Mixed ruling issued in Egg Products Antitrust MDL defense motion to dismiss

The judge presiding over the multi-district Processed Egg Products Antitrust Litigation

playing out in the Eastern District of Pennsylvania has granted in part, and denied in part the defendants’ motion to dismiss the direct action plaintiffs’ claims for damages incurred prior to the commencement date of the applicable statute of limitations in the case.

U.S. District Judge Gene E.K. Pratter, who is handling the antitrust MDL that has been consolidated in Philadelphia, and involves allegations that egg producers violated the Sherman Act by conspiring to restrict the supply of, and fix the prices for, domestically produced eggs, ruled on Dec. 20 that the motion is granted without prejudice with respect to the direct purchaser plaintiffs’ fraudulent concealment allegations pertaining to their federal law claims.

At the same time, the judge denied part of the motion with respect to plaintiff Giant Eagle’s claim under Ohio law, as well as the ability of all of the direct purchaser plaintiffs to claim the benefit of class action tolling.

According to Pratter’s memorandum, the plaintiffs’ antitrust claim is subject to the Clayton Act’s four-year statute of limitations, which says damages for such claims are recoverable only if the lawsuit commenced within four years after the cause of action accrued.

The plaintiffs in this case seek damages for alleged injuries beginning in 2000 and continuing through to the present.

The defendants moved to dismiss all damages that accrued four years prior to the dates on which the plaintiffs filed their complaints.

In opposing the motion to dismiss, the plaintiffs relied on the fraudulent concealment doctrine, which stops the statute of limitations from running when the accrual date of a claim has passed but the “plaintiff’s cause of action has been obscured by the defendant’s conduct.”

After careful examination, Pratter ruled that the plaintiffs have failed to sufficiently allege that the fraudulent concealment doctrine should toll the statute of limitations as to their federal law claims.

At the same time, the judge wrote, the plaintiffs may rely on class action tolling to recover damages accruing on or after Sept. 24, 2004, and the plaintiffs may also seek the court’s leave to amend their complaints as to fraudulent concealment if they have a good faith believe that such a claim may be advanced, provided they do so in a timely manner.

Pratter gave the direct purchaser plaintiffs until Jan. 18, 2013, by which to seek leave to file amended complaints consistent with the terms of the court’s opinion.

In her opinion, Pratter, citing case law, had stated that in order to invoke equitable tolling through fraudulent concealment at the pleading stage, a plaintiff must allege facts sufficient to suggest that the defendant actively misled the plaintiff, which prevented the plaintiffs from recognizing the validity of their claim within the limitations period, and where the plaintiffs’ ignorance is not attributable to their lack of reasonable due diligence in attempting to uncover the relevant facts.

In their dismissal motion, the defense had also argued that the plaintiffs cannot claim tolling based on the filing of the first direct purchaser class action complaint consolidated in the MDL because the plaintiffs filed independent actions before the court reached a decision on class certification.

Because the Third Circuit Court of Appeals has not addressed the permissibility of such class action tolling, Pratter was tasked with looking to decisions of other circuit courts in deciding the issue.

The Second Circuit Court of Appeals, for example, has held that a plaintiff may rely on the filing of a class action complaint for tolling purposes even if that plaintiff opts out of the putative class before certification, Pratter wrote.

Likewise, the Ninth and Tenth Circuit Appeals Courts have held that tolling applies to putative class members who file independent actions before class certification is resolved.

The Sixth Circuit Court of Appeals, however, bars plaintiffs from relying on such class action tolling, Pratter wrote.

“After carefully reviewing the divergent circuit court opinions on this issue, the Court will apply the analysis of the Second, Ninth, and Tenth Circuit Courts of Appeals and hold that the Plaintiffs may claim the benefit of class action tolling,” Pratter wrote. “Therefore, the Court holds that the statute of limitations only bars claims for damages occurring prior to September 24, 2004, the date four years before the filing of the first direct purchaser suit consolidated in these proceedings.”

In the end, Pratter determined that the plaintiffs have failed to sufficiently allege that the fraudulent concealment doctrine should toll the statute of limitations as to their federal law claims, although the judge allowed the plaintiffs to rely on class action tolling to recover damages accruing on or after Sept. 24, 2004.