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August 28, 1962


The opinion of the court was delivered by: Robson, District Judge.

In this memorandum the Court is concerned with the breadth of construction to be given the statute of limitations provision of Section 4B of the Clayton Act, 15 U.S.C.A. § 15b as presented by Part II of defendants' motion of February 1, 1962. The motion, made by 27 corporate defendants, variously involved in some 37 causes, challenges

  "all allegations of damage for any period prior
  to the time period of the statute of limitations
  provided in Section 4B of the Clayton Act (15
  U.S.C.A. § 15(b)) and all allegations relating to
  the alleged fraudulent concealment of the causes of
  action; or, in the alternative pursuant to Rules 12
  and 56 [28 U.S.C.], for an order or judgment
    "1. Count I in each complaint wherein the same
  cause of action (except for the time period
  involved) is pleaded in two counts; and
    "2. All claims in each of the single count
  complaints and all claims in Count II of multiple
  count complaints for damages during periods which
  antedate the time limitations provided by Section
  4B of the Clayton Act."

The Act provides:

    "Any action to enforce any cause of action
  under sections 15 or 15a of this title 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 section and sections 15a and 16 of
  this title shall be revived by said sections."

This provision was enacted July 7, 1955, to take effect six months thereafter. It is asserted that the various complaints cover as much as a twelve-year period beginning on or about January 1, 1947, and continuing until sometime in 1960, which charge the defendants as actively and fraudulently concealing the existence of the respective conspiracies.

The asserted legal bases of the motion to strike are that the statute is substantive, absolute, and bars causes unless commenced within four years after the cause of action accrued, and, the statute, not being procedural cannot be tolled for fraudulent concealment of the cause pending plaintiffs' discovery thereof.

This Court concludes that Section 4B is to be construed as being tolled by fraudulent concealment — as contrasted with nontolling by virtue of mere failure of an injured party timely to discover the existence of a cause of action.

The bases for this conclusion are:

(1) The legislative history, especially as revealed in the colloquy between Mr. Celler, the sponsor of the provision, and Mr. Patman, confirms a Congressional intention to read into the limitations provision an exception for fraudulent concealment. The earlier tendered, and rejected, exceptions pertained to discovery, of the existence of a cause of action, and not to fraudulent concealment thereof.

(2) The limitations provision of the Clayton Act is more properly akin to procedural than substantive in nature and therefore not subject to a strict construction.

(3) The doctrine of Bailey v. Glover, 21 Wall. 342, 88 U.S. 342, 22 L.Ed. 636 (1874), and Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946), of reading "into every federal statute of limitation" the equitable doctrine excepting from the statute's operation cases of fraud, and tolling the statute therefor, is applicable to Section 4B of the Clayton Act.

These very issues have recently received consideration in five different federal districts, resulting in three holdings in accord with defendants' view that there is an inelastic four-year limitations period, and two holdings that the limitation provision is tolled by fraudulent concealment. The Court has read the transcript of proceedings in Brigham City Corporation v. General Electric Company, Civil Action No. C 16-62 and Provo City Corporation v. General Electric Company, et al., No. C 28-62, wherein Judge A. Sherman Christenson (D.C. Utah) ruled orally that he was

  "clearly of the opinion that the statute of
  limitations * * * cannot be deemed to have read
  into it the so-called doctrine of concealment or
  the doctrine of discovery or a conglomeration of
  those doctrines by which the fact finder or the
  Court would let the decision as to the
  application of the statute turn upon the degree
  with which either subjective intention or
  objective action with regard to concealment was
  applied or was present.
    "An action for conspiracy I must take as one
  not in the category of the traditional action for
  fraud * * *. These things can't be regarded as
  making the statutory action one as in the
  category of an action for fraud. I'm going to
  tentatively make that ruling; and unless
  something is called to my attention which is
  controlling or reasons

  that persuade me otherwise, I'll pursue that
  position * * *. I'll strike those allegations (re
  fraudulent concealment) * * *." (In an oral
  decision Judge Waldo H. Rogers of Albuquerque,
  New Mexico, followed that of Judge Christenson).

Judge William H. Becker of Kansas City, Missouri has ruled similarly in two cases*fn1 before him. In a memorandum on the ruling he stated several considerations upon which his decision was founded. He considered as significant the lack of an express exception in Section 4B suspending the running of the four year period during the time the wrong was fraudulently concealed, the deliberate elimination of provisions suspending the running of the statute until the date of discovery, and "the long established rule that, when Congress creates a new right of action and explicitly limits the time in which the action may be brought, the explicit limitation governs and is not affected by the general federal doctrine employed to bar inequitable reliance on statutes of limitation." Judge Becker also considered the subject matter of the legislation and the effect that extending the period would have upon the dockets of the courts before which these antitrust cases are pending. With respect to the latter point, he stated:

    "The foreseeable effects of the application of
  equitable principles of suspension and estoppel
  upon the ability of the courts to process
  anticipated litigation should be given some
  consideration. In this connection there is the
  practical consideration that these antitrust
  cases and other cases ordinarily on the dockets
  may overtax the capacities of the courts if the
  period of limitation can be extended backward in
  time as contended by the plaintiff. Congress
  should be assumed to have had in mind the
  capacity of the courts to process the authorized
  litigation. If plaintiff's contention is
  sustained there is no definite limit in time
  beyond which treble damage actions are barred."

In contrast, Judge Wilfred Feinberg of the Southern District of New York, denied similar motions in Atlantic City Electric Company et al. v. General Electric Company, D.C., 207 F. Supp. 613. He stated that he was

  "* * * persuaded that Moviecolor*fn2 provides
  the complete answer to all of defendants'
  contentions * * *."

In answer to the argument that the applicable statement in the opinion of Judge Friendly in the Moviecolor case, supra, was dictum, he further stated

  "* * * analysis of Moviecolor compels the
  conclusion that the appellate court necessarily
  found that fraudulent concealment applies to
  Section 4B.
    "The complaint in Moviecolor was filed in 1959
  on a claim which had aged for almost 30 years.
  The lower court explicitly, and the Court of
  Appeals implicitly, recognized that Section 4B
  applied to the complaint before it. If the
  doctrine of fraudulent concealment did not apply
  to the action in Moviecolor and, therefore, did
  not toll the four year time limit of Section 4B,
  then the action was clearly barred since the
  claim arose almost 30 years before. * * *
  Therefore, to reach the ultimate issue decided in
  Moviecolor — that the federal fraudulent
  concealment doctrine also tolled the New York
  statute of limitations — the Court of Appeals
  first decided that fraudulent concealment was an
  existing federal doctrine and that it attached to
  Section 4B.
  "`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 * * *.'
  (emphasis supplied).
    "The Court was satisfied that the result was in
  accord with legislative intent. Thus, it stated
  (id. at 84):
    "`It seems far more likely that Congress would
  have desired the federal suitor it was creating
  to have the benefit of the federal rule
  prolonging the period of suit during concealment
  by the wrongdoer. This is particularly so when,
  as under the Clayton Act, enforcement of the
  right often serves not merely private but public
  ends. * * *'"
    "Moviecolor makes abundantly clear the view of
  the Court of Appeals that fraudulent concealment
  applies to Section 4B. * * *
    "* * * Accordingly, on what I conceive to be
  the clear authority of Moviecolor, defendants'
  motion is denied."

Judge Feinberg concluded the order involved a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal would materially advance the ultimate termination of the litigation.

In an opinion filed August 24, 1962, Judge C. William Kraft, Jr. of the Eastern District of Pennsylvania, ruled in favor of plaintiffs on this issue.*fn3 He rejected arguments advanced by defendants based upon the legislative history, the "clear meaning" of Section 4B and its being substantive rather than procedural, and thus not subject to being tolled by the fraudulent concealment doctrine. He concluded that:

    "A thorough study of the legislative history
  impels us to the conclusion that it was the
  intent of Congress that the limitations provision
  in § 4B be construed in the same manner as had the
  state statutes of limitations, i.e., as purely a
  statute of repose, affecting no substantive rights,
  and subject to the well-settled doctrine of
  fraudulent concealment."

There has also been a decision of especial pertinency in another district. In Michigan, Judge Wade H. McCree, Jr., in the case of Gaetzi, d.b.a. John A. Gaetzi Distributing Co. v. Carling Brewing Co., D.C., 205 F. Supp. 615, held:

    "We are dealing here with a federally-created
  right conjoined with a federal statute of
  limitations. In such a case the extension of
  limitations is governed by `federal equitable
  doctrine.' Bailey v. Glover, 21 Wall. 342,
  88 U.S. 342, 22 L.Ed. [636] (1874). * * *
    "* * * The rationale underlying the principle
  [is] that affirmative acts of concealment must be
  shown except in cases founded on fraud or breach of
  fiduciary duty.
    "* * * (C)oncealment necessitates the commission
  of affirmative acts. Mere silence, where there is
  no duty to speak, does not toll the statute."
  (Italics added.)

He held that in that case the conspiracy could have been discovered by due diligence well within the statutory period.

1. Legislative History. Defendants lay great stress on the legislative history of Section 4B as conclusive evidence of Congressional intent to achieve strict and invariable uniformity of limitations provisions throughout the nation, where, heretofore, they state, there was a

  "morass of often conflicting and generally
  confusing decisions which left both plaintiffs
  and defendants in doubt as to which state's
  statute applied, which statute within a given
  state controlled, when the statute began to run,
  and the circumstances, if any, under which the
  running of the statute was tolled."

They cite the fact that the Reports from both Houses indicated that

  "one of the primary purposes of this bill [was]
  to put an end to the confusion and discrimination
  present under existing law where local statutes
  of limitations are made applicable to rights
  granted under our Federal laws. This will be
  accomplished by establishing a uniform statute of
  limitations applicable to all private treble
  damage actions as well as Government damage
  actions, of 4 years." U.S.Code Cong. and Adm.News
  1955, p. 2331.

Bills were initiated in 1949 providing that the statute should not begin to run until "discovery by the plaintiff of the facts upon which he relies for proof of the existence of conspiracy, if the plaintiff has exercised due diligence in seeking to discover such facts." The Congressional subcommittee hearing discussion revealed this language was thought necessary to protect plaintiffs against alleged instances of fraudulent concealment by conspirators. Defendants state that many witnesses objected "strongly" to the "concealment" provision, including Professor Milton Handler of the Columbia Law School, objecting on the ground that it would introduce an "uncertainty" which is repugnant to the very idea of a statute of repose. He was joined in this view by members of the New York State Bar Association and the American Bar Association. The bill passed without the "concealment" provision.

In the following Congress new bills were introduced seeking to revive the "concealment" exception, but failed. Despite Mr. Patman's efforts to insert such a provision into the Act, which became the present Section 4B, the bill passed without it. From this history, defendants argue that a provision specifically rejected cannot be read into the statute by inference.

A minute study of the earlier bills in Congress is presented in the defendants' briefs, disclosing that Congress rejected legislation which would allegedly toll the proposed statutes of limitation by reason of plaintiff's failure to discover the alleged conspiracy and not for fraudulent concealment. They quote from the statements of Professor Milton Handler indicative of the nondesirability of importing into a statute of repose a mental element (the discovery element) and urging a definite limitation period, on the ground that one does not suffer injury without his knowledge. They cite the Senate Committee Report on Section 4B wherein it is stated that the Committee recognized that

  "* * * in many instances the long duration of
  such proceedings taken in conjunction with a
  lengthy statute of limitations may tend to
  prolong stale claims, unduly impair efficient
  business operations, and overburden the calendars
  of courts. The committee believes the provisions
  of this bill will tend to shorten the period over
  which private treble damage actions will extend
  by requiring that the plaintiff bring his suit
  within 4 years after it accrued or within 1 year
  after the Government's case has been concluded.
    "While the committee considers it highly
  desirable to toll the statute of limitations
  during a Government antitrust action and to grant
  plaintiff a reasonable time thereafter in which
  to bring suit, it does not believe that the undue
  prolongation of proceedings is conducive to
  effective and efficient enforcement of the
  anti-trust laws."

There follows what this Court deems to be a critical colloquy between Mr. Celler, the proponent of the legislation, and Mr. Patman:

    "Mr. Celler: The statute of limitations will
  start running from the time the action accrues,
  not from the time of discovery. If you make it
  time of discovery, then you practically have no
  statute of limitations at all. * * * We provide
  that the 4-year statute shall start to run from the
  time of the ...

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