R. ABCARIAN; R. REYES; H. REYES; J. PETRIE, Plaintiffs-Appellants, v. MELDON EDISES LEVINE; WILLIAM WATSON FUNDERBURK, JR.; JILL BANKS BARAD; MICHAEL F. FLEMING; CHRISTINA E. NOONAN; DAVID H. WRIGHT; MARCIE L. JAMES-KIRBY EDWARDS; JOSEPH A. BRAJEVICH; ERIC GARCETTI; GILBERT CEDILLO; PAUL KREKORIAN; BOB BLUMENFIELD; DAVID E. RYU; PAUL KORETZ; NURY MARTINEZ; FELIPE FUENTES; MARQUEECE HARRIS-DAWSON; CURREN D. PRICE; HERB J. WESSON, JR.; MIKE BONIN; MITCHELL ENGLANDER; MITCH O‘FARRELL; JOSE HUIZAR; JOE BUSCAINO; MICHAEL NELSON FEUER; AND JAMES PATRICK CLARK, Defendants-Appellees.
No. 19-55129
United States Court of Appeals for the Ninth Circuit
August 25, 2020
D.C. No. 2:16-cv-07106-FMO-JPR
FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
R. ABCARIAN; R. REYES; H. REYES; J. PETRIE, Plaintiffs-Appellants, v. MELDON EDISES LEVINE; WILLIAM WATSON FUNDERBURK, JR.; JILL BANKS BARAD; MICHAEL F. FLEMING; CHRISTINA E. NOONAN; DAVID H. WRIGHT; MARCIE L. JAMES-KIRBY EDWARDS; JOSEPH A. BRAJEVICH; ERIC GARCETTI; GILBERT CEDILLO; PAUL KREKORIAN; BOB BLUMENFIELD; DAVID E. RYU; PAUL KORETZ; NURY MARTINEZ; FELIPE FUENTES; MARQUEECE HARRIS-DAWSON; CURREN D. PRICE; HERB J. WESSON, JR.; MIKE BONIN; MITCHELL ENGLANDER; MITCH O‘FARRELL; JOSE HUIZAR; JOE BUSCAINO; MICHAEL NELSON FEUER; AND JAMES PATRICK CLARK, Defendants-Appellees.
No. 19-55129
D.C. No. 2:16-cv-07106-FMO-JPR
OPINION
Appeal from the United
Argued and Submitted October 15, 2019 Pasadena, California
Filed August 25, 2020
Before: Kim McLane Wardlaw and Daniel P. Collins, Circuit Judges, and Benjamin H. Settle,* District Judge.
Opinion by Judge Collins
SUMMARY**
Hobbs Act / RICO / Johnson Act
The panel affirmed the district court‘s dismissal of an action in which customers claimed that the Los Angeles Department of Water and Power overcharged for electric power and then transferred the surplus funds to the City of Los Angeles, thereby allowing the City to receive what amounted to an unlawful tax under California law.
The panel affirmed the district court‘s dismissal of plaintiffs’ claim under the Hobbs Act, which imposes criminal punishment for the taking of property by extortion. Agreeing with other circuits, the panel held that the Hobbs Act does not create a civil cause of action.
The panel affirmed the dismissal of plaintiffs’ RICO claim for reasons different from those given by the district court. The panel held that municipal entities are not subject to liability under RICO when sued in their official capacities, but here the RICO claims were asserted against the defendant City and DWP officials in their personal capacities. Nonetheless, the RICO claim failed as a matter of law because it did not adequately allege a predicate act in extortion under California law or the Hobbs Act, mail and wire fraud, or obstruction of justice.
The panel affirmed the dismissal of plaintiffs’ claims under
COUNSEL
Marion R. Yagman (argued) and Joseph Reichmann, Yagman & Reichmann, Venice Beach, California, for Plaintiffs-Appellants.
Michael Martin Walsh (argued), Deputy City Attorney; Blithe S. Bock, Managing Assistant City Attorney; Michael N. Feuer, City Attorney; Office of the City Attorney, Los Angeles, California; for Defendants-Appellees.
OPINION
COLLINS, Circuit Judge:
Plaintiffs are customers of the Los Angeles Department of Water and Power (“DWP“) who claim that DWP overcharged for electric power and then transferred the surplus funds to the City of Los Angeles (“City“), thereby allowing the City to receive what amounts to an unlawful tax under California law.1 Plaintiffs brought suit in federal court, asserting claims under the Hobbs Act, the Racketeer Influenced and Corrupt Organizations Act (“RICO“), and
I
In reviewing the district court‘s dismissal under
A
DWP is governed by a Board of Water and Power Commissioners composed of five members who are ordinarily appointed by the Mayor with the approval of the City Council. See L.A. City Charter §§ 502(a), 670. Under the City Charter, the Board fixes the rates to be charged to DWP customers for electric power, “[s]ubject to approval by ordinance” of the City Council. See id. § 676(a); see also id. § 675(b)(3).
The Charter provides, however, that if there is a “surplus” in the Power Revenue Fund at the end of the City‘s fiscal year on June 30, then the City Council, acting by ordinance and with the consent of the Board, may direct that the surplus be transferred to the City Treasury‘s Reserve Fund. Id. § 344(a), (b); see also id. § 310 (City‘s fiscal year runs from July 1 through June 30 of the following year). The Reserve Fund may be used for “unanticipated expenditures and revenue shortfalls in the City‘s General Fund,” id. § 302(b); however, with the Mayor‘s consent (or a two-thirds vote), the City Council may approve a transfer of funds from the Reserve Fund to the City‘s General Fund, id. § 341. See also id. § 679(c)(9) (expressly authorizing transfers, under these procedures, from the Power Revenue Fund “to the City General Fund“). For purposes of a potential transfer, a “surplus” is defined as “the amount remaining in the ... Power Revenue Fund, less outstanding demands and liabilities payable out of the fund ... as shown by audited financial statements.” Id. § 344(b)(1). However, if the Board concludes that such a transfer would have “a material negative impact on [DWP‘s] financial condition in the year in which the transfer is to be made,” then the Board can approve or disapprove the proposed transfer in whole or in part. Id. § 344(b)(2), (3).
At the time that the district court ruled in this case, the applicable rates for DWP electric power services were set by a combination of two City ordinances, one of which had been adopted in 2008, and the other in 2016. The 2016 ordinance, in turn, completely superseded a prior 2012 ordinance. All three ordinances were adopted by the City Council, and approved by the Mayor, after a series of at least three public meetings—one before the Council‘s Energy and Environment Committee to consider the rates, another before the full Council to consider the rates, and a final Council meeting to formally approve the ordinance setting the rates.2
Since at least 2010, the rates that DWP has charged its utility customers for electric power have exceed DWP‘s costs for providing that service, thereby yielding a surplus at the end of the fiscal year. Accordingly, each year over the same time period, the City Council, with the approval of the Board, has approved a transfer of surplus moneys from the Power Revenue Fund to the City‘s General Fund. The amounts transferred from the Power Revenue Fund have ranged from $254 million to $300 million.
B
Plaintiffs R. Abcarian, R. Reyes, H. Reyes, and J. Petrie3 are individuals who
exaction of any kind imposed by a local government,” except for, inter alia, a “charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.” See
On September 21, 2016, Plaintiffs filed a putative class action complaint against various City and DWP officials, alleging that DWP “illegally overcharges its customers” for electric service and that the defendants were liable to ratepayers on a variety of federal and state-law grounds. Plaintiffs sought a preliminary injunction shortly thereafter, and Defendants opposed that motion and moved to dismiss or stay the action. Defendants’ motion argued, among other grounds, that the case should be stayed or dismissed under Colorado River Conservation District v. United States, 424 U.S. 800 (1976), in light of a parallel state court class action challenging the legality of the City‘s electric rates under Article XIII C, see Eck v. City of Los Angeles, No. BC577028 (L.A. Super. Ct.). On November 28, 2016, the district court stayed this case pending resolution of Eck, concluding that Plaintiffs’ action “is essentially a dressed-up version of the Eck complaints.” In light of the stay, the district court denied Plaintiffs’ request for a preliminary injunction. Shortly thereafter, the district court denied Plaintiffs’ separate motion to enjoin the Eck action. Plaintiff appealed these orders, and we affirmed. See Abcarian v. Levine, 693 F. App‘x 487 (9th Cir. 2017). Our memorandum affirming the district court‘s orders expressed no view of the underlying merits of Plaintiffs’ claims.
After the state court subsequently granted preliminary approval for a class action settlement in the Eck litigation, Plaintiffs successfully moved to lift the stay of this action. Plaintiffs thereafter filed the operative First Amended Complaint (“FAC“) against the following 27 City officers and employees (“Defendants“): the five members of the DWP Board; three “operating head[s] of DWP“; DWP‘s in-house legal counsel; the fifteen members of the City Council; the Mayor; and the City Attorney and his chief deputy. The FAC asserts nine claims, three of which expressly arise under federal law.4
First, Plaintiffs allege that Defendants are personally liable under
The FAC alleged six additional claims, five of which (fraud, conspiracy, conversion, breach of contract, and interference with economic relations) rested solely on state
law. The last claim, for “extortion,” was expressly “charged both as a tort, as a violation of the Hobbs Act, [
The district court dismissed the four federal claims with prejudice and the state law claims without prejudice. Plaintiffs timely appealed.
II
We first address Plaintiffs’ assertion of a direct cause of action under the Hobbs Act,
Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section . . . .
Prior to its decision in Alexander v. Sandoval, 532 U.S. 275 (2001), the Supreme Court “followed a different approach to recognizing implied causes of action than it follows now.” Ziglar v. Abbasi, 137 S. Ct. 1843, 1855 (2017). Under this “‘ancien regime,’ the Court assumed it to be a proper judicial function to ‘provide such remedies as are necessary to make effective’ a statute‘s purpose,” and the Court routinely implied causes of action “not explicit in the statutory text itself.” Id. (citations omitted). But the Court has now clarified that, “when deciding whether to recognize an implied cause of action, the ‘determinative’ question is one of statutory intent.” Id. at 1855–56 (quoting Sandoval, 532 U.S. at 286). That is, a cause of action may now be recognized under a statute only where the language Congress used “displays an intent to create not just a private right but also a private remedy.” Sandoval, 532 U.S. at 286. This “interpretive inquiry begins with the text and structure of the statute and ends once it has become clear that Congress did not provide a cause of action.” Id. at 288 n.7 (citation omitted); see also Northstar Fin. Advisors, Inc. v. Schwab Invs., 615 F.3d 1106, 1115 (9th Cir. 2010). Thus, if the statutory language “itself does not ‘display an intent’ to create ‘a private
Here, the text of the Hobbs Act merely defines a criminal offense and the prescribed punishment for that offense, and it contains no “‘rights-creating’ language” manifesting an intent to create an accompanying civil private right of action for victims of extortion (or anyone else, for that matter). Sandoval, 532 U.S. at 288 (citing Chicago” cite=“441 U.S. 677” pinpoint=“690” court=“U.S.” date=“1979“>Cannon v. University of Chicago, 441 U.S. 677, 690 n.13 (1979)). Indeed, even prior to Sandoval, the Supreme Court noted that it “has rarely implied a private right of action under a criminal statute, and where it has done so ‘there was at least a statutory basis for inferring that a civil cause of action of some sort lay in favor of someone.‘” Chrysler Corp. v. Brown, 441 U.S. 281, 316 (1979) (quoting Cort v. Ash, 422 U.S. 66, 79 (1975)) (emphasis added).
Plaintiffs nonetheless argue that, as alleged victims of Hobbs Act extortion, they are “members of the class for whose especial benefit the statute was enacted,” and a cause of action in their favor should therefore be implied. But the fact that a federal criminal statute protects victims of the offense defined by that statute does not, without more, make such victims the sort of “’especial’ beneficiary” who may assert an implied private civil cause of action. Logan v. U.S. Bank N.A., 722 F.3d 1163, 1171 (9th Cir. 2013) (quoting California v. Sierra Club, 451 U.S. 287, 294 (1981)). As we explained in Logan, if being a victim of the offense described in a criminal statute were sufficient to assert an implied cause of action, then “the victim of any crime would be an especial beneficiary of the criminal statute‘s proscription” who could then assert a civil claim. Id. (emphasis added). The Supreme Court has emphatically rejected that sweeping view, which “would work a significant shift in settled interpretive principles regarding implied causes of action.” Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 191 (1994); see also id. at 190–91 (“There would be no logical stopping point to this line of reasoning: Every criminal statute passed for the benefit of some particular class of persons would carry with it a concomitant civil damages cause of action.“).
Plaintiffs also contend that Congress‘s intent to allow civil actions under the Hobbs Act is confirmed by the fact that Congress expressly included violations of the Hobbs Act within the definition of “racketeering activity” for purposes of a civil RICO claim.
We thus agree with our sister circuits that the Hobbs Act does not support a private civil right of action, see Eliahu v. Jewish Agency for Israel, 919 F.3d 709, 713 (2d Cir. 2019); Wisdom v. First Midwest Bank, of Poplar Bluff, 167 F.3d 402, 408–09 (8th Cir. 1999), and we affirm the dismissal of Plaintiffs’ Hobbs Act claim.5
III
We likewise affirm the dismissal of Plaintiffs’ RICO claim, but we do so for reasons different from those given by the district court.
A
In dismissing the RICO claim, the district court relied primarily on Ninth Circuit precedent holding that municipal entities are not subject to liability under RICO. See Pedrina v. Chun, 97 F.3d 1296, 1300 (9th Cir. 1996); Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 404 (9th Cir. 1991). While the district court was correct in concluding that this rule would necessarily extend to a suit against municipal officers in their official capacities, see Center for Bio-Ethical Reform, Inc. v. Los Angeles County Sheriff Dep‘t, 533 F.3d 780, 799 (9th Cir. 2008) (“An official capacity suit against a municipal officer is equivalent to a suit against the entity.“), the rule has no application here, because Plaintiffs’ RICO claims are asserted against Defendants in their personal capacities. The district court thought it was sufficient that the FAC relies upon actions that Defendants performed within the scope of their official duties, but that is wrong. In the context of
Indeed, our rationale for concluding that civil RICO does not apply to municipal entities—that “government entities are incapable of forming a malicious intent,” see Lancaster Cmty. Hosp., 940 F.2d at 404—is obviously inapplicable to natural persons. In invoking this rationale with respect to RICO, Lancaster Community Hospital relied heavily on City of Newport v. Fact Concerts, Inc., 453 U.S. 247 (1981), which rejected punitive damages against municipalities under
B
Although we thus agree with Plaintiffs that the district court‘s rationale
To state a civil RICO claim under
Plaintiffs’ remaining theory—that Defendants’ collection of unlawfully high charges for DWP electric service amounted to extortion under the Hobbs Act or California law—fails as a matter of law under Wilkie v. Robbins, 551 U.S. 537 (2007). In Wilkie, the Supreme Court held that the Hobbs Act incorporates “the common law conception of ‘extortion,‘” which drew a sharp “line between public and private beneficiaries” in defining what counts as “extortion.” Id. at 563–64. Because extortion at common law “focused on the harm of public corruption, by the sale of public favors for private gain,” and “not on the harm caused by overzealous efforts to obtain property on behalf of the Government,” id. at 564, the Court rejected the plaintiff‘s effort in that case to assert extortion-based civil RICO claims against government officials who aggressively sought to obtain an easement for the government from the plaintiff, id. at 541, 567. Plaintiffs’ RICO claim here likewise rests on the theory that Defendants wrongfully sought to obtain money for DWP and the City from DWP customers, and it therefore fails as a matter of law under Wilkie.
Plaintiffs’ three arguments for evading Wilkie all fail. First, Plaintiffs’ theory that Defendants’ ordinary municipal compensation supplies the necessary private gain would apply to any government official (who is likewise paid by the government for which he or she acts) and would simply obliterate Wilkie‘s clear “line between public and private beneficiaries.” 551 U.S. at 564. Second, Plaintiffs argue that, because Wilkie involved federal officials and the federal government, its holding does not apply to extortion-based civil RICO claims against state and local officials. This ignores the Court‘s reasoning in Wilkie, which was
IV
We also agree with the dismissal of Plaintiffs’
The Johnson Act provides, in full:
The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:
(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and,
(2) The order does not interfere with interstate commerce; and,
(3) The order has been made after reasonable notice and hearing; and,
(4) A plain, speedy and efficient remedy may be had in the courts of such State.
satisfied here. We hold that they are with respect to Plaintiffs’ remaining
A
In light of the dismissal of all of Plaintiffs’ federal statutory claims, see supra sections II and III, we conclude that jurisdiction here “is based solely on ... repugnance of the order[s] to the Federal Constitution.”
As an initial matter, there is no question that Plaintiffs’
In barring federal courts from exercising “[j]urisdiction” to interfere with state rate orders in specified circumstances, the text of the Johnson Act necessarily focuses on the jurisdictional basis on which the court is asked to grant such relief. The happenstance that there may or may not be other claims in the case is irrelevant—especially given the fact that, in light of the generous rules governing joinder of claims, the additional claims asserted in the action may have nothing to do with state rate orders at all. See
But even if the inquiry under the Johnson Act focuses on the bases for asserting jurisdiction to grant relief concerning the rate orders and not on the complaint as a whole, the fact remains that, alongside their constitutionally-based
Accordingly, we agree with the Second Circuit that, at least where all other federal statutory claims have been dismissed, the Johnson Act does not permit a plaintiff to pursue a constitutionally based
We disagree with the district court‘s suggestion that this approach to the Johnson Act would contravene our observation that “[w]e have construed the term ‘solely’ in
preemptive effect ultimately rested on the Supremacy Clause, the claim was actually a constitutional one for purposes of
B
The remaining three enumerated requirements under the Johnson Act are all likewise satisfied here.
Although the DWP‘s rates for electrical service to its customers may have an effect on interstate commerce, we have held that “it is not enough that an intrastate rate-making policy merely ‘affect[s]’ interstate commerce.” US West, 146 F.3d at 724.
The official records of the City Council confirm that the three rate-setting ordinances at issue were indisputably “made after reasonable notice and hearing.”
Finally, we conclude that a “plain, speedy and efficient remedy may be had in the courts” of California.
Succinctly put, the state remedy is “plain” as long as the remedy is not uncertain or unclear from the outset; “speedy” if it does not entail a significantly greater delay than a corresponding federal procedure; and “efficient” if the pursuit of it does not generate ineffectual activity or unnecessary expenditures of time or energy.
146 F.3d at 724–25. Given that other DWP customers have challenged the same ordinances under Article XIII C in state court through the Eck litigation, see supra section I(B), the California courts clearly provide for a plain, speedy, and efficient remedy under these standards. US West, 146 F.3d at 725.
Because all of the elements of the Johnson Act are satisfied here, the district court lacked jurisdiction over Plaintiffs’
V
Plaintiffs have provided no basis for concluding that any of these deficiencies could be cured by an amendment of the complaint, and based upon our own thorough review of the record, we agree that amendment would be futile. The district court therefore did not err in denying leave to amend and in dismissing Plaintiffs’ federal claims with prejudice. See Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004).
The judgment of the district court is AFFIRMED.