Atlantic City Electric Company v. General Electric Company

312 F.2d 236, 1962 U.S. App. LEXIS 3186, 1963 Trade Cas. (CCH) 70,604

• Court: Court of Appeals for the Second Circuit
• Decided: December 31, 1962
• Docket: 208, Docket 27884
• Status: Published

Opinions

LUMBARD, Chief Judge.

The question for decision is whether fraudulent concealment of the existence of a cause of action under § 4 of the Clayton Act, 38 Stat. 731 (1914), 15 U.S.C. § 15, tolls the running of the four-year limitation period contained in §§ 4B and 5(b) of the Act, as amended by Act of July 7, 1955, 69 Stat. 282, 15 U.S.C. §§ 15b and 16(b). We hold that it does and accordingly we affirm Judge Fein-berg’s order, 207 F.Supp. 613 (1962), denying motions of the defendants in 418 related actions pending in the Southern District of New York to strike from the complaints (1) allegations relating to damages sustained prior to the statutory limitation period, and (2) allegations relating to the fraudulent concealment of the conspiracies of the defendants involved in each case.¹

Judge Feinberg, in denying the defendants’ motions, certified that he was of the opinion that a controlling question of law was involved as to which there was substantial ground for difference of opinion, and that immediate appeal from his order might materially advance the ultimate termination of the litigation.² We granted the defendants’ petition for leave to appeal, under 28 U.S.C. § 1292(b), Judges Friendly and Smith not participating. Because of the importance of the question we ordered argument before the court sitting in banc. The relevant issues have been so thoroughly explored by the Court of Appeals for the Eighth Circuit³ and by at least eight district judges ⁴ that we deem it unnecessary to do more than briefly summarize the reasons for our conclusion.

The intendment of the relevant decisions of the Supreme Court starting with Bailey v. Glover, 88 U.S. (21 Wall.) 342, 22 L.Ed. 636 (1874), is that all federal limitation statutes are subject to the doctrine of fraudulent concealment, so that if the doctrine applies “the statute does not begin to run until the fraud is discovered by, or becomes known to, the party suing. * * * ” Id. at 350. Exploration Co. v. United States, 247 U.S. 435, 38 S.Ct. 571, 62 L.Ed. 1200 (1918), applied this doctrine to the statute of limitations in the land patents act, ch. 559, 26 Stat. 1093 (1891), 43 U.S.C. § 1166. In Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946), the Supreme Court declined to borrow” state law and applied the doctrine in a suit to enforce a federally-created equitable right arising out of § 16 of the Federal Farm Loan Act, 39 Stat. 374 (1916), 12 U.S.C. § 812, which contained no statute of limitation. Speaking for the Court, Mr. Justice Frankfurter stated: “This equitable doctrine is read into every federal statute of limitation.” 327 U.S. at 397, 66 S.Ct. at 585. tt

Thus the doctrine of fraudulent concealment and its application to federal statutes was well known when, starting in 1949,⁵ Congress came to deal with proposals to write a limitation period into the antitrust laws in order to bring some uniformity to a field which had been left subject to the confusion of differing applicable state statutes. Section 4B, as finally enacted after six years of proposed legislation and committee hearings, reads:

“Any action to enforce any cause of action under section 4 or 4A shall be forever barred unless commenced within four years after the cause of action accrued. No cause of action barred under existing law on the effective date of this Act shall be revived by this Act.” 69 Stat. 283 (1955), 15 U.S.C. § 15b.⁶

Among the prior bills which Congress failed to enact were several which expressly provided that in conspiracy cases the statute of limitations would not begin to run until the injured party discovered or had reason to discover the facts on which his claim was based;⁷ there are indications in the legislative history that Congress was aware of the issue at stake.⁸ But we do not believe that this background to § 4B evinces a congressional intention to enact an absolute period of limitation which would not be subject to tolling in cases of fraudulent concealment. The failure to enact bills containing provisions that would have embodied a discovery provision in the words of the statute is hardly the kind of express negative which we think would be necessary to reverse so well established a policy of the law.⁹ As we read the Supreme Court’s opinion in Holmberg v. Armbreeht, supra, that policy is so strong that it is applicable unless Congress expressly provides to the contrary in clear and unambiguous language.

This seems to have been the view of Congressman Celler, Chairman of the Judiciary Committee of the House, who stated in response to a question on the floor of the House that: “In the case of fraud or conspiracy the statute of limitation only runs from the time of discovery.” 101 Cong.Rec. 5133, 84th Cong. 1st Sess. (1955). It seems far more likely that when Congress enacted § 4B, it intended that the doctrine of fraudulent concealment continue to apply as it had under Holmberg and its predecessors, than that it be discarded by reference to legislative history.

The appellants have strenuously urged that there are good reasons for never tolling the limitation period in antitrust actions. But it is the sole province of the Congress to weigh such factors and to determine whether well understood and long accepted doctrines are to be changed. If the Congress is disposed to make such a change it must do so by words which cannot be misunderstood.

The order of the district court is affirmed.

1 . Judge Feinberg’s order has been made applicable to nine additional related actions commenced after entry of the order. Pre-trial order of Chief Judge Ryan, entered on September 14, 1962 (S.D.N.Y.).

2 . Judge Feinberg decided on the basis that the decision of this court in Moviecolor Ltd. v. Eastman Kodak Co., 2 Cir., 288 F.2d 80, cert. denied, 368 U.S. 821, 82 S.Ct. 39, 7 L.Ed.2d 26 (1961), was controlling. The opinion in that case was concerned with the applicability of the concealment doctrine to a state statute of limitation “borrowed” for the purpose of an action under the Clayton Act, see id. at 82, 83, and was decided on the ground that, although the doctrine applied, the complaint did not allege sufficient facts to give the plaintiff the benefit of it. Although Moviecolor is therefore not dis-positive of the question now before us, we are in accord with the general views expressed by Judge Friendly in that opinion, as hereafter indicated.

3 . Kansas City, Missouri v. Federal Pacific Electric Co., 310 F.2d 271, cert. denied, 371 U.S. 912, 83 S.Ct. 256, 9 L.Ed.2d 171 (1962). Belying primarily on its analysis of the legislative history of § 4B, the Court of Appeals ruled as we do here.

4 . In addition to Judge Feinberg’s ruling below, three other district courts have held that fraudulent concealment tolls the statute of limitations. Public Service Co. of Colorado v. Allen-Bradley Co. (D. Colo., 1962); Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 210 F.Supp. 557 (N.D.Ill., 1962); United States v. General Electric Co. (E.D.Pa., 1962). In two earlier cases, district courts reached the same conclusion without much discussion. Gaetzi Distributing Co. v. Carling Brewery Co., 205 F.Supp. 615 (E.D.Mich.1962); Dovberg v. Dow Chemical Co., 195 F.Supp. 337 (E.D.Pa. 1961) . Four district courts have held that fraudulent concealment does not toll the statute of limitations. Binzler v. Westinghouse Electric Corp., 214 F.Supp. 49 (N.D.Ga., 1962); Brigham City Corp. v. General Electric Co., 210 F.Supp. 574 (D.Utah, 1962); Kansas City, Missouri v. Federal Pacific Electric Co., 210 F.Supp. 545 (W.D.Mo., 1962) ; Public Service Co. of New Mexico v. General Electric Co., (D.N.M., July 25, 1962) .

5 . On May 20, 1949, S. 1910, “a bill to amend the Sherman and Clayton Acts to provide a uniform period of limitations within which treble-damage actions may be instituted under the antitrust laws,” was introduced in the Senate and referred to the Committee on the Judiciary. 95 Cong.Bec. 6493, 81st Cong. 1st Sess.

6 . Section 5(b), as amended in 1955, modifies § 4B as follows:

“Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, but not including an action under section 4A, the running of the statute of limitations in respect of every private right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pend-ency thereof and for one year thereafter : Provided, however, That whenever the running of the statute of limitations in respect of a cause of action arising under section 4 is suspended hereunder, any action to enforce such cause of action shall be forever barred unles commenced either within the period of suspension or within four years after the cause of action accrued.” 69 Stat. 283, 15 U.S.O. § 16(b).

7 . S. 1910, 81st Cong. 1st Sess. (1949), would have added to section 4 of the Clayton Act the following:

“Any action pursuant to this section tion may be instituted within six years after the accrual of the cause of action hereunder; or, in the case of any such cause of action based upon an alleged conspiracy in violation of the antitrust laws, within six years after the discovery by the plaintiff of the facts upon which he relies for proof of the existence of such conspiracy, if the plaintiff has exercised due diligence in seeking to discover such facts.”

H.R. 7905, 81st Cong.2d Sess. (1950), proposed amendments to section 4, including the following:

“Any action (including an action brought by or on behalf of the United States) to enforce any cause of action under this section may be commenced within six years after the cause of action accrued or, if the cause of action is based upon a conspiracy in violation of the antitrust laws, after the plaintiff discovered (or, by the exercise of reasonable diligence, should have discovered) the facts relied upon for proof of the conspiracy; and every such action (including an action brought by or on behalf of the United States) shall be forever barred unless commenced within such six-year period.”

Other bills which were introduced prior to 1955 include:

H.R. 4985, 81st Cong. 1st Sess. (1949) ;

H.R. 8763, 81st Cong. 2d Sess. (1950) ;

H.R. 3408, 82nd Cong. 1st Sess. (1951) ;

H.R. 1323, 82nd Cong. 1st Sess. (1951);

H.R. 1986, 82nd Cong. 1st Sess. (1951);

H.R. 467, 83rd Cong. 1st Sess. (1953).

8 . See, e. g., Hearings before the Subcommittee on Study of Monopoly Power of the House Committee on the Judiciary, 81st Cong. 2nd Sess., ser. no. 14, pt. 5, at 20-23 (1950) [on H.R. 7905]; H.R.Rep. No. 2467, 81st Cong. 2nd Sess. 4; Hearings before the Subcommittee on Study of Monopoly Power of the House Committee on the Judiciary, 82nd Cong. 1st Sess., ser. no. 1, pt. 3, at 100 (1951) [on H.R. 3408]; 96 Cong.Rec. 10442, 81st Cong. 2nd Sess. (1950) [exchange between Mr. Hale and Mr. Celler]; 101 Cong.Rec. 5132, 84th Cong. 1st Sess. (1955) [remarks of Mr. Patman].

9 . It should be noted that a provision tolling the statute of limitations until the time of discovery of a violation is not the same as the doctrine of fraudulent concealment, which involves elements beyond the injured party’s failure to discover that a violation has taken place. Our opinion here is, of course, confined to the effect of fraudulent concealment on the running of the statute of limitations, and does not extend to cases involving delayed discovery where there has been no fraudulent concealment,