Determining the Right Requirements for Restarting the Limitation Period in Private Antitrust Conspiracy Suits

• Author: Reid J. Shepard
• Position: J.D. Candidate, The University of Iowa College of Law, 2019; B.A., Hamline University, 2015
• Pages: 957-984

Determining the Right Requirements for Restarting the Limitation Period in Private Antitrust Conspiracy Suits Reid J. Shepard * ABSTRACT: This Note explores how the Eighth Circuit and other circuits have recently expanded the liability of antitrust defendants significantly by holding that plaintiffs do not need to allege that a conspiracy was ongoing during the four-year statute of limitation period to restart the statute. These decisions undermine both the federal antitrust regime’s goal of proactive private enforcement and the repose and efficiency interests underlying statutes of limitations. This Note argues that these decisions improperly rely on the Supreme Court’s RICO precedent and contradict the Court’s pleading standard precedent. This Note proposes legislative solutions to this problem in the form of clarification to the “accrual” language in the statutory regime and through the enactment of a statute of repose. Either solution would provide clarity to defendants as to the limits of their liability and encourage plaintiffs to promptly bring their claims. I. INTRODUCTION ............................................................................. 958 II. ANTITRUST CONSPIRACY SUITS AND STATUTES OF LIMITATION .................................................................................. 960 A. A NTITRUST C ONSPIRACY S UITS ................................................ 960 B. R ATIONALES B EHIND P RIVATE T REBLE D AMAGES ..................... 962 C. T HE R ATIONALES B EHIND S TATUTES OF L IMITATIONS .............. 964 1. The Repose Rationale ................................................... 965 2. Promote Efficiency ........................................................ 966 D. C ONTINUING V IOLATION D OCTRINE ......................................... 967 III. P ROPANE T ANK AND LIVING CONSPIRACIES ................................... 969 A. I N RE P RE -F ILLED P ROPANE T ANK A NTITRUST L ITIGATION ....... 970 B. T HE RICO A NALOGY ............................................................... 972 * J.D. Candidate, The University of Iowa College of Law, 2019; B.A., Hamline University, 2015. I would like to thank the Editorial Board of Volume 104 of the Iowa Law Review for their help in editing this Note. 957 958 IOWA LAW REVIEW [Vol. 104:957 1. The Relationship Between Antitrust Regulation and RICO ....................................................................... 972 2. Distinctions Between Antitrust Regulation and RICO ....................................................................... 973 C. T ENSION WITH THE A NTITRUST R EGIME .................................. 974 1. Pleading Requirements under Twiqbal ........................ 974 2. Impact of Propane Tank on Private Antitrust Suits ...... 976 D. T ENSION WITH S TATUTORY L IMITATION P ERIODS ..................... 977 1. Extending Stale Claims and Preventing Repose ......... 977 2. Chilling Economic Activity ........................................... 978 IV. SOLUTIONS: RECONCILING P ROPANE T ANK WITH THE ANTITRUST REGIME ...................................................................... 980 A. C LARIFY “A CCRUAL ” ............................................................... 980 B. A DOPT A S TATUTE OF R EPOSE .................................................. 981 V. CONCLUSION ................................................................................ 983 I. INTRODUCTION In 2008, Apple and a group of book publishing companies tried to challenge Amazon’s place of dominance in the e-book market. 1 Their strategy was to work together to raise the price of e-books. Unfortunately for them, their actions attracted the attention of no fewer than 33 state governments, who accused Apple of violating the laws that regulate competition itself: the antitrust laws. In the end, Apple’s unsuccessful attempt cost the company $450 million to settle the suit. 2 Congress first formally recognized the incredible danger posed to consumers by businesses joining together to conspire against their interest when it passed the Sherman Antitrust Act in 1890. 3 Private enforcement by consumers is a cornerstone of the antitrust regime enforcement mechanism. Coupled with heavy criminal punishments, 4 the regime provides consumers 1. Nate Raymond & Jonathan Stempel, Apple Conspired to Fix E-book Prices: U.S. Appeals Court , REUTERS (June 30, 2015, 9:05 AM), https://www.reuters.com/article/us-apple-ebooks-decision-idUSKCN0PA1RS20150630. 2 . Id. 3 . See Sherman Antitrust Act of 1890, ch. 647, 26 Stat. 209 (1890) (codified as amended at 15 U.S.C. §§ 1–7 (2012)). 4. The Sherman Act’s heavy punishments are given in section 1 of the Act: Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. 15 U.S.C. § 1. 2019] PRIVATE ANTITRUST CONSPIRACY SUITS 959 with generous financial incentives 5 to encourage swift and proactive enforcement. To offset the threat of potentially ruinous penalties, the regime only allows a plaintiff to recover if their claim is brought within four years of the date that the claim accrues. 6 On June 23, 2017, the Eighth Circuit upset this delicate balance by effectively destroying the statute of limitations for private antitrust conspiracy suits in the case of In re Pre-Filled Propane Tank Antitrust Litigation . 7 Sitting en banc, the court determined that a plaintiff need not allege an ongoing conspiracy to restart the limitation period imposed on suits brought under § 1 of the Sherman Antitrust Act. 8 The court’s decision permits an antitrust plaintiff to sue for a defendant’s alleged wrongful conduct years after the statute of limitations has run. This Note argues that the Eighth Circuit’s decision in Propane Tank , and similar decisions reached by other circuits, 9 improperly rely on Supreme Court precedent and frustrate the rationales behind both statutes of limitations and the antitrust regime’s private enforcement mechanism. Part II of this Note discusses the history of private antitrust enforcement of § 1 of the Sherman Act and the rationales behind that provision’s mandatory trebling 10 of damages. Additionally, Part II also explores the rationales underlying the use of statutes of limitation, including their ability to provide repose for defendants and promote judicial efficiency. Part III explores Propane Tank and discusses its reasoning, particularly its reliance on Supreme Court RICO precedent. 11 Part III also explains the problems with the so-called RICO analogy, and discusses problems created by permitting plaintiffs to restart the statute of limitations without having to prove the existence of an ongoing conspiracy during the limitation period. 12 Finally, Part IV proposes a 5 . See id. at § 15(a) (“[An injured party] shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.” (emphasis added)). 6 . Id. § 15b. 7. Hartig Drug Co. v. Ferrellgas Partners, L.P. ( In re Pre-Filled Propane Tank Antitrust Litig.), 860 F.3d 1059 (8th Cir. 2017) (en banc), cert. denied sub nom . Ferrellgas Partners, L.P. v. Morgan–Larson, LLC, 138 S. Ct. 647 (2018). 8 . In re Pre-Filled Propane Tank Antitrust Litig. , 860 F.3d at 1068. 9 . See, e.g. , Oliver v. SD-3C LLC, 751 F.3d 1081, 1086 (9th Cir. 2014); Tam Travel, Inc. v. Delta Airlines, Inc. ( In re Travel Agent Comm’n Antitrust Litig.), 583 F.3d 896, 902 (6th Cir. 2009); Atl. Textiles v. Avondale Inc. ( In re Cotton Yarn Antitrust Litig.), 505 F.3d 274, 290–91 (4th Cir. 2007); Morton’s Mkt., Inc. v. Gustafson’s Dairy, Inc., 198 F.3d 823, 828 (11th Cir. 1999) (holding in each case that the Supreme Court’s 1997 decision Klehr v. A.O. Smith Corp. applies to antitrust conspiracy suits). 10 . Damages , BLACK’S LAW DICTIONARY (10th ed. 2014) (“[T]reble [D]amages [:] Damages that, by statute, are three times the amount of actual damages that the fact-finder determines is owed.”); see also 15 U.S.C. § 15(a) (“[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . and shall recover three fold the damages by him sustained . . . .”). 11 . See infra Sections III.A–B. 12 . See infra Sections III.C–D. 960 IOWA LAW REVIEW [Vol. 104:957 few solutions to Propane Tank ’s issues, including modifying the limitation provision for conspiracy suits 13 or even adopting a statute of repose or similar mechanism. 14 II. ANTITRUST CONSPIRACY SUITS AND STATUTES OF LIMITATION To properly examine the ramifications and rationales of the Eight Circuit’s holding in Propane Tank , 15 it is necessary to explore the policies underlying the Sherman Act and how courts have interpreted the procedural requirements for bringing conspiracy suits under § 1. This Part provides: (A) an overview of private Sherman Antitrust conspiracy suits; (B) an explanation of the policy objectives underlying the use of private enforcement and treble damages in conspiracy suits; (C) an explanation of statutes of limitations and the relevant policy rationales behind them; and (D) an explanation of the Continuing Violation Doctrine. A. A NTITRUST C ONSPIRACY S UITS Passed in 1890, Congress designed the Sherman Antitrust Act 16 “to protect trade and commerce against unlawful restraints and monopolies.” 17 The Court has stressed the antitrust regime’s importance to both the economic and political health of the United States, calling the Act “a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade,” 18 and calling antitrust law violations “a blow to the free-enterprise system envisaged by Congress.” 19 By passing the...