State of Colo. v. Western Paving Const. Co.

• Decision Date: 03 March 1986
• Docket Number: Civ. A. No. 84-A-1483.
• Citation: 630 F. Supp. 206
• Parties: STATE OF COLORADO, ex rel. Colorado Attorney General Duane WOODARD, Plaintiff, v. WESTERN PAVING CONSTRUCTION CO., Defendant.
• Court: U.S. District Court — District of Colorado

630 F. Supp. 206

STATE OF COLORADO, ex rel. Colorado Attorney General Duane WOODARD, Plaintiff, v. WESTERN PAVING CONSTRUCTION CO., Defendant.

Civ. A. No. 84-A-1483.

United States District Court, D. Colorado.

March 3, 1986.

Thomas P. McMahon, First Asst. Atty. Gen. Chief, Antitrust Unit, Enforcement Section, David S. Harmon, Asst. Atty. Gen., Antitrust Unit, Enforcement Section, Denver, Colo., for plaintiff.

B. Lawrence Theis, Walters & Theis, Denver, Colo., John Bodner, Jr., Marcia Press Kaplan, Howrey & Simon, Washington, D.C., for defendant.

MEMORANDUM OPINION AND ORDER

ARRAJ, District Judge.

I. BACKGROUND

On July 19, 1984, the State of Colorado filed this civil antitrust action against Western Paving Construction Company ("Western Paving"), an asphalt-paving construction firm in the Denver area, alleging violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (1980), and the Colorado state antitrust laws.¹ In the Sherman Act claim, plaintiff alleges that Western Paving conspired with other road paving firms to rig bids for Colorado highway construction projects. Plaintiff alleges in the complaint that the conspiracy existed "as early as January 1971" and extended "at least to sometime in 1978." Because the complaint does not allege a conspiracy within the four-year statute of limitations period, i.e., 1980—1984, the complaint alleges that the statute of limitations should be tolled due to Western Paving's fraudulent concealment of the conspiracy. After much discovery, including depositions, interrogatories and other extensive document discovery, Western Paving filed this Motion to Dismiss for Failure to Comply with Rule 11 and this Motion for Summary Judgment. In support of its Motion to Dismiss, Western Paving asserts that the complaint lacks any factual or legal basis and was filed without reasonable inquiry, "in flagrant disregard" of the requirements of Rule 11 of the Federal Rules of Civil Procedure. Defendant prays for attorneys' fees and costs, as provided for under Rule 11. In its Motion for Summary Judgment, which was evidently filed as an alternative to the Motion to Dismiss, Western Paving asserts that, as a matter of law, it did not conspire to rig highway project bids, at any time, and even if it had, the State has failed to establish the necessary elements of fraudulent concealment to toll the statute of limitations. In response to these motions, the State filed this Motion for Partial Summary Judgment. In its motion, the State contends that it is undisputed that Western Paving participated in a conspiracy to rig the bids on a particular highway project in 1971 (the Newcastle Easterly project) and that defendant's fraudulent concealment of the 1971 conspiracy tolls the four-year statute of limitations at least through August 1980. In support of its motion, the State has submitted the deposition testimony of Larry Corn, of Corn Construction Company. Mr. Corn testified that he contacted the president of Western Paving, Harold Stillman, and asked him to submit an inflated bid for the 1971 Newcastle Easterly job so that Corn Construction would get the job. According to Mr. Corn, Mr. Stillman agreed to submit a complementary bid.

The parties have thoroughly briefed all of the issues presented in these motions, and have submitted voluminous appendices containing affidavits, deposition transcripts and other documentation. Under these circumstances, I find that oral argument would be of no meaningful assistance. For the reasons set forth herein, plaintiff's Motion for Partial Summary Judgment is denied, defendant's Motion to Dismiss is denied and defendant's Motion for Summary Judgment is granted.

II. TOLLING OF STATUTE OF LIMITATIONS

Even if the State is able to establish that Western Paving participated in a conspiracy in 1971, the State must overcome defendant's claim that the statute of limitations bars recovery for a conspiracy which took place more than 13 years prior to the filing of the complaint. Section 4B of the Clayton Antitrust Act, 15 U.S.C. § 15b (1985 Cum.Supp.), requires that federal antitrust actions be commenced within four years of the date the cause of action accrued. 15 U.S.C. § 15b. Under this general rule, the statutory period has run on claims based on facts occurring prior to July 1980, four years prior to the filing of the complaint in this action. To overcome this defense, the State relies on the federal doctrine of equitable tolling.

The equitable tolling concept was enunciated by the Supreme Court in Bailey v. Glover, 88 U.S. (21 Wall.) 342, 22 L.Ed. 636 (1874). In that case, the Court recognized two situations in which the "strict letter of general statutes of limitation" will not be followed. First, the Court stated that "where the ignorance of the fraud has been produced by affirmative acts of the guilty party in concealing the facts from the other, the statute will bar relief." In the alternative, the Court stated "where the party injured by the fraud remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered." 88 U.S. at 348. These two concepts set forth by the Court in Bailey have come to be known as the "concealment" and "diligence" elements of the equitable tolling doctrine. See Long v. Abbott Mortgage Corp., 459 F.Supp. 108, 113 (D.Conn.1978). In Bailey, which involved a claim for common law fraud, the Court recognized that the statute of limitations would be tolled if the plaintiff established either the defendant's concealment or the plaintiff's diligence.

The courts have applied the equitable tolling doctrine differently, depending upon the circumstances and underlying facts of each case. In actions based on fraud, the courts have continued to apply the test set forth in Bailey, i.e., tolling requires proof of either plaintiff's diligence or defendant's concealment. See Holmberg v. Armbrecht, 327 U.S. 392, 397, 66 S.Ct. 582, 585, 90 L.Ed. 743 (1946); Tomera v. Galt, 511 F.2d 504 (7th Cir.1975); Seiffer v. Topsy's International, Inc., 487 F.Supp. 653 (D.Kan.1980). However, in antitrust actions, the majority of the Circuits, including the Tenth Circuit, have developed a more stringent test for tolling the statute of limitations. To invoke the equitable tolling doctrine in the antitrust context, a plaintiff must plead and prove three elements: (1) affirmative acts of concealment by the defendant; (2) successful concealment from the plaintiff; and (3) plaintiff's due diligence until discovery of the facts. See King & King Enterprises v. Champlin Petroleum Co., 657 F.2d 1147, 1154 (10th Cir.1981), cert. denied, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320 (1982) (Involving cause of action for alleged violations of Sherman Act); Berkson v. Del Monte Corp., 743 F.2d 53, 55 (1st Cir.1984), cert. denied, ___ U.S. ___, 105 S.Ct. 1765, 84 L.Ed.2d 527 (1985) (Sherman Act); In re Beef Industry Antitrust Litigation, 600 F.2d 1148, 1169 (5th Cir.1979) (Sherman Act); Charlotte Telecasters, Inc. v. Jefferson-Pilot Corp., 546 F.2d 570, 574 (4th Cir.1976) (Sherman Act); Dayco Corp v. Goodyear Tire & Rubber Co., 523 F.2d 389, 394 (6th Cir.1975) (Sherman and Clayton Acts); City of Detroit v. Grinnell Corp., 495 F.2d 448, 460 (2d Cir.1974) (Clayton Act). Fraud cases are treated differently because the original fraud is itself an act of concealment and is considered to be inherently more difficult for a plaintiff to discover. See Bufalino v. Michigan Bell Telephone Co., 404 F.2d 1023, 1028 (6th Cir.1968), cert. denied, 394 U.S. 987, 89 S.Ct. 1468, 22 L.Ed.2d 763 (1969) ("To toll the statute there must be affirmative acts or misrepresentations.... If, however, plaintiff's cause of action is based on fraud, a different rule would apply. The original fraud is regarded as a `continuing affirmative act, and mere silence of the defendant is treated as a concealment.'") Therefore, in antitrust cases, the equitable tolling doctrine requires proof of both the concealment and diligence elements.

The concealment element requires proof that the defendant engaged in affirmative conduct designed to lead a reasonable person to believe that he did not have a claim for relief. See Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248 (9th Cir.1978). The diligence element imposes a positive duty on the plaintiff to use diligence in discovering its cause of action within the limitations period. Dayco v. Goodyear Tire & Rubber Co., supra, 523 F.2d at 394. Unawareness of facts or law, alone, does not justify suspending the operation of the statute. Long v. Abbott Mortgage Corp., supra, 459 F.Supp. 108, 117.

The State erroneously argues in its brief that it is not required to prove affirmative acts of concealment by Western Paving to toll the statute of limitations. The State evidently contends that proof of its due diligence, alone, is sufficient. The cases cited by plaintiff in support of this argument involve underlying actions for fraud.² As stated earlier, courts have historically not required proof of both defendant's concealment and plaintiff's diligence in fraud cases. Therefore, these cases are inapposite to the instant antitrust action. Plaintiff also relies on a misconstrued reading of King & King Enterprises v. Champlin Petroleum Co., supra, 657 F.2d 1147. In King & King, the Tenth Circuit Court of Appeals stated:

The party asserting the fraudulent concealment doctrine has the burden of showing (1) the use of fraudulent means by the party who raises the bar of the statute; (2) successful concealment from the injured party; and (3) that the party claiming fraudulent concealment did not know or by the exercise of due diligence could not have known that he might have a cause of action.

657 F.2d at 1154. The Court's decision to toll the statute was specifically based on a finding that "the defendant actively sought to conceal its price fixing activities."...