66 F.

3d 12
RICO Bus.Disp.Guide 8891

TRIBUNE COMPANY; Tribune New York Holdings, Inc.,

now
merged with WPIX Inc., Plaintiffs-Appellees,
v.
Hamid ABIOLA et al., Defendants-Appellants.
No. 1915, Docket 95-7088.

United States Court of Appeals,

Second Circuit.
Argued July 19, 1995.
Decided Sept. 11, 1995.

Michael M. Connery, Skadden, Arps, Slate, Meagher & Flom, New York
City (Julie B. Carlin-Sasaki, Skadden, Arps, Slate, Meagher & Flom, of
counsel), for defendant-appellant New York newspaper Printing
Pressmen's Union No. 2.
Kenneth Gordon, Steven J. Saltiel, Gordon & Gordon, P.C., New York
City, for defendants-appellants Robert P. Allen, Jr., George Baltzer, et al.
William G. O'Donnell, O'Donnell & Fox, P.C., New York City, for
defendants-appellants Robert A. Purcigliotti and Cascione, Chechanover
& Purcigliotti.
Raymond A. Levites, Diane Britton, Pavelic & Levites, New York City,
for defendant-appellant Newspaper and Mail Deliverers' Union, New
York and Vicinity.
Garbrielle Semel, Weissman & Mintz, New York City, and Richard
Rosenblatt, Boyle, Tyburski, Toll & Rosenblatt, Englewood, Colo., for
defendant-appellant New York Mailers' Union No. 6, Printing Publishing
and Media Workers Sector of the Communications Workers of America.
David S. Frankel, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
New York City, for defendant-appellant Dr. Walter Stingle.

Andrew S. Hoffman, Wiseman, Hoffman & Walzer, New York City, for
defendants-appellants William Adam, Louis Adesso, et al.
Mitchell Segal, Mitchell Segal, P.C., Great Neck, NY, for defendantsappellants Carmine Bucco, Jr., Carmine Bucco, Sr., et al.
M. Patricia Smith, Assistant Attorney General, State of New York, New
York City, N.Y. (Dennis C. Vacco, Attorney General, Jane Lauer Barker,
Assistant Attorney General in Charge of Labor Bureau, New York City, of
counsel), for intervenor-appellant NYS Workers' Compensation Board.
Steven M. Bierman, Sidley & Austin, New York City (Alan M. Unger,
Sidley & Austin, New York City, Richard S. Busch, King & Ballow,
Nashville, Tenn., of counsel), for plaintiffs-appellees.
Before: WINTER, CALABRESI and CABRANES, Circuit Judges.
JOSE A. CABRANES, Circuit Judge:

We are asked to decide whether a district court may abstain from exercising its
jurisdiction pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87
L.Ed. 1424 (1943), when a plaintiff asserts claims only for money damages.

The Tribune Company and its parent corporation, former owners of the New
York Daily News, filed an action against numerous defendants: several hundred
union workers at the News, three of their unions, the workers' law firm, an
individual lawyer, and a doctor who examined those workers--all of whom had
purportedly engaged in a conspiracy to file fraudulent claims for workers'
compensation benefits against the plaintiffs. The United States District Court
for the Southern District of New York (Loretta A. Preska, Judge ) denied the
defendants' motion to dismiss the complaint on grounds of Burford abstention.
869 F.Supp. 1076 (S.D.N.Y.1994). In light of the Supreme Court's decision in
New Orleans Public Service, Inc. v. Council of the City of New Orleans, 491
U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("NOPSI "), we hold that it
is generally appropriate for a district court to abstain on Burford grounds only
when asked to provide equitable relief. Alternatively, we hold that even if
Burford abstention would be available when a district court is not asked to
grant equitable relief, the district court in this case did not abuse its discretion
when it declined to abstain on Burford grounds. We therefore affirm.

I. BACKGROUND

Because we are reviewing the district court's denial of a motion to dismiss, we

must accept as true the allegations of the complaint. Mills v. Polar Molecular
Corp., 12 F.3d 1170, 1174 (2d Cir.1993) (reviewing grant of motion to dismiss
under Fed.R.Civ.P. 12(b)(6)); see also Conley v. Gibson, 355 U.S. 41, 45-46,
78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) (holding that dismissal is proper only if
"it appears beyond doubt that plaintiff can prove no set of facts in support of his
claim which would entitle him to relief"). We accordingly relate the plaintiffs'
version of the facts.

From 1990 to 1991, unionized workers engaged in a bitter strike at the New
York Daily News--a strike that ultimately led the Tribune Company, then
owner of the News and now one of the plaintiffs, to sell the newspaper to
Robert Maxwell. In what the plaintiffs describe as a final act of vengeance, the
various defendants conspired to arrange for each of the several hundred union
member defendants to file a fraudulent workers' compensation claim against the
Tribune Company, based on hearing loss allegedly caused by exposure to
excessive noise at Daily News facilities.

This scheme had two essential components. First, each of the defendant
workers submitted falsified medical evidence of hearing loss to the New York
State Workers' Compensation Board. The unions directed the workers to retain
the legal services of the defendant law firm Cascione, Chechanover &
Purcigliotti. Robert A. Purcigliotti, a member of the firm and also a defendant,
was primarily responsible for preparing, filing, prosecuting, and settling the
fraudulent claims. Purcigliotti also directed the workers to obtain hearing
examinations from the defendant Dr. Walter Stingle. Although Dr. Stingle
knew that the workers had been coached to exaggerate their hearing loss during
these examinations, he nevertheless certified that their audiograms were
accurate. Second, the defendants conspired to attribute liability for their false
hearing loss claims to the Tribune Company under the "last employer" doctrine,
which provides that the last employer who exposes an employee to harmful
noise is liable in full for the employee's occupationally related hearing loss.
N.Y.WORK.COMP.LAW Sec. 49-ee (McKinney 1993); see also id. Sec. 49-bb
(providing that compensation for hearing loss is due and payable after three
months from employee's removal from exposure to harmful noise). At the
instigation of Purcigliotti and his law firm, the individual workers falsely stated
on their workers' compensation applications that they had last been exposed to
harmful noise on the date that the strike began, and that the new owner of the
News gave them hearing protectors after the strike ended--facts that, if true,
would make the Tribune Company liable for the workers' hearing loss. Faced
with these claims, the Tribune Company settled approximately three hundred
claims over three years--until it uncovered evidence of the fraudulent scheme.

The plaintiffs filed suit in the United States District Court for the Southern
District of New York. Their amended complaint asserts claims for fraud,
negligent misrepresentation, and unjust enrichment, as well as violations of the
Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec.
1962. Although their original complaint sought an injunction barring the
defendants from participating in any further proceedings before the Workers'
Compensation Board, the amended complaint seeks only monetary damages,
including treble damages under RICO.

The defendants moved to dismiss the amended complaint on several grounds,

including abstention under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct.
1098, 87 L.Ed. 1424 (1943). The New York State Workers' Compensation
Board intervened and also moved to dismiss on abstention grounds. In a
published opinion, the district court rejected the defendants' arguments that
Burford abstention was appropriate. 869 F.Supp. at 1083-87. More specifically,
the district court found that its exercise of jurisdiction over the plaintiffs' claims
would not disrupt New York's effort to create a coherent workers' compensation
system, id. at 1085-86, and that the plaintiffs could not obtain relief from the
Workers' Compensation Board that would adequately substitute for their federal
remedies under RICO, id. at 1086-87. Taking note of the Supreme Court's
admonition that "the obligation of the federal court to adjudicate claims within
its jurisdiction is 'virtually unflagging,' " id. at 1087 (quoting NOPSI, 491 U.S.
at 359, 109 S.Ct. at 2513 (internal quotation marks and citation omitted)), the
district court denied the motion to dismiss on Burford grounds.1 Id. The
defendants and the Workers' Compensation Board obtained an order from the
district court certifying for immediate appeal only that portion of the ruling that
addressed the Burford abstention issue. See 28 U.S.C. Sec. 1292(b)
(authorizing discretionary interlocutory appeals upon certification of district
court and acceptance by court of appeals). In an order dated January 31, 1995,
we granted defendants' and intervenor's petition to hear this interlocutory
appeal.

II. DISCUSSION
8

We review a district court's abstention decision for abuse of discretion.

Bethphage Lutheran Serv., Inc. v. Weicker, 965 F.2d 1239, 1244 (2d Cir.1992).
We have observed that when a district court decides to abstain from exercising
its jurisdiction, our "review is somewhat rigorous in view of the fact that we are
considering an exception to a court's normal duty to adjudicate a controversy
properly before it." Id. Because the district court in the present case rejected the
defendants' request to abstain on Burford grounds, we review the district court's
decision in light of its considerably broader discretion to retain jurisdiction over

the complaint.
9

In Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943),
"a Federal District Court sitting in equity was confronted with a Fourteenth
Amendment challenge to the reasonableness of the Texas Railroad
Commission's grant of an oil drilling permit." NOPSI, 491 U.S. at 360, 109
S.Ct. at 2514. The challenge involved predominantly state law claims, and "
[t]he constitutional challenge was of minimal federal importance, involving
solely the question whether the commission had properly applied Texas'
complex oil and gas conservation regulations." Id. (citing Burford, 319 U.S. at
331 & n. 28, 63 S.Ct. at 1106 & n. 28). The Supreme Court characterized the
Fourteenth Amendment due process claim as a "simple proceeding in equity to
enjoin the enforcement of the Commission's order." Burford, 319 U.S. at 317,
63 S.Ct. at 1099.

10

In Burford, the Court held that, as a matter of sound equitable discretion, the
district court had properly declined to exercise its jurisdiction because of
several factors, including the complex state regulatory scheme involved, id. at
318-24, 63 S.Ct. at 1099-1103, the local importance of the matters before the
regulatory agency, id. at 320, 63 S.Ct. at 1100, the existence of a unified system
of review of commission decisions by a single court, the potential for delay, id.
at 325, 63 S.Ct. at 1103, misunderstanding of local law, and needless conflict
with the state policy by federal review, id., at 325, 63 S.Ct. at 1103, and
because plaintiff's federal claims could be heard in the relevant state
proceedings and would be "fully preserved" by appeal to the Supreme Court, if
necessary, id. at 334, 63 S.Ct. at 1107.

11

One commentator has suggested that over time, "the lack of guidance from the
Supreme Court as to when Burford abstention is appropriate ... resulted in
divergent lower court approaches." ERWIN CHEMERINSKY, FEDERAL
JURISDICTION Sec. 12.2.3, at 611 (1989 & Supp.1992). Accordingly, in
1989, the Supreme Court took pains in NOPSI to reiterate the narrow reach of
Burford abstention, and to distill the distinctively equitable principles
underlying that doctrine:

12
Where
timely and adequate state-court review is available, a federal court sitting in
equity must decline to interfere with the proceedings or orders of state administrative
agencies: (1) when there are "difficult questions of state law bearing on policy
problems of substantial public import whose importance transcends the result in the
case then at bar"; or (2) where the "exercise of federal review of the question in a
case and in similar cases would be disruptive of state efforts to establish a coherent
policy with respect to a matter of substantial public concern."

13

NOPSI, 491 U.S. at 361, 109 S.Ct. at 2514 (emphasis added and citation
omitted).

14

The Supreme Court explained that abstention doctrines are grounded in the
courts' longstanding discretion to determine whether to grant equitable relief,
and in the fact that "there are some classes of cases in which the withholding of
authorized equitable relief because of undue interference with state proceedings
is 'the normal thing to do.' " NOPSI, 491 U.S. at 359, 109 S.Ct. at 2513
(quoting Younger v. Harris, 401 U.S. 37, 45, 91 S.Ct. 746, 751, 27 L.Ed.2d 669
(1971)). When a federal court sits in equity--that is, when it is asked to provide
equitable relief--it " 'should be wary of interrupting the proceedings of state
administrative tribunals by use of the extraordinary writ of injunction.' "
NOPSI, 491 U.S. at 362, 109 S.Ct. at 2515 (quoting Public Util. Comm'n of
Ohio v. United Fuel Gas Co., 317 U.S. 456, 468-69, 63 S.Ct. 369, 375-76, 87
L.Ed. 396 (1943)).

15

The plaintiffs urge us to interpret NOPSI as holding that a federal court may
abstain on Burford grounds only if it is sitting in equity. There is little
consensus among our sister circuits on this issue. Both the First and Ninth
Circuits have held that NOPSI limits the reach of Burford to cases involving
claims for equitable relief. Garamendi v. Allstate Insur. Co., 47 F.3d 350 (9th
Cir.1995) ("The Supreme Court's recent, restrictive reading of Burford,
together with its reaffirmation of the doctrine's equitable predicate, leads us to
conclude that a district court may not abstain under Burford when the plaintiff
seeks only legal relief."), cert. granted, --- U.S. ----, 116 S.Ct. 334, --- L.Ed.2d --- (1995); Fragoso v. Lopez, 991 F.2d 878, 882 (1st Cir.1993) ("When ... the
only equitable power a court is asked to exercise constitutes the very act of
abstaining under Burford, we think it is highly questionable whether the court
is one 'sitting in equity' to which Burford abstention might be available."); see
also id. at 883 n. 6. The Eighth Circuit, by contrast, has concluded that Burford
abstention may be invoked even if the plaintiff seeks money damages.2
Wolfson v. Mutual Benefit Life Insur. Co., 51 F.3d 141, 147 (8th Cir.1995)
(upholding district court's decision to abstain from adjudicating plaintiff's
claims for insurance benefits under ERISA, in light of defendant insurer's
involvement in pending state insolvency proceeding). The Third Circuit has
apparently split on the issue. Compare Riley v. Simmons, 45 F.3d 764, 772 n. 7
(3d Cir.1995) (Hutchinson, J.) (expressing reluctance of "the opinion writer, not
the Court," to restrict Burford abstention to equity) with id. at 778-79 (Nygaard,
J., concurring) (arguing that NOPSI and circuit precedent limit Burford
abstention to cases where equitable or declaratory relief is sought).3

16

We find it significant that the Supreme Court carefully traced the origin of

16

abstention doctrines to the federal courts' discretion to withhold equitable relief,

NOPSI, 491 U.S. at 359, 109 S.Ct. at 2513, and reformulated the Burford
doctrine to require federal courts "sitting in equity" to abstain from exercising
their jurisdiction in certain circumstances. Id. at 361, 109 S.Ct. at 2514.
Injunctions are the most intrusive sort of judicial relief, and may directly
interfere with "the proceedings or orders of state administrative agencies." Id.
The Supreme Court's decision in NOPSI leaves little doubt that Burford
abstention is generally appropriate only in cases where equitable relief is
sought.

17

The defendants claim that our decision in Sheerbonnet, Ltd. v. American

Express Bank Ltd., 17 F.3d 46 (2d Cir.1994), rejected the notion that Burford
abstention is appropriate only when a plaintiff seeks equitable relief. In support
of this argument, they point out that this court omitted the phrase "sitting in
equity" when quoting NOPSI 's restatement of the Burford doctrine,
Sheerbonnet, 17 F.3d at 48, and proceeded to address the merits of Burford
abstention even though the plaintiffs sought only money damages. The
defendants read too much into an ellipsis. The parties in Sheerbonnet had not
raised the issue whether Burford abstention was permissible only in equitable
actions, so we had no occasion to rule on it. Indeed, the result we reached--that
Burford abstention was not appropriate--reinforces our conclusion today that
only claims seeking equitable relief will generally pose a danger of interfering
with state proceedings or orders.

18

We need not decide whether NOPSI entirely forecloses the possibility that, in
highly unusual circumstances, not now foreseeable, a plaintiff might assert
claims for money damages that, if granted, might unduly interfere with a state
proceeding or order, and thus make it appropriate for a district court to abstain
on Burford grounds. Even if Burford abstention would arguably be appropriate
in cases where equitable relief is not sought, we find that the district court in
this case did not err in refusing to abstain.

19

We recently observed that "[o]nly under exceptional circumstances" may

federal courts eschew their duty "to exercise jurisdiction over all cases properly
before them." Youell v. Exxon Corp., 48 F.3d 105, 108 (2d Cir.1995) (internal
quotation marks and citation omitted). Burford abstention is an " 'extraordinary
and narrow exception[ ]' to a federal court's duty to exercise jurisdiction." Id.
(quoting Colorado River Water Conservation Dist. v. United States, 424 U.S.
800, 813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976)). Under the NOPSI test,
the first inquiry is whether "timely and adequate state-court review" of
plaintiff's claims is available. NOPSI, 491 U.S. at 361, 109 S.Ct. at 2514. We
therefore examine the state framework for addressing the plaintiffs' claims.

20

New York does have a mechanism permitting the re-opening of workers'

compensation claims before the Workers' Compensation Board on grounds of
fraud. N.Y. WORK.COMP.LAW Sec. 123 (McKinney 1993). Under the
circumstances of this case, however, the review provided by the state
administrative agency is not comparable to that afforded by the federal court.
The principal defendants in this case are not proper parties to workers'
compensation proceedings in New York. Furthermore, the Board cannot require
a claimant to return moneys already paid. Id. Sec. 22.4 The substance of the
plaintiffs' RICO claims--including, for example, the alleged existence of a
"pattern" and "enterprise", see McLaughlin v. Anderson, 962 F.2d 187, 190 (2d
Cir.1992) (holding that to prevail under civil RICO, plaintiff must prove that
defendants participated in the conduct of an enterprise through a pattern of
racketeering activity)--cannot be adjudicated in proceedings before the New
York Workers' Compensation Board. N.Y. WORK. COMP. LAW Sec. 20
(McKinney 1993) (authorizing Board only "to determine all questions in
relation to the payment of claims presented to it for compensation under [the
Workers' Compensation Law]."). Significantly, the Board cannot award the
treble damages or attorneys' fees that are available under RICO. We have
previously stated that "the unavailability of treble damages and attorneys' fees
in an action before [a state tribunal] ... militates against the application of the
Burford doctrine." County of Suffolk v. Long Island Lighting Co., 907 F.2d
1295, 1309 (2d Cir.1990). Because of the Board's limitations, the district court
properly concluded that the state "appellate court that sits in review of the
Board decisions involved here lack[s] jurisdiction to hear plaintiffs' RICO
claims fully." 869 F.Supp. at 1087.

21

Secondly, the plaintiffs in this case have brought garden-variety claims for
money damages including their claims for treble damages under RICO, 18
U.S.C. Sec. 1962, that present no danger of interfering with any proceeding or
order of the New York State Workers' Compensation Board. In their amended
complaint, the plaintiffs do not request an injunction barring the defendants
from pursuing their workers' compensation claims before the Board; they do
not seek to overturn any workers' compensation award made by the Board; nor
do they request any other equitable relief. At most, an award of RICO damages
by the district court might be used as a basis for offensive collateral estoppel by
the plaintiffs in subsequent proceedings before the Board or a state court to
overturn those workers' compensation awards, to prove the fact that individual
workers had submitted falsified medical evidence to the Board. But precisely
because further state proceedings would be necessary to invalidate the state
agencies' awards, we find that the district court's exercise of jurisdiction over
the plaintiffs' damages claims would in no way "interfere with the proceedings
or orders" of the Board.

III. CONCLUSION
22

To summarize: There are no grounds for abstention here whether or not

Burford applies. Burford abstention is generally appropriate only when a
district court is asked to grant equitable relief. Because the plaintiffs sought
only damages against various private individuals and did not seek to enjoin any
proceedings or invalidate any order of the New York State Workers'
Compensation Board, the court correctly declined to abstain on Burford
grounds. Even if Burford abstention were available when a district court is not
asked to grant equitable relief, the district court in this case did not abuse its
discretion when it declined to abstain on Burford grounds.

23

Affirmed.

The district court granted the motion to dismiss only with respect to the unjust
enrichment claims against certain defendants, 869 F.Supp. at 1102. That ruling
was not certified for interlocutory appeal

The Eleventh Circuit, in an opinion that was later vacated, rejected without
explanation the position that courts cannot abstain under Burford when faced
with damages claims. Taffet v. Southern Co., 930 F.2d 847, 853 n. 4 (11th
Cir.1991) ("This argument ... [that Burford is applicable only to courts sitting in
equity] is meritless."), vacated on other grounds, 967 F.2d 1483 (11th Cir.),
cert. denied, --- U.S. ----, 113 S.Ct. 657, 121 L.Ed.2d 583 (1992)

See also University of Md. v. Peat Marwick Main & Co., 923 F.2d 265, 272
(3d Cir.1991) (reaffirming the Third Circuit's statement in Baltimore Bank for
Cooperatives v. Farmers Cheese Coop., 583 F.2d 104, 111 (3d Cir.1978), that
traditionally, abstention is proper only in cases involving equitable relief, and
trying to harmonize that statement with Lac D'Amiante du Quebec, Ltee. v.
American Home Assurance Co., 864 F.2d 1033, 1044-45 (3d Cir.1988), which
permitted Burford abstention in a declaratory judgment case); General Glass v.
Monsour Medical Found., 973 F.2d 197, 202 (3d Cir.1992) (hesitating to
embrace rule that Burford abstention may be ordered only in case of an
equitable nature, in light of "inconclusive" "[d]ecisional authority")

Section 22 of the New York Workers' Compensation law, providing for the
review of awards, decisions or orders, states that "[n]o such review shall affect
such award as regards any moneys already paid" with some few exceptions not
relevant here