered it in New Jersey. There is no indication Grosser made her financial base or conducted her trading activities in any state other than New Jersey. To paraphrase the language in Arneil v. Ramsey, 550 F.2d at 780, when Grosser became a poorer investor, she became a poorer New Jerseyite. Alternatively, Grosser's injury might be considered to have occurred when she liquidated her futures contracts at a loss on the MACE in Illinois. In a sense, her liability on her long futures position ripened when her open positions were closed by offsetting sales in the spring of 1980 on the MACE.

 The next task is to determine which New Jersey and Illinois limitations periods would apply to plaintiff's CEA claims. A number of courts have held, in the absence of a state commodity fraud statute, that state blue sky laws provide the closest analogy to CEA claims and thus that state securities law statutes of limitations should be applied to federal causes of action brought under the CEA. See, e.g., Boulder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., [1982-84 Transfer Binder]Comm. Fut. L. Rep. (CCH) P 22,071 (D.Md. 1984) (CEA claim more analogous to state securities fraud than common law fraud since CEA and Maryland blue sky law are "both regulatory statutes designed to protect investors"); Shelley v. Noffsinger, 511 F. Supp. 687 (N.D.Ill. 1981) (citing Smith v. Groover, 468 F. Supp. 105, 119-20 (N.D.Ill. 1979)); Grayson v. ContiCommodity Services, Inc., [1977-80 Transfer Binder]Comm. Fut. L. Rep. (CCH) P 20,858 (D.D.C. 1979) (both local blue sky law and CEA "directed at fraud in connection with trading in regulated and specialized market, rather than at fraud in general"). The courts have employed the blue sky analogy even in situations in which the allegations in the complaint might not state a claim under the state statute. See Grayson, P 20,858 at 23,521; Smith v. Groover, 468 F. Supp. at 122-23.

 Both New Jersey and Illinois have blue sky laws, each of which provides the closest state law analog to plaintiff's CEA claims. The New Jersey Uniform Securities Law, N.J. Stat. Ann. § 49:3-47 to 76 (West 1970), provides a two-year statute of limitations for civil actions brought under its provisions. Id. at § 49:3-71(e). The Illinois Securities Law of 1953, Ill. Rev. Stat. ch. 121 1/2, § 137.1-19 (1974), specified at the time relevant to this action a three-year statute of limitations for civil actions brought under the statute. Id. at § 137.13(D). *fn7"

 Assuming without deciding that the plaintiff's suggested six-year statute of limitations governing fraud actions, N.Y. Civ. Prac. Law 213(8) (McKinney Supp. 1986), is the most appropriate limitations period under New York law, the borrowing statute requires the application of the shorter New Jersey or Illinois limitations periods to plaintiff's CEA claims. Under either of those states' statutes of limitations, plaintiff's claims are time-barred.

 Plaintiff opposes this result on two grounds. First, she argues that her claim actually accrued in New York and that accordingly no comparison of New York's limitations period with that of New Jersey or Illinois is required under the New York borrowing statute. She contends that her cause of action should be found to have accrued in New York because (a) New York was the headquarters of the brokerage house through which she traded, the center of the alleged conspiracy to manipulate silver prices, and the place where the main effects of the market disruption were felt; (b) New York is the state having the greatest concern with the issues raised in this litigation; and (c) where federal claims are involved, federal courts should not be bound to construe borrowing statutes in accord with state interests such as protecting state defendants from forum-shopping plaintiffs but rather should apply the broadest statute of limitations necessary to effectuate the purpose of the federal statute.

 These arguments misconstrue the law. Facts such as the principal place of business of a key defendant and the place where a conspiracy was centered might well have a bearing upon a choice of law analysis under a "grouping of contacts" or "center of gravity" approach, but they are decidedly irrelevant to a determination of where a cause of action accrues under New York's borrowing statute according to the "place of injury" rule. See Sack v. Low, 478 F.2d at 365-66 ("cause of action accrues for purposes of the borrowing statute in the state where the injury is suffered rather than where the defendant committed the wrongful acts"). Likewise, although considerations of which state has the greatest concern with the subject of the litigation may have everything to do with the modern conflict of laws doctrine espoused by the New York Court of Appeals in other contexts, see Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985) (applying "interest analysis" approach), the district courts in this circuit continue to be bound by the prediction (in the absence of state case law directly on point) of the Second Circuit Court of Appeals that for purposes of applying the borrowing statute the New York Court of Appeals would specify as controlling the place of injury in order to determine where a cause of action accrues. See, e.g., Bank of Boston International v. Arguello Tefel, 626 F. Supp. 314, 316-17 (E.D.N.Y. 1986); Avagliano v. Sumitomo Shoji America, Inc., 614 F. Supp. 1397, 1404-05 (S.D.N.Y. 1985); In Re "Agent Orange" Product Liability Litigation, 597 F. Supp. 740, 800-02 (E.D.N.Y. 1984); Lang v. Paine, Webber, 582 F. Supp. at 1424-25; Maiden v. Biehl, 582 F. Supp. 1209, 1212 (S.D.N.Y. 1984).

 To plaintiff's contention that federal courts adjudicating federal claims should not construe the borrowing statute in such a way as to further the state policy "to protect New York resident-defendants from suits in New York that would be barred by shorter statutes of limitations in other states where non-resident plaintiffs could have brought suit," Sack v. Low, 478 F.2d at 367, but rather should interpret it in a way that results in the application of the broadest statute of limitations which would effectuate the purpose of the federal statute, there are two responses. First, all but one of the governing decisions of the Second Circuit Court of Appeals in this area concerned federal claims, and the Court still applied the "place of injury" rule. Second, it is difficult to see the validity in this case of an argument, on policy grounds, for the application of the longest statute of limitations which could conceivably result under the borrowing statute, when the New Jersey and Illinois limitations periods that would otherwise apply to Grosser's claims themselves equal or exceed the period adopted by Congress in 1982 for private CEA actions.

 The second ground on which plaintiff opposes the application of the New Jersey and Illinois limitations periods is the holding by the Court of Appeals for this circuit in Stafford v. International Harvester Co., 668 F.2d 142 (2d Cir. 1981), that "New York's borrowing statute does not require the application of the statute of limitations of a jurisdiction if the cause of action could never have been brought in that jurisdiction." Id. at 152. In essence, plaintiff claims that because personal jurisdiction could not be asserted over all the defendants in this action by the courts of either New Jersey or Illinois, her cause of action cannot be said to have accrued in those states and that the borrowing statute therefore requires application of a New York rule of limitation.

 Plaintiff correctly describes Stafford 's teaching that insofar as the purpose of the borrowing statute is "to prevent a plaintiff from forum shopping, it makes no sense at all to apply the shorter limitation of a state where the defendant could not have been sued." Id. at 152. She misreads the decision, however, to the extent that she finds support there for the proposition that it makes no sense to apply the shorter limitations periods of states where all the defendants could not have been sued. Rather, Stafford only requires that as to the claims asserted against each defendant, suit could have been brought in the foreign state from which a rule of limitation is borrowed according to N.Y. Civ. Prac. Law § 202. Indeed, Stafford itself held that the borrowing statute required application of the appropriate Pennsylvania statute of limitations to the claims against a defendant the parties agreed was amenable to suit in that state but not to the claims against a defendant the parties conceded could not have been sued there. Stafford, 668 F.2d at 150-54; see Bank of Boston International, 626 F. Supp. at 318 (applying Stafford).

 In this case, but for the Stafford rule, Grosser's CEA claims accrued for borrowing statute purposes in New Jersey or Illinois. Plaintiff does not contend that her claims accrued in one of the two states rather than the other under the "place of injury" rule. The question, then, as to each defendant, is whether personal jurisdiction could have been properly asserted in either New Jersey or Illinois. *fn8" If so, the borrowing statute applies and the CEA claims are barred.

 Plaintiff has failed to come forward with any evidence whatsoever that particular moving defendants would not be amenable to suit in either New Jersey or Illinois. As we see it, the burden of proving lack of amenability to suit or lack of personal jurisdiction rests on plaintiff, who seeks to benefit from what she contends is New York's longer limitations period by invoking a judicially crafted exception to the applicability of the borrowing statute. Cf. Bache Halsey Stuart, Inc. v. Namm, 446 F. Supp. 692, 694 (S.D.N.Y. 1978) (burden of proving residence on party seeking to benefit from New York's longer limitation period). Consequently, we cannot say the Stafford rule precludes the general application of the New Jersey and Illinois limitations periods to plaintiff's CEA claims.

 Thus, we conclude that Grosser's CEA claims against the moving defendants are barred by the two-and three-year statutes of limitations contained in the New Jersey and Illinois blue sky laws respectively.

 2. RICO claims

 The non-exchange defendants also contend that plaintiff's RICO claims are time-barred. Since RICO does not contain its own statute of limitations for civil actions, the same procedure followed above with regard to the CEA claims must be employed to fill the gap in the federal law. The parties apparently agree that in this situation the court must select the most appropriate limitations period provided by state law.

 The very same considerations discussed above with respect to the borrowing statute require that under the circumstances of this case it be determined which New Jersey and Illinois statutes of limitations would govern plaintiff's RICO claim. A federal district court in Illinois recently considered this question as an issue of first impression. See Electronic Relays (India) Pvt., Ltd. v. Pascente, 610 F. Supp. 648 (N.D.Ill. 1985). In Electronic Relays the court was guided by Wilson v. Garcia, 471 U.S. 261, 105 S. Ct. 1938, 85 L. Ed. 2d 254 (1985), which directed lower federal courts faced with a borrowing question involving a civil rights action under 42 U.S.C. § 1983 "to select, in each State, the one most appropriate statute of limitations for all § 1983 claims." Id. at 1947. In characterizing the essence of a civil RICO claim in order to select the most appropriate Illinois limitations period, the Electronic Relays court stated:

 Congress viewed the treble damages provision as civil RICO's most distinctive feature. That suggestion is certainly consistent with the nature of RICO. In most, if not all, RICO cases there exist state-law remedies for the same conduct that forms the basis of the RICO count. RICO's attractiveness, what sets it apart from the other available legal theories, is not the wrong but the remedy. Thus, to the extent Congress had any intent in adding the civil provisions to RICO, Congress intended the treble damages provision to provide the incentive necessary to cause private citizens to assist the government in eradicating organized crime. Therefore, this court concludes that for purposes of choosing the proper statute of limitations RICO should be characterized as a treble damages action.

 610 F. Supp. at 651. The district court accordingly concluded that the most appropriate Illinois limitations period for all federal civil RICO actions is the two-year statute of limitations governing "[a]ctions for damages ... for a statutory penalty," Ill. Ann. Stat. ch. 110, P 13-202 (Smith-Hurd 1984). Id. at 652. *fn9" The same statute of limitations had earlier been applied to treble-damage actions brought under the federal antitrust laws in Illinois before Congress enacted a specific federal limitations period to govern such actions. See id. (citing Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., 191 F.2d 912 (7th Cir.), cert. denied, 342 U.S. 947, 96 L. Ed. 704, 72 S. Ct. 555 (1951)).

 We recognize that the result reached by the Illinois district court may at first blush appear at odds with our decision in Fustok, 618 F. Supp. 1076 (S.D.N.Y. 1985), that the most appropriate RICO limitations period under New York law was the six-year period for fraud actions rather than the three-year period for actions to recover upon a liability, penalty, or forfeiture created or imposed by statute. In the case at hand, we believe it highly appropriate to follow the determination of the federal court in Illinois: not only because that court is better situated to decide questions involving Illinois state law but also because the whole purpose of the New York borrowing statute is to take account of the statutes of limitations that would actually confront a plaintiff suing in another jurisdiction. It is precisely a federal district court in Illinois -- to which such a federal RICO claim would be brought -- which would decide in the first instance what limitations period applies. These considerations did not arise in Fustok, a case in which we were called upon only to determine which New York statute of limitations governed. In sum, we find that the Illinois limitations period which should apply to plaintiff's RICO claims is the two-year period provided by Ill. Ann. Stat. ch. 110, P 13-202.

 In New Jersey the slate of decisional law is still clean on the subject of which state limitations period or periods should be applied to federal RICO actions. The non-exchange defendants argue, however, that a two-year New Jersey statute of limitations which is similar to the aforementioned Illinois law would likely be applied to RICO claims brought in New Jersey. They reason that because N.J. Stat. Ann. 2A:14-10 (West 1952), governing "actions at law brought for any forfeiture upon any penal statute," like the Illinois provision, had in the past been applied to federal antitrust claims, see Gordon v. Loew's Inc., 247 F.2d 451 (3d Cir. 1957), the two-year New Jersey limitations period is the most appropriate rule to apply to RICO actions as well.

 The task of a federal court in New York, attempting at the direction of the forum state's borrowing statute to divine the result likely to be reached by a federal court sitting in another state after searching its own forum's law for the limitations period most appropriately applied to a federal cause of action is, to say the least, convoluted and not a little artificial. The task is further complicated by awareness that if and when the Supreme Court confronts the issue of how to borrow limitations periods for RICO actions, it may not decide (as it did with respect to Section 1983 actions) that "a simple, broad characterization of all [RICO] claims best fits the statute's remedial purpose," Wilson v. Garcia, 105 S. Ct. at 1945, but rather that the "choice of the correct statute of limitations [should be predicated] on an analysis of the particular facts of each claim," id. As the survey of case law conducted by the Electronic Relays court revealed, many courts have chosen to characterize RICO actions according to the particular facts pleaded as predicate acts. See Electronic Relays, 610 F. Supp. at 650-51; see also Fustok, 618 F. Supp. at 1080-81 ("weight of authority appears to lean in favor of the particularistic approach, at least when the gravamen of the RICO complaint is fraud").

 This said, the argument for the selection of New Jersey's two-year statute of limitation is nevertheless persuasive. Both the Third and Seventh Circuit Courts of Appeals, in deciding many years ago to apply the respective New Jersey and Illinois two-year statutes of limitations to federal antitrust claims, employed virtually identical reasoning in characterizing the treble-damage remedy as the salient feature of antitrust actions and in drawing upon state court decisions which had applied the two-year limitation period to analogous state causes of action. Compare Gordon, 247 F.2d at 455-57, with Hoskins, 191 F.2d at 913- 14. Gordon even refers, exclusively, to the similar conclusions reached by the Seventh Circuit Court of Appeals in Hoskins as support for its result. See Gordon, 247 F.2d at 457. The antitrust laws and the racketeering statute, while quite different in their genesis and elements, are nonetheless analogous in their dual criminal/civil aspects, their venue provisions, and their private treble-damage remedies. With little more to go on than this historical analogy, we find that the New Jersey limitations period which should apply to plaintiff's RICO claims is the two-year period provided by N.J. Stat. Ann. 2A:14-10.

 The parties disagree on the applicable New York limitations period. Predictably, the non-exchange defendants argue for the three-year period of N.Y. Civ. Prac. Law § 214(2) (McKinney 1972), governing actions to recover upon a liability, penalty or forfeiture created or imposed by statute, while plaintiff urges the court to apply the six-year period of Section 213(8), governing actions based on fraud. However, even assuming without deciding that the plaintiff's suggestion is the more appropriate limitation period for a federal civil RICO claim brought in New York, the borrowing statute requires the application of the shorter New Jersey or Illinois limitations periods to plaintiff's RICO claims, and under either of those states' statutes of limitations, plaintiff's claims are time-barred. Thus, Grosser's RICO claims against the moving defendants are barred by the two-year limitations periods applicable under New Jersey and Illinois law.

 Personal Jurisdiction and Venue as to MACE

 MACE alone among the defendants moves to dismiss the complaint for lack of personal jurisdiction and improper venue. MACE contends that it is not subject to personal jurisdiction in this state under New York's long-arm statute, *fn10" that the nationwide service of process provisions of the antitrust laws are of no avail to Grosser since she fails to state a claim for relief under the antitrust laws, and that, even if the court ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.