268 N.Y. 164, 171, appeal dismissed, 296 U.S. 545 (1935); Van Dusen-Storto Motor Inn, Inc., v. Rochester Tel. Corp., 42 A.D.2d 400, 403, 348 N.Y.S.2d 404, 407 (4th Dep't 1973), aff'd mem., 34 N.Y.2d 904, 359 N.Y.S.2d 286, 316 N.E.2d 719 (1974); Central Hudson Gas & Elec. Corp. v. Napoletano, 277 A.D. 441, 443, 101 N.Y.S.2d 57 (3d. Dep't 1950); Cardone v. Consolidated Edison Co., 197 Misc. 188, 190, 94 N.Y.S.2d 94, 97 (N.Y. App. Term.), aff'd, 276 A.D. 1068, 96 N.Y.S.2d 491 (1st Dep't 1950). See also County of Suffolk v. Long Island Lighting Co., 728 F.2d 52, 61 (2d Cir. 1984) (affirming dismissal of Suffolk's common law claims, including misrepresentation, arising out of the Shoreham construction). When fraud in the ratemaking process is suspected, the jurisdiction of the [Public Service] Commission at once attaches." 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 736 (1937).

The undeniable effect of permitting federal court review of claims such as those brought by Suffolk is to bypass state review of allegations of fraud in the ratemaking process. It allows litigants to short circuit the elaborate state scheme provided by New York for review of rate-related matters. See HMK Corp. v. Walsey, 828 F.2d 1071, 1076-77 (4th

Cir. 1987), cert. denied, 108 S.Ct. 706 (1988) (questioning application of RICO to local zoning dispute). Thus the application of RICO in a case such as this results in a federal abrogation of New York's decision that review of rate-making matters should be exclusively the province of the state-createdremedial scheme.

The practical effect of permitting federal review of these claims under the RICO statute with its lure of treble

-

damages and attorneys' fees -- will be that in the future

ratepayers will bring many such claims in federal court. The PSC might well initiate its own investigation into the claims, but then the problems of federal-state coordination are

enormous.

For instance, what effect should the PSC give to a federal jury's determination that the PSC itself was the victim of a utility's fraudulent misrepresentations? And what effect should the PSC give to a jury's determination that the misrepresentations influenced its rate decisions in specific ways? Suppose that in its own investigation the PSC reaches different conclusions with regard to these matters.

Can the

PSC then ignore the jury verdict? If not, the state will be effectively deprived of a meaningful opportunity to arrive at its own determinations with respect to these claims. It will be left without the means to bring its expertise in ratemaking

49

matters to bear, and it will be unable to frame relief that is harmonious with the wider state regulatory scheme and that is informed by uniquely local perspectives on such matters of

overwhelmingly local concern.

In the very case now before us we were informed that the PSC was withholding decisions on rate applications of LILCO, claimed to be essential to forestall bankruptcy, pending decision of this RICO case. We are not left to speculation. RICO as sought to be applied by Suffolk was interfering with New York's regulatory scheme.

We should not assume that Congress intended to alter the historic federal-state balance in so dramatic a fashion. If the end result of entertaining claims such as Suffolk's in federal court is a defacto preemption, depriving the states of the opportunity to consider the claims in a meaningful fashion and upsetting the exclusive remedial measures provided by states for review of rate regulation matters, federal courts must assume that Congress intended that we refuse to hear the claims. See Sedima, 473 U.S. at 507 (Marshall, J.,

dissenting).

What makes the application of RICO in this situation especially inappropriate is that national power is being utilized not as the result of an affirmative decision by the

· 50

national government to intrude into state regulatory affairs in order to vindicate important federal interests, but as the result of actions by private litigants. The process-based protection of state sovereignty envisaged by Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 550-55 (1985), is short-circuited when a broadly framed statute such as RICO is used by private persons or local governments in ways that upset the balance of federal-state power that were never forseen by the state representatives in Congress who approved the statute. Even in the field of nuclear safety regulation where the national interest is strongly asserted, the Court has refused to find the states' institutions for protection of the public through its tort law preempted.

Silkwood v. Kerr-McGee

Corp., 464 U.S. 238, 256 (1984). See also G. M. Vairo, Survey of Recent Preemption Cases, in ALI-ABA, I Trial Evidence, Civil Practice and Effective Litigation Techniques in Federal and

State Court, 255 (S. Schreiber ed. 1988).

Federal law is,

where reasonably possible, construed to avoid destruction of a state program to protect its citizens.

Balancing of pragmatic considerations in our complex scheme of separation of powers and of governmental functions between state and national governments requires some national humility in the face of historical experience. Cf. e.g.,

Mistretta v. United States, 57 U.S.L.W. 4102, 4107 (1989) (upholding sentencing guidelines on historic and pragmatic grounds). History as well as policy warrants leaving electric power rate regulation to skilled state commissions rather than to federal RICO juries unless Congress plainly requires otherwise.

Dismissal of unfounded claims after a trial at which the plaintiff obtained a verdict in its favor is sound practice. See, e.g., Apex Hosiery v. Leader, 310 U.S. 469 (1940) (invoking doctrine of "clear statement to dismiss plaintiff's claims after plaintiff had obtained a jury verdict in its favor and an award of damages in excess of $700,000); Alabama Pub. Serv. Comm'n v. Southern Ry. Co., 341 U.S. 341 (1951) (relying on Burford abstention to reverse a trial verdict in favor of plaintiff); United States v. Yellow Freight Sys., 762 F.2d 737 (9th Cir. 1985) (applying doctrine of primary jurisdiction to set aside a trial verdict in favor of plaintiff).

No right of Suffolk to a jury trial, provided by the Seventh Amendment to the United States Constitution, is implicated by the dismissal of the County's claims. When, as here, federal law provides no basis for the exercise of federal jurisdiction, there is no cognizable cause of action to which the Seventh Amendment guarantee can apply.