claims involve a "naked restraint" on price and/or output.
Plaintiffs allege it is not necessary under such circumstances
for the antitrust defendant to possess "market power" or to be a
monopolist for a prima facie Sherman Act violation to be
alleged or established.
It is crucial here to distinguish between a per se violation
of the antitrust laws and antitrust injury. As our Circuit has
stated, "proof of a per se violation and of antitrust injury
are distinct matters that must be shown independently." ARCO,
495 U.S. at 344, 110 S.Ct. 1884. In their complaint, plaintiffs
sufficiently have alleged both.
Per se violations of the Sherman Act include that "`limited
class of cases where a defendant's actions are so plainly harmful
to competition and so obviously lacking in any redeeming
pro-competitive values that they are conclusively presumed
illegal without further examination.'" Balaklaw, 14 F.3d at 800
n. 14 (quoting Capital Imaging Assocs., P.C. v. Mohawk Valley
Medical Assocs., Inc., 996 F.2d 537, 542 (2d Cir. 1993)). While
the per se rules are the product of judicial interpretations of
the Sherman Act, they have the "same force and effect as any
other statutory commands." Federal Trade Comm'n v. Superior
Court Trial Lawyers Ass'n, 493 U.S. 411, 433, 110 S.Ct. 768, 107
L.Ed.2d 851 (1990). Further, "[t]he per se rules reflect a
longstanding judgment that the prohibited practices by their
nature have `a substantial potential for impact on competition.'"
Id. (quoting Jefferson Parish Hosp. Dist. No. 2 v. Hyde,
466 U.S. 2, 16, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984)). "[T]he
rationale for per se rules in part is to avoid a burdensome
inquiry into actual market conditions in situations where the
likelihood of anticompetitive conduct is so great as to render
unjustified the costs of determining whether the particular case
at bar involves anticompetitive conduct." Id. at 433 n. 15, 110
S.Ct. 768 (internal quotations omitted); see also ARCO, 495
U.S. at 342, 110 S.Ct. 1884.
A vertical minimum price-fixing scheme is unlawful per se
under § 1 of the Sherman Act. See State Oil Co. v. Khan,
522 U.S. 3, 118 S.Ct. 275, 283, 139 L.Ed.2d 199 (1997) (affirming
vertical minimum price-fixing schemes as illegal per se);
Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d
998 (1968); In re Playmobil Antitrust Litig., 35 F. Supp.2d 231,
249 (E.D.N.Y. 1998); Konik v. Champlain Valley Physicians Hosp.
Medical Center, 561 F. Supp. 700, 715 (N.D.N.Y. 1983).
Likewise, horizontal price-fixing is considered a per se
violation of the antitrust laws because "[e]very such horizontal
arrangement among competitors poses some threat to the free
market." FTC, 493 U.S. at 434, 423, 110 S.Ct. 768 ("The
horizontal arrangement among these competitors was unquestionably
a `naked restraint' on price and output."). See also United
States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225, 60 S.Ct.
811, 84 L.Ed. 1129 (1940) ("Whatever economic justification
particular price-fixing agreements may be thought to have, the
law does not permit an inquiry into their reasonableness. They
are  banned because of their actual or potential threat to the
central nervous system of the economy."); Balaklaw, 14 F.3d at
800 n. 14.
As previously noted, plaintiffs here allege both horizontal and
vertical price-fixing arrangements. They allege that in a minimum
price-fixing case, the "consumer's payment of an artificially
high price is itself the antitrust injury redressable under the
antitrust law." Plaintiff's Memo at 10. Plaintiffs assert that
the cases relied on by defendants, by contrast, generally involve
vertical agreements by competitors to fix maximum resale prices
which, apart from any harm to specific plaintiffs, may have
enhanced overall competition by offering goods to consumers at
artificially low prices.
Case law teaches that consumers are not required to prove
market power in
cases involving per se violations of the antitrust laws. The
Supreme Court has noted:
As a matter of law, the absence of proof of market
power does not justify a naked restriction on price
or output. To the contrary, when there is an
agreement not to compete in terms of price or output,
no elaborate industry analysis is required to
demonstrate the anticompetitive character of such an
agreement. . . . . We have never required proof of
market power in such a case.
National Collegiate Athletic Ass'n v. Board of Regents of the
University of Oklahoma, 468 U.S. 85, 109-10, 104 S.Ct. 2948, 82
L.Ed.2d 70 (1984) (internal quotations omitted); see also FTC,
493 U.S. at 423, 110 S.Ct. 768.*fn5
Regardless of whether a claim is based on a per se violation,
a plaintiff still must plead antitrust injury. ARCO, 495 U.S.
at 341, 110 S.Ct. 1884 ("We reject respondent's suggestion that
no antitrust injury need be shown where a per se violation is
involved."). "The per se rule is a method of determining whether
§ 1 of the Sherman Act has been violated, but it does not
indicate whether a private plaintiff has suffered antitrust
injury and thus whether he may recover damages under § 4 of the
Clayton Act." Id. at 342, 110 S.Ct. 1884; see also Balaklaw,
14 F.3d at 800; Sage Realty Corp. v. ISS, Cleaning Services
Group, Inc., 936 F. Supp. 130, 135 (S.D.N.Y. 1996) (the need to
show antitrust injury is at least as great under per se rule as
under rule of reason); Indiana Grocery, Inc. v. Super Valu
Stores, Inc., 864 F.2d 1409, 1419 (7th Cir. 1989).
Defendants rely primarily on ARCO, George Haug and other
cases which hold that because conduct found to violate the per
se rule could, in a given case, be neutral or even beneficial to
competition, a private plaintiff must further allege that its
injury is tied to a "competition-reducing aspect or effect of the
defendant's behavior." ARCO at 343, 110 S.Ct. 1884. Defendants
note that to be "competition-reducing," our Circuit has
instructed that the conduct must have "an actual adverse effect
on competition as a whole." George Haug, 148 F.3d at 139.
The cases relied on by defendants are inapposite. In ARCO,
plaintiff USA Petroleum Company alleged a vertical, maximum
price-fixing agreement between the Atlantic Richfield Company and
its dealers, with whom plaintiff directly competed. The result of
the alleged conspiracy was that gas prices were maintained at
below market levels. The Court held that plaintiff had not
suffered antitrust injury because the maximum price-fixing scheme
resulted in nonpredatory prices. 495 U.S. at 339, 110 S.Ct. 1884.
The plaintiff in ARCO could not recover because as a
competitor, it potentially could have benefitted from the alleged
maximum-price agreement. See id. at 336-37, 110 S.Ct. 1884.
Similarly, in George Haug a Rolls Royce parts and service
dealer sued a competitor for, inter alia, conspiring with Rolls
Royce to drive plaintiff out of business, to restrain trade and
to form a monopoly. 148
F.3d at 138. Our Circuit upheld the district court's dismissal of
the complaint for failure sufficiently to allege antitrust injury
where plaintiff failed to plead its own market share for the
servicing of Rolls Royce cars or the market share absorbed by the
defendant competitor as a result of plaintiffs' elimination from
the market. Id. at 140. Here, plaintiffs are consumers of Nine
West's products — not its competitors.
A more instructive case is Reiter v. Sonotone Corp.,
442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979), in which the
Supreme Court analyzed the consumer antitrust injury that
plaintiffs allege they suffered here. The Supreme Court upheld a
district court's refusal to dismiss an antitrust class action
brought on behalf of purchasers of hearings aids manufactured by
five corporations. Plaintiffs in Reiter alleged vertical and
horizontal price-fixing by defendants which forced them "to pay
illegally fixed higher prices for the hearing aids and related
services they purchased from respondents' retail dealers." 442
U.S. at 335, 99 S.Ct. 2326. Plaintiffs sought Treble damages and
injunctive relief under §§ 4 and 16 of the Clayton Act. The Court
adopted an expansive interpretation of the phrase in § 4, "[a]ny
person who shall be injured in his business or property by reason
of anything forbidden in the antitrust laws." The Court noted:
Congress must have intended to exclude some class of
injuries by the phrase "business or property." But it
taxes the ordinary meaning of common terms to argue,
as respondents do, that a consumer's monetary injury
arising directly out of a retail purchase is not
comprehended by the natural and usual meaning of the
phrase "business or property." We simply give the
word "property" the independent significance to which
it is entitled in this context. A consumer whose
money has been diminished by reason of an antitrust
violation has been injured "in his . . . property"
within the meaning of § 4 of the Clayton Act.
Id. at 339, 99 S.Ct. 2326.
Plaintiffs complaint is sufficient to survive defendants'
motion to dismiss. Plaintiffs allege that the harm to competition
here is that Nine West and several department stores agreed among
themselves as to the prices of Nine West shoes as opposed to
allowing competition to determine prices, resulting in excessive
pricing of Nine West shoes. See FTC, 493 U.S. at 423, 110 S.Ct.
768 ("[T]he Sherman Act reflects a legislative judgment that
ultimately competition will produce not only lower prices, but
also better goods and services."). The factual allegation of
injury appears in ¶ 81 of the Complaint, which alleges that "as a
result of the conspiracy" plaintiffs have paid higher prices
"than they would have paid in the absence of the conspiracy."
Defendants conduct "reduced overall competition" in the market
and caused plaintiffs' "injury to their business and property."
Complaint ¶ 89. Given the standards this Court must adhere to on
a motion to dismiss, the plaintiffs sufficiently have alleged
legally cognizable injury resulting from the defendants' alleged
5. Conspiracy Claim
Defendants argue that plaintiffs' complaint should be dismissed
because it lacks specificity and thus fails to put defendants
sufficiently on notice of the claims against them. They assert
that plaintiffs must detail the conduct of each defendant in
participating in the conspiracy, including information on which
stores participated in which meetings in furtherance of the
To state a claim under section 1 of the Sherman Act, a
plaintiff must allege: (1) concerted action, (2) by two or more
persons that (3) unreasonably restrains trade. See Capital
Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc.,
996 F.2d 537, 542 (2d Cir.), cert. denied, 510 U.S. 947, 114 S.Ct.
L.Ed.2d 337 (1993); Brenner v. World Boxing Council,
675 F.2d 445, 451 (2d Cir.), cert. denied, 459 U.S. 835, 103 S.Ct. 79,
74 L.Ed.2d 76 (1982); Mover's & Warehousemen's Ass'n of Greater
New York, Inc. v. Long Island Moving & Storage Ass'n, Inc., No.
98 Civ. 5373(SJ), 1999 WL 1243054, at *3 (E.D.N.Y. Dec. 16,
1999); Granite Partners, L.P. v. Bear, Stearns & Co., Inc.,
58 F. Supp.2d 228, 238 (S.D.N.Y. 1999); Continental Orthopedic
Appliances, Inc. v. Health Insurance Plan of Greater New York,
Inc., 994 F. Supp. 133, 138 (S.D.N.Y. 1998); In re Nasdaq
Market-Makers Antitrust Litig., 894 F. Supp. 703, 710 (S.D.N Y
1995). The complaint "must identify the co-conspirators, and
describe the nature and effects of the alleged conspiracy."
Continental Orthopedic, 994 F. Supp. at 138 (quoting
International Television Productions Ltd. v. Twentieth
Century-Fox Television Division, 622 F. Supp. 1532, 1537
(S.D.N.Y. 1985)). To measure the sufficiency of the plaintiffs'
claim, the Court must determine whether the complaint "contains
either direct or inferential allegations respecting all the
material elements necessary to sustain a recovery under some
viable legal theory." Id.; see also Brenner, 675 F.2d at 451
("Concerted action need not be proved directly, but can be based
upon circumstantial evidence; for example, from inferences drawn
from the words and conduct of the parties to the agreement and
from their course of dealing").
Plaintiffs have satisfied all three elements. Plaintiffs here
have alleged that Nine West and at least 10 department stores
agreed among themselves to fix prices of Nine West shoes. The
complaint gives some detail about how this conspiracy operated by
alleging, inter alia, when and where defendants conducted their
conspiratorial meetings and how prices were set and suggests how
defendants monitored and enforced their conspiracy. They allege
that this conspiracy restrained trade by reducing competition and
forcing consumers to pay artificially inflated prices.
Furthermore, relevant information regarding the conduct of
particular defendants is "`largely in the hands of the alleged
conspirators.'" Gross, 955 F. Supp. at 247 (quoting Poller v.
Columbia Broadcasting, 368 U.S. 464, 473, 82 S.Ct. 486, 7
L.Ed.2d 458 (1962)). Consumer antitrust plaintiffs like those
here have less ability to determine the details of this alleged
conspiracy than would competitors. See id.
6. Statute of Limitations
Defendants argue that plaintiffs' action should be limited to
claims arising after January 15, 1995, consistent with the
four-year statute of limitations governing antitrust claims. They
assert that plaintiffs' allegations fail to satisfy the
heightened pleading requirements of Fed.R.Civ.P. 9(b), which
provides in relevant part: "Fraud, Mistake, Condition of the
Mind. In all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with
particularity." Plaintiffs assert that claims dating back to
January 1, 1988 are not time-barred because the statute of
limitations was tolled under the doctrine of fraudulent
Under § 4B of the Clayton Act, a four-year statute of
limitations governs private civil antitrust actions seeking
treble damages. 15 U.S.C. § 15b; Klehr v. A.O. Smith Corp.,
521 U.S. 179, 189, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997); New York
v. Hendrickson Bros., Inc., 840 F.2d 1065, 1083 (2d Cir. 1988).
An antitrust action accrues and the statute of limitations begins
to run when the defendant commits an act that injures the
plaintiff. Zenith Radio Corp. v. Hazeltine Research, Inc.,
401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971); Higgins v.
New York Stock Exchange, Inc., 942 F.2d 829, 832 (2d Cir. 1991).
An overt act committed more than four years prior to the filing
of the complaint whose effects were first felt outside the
limitations period, therefore, usually will not support a cause
of action even if the effects persist into the limitations
Donahue v. Pendleton Woolen Mills, Inc., 633 F. Supp. 1423,
1440-41 (S.D.N.Y. 1986). Exceptions exist for damages that would
have been too speculative to recover at the time plaintiff filed
suit, and for damages resulting from an act outside the four year
period whose effects first were felt within the statutory period.
Higgins, 942 F.2d at 832.
In the context of a continuing antitrust conspiracy, such as
the price-fixing scheme alleged in this action, the general
limitations rule "has usually been understood to mean that each
time a plaintiff is injured by an act of the defendants a cause
of action accrues to him to recover the damages caused by that
act and that, as to those damages, the statute of limitations
runs from the commission of the act." Id. (quoting Zenith,
401 U.S. at 338, 91 S.Ct. 795). The Supreme Court has explained
further that in the case of a price-fixing conspiracy that
"brings about a series of unlawfully high priced sales over a
period of years, each overt act that is part of the violation and
that injures the plaintiff, e.g., each sale to the plaintiff,
starts the statutory period running again, regardless of the
plaintiff's knowledge of the alleged illegality at much earlier
times." Klehr, 521 U.S. at 189, 117 S.Ct. 1984 (internal
quotations omitted). But the commission of a "separate new overt
act" will not permit the plaintiff to recover for the injury
caused by old overt acts that do not fall within the limitations
a. Fraudulent Concealment
The statute of limitations for an antitrust violation is tolled
if plaintiff can show fraudulent concealment. Id.; Hendrickson
Bros., 840 F.2d at 1083; Donahue, 633 F. Supp. at 1440. "[T]he
purpose of the fraudulent-concealment doctrine is to prevent a
defendant from `concealing a fraud, or . . . committing a fraud
in a manner that it concealed itself until such time as the party
committing the fraud could plead the statute of limitations to
protect it.'" Hendrickson Bros., 840 F.2d at 1083 (quoting
Bailey v. Glover, 88 U.S. (21 Wall.) 342, 349, 22 L.Ed. 636
In order to show fraudulent concealment, an antitrust plaintiff
must prove (1) that the defendant concealed the existence of the
antitrust violation, (2) that plaintiff remained in ignorance of
the violation until sometime within the four-year antitrust
statute of limitations; and (3) that his continuing ignorance was
not the result of lack of diligence. In re Merrill Lynch Limited
Partnerships Litig., 154 F.3d 56, 60 (2d Cir. 1998);
Hendrickson Bros., 840 F.2d at 1083; In re NASDAQ
Market-Makers Antitrust Litig., 169 F.R.D. 493, 519 (S.D.N Y
1996); Donahue, 633 F. Supp. at 1443. "The burden rests squarely
on the party pleading fraudulent concealment, and courts require
particularity in pleading fraudulent concealment." Donahue, 633
F. Supp. at 1443. Defendants contest the adequacy of plaintiffs'
pleading with respect to elements one and three of the
Circuits have adopted different standards of proof required to
show fraudulent concealment. See, e.g., King & King Enters. v.
Champlin Petroleum Co., 657 F.2d 1147, 1156 (10th Cir. 1981)
(fraudulent concealment toll applies where the "defendant
actively sought to conceal its price-fixing activities, and the
defendant's conduct, by reason of its fraudulent nature, was
inherently self-concealing."). State of West Virginia ex rel.
McGraw v. Meadow Gold Dairies, Inc., 875 F. Supp. 340, 343
(W.D.Va. 1994) (discussing three different standards). Our
Circuit has adopted the more lenient standard requiring
plaintiffs to prove concealment by showing either that the
defendants took affirmative steps to prevent plaintiffs'
discovery of the conspiracy, or that the conspiracy itself was
inherently self-concealing. Hendrickson, 840 F.2d at 1083.
In Hendrickson, our Circuit addressed the question whether
defendants were entitled to either a judgment notwithstanding the
verdict or to a new trial on the grounds that the State's claims
to obtain highway construction contracts and to fix prices were
barred by the statute of limitations. The Court of Appeals held
that since bid-rigging and price-fixing conspiracies are deemed
self-concealing, a plaintiff is not required to show defendants
took independent affirmative steps to conceal their conduct.
Id. at 1083; see also New York v. Cedar Park Concrete Corp.,
684 F. Supp. 1229, 1231-32 (S.D.N.Y. 1988).
Because, unlike in Hendrickson, this issue arises in the
context of a motion to dismiss, this Court must look only to the
allegations contained within the four corners of the complaint.
See Cedar Park Concrete Corp., 684 F. Supp. at 1232. Thus, by
alleging a price-fixing scheme, the plaintiff sufficiently has
alleged the first prong of fraudulent concealment and under
Hendrickson, there is no need to require the pleading of
affirmative actions taken by the defendants to prevent the
plaintiff's discovery. of its claim. See id.; Hendrickson, 840
F.2d at 1083-84.
B. Due Diligence
"`The concealment requirement is satisfied only if the
plaintiff shows that he neither knew nor, in the exercise of due
diligence, could reasonably have known of the offense.'" Klehr,
521 U.S. at 195, 117 S.Ct. 1984 (quoting II Areeda & Hovenkamp,
Antitrust Law § 338, at 152); see also Cerbone v. International
Ladies' Garment Workers' Union, 768 F.2d 45, 48 (2d Cir. 1985)
("the statute does not begin to run until the plaintiff either
acquires actual knowledge of the facts that comprise his cause of
action or should have acquired such knowledge through the
exercise of reasonable diligence after being apprised of
sufficient facts to put him on notice."); Camotex, S.R.L. v.
Hunt, 751 F. Supp. 469, 470 (S.D.N.Y. 1990) (same). Plaintiffs
must plead due diligence with specificity. In re Merrill Lynch,
154 F.3d at 60 (affirming dismissal of complaint where plaintiffs
"did not allege . . . that they exercised due diligence; they
make no allegation of any specific inquiries of [defendant], let
alone detail . . . such inquiries. . . .").
Plaintiffs have sufficiently alleged due diligence. The
Plaintiffs and the other class members could not have
discovered the conspiracy at an earlier date by the
exercise of due diligence because of the affirmative,
deceptive practices and techniques of secrecy
employed by Defendants, including, but not limited
to: (1) the selective use by the Defendants of
"promotional windows" to create the false appearance
that discounting was occurring through ordinary
market forces; and (2) hiding the existence and
purpose of the Off Limits Lists from the consuming
Complaint ¶ 84.
Plaintiffs filed their complaint on February 18, 1999, within
days after the national media reported on allegations of
price-fixing by Nine West. Plaintiffs claim that this was the
first public disclosure of facts relating to the alleged
conspiracy and that prior to the articles, there was insufficient
public indication of Nine West's pricing practices to trigger the
running of the statute of limitations. See Camotex, 751 F. Supp.
at 472. As one district court wrote in the context of RICO
claims, the question is "whether the plaintiffs received
information sufficient to alert a reasonable person to the
probability that they had been misled, that is whether the
plaintiffs were on inquiry notice; and . . . whether the
plaintiffs responded to such notice with reasonable diligence."
Butala v. Agashiwala, No. 95 Civ. 936(JGK), 1997 WL 79845, at
*4 (S.D.N.Y. Feb. 24, 1997). Once plaintiffs were alerted to
their potential claims by the media, they promptly filed suit and
thus have satisfied the due diligence requirement.
For the foregoing reasons, defendants' motion to dismiss is