Brunswick Corp. v. Riegel Textile Corp.

• Court: U.S. District Court — Northern District of Illinois
• Writing for the Court: ASPEN
• Citation: Brunswick Corp. v. Riegel Textile Corp., 578 F.Supp. 893 (N.D. Ill. 1983)
• Decision Date: 19 December 1983
• Docket Number: No. 82 C 4374.,82 C 4374.
• Parties: BRUNSWICK CORPORATION, a Delaware corporation, Plaintiff, v. RIEGEL TEXTILE CORPORATION, a Delaware corporation, Defendant.

578 F. Supp. 893

BRUNSWICK CORPORATION, a Delaware corporation, Plaintiff, v. RIEGEL TEXTILE CORPORATION, a Delaware corporation, Defendant.

No. 82 C 4374.

United States District Court, N.D. Illinois, E.D.

December 19, 1983.

COPYRIGHT MATERIAL OMITTED

Ned Robertson, Erwin C. Heininger, Mayer, Brown & Platt, Chicago, Ill., John G. Heimovicks, Skokie, Ill., for plaintiff.

C. Lee Cook, Jr., Pamela J. Kempin, Alan I. Greene, Chadwell & Kayser, Ltd., Chicago, Ill., J.D. Fleming, Jr., Bennett L. Kight, John W. Bonds, Jr., Sutherland, Asbill & Brennan, Atlanta, Ga., for defendant.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge.

Plaintiff Brunswick Corporation ("Brunswick") sued Riegel Textile Corporation ("Riegel") pursuant to federal antitrust statutes as well as state law. Jurisdiction is asserted pursuant to 28 U.S.C. § 1337 and the pendent jurisdiction doctrine. Presently before the Court is Riegel's motion to dismiss Counts III, IV and V pursuant to Fed.R.Civ.P. 12(b)(6). Riegel also seeks dismissal of the state law claims set forth in Counts I, II and VI. For reasons set forth below, Riegel's motion is granted.

In considering motions to dismiss, we take as true all material allegations of fact contained in Brunswick's complaint. A complaint should not be dismissed, moreover, "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263 (1972); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

Facts

Brunswick claims that in 1967, it developed a blending process which permitted metal fibers to be combined with conventional fibers to make an antistatic yarn for static-free garments. In 1968, Brunswick and Riegel entered into an agreement and confidential relationship whereby Brunswick agreed to disclose its blending process to Riegel, and to refrain from disclosing the process to any other textile company for a year after Riegel mastered the blending process. Riegel agreed to use Brunswick metal fibers, and not to disclose the process to others. Brunswick, through an employee, filed a patent application which included a group of claims relating to its blending process in 1970. In that same year, Brunswick alleges that two Riegel employees fraudulently filed a patent application concerning the blending process; a patent was issued to the Riegel employees in 1972, and Brunswick asserts that the trade secret status of its blending process was thereby destroyed.

In 1975, the Patent Office declared a patent interference proceeding to determine the priority of invention between Brunswick's employee and Riegel's employees.¹ Brunswick claims that it initially believed that Riegel's patents might have been based upon an earlier independent invention. In 1977, however, during the course of the Patent Office interference proceedings, Brunswick asserts it learned that Riegel's procurement of the patent was fraudulent.

Count I avers that the aforementioned acts by Riegel constitute malicious interference with prospective economic advantage, while Count II claims that Riegel's patent application and involvement in the patent interference proceeding are abuse of process. In Count III, Brunswick asserts that the patents were fraudulently obtained to restrain trade, as part of a combination and conspiracy, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Count IV claims a conspiracy to monopolize, an attempt to monopolize and an unlawful monopolization, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. Count V asserts that Riegel's allegedly unlawful acquisition of Brunswick's blending process constitutes an acquisition of assets in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. Finally, Count VI asserts a claim for breach of contract. Riegel has made a number of arguments in support of its motion to dismiss, to which we now turn.

Statute of Limitations

According to 15 U.S.C. § 15b,

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.

The Supreme Court has recognized various grounds for allowing antitrust lawsuits to be brought more than four years after the events which initially create a cause of action. Thus, if, when a defendant's antitrust act originally occurred, the plaintiff's damages were speculative or unprovable, suit may be brought more than four years after the antitrust act. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 339-40, 91 S.Ct. 795, 806-07, 28 L.Ed.2d 77 (1971). Additionally if a plaintiff refrains from suit during the limitations period because of inducement by the defendant, Glus v. Brooklyn Eastern Terminal, 359 U.S. 231, 79 S.Ct. 760, 3 L.Ed.2d 770 (1959), or because of fraudulent concealment, Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946), the limitations period will be tolled. See also, Allis-Chambers Mfg. Co. v. Commonwealth Edison Co., 315 F.2d 558 (7th Cir.1963). More recently, the Ninth Circuit has developed an equitable tolling doctrine to toll the statute of limitations, Mt. Hood Stages v. Greyhound Corp., 616 F.2d 394 (9th Cir.1980), cert. denied, 449 U.S. 831, 101 S.Ct. 99, 66 L.Ed.2d 36 (1980).

Riegel claims that Brunswick alleges no actionable anticompetitive conduct by Riegel within the four years preceding the complaint, which was filed on July 15, 1982. In response, Brunswick makes three arguments in an effort to toll the statute of limitations: (1) equitable tolling; (2) fraudulent concealment; and (3) the speculative nature of Brunswick's damages at the time of violation. We will consider each of these arguments in turn.

Equitable Tolling

In Mt. Hood Stages v. Greyhound Corp., 616 F.2d 394 (9th Cir.1980), cert. denied, 449 U.S. 831, 101 S.Ct. 99, 66 L.Ed.2d 36 (1980), the Ninth Circuit held that the plaintiff's resort to an administrative proceeding with the Interstate Commerce Commission, in which plaintiff objected to Greyhound's acquisition of other bus companies, tolled the statute of limitations for purposes of a subsequent antitrust action against Greyhound.² Central to the holding in Mt. Hood was the fact that a key issue raised by the plaintiff's antitrust suit involved matters within the Interstate Commerce Commission's primary jurisdiction. Mt. Hood, 616 F.2d at 397-98. Thus, prior to their consideration by a court, the Commission was required to resolve these issues.

In the instant case, Brunswick asserts that the patent interference proceeding in the present case suspended the statute of limitations. However, patent validity is neither a matter within the primary jurisdiction of an administrative agency nor a public issue of regulatory concern. Johnson & Johnson v. Wallace A. Erickson & Co., 627 F.2d 57, 61-62 (7th Cir.1980). The factual adjudications of the Patent Office, moreover, are not necessarily conclusive. Id. The Mt. Hood Court's careful balancing of purposes behind the Clayton Act and the Interstate Commerce Act renders it distinguishable from the present case, and we decline to apply the equitable tolling doctrine. Cf., Corson v. First Jersey Securities, Inc., 537 F.Supp. 1263 (D.N.J.1982) (SEC investigation does not toll statute of limitations on private enforcement action).

Fraudulent Concealment

In an effort to fall within the fraudulent concealment exception to the statute of limitations, Brunswick claims that the first evidence that Riegel's 1970 patent application was fraudulent appeared during a 1980 deposition. Prior to that date, Brunswick claims that it reasonably relied upon Riegel's denial of wrongdoing and Riegel's claim that it had developed an independent invention.

A party seeking the benefit of rules in avoidance of statutes of limitations has the burden of proof to establish his or her entitlement to such rules. Akron Presform Mold Co. v. McNeil Corp., 496 F.2d 230, 233 (6th Cir.1974), cert. denied, 419 U.S. 997, 95 S.Ct. 310, 42 L.Ed.2d 270 (1974). Thus, to invoke the fraudulent concealment doctrine, Brunswick must be able to produce evidence that Riegel concealed the basic facts disclosing the existence of a cause of action, and that Brunswick remained in ignorance of those facts through no fault of their own. Baker v. F & F Investment, 420 F.2d 1191, 1199 (7th Cir.1970), cert. denied, 400 U.S. 821, 91 S.Ct. 42, 27 L.Ed.2d 49 (1970). Due diligence by Brunswick in attempting to discover the relevant facts is therefore required. Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546 F.2d 570, 574 (4th Cir.1976). Particularity in pleading fraudulent concealment has also been required. Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248, 250 (9th Cir.1978); Laundry Equipment & Sales Corp. v. Borg-Warner Corp., 334 F.2d 788 (7th Cir. 1964).

In paragraph 24 of its complaint, Brunswick sets forth a detailed explanation of why it did not learn of Riegel's alleged fraudulent conduct until October, 1977.³ But October, 1977, is more than four years prior to the filing of the complaint in the present matter. From the complaint, it is apparent that Brunswick either knew or could have discovered, through reasonable diligence, the facts upon which its cause of action is premised in 1977.⁴ Where a complaint reveals that certain claims are barred from recovery by limitations, they may be disposed of on a motion to dismiss. Baker v. F & F Investments, 420 F.2d 1191, 1198 (7th Cir.1970), cert. denied, 400 U.S. 821, 91 S.Ct. 42, 27 L.Ed.2d 49 (1970); Kincheloe v. Farmer, 214 F.2d 604, 605 (7th Cir.1954), cert. denied, 348 U.S. 920, 75 S.Ct. 306, 99 L.Ed. 721 (1955). As a result, Brunswick's complaint itself indicates that the doctrine of fraudulent concealment is unavailable as a means of tolling the statute of limitations.

Speculative Damages

According to...