Conmar Corp. v. Mitsui & Co. (U.S.A.), Inc.

• Decision Date: 24 October 1988
• Docket Number: No. 87-2556,87-2556
• Citation: 858 F.2d 499
• Parties: 1988-2 Trade Cases 68,249 CONMAR CORPORATION, a California corporation; L.R. Yegge Company, a California corporation; Lawrence R. Yegge, as assignee of L.R. Yegge Co., Plaintiffs-Appellants, v. MITSUI & COMPANY (U.S.A.), INC., a New York corporation; Mitsui Bussan Kabushiki Kaisha, a foreign corporation; VSL Corporation, Inc., a California corporation; Shinko Wire Co., Ltd., a foreign corporation; Losinger AG, a foreign corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 499

858 F.2d 499

1988-2 Trade Cases 68,249

CONMAR CORPORATION, a California corporation; L.R. Yegge

Company, a California corporation; Lawrence R.

Yegge, as assignee of L.R. Yegge Co., Plaintiffs-Appellants, v. MITSUI & COMPANY (U.S.A.), INC., a New York corporation;

Mitsui Bussan Kabushiki Kaisha, a foreign corporation; VSL

Corporation, Inc., a California corporation; Shinko Wire

Co., Ltd., a foreign corporation; Losinger AG, a foreign

corporation, Defendants-Appellees.

No. 87-2556.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 12, 1988.

Decided Sept. 27, 1988.

As Amended Oct. 24, 1988.

John H. Dresslar, Robert A. Susk, Leslie J. Mann, Law Offices of Robert Susk, San Francisco, Cal., for plaintiffs-appellants.

James L. Hunt, McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before PREGERSON, BOOCHEVER and BEEZER, Circuit Judges.

BOOCHEVER, Circuit Judge:

Conmar Corp. et al. (Conmar) appeal from the district court's grant of summary judgment to defendants Mitsui & Co. et al. (Mitsui). The district court found that there was no genuine issue of material fact that the four-year statute of limitations had run on Conmar's antitrust claim against Mitsui. We reverse.

FACTS

Conmar and L.R. Yegge Co. are contractors who post-tension concrete. Lawrence R. Yegge is the president of both companies. To obtain greater strength and improved structural characteristics, concrete is post-tensioned after the poured concrete is hardened by stretching previously inserted steel wire strands (PC-strand). Defendants Mitsui and Mitsui Bussan Kabushiki Kaisha import into the United States products that defendant Shinko Wire Co. manufactures, including PC-strand. Defendant VSL Corp. is a competitor of Conmar and a wholly-owned subsidiary of defendant Losinger AG.

In December 1980, United States custom agents seized Mitsui records and a federal grand jury was impaneled in the Northern District of California to investigate possible customs violations. Mitsui allegedly was "dumping" steel products, i.e. importing them at below fair market value, in part by using false customs reports. News coverage in early 1981 of these events included three articles in the San Francisco Chronicle, one of which specified PC-strand as one of the products involved. Also reporting the investigation were two Wall Street Journal articles. One of these mentioned that PC-strand was involved, and that records of sales to VSL were being sought in the search. Single articles appeared in the Los Angeles Times and the New York Times. Major wire services also carried the story.

On March 23, 1981, the affidavit by Customs Agent Thomas Yasueda, which had been the basis for a warrant to search Mitsui's San Francisco office, was unsealed. The district court redacted the affidavit to exclude the names of American companies and employees. Yasueda alleged that Mitsui imported nearly $33 million worth of PC-strand in 1977-1979 and engaged in a complicated scheme to dump PC-strand by splitting with the customer the difference between nominal and actual exchange rates, then falsely reporting the rates to the Customs Service. Reports of the unsealing of the affidavit included two articles in the San Francisco Chronicle, in Later that year, on June 30, 1981, Pacific Steel & Supply Co., a Mitsui customer, was indicted for falsifying customs documents to mask the alleged dumping of Japanese steel nails. The indictment received news coverage in the San Francisco Chronicle (2 articles), the Wall Street Journal, the New York Times, and wire services. An antitrust suit was filed in the Northern District of California against Pacific Steel and Mitsui less than a month later, alleging that the illegal purchases of steel nails at prices below those reported were part of a conspiracy to monopolize the market.

                one of which a Mitsui executive characterized the investigation as "based on a distortion or misunderstanding of the facts and a misinterpretation of anti-dumping regulations."    The Los Angeles Times carried a brief report of the affidavit's release and Mitsui's reaction.  The New York Times reported the story, as did Business Week and the San Jose Mercury-News.  None of these articles mentioned PC-strand.  Wire services carried the story
                

In January 1982, VSL and one of its employees pled guilty to charges of aiding and abetting Mitsui in filing false customs declarations regarding the true price of PC-strand VSL bought from Mitsui. At least one paper reported the guilty plea.

On July 20, 1982, a fifty-nine page indictment issued charging Mitsui with violating customs reporting laws. The indictment charged that Mitsui and several of its employees conspired to defraud the United States by filing false customs entry forms to avoid the application of anti-dumping laws. Mitsui was alleged to have used false damage claims, false cancellation penalties, false secret commission payments, and undisclosed yen/dollar exchange payments. The indictment named VSL as a purchaser receiving from Mitsui PC-strand which was reported to customs at falsely inflated prices, and in eight pages detailed the methods used. The indictment did not suggest that Mitsui or VSL intended to give VSL a price advantage over its competitors.

Two lawsuits were filed in October and December of 1982 based on information in the indictment, alleging antitrust violations based on Mitsui's dumping of steel products. After a visit in January 1986 from an attorney in the latter case, Conmar filed suit on Monday, July 21, 1986, four years after the issuance of the Mitsui indictment. Conmar's second amended complaint alleged that VSL obtained PC-strand from Mitsui at illegally low prices in a conspiracy to violate dumping laws, and that the low prices allowed VSL to submit low bids for post-tensioning jobs, with the intent of suppressing competition in the industry, again in conspiracy with Mitsui. Conmar also alleged that the anticompetitive acts were "by their very nature designed to conceal themselves from detection" and that defendants "actively, fraudulently and successfully concealed the existence of their agreements, conspiracies, and anti-competitive conduct" by submitting false documents, invoices, and customs forms, as well as by altering others, as described in the Mitsui indictment.

On April 27, 1987, Mitsui moved to dismiss the lawsuit for failure to state a claim and for summary judgment on the ground that the four-year statute of limitations had run. After a hearing on June 5, 1987, the district court ruled from the bench that summary judgment would be granted, and issued its order on July 28, 1987.

ANALYSIS

We review de novo the district court's grant of summary judgment. T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629 (9th Cir.1987). Where the moving party has identified the portions of the material before the court that it claims shows the absence of any genuine issue of fact, the nonmoving party must set forth by affidavit or otherwise specific facts demonstrating that there is a genuine issue for trial. Id. at 630. The evidence must be viewed, and inferences from the evidence must be drawn, in the light most favorable to the nonmoving party. Id. at 630-31.

Antitrust actions under the Clayton Act are subject to a four-year statute of limitations. 15 U.S.C. Sec. 15b (1982). Conmar concedes that it filed its action more than four years after the activities that form the basis for its complaint of antitrust conspiracy, but contends that fraudulent concealment by Mitsui tolled that statute of limitations.

To toll the statute of limitations under this theory, Conmar must do more than show that it was ignorant of its cause of action. It must prove that Mitsui "fraudulently concealed the existence of the cause of action so that [Conmar], acting as a reasonable person, did not know of its existence." Hennegan v. Pacifico Creative Service, Inc., 787 F.2d 1299, 1302 (9th Cir.), cert. denied, 479 U.S. 886, 107 S.Ct. 279, 93 L.Ed.2d 254 (1986). Conmar carries the burden of pleading and proving fraudulent concealment; it must plead facts showing that Mitsui affirmatively misled it, and that Conmar had neither actual nor constructive knowledge of the facts giving rise to its claim despite its diligence in trying to uncover those facts. Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248, 249-50 (9th Cir.1978). Conclusory statements are not enough. Conmar must plead with particularity the circumstances of the concealment and the facts supporting its due diligence. Id. at 250. The district court may grant summary judgment if uncontroverted evidence "irrefutably demonstrates that a plaintiff discovered or should have discovered [the cause of action] but failed to file a timely complaint." Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1417 (9th Cir.1987).

Conmar's second amended complaint alleged that Mitsui concealed its anticompetitive behavior by the elaborate scheme of false documentation and secret payments described in the July 1982 indictment of Mitsui for customs violations. To support its contention that it acted with due diligence in attempting to discover its cause of action, it submitted in opposition to the summary judgment motion a seven-page declaration of Lawrence R. Yegge, Conmar's president, detailing his business life and habits and specifying that he had not read any of the newspaper articles nor known of Mitsui's legal troubles until sometime after the indictment. Mitsui was not a Conmar supplier, and Conmar's counsel informed the court that Yegge did not know that Mitsui supplied VSL with PC-strand.

The central question, however, is not whether Conmar had actual knowledge of its antitrust cause of action, but whether before June 20, 1982, it should have been alerted to facts that, following duly...