The opinion of the court was delivered by: Bua, District Judge.
Before the Court are certain defendants' motions for partial
summary judgment and defendant United Artists Corporation's
motion for summary judgment. For the reasons stated below,
certain defendants' motions for partial summary judgment are
denied, and United Artists' motion for summary judgment is
entered and continued pursuant to Fed.R.Civ.P. 56(f) pending
completion of discovery.
I. Certain Defendants' Motions for Partial Summary
All defendants except United Artists Corporation move for
partial summary judgment on plaintiffs' claims arising before
December 13, 1978. Defendants argue that the applicable
four-year statute of limitations, 15 U.S.C. § 15b, bars any
pre-December 13, 1978 claims. Plaintiffs argue that the
limitations period should be tolled due to defendants'
fraudulent concealment of the cause of action and plaintiffs'
failure to discover defendants' alleged wrongdoing despite the
exercise of due diligence.
In this circuit, at least two types of fraudulent behavior
toll a statutory limitations period. First, the "equitable
tolling doctrine" will toll the limitations period if the
defendant's wrongdoing is undiscovered and the plaintiff has
diligently inquired into its circumstances. Tomera v. Galt,
511 F.2d 504, 510 (7th Cir. 1975). Although the plaintiff need not
allege specific acts of concealment on the part of the
defendant, the plaintiff must establish due diligence in order
to toll the limitations period under the equitable tolling
doctrine. The second type of fraudulent behavior which tolls
the limitations period is generally referred to as the
"fraudulent concealment doctrine." See generally The Seventh
Circuit's Reformation of the Equitable Tolling Doctrine, 1982
U.Ill.L.Rev. 565, 568 (1982). Under this doctrine, the
plaintiff must allege that the defendant has taken "positive
steps after commission of the fraud to keep it concealed." Id.
the plaintiff need not establish due diligence, the plaintiff
must specifically allege fraudulent action "subsequent to the
initial wrong." Gieringer v. Silverman, 731 F.2d 1272, 1278
(7th Cir. 1984). In this case, plaintiffs have raised triable
issues of fact under either doctrine.
A. The Fraudulent Concealment Allegations
Plaintiffs allege that defendants, beginning at least as
early as January 1, 1971, conspired and agreed to fix prices
and impose industrywide conditions upon members of the class in
violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
Plaintiffs further allege that defendants affirmatively and
fraudulently concealed their wrongdoing and that class members
were without knowledge of the cause of action despite the
exercise of due diligence.
Under the fraudulent concealment doctrine, the statute of
limitations is tolled until actual discovery of the underlying
wrong when the concealment is accomplished by affirmative acts
designed to prevent discovery of the facts comprising the cause
of action. Tomera v. Galt, 511 F.2d 504, 510 (7th Cir. 1975).
The affirmative acts of concealment must occur after the
original wrongdoing. Id. Generally, the mere denial of any
wrongdoing on the part of a defendant is insufficient to
constitute affirmative acts of concealment under this doctrine.
E.g., Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248,
250 (9th Cir. 1978). "Hiding" the wrongdoing, "throwing up a
smokescreen" or "misrepresentation" concerning the facts
constituting the wrong, on the other hand, are sufficient
allegations to toll the limitations period. Trecker v. Scag,
679 F.2d 703, 708 (7th Cir. 1982).
Plaintiffs point to several press releases and other
statements issued by defendants to the media as affirmative
acts of concealment during the 1970s. Plaintiffs argue that
these statements were designed to conceal the original wrong,
defendants' conspiracy to fix prices and imposed industrywide
conditions. While many of defendants' statements are merely
denial of price fixing allegations, several statements go
beyond the mere denial of wrongdoing. In fact, several
statements offer alternative explanations for the apparent
parallel prices of records and tapes during the 1970s. For
example, in 1977 an official of defendant Warner Brothers
allegedly denied allegations of price fixing and further
explained that recent parallel price increases were "merely a
case of other companies following the lead of their
competitors." Defendants' Exhibit B-97. Also in 1977, an
official of defendant Capital allegedly explained that the
recent price increases were due to the "pressures of inflation
and shrinking margins." Defendants' Exhibit B-108. CBS
allegedly explained that its price increases were due to
"increased costs in many areas, including recording, raw
materials, manufacturing, promotion, sales and distribution."
Defendants' Exhibit B-19. Defendants RCA and Columbia allegedly
offered similar explanations for their price increases.
Defendants' Exhibits B-28, B-79. In 1978, defendant Capital
allegedly stated that its pricing structure "is always
determined in the context of competitive considerations."
Defendants' Exhibit B-172. All of these statements, allegedly
attributable to defendants, go beyond mere denial of
wrongdoing. Each statement offers an alternative reason for the
apparent parallel price increases throughout the 1970s. These
statements, among others contained in Defendants' Exhibit B,
create triable issues of fact as to whether defendants
affirmatively concealed their alleged agreement to fix prices
and impose industrywide conditions during the 1970s.
In addition to the various statements allegedly attributable
to defendants in Defendants' Exhibit B, plaintiffs point to
allegedly secret meetings between defendants and confidential
memoranda issued by defendants urging secrecy as further
evidence of defendants' fraudulent concealment. For example,
plaintiffs allege that representatives of CBS and Warner
(Atlantic) met secretly on March 25, 1974, for the
purpose of concealing an alleged pricing agreement. See Exhibit
C to plaintiffs' Surreply. In addition, plaintiffs point to two
"confidential" memoranda and one "confidential" letter
allegedly discussing defendants' future pricing plans. See
Exhibits D, E and F to plaintiffs' Surreply. Such conduct
generally is sufficient to create a question of fact regarding
a fraudulent concealment claim. See generally R. Marcus,
Fraudulent Concealment in Federal Court: Toward a More
Disparate Standard, 71 Geo.L.Rev. 829, 859 (1983), and cases
B. The Due Diligence Allegations
Under the equitable tolling doctrine, when the wrongdoing
"has been concealed or is of such a nature as to conceal
itself, the statute of limitations is tolled until the
plaintiff has obtained knowledge of the fraud or in the
exercise of due care should have obtained knowledge of the
fraud." Sperry v. Barggren, 523 F.2d 708, 710 (7th Cir. 1975)
(citations omitted) (emphasis supplied). Although the plaintiff
need not allege affirmative acts of concealment under this
doctrine, the plaintiff must establish due diligence in
inquiring into the circumstances surrounding the alleged
wrongdoing. Tomera v. Galt, 511 F.2d 504, 510 (7th Cir. 1975).
Conspiracies to violate the antitrust laws are generally
self-concealing. See, e.g., Greenshaw v. Lubbock County
Beverage Assoc., 721 F.2d 1019, 1030 (5th Cir. 1983).
Defendants argue that plaintiffs knew, or should have known,
of their antitrust claims no later than 1978. Defendants point
to several articles printed in trade publications which
reported defendants' announced price changes. See Defendants'
Exhibit B. Defendants, however, misconstrue the nature of the
alleged wrongdoing. Defendants' price increases, and even their
apparent parallel price increases, do not constitute violations
of the antitrust laws. See, e.g., Theatre Enterprises, Inc. v.
Paramount Film Distributing Corp., 346 U.S. 537, 74 S.Ct. 257,
98 L.Ed. 273 (1954); Quality Auto Body, Inc. v. Allstate Ins.
Co., 660 F.2d 1195 (7th Cir. 1981). Mere knowledge that
defendants were raising prices throughout the 1970s does not
mean the plaintiffs knew or should have known that defendants
were allegedly agreeing to fix prices. King & King Enterprises
v. Champlin Petroleum Co., 657 F.2d 1147, 1156 (10th Cir.
Defendants also argue that the existence of prior antitrust
litigation against defendants should have put all plaintiffs on
notice of the existence of a horizontal price fixing
conspiracy. Defendants point specifically to a suit brought in
1976 by Dean Stamatopoulos, owner of plaintiff GHII, Inc.
Although the Stamatopoulos litigation included allegations of
price fixing, Stamatopoulos' knowledge, in 1976, of the facts
giving rise to his suit appear to be nothing more than
assumptions based upon his observation of the ...