2017 Statute of Limitations Roundup: Courts Disagree About Applicability of “Continuing Violation” Doctrine in Antitrust Actions
2017 saw three notable decisions concerning the applicability of the “continuing violation” doctrine in antitrust cases. We discuss below three cases that have taken different approaches in their treatment of this doctrine—and have reached different conclusions regarding its applicability.
1. In re Pre-Filled Propane Tank Antitrust Litigation, 860 F.3d 1059 (8th Cir. 2017)
We’ve already written about this hotly contested case, in which an en banc panel of the Eighth Circuit issued a split (5-4) decision finding that a continuing violation tolls the statute of limitations so long as there were unlawful acts (e.g., sales) within the limitations period, even where the alleged Sherman Act conspiracy transpired outside the statute of limitations.
The case involved a challenge to an allegedly coordinated, anticompetitive change in the defendant propane suppliers’ practices. Before 2008, defendants allegedly filled standard-size tanks with 17 pounds of propane. Plaintiffs alleged that, in 2008, defendants colluded to reduce the amount of propane in standard tanks to 15 pounds while keeping prices the same, resulting in an effective price increase of 13% per tank. Plaintiffs filed suit in 2014—about six years after the alleged agreement. The district court dismissed plaintiffs’ suit as time-barred, and a three-judge panel of the Eighth Circuit affirmed that dismissal. See 834 F.3d 943 (8th Cir. 2016).
The en banc Circuit reversed, holding that a continuing violation tolls the statute of limitations as long as there are unlawful overt acts within the limitations period, even if the alleged conspiracy was hatched outside the Sherman Act’s four-year limitations period. Relying principally on the Supreme Court’s decision in Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), a RICO case, the majority held that, in an antitrust suit, each unlawful sale at supracompetitive prices could qualify as an overt act and thereby restart the tolling period, regardless of whether the plaintiff had earlier knowledge of the allegedly illegal conduct. However, relying on the Supreme Court’s decision in Klehr, the Circuit also emphasized that a “plaintiff cannot use an independent, new predicate act as a bootstrap to recover for injuries caused by other earlier predicate acts that took place outside the limitations period.”
The dissent strongly disagreed with the majority’s decision, finding that “each sale to the plaintiff can start the statutory period running again” only “so long as an illegal price-fixing conspiracy is alive and ongoing.”
2. United States v. Kemp & Associates, No. 2:16-cr-403, 2017 U.S. Dist. LEXIS 138080 (D. Utah Aug. 28, 2017)
In August, a Utah district court considering the continuing violation doctrine in the context of criminal antitrust charges reached a different conclusion.
The 2016 indictment at issue in United States v. Kemp & Associates alleged that defendants entered into a conspiracy to suppress and eventually eliminate competition in the heir-location services market by allocating customers between Kemp & Associates and other heir location services. Noting that the limitations period for a conspiracy to violate the antitrust laws is five years, see 18 U.S.C. § 3282(a), the court determined that the pertinent agreements to allocate customers terminated in 2008, eight years before the indictment was returned.
The Government argued that one of the objects of the conspiracy “was economic enrichment” and that because the conspirators continued to earn proceeds from the administration of estates beyond 2008, the charges were timely. The district court disagreed. Observing that a conspiracy to violate the Sherman Act “exists only for so long as its members continue to commit acts in furtherance of the agreement that tend to suppress or restrain competition,” the court opined that the Government’s theory “confuses the results of a conspiracy with actual conduct in furtherance of it.” Accordingly, the court held that the “conspiracy ended with the termination” of the agreement to allocate customers in 2008, and dismissed the indictment.
The Government has appealed this ruling—as well as the court’s prior conclusion that the customer-allocation agreement, ordinarily a per se violation, was subject to the rule of reason under the facts of this case—to the Tenth Circuit.
3. In re Packaged Seafood Products Antitrust Litigation, 242 F. Supp. 3d 1033 (S.D. Cal. 2017)
In re Packaged Seafood is a multi-district litigation consolidating dozens of actions predicated on an alleged price-fixing conspiracy among sellers of packaged seafood, such as canned tuna, in violation of the Sherman Act, state antitrust laws, and other state consumer-protection laws. (The United States has also intervened in light of a pending federal criminal case concerning the same conduct.)
This court also addressed the continuing violation doctrine. Unlike the en banc Eighth Circuit in Pre-Filled Propane, the Seafood court in a brief discussion held that it would not “apply the continuing conspiracy doctrine to Sherman Act damage claims generally,” let alone the “more-lenient standard wherein each sale of a price-fixed product constitutes an overt act that resets the underlying statute of limitations.”
The court also conducted a state-by-state analysis regarding the timeliness of the plaintiffs’ claims, in which it considered whether each state’s limitations period was triggered by an “injury” rule (in which case it started running the date of the last alleged injury) or by a “discovery” rule (in which case it started running when a plaintiff discovered or had reason to discover the injury). Ultimately, the court found that most of the plaintiffs’ state-law claims are not barred by the statute of limitations and can proceed.