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The Commissioners have a large staff of experts to
assist them with the more difficult technical aspects
of regulating public utilities. In contrast, courts
whether state or federal -- are ill-equipped to set
electric rates. Were this Court, for example, to
grant appellant its requested relief, it might reduce
LILCO's rate base below the level required for LILCO
to "break even" and, as a result, drive the company
into bankruptcy or out of business. Also, if
different courts could set different rates for
electric power there would be no uniformity; and the
question would arise, what rates govern? To avoid
this possibility of confusion New York State confided
to the PSC exclusive jurisdiction over rates.

This court recognized in its charge, which is the law of the case, that "[t]o say that a fraud was successfully committed against the PSC resulting in damages is, for practical purposes, to retroactively reduce electric rates." Charge p. 18.

The doctrine of primary jurisdiction applies even where a central issue is whether misrepresentations to an administrative agency resulted in rate increases.

See Alberta

Gas Chem., Ltd. v. Celanese Corp., 650 F.2d 9, 12 (2d Cir. 1981)("central issue of the action was alleged

misrepresentations before the commission).

An argument can be made that the primary jurisdiction doctrine should not be applied by a federal court to a state administrative agency where that course of action will

frustrate a federal policy. But there is no reason to believe

that allowing the PSC to set state electric rates and to exercise its own powers to roll back rates where it has been misled will frustrate RICO policy. See N.Y. Public Service Law SS 5, 22, 66(5) and (12), 71, and 72 (establishing PSC and describing its ratemaking authority and procedures for administrative review); see also New York State Elec. & Gas Corp. v. Public Serv. Comm'n, 245 A.D. 131, 135, 281 N.Y.S. 384, 387-88 (3d Dep't 1935), aff'd, 274 N.Y. 591, 10 N.E.2d 567 (1937) (PSC has jurisdiction where utility furnishes "false basis for rates resulting in an unreasonable charge upon the public); Alvarez v. Schwartz, 130 Misc. 2d 692, 694, 497 N.Y.S. 2d 602, 604 (Sup. Ct. N.Y. Co. 1985) (administrative agency may reopen decision tainted by fraud, citing People ex rel. Finnegan v. McBride, 226 N.Y. 252, 123 N.E. 374 (1919)).

The RICO statute does not inhibit application of the

doctrine of deference. See, e.g., H.J., Inc. v. Northwest Bell Tel. Co., 648 F.Supp. 419 (D. Minn. 1986), aff'd on other grounds, 829 F.2d 648 (8th Cir. 1987), cert. granted, 108 S.Ct. 1219 (1988) (applying the "filed rate doctrine to dismiss a claim brought under the RICO statute alleging damages as a result of alleged improprieties committed in connection with proceedings of the Michigan Public Utilities Commission); Meditech Int'l Co. v. Minigrip, Inc., 648 F.Supp. 1488,

29

1494-1495 (N.D. Ill. 1986) (applying the holding in Alberta to a damages claim under RICO predicated upon alleged fraud which allegedly resulted in the issuance of an order by the

International Trade Commission banning the importation of

certain plastic bags); cf. Nike, Inc. v.

509 F.Supp. 912, 917-918 (S.D.N.Y. 1981)

Rubber Mfrs. Ass'n,

(staying an antitrust

claim based upon the alleged provision of false certifications

by defendants to the United States Customs Service that resulted in the imposition of special duties on Nike shoes). Federal courts have applied the doctrine where the

claim is brought under federal law and the regulatory agency is a state body. See, e.g., H.J., Inc. v. Northwestern Bell Tel. Co., 648 F.Supp. 419 (D. Minn. 1986), aff'd on other grounds, 829 F.2d 648 (8th Cir. 1987), cert. granted, 108 S.Ct. 1219 (1988) (federal RICO action); Huron Valley Hospital v. City of Pontiac, 666 F.2d 1029 (6th Cir. 1981) (federal antitrust action); Industrial Communications Sys. v. Pacific Tel. & Tel. Co., 505 F.2d 152 (9th Cir. 1974) (federal antitrust action); Litman v. A. Barton Hepburn Hospital, [1982-83] Trade Cases (CCH) 165,161 (N.D.N.Y. 1983) (federal antitrust action); Denver v. Santa Barbara Community Dialysis Center, [1981-1] Trade Cases (CCH) 163,946 (C.D. Cal. 1981) (federal antitrust action); Association Tel. Answering Exchanges v. American Tel.

& Tel. Co., 492 F.Supp. 921 (E.D. Pa. 1980) (federal antitrust

action).

2. Abstention

support Supreme

Inapplicability of RICO in this case also finds

315 (1943).

in a long line of abstention cases beginning with the Court's decision in Burford v. Sun Oil Co., 319 U.S. There the Court held that the district court properly declined to exercise jurisdiction of plaintiff's claims challenging the validity of an order of the Texas Railroad Commission. The Court found that "[d]elay, misunderstanding of local law, and needless federal conflict with the State policy, are the inevitable product of federal adjudication of such claims. Id. at 327.

The concerns reflected in the Burford abstention are

those of federalism and comity

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the notion that the federal

government should accord a "proper respect for state

functions." Younger v. Harris, 401 U.S. 37, 44 (1971); see Society for Good Will to Retarded Children v. Cuomo, 652

The Burford doctrine

F.Supp. 515, 523 (E.D.N.Y. 1987). embodies these concerns by enabling a federal court to "abstain from interfering with ongoing state regulatory schemes."

Levy

v. Lewis, 635 F.2d 960, 963 (2d Cir. 1980). Thus, in New Orleans Pub. Serv. v. City of New Orleans, 798 F.2d 858 (5th Cir. 1986), cert. denied, 481 U.S. 1023 (1987), the district court properly abstained from a suit involving a utility's application for a permanent rate increase. The complexity of utility regulation and the state's paramount interest in its regulatory system warranted abstention:

As

The motivating force behind Burford abstention is ...
a reluctance to intrude into state proceedings where
there exists a complex state regulatory system....
with the regulatory scheme at issue in Burford, the
regulation and adjustment of local utility rates is of
paramount local concern and a matter which demands
local administrative expertise.

Id. at 861-62. And in Hanlin Group, Inc. v. Power Authority of
the State of New York, No. CV-87-570 (S.D.N.Y. January 13,
1989), a rate dispute case concerning the sale of electric
power, the court relied on the Burford doctrine to dismiss the
plaintiff's claims because

in deciding this case, the court would be inevitably
drawn into the complex process of utility ratemaking
in New York. That is precisely the activity area
which Burford abstention intended to relegate to state
adjudication.

Slip op. at 14. See also Levy v. Lewis, 635 F.2d 960, 964 (2d Cir. 1980) (abstention required where federal review of plaintiff's claim would interfere with New York's "complex

administrative and judicial" insurance regulatory scheme); Law