California v. Emhart Corp.

70 F.R.D. 29
District Court, D. Connecticut·Decided February 27, 1976·No. M.D.L. No. 45 and Civ. No. H-61·Published·Cited by 5 cases

Opinion

RULING ON MOTION FOR SUMMARY JUDGMENT

BLUMENFELD, District Judge.

On April 25, 1973, the State of California filed this action in the United States District Court for the Central District of California, alleging that the defendants had conspired to restrain trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1970). Jurisdiction exists pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15 (1970). The action was eventually transferred to this court pursuant to 28 U.S.C. § 1407, to be consolidated with the other actions pending here. In re Master Key Antitrust Litigation, M.D.L. Dkt. No. 45.

Three of the defendants, Eaton Corporation, Ileo Corporation, and Sargent & Company, have filed a motion for summary judgment in this individual action. They argue that the claims of the State of California are barred by the Clayton’s Act’s four-year statute of limitations. 15 U.S.C. § 15b (1970).1

I. Statute of Limitations

The defendants are manufacturers of “master key systems.”2 The State of California contends that they conspired to restrain competition, enabling themselves to charge inflated prices for the systems. The complaint alleges a continuing conspiracy, the effects of which California suffered until the filing of its complaint.

The defendants, on the other hand, deny the existence of a conspiracy, and claim that even if there was at one time such a conspiracy, it ended more than four years before California can be deemed to have filed its complaint. There are thus two parts to the issue presented by this summary judgment motion. First, from what date should the four-year statute of lirriitations be measured; second, have the defendants met the requirements of Rule 56(b), Fed.R.Civ.P.?

The proper application of the Clayton Act statute of limitations was set out by the Supreme Court in Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77, 92 (1971):

“The basic rule is that damages are recoverable under the federal antitrust acts only if suit therefor is ‘commenced within four years after the cause of action accrued,’ 15 U.S.C. [32] § 15b, plus any additional number of years during which the statute of limitations was tolled. Generally, a cause of action accrues and the statute begins to run when a defendant commits an act that injures a plaintiff’s business. [Citations omitted.] This much is plain from the treble-damage statute itself. 15 U.S.C. § 15. In the context of a continuing conspiracy to violate the antitrust laws, such as the conspiracy in the instant case, this 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. [Citations omitted.]”

At the outset, therefore, California can maintain this action for any injury it has suffered due to any overt act of the defendants which occurred on or after April 25, 1969, four years before the suit was filed. It may, however, be entitled to the benefit of one or more tolling periods which would extend the period for which it can recover.

On February 3, 1970, the City of Philadelphia filed an action against these same defendants, alleging identical antitrust violations. City of Philadelphia v. Emhart Corp., Civil No. 70-352 (E.D.Pa.).3 In its action Philadelphia purported to represent a class described as:

“all state, county, and local governmental authorities and agencies in the United States who have purchased locks with Master Key Systems from one or more of the defendants.”

This class was tentatively certified by Judge Wood, 50 F.R.D. 232 (E.D.Pa. 1970), and his determination was reaffirmed by this court.4 Since the State of California was clearly a member of that class, the statute of limitations was tolled when that complaint was filed. American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). This takes the four-year period back to February 2, 1966.

Furthermore, California claims the benefits of Section 5(b) of the Clayton Act, 15 U.S.C. § 16(b) (1970),5 whifeh provides that at the time the federal government files an antitrust suit the running of the statute of limitations is suspended for the benefit of all private plaintiffs who bring suit within one year of the termination of the government’s action.

On July 11, 1969, the United States filed suit against each of these three defendants individually, alleging in each case a vertical conspiracy between the manufacturer and its distributors to restrain competition in the marketing of master key systems. Two of the three moving defendants stipulated to consent judgments.6 The third defendant, Eaton [33] Corporation, proceeded to trial, after which a jury returned a verdict in favor of the United States. Judgment was entered on March 10, 1972.7 Thus, the action continued to be pending for the purposes of Section 5(b) only until April 10, 1972, the date when the time for appeal from the judgment expired.8 Russ Togs, Inc. v. Grinnell Corp., 426 F.2d 850 (2d Cir.), cert. denied, 400 U.S. 878, 91 S.Ct. 119, 27 L.Ed.2d 115 (1970).

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California v. Emhart Corp., 70 F.R.D. 29 (D. Conn. 1976).

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