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Eighth Circuit Applies Continuing Violation Doctrine to Extend Statute of Limitations for Sherman Act Claims

Recently in In re Pre-Filled Propane Tank Antitrust Litigation, an en banc panel of the Eighth Circuit clarified the application of the continuing violation exception to the statute of limitations for claims under the Sherman Act.  The Court was closely divided, with a 5-to-4 split between the majority opinion and a sharply worded dissent.  The majority held that, in an antitrust conspiracy suit, a continuing violation tolls the statute of limitations as long as there were unlawful acts (e.g., sales to the plaintiff) within the limitations period, even if the alleged conspiracy was hatched outside the four-year statute of limitations period.  The dissent, however, argued that to avoid dismissal plaintiffs are required to show a live, ongoing conspiracy within the limitations period.

The appeal involves claims by direct purchasers of pre-filled propane tanks against the two largest propane tank distributors.  Before 2008, defendants filled standard-size tanks with 17 pounds of propane.  Plaintiffs allege 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, arguably several years beyond the four-year limitations period for Sherman Act claims.  See 15 U.S.C. § 15(b).  The district court dismissed plaintiffs’ suit as time-barred.  A three-judge panel of the Eighth Circuit originally affirmed that dismissal.

But on rehearing en banc, a bare majority of the full Eighth Circuit reversed.  Relying principally on the Supreme Court’s decision in Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), the majority held that, in an antitrust suit, each allegedly unlawful sale restarts the running of the statute of limitations regardless of whether the plaintiff had earlier knowledge of the allegedly illegal conduct.  In doing so, the majority recognized several weaknesses in this argument—namely, that Klehr was a RICO case and that the relevant passage in that decision is dicta.  Nonetheless, it concluded that deference was owed to Klehr’s expression of the continuing violation doctrine, which it read as consistent with other Supreme Court antitrust decisions.  For example, the majority cited Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), in which the Supreme Court did not bar an antitrust plaintiff from bringing suit in 1955 for alleged monopolization that had started several decades earlier. 

Four dissenting judges strongly disagreed with the majority’s reliance on Klehr and its application of the continuing violation doctrine to Sherman Act claims.  The dissent stressed that Klehr was a RICO case and not readily applicable in the antitrust context.  Klehr’s discussion of antitrust law was limited to an offhand analogy between the civil RICO statute and the Clayton Act—but that, the dissent argued, does not mean that Klehr was espousing guidance on how the continuing violation doctrine should be applied in antitrust litigation.

According to the dissent, in order for the continuing violation doctrine to apply in an antitrust case, there must be a live, ongoing conspiracy within the limitations period.  The dissent argued, contrary to the majority’s reasoning, Hanover Shoe actually supports its interpretation of the doctrine because, in that case, the underlying conspiratorial activity was ongoing through the time that the plaintiff filed suit.  Furthermore, the dissent stressed, the purpose of the statute of limitations in private antitrust actions supports this interpretation because, by empowering private plaintiffs to bring antitrust claims, Congress meant to incentivize prompt action to redress allegedly harmful conduct.  As the dissent noted, “Congress did not intend for plaintiffs to sit back, with fully knowledge of the 2008 conspiracy, and wait six years before finally correcting a public harm.”

The dissent’s interpretation of Klehr arguably is more persuasive—particularly in light of the policy rationales behind private antitrust enforcement and need for repose to defendants from the threat of civil liability.  The Pre-Filled Propane Tank defendants likely will file a petition for writ of certiorari to the Supreme Court, but the odds of getting the Supreme Court to take the case are long.  Thus, at least in the near term, antitrust defendants should be aware of this lenient reading of the continuing violation exception to the statute of limitations for claims under the Sherman Act—at least in the Eighth Circuit.