Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co.

• Decision Date: 28 August 1962
• Docket Number: 61 C 2179 to 61 C 2187.,Civ. A. No. 61 C 1277 to 61 C 1285,61 C 2068 to 61 C 2077,61 C 1688 to 61 C 1696
• Citation: 210 F. Supp. 557
• Parties: COMMONWEALTH EDISON COMPANY et al., Plaintiffs, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nineteen cases). CENTRAL ILLINOIS LIGHT COMPANY et al., Plaintiffs, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nine cases). CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, Plaintiff, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nine cases).
• Court: U.S. District Court — Northern District of Illinois

210 F. Supp. 557

COMMONWEALTH EDISON COMPANY et al., Plaintiffs, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nineteen cases).

CENTRAL ILLINOIS LIGHT COMPANY et al., Plaintiffs, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nine cases).

CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, Plaintiff, v. ALLIS-CHALMERS MANUFACTURING COMPANY et al., Defendants (nine cases).

Civ. A. Nos. 61 C 1277 to 61 C 1285, 61 C 2068 to 61 C 2077, 61 C 1688 to 61 C 1696, 61 C 2179 to 61 C 2187.

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

August 28, 1962.

Charles A. Bane, Robert W. Bergstrom, Seymour F. Simon, Thomas C. McConnell, Lee A. Freeman, William J. Froelich, Chicago, Ill., Van B. Wake, Milwaukee, Wis., Daniel P. Ward, State's Attorney of Cook County, Ill., Barnabas F. Sears, James O. Smith, Chicago, Ill., for plaintiffs.

John T. Chadwell, Hammond E. Chaffetz, Holmes Baldridge, Edward R. Johnston, W. Donald McSweeney, John Paul Stevens, Earl E. Pollock, Robert C. Keck, Roland D. Whitman, Timothy G. Lowry, Harold T. Halfpenny, Lloyd M. McBride, Neil McKay, Jacob H. Martin, Edward R. Adams, Brainerd Chapman, Chicago, Ill., for defendants.

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 dismissing:

"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 cases¹ 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 Moviecolor² 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 Court of Appeals further decided, on policy grounds and the imputed purpose of Congress, that a uniform rule was to be preferred in the federal courts on the effect of the wrongdoer's concealment on the measuring period. This explains the significance of the word `even' in the holding already quoted above (288 F.2d at 83):

"`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

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