The opinion of the court was delivered by: FEINBERG
Defendants in 418 related treble damage actions
brought under the Clayton Act (15 U.S.C.A. § 15) have moved under Rule 12(f), Fed.R.Civ.P., 28 U.S.C.A., to strike material from plaintiffs' complaints. Plaintiffs are public utilities, state and local governmental agencies or units and industrial corporations. Defendants include large national manufacturers of heavy electrical equipment. Comparable private treble damage suits have been instituted over the nation and roughly 1800, including those in this District, are now pending. The impetus for this massive litigation was supplied by criminal and civil injunctive proceedings brought by the United States Government against many of these defendants in 1960 in the Eastern District of Pennsylvania; the complaints before this Court were filed between November 1961 and March 1962.
The complaints generally allege that defendants combined and conspired to fix prices and rig bids with respect to the sale of specified electrical equipment,
and that plaintiffs' damages are based on their purchases from defendants during a period ranging from at least the 1940's to 1960.
Most of the complaints also allege that defendants actively and fraudulently concealed the existence of the alleged conspiracy, and that plaintiffs neither knew of the conspiracy nor, by the exercise of reasonable diligence, could have gained knowledge of its existence until they learned of the government suits in 1960.
Three motions by defendants were brought on by notice of motion dated May 25, 1962; on successive days in June, the motions were ably argued on the basis of thorough and well-reasoned briefs. The first motion, to which this opinion is limited, is based upon the applicable four-year statute of limitations, Section 4B of the Clayton Act ('Section 4B').
Defendants move to strike from the complaints all allegations of damages claimed for any period prior to the time period indicated by Section 4B and the related Section 5(b),
as well as allegations of fraudulent concealment of any alleged unlawful combination or conspiracy. Illustrative of allegations to which this motion is addressed are these:
'Beginning at least as early as January 1948 and continuing thereafter until at least as late as June 1960, the defendants, co-conspirators and other persons presently unknown have engaged in a combination and conspiracy in restraint of interstate trade and commerce in turbine-generators in violation of § 1 of the Sherman Act (15 U.S.C. § 1).
'The defendants and co-conspirators used various devices and practices to conceal the existence of their conspiracy * * *. The defendants and co-conspirators also rigged price quotations and bids to purchasers and so represented their prices to plaintiffs as to create the semblance of competitive bidding and pricing and thereby deceived plaintiffs into thinking that they were receiving competitive prices. By reason of these and other deliberate acts, the defendants and co-conspirators fraudulently concealed the existence of their combination and conspiracy and plaintiffs had no knowledge and could not by the exercise of reasonable diligence have obtained knowledge of the existence of the combination and conspiracy until the institution of the proceedings described in paragraph 15.'
The crucial question for determination is one of statutory construction; i.e., is Section 4B construed to allow its four-year time period to be tolled by fraudulent concealment? In support of the proposition that it is not,
defendants, inter alia, rely on the wording of the statute, the legislative history of Section 4B, and a contention that the statute cannot be suspended on a non-statutory ground because it is substantive and not procedural in character. Plaintiffs argue principally that a doctrine of fraudulent concealment is read into every federal statute of limitations; the legislative history of Section 4B demonstrates that fraudulent concealment applies to private damage actions for antitrust violations, 'artificial' formulae such as 'substantive-procedural' notwithstanding, and the Court of Appeals for the Second Circuit in Moviecolor, Ltd. v. Eastman Kodak Co.
has held that fraudulent concealment tolls Section 4B of the Clayton Act.
I am persuaded that Moviecolor provides the complete answer to all of defendants' contentions; therefore, I will discuss the case in some detail. Initially, I note that the parties concede that Section 4B applies to cases filed after January 7, 1956, whatever the date of accrual of the cause of action;
they differ only on the effect of concealment.
Moviecolor was an action for treble damages under Section 4 of the Clayton Act. Plaintiff Moviecolor was a British corporation formed in 1929 and dissolved in 1939. Its action presumably accrued in 1929 or the early 1930's but was not brought until 1959.
Section 4B was asserted as a defense in the answers. Defendants then moved for judgment on the pleadings under Rule 12(c), Fed.R.Civ.P., claiming that the action was barred by 'both the applicable state and federal statutes of limitations.'
The District Court judge granted the motion. He pointed out that Section 4B had become effective on January 7, 1956, that prior to that time the federal courts looked to the statute of limitations of the states in which they sat, and that Section 4B made clear that if, on its effective date, state law barred the claim, Section 4B would not revive it. Therefore, he examined the New York statute of limitations (New York Civil Practice Act, § 48(2)) to see whether the claim was barred on January 7, 1956. The District Court judge held that under New York law fraudulent concealment did not toll the New York statute of limitations. The crucial issue, therefore, was whether what he called 'the federal equitable doctrine' of Bailey v. Glover, 21 Wall. 342, 88 U.S. 342, 22 L. Ed. 636 (1874) was available to toll the state statute. He concluded that it was not, even though the action was brought to enforce a federally created right, because the action was at law rather than in equity. It is clear from the opinion that the District Court would have reached a contrary result, on the authority of Holmberg v. Armbrecht, 327 U.S. 392, 66 S. Ct. 582, 90 L. Ed. 743 (1946), had the action been in equity.
Thereafter, plaintiff appealed. In an opinion by Judge Friendly speaking for a unanimous Court, the reasoning of the holding below was explicitly overruled. The Court stated (288 F.2d at 83):
'We hold that the federal rule as to the effect of concealment on the running of a period of limitation applies to an action for treble damages under the Clayton Act even when a state statute is used to measure the period * * *.'
The Court of Appeals, however, did not reverse the judgment of the District Court. It went on to consider the additional question of whether plaintiff's complaint alleged facts sufficient to bring it 'within the federal concealment rule.'
Since it concluded that the complaint did not meet that test, the judgment for defendants was affirmed.
Defendants attempt to minimize the controlling effect of Moviecolor. They urge that Moviecolor is not a holding that the fraudulent concealment doctrine applies to Section 4B but is dictum at best, that the decision applies only to a state statute of limitations, and is inapplicable to the main issue here.
They attempt to buttress this position by contending that the issue of whether Section 4B is tolled by fraudulent concealment was not fully briefed before the Court of Appeals.