In re Copper Antitrust Litigation

• Decision Date: 06 February 2006
• Docket Number: No. 04-1713.,No. 04-1714.,No. 04-1715.,No. 04-1716.,No. 04-1719.,No. 04-1717.,04-1713.,04-1714.,04-1715.,04-1716.,04-1717.,04-1719.
• Citation: 436 F.3d 782
• Parties: In re COPPER ANTITRUST LITIGATION.
• Court: U.S. Court of Appeals — Seventh Circuit

436 F.3d 782

In re COPPER ANTITRUST LITIGATION.

No. 04-1713.

No. 04-1714.

No. 04-1715.

No. 04-1716.

No. 04-1717.

No. 04-1719.

United States Court of Appeals, Seventh Circuit.

Argued November 1, 2004.

Decided February 6, 2006.

COPYRIGHT MATERIAL OMITTED

Edward H. Wasmuth, Jr., James H. Bratton, Jr., Smith, Gambrell & Russell, Atlanta, GA, for Plaintiff-Appellant Southwire Company, Gaston Copper Recycling Corporation.

Bruce Birenboim, Paul, Weiss, Rifkind, Wharton & Garrison, New York, NY, for Defendant-Appellee Sumitomo Futures Corporation.

James H.R. Windels (argued), Davis, Polk & Wardwell, New York, NY, for Defendant-Appellee Morgan Guaranty Trust Company of New York.

H. Peter Haveles, Jr., Arnold & Porter, New York, NY, for Defendant-Appellee J.P. Morgan & Company, Incorporated.

Arthur M. Kaplan, Fine, Kaplan & Black, David H. Weinstein (argued), Weinstein Kitchenoff Scarlato, Philadelphia, PA, for Plaintiff-Appellant Asarco Incorporated, Kennecott Utah Copper Corporation, Leviton Manufacturing Company, Incorporated, American Insulated Wire Corporation, Essex Electric, Incorporated.

Mark A. Glick, Parsons, Behle & Latimer, Salt Lake City, UT, for Plaintiff-Appellant Kennecott Utah Copper Corporation.

Before CUDAHY, ROVNER, and WOOD, Circuit Judges.

WOOD, Circuit Judge.

Although this appeal arises out of the extensive alleged conspiracy to fix prices in various copper markets that this court addressed in Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 477 (7th Cir.2002) (Loeb I), the issues that concern us here would find a more comfortable home in a civil procedure class than an antitrust class. We must decide whether, on the basis of any of the theories the plaintiffs have presented to us, some or all of their claims are entitled to go forward. The district court found that the plaintiffs filed their suit too late, based on an accrual date that it thought could not be disputed. It also rejected plaintiff Southwire's argument that the earlier litigation that reached this court in Loeb I tolled its claims against two of the defendants long enough to make them timely in this case. Finally, it concluded that the federal statute of limitations applicable to the plaintiffs' claims was not tolled during the pendency of certain state class actions in the California courts, which were necessarily based on state rather than federal antitrust law.

We conclude that the district court erred in its conclusion that the undisputed facts demonstrate that the plaintiffs' right to sue J.P. Morgan has to be measured from July 23, 1996. Whether viewed as a question of the time when the plaintiffs reasonably could have discovered that Morgan had anything to do with their injuries or viewed as a question of equitable estoppel and fraudulent concealment, the facts taken in the light most favorable to the plaintiffs could support a finding that their suit was timely. We find, however, that the plaintiffs' claims against Sumitomo and Global were correctly dismissed, as that set of claims does not benefit from any form of tolling. We therefore affirm in part and reverse and remand in part for further proceedings consistent with this opinion.

I

Loeb I describes the allegations about the extensive manipulations of the copper market that gave rise to these suits. We therefore limit our discussion of the facts (taken for present purposes in the light most favorable to plaintiffs) to those that are of particular relevance. See generally 306 F.3d at 474-78. Briefly, in the underlying actions that were consolidated under the multidistrict litigation (MDL) statute, 28 U.S.C. § 1407, a group of purchasers of copper rod and cathode sued J.P. Morgan Chase & Company, and Morgan Guaranty Trust Company of New York (collectively referred to as Morgan) for their participation in the copper price-fixing scandal of the 1990s, claiming that the defendants had violated the Sherman Act, 15 U.S.C. § 1, et seq., and the Clayton Act, 15 U.S.C. § 15, et seq. In a separate action, plaintiffs Southwire Company and Gaston Copper Recycling Corporation, a wholly owned subsidiary of Southwire (collectively referred to as Southwire), sued Sumitomo Corporation and Global Minerals & Metals Corporation (Global), claiming that the latter two companies had combined to manipulate the price of copper by artificially restricting the physical supply of copper and creating a false demand for it. These manipulations allegedly "caused the price of primary copper to rise more than 50% over a two-year period." Loeb I, 306 F.3d at 477. In June 1996, when Sumitomo announced that it had lost over $1.8 billion as a result of the supply restriction scheme perpetrated in large part by its employee Yasuo Hamanaka, "the trading price for copper dropped by a third almost overnight. The prices of physical copper cathode, rod, and scrap crashed comparably." Id.

In Loeb I, we upheld the district court's dismissal of a putative class that included purchasers of only copper scrap, because their injuries were indirect. 306 F.3d at 475. In the same decision, we held that the purchasers of copper rod and cathode could go forward with their antitrust claims against Morgan because they had suffered "direct and independent" injuries. Id. This case raises the question whether the next chapter of the litigation can proceed.

A. The Parties

The majority of plaintiffs now before us are purchasers of copper cathode and copper rod. This group includes the following companies: Asarco Inc., American Insulated Wire Corp., Essex Electric Inc., Kennecott Utah Copper Corp., Leviton Manufacturing Company, Inc., Mueller Copper Tube Company, Inc., Mueller Copper Tube Products, Inc., and Superior TeleCom, Inc. (now known as Superior Essex, Inc.). We collectively refer to this entire group of plaintiffs as the Asarco Group. Plaintiff Southwire Company manufactures and distributes electrical quality copper rod, wire and cable.

Defendant Sumitomo is a Japanese trading corporation that allegedly engaged in various trades and transactions to fix the price of copper from September 1993 to June 1996. Global is a copper merchant that allegedly engaged in transactions with Sumitomo to restrict the physical supply of copper. Morgan provided loans to Sumitomo during the relevant time period.

B. The District Court Proceedings

Our decision in Loeb I allowing the claims of purchasers of cathode and rod to go forward gave rise to a new round of litigation. The dates when these suits were commenced are important to the central statute of limitations issue. Southwire filed its complaint against defendants Morgan, Sumitomo, and Global on December 30, 2002. On June 13, 2003, the Asarco Group filed their actions against Morgan, except for plaintiff Superior TeleCom, Inc., which filed its action on July 11, 2003. On September 4, 2003, the district court consolidated the actions with the rest of the copper antitrust litigation for pretrial purposes.

On March 3, 2004, the district court granted Morgan's motion for summary judgment against the Asarco Group and converted Morgan's motion to dismiss against Southwire into a motion for summary judgment. The court granted these motions, finding that all of the plaintiffs' claims against Morgan were filed after the expiration of the applicable four-year limitations period. See 15 U.S.C. § 15b. It came to the same conclusion for Southwire's claims against Sumitomo and Global.

The first issue that the court addressed was when the plaintiffs' claims accrued. In one order, it confirmed that Southwire's claims against Sumitomo and Global accrued on June 14, 1996, as Southwire had admitted in its complaint. In another order, it selected the date July 23, 1996, as the point when all claims against Morgan had accrued, placing conclusive weight on the fact that by this time, the general press had reported that Sumitomo had financed its transactions through Morgan. For example, an article published in The New York Times on June 17, 1996, reported that the Commodity Futures Trading Commission was investigating ties between Sumitomo and Global. This article also reported that Morgan and Bankers Trust had taken "an active part" in the hedging transactions of the copper market. The court also referenced an Associated Press release dated July 23, 1996, stating that "[I]oan agreements between Sumitomo and Chase Manhattan Corp. and J.P. Morgan & Co. are under scrutiny because they may have played a role in [Yasuo] Hamanaka's attempt to buy large supplies of copper and artificially boost copper prices." Finally, the court relied on a Wall Street Journal article published the same day discussing loans that were made in the form of derivative contracts from Chase to Sumitomo in the amount of $500 million and from Morgan to Sumitomo in the amount of $400 million. The article described the loans as being "unusually structured." Based on these reports and articles that appeared later in 1996 and 1997, the district court reasoned that:

[p]laintiffs do not argue that as of July 23, 1996, they did not know that they had been injured or that Sumitomo was potentially responsible for the injuries. They argue only that despite the newspaper reports, they did not know and could not have known as of this date that the J.P. Morgan defendants had played a part in producing their injuries. They are correct, but the point is not whether they would have known that defendants played a part; it is whether they knew enough to suspect a violation that they could have detected with due diligence or whether they had knowledge of facts that would have led to actual knowledge in the exercise of reasonable diligence. It is clear that they did. The articles did not say simply that Sumitomo Corporation did its banking with defendants and that defendants might suffer losses as a result of their banking role; they said that the Commodities Futures Trading Commission was investigating who might have helped Yasuo...