Opposition Brief — Berkson v. Del Monte Corp.

et

Supreme Court, U.S.

(6) FILED

No. 88-1019 a

SOSEPH FSPANIOL, JR.

CLERK

In the oe

Supreme Court of the United States

Ocroser TERM, 1988

HERBERT D. BERKSON,

PETITIONER,

0.

DEL MONTE CORPORATION, et al.,

RESPONDENTS.

BRIEF OF RESPONDENT COVINGTON & BURLING

IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

Jack 3. PirozzoLo*

RicH«4rp L. BinpER

WILcox, PrrozzoLo AND McCartruy

PROFESSIONAL CORPORATION

5C Federal Street

Boston, Massachusetts 02110

(617) 482-5470

Attorneys for Respondent

Covington & Burling

February 6, 1989

* Counsel of Record

Blanchard Press, Inc., Boston, Miss. — Law Printers [617] 426-6690

i

QUESTIONS PRESENTED

1. Should this Court consider a claim that respondents

have violated the Anti-Deficiency Act, where (a) no such

claim was pleaded in the complaint or presented to either of

the lower courts; and (b) there is no basis on which to hold

that the statute provides for a private right of action or for an

action against private parties?

2. Should this Court review the purely factual determina-

tion of when the statute of limitations began to run on peti-

tioner’s claims, a determination that has twice been made and

resolved against petitioner by the lower courts?

TABLE OF CONTENTS

Page

EE i

ee cane eeebenecuenen iv

Counterstatement of the Case....................... 1

Reasons for Denying the Writ....................... 8

I. The Contention That the Anti-Deficiency Act

Was Violated Does Not Warrant Considera-

A. No Such Claim Was Presented in the

SS re ee ee 9

B. There Is No Basis for Implying a Private

Right of Action Under the Anti-Deficiency

bee iwi eh. cit hwcoeaeee cess s ll

II. The Court Should Not Engage in Further Fact

Finding Concerning the Timeliness of Peti-

I SPR as I 13

Ree enc wcacewcaccosaween es 15

Appendix:

Report and Recommendation of Magistrate........ A-1

Judgment of the District Court................... A-15

Er A-16

Prior Opinion of First Circuit.................... A-20

iv

TABLE OF AUTHORITIES

Cases:

Agency Holding Corp. v. Malley-Duff & Associates, 483

he Noirs thos Wee aainbbie aces 6, 7, 14, 15

Berkson v. Del Monte Corp., 743 F.2d 53 (1st Cir. 1984),

cert. denied, 470 U.S. 1056 (1985)............. 1, 3, 4, 14

Berkson v. United Brands Co.., et al., Civil Action No. 2824

(Mass. Super. Ct. 1978), appeal dismissed, No.'79-153

CN, Se IE at eas cw ak ons 2) aa eee de 2

Cannon v. University of Chicago, 441 U.S. 677 (1979)... 12

Catt 6, Se ee tr nw oe hn ee Sle eas 12, 13

Helvering v. Minnesota Tea Co., 296 U.S. 378 (1935).... 11

Edward Hines Yellow Pine Trustees v. Martin, 268 U.S.

So cbc hoe Sides isas ood enn k en Feo ll

Kosak v. United States, 465 U.S. 848 (1984)............ 10

McGrath v. Manufacturers Trust Co., 338 U.S. 241

a oe UE s Gy wack «mane DRAM Anne aS Sieh 10

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,

I oc ae ho ba ein cheese erandeks 12

Miree v. DeKalb County, 433 U.S. 25 (1977)........... ll

Touche Ross & Co. v. Redington, 442 U.S. 560 (1979)

Ss eg he TTS PT PRE i Py Se ey 12, 13

Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S.

ROG ao Gael chi cael eyes aimee sons shone 12

United States v. Ortiz, 422 U.S. 891 (1975)............ 11

United States v. United Fruit Company, C.A. 4560

ee i RS 55 ks aediv a ba nusaeenes baeee eases: 2

Virginian Railway Co. v. Mullens, 271 U.S. 220 (1926).. 10

White River Lumber Co. v. Arkansas, 279 U.S. 692

hn Ps xn Maa iam Eek eae ee Mae Ae aaa 1]

Statutes and Rules:

Page

Anti-Deficiency Act, 31 U.S.C. § 1341 et seg. (1986). . 7, 8, 9,

10, 11, 13

Clayton Act §§4, 4b, 15 U.S.C. § 15, 15b (1986)...... 3, 6

Racketeer Influenced and Corrupt Organizations Act

(“RICO”), 18 U.S.C. § 1961 et seq. (1986)....... 4, 5, 6,

| 7, 9, 14, 15

SOU IE TD ao ks cece nn ce cadeviscceveaees 8

6 5 So sa ona ds coal hers eees 10

Se i MS hoo hs a's ov as Vda eh ee ken en es 10

Be Se ie os ove cv aoanapancucaenwns 10

tt | | rere eo 10

In the

Supreme Court of the United States

OcToBER TERM, 1988

No. 88-1019

HERBERT D. BERKSON,

PETITIONER,

v.

DEL MONTE CORPORATION, et al.,

RESPONDENTS.

BRIEF OF RESPONDENT COVINGTON & BURLING

IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

Counterstatement of the Case

This case represents petitioner’s third effort to recover on

claims that are now nearly twenty years old. It is petitioner’s

second effort to secure review of those claims by this Court.

We briefly set forth here the pertinent facts and holdings of the

lower courts.’

' For the Court's convenience, an appendix has been included consisting of

(i) the Report and Recommendation filed by Magistrate Cohen on April 23,

1987, and subsequently adopted by the district court, (ii) the district court's

May 29, 1987, judgment, (iii) the June 29, 1988, unpublished opinion of the

First Circuit affirming the district court judgment, and (iv) the opinion of

the First Circuit in petitioner’s prior antitrust suit, which is published at 743

F.2d 53 (1st Cir. 1984), cert. denied, 470 U.S. 1056 (1985). Cititions to this

appendix are in the form (“App. __.”).

2

In 1958, United Fruit, the predecessor of respondent United

Brands, settled an antitrust action brought by the Department

of Justice. The parties consented to the entry of a decree that,

inter alia, required United Fruit to divest itself of certain

banana-growing properties in Central America. United States

v. United Fruit Company., C.A. 4560 (E.D. La. 1958). Cov-

ington & Burling represented United Fruit, and then United

Brands, in that proceeding. That representation is this respon-

dent’s sole involvement in the events that underlie a series of

law suits subsequently brought by petitioner.

United Fruit initially planned to comply with the decree by

selling certain properties in Panama, and in 1967, its plan to

do so was approved by both the Justice Department and by the

Honorable Seybourn Lynne, the federal judge supervising the

decree. Ultimately, the Panamanian government refused to

permit the sale to go forward, and the plan was abandoned in

1970. Instead, it was determined that United Brands should

divest itself of certain banana-growing properties in

Guatemala.

On November 29, 1972, Judge Lynne approved United

Brands’ proposal to sell the Guatemalan properties to Del

Monte. Petitioner, in association with a Guatemalan national,

was interested in purchasing those properties. Before approv-

ing the sale, Judge Lynne received petitioner’s brief (and sup-

porting materials) in opposition to the sale and permitted peti-

tioner to address the court at length with respect to his objec-

tions. The court-approved sale has been the target of all the

litigation subsequently initiated by petitioner.

Petitioner's first collateral attack on the divestiture sale was

commenced in 1974, when he sued United Brands and its

then-Chairman, Eli M. Black, for alleged breach of an oral

agreement to sell the Guatemalan properties to petitioner and

his group. That action was dismissed by the Massachusetts

trial court in 1978, and petitioner’s appeal was dismissed by

the state appellate court in June, 1979. Berkson v. United

Brands Co., et al., Civil Action No. 2824 (Mass. Super. Ct.

1978), appeal dismissed, No. 79-153 (Mass. App. 1979).

3

In June, 1979, following the dismissal of his state case, peti-

tioner turned to the federal courts in his next effort to undo the

_ court-approved sale. Petitioner brought suit against United

Brands and Del Monte for alleged violations of the federal an-

titrust laws. As part of that suit, petitioner alleged that United

Brands and Del Monte had made bribes and other “ques-

tionable payments” to Guatemalan officials in order to gain

approval of the sale. Petitioner similarly accused the two com-

panies of having lied to Judge Lynne in 1972 to conceal the

alleged bribery. As petitioner acknowledges, his knowledge of

these alleged “questionable payments” dates from at least July

14, 1975—the date of an article in the Wall Street Journal

disclosing certain payments by Del Monte to a consultant in

Guatemala. (Pet. 3.)

After extensive discovery, the district court entered judg-

ment against petitioner on the independent grounds that his

antitrust claims were barred by the statute of limitations, the

Act of State doctrine, the failure to prove injury to “business or

property” as required by Section 4 of the Clayton Act,* and

because the suit was an impermissible collateral attack on the

1958 consent decree and the related proceedings before Judge

Lynne. Petitioner appealed the judgment to the Court of

Appeals for the First Circuit, which affirmed. Berkson v. Del

Monte Corp., 743 F.2d 53 (1st Cir. 1984), cert. denied, 470

U.S. 1056 (1985).

That court held that petitioner’s antitrust complaint was

“based entirely on actions occurring before the consummation

of the 1972 sale; no subsequent overt act in furtherance of the

alleged conspiracy is described or even hinted at. It is clear,

therefore, that Berkson’s cause of action accrued no later than

December, 1972....” (743 F.2d at 55; App. A-21-22.) The

court therefore concluded that the action was untimely “[o]n

its face.” (Id.; App. A-22.)

? The district court’s holding in this respect was based on overwhelming

evidence developed in the course of the prior litigation that petitioner was

wholly unable successfully to operate a banana plantation.

The court then reviewed petitioner’s allegations of

fraudulent concealment and found that there was “no trace of

any allegation, let alone a showing sufficient to raise a genuine

issue of fact,” on critical elements of that charge. (743 F.2d at

55-56; App. A-23.) It expressly found that petitioner “voiced

his suspicions and filed an amicus curiae brief before the

United States District Court for the Eastern District of Loui-

siana in 1972, when he opposed the sale to Del Monte on

grounds virtually identical to those advanced in the present

case.” (Id. at 56; App. A-24) (emphasis supplied). The court

found “absolutely no indication” that petitioner had made any

“ ‘conscientious effort’ to substantiate the suspicions he voiced

to the district court in Louisiana in 1972.” (Id.; App. A-25.) It

therefore affirmed the judgment of the district court. Peti-

tioner then sought review in this Court, which was denied.

470 U.S. 1056 (1985).

Petitioner commenced the instant action, his third collateral

attack on the court-approved sale, in late September, 1986.

Although allegations of fraud and corruption permeated peti-

tioner’s earlier actions as well as his argument before Judge

Lynne, and although petitioner was obviously aware of the

firm’s role in the divestiture proceeding, he raised no claim

against Covington & Burling until he filed the current action.

Unlike the prior federal action, petitioner’s current suit focuses

on alleged violations of the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. (1986).

The complaint affirmatively acknowledges that the facts

underlying the current action are the same as those underlying

the earlier antitrust suit. (See, e.g., Complaint J 1, 16.) It

mentions Covington & Burling in only four of its 61

paragraphs, and the most specific fact that is pleaded concern-

ing this respondent is its address.*

3 In addition to Covington & Burling, petitioner sued Del Monte, United

Brands, three other law firms (Goodwin, Procter & Hoar, Palmer & Dodge,

and Pillsbury, Madison & Sutro), an accounting firm (Price Waterhouse),

and three former government officials (Nathaniel Davis, Henry A. Kissinger,

and William Rogers).

ee IBS

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;

5

5

All defendants moved for judgment shortly after the filing of

the complaint. The district court referred the motions to a

Magistrate, who recommended on April 23, 1987, that each

defendant's motion be granted. The district court thereupon

granted summary judgment for all defendants on May 29,

1987, based on the report and recommendation of the

Magistrate. With respect to the claims relating to the court-

approved sale, the court held that petitioner’s claims against

respondents United Brands and Del Monte, who were parties

to the prior antitrust action, were “barred by the doctrine of

res judicata, or claim preclusion. That conclusion is in-

escapable in the circumstances.” (Magistrate’s Report at 6;

App. A-5.)

The remaining respondents, including Covington & Burl-

ing, were entitled to “assert the benefits of collateral estoppel,

or issue preclusion, on at least those claims of plaintiff involv-

ing the 1972 divestiture.” (Magistrate’s Report at 11; App.

A-9.) The court had “no doubt” that petitioner “had a full and

fair opportunity to litigate” the statute of limitations issue (in-

cluding any claim of fraudulent concealment) in his earlier

antitrust action. (Magistrate’s Report at 11; App. A-10.)

Moreover, “the factual determinations regarding the bar of

the statute of limitations were necessary to the judgment of the

Court of Appeals in the prior suit... .” (Magistrate’s Report at

11; App. A-10.)

The court considered whether petitioner’s current case was

based on the same facts as his earlier antitrust action. It found

that there was “no doubt that the underlying facts of the

RICO claim are precisely the same as the facts underlying the

antitrust claim.” (Magistrate’s Report at 8; App. A-7.) The

court was “unable to find any factual allegations indicating

that plaintiff's current action grows out of a different transac-

tion than that alleged in his first suit.” (Id.; App. A-7.) Thus,

petitioner’s change in legal theory was entitled to no weight.

6

“(T]he change in legal theory cannot disguise the fact that

plaintiff's two causes of action are grounded on the same

transaction—the 1972 divestiture. Plaintiff alleges no

new facts regarding the events surrounding the sale of

United Brands’ Guatemalan banana properties. Thus,

the issue of when the antitrust claim arose is identical to

the issue of when the RICO claim arose. Both arose by

December, 1972.

“That plaintiffs RICO claim is time-barred is obvious.”

(Magistrate’s Report at 11-12; App. A-10.)

Based on these factual findings, as well as the First Circuit's

earlier opinion, the district court concluded that petitioner's

RICO claims, like his earlier antitrust claims, were untimely

and that principles of collateral estoppel barred relitigation of

that issue. (Id. at 13-14; App. A-11-12.)‘

The district court’s judgment was affirmed in a per curiam

opinion of the Court of Appeals for the First Circuit, “substan-

tially for the reasons stated in the magistrate’s report and

recommendation adopted by the district court.” (First Circuit

opinion at 3; App. A-17.) The Court of Appeals specifically

considered this Court’s intervening opinion in Agency Holding

Corp. v. Malley-Duff & Associates, 483 U.S. 143, 107 S. Ct.

2759, 2767 (1987), that the four-year statute of limitations

governing actions under the Clayton Act was the applicable

limitations period for civil RICO actions and concluded that

“this adjustment does not affect plaintiffs claims based on the

1972 divestitute. Those claims remain long time-barred under

the new standard.” (Id. at 4; App. A-18.)

‘ The district court’s judgment separately considered petitioner's claims

based on the 1972 court-approved sale and those based on alleged miscon-

duct by the defendants in the prior antitrust litigation. The court found that

Covington & Burling had no involvement whatsoever in the alleged miscon-

duct in petitioner's earlier antitrust case, and the complaint alleges no touch

by Covington & Burling with the subject matter of this action following the

conclusion of the divestiture proceeding on November 29, 1972. (Magistrate's

Report at 13-14 and n.7; App. A-11-12).

ee eT ee ee

a ee oe PE Pe an

7

The Court of Appeals pointed to petitioner's admitted

awareness of the alleged bribery of Guatemalan officials since

“the ‘bribe’ was reported in a 1975 article in the Wall Street

Journal.” (First Circuit opinion at 6; App. A-19.) And the

court also addressed certain other facts in the record

establishing that petitioner’s “claims under RICO accrued

before September 25, 1982 and are therefore time-barred even

under Agency Holding Corp., supra, 107 S. Ct. 2759.” (Id. at

5; App. A-18.) Petitioner's motion for rehearing was denied in

an order dated September 15, 1988. (Pet. 1j.)

In this Court, petitioner challenges the holdings below that

his action was untimely. But petitioner has nowhere shown

that any respondent committed any act within the four year

limitations period that could form a basis of civil RICO lia-

bility. Petitioner submitted voluminous briefs and appendices

to both the district court and the Court of Appeals but was

unable to identify any conduct within four years of the filing

of his complaint. Nor is any such conduct identified in the

petition for writ of certiorari. And petitioner has similarly

failed to identify any conduct by Covington & Burling subse-

quent to the 1972 court-approved divestiture sale.®

* Petitioner continues to assert that the “law firms representing said Del

Monte and United Fruit, in some instances submitted perjured af-

fidavits....” (Pet. 16.) As the Court of Appeals recognized, the only

“documentation” for this charge (which has never been made against this

respondent) is simply petitioner's allegations. (First Circuit opinion at 4-5;

App. A-18.)

Petitioner also claims that Covington & Burling has admitted to acting in

league with government officials in a manner that “is in stark violation of the

‘Anti-Deficiency Act’ (U.S. Code 1982, Title 31)....” (Pet. 17-18.) This

claim is based on a continued misreading and misstatement of the twelfth

defense of Covington & Burling’s answer to the complaint. That defense

states:

“If this defendant committed acts alleged in the Complaint, which it

denies, it is immune from suit to the extent that it took action in con-

cert with officials of the United States Government who were acting

pursuant to their official duties.” (emphasis supplied)

As the answer makes clear, Covington & Burling denied each and every

allegation of wrongdoing on its part made by petitioner. The defense of

immunity was asserted strictly in the alternative and played no role what-

soever in either of the decisions below.

8

Reasons for Denying the Writ

Petitioner has offered no reason, let alone any “special and

important” reason, why this case warrants review by this

Court. (Rule 17.1.) The petition does not frame an issue of

constitutional or statutory significance and concentrates on an

issue not raised below.

The Anti-Deficiency Act, 31 U.S.C. § 1341 et seq. (1986),

which petitioner invokes for the first time in this long-

continuing litigation, is wholly irrelevant. It is a criminal

statute that applies by its terms only to government employees

and creates no private right of action. Dismissal of petitioner’s

action on the ground that it is time-barred is amply supported

by findings of fact made by the lower courts which this Court

does not sit to review.

I. THE CONTENTION THAT THE ANTI-DeEFICIENCY AcT Was

VIOLATED Does Not WARRANT CONSIDERATION.

The Anti-Deficiency Act, 31 U.S.C. § 1341 (1986), states in

relevant part that

“(a)(1) An officer or employee of the United States

Government or of the District of Columbia government

may not—

(A) make or authorize an expenditure or obligation

exceeding an amount available in an appropria-

tion or fund for the expenditure or obligation;

or

(B) involve either government in a contract or

obligation for the payment of money before an

appropriation is made unless authorized by

law.”®

® Section 1342 states that these same employees “may not accept voluntary

services for either government or employ personal services exceeding that

authorized by law except for emergencies involving the safety of human life

or the protection of property.”

9

Any such employee who “knowingly and willfully” violates

either section 1341(a) or section 1342 “shall be fined not more

than $5,000, imprisoned for not more than 2 years, or both.”

31 U.S.C. § 1350 (1986).

Petitioner advances for the first time in this Court a claim

that this statute has been violated. Because this claim was not

presented below, it should not be considered by this Court.

Moreover, there is no basis whatsoever for a holding that the

Anti-Deficiency Act provides for a private right of action or for

an action against private parties. Absent such a right, peti-

tioner’s claim cannot be sustained.

A. No Such Claim Was Presented in the Lower Courts.

Petitioner’s compiaint described the nature of his action as

follows:

“This is an action to recover damages for securities fraud,

civil violations of the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), common law fraud, inten-

tional interference with business and contractural (sic)

relations, breach of fiduciary duty, misuse and improper

disclosure of confidential business and proprietary infor-

mation belonging to plaintiff in connection with the pur-

chase of the divestiture properties of the United Fruit

Company, now United Brands (“United”), in

Guatemala, Central America.” (Complaint { 1.)

Nowhere did petitioner’s complaint plead a claim under the

“Anti-Deficiency Act.”

Throughout this litigation, plaintiff has pursued his claim as

one under the RICO statute. Thus, the district court

understood that petitioner raised claims “primarily based on

the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), 18 U.S.C. § 1961 et seq.....” (Magistrate’s Report

at 1; App. A-1.) At no time did petitioner brief or even

mention in the district court what is now the primary issue

10

submitted for consideration by this Court—an asserted viola-

tion of the Anti-Deficiency Act. Nor did the district court con-

sider such a claim.

Similarly, petitioner ignored the Anti-Deficiency Act in the

Court of Appeals. Thus, in his brief to the First Circuit, peti-

tioner argued that his current action was “in nexus” with his

earlier antitrust case. (Br. 2.) That same brief {at pp. 7-9)

identified a series of 13 criminal statutes that petitioner con-

tended had been violated by the respondents, including, inter

alia, 18 U.S.C. §371 (Conspiracy to Defraud the United

States), 18 U.S.C. § 1005 (Banking Fraud), and 18 U.S.C.

§§ 1341, 1343 (Mail and Wire Fraud). Nowhere in his briefs to

the Court of Appeals did petitioner contend that there was any

violation of the Anti-Deficiency Act and the Court of Appeals,

like the district court before it, never considered that question.

Under these circumstances—where the question has never

been pleaded, briefed, or argued to the lower courts—this Court

will not agree to consider it for the first time. See, e.g., Kosak

v. United States, 465 U.S. 848, 850 n.3 (1984) (where “peti-

tioner did not present this argument to the Court of Appeals,

we decline to consider it.”). The Court has consistently de-

clined to consider questions not properly presented in the

pleadings. See, e.g., Virginian Railway Co. v. Mullens, 271

U.S. 220, 227-228 (1926), where the Court refused to consider

plaintiff's eleventh-hour effort to base liability on a new legal

theory. “The case stated in the complaint was distinctly in

tort. There was no mention of a contract obligation. ... After

bringing and trying the case on that theory the plaintiff cannot

be permitted on this review to change to another which the

defendant was not required to meet below.” That is, of course,

precisely what petitioner seeks to do in this case. See also

McGrath v. Manufacturers Trust Co., 338 U.S. 241, 249-50

(1949). *

1]

The Court has long refused to consider issues raised for the

first time in a petition for certiorari. See. e.g., United States v.

Ortiz, 422 U.S. 891, 898 (1975): Helvering v. Minnesota Tea

Co., 296 U.S. 378, 380 (1935); White River Lumber Co. v.

Arkansas, 279 U.S. 692, 700 (1929); Edward Hines Yellow

Pine Trustees v. Martin, 268 U.S. 458, 465 (1925) (“This court

is a court of review, and it will not consider questions not

raised or disclosed by the record brought to it for a review and

which were not considered by the courts below.”).

The Court's reasoning in Miree v. DeKalb County, 433 U.S.

25, 33-34 (1977), where it declined to consider plaintiffs’ last-

minute attempt to assert a private claim based on alleged

violations of the Airport and Airway Development Act of

1970, is particularly applicable here. The Court noted that the

complaints in Miree “sought recovery solely on the grounds of

negligence, nuisance, and breach of contract. There is no indi-

cation that petitioners alleged a violation of a federal statute

and a right to recovery for such a violation. The fact that this

asserted basis of liability is so obviously an afterthought may

be some indication of its merit, but since it was neither

pleaded, argued, nor briefed either in the district court or in

the Court of Appeals, we will not consider it.”

B. There Is No Basis for Implying a Private Right of

Action Under the Anti-Deficiency Act.

Had the courts below considered petitioner’s claim i:nder

the Anti-Deficiency Act, they would have been required to

decide whether that Act applies to private parties or provides

for a private right of action in the circumstances presented

here. By its terms, the Act applies only to officers and

employees of the United States and District of Columbia

governments. 31 U.S.C. § 1341 (1986). It is a criminal statute,

and provides that violations are punishable by fines of up to

$5,000, imprisonment of up to two years, or both. 31 U.S.C.

§ 1350 (1986). Nothing in the statute expressly provides for a

12

private right of action, and petitioner would therefore be

required to establish that such a right could be implied under

this Court’s decisions. There are no decisions that support such

an implication.

This Court has set forth on several occasions the tests that

are to be applied in determining whether a federal statute

implies a private civil right of action. See, e.g., Merrill Lynch,

Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 378-95

(1982) (private right of action exists under Commodity Ex-

change Act); Transamerica Mortgage Advisors, Inc. v. Lewis,

444 U.S. 11, 23-24 (1979) (limited private right of action under

Investment Advisers Act of 1940); Touche Ross ¢ Co. v.

Redington, 442 U.S. 560, 575-76 (1979) (no private right of

action under Section 17(a) of Securities Exchange Act of 1934);

Cannon v. University of Chicago, 441 U.S. 677, 688-717

(1979) (private right of action exists under Title IX of Educa-

tion Amendments of 1972); Cort v. Ash, 422 U.S. 66, 78-85

(1975) (no private right of action to enforce limitation on cor-

porate campaign contributions.)

The Court has emphasized in these cases that “the fact that

a federal statute has been violated and some person harmed

does not automatically give rise to a private cause of action in

favor of that person.” Cannon, 441 U.S. at 688. In Cort v.

Ash, 422 U.S. at 78, the Court set forth four factors to be con-

sidered in deciding whether to imply a private right of action.

“First, is the plaintiff ‘one of the class for whose especial

benefit the statute was enacted,’...—that is, does the

statute create a federal right in favor of the plaintiff?

Second, is there any indication of legislative intent, ex-

plicit or implicit, either to create such a remedy or to

deny one?.. . Third, is it consistent with the underlying

purposes of the legislative scheme to imply such a remedy

for the plaintiff? . . . And finally, is the cause of action one

traditionally relegated to state law, in an area basically

13

the concern of the States, so that it would be in-

appropriate to infer a cause of action based solely on

federal law?” (citations omitted) (emphasis in original).

Since then, the Court has refined its analysis to focus primarily

on the first three factors, recognizing that “(t]he central

inquiry remains whether Congress intended to create, either

expressly or by implication, a private cause of action.” Touche

Ross, 442 U.S. at 575.

Simply put, petitioner has made no showing—nor could one

be made on this record—that he is entitled to bring a private

civil action to enforce the Anti-Deficiency Act, even assuming

that violations of that Act took place.’ As in Cort v. Ash, this

case at most presents “nothing more than a bare criminal

statute, with absolutely no indication that civil enforcement of

any kind was available to anyone.” 422 U.S. at 79-80. There is

no indication that the statute was intended to benefit peti-

tioner or that Congress intended civil suits to supplement the

criminal enforcement procedures that it established. As the

Court observed in Touche Ross, “when Congress wished to

provide a private damage remedy, it knew how to do so and

did so expressly.” 442 U.S. at 572. Congress has plainly not

done so, and this Court should not reach to decide that ques-

tion in this case.

Il. THe Court SHouLD Not ENGAGE IN FurTHER FAct FINDING

CONCERNING THE TIMELINESS OF PETITIONER'S CLAIMS.

Inasmuch as the decision below in favor of Covington &

Burling independently rested on settled principles of collateral

estoppel, which are not challenged by petitioner, the issue of

when petitioner’s claim accrued for statute of limitations pur-

7 It is not without significance that Congress amended the Anti-Deficiency

Act in 1982 without providing for such a private right of action, even though

it may be presumed that Congress was well aware of this Court’s holdings on

the implication of rights of action. See Pub. L. 97-258, 96 Stat. 923.

14

poses is irrelevant. In any event, the question of accrual is a

purely factual one on which both the district court and the

Court of Appeals have twice ruled. In both cases, the lower

courts were unanimous in finding that petitioner's claims are

untimely. This Court has already denied review on the

application of the four year statute of limitations to

petitioner's antitrust claims. 470 U.S. 1056 (1985).

Based on this Court’s holding in Agency Holding Corp. v.

Malley-Duff & Associates, 483 U.S. 143 (1987), the identical

four-year statute of limitations applies to both antitrust and

RICO actions. This case therefore does not present the issue of

what statute of limitations is appropriate in the context of civil

RICO. Rather, it presents the purely factual question of when

petitioner's RICO claims accrued so as to start the statute of

limitations running. Petitioner contends, without support,

that so long as the effects of the alleged RICO violation con-

tinue, his time in which to bring suit is tolled indefinitely.

(See, e.g., Pet. at 26-27.)

In the prior antitrust action, the First Circuit found that

petitioner had failed to identify any overt act subsequent to

the 1972 court-approved sale. (743 F.2d at 55; App. A-21-22.)

Petitioner still has not identified a single act by any respondent

that occurred within four years of the filing of the complaint.

Petitioner continues to assert that his action was concealed

from him notwithstanding the First Circuit’s findings to the

contrary. (743 F.2d at 56; App. A-23-25.) And given the inten-

sity with which petitioner has litigated for more than 15 years,

his claims of concealment are simply not credible.

The Court of Appeals carefully considered petitioner's

extensive submissions and focused in particular on those

allegations that were more recent in time. It found, after a full

review of the record, that petitioner was well aware of his

alleged cause of action long before September, 1982.

15

“The allegedly false affidavit of Laurence Johnson sub-

mitted by Palmer and Dodge on Del Monte’s behalf was

filed on or about August 1, 1979, and the allegedly false

interrogatories filed by Palmer and Dodge on Del Monte's

behalf were filed on June 18, 1981. Furthermore, plain-

tiff asserts in his brief on appeal that by November 25,

1981 he noticed that the district judge in the prior federal

action had turned against him as part of a conspiracy in-

volving Palmer and Dodge, Goodwin, Procter, and Hoar

and their clients. Accordingly, we hold that plaintiff's

claims under RICO accrued before September 25, 1982

and are therefore time-barred even under Agency

Holding Corp., supra, 107 S. Ct. 2759.” (First Circuit

opinion at 4-5; App. A-18.) (citations omitted).

The determination of when this petitioner's action accrued

is strictly a factual one without precedential significance. It

presents no issue worthy of review by this Court.

Conclusion

The petition for a writ of certiorari should be denied.

Respectfully submitted,

Jack R. PirozzoLo*

RicHARD L. BINDER

WILLcox, PrrozzoLo AND McCarTHY

PROFESSIONAL CORPORATION

50 Federal Street

Boston, Massachusetts 02110

(617) 482-5470

Attorneys for Respondent

Covington & Burling

February 6, 1989

* Counsel of Record

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Se ta em es

A-1

UNITED States District Court

District OF MASSACHUSETTS

Civil Action No. 86-2775-N

HERBERT D. BERKSON,

PLAINTIFF,

v.

DEL MONTE CORPORATION, ET AL.,

DEFENDANTS.

REPORT AND RECOMMENDATION ON DEFENDANTS

MOTIONS TO DISMISS OR, IN THE ALTERNATIVE,

MOTIONS FOR SUMMARY JUDGMENT

April 23, 1987

COHEN, M.

Plaintiff, Herbert D. Berkson, commenced this action on

September 25, 1986. This represents his second trip to this

court, and third trip to federal courts, complaining about mat-

ters attendant to the divestiture of the United Fruit Company.

Although primarily based on the Racketeer Influenced and

Corrupt Organizations Act (“RICO”), 18 U.S.C. §1961 et

seq., plaintiffs complaint includes claims for common law

fraud, intentional interference with contractual and business

relations, breach of fiduciary duty, and disclosure of “con-

fidential business and proprietary informaticn belonging to

plaintiff in connection with the purchase of the divestiture

properties of the United Fruit Company, now United

Brands. . . in Guatemala, Central America.” Plaintiff's

Complaint §1. Also mentioned in the body of the complaint

are claims for violations of the Sherman and Clayton Acts, the

A-2

Securities Exchange Act of 1934, 15 U.S.C. §78n(e), and

various criminal statutes not part of RICO.!

Plaintiff has named as defendants Del Monte Corp., United

Brands Co., Price Waterhouse, Palmer & Dodge, Goodwin,

Procter & Hoar, Pillsbury, Madison & Sutro, Covington &

Burling, William P. Rogers, Henry A. Kissinger and Nathaniel

Davis.

All defendants have moved to dismiss plaintiff's complaint,

or in the alternative for summary judgment, based on res

judicata, collateral estoppel, statute of limitations, failure to

state a claim upon which relief can be granted and immunity.

I. BACKGROUND

In 1954, the United States commenced an action in Loui-

siana federal court against United Fruits (the predecessor of

United Brands) for violations of the Sherman Act. In 1958, a

consent decree was entered into by the parties. article VIII of

the decree required United Brands to divest itself of part of its

banana producing properties.

In 1970, properties in Guatemala were approved for sale by

the Louisiana court and United Brands entered into negotia-

tions with Del Monte for the purchase of the properties.

However, in 1971, the Guatemalan government disapproved

Del Monte as a buyer and indicated that it would prefer to

deal with Guatemalan nationals. In 1972, Del Monte suc-

cessfully resumed its efforts to purchase the properties;

' These criminal statutes—18 U.S.C. §§371, 1621, 1622, 1623, 1005, 1546

and 2071—are not predicate offenses within the meaning of RICO’s defini-

tions of “racketeering activity.” See 18 U.S.C. §1961(1). As a result, they

cannot form the bases of a RICO claim. See United States v. Pepe, 747 F.2d

632, 645 (11th Cir. 1984). Nor do purely criminal statutes provide a private

right of action to a civil litigant such as plaintiff. See. e.g., Dugar v.

Coughlin, 613 F. Supp. 849, 852 n. 1 (S.D.N.Y. 1985) (no private right of

action under 18 U.S.C. §371): Fiorino v. Turner, 476 F. Supp. 962, 963 (D.

Mass. 1979) (same); Weiland v. Byrne, 392 F. Supp. 21, 22 (N.D. Ill. 1975)

(private litigant does not have standing under 18 U.S.C. §1621).

a

A-3

Guatemala approved Del Monte as a purchaser and the sale

was confirmed by the Lousiana court. The divestiture

occurred on December 14, 1972.

According to plaintiff, he and a Guatemalan, Julian Presa,

had formed an enterprise, the Pan Tropic Fruit Company, to

purchase the divestiture properties. Plaintiff appeared as

amicus curiae at the hearing before the Louisiana court to

oppose the sale of the properties to Del Monte. He has been

challenging the results of the divestiture ever since.

In November 1974, plaintiff filed an action in Massachusetts

state court against United Fruit and Eli M. Black, United’s

then chairman. Plaintiff alleged that United Fruit and Black

had breached an oral contract to sell to him the divestiture

properties. This suit was dismissed by the state court, as was

plaintiff's appeal to the Massachusetts Appeals Court.

Shortly after the dismissal of his appeal in June, 1979, plain-

tiff commenced an action in this Court, Civil Action No.

79-1180-T. Plaintiff named as defendants Del Monte and

United Brands; he alleged that they violated the federal

antitrust laws by excluding companies other than Del Monte

from purchasing United Brands’ Guatemala properties, by

undermining plaintiff's efforts to purchase the properties, by

refusing to divulge information and divulging false informa-

tion concerning the properties, by using bribery and political

pressure to obtain Guatemalan approval of Del Monte as the

purchaser, and by withholding information from the Loui-

siana federal court in 1972.

In March, 1983, United Brands and Del Monte moved for

summary judgment. In July, 1983, after submission of briefs

and oral argument, Magistrate DeGiacomo recommended

that defendants’ motions be granted. He found that plaintiff's

action was time-barred, that plaintiff lacked standing under

the Clayton Act, that the Act of State Doctrine barred plain-

tiffs action and that plaintiffs suit was an impermissible col-

lateral attack on the consent decree and judgment of the

A-4

Louisiana federal court. The District Court approved the

Magistrate's recommendation and granted defendants’

motions for summary judgment in August, 1983.

Plaintiff appealed to the United States Court of Appeals for

the First Circuit. On September 17, 1984, the First Circuit af-

firmed the District Court’s grant of summary judgment on the

ground that the action was time-barred. Berkson v. Del Monte

Corp., 743 F.2d 53 (1st Cir. 1984). Plaintiff petitioned the

United States Supreme Court for certiorari. The petition was

denied in March, 1985. 105 S.Ct. 1765 (1985). Plaintiff

thereafter filed the instant action.

II. DISCUSSION

A. Summary Judgment Standard?

“Summary judgment procedure is properly regarded not as

a disfavored procedural shortcut, but rather as an integral part

of the Federal Rules as a whole, which are designed ‘to secure

the just, speedy and inexpensive determination of every

action.” Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2555

(1986) (quoting Fed. R. Civ. P. 1). To survive defendants’ mo-

tions for summary judgment, plaintiff must demonstrate that

there is a genuine issue of material fact requiring a trial. Fed.

R. Civ. P. 56(e); Matsushita Electric Industrial Co. v. Zenith

Radio Corp., 106 S.Ct. 1348, 1355-56 (1986). As the Supreme

Court recently has made clear, the standard for granting sum-

mary judgment “mirrors” the standard for a directed verdict

under Fed. R. Civ. P. 50(a). Anderson v. Liberty Lobby, Inc.,

106 S. Ct. 2505, 2511 (1986). That is, the inquiry focuses on

“whether the evidence presents a sufficient disagreement to re-

quire submission to a jury or whether it is so one-sided that one

party must prevail as a matter of law.” Id. at 2512. “Where

the record taken as a whole could not lead a rational trier of

fact to find for the non-moving party, there is no ‘genuine issue

2 Because papers outside the pleadings have been considered, this court

will treat the instant motions as motions for summary judgment. Fed. R.

Civ. P. 12(b).

A-5

for trial.” Matsushita, 106 S.Ct. at 1356 (citing First National

Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289

(1968)).

In determining defendants’ motion for summary judgment,

this court must view the evidence and all inferences in the light

most favorable to the party opposing the motion. Hahn v.

Sargent, 523 F.2d 461, 464 (1st Cir. 1975) (citations omitted),

cert. denied, 425 U.S. 904 (1976). However, plaintiff may not

obtain a trial merely on the allegations in his complaint, First

National Bank of Arizona v. Cities Service Co., 391 U.S. 253,

289-99 (1968), or by showing that there is “some metaphysical

doubt as to the material facts,” Matsushita, supra, 106 S.Ct. at

1356 (citations omitted). “Only disputes over facts that might

affect the outcome of the suit under the governing law will

properly preclude the entry of summary judgment. Factual

disputes that are irrelevant or unnecessary will not be

counted.” Anderson, 106 S.Ct. at 2510.

Plaintiff's complaint can be read to concern two distinct sets

of events. First are his allegations that the 1972 method of

divestiture and the incidents surrounding it violated RICO,

other laws, and common law rights belonging to plaintiff. Se-

cond, plaintiff complains about the defendants’ actions during

the prior federal suit in this court. Because different legal stan-

dards apply to each of these claims, this court will address

each separately.

B. Claims Based on the 1972 Divestiture

1. United Brands and Del Monte

United Brands and Del Monte, the two defendants in the

prior federal action, claim that plaintiffs RICO claims against

them are barred by the doctrine of res judicata, or claim

preclusion. That conclusion is inescapable in the cir-

cumstances.

Under this doctrine, “a final judgment on the merits of an

action precludes the parties or their privies from relitigating

issues that were or could have been raised in that action.”

A-6

Allen v. McCurry, 449 U.S. 90, 94 (1980). A grant of summary

judgment is a judgment on the merits. See Rose v. Town of

Harwich, 778 F.2d 77 (1st Cir. 1985), cert. denied, 106 S.Ct.

2278 (1986); Isaac v. Schwartz, 706 F.2d 15, 17 (1st Cir. 1983)

(dismissal for failure to state a claim under Rule 12(b)(6) is a

judgment on the merits); 1B J. Moore, J. Lucas & T. Currier,

Moore's Federal Practice, J0.409 [1.-2] (1984) (judgment on

motion for summary judgment is on the merits).

The bar of res judicata, however, is limited to cases arising

out of the same claim or cause of action. Manego v. Orleans

Board of Trade, 773 F.2d 1, 5 (1st Cir. 1985), cert. denied. 106

S.Ct. 1466 (1986). This circuit has adopted the approach of

§24 of the Restatement (Second) of Judgments in determining

when two cases concern the same claim. Id.

§ 24. Dimensions of “Claim” for Purposes of Merger or

Bar—General Rule Concerning “Splitting”

(1) When a valid and final judgment rendered in an ac-

tion extinguishes the plaintiffs claim pursuant to the

rules of merger or bar. . . . the claim extinguished in-

cludes all rights of the plaintiff to remedies against the

defendant with respect to all or any part of the transac-

tion, or series of connected transactions, out of which the

action arose.

(2) What factual grouping constitutes a “transaction”,

and what groupings constitute a “series”, are to be deter-

mined pragmatically, giving weight to such considera-

tions as whether the facts are related in time, space,

origin, or motivation, whether they form a convenient

trial unit, and whether their treatment as a unit conforms

to the parties’ expectations or business understanding or

usage.

Restatement (Second) Judgments §24 (1982).

Plaintiff cannot avoid res judicata by pleading different

legal theories or by adding new defendants. Manego, 773 F.2d

at 6; Restatement, §24, comm. c., §25, comm. d. As the com-

ments to §24 point out:

—y

—

P es RO ee ae ee Te ee Oe ee ee ee eS ee

A-7

That a number of different legal theories casting

liability on an actor may apply to a given episode does not

create multiple transactions and hence multiple claims.

This remains true although the several legal theories

depend on different shadings of the facts, or would

emphasize different elements of the facts, or would call

for different measures of liability or different kinds of

relief.

§24, comm. c. Similarly, when a judgment is on statute of

limitations grounds, as in plaintiff's prior suit, the bar is not

avoided by shifting the legal theory on which the claim is

pitched. Moore's Federal Practice, {0.409[6]. If the transac-

tion underlying the two suits is the same, res judicata is a bar

to the second suit.

There is no doubt that the underlying facts of the RICO

claim are precisely the same as the facts underlying the anti-

trust claim. Plaintiff's first complaint concerned alleged viola-

tions of the antitrust laws based on the 1958 consent decree

and 1972 divestiture of the Guatemalan banana properties.

His second complaint involves the same occurrences, but

alleges that the divestiture and those who took part in it

violated RICO. This court has carefully reviewed plaintiff's

pleadings in this case and is unable to find any factual allega-

tions indicating that plaintiffs current action grows out of a

different transaction than that alleged in his first suit.

Widening the alleged conspiracy to include government

officials and law firms does not change this result; the fact is

that the actions of the new defendants which are alleged to

violate RICO are the same actions about which plaintiff has

complained in the prior suit. Plaintiff adds little that is dif-

ferent in this action and any minor differences that he does

allege do not transform his second suit into a new cause of

action. See Manego, 773 F.2d at 6. Res judicata, then, bars all

of plaintiff's claims which concern the 1972 divestiture.”

3 Plaintiff argues that, because none of the defendants had been convicted

under RICO, he could not have brought his RICO suit until 1985 when the

A-8

2. The Remaining Defendants

The remaining defendants, not parties to the prior suit, also

argue that res judicata bars this present RICO action against

them. Although there is some support for. the position that

strangers to the first action may claim the effects of res

judicata,‘ that is not the law, except in limited circumstances,

in this circuit.°

In Manego v. Orleans Board of Trade, the First Circuit

Court of Appeals affirmed the trial court’s decision that res

judicata did not apply to a defendant which was not a party to

the prior suit. 773 F.2d at 7, affirming 598 F. Supp. 231, 235

(D. Mass. 1984); see also Valentin v. United States Postal Ser-

vice, 787 F.2d 748, 750 and n. 1 (1st Cir. 1986) (res judicata

available only to “parties or their privies”); Sierra Club v.

Secretary of Transportation, 779 F.2d 776, 779 (1st Cir. 1985)

United States Supreme Court resolved a conflict among the Circuit and

district courts. See Sedima, S.P.R.L. v. Imrex Co., 105 S.Ct. 3275 (1985)

(holding that a RICO private treble damages action may be brought even

though defendants have not been criminally convicted of a predicate act

under RICO). Plaintiff seeks far too much from far too little. The mere fact

that a conflict existed does not excuse a litigant from asserting all claims. The

very existence of a conflict indicates that the claim was not frivolous, and

plaintiffs choice not to pursue a RICO claim at that time is not a valid

defense to the doctrine of res judicata.

‘ Permitting “nonmutual claim preclusion” would be attractive in this case

which reflects “no more than a last desperate effort by a plaintiff who is pur-

suing a thin claim against defendants who were omitted from the first action

because they were less directly involved than the original defendants.” 18 C.

Wright, W. Miller & E. Cooper, Federal Practice and Procedure, §4464, at

588-89 (1981). Professors Wright, Miller and Cooper suggest a limited rule

that would permit nonmutual claim preclusion only when the new defen-

dant can show why he should have been joined in the first suit and plaintiff

cannot show any good reasons justifying a second chance. Id. at 589. This,

however, is not the law of this circuit.

5 Defendants seemingly argue that the fact that a claim may be the same

for res judicata purposes even if new defendants are present in the second suit

means that those new defendants may also claim the bar of res judicata. Sec-

tion 24's test, however, is only aimed at determining when the same trans-

actions underly two claims once the prerequisites to res judicata already

apply, namely, identity of parties.

sabi ST TL ee

A-9

(basic prerequisites of res judicata are finality of judgment,

identity of parties and identity of claim).

The First Circuit cases on which defendants rely exemplify

the limited exceptions to the mutuality requirement and are

not applicable in this case. For example, in Capraro v. Tilcon

Gammino, Inc., 751 F.2d 56 (1st Cir. 1985), the court held

that the parent of a wholly-owned subsidiary could take

advantage of res judicata, even though only its subsidiary was

a defendant in the first suit. Jd. at 59 (citing §59(3) of the

Restatement (Second) of Judgments, which specifically con-

cerns holders of ownership in corporations). The court held

that under the requirements of §59(3), the subsidiary had

acted at the direction of its parent. Id.

Another exception to the rule that there must be identity of

parties appears in Mashpee Tribe v. Watt, 707 F.2d 23 (lst

Cir.), cert. denied, 464 U.S. 1020 (1983). The claims in

Mashpee Tribe concerned title to land. When property rights

are at stake, new defendants may claim the bar of res judicata.

Id. at 24-25 (citing Restatement (Second) of Judgments §§25,

43 comm. c.).

Notwithstanding these limitations, however, defendants

may assert the benefits of collateral estoppel, or issue preclu-

sion, on at least those claims of plaintiff involving the 1972

divestiture. See Manego, 598 F. Supp. at 236 (stranger to first

action may defensively assert principles of issue preclusion)

(citing Parklane Hosiery v. Shore, 439 U.S. 322 (1979)). Col-

lateral estoppel applies when an issue of fact or law is actually

litigated and determined by a final judgment and the deter-

mination is essential to the judgment. Restatement (Second)

Judgments §27; Manego, 598 F. Supp. at 236.

The Court of Appeals in Berkson v. Del Monte Corp. con-

cluded that plaintiffs antitrust claim based on the 1972,

divestiture arose no later than December, 1972, and that there

was no fraudulent concealment of this claim. 743 F.2d at

55-57. Despite plaintiffs arguments to the contrary, there is

A-10

no doubt that he had a full and fair opportunity to litigate

these issues; when issues are submitted and determined on

motions for summary judgment such issues have been

“actually litigated.” Restatement, §27, comm. d. Also, the

factual determinations regarding the bar of the statute of

limitations were necessary to the judgment of the Court of

Appeals in the prior suit as they were the bases for the affir-

mance of the district court’s grant of summary judgment. See

Berkson v. Del Monte Corp., 743 F.2d at 57.

Plaintiff's prior suit was based on antitrust law. The instant

suit is premised on alleged RICO violations. However, the

change in legal theory cannot disguise the fact that plaintiff's

two causes of action are grounded on the same trans-

action—the 1972 divestiture. Plaintiff alleges no new facts

regarding the events surrounding the sale of United Brands’

Guatemalan banana properties. Thus, the issue of when the

antitrust claim arose is identical to the issue of when the RICO

claim arose. Both arose by December, 1972. Cf. Wilson v.

Retail Credit Co., 474 F.2d 1260, 1261 & n. 2 (5th Cir. 1973)

(finding that statute of limitations barred plaintiff's libel claim

is entitled to collateral estoppel where same facts underly

plaintiff's new cause of action based on different legal theory).

That plaintiffs RICO claim is time-barred is obvious.®

Plaintiff attempts to avoid the statute of limitations, as he did

in the prior suit, by alleging fraudulent concealment. He

asserts that it was only during the discovery process of the

prior suit that he learned of the facts on which his RICO

claims are premised. Complaint 16. Without specifying what

these facts are, he broadly alleges that after commencing his

action, he discovered that the government agencies involved in

the divestiture were not “faithfully executing the laws of the

United States.” Id.

However, the Court of Appeals found that Berkson did not

use due diligence in discovering the facts underlying his anti-

* This is so no matter what statute of limitations applies. See infra.

A-1]

trust cause of action and, thus, that he did not meet the re-

quirements to invoke the doctrine of fraudulent concealment.

734 F.2d at 56-57. Because the facts on which both claims are

premised are identical, the finding of lack of due diligence

precludes plaintiff from relitigating whether any of these new

defendants fraudulently concealed his RICO claim.

Plaintiff already has had his one bite at the apple to litigate

the statute of limitations issues; he is not entitled to yet

another. As the United States Supreme Court has made clear:

Permitting repeated litigation of the same issue as long as

the supply of unrelated defendants holds out reflects

either the aura of the gaming table or “a lack of discipline

and of disinterestedness on the part of the lower courts,

hardly a worthy or wise basis for fashioning rules of pro-

cedure.” Kerotest Mfg. Co. v. C-O-Two Co., 342 U.S.

180, 185 (1952).

Blonder-Tongue Laboratories, Inc. v. University of Illionois

Foundation, 402 U.S. 313, 329 (1971). Moreover, collateral

estoppel acts to “relieve parties of the cost and vexation of

multiple lawsuits, conserve judicial resources, and, by preven-

ting inconsistent decisions, encourage reliance on

adjudication.” Allen v. McCurry, 449 U.S. 90, 94 (1980). This

case readily invites—indeed, demands—application of these

principles. All of plaintiffs claims based on the 1972

divestiture are time-barred as to these new defendants as well.

C. Claims Based on Events in the Prior Federal Action

In his complaint, plaintiff charges that some defendants

acted improperly in the prior federal action. Specifically,

plaintiff claims that Palmer & Dodge and Goodwin, Procter &

Hoar (attorneys for Del Monte and United Brands respec-

tively) misled the court about the facts, “blinded” the court,

aided the court in “expunging” a document from court

records, influenced the decision of Magistrate DeGiacomo and

A-12

wrote the Magistrate’s decision for him.’ Plaintiff additionally

charges Palmer & Dodge with refusing to correct, in open

court, au incorrect answer to an interrogatory,® and with fil-

ing false affidavits. Similarly, plaintiff asserts that Del Monte

filed false affidavits.

To the extent that these claims are alleged to violate RICO,

they are barred by the applicable statute of limitations.

Because RICO contains no limitations period, this court

must apply the most analogous state statute of limitations.

Wilson v. Garcia, 471 U.S. 261 (1985). Under the test an-

nounced in Garcia, courts first must decide whether all causes

of action under a particular federal statute should be

characterized in the same way for limitations purposes, or

whether individual determinations should be made based

upon the underlying fact patterns in each case. Jd. at 271-75.

Courts that have addressed this issue in the context of RICO

have reached opposite conclusions. Compare Malley-Duff &

Associates, Inc. v. Crown Life Insurance Co., 792 F.2d 341,

349, 352-53 (3d Cir. 1986) (court must choose one analogous

state statute of limitations for all RICO claims; court chose

state’s catchall limitations statute for claims based on statute),

cert. granted, 107 S.Ct. 569 (1987), with Silverberg v. Thom-

son McKinnon Securities, Inc., 787 F.2d 1079, 1083 (6th Cir.

1986) (court must look to characterization of underlying facts

in particular cases to determine analogous state statute of

limitations; court chose limitations period for common law

fraud).

’ It is not insignificant, of course, that the judgment in the prior litigation

was entered by the district judge—not the magistrate—and affirmed by the

United States Court of Appeals.

Plaintiff also asserts that Pillsbury, Madison & Sutro and Covington &

Burling misled the court in the prior action. As there is no evidence that these

two law firms were involved in the prior federal suit, it is difficult to see to

what plaintiff is referring. To the extent plaintiff is complaining about ac-

tions that took place before the Louisiana federal district court in the early

1970s, his claim clearly is time-barred. See Part IIB, supra.

* In the answer, Del Monte gave the name of a bank incorrectly. The pro-

per name was City National Bank; the answer to the interrogatory identified

the bank as the First National Bank of Miami.

A-13

Because Massachusetts does not have a limitations period

specifically applicable to statutory causes of action, the most

analogous statute of limitations under either prong of the test,

is the three year limitations period contained in M.G.L. c.

260, §2A.° Thus, plaintiff's cause of action is barred if it

accrued prior to September 25, 1983.

The actions about which plaintiff complains specifically

concern the issuance of Magistrate DeGiacomo’s Report and

Recommendation in July 1983. At the latest, plaintiff should

have been aware of his cause of action by August 1983, when

the district judge approved the magistrate’s report, and

entered judgment thereon, and plaintiff offers nothing to in-

dicate that he was not, or was prevented from being, so

aware.

Based on the foregoing, then, plaintiff's RICO claims based

on defendants’ alleged actions in the prior suit are likewise

barred by the statute of limitations.

*M.G.L. c. 260, §2A provides:

§2A. Three years; actions of tort, contract to recover for personal in-

juries and replevin

Except as otherwise provided, actions of tort, actions of contract to

recover for personal injuries, and actions of replevin, shall be com-

menced only within three years next after the cause of action accrues.

Although no court within the First Circuit has appeared to have decided

this precise question, the court in UST Capital Corp. v. Charter Nat! Life

Insurance Co., No. 77-21-Z, slip. op. (D.Mass. 1986), agreed with the par-

ties that §2A governed in a RICO action based on fraud. Here, also,

plaintiff's allegations concerning the defendant's actions in the prior suit most

resemble claims that the defendants perpetrated a fraud upon the court.

EEO

SS --- *

III. CONCLUSION

For the reasons set forth above, this Court accordingly

recommends’® that defendants’ various motions for summary

jdgment be allowed, and that judgment accordingly enter for

the defendants.

s/_ LAWRENCE P. COHEN

United States Magistrate

‘© The parties are hereby advised that under the provisions of Rule 3(b) of

the Rules for United States Magistrates in the United States District Court for

the Distrtict of Massachusetts, any party who objects to these proposed

findings and recommendations must file a written objection thereto with the

Clerk of this Court within 10 days of the party's receipt of this Report and

Recommendation. The written objections must specifically identify the por-

tion of the proposed findings, recommendations, or report to which objection

is made and the basis for such objections. The parties are further advised that

the United States Court of Appeals for this Circuit has indicated that failure

to comply with this rule shall preclude further appellate review. See United

States v. Emiliano Valencia-Copete, 792 F.2d 4 (1st Cir. 1986); Park Motor

Mart, Inc. v. Ford Motor Co., 616 F 2d 603 (ist Cir. 1980); United States v.

Vega, 678 F.2d 376, 378-379 (lst Cir. 1982); Scott v. Schweiker, 702 F.2d

13, 14 (1st Cir. 1983); see also, Thomas v. Arn, __ U.S. __, 106 S.Ct. 466

(1985).

EE

A-15

AO 450 (Rev.5/85) Judgment in a Civil Case

UNITED STATES Districr Court

Districr OF MASSACHUSETTS

CasE NUMBER CA 86-2775-N

HERBERT D. BERKSON

v.

DEL MONTE CORPORATION, ET AL.

JUDGMENT IN A CIVIL CASE

_J Jury Verdict. This action came before the Court for a

trial by jury. The issues have been tried and the jury has

rendered its verdict.

XX} Decision by Court. The Court having accepted the

recommendation of Magistrate Cohen, and _ having

adopted same,

Ir Is ORDERED AND ADJUDGED

JUDGEMENT FOR DEFENDANTS.

May 29, 1987 GeorceE F. McGratn, Clerk

(By) /s/ (ILLEGIBLE), Deputy Clerk

el

A-16

[NOT FOR PUBLICATION ]

United States Court of Appeals

For the First Circuit

No. 87-1539

HERBERT D. BERKSON,

PLAINTIFF, APPELLANT,

v.

DEL MONTE CORPORATION, ET AL.,

DEFENDANTS, APPELLEES.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Davin S. Netson, U.S. District Judge}

Before

CAMPBELL, Chief Judge,

CoFFIN AND SELYA, Circuit Judges.

Herbert D. Berkson on brief pro se.

Craig E. Stewart, John T. Harding, Jr. and Palmer & Dodge on brief for

appellees, Palmer & Dodge and Pillsbury, Madison & Sutro.

Thomas J. Griffin, Jr. and Goodwin, Procter & Hoar on brief for appellee

Goodwin, Procter & Hoar.

Thomas J. Griffin, Jr.. Richard A. Oetheimer, Gordon H. Piper and

Goodwin, Procter & Hoar on brief for appellee United Brands Company.

Christine M. Roach, Assistant U.S. Attorney and Frank L. McNamara,

Jr., Acting United States Attorney, on brief for appellees Henry A. Kissinger,

William P. Rogers and Nathaniel Davis.

Jennifer A. Kemp, Jeffrey B. Rudman and Hale and Dorr on brief for

appellee Price Waterhouse.

Jack R. Pirozzolo, Richard L. Binder, Willcox, Pirozzolo & McCarthy,

Professional Corporation on brief for appellee Covington & Burling.

Paul B. Galvani and Ropes & Gray on brief for appellee Del Monte

Corporation.

A-17

June 29, 1988

Per CurtiAM. The judgment of the district court is affirmed

substantially for the reasons stated in the magistrate’s report

and recommendation adopted by the district court.

The magistrate found that plaintiff Herbert Berkson’s

claims under the Racketeer Influenced and Corrupt Organiza-

tions Act (“RICO”), 18 U.S.C. §1961 et seq., against all

defendants were time-barred (whereas principles of res

judicata were found to preclude Berkson’s claims only against

those defendants who were parties to plaintiffs prior federal

suit, Berkson v. Del Monte Corp., 743 F.2d 53 (1st Cir. 1984),

cert. denied, 470 U.S. 1056 (1985) ).

In so finding, the magistrate applied the three-year limita-

tions period for Massachusetts tort actions contained in Mass.

Gen. Laws c. 260, § 2A, as the statute of limitations governing

plaintiff's RICO claims. Plaintiff's complaint having been

filed on September 25, 1986, the magistrate found that plain-

tiffs claims were barred if they accrued before September 25,

1983. Accordingly, plaintiff's claims based on defendants’

alleged misdeeds in the course of plaintiff's prior federal action

were held time-barred because all these claims accrued by

August 1983, when the district court entered judgment against

plaintiff on the basis of the magistrate’s report and recommen-

dation. Plaintiff's other claims based on the 1972 divestiture of

United Brands were held time-barred because they arose no

later than 1972 and because principles of collateral estoppel

bound plaintiff to the determination in the prior federal action

that there had been no fraudulent concealment of these

claims.

After the district court’s judgment the Supreme Court ruled

in Agency Holding Corp. v. Malley-Duff & Associates, Inc.,

107 S. Ct. 2759 (1987), that the four-year statute of limitations

governing Clayton Act civil enforcement actions, 15 U.S.C.

§ 15b, constituted the applicable limitations period for civil

A-18

RICO actions. Thus, plaintiffs claims are time-barred if they

accrued before September 25, 1982, not the September 25,

1983 date applied by the magistrate.

Obviously, this adjustment does not affect plaintiff's claims

based on the 1972 divestiture. Those claims remain long time-

barred under the new standard.

Nor does application of the four-year limitations period

revive, as timely, any of plaintiff's RICO claims based on

events in the prior federal action. A cause of action under

RICO accrues when “a plaintiff knows or should know of the

injury” which forms the basis of the plaintiffs action. Bowling

v. Founders Tile Co., 773 F.2d 1175, 1178 (11th Cir. 1985),

cert. denied, 475 U.S. 1109 (1986). Plaintiffs RICO claims

against each defendant accrued when he was first injured by

that defendant's alleged acts, not when the last predicate act

for a RICO claim occurred. Id. The allegedly false affidavit of

Laurence Johnson submitted by Palmer and Dodge on Del

Monte’s behalf was filed on or about August 1, 1979, and the

allegedly false interrogatories filed by Palmer and Dodge on

Del Monte’s behalf were filed on June 18, 1981. Furthermore,

plaintiff asserts in his brief on appeal that by November 25,

1981 he noticed that the district judge in the prior federal

action had turned against him as part of a conspiracy involv-

ing Palmer and Dodge, Goodwin, Procter, and Hoar,' and

their clients. Accordingly, we hold that plaintiff's claims

under RICO accrued before September 25, 1982 and are

therefore time-barred even under Agency Holding Corp..,

supra, 107 S. Ct. 2759.

Plaintiff also purported to bring claims under the Securities

Exchange Act of 1934, 15 U.S.C. §78n(e). Claims brought

under that section, which does not itself specifically provide

for a limitations period, are subject to the most closely

analogous statute of limitations of the forum state, i.e., the

statute of limitations for common law fraud actions. Stull v.

Bayard, 561 F.2d 429, 431 (2d Cir. 1977), cert. denied, 434

A-19

U.S. 1035 (1978). See Cook v. Avien, Inc., 573 F.2d 685, 694

(Ist Cir. 1978); Janigan v. Taylor, 344 F.2d 781, 783 (lst

Cir.), cert. denied, 382 U.S. 879 (1965). In Massachusetts the

limitations period for tort and fraud actions is three years.

Mass. Gen. Laws c. 260, §2A. Accordingly, any securities

claim plaintiff might assert is barred if it accrued before

September 25, 1983. However, plaintiff's securities claims are

based on his allegation that defendant Price Wa*erhouse

wrongfully approved defendant Del Monte Corp.'s 1972 pay-

ment of $500,000—characterized by plaintiff as a bribe—to a

foreign consultant in connection with the 1972 divestiture. Not

only did this payment occur fourteen years before plaintiff

filed his complaint, but plaintiff's complaint concedes that the

“bribe” was reported in a 1975 article in the Wall Street

Journal. Plaintiff's securities claims under 15 U.S.C. § 78n are,

accordingly, time-barred.

Insofar as plaintiff purports to bring a variety of common

law tort claims (governed by the three-year statute of limita-

tions of Mass. Gen. Laws c. 260, § 2A) and claims under the

Sherman and Clayton Acts (governed by the four-year statute

of limitations of 15 U.S.C. § 15b), these claims are time-barred

and/or precluded under principles of res judicata for the

reasons stated in the magistrate’s report and recommendation

and in this opinion.

Defendant-appellee Covington & Burling’s request for sanc-

tions against plaintiff is denied.

The judgment of the district court is affirmed.

A-20

United States Court of Appeals

For the First Circuit

No. 83-1636

HERBERT D. BERKSON,

PLAINTIFF, APPELLANT,

v.

DEL MONTE CORPORATION, Et AL.,

DEFENDANTS, APPELLEES.

Before CAMPBELL, Chief Judge, Bownes, Circuit Judge,

and Perez-GIMENEz,* District Judge.

J. Sheffield Dow. Boston, Mass., for plaintiff, appellant.

Thomas J. Griffin, Jr., Boston, Mass., with whom Richard A. Oetheimer,

Gordon H. Piper, and Goodwin, Procter & Hoar, Boston, Mass., were on

brief, for defendant, appellee United Brands Co.

Craig E. Stewart, Boston, Mass., with whom Erik D. Lazar. John T.

Harding, Jr., and Palmer & Dodge. Boston, Mass., were on brief, for defen-

dant, appellee Del Monte Corp.

ArGuED AucustT 6, 1984.

Decipep Sept. 17, 1984.

Bownes, Circuit Judge. Appellant Herbert Berkson

brought this action under 15 U.S.C. §§1 and 2, alleging that

appellees Del Monte and United Brands conspired together to

prevent Berkson and his Pan Tropic Fruit Company from pur-

chasing certain banana properties in Guatemala. The district

court granted summary judgment on the ground, among

others, that the action was time barred. We find this issue

dispositive, and affirm.

* Of the District of Puerto Rico. sitting by designation.

A-21

Under a consent decree in United States v. United Fruit

Co., Civil No. 4560 (E.D. La. 1958), United Brands’

predecessor, United Fruit, agreed to divest itself of some Cen-

tral American banana properties. After an unsuccessful

attempt to fulfill the decree by selling properties in Panama,

United Fruit turned to the Guatemalan properties involved in

this case. Bids were solicited; among the bidders were Del

Monte and Pan Tropic. In the hope that a suitable mixed

Guatemalan-American enterprise could be found, the

Guatemalan Government initially refused to approve Del

Monte as a potential purchaser in November, 1971. In

October, 1972, however, the Guatemalan Government

changed its position and approved the sale to Del Monte. The

United States Department of Justice also approved. After a

hearing before the United States District Court for the Eastern

District of Louisiana at which Berkson appeared as amicus

curiae opposing the transaction, the sale to Del Monte was

consummated in December, 1972. In June, 1979, six and one-

half years later, Berkson filed the complaint in this case.

In his complaint, Berkson charged Del Monte and United

Brands with the following antitrust violations: conspiring to

exclude companies other than Del Monte from purchasing the

Guatemalan properties; refusing to divulge information, and

divulging false information, to prospective purchasers other

than Del Monte concerning the properties; undermining

Berkson’s sources of financial backing; using political pres-

sure, intimidation, and bribery to drive away Berkson’s

Guatemalan associate and obtain approval of the sale to Del

Monte from the Guatemalan Government; withholding infor-

mation from the federal district court at the 1972 hearings;

and maintaining a shared monopoly by excluding competitors

from the banana growing and importing market. Although

Berkson claims that the alleged violations have continuing

effects in the United States, his complaint is based entirely on

actions occurring before the consummation of the 1972 sale;

A-22

no subsequent overt act in furtherance of the alleged con-

spiracy is described or even hinted at. It is clear, therefore,

that Berkson’s cause of action accrued no later than

December, 1972,' for the impact of events leading up to the

sale became final at that time and any subsequent harm must

be seen as the “unabated inertial consequence[ ]” of the earlier

events. See In re Multidistrict Vehicle Air Pollution, 591 F.2d

68, 71-72 (9th Cir.), cert. denied, 444 U.S. 900, 100 S.Ct. 210,

62 L.Ed.2d 136 (1979); Poster Exchange, Inc. v. National

Screen Service Corp., 517 F.2d 117, 126-28 (5th Cir. 1975),

cert. denied, 425 U.S. 971, 96 S.Ct. 2166, 48 L.Ed.2d 793

(1976).

On its face, the action is barred by the four-year statute of

limitation. 15 U.S.C. §15b. Berkson seeks to avoid the time

bar on the only legal theory available to him, namely, by

ascribing his failure to bring timely suit to fraudulent con-

cealment on the part of Del Monte and United Brands. He

argues that in 1972 he lacked the requisite factual basis for

filing an antitrust complaint though his suspicions were

already aroused, and that he only became aware of appellee’s

specific misconduct in July, 1975, through a Wall Street Jour-

nal article. To invoke the doctrine of fraudulent concealment,

a plaintiff must plead and prove three elements: “*(1) wrongful

concealment of their actions by the defendants; (2) failure of

the plaintiff to discover the operative facts that are the basis of

his cause of action within the limitations period; and (3) plain-

tiff's due diligence until discovery of the facts.” Dayco Corp.

v. Goodyear Tire & Rubber Co., 523 F.2d 389, 394 (6th Cir.

1975); see also In re Beef Industry Antitrust Litigation, 600

F.2d 1148, 1169 (5th Cir. 1979), cert. denied, 449 U.S. 905,

101 S.Ct. 280, 66 L.Ed.2d 137 (1980); Charlotte Telecasters,

' The rule that a limitation period is tolled when damages are speculative

or unascertainable, see Zenith Radio Corp. v. Hazeltine Research, Inc., 401

U.S. 321, 339, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971), has no application

here.

A-23

Inc. v. Je#ferson-Pilot Corp., 546 F.2d 570, 574 (4th Cir.

1976). The burden rests squarely on the party pleading

fraudulent concealment. Akron Presform Mold Co. v. McNeil

Corp., 496 F.2d 230, 233 (6th Cir.), cert. denied, 419 U.S.

997, 95 S.Ct. 310, 42 L.Ed.2d 270 (1974).

In reviewing Berkson’s voluminous submissions in opposi-

tion to the summary judgment motion,’ we find no trace of

any allegation, let alone a showing sufficient to raise a genuine

issue of fact, concerning the first and third elements of

fraudulent concealment. It is well established that

the plaintiff must allege facts showing affirmative con-

duct on the part of the defendant which would, under the

circumstances of the case, lead a reasonable person to

believe that he did not have a claim for relief. Silence or

passive conduct of the defendant is not deemed fraudu-

lent, unless the relationship of the parties imposes a duty

upon the defendant to make disclosure. The affirmative

act of denying wrongdoing may constitute fraudulent

concealment where the circumstances make the

plaintiff's reliance upon the denial reasonable. .. .

2 In his opposition to the summary judgment motion and his accom-

panying affidavit, Berkson stated merely that he believed neither appellee

was entitled to summary judgment: he failed to specify a single issue of

material fact relevant to the statute of limitation issue. His attempt to incor-

porate by reference over 5,000 pages of pleadings, depositions, and discovery

documents was blatantly improper under Fed. R. Civ. P. 56(e), which re-

quires that affidavits be made on personal knowledge and set forth specific

facts admissible in evidence to show that there is a genuine issue for trial. The

district court would have been fully justified in disregarding Berkson’s sub-

missions for lack of authentication and failure to identify or organize rele-

vant documents in a “reasonably intelligible manner.” See Zoslaw v. MCA

Distributing Corp. 693 F.2d 870, 883 (9th Cir. 1982), cert. denied, 460 U.S.

1085, 103 S.Ct. 1777, 76 L.Ed.2d 349 (1983). We have nevertheless

reviewed Berkson’s own deposition testimony and other submissions, and

have found nothing in them sufficient to raise an issue of fact as to fraudulent

concealment.

A-24

Rutledge v. Boston Woven Hose & Rubber Co., 576 F.2d 248,

250 (9th Cir. 1978). Although fraud in the sale of the banana

properties underlies Berkson’s complaint, there is no charge of

affirmative conduct by the appellees intended to conceal the

facts upon which Berkson based his complaint or to deceive

him into believing that he did not have a cause of action. At

most, Berkson has alleged that appellees have refused to

divulge information to substantiate his earlier suspicions. See

Hallyv. E. I. DuPont de Nemours & Co., 312 F.Supp. 358, 362

(E.D.N.Y. 1970) (conspiracy secret by nature, not per se suffi-

cient to toll statute of limitation). Indeed, we note that

Berkson voiced his suspicions and filed an amicus curiae brief

before the United States District Court for the Eastern District

of Louisiana in 1972, when he opposed the sale to Del Monte

on grounds virtually identical to those advanced in the present

case. In the absence of a fiduciary relationship between

Berkson and appellees, we do not think that silence or refusal

to cooperate on the part of Del Monte and United Brands rises

to the level of fraudulent conduct.

Appellees argue that Berkson’s appearance and submissions

in Louisiana in 1972 establish as a matter of law that he had

actual notice at that time of his cause of action, and that he

cannot meet the second limb of the test for fraudulent conceal-

ment. Had the district court considered the claim on the

merits, we would likely agree; on a motion for summary judg-

ment, though, we hesitate to infer that Berkson knew of facts

sufficient to support a claim in 1972. Nevertheless, we need

not reach the question of how concrete or well founded a

suspicion of misconduct must be to constitute notice of “the

facts necessary to institute [a] suit,” for even if Berkson’s suspi-

cions were purely conjectura! in 1972 and became concrete

only later, a “plea of ignorance” standing alone “is insufficient

to avoid the statute [of limitation].” Charlotte Telecasters, 546

F.2d at 574; Akron Presform, 496 F.2d at 234.

A-25

If Berkson wished to bring an action based on his suspicions,

he was under a duty to exercise due diligence in investigating

whether the suspicions were well founded. There is absolutely

no indication in the record, however, of any particular

attempt on Berkson’s part to engage in discovery or make a

“conscientious effort” to substantiate the suspicions he voiced

to the district court in Louisiana in 1972. See General Aircraft

Corp. v. Air America, Inc., 482 F.Supp. 3, 8-9 (D.D.C.

1979). Conclusory allegations are not sufficient, see Dayco.

523 F.2d at 394; Akron Presform, 496 F.2d at 234; where a

plaintiff has utterly failed to make even the requisite allega-

tions, he cannot claim that his underlying cause of action was

fraudulently concealed.

In the absence of a valid defense to the statute of limitation,

the district court was correct in granting summary judgment

for appellees on the ground that the action was time barred.

Affirmed. Costs awarded to appellees.