Morton's Market v. Gustafson's Dairy

• Decision Date: 20 December 1999
• Docket Number: No. 98-2498,98-2498
• Citation: 198 F.3d 823
• Parties: (11th Cir. 1999) MORTON'S MARKET, INC.; J & J Produce and Deli, Inc., Plaintiffs-Appellants, v. GUSTAFSON'S DAIRY, INC., Defendant, Borden, Inc.; T.G. Lee Foods, Inc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 823

198 F.3d 823 (11th Cir. 1999)

MORTON'S MARKET, INC.; J & J Produce and Deli, Inc., Plaintiffs-Appellants, v. GUSTAFSON'S DAIRY, INC., Defendant, Borden, Inc.;

T.G. Lee Foods, Inc., et al., Defendants-Appellees.

No. 98-2498.

United States Court of Appeals, Eleventh Circuit.

Dec. 20, 1999.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeals from the United States District Court for the Middle District of Florida.

(Nos. 93-1077-CIV-T-23b, 93-1264-CIV-23A, 94-1437-CIV-T23A,95-35-CIV-23B), Steven D. Merryday, Judge.

Before ANDERSON, Chief Judge, HILL, Senior Circuit Judge, and COOK^*, Senior District Judge.

HILL, Senior Circuit Judge:

Plaintiffs brought these consolidated antitrust actions against most of the large dairy producers in Florida. The district court held the actions time-barred and granted summary judgment for the defendants. Both plaintiffs appeal.

I.

J & J Produce & Deli, Inc. and Morton's Market, Inc. are retailers of milk. Gustafson's Dairy, Inc., Borden, Inc., Pet, Inc., Flav-O-Rich, Inc., the Southland Corporation, T.G. Lee Foods, Inc., and McArthur Dairy,Inc. (the Dairies) engaged in the production and sale of milk in Florida. The parties agree on the following facts.

Beginning in the early 1970s, the Dairies conspired and combined to rig their bids for contracts to supply milk to the public school districts in Florida. The Dairies submitted artificial bids and effectively divided the school milk market among themselves.

In mid-1987, the United States and the State of Florida began investigating anti-competitive activities in the dairy industry. During July and August of 1987, Florida's Attorney General subpoenaed documents from and deposed employees of many dairies operating in Florida. On February 16, 1988, Florida filed a civil lawsuit against ten dairies, many individuals, and certain milk distributors. The complaint alleged that the Dairies violated federal antitrust laws. Florida also alleged that the defendants fraudulently concealed their activities by secretly conducting meetings and confining to key individuals information regarding the Dairies' efforts unreasonably to restrain trade.

The investigations, criminal charges, and civil action were reported in February 1988, by the major newspapers in Florida. The newspaper articles discussed the Dairies' agreements among themselves to rig bids for school milk and revealed that the federal government was also scrutinizing the industry. Edmund Morton, the president of Morton's Market, read at least some of these articles. The principal of J & J Produce and Deli heard from her spouse that Florida had sued the Dairies. The plaintiffs did not, however, undertake any investigation into whether the Dairies were also fixing the price of milk to retailers.

During late 1987 and early 1988, the United States Department of Justice charged the Dairies and some of their employees with criminal antitrust violations. Several individuals pled guilty to rigging bids for school milk contracts. Between 1990 and 1992, all of the Dairies, except Gustafson's, pled guilty to conspiring to rig bids for school milk contracts. Information regarding price-fixing of wholesale milk prices was contained in each of these guilty pleas, the first of which occurred in December of 1990. Gustafson's was charged with price-fixing in May of 1992, and pled guilty in August to conspiring to fix the prices of milk in Florida and Georgia between the early 1970s through at least August of 1988.

On July 1, 1993, subsequent to the government proceedings, plaintiffs each filed an antitrust action under Section 4 of the Clayton Act, 15 U.S.C. 15 (the Act), on behalf of itself and a class of direct purchasers of dairy products in Florida. Both actions assert that the Dairies fixed, raised and maintained the wholesale prices of dairy products to commercial customers by collusive agreements in violation of the Sherman Act, 15 U.S.C. 1.

The Dairies moved for summary judgment, contending that these actions are time-barred by the Act's four-year statute of limitations. 15 U.S.C. 15(b). They assert that their price-fixing activities, if any, terminated in 1987 or 1988, with their school bid-rigging prosecutions, more than four years before these actions were filed in 1993. Plaintiffs countered that the price-fixing conspiracy continued until 1992, when Gustafson's pled guilty to fixing the price of milk in Florida. Plaintiffs also contended that the statute of limitations was tolled in this case by the Dairies' fraudulent concealment of their price-fixing activities,¹ and by the Clayton Act itself, which tolls the running of the statute during government proceedings concerning related violations. 15 U.S.C. 16(i). Additionally, Pet and Southland claimed that they withdrew from the alleged conspiracy in 1985 and 1988 respectively, and that plaintiffs did not timely file as to them.

The district court granted the Dairies' motions for summary judgment. We review this grant of summary judgment de novo applying the same standards as the district court. Industrial Partners, Ltd. v. CSX Transp., Inc. 974 F.2d 153 (11th Cir.1992). For the following reasons, we reverse those judgments.

II.

There has been considerable confusion in this case over the application of the statute of limitations and the impact of equitable or statutory tolling of it. Some of this confusion has been created by the failure of both parties to distinguish between the accrual of an antitrust cause of action and the scope of damages available in such an action. We cannot know whether plaintiffs' actions are time-barred unless we know when the statute began to run. Once we know when the statute began to run, we can determine whether and how it was tolled in this case and what impact that tolling has on the scope of plaintiffs' damages.

A. The Commencement of the Statute of Limitations

Under the antitrust laws, "a cause of action accrues and the statute [of limitations] begins to run when a defendant commits an act that injures the plaintiffs' business." Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971). A plaintiff must file his claim within four years following defendant's injurious act. 15 U.S.C. 15(b). Suit may be brought more than four years after the events that initially created the cause of action only if the action is commenced within four years after the defendant commits (1) an overt act in furtherance of the antitrust conspiracy or (2) an act that by its very nature constitutes a "continuing antitrust violation." Zenith, 401 U.S. at 338, 91 S.Ct. 795.²

An act constitutes a "continuing violation," if it injures the plaintiff over a period of time. Even though the illegal act occurs at a specific point in time, if it inflicts "continuing and accumulating harm" on a plaintiff, an antitrust violation occurs each time the plaintiff is injured by the act. Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 502 n. 15, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968). For example, when sellers conspire to fix the price of a product, each time a customer purchases that product at the artificially inflated price, an antitrust violation occurs and a cause of action accrues. Klehr v. A.O. Smith Corp., 521 U.S. 179, 189, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997). As a cause of action accrues with each sale, the statute of limitations begins to run anew.

Antitrust law provides that, in the case of a "continuing violation," say a price fixing conspiracy that brings about a series of unlawfully high priced sales over a period of years, "each overt act that is part of the violation and that injures the plaintiff," e.g., each sale to the plaintiff, "starts the statutory period running again, regardless of the plaintiff's knowledge of the alleged illegality at much earlier times."

Id. 521 U.S. at 189, 117 S.Ct. 1984 (quoting 2 Areeda, 338b, at 145).

Plaintiffs allege such a continuing price-fixing conspiracy. Plaintiffs claim that the Dairies conspired to fix the retail prices of milk in Florida over a twenty-year period, and that sales at these fixed prices continued at least until 1992, when Gustafson's pled guilty to price-fixing. Thus, even if there were no price-fixing conversations after 1987, as the Dairies contend,³ if plaintiffs purchased milk at a fixed price after that date, the purchase would constitute an overt act that injured it. A cause of action would accrue with each purchase and a new statutory period would begin to run. See Zenith, 401 U.S. at 338, 91 S.Ct. 795.

The commencement of the statute of limitations is a question of fact. In re Beef Indust. Antitrust Litig., 600 F.2d 1148, 1169-70 (5th Cir.1979). It cannot be determined upon motion for summary judgment if there is a genuine question as to when it began to run. Id. Upon motion for summary judgment, the district court's task was simply to determine whether a genuine question was presented for trial. The district court held there was not. The court found that "the record reveals that any price-fixing activity occurred concurrently with the bid-rigging"⁴ and "the record lacks any competent evidence that the defendants unlawfully contrived the prices they charged commercial customers after 1987."

Even if this were so, these facts would not require a finding that these actions are time-barred. There is evidence in this record, including the Dairies' bid-rigging guilty pleas and Gustafson's price-fixing guilty plea and the factual bases therefor, from which a jury could find that the Dairies participated in a price-fixing conspiracy which resulted in a series of unlawfully high priced sales to plaintiffs over a period of years, continuing into the limitations period. Where there is evidence of the continuing nature of an agreement to eliminate competition, absent an affirmative showing of the termination of that agreement, the conspiracy must be presumed to...