Appendix — Pinney Dock & Transport Co. v. Norfolk & Western Railway Co.

cP

Su ' cama Court, U.S.

Kin D

88-72 JUL LL 1988

Sept F. PANNE, JR.

No. 88- see GLBRK

IN THE

Supreme Court of the Wnited States

OcToBer TERM, 1988

PINNEY Dock & TRANSPORT Co..

Petitioner,

Vv.

NorFrock & WESTERN Raitway Co., ef al.

LitTON INDUSTRIES, INC., et al.,

Petitioners,

Vs

Norrork & WESTERN RaiLWay Co., ef al.

APPENDIX TO

Petition for a Writ of Certiorari to the

United States Court of Appeals for the Sixth Circuit

RICHARD T. COLMAN, P.C.

(Counsel of Record)

RosBert G. ABRAMS

JERROLD J. GANZFRIED

RONALD G. HaRON

Howrey & SIMON

1730 Pennsylvania Ave., N.W.

Washington, D.C. 20006

(202) 783-0800

Counsel for Petitioners

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

APPENDIX G

APPENDIX H

APPENDIX I

APPENDIX J

APPENDIX K

APPENDIX L

APPENDIX M

APPENDIX N

APPENDIX O

Opinion of the Sixth Circuit ( Feb.

ig I Ndisshdccaakanbshstaxalnehsavchnitepcaian

Fis ROE F shtasdbicidhstiosinaneiemsinsandcieess

Sixth Circuit’s Denial of Petition

for Rehearing (Apr. 13, 1988) ....

District Court Opinion in Pinney

(Junsdictional Issues) (June 21,

ih ca

Distnct Court Opinion in Pinney

(Statute of Limitations Issues)

a se oa ceneas

Distnct Court Opinion in Pinney

(On Motion for Reconsideration

of Junsdictional Issues) ( Mar.

FRED Re oe na

District Court Order Certifying In-

terlocutory Appeal in Pinney

CN Bs ED scispnsoncncnisdhccnascnics

Sixth Circuit Order Granting Leave

to Appeal in Pinney Pursuant to

28 U.S.C. § 1292(b) (Aug. 8,

SE sGicbislnediiaskdineiacaniiclencunsons

District Court Opinion in Litton

(Statute of Limitations Issues )

Se |: See ae

Distnct Court Opinion in Litton

(Jurisdictional Issues) (Oct. 5,

NE as snnendicimitkaihciadsskeaskciruisinnss

Distnct Court Order Certifying In-

terlocutory Appeal in Litton

Lie IN isehiisc bakeahasesasccvaninen

Sixth Circuit Order Granting Leave

to Appeal in Litton Pursuant to

28 U.S.C. § 1292(b) (Oct. 25,

c_, RMERE SNE roa nN Fo Por c= OP

Distnct Court Order Retaining

Record in Pinney (Sept. 24,

Sa RENEE ENEWS SCO em ANE

Distnct Court Order Retaining

Record in Litton ( Dec. 4, 1984)..

Statutory Provisions Involved..........

255a

257a

31la

315Sa

317a

319a

321a

323a

A

ADO

Rt te

la

RECOMMENDED FOR FULL TEXT PUBLICATION

See, Sixth Circuit Rule 24

Nos. 84-3653/3654/3876/3877

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

PINNEY DOcK AND TRANSPORT CO.,

Plaintiff-Appellant (84-3653),

Plaintiff-Cross Appellee (84-3654),

and

Litton INbustries, INc.; LITTON

Systems, INc.; Litton GREAT LAKES

Corp.; and ERIE MARINE, INC.,

Plaintiffs-Appellees (84-3876),

Plaintiffs-Cross Appellants (84-3877),

Ve

PENN CENTRAL CorP.; THE CHESSIE

System Co.; N&W Raiiway Co.;

NWS, INc.; and BEssEMER & LAKE

Erie RAILROAD Co.,

Defendants-Appellees (84-3653),

Defendants-Cross Appellants

(84-3654),

Defendants-Appellants (84-3876),

Defendants-Cross Appellees (84-3877),

CHESAPEAKE & OHIO RAILROAD Co.;

BALTIMORE & OHIO RAILROAD Co.;

and CSX Corp.,

Defendants-Appellants (84-3876),

Defendants-Cross Appellees (84-3877).

On Appeat from the

United States District

- Court for the Northern

District of Ohio.

2a

Pinney Dock v. Penn Central, et al.

Decided and Filed February 3, 1988

Before: ENGEL and KENNEDY, Circuit Judges; and

HIGGINS,”* District Judge.

ENGEL, Circuit Judge. These consolidated antitrust cases

are before the court pursuant to 28 U.S.C. § 1292(b) after

a panel of this court granted permission on August 14, 1984

to appeal several orders of the United States District Court

for the Northern District of Ohio.

Plaintiffs originally commenced these separate actions in

district court, seeking treble damages and injunctive relief

for injuries to their business and property allegedly caused

by defendants’ violations of sections | and 2 of the Sherman

Act, 15 U.S.C. §§ 1 and 2; section 3 of the Clayton Act, 15

U.S.C. § 14; and parallel provisions of Ohio’s antitrust laws

under the Valentine Act, Ohio Rev. Code §§ 1331.01-02,

1331.04, 1331.06, 1331.08, 1331.12, amd 1331.14. Plaintiffs’

actions are based on similar allegations that “from at least

the mid-1950’s” the defendant railroads conspired to restrain

trade in, and monopolize, the movement of iron ore by ship

across the Great Lakes to docks located on the south shore

of Lake Erie, the unloading of these ships at those docks, and

the subsequent movement of the ore to steel mills located

inland.

The issues certified for interlocutory appeal involve a num-

ber of jurisdictional questions, including antitrust immunity

under the Interstate Commerce Act, 49 U.S.C. § 10706, appli-

cation of the Keogh doctrine which bars antitrust damage

claims in certain situations, exclusive and primary jurisdic-

tion of the Interstate Commerce Commission, standing, stat-

ute of limitation/fraudulent concealment under the antitrust

*Honorable Thomas A. Higgins, United States District Judge for the

Middle District of Tennessee, sitting by designation.

EEE EE

3a

Pinney Dock v. Penn Central, et al.

laws, and federal preemption of the Ohio antitrust statute

of limitations.

A. The Parties

The plaintiffs in this consolidated action are Pinney Dock

and Transport Company. (Pinney) and Litton Industries, Inc.,

Litton Great Lakes Corporation, and Erie Marine, Inc., (col-

lectively Litton). Pinney provides dock services at Ashtabula,

Ohio, for iron ore and other bulk commodities moving over

the Great Lakes by ship. For at least part of the time period

relevant to these cases, Litton was engaged in the design and

construction of large self-unloading vessels and the operation

of these vessels, along with conventional bulker vessels, in

the movement of iron ore and other commodities over the

Great Lakes. In 1974, however, Litton ceased operating such

vessels on the Great Lakes.

The defendants are certain railroad companies, including

Penn Central Corporation (Penn Central), Baltimore & Ohio

Railroad Company (B & O), Chesapeake & Ohio Railway

Company (C & O), CSX Corporation, Chessie Systems Com-

pany (Chessie), Norfolk & Western Railway Company (N &

W), and Bessemer & Lake Erie Railroad Company (B & LE).'

The defendant railroad companies are all engaged in the busi-

ness of providing common carriage of goods and commodi-

ties by rail to or from Lake Erie docks. In addition, each of

the railroad companies owns or has owned, was affiliated

with, or operated one or more of these Lake Erie docks.

‘Pursuant to Rule 27(a) of the Local Rules of this court, and the

order of the district court of May 23, 1985, we entered an order on

June 5, 1985 dismissing from Nos. 84-3653 and 84-3654 B & O, C

& O and CSX, collectively referred to as the “Chessie defendants,”

the parties having reached a settlement.

_ EOE

sta

Pinney Dock v. Penn Central, et al.

B. Historical Background

Pursuant to its authority under the Interstate Commerce

Act,’ the Interstate Commerce Commission (ICC) has for

many years regulated the rates set by railroads for the com-

mon carriage of goods and commodities by rail to and from

Lake Erie. See Jron Ore Rate Cases, 44 I.C.C. 181 (1916),

as supplemented, 44 I1.C.C. 368 (1917). Under the Act, the

carriers themselves initiate rates and include them in tariffs

which must be filed with the ICC. 49 U.S.C. § 10762(a)(1).?

Unless and until suspended, set aside or disapproved, these

rates become the lawful rate as between carrier and shipper.‘

*The initial Act to Regulate Commerce was enacted in 1887. Ch.

104, 24 Stat. 379. Its successor, the Interstate Commerce Act, as

amended, was subsequently codified at 49 U.S.C. §§ 1-66. These and

related provisions were repealed and recodified by Act of Oct. 17, 1978,

Pub. L. No. 95-473, 92 Stat. 1337, and are currently codified in scat-

tered sections of 49 U.S.C. §§ 10101-11917. Although this recodifica-

tion was not intended to effect any “substantive change,” see § Xa),

92 Stat. 1337, 1466, it substantialiy revised the language and structure

of the Act. The parties have cited the old version of the Act, but we

have cited the current version.

For a good overview of the Interstate Commerce Act, including sub-

sequent amendments, and its relationship to the antitrust laws, see

Dempsey, Rate Regulation and Antitrust Immunity in Transportation:

The Genesis and Evolution of this Endangered Species, 32 Am. U. L.

Rev. 335 (1983).

34 tariff is a filed publication in which a carrier states its rates and

charges and which may include rules governing other related services.

See Rosenak, Rate Procedures and Proceedings, 12 Transp. L. Inst. 1,!

(1979).

“Once a proposed tariff is filed with the ICC, the Commission has

a limited time within which to suspend or reject the tariff. During this

notice period the ICC may suspend the tariff either on its own motion

or on the motion of an interested party. 49 U.S.C. § 10707(a). If the

ICC fails to reject the proposed tariff within the applicable notice

period the tariff automatically becomes effective. 49 U.S.C. § 10707(b).

After a rate becomes effective, the Commission can still investigate

EE

Sa

Pinney Dock v. Penn Central, et al.

In setting rates under the Act, a carrier may provide inter-

state transportation services only at the rate specified and

the tariff filed with the ICC. Jd. § 10761. In addition, a carrier

is strictly prohibited from charging any person a different rate

for a “like and contemporaneous service in the transportation

of a like kind of traffic under substantially similar

circumstances.” Jd. § 10741(a). These provisions reflect one

of the preeminent purposes of the Act: the prevention of

unjust discrimination in interstate commerce.’ Differences

in rates, classifications, rules, or practices, however, do not

violate the anti-discrimination provisions of the Act if they

reflect substantive differences in services performed.

violations of the Act and compel compliance with the Act. /d.

§ 11701(a). Judicial review of the ICC's decision under these proceed-

ings is also available but subject to certain limitations. Thus, a decision

by the Commission following a § 10707(a) investigation to approve

or disapprove a set of rates is a judicially reviewable final decision as

is a decision to approve or disapprove a set of rates following a

§ 11701(a) investigation. In addition, although a decision nor to inves-

tigate the lawfulness of a proposed rate schedule under § 10707(a) is

not reviewable, an interested party may require the Commission to

“investigate the lawfulness of any rate at any time - and may secure

judicial review of any decision not to do so - by filing a §[11701(a)]

complaint.” Southern Ry. Co. v. Seaboard Allied Mining Corp., 442

U.S. 444, 454 (1979).

*See Louisville & Nashville R.R. v. Maxwell, 237 U.S. 94 (1915):

Under the Interstate Commerce Act, the rate of the carrier

duly filed is the only lawful charge. Deviation from it is not

permitted upon any pretext. Shippers and travelers are

charged with notice of it, and they as well as the carrier must

abide by it, unless it is found by the Commission to be unrea-

sonable. ... This rule is undeniably strict, and it obviously

may work hardship in some cases, but it embodies the policy

which has been adopted by Congress in the regulation of inter-

state commerce in order to prevent unjust discrimination.

Id. at 97.

EE

6a

Pinney Dock v. Penn Central, et al.

Under the Interstate Commerce Act, rail carriers have long

been permitted to act jointly in setting rates despite the

potential for antitrust liability. Indeed, although the Inter-

state Commerce Act of 1887 was silent on the issue of collec-

tive ratemaking, the ICC condoned the practice even after

the enactment of the federal antitrust laws. See In re

Trans-Continental Freight Bureau, 77 1.C.C. 252 (1923).®

Beginning in the 1940’s, however, the Department of Justice

began enforcing the antitrust laws against related common

carriers. In 1944, the State of Georgia brought an action

against 21 railroads alleging rate discrimination, antitrust

violations and price fixing. This suit culminated in Georgia

v. Pennsylvania Railroad, 324 U.S. 439 (1945), in which the

Supreme Court held that a conspiracy “to use coercion in

the fixing of rates and to discriminate against Georgia in the

rates which are fixed” stated a cause of action under the anti-

trust laws. Jd. at 462. In so holding, however, the Court

emphasized that the State could not directly challenge the

continuance of any tariff, since such an action would be

within the jurisdiction of the ICC.

Congress responded to this decision in 1948 with the

Reed-Bulwinkle Act.” This Act specifically authorizes rate

bureaus to agree collectively upon “rates . . . , classifications,

divisions, or rules related to them. or procedures for joint

consideration, initiation, publication, or establishment of

them... .” 49 U.S.C. § 10706(a)(2)(A). This Act further pro-

vides that parties to an ICC-approved rate agreement are

exempt from the antitrust laws with respect to making and

*This collective ratemaking was, and continues to be, effected

through rate bureaus, which are associations of two or more carriers

that disseminate information regarding the rates to be charged for van-

ous services by participating rate bureau members. See Dempsey, supra

note 2, at 354.

7Pub. L. No. 80-662, 62 Stat. 472 (1948) (originally codified at 49

U.S.C. § Sb, and currently codified at 49 U.S.C. § 10706).

7a

Pinney Dock v. Penn Central, et al.

carrying out the agreement. 49 U.S.C. § 10706(a)(2)(A).® In

addition to the qualified immunity under the Reed-Bulwinkle

Act, the Keogh doctrine’? has long protected carriers from

antitrust damages based on alleged discriminatory rates

which have been approved by the ICC.

Although these protections from the antitrust laws are con-

siderable, an aggrieved party is not without a remedy for inju-

ries inflicted in violation of the Act. The Act permits any

person to bring a complaint at any time for violations of the

Act. The Commission must investigate the complaint unless

the complaint “does not state reasonable grounds for investi-

gation and action.” 49 U.S.C. §11701(b). Also, a person

injured by a violation of the Act can seek damages in a civil

action or in a proceeding before the ICC. Jd. § 11705. In addi-

tion to these private remedies, a carrier which willfully vio-

lates the Act may be subject to various penalties, fines, and

civil damages, as well as other equitable relief, which may

be sought by the Government. /d. §§ 11703, 11901-11907.

C. Factual Background

The defendant railroads in the instant case formed a rate

bureau and entered into a collective ratemaking agreement

shortly after the passage of the Reed-Bulwinkle Act. This

agreement was subsequently approved by the ICC in 1950

pursuant to 49 U.S.C. § 5(b) (now codified at 49 U.S.C.

§ 10706). See Eastern Railroads—Agreements, 277 I1.C.C. 279

(1950). No challenge is made here to the original agreement

or to the defendants’ right collectively to set rates pursuuat

*although the Reed-Bulwinkle Act has been substantially amended

by the Railroad Revitalization and Regulatory Reform Act of 1976,

Pub. L. No. 94-210, 90 Stat. 31 (1976), there is no claim that this

amendment is applicable to the facts of the instant case.

*The Keogh doctrine was announced in Keogh v. Chicago & North-

western Ry., 260 U.S. 156 (1922), and recently reaffirmed in Square

D Co. v. Niagara Frontier Tariff Bureau, Inc., 106 S. Ct. 1922 (1986).

da

8a

Pinney Dock v. Penn Central, et al.

to the terms and conditions of this agreement. Rather, plain-

tiffs challenge an alleged anticompetitive conspiracy which,

plaintiffs contend, was formulated outside the scope of the

agreement and in response to the emergence of self-unloaders

and the threat they posed to defendants’ control of the dock

unloading and land transportation business. According to

plaintiffs:

Historically, iron ore had been carried across the

Lakes in “bulker” vessels, which had to be unloaded

by. shore-side cranes, called huletts. Defendants

owned all of the docks equipped with huletts, and

their docks were exclusively used for unloading

bulkers. Defendants collected “handling charges”

for unloading bulkers and “line-haul rates” for carry-

ing ore from their lake front docks to inland steel

mills. By use of a conveyor system built into a

self-unloading vessel, these boats could unload with-

out the assistance of huletts. Self-unloaders threat-

ened to render obsolete defendants’ investment in

huletts, and elevated the competitive importance of

non-railroad docks such as Pinney because they

were not incumbered by huletts and were ideally

suited for self-unloaders. To eliminate the competi-

tive threat of non-railroad docks and to monopolize

the dock handling business, defendants, inter alia

assessed the bulker handling charge to self-unloaders

even though no unloading services were performed,

thereby eliminating the primary economic incentive

to devalop self-unloaders, and refused to publish a

commodity line-haul rate from Pinney for the move-

ment of iron ore, thereby eliminating the economic

incentive to use Pinney instead of defendants’

docks.

Litton entered the Great Lakes transportation

market in the mid-1960’s and embarked on a ven-

ture to construct and operate large, technologically

9a

Pinney Dock v. Penn Central, et al.

advanced self-unloading vessels. Litton’s venture

was frustrated by defendants’ efforts to exclude

self-unloaders and non-railroad dock competition

and by defendants’ concerted refusals to deal with

Litton. In particular, defendants refused to cooper-

ate with Litton in developing an unloading dock

facility and refused to sell or lease dock space to Lit-

ton. Defendants’ boycott of Pinney prevented Litton

froin using Pinney even though Pinney was capable

of handling Litton’s large self-unloaders. As a result,

Litton withdrew from the market after constructing

only two vessels.

According to plaintiffs, therefore, it was in response to this

competitive threat posed by the development of

self-unloaders that the defendants entered into a new and sep-

arate agreement and took actions pursuant to this agreement

“from at least the mid-1950’s,” all of which plaintiffs alleged

were outside the permissible bounds and protection of the

original ICC approved agreement of 1950.

D. The Parties’ Allegations

In its amended complaint, Pinney’s principal allegation is

that the defendants conspired to restrain trade in, eliminate

competition in, and monopolize the business of providing

both dock services for iron ore and other goods moving over

docks on the lower Great Lakes and water carriage for iron

ore moving to the same docks. Pinney alleges that the defen-

dants accomplished their illegal purposes by engaging in

secret meetings, by refusing to grant non-railroad owned

docks, such as Pinney, a competitive rail rate (i.e., a commod-

ity line-haul rate), by arbitrarily placing Pinney in a switching

district where it would be ineligible for rail rates competitive

with those available at railroad owned docks, by imposing

an arbitrarily and unjustifiably high switching charge on cars

of a railroad competitor which sought to carry iron ore from

Pinney Dock at competitive rail rates, by intentionally

10a

Pinney Dock v. Penn Central, et al.

impeding the construction and use of self-unloading vessels

through the imposition of artificial, arbitrary, and unjustifi-

ably high dock handling charges on such vessels and thereby

foreclosing Pinney Dock’s development as an iron ore han-

dling facility, and by forcing railroads to forgo their right to

independent action with respect to rail rates and servicas and

other matters.’®

Pinney alleges that as a result of the defendants’ acts and

violations, it was injured in its business and property because

it was “forestalled and excluded from participating in the

business of providing dock services for various commodities,

including iron ore, coal and coke.” Pinney seeks to recover

damages based on the amount of business it lost as a result

of the defendants’ efforts to drive it out of the iron ore busi-

ness. They state that “[o]ne way to calculate the amount of

business Pinney lost is to determine the amount of iron ore

Pinney would have handled absent defendants’ conspiracy

and multiply that amount by the charges Pinney would have

assessed for handling the ore.” Pinney also claims that it was

injured in its business by the defendants’ assessment of

bulker handling charges to self-unloaders, which, according

to Pinney, was intended tc impede the development and

operation of such vessels, vessels which Pinney claims it was

uniquely capable of handling.

Litton’s damage claims are in many respects similar to

those of Pinney. Litton’s principal allegation is that the defen-

dants conspired to restrain trade in, eliminate competition,

and monopolize the business of providing dock services for

iron ore and other bulk commodities moving over the docks

on the Great Lakes, and also conspired to restrain and sup-

101m paragraph 18 of its amended complaint, Pinney incorporates

by reference and realleges, with respect to coal and coke shipments,

the allegations and claims regarding iron ore shipments as set forth

in paragraph 13 of the amended complaint.

lla

Pinney Dock v. Penn Central, et al.

press trade in the business of carrying iron ore and other bulk

commodities in self-unloading and certain bulker vessels

mcving on the Great Lakes. Litton also claims that the defen-

dants conspired to foreclose and prevent Litton from devel-

oping, selling, or chartering, or using technically advanced

vessel, dock and related products and services.

Litton asserts that the defendants accomplished these ille-

gal purposes by continuous secret meetings, by refusing to

permit Litton to purchase, lease or use dock facilities which

could have accommodated self-unloading vessels, by refusing

to handle self-unloading vessels, by taking affirmative action

to prevent non-railroad controlled docks from handling bulk

commodities transported in self-unloading vessels, by arbi-

trarily placing unjustifiably high dock handling charges on

iron ore discharged from self-unloading vessels, and by forc-

ing railroads to forego their right of independent action. Lit-

ton claims that as a result of the defendants’ acts and

violations, it was forced to cease the design, construction,

sale and charter of its advanced self-unloading vessels, the

operation of its self-unloading and bulker vessels for the

transportation of iron ore and other bulk commodities, and

prevented in its efforts to secure and operate dock facilities.

Litton claims that, as a result, it was forced to withdraw from

the Lake Erie transportation market in 1974.

E. History of the Proceedings

Pinney filed its complaint on September 17, 1980, and a

first amended complaint on October 8, 1980, in the United

States District Court for the Northern District of Ohio. Litton

filed its complaint on March 5, 1981. After extensive discov-

ery was taken, defendants filed a number of motions for sum-

mary judgment seeking to dismiss all or some of plaintiffs’

claims on jurisdictional grounds. When this onslaught was

concluded, United States District Judge Thomas had issued

Over six rulings consisting of over 500 pages of written memo-

randa and orders.

12a

Pinney Dock v. Penn Central, et al.

In the first two opinions, issued June 21, 1983, Judge

Thomas denied defendants’ summary judgment motions in

Pinney. In the first opinion, Judge Thomas rejected each of

the defendants’ five grounds for dismissal of Pinney’s claims:

(1) express immunity from antitrust liability under the

Reed-Bulwinkle Act; (2) immunity from antitrust damages

under the Keogh doctrine; (3) exclusive jurisdiction of the

Interstate Commerce Commission; (4) primary jurisdiction

of the Interstate Commerce Commission; and (5) lack of

standing to raise certain claims. Pinney Dock & Transport

Co. v. Penn Central Corp., 600 F. Supp. 859 (N.D. Ohio

1983). In the second opinion, Judge Thomas denied defen-

dants’ motions for summary judgment on Pinney’s claims

which predate the four-year statute of limitations under sec-

tion 4B of the Clayton Act, 15 U.S.C. § 15(b). In denying

the motions, Judge Thomas held that there was a genuine

issue of fact whether the fraudulent concealment exception

under Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d

389 (6th Cir. 1975), tolled the statute of limitations. Pinney

Dock & Transport Co. v. Penn Central Corp., 1983-2 Trade

Cas. (CCH) 1 65,608 (N.D. Ohio 1983). Defendants thereaf-

ter moved for reconsideration, or certification of these issues

for interlocutory appeal. On March 29, 1984, Judge Thomas

again fully analyzed defendants’ arguments and reaffirmed

the June 21, 1983, decision on exclusive jurisdiction, express

immunity and standing. The court also directed Pinney to

respond to its inquiries concerning the possible application

of the Keogh doctrine and primary jurisdiction.

On May 10, 1984, the court reaffirmed its June 21, 1983,

decision on Keogh and primary jurisdiction, and certified

both of its Pinney decisions for interlocutory appeal pursuant

to 28 U.S.C. § 1292(b). This court granted defendants’ peti-

tion to appeal on August 8, 1984.

On October 4, 1984, Judge Thomas issued an exhaustive

written Memorandum and Order in Litton denying defen-

dants’ motions for summary judgment on statute of limita-

eer es

l3a

Pinney Dock v. Penn Central, et all.

tions grounds. The court held that the legal principles relied

_ upon inthe Pinney statute of limitations opinion were equally

applicable in Litton and further found that the facts of Litton

raised a genuine issue of fact of fraudulent concealment by

the defendants. In addition, after finding the jurisdictional

issues in Litton virtually the same as in Pinney, the court,

on October 5, 1984, adopted its holding in Pinney on all

issues except standing, which defendants had not challenged.

Judge Thomas also certified the Litton rulings pursuant to

section 1292(b) for interlocutory appeal. On October 25,

1984, a panel of this court granted defendants’ petition for

leave to appeal the interlocutory orders and consolidated the

Pinney and Litton appeals for briefing and oral argument.

On February 2, 1982, Judge Thomas had also denied defen-

dants’ motions for summary judgment to dismiss Pinney’s

pendent state claims under Ohio’s Valentine Act. Although

the court sustained pendent jurisdiction, the court noted that

an issue was raised as to whether the four-year statute of limi-

tations governing federal antitrust actions, 15 U.S.C. § 15(b),

preempts Ohio Rev. Code § 1331.12, which provides that no

statute of limitations shall bar claims under the Valentine

Act. At the court’s invitation, the parties submitted briefs

on this issue. On October 1, 1982, Judge Thomas issued a

written Memorandum and Order, finding that the statute of

limitations provision under the Valentine Act was preempted

by federal law. The court therefore held that Pinney’s pendent

antitrust claims under the Valentine Act were subject to the

Clayton Act’s four-year statute of limitations. See Pinney

Dock & Transport Co. v. Penn Central Corp., 1982-83 Trade

Cas. (CCH) 1 65,053 (N.D. Ohio 1982). On May 10, 1984,

Judge Thomas again considered the preemption issue and

reafirmed his original decision. The court also certified this

issue for interlocutory appeal pursuant to section 1292(b).

On August 8, 1984, this court granted Pinney’s petition for

interlocutory appeal.

l4a

Pinney Dock v. Penn Central, et al.

On October 4, 1984, Judge Thomas issued a written Mem-

orandum and Order in the Litton case adopting his October

1, 1982, preemption ruling in the Pinney litigation. Judge

Thomas also certified this order for interlocutory appeal pur-

suant to section 1292(b), and, on October 25, 1984, this court

granted Litton’s petition to appeai and consolidated Pinney

and Litton for briefing and oral argument.

Judge Thomas’ meticulous care and scholarship have been

immensely helpful to the parties and to us.

On appeal, defendants have challenged virtually every rul-

ing of the district court. Defendants argue that the district

court erred in finding that they are not expressly immune

from antitrust liability under the Interstate Commerce Act;

that the court erred in finding that the Keogh doctrine does

not bar plaintiffs’ antitrust damage claims; and that the court

erred in finding that the matters at issue are not within the

exclusive jurisdiction of the ICC. The defendants also con-

tend that the district court’s refusal to refer certain issues to

the ICC under the doctrine of primary jurisdiction was erro-

neous. The defendants further argue that both Pinney and

Litton lack standing to seek antitrust relief for certain claims.

Finally, the defendants contend that the district court erred

when it applied the doctrine of fraudulent concealment to

toll the Claytcn Act’s four-year statute of limitations. Pinney

and Litton, joined by the State of Ohio as amicus, also chal-

lenge the district court’s ruling that the four-year statute of

limitations governing federal antitrust actions preempts the

statute of limitations provision under Ohio’s Valentine Act.”

11Eollowing oral argument, C.D. Ambrosia Trucking Company, Inc.,

and David W. Reaney and Reaney Dock Company sought leave to

file a post-argument amicus brief pursuant to Rule 29 of the Federal

Rules of Appellate Procedure. Because of the complexity of this case,

and the possibility that the interest of amicus could be affected by the

outcome of this case, we granted this motion on January 3, 1986. In

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Pinney Dock v. Penn Central, et al.

Il.

Initially, we address plaintiffs’ contention that defendants

are attempting to raise issues in this appeal which were not.

properly certified pursuant to section 1292(b) and which

could not have been within the contemplation of the district

court when it certified its orders for interlocutory appeal. Spe-

cifically, plaintiffs contend that defendants should not be able

to raise the issue of primary jurisdiction, nor should defen-

dants be able to challenge Litton’s standing. Plaintiffs further

contend that issues involving the fraudulent concealment

exception to the statute of limitations should not be

addressed to the extent that they do not involve “controlling

questions of law.” |

Upon a review of the district court’s order of certification

in the Pinney case, dated May 10, 1984, and the court’s order

of certification in the Litton case, dated October 5, 1984, we

find it difficult to determine precisely whether certain issues

were certified for interlocutory appeal. The district court con-

cluded that its jurisdictional orders in the Pinney and Litton

cases, its statute of limitations orders in those cases, and its

orders relating to the preemption of the Ohio Valentine Act’s

statute of limitations, involve “controlling question(s] of law

for which there is a substantial ground for difference of opin-

ion and that immediate appeal may materially advance the

ultimate termination of this litigation,” and the court did not

elaborate further. In any event we recognize that even those

issues not properly certified are subject to our discretionary

power of review if otherwise necessary to the disposition of

the case. See Alexander v. Aero Lodge No. 735, Intern’l. Ass'n,

disposing of the issues raised in this appeal, we have considered the

arguments raised by amicus. Although amicus has raised some argu-

ments which have not been raised by the principal parties to this action,

it is sufficient to note that the position of amicus is similar to that of

Pinney. and Litton.

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Pinney Dock v. Penn Central, et ali.

565 F.2d 1364, 1370 (6th Cir. 1977); 9 Moore’s Federal Prac-

tice 1 110.25[1] at 270 (2d ed. 1987). Accordingly, we address

only those issues necessary to the disposition of this case and

to the extent this opinion is construed not to address an issue,

that issue is, for the purposes of this appeal, decertified.

Ill. KEOGH

Defendants argue that Keogh v. Chicago & N.W. Railway

Co., 260 U.S. 156 (1922), bars the claims that unreasonable

freight and handling charges caused plaintiffs to lose business.

The plaintiff in Keogh, a shipper of commodities, sued for

antitrust damages on the ground that the defendant railroads

restrained competition by conspiring to fix rates for shipment

by rail. The ICC had approved the rates as reasonable and

nondiscriminatory. The plaintiff claimed damages for the dif-

ference between these rates and earlier, lower rates that he

alleged would have remained in effect if not for the conspir-

acy. The Supreme Court held that the plaintiff did not have

a cause of action.

The Court listed four reasons for its holding. First, the

Court observed that when the ICC finds a rate to be illegal

because it is unreasonably high or discriminatory, the shipper

can recover damages under the Interstate Commerce Act.

The Court asked rhetorically whether Congress intended for

the antitrust laws to provide an additional remedy, suggesting

that the Court would not easily infer one. Second, the Court

explained that “the paramount purpose” of the Interstate

Commerce Act is “prevention of unjust discrimination.” /d.

at 163. This required that ICC-approved rates be the sole

source of a shippers’ rights against a carrier. If a shipper could

recover under the antitrust laws for ICC-approved rates, Con-

gress’ purpose might be defeated, because the amownt recov-

ered would give that shipper an advantage over his

competitors. Third, the Court reasoned that an antitrust

plaintiff would have to show that the rate that would have

|

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Pinney Dock v. Penn Central, et al.

prevailed but for the conspiracy would have been approved

by the ICC. There was no proceeding in which the ICC could

issue an Opinion on a hypothetical rate. Finally, the Court

said that the plaintiffs’ damages were speculative because all

shippers paid the same rate and the benefit of a lower rate

might have gone to the plaintiffs’ customers or to the ultimate

consumer. Jd. at 162-65.

Plaintiffs argue, and the district court held, that Keogh does

not apply because they are defendants’ competitors, not cus-

tomers seeking damages that would give them an advantage

over defendants’ other customers. Also, the plaintiffs distin-

guish Keogh on the basis that there the plaintiff asked for a

rebate from the rates he had paid, whereas here plaintiffs

claim damages for loss of business.

The Second and Third Circuits have held that Keogh does

not apply when the plaintiff is in competition with the defen-

dant. In City of Groton v. Connecticut Light & Power Co.,

662 F.2d 921 (2d Cir. 1981), the plaintiffs were municipal

power companies who bought electricity at wholesale rates

from a larger power company, the defendant. The plaintiffs

competed with the defendant in selling power to industrial

companies in the different municipalities, and the plaintiffs

alleged that the defendant tried to squeeze them out of this

competition by selling them power at a wholesale price that

was higher than the retail price that the defendant charged

its industrial customers. The plaintiffs claimed damages

resulting from the industrial enterprises’ decision to operate

outside of the plaintiffs’ territories. Jd. at 927, 934-35. The

court held that the discrimination problem of Keogh was

absent because in Keogh the plaintiff's competitors were not

represented in the lawsuit, whereas in City of Groton the

plaintiffs had no competitors other than the defendant. See

id. at 929-31.

In Essential Communications Systems, Inc. v. American

Telephone & Telegraph Co., 610 F.2d 1114 (3d Cir. 1979),

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Pinney Dock v. Penn Central, et al.

plaintiff Essential was in the business of distributing a tele-

phone answering device called Code-a-Phone. The defen-

dants provided telephone service and also competed with

Essential in the distribution of Code-a-Phone. Defendants

filed a tariff that required customers who installed an Essen-

tial Code-a-Phone to install an additional device as well,

which Essential alleged was unnecessary. The tariff did not

require customers who bought a Code-a-Phone from defen-

dants to install the additional device. Essential alleged it was

the victim of an antitrust conspiracy and claimed damages

for loss of business.

The court allowed the claim. The court reasoned that in

both Keogh and Essential the intended beneficiaries of regula-

tion were customers, not competitors of the regulated utility.

Thus, the court stated that the Keogh rule “has little or noth-

ing to do with [the utility’s] duties under the antitrust laws

toward its competitors.” Jd. at 1121. Also, the court noted

that the plaintiffs did not ask for a rebate from rates paid,

as the plaintiff had in Keogh. Id. at 1122.

Plaintiffs’ argument against extending Keogh to competitor

suits finds some support in Square D Co. v. Niagara Frontier

Tariff Bureau Inc., 760 F.2d 1347 (2d Cir. 1985) (Friendly,

J.), aff'd, 106 S. Ct. 1922 (1986), where the Keogh situation

was repeated in a suit by the purchasers of truck transporta-

tion services. The Second Circuit argued that post-Keogh

developments undercut all four reasons for the Keogh rule.

First, the Supreme Court has allowed an antitrust remedy

even when a regulatory remedy is available. Second, the exis-

tence of class actions can alleviate the danger of a rebate to

a single plaintiff. Third, judicial proceedings can be stayed

pending a regulatory proceeding to determine whether a

hypothetical rate would have been reasonable. Fourth, the

Supreme Court has held that a direct purchaser can recover

antitrust damages for the full amount of an overcharge,

regardless whether he passed part or all of it on to customers.

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Pinney Dock v. Penn Central, et al.

Id. at 1352-53. See Hanover Shoe, Inc. v. United Shoe

Machinery Corp., 392 U.S. 481 (1968).

The Second Circuit followed Keogh but urged the Supreme

Court to overrule it. The Supreme Court praised Judge

Friendly’s opinion as “characteristically thoughtful and

incisive” and did not take issue with his description of the

developments since Keogh, but reaffirmed the Keogh rule for

the sake of stability in the law.

[T]he developments in the six decades since Keogh

was decided are insufficient to overcome the strong

presumption of continued validity that adheres in

the judicial interpretation of a statute.... We are

especially reluctant to reject this presumption in an

area that has seen careful, intense, and sustained

congressional attention. If there is to be an overrul-

ing of the Keogh rule, it must come from Congress,

rather than from this Court.

Square D, 106 S. Ct. 1930-31.

We do not read this deferential language as an adoption

of Judge Friendly’s rationale, for on its face it is a polite

refusal of an invitation. Since the Supreme Court did in fact

uphold the ruling in Keogh we construe its cited language to

be that the Keogh rationale, whatever else might be said of

it, still commands, in the Supreme Court’s view, the support

of Congress. Justice Stevens emphasized “Keogh’s role as an

essential element of the settled legal context in which Con-

gress has repeatedly acted in this area.” Square D, 106 S Ct.

at 1930.

Furthermore, we do not believe that either Keogh or Square

D was intended to be limited solely to antitrust damage

claims brought by shippers. It is true that in both Keogh and

Square D the plaintiffs were shippers, i.e., customers of the

defendants, rather than direct competitors.** We may also

‘However, in Georgia v. Pennsylvania R.R. Co., 324 U.S. 439

(1945), the Supreme Court did see fit to apply Keogh in a case where

20a

Pinney Dock v. Penn Central, et al.

assume that plaintiffs will not gain a preference over their

trade competitors if permitted to recover antitrust damages

resulting from the defendants’ alleged conspiracy. In our

view, however, it does not follow that plaintiffs’ action for

damages is therefore outside the scope of Keogh.

When the ICC approves a rate, including a rate purportedly

arrived at under the type of joint rate agreement permitted

under Reed-Bulwinkle, it mecessarily takes an anti-

competitive action. This action is justified by the ICA

because the statute assumes that the pro-competition policies

of the antitrust laws have been taken into account but also

assumes that the ICC possesses and ought to have the power

to override those policies in order to further national trans-

portation policy as expressed in the Act. Rates must not only

protect against overcharging captive customers but must also

keep in mind the economic costs of delivery of the service.

Regulation of one aspect inevitably begets regulation of the

other. Thus, the ICC is the sole source of the rights not only

of shippers, but of the entire public, including competitors.

Plaintiffs here had a right under the ICC to complain to the

Commission. We should not easily infer that the Reed-

Bulwinkle amendments were not intended to extend to com-

petitor’s suits. While such actions may be aimed at achieving

some of the objectives of the antitrust laws, they nonetheless

Georgia was both a customer and a competitor. The Court noted that

“Georgia sues as a proprietor to redress wrongs suffered by it as the

owner of a railroad and as the owner and operator of various public

institutions.” /d. at 447. The Court then stated “[w]e think it is clear

from the Keogh case alone that Georgia may not recover damages even

if the conspiracy alleged were shown to exist.” /d. at 453. While Georgia

presents a special case because it was decided prior to the passage of

the Reed-Bulwinkle Act in 1948, we find the Supreme Court’s applica-

tion of Keogh to a competitor to be relevant even under these circum-

stances. Georgia is discussed in greater depth in section IV of this

opinion.

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Pinney Dock v. Penn Central, et al.

can be inconsistent with the statutory delegation of power

to the Interstate Commerce Commission and with the allow-

ance of joint ratemaking activities as expressly authorized

by Reed-Bulwinkle.

We recognize that the anti-discrimination arguments

behind the Keogh doctrine lose their force in competitor law-

suits such as this. For those who believe that the original rea-

sons expressed in Keogh still have some substantive

persuasive force, in the face of Square D’s expressed reserva-

tions, the other reasons in Keogh, we observe, still have con-

siderable applicability here.

In sum, we conclude that the Keogh doctrine bars the plain-

tiffs’ antitrust damage claims insofar as these claims are based

either on the defendants’ own handling charges or on the

line-haul rate that was applied from Pinney Dock. To the

extent that these rates and charges are otherwise unlawful,

we believe that plaintiffs must seek whatever remedies are

available under the provisions of the Interstate Commerce

Act. At the same time, however, at least some of the plaintiffs’

claims for antitrust damages appear to be outside the scope

of the Keogh doctrine. Litton contends that the defendants

refused to permit Litton to purchase, lease or use dock facili-

ties which could have accommodated the technologically

advanced self-unloading vessels being designed and con-

structed by Litton. These allegations are plainly not related

to the defendants’ handling charges or to the commodity

line-haul rate applied from Pinney Dock and, to that extent,

Keogh would not bar antitrust damage claims based on such

allegations. Plaintiffs allege that defendants used harassing

tactics and spurious challenges to try to forestall legitimate

business activities of competitors. To the extent that these

alleged acts are unrelated to defendants’ rates, any damages

suffered therefrom would not be barred by Keogh.

Plaintiffs have raised other claims as well, but it is less clear

from the face of these claims that they are not rate-related

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Pinney Dock v. Penn Central, et al.

and therefore within the scope of Keogh. Plaintiffs contend

that defendants refused to handle self-unloading vessels at

docks owned or operated by defendants and that defendants

boycotted Pinney Dock. However, if this boycott or refusal

to deal took the form of assessing higher rates and charges,

it would again appear that these claims are within the scope

of Keogh. Plaintiffs also allege that defendants divided mar-

kets, but if the effect of such division is the lack of rate compe-

tition, Keogh again would bar recovery. Rather than requiring

outright dismissal of these claims, however, we believe that

plaintiffs should be afforded an opportunity on remand to

amend their complaint in order to clarify these allegations

to state a claim for damages consistent with Keogh. We note

that this is the approach taken by Judge Friendly in Square

D, 760 F.2d at 1365, and this ruling was specifically men-

tioned by the Supreme Court and left undisturbed when it

affirmed the Second Circuit decision in Square D. 106 S. Ct.

at 1930 n.28.%

IV. ANTITRUST IMMUNTY UNDER THE ICA

Defendants argue that they are immune from antitrust lia-

bility for their ratemaking activities because they are parties

to the ICC-approved 1950 Eastern Railroad Agreement. The

Reed-Bulwinkle Act, which was enacted in 1948 as an

amendment to the Interstate Commerce Act, gives the parties

to an ICC-approved ratemaking agreement immunity from

the antitrust laws:

'34n additional argument which may be equally applicable to com-

petitors and is addressed in Keogh and in Square D is the speculative

nature of any damages. As we have pointed out, their existence neces-

sarily presupposes alternate activity which might have heen

undertaken by the plaintiffs but for the allegedly violative conduct of

the defendants.

Pub. L. No. 80-662, 62 Stat. 472 (1948) (current version at 49

U.S.C. § 10706).

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Pinney Dock v. Penn Central, et al.

If the Commission approves the agreement, it may

’ be made and carried out under its terms and under

the conditions required by the Commission, and the

Sherman Act (15 U.S.C. 1, et seq.), the Clayton Act

(15 U.S.C. 12, et seq.), the Federal Trade Commis-

sion Act (15 U.S.C. 41, et seq.), sections 73 and 74

of the Wilson Tariff Act (15 U.S.C. 8 and 9), and

the Act of June 19, 1936, as amended (15 U.S.C.

13, 13a, 13b, 21a) do not apply to parties and other

persons with respect to making or carrying out the

’ agreement.

49 U.S.C. § 10706(a)(2)(A).

The district court held that the immunity in this provision

does not cover a conspiracy to eliminate a competitor. Pinney

Dock, 600 F. Supp. at 878. On appeal the defendants attack

the district court’s reasoning, while the plaintiffs endorse it

and ask this court to uphold it.

The district court held that the language of Reed-Bulwinkle

excludes anti-competitive conspiracies from the grant of

immunity. The court found support in the legislative history

for this reading of the statute. First the court considered the

meaning of the statutory language:

[T]he issue confronting this court is whether the

ICC’s approval of the defendants’ [ratemaking]

agreement operates as either an express or implied

approval of a later “agreement” to eliminate a com-

petitor and monopolize a market.

600 F. Supp. at 866-67.

This definition of the issue is correct insofar as it refers

to the statutory provision that the parties to a rate agreement

are exempt from the antitrust laws “with respect to making”

the agreement. This definition protects the defendants from

liability for their conduct in making the 1950 Eastern Rail-

roads agreements, however, it does not necessarily protect

iil

24a

Pinney Dock v. Penn Central, et al.

them from liability for any other agreement, including the

alleged anticompetitive conspiracy.

But Reed-Bulwinkle also exempts the parties to a rate

agreement from antitrust liability “with respect to . .. carry-

ing out the agreement.” Thus, if the parties to a rate agree-

ment conform with the agreement when setting rates, they

are exempt from antitrust liability.

So long as defendants stay within the framework of the rate

agreement and conform their rates to those approved by the

Commission, it cannot make a difference that their underly-

ing intent may be anti-competitive. The difficulty with the

district court’s conclusion is that while it takes into account

the exemption for making a rate agreement, it is irreconcil-

able with the exemption for carrying out a rate agreement:

[N]othing in the present record indicates that the

ICC ever “approved” or even was aware of defen-

dants’ alleged predatory conspiracy to boycott and

eliminate plaintiff as a competitor. The 1950 East-

ern Railroads Agreement, which merely establishes

the procedures for discussing rate matters and reach-

ing rate agreements, cannot be read as impliedly or

expressly “approving” such a predatory conspiracy.

600 F. Supp. at 867. Assuming that this reasoning is adequate

as far as it goes, it still ignores the reality that the Agreement

was only the first, not the last word, in the Acts of the defen-

dants which it contemplated. It was the establishing of rates

which was the purpose of the Agreement, and it is the rates

and the incorporated provisions concerning their application

which lie at the heart of plaintiff's complaint. It is difficult

if not impossible to contemplate how the railroads could

establish rates under the Agreement without communication

with one another and even more difficult to hypothesize how

such communication, in an area which is undeniably

anti-competitive even in its effect, could not always be con-

strued as capable of anti-competitive motivation.

ee

25a

Pinney Dock v. Penn Central, et al.

Therefore, the challenged activities must be measured

against the fact that concerted activity was contemplated by

the Commission in its original recognition of the 1950 Agree-

ment. The real issue is whether in such circumstances the

task is one of determining if the defendants’ conduct was

within the framework of permissible activity condoned by

the Commission’s approval of the Agreement. It is asserted

that much of the evidence in this case will concern private

communications among the alleged conspirators and allega-

tions of the withholding of certain exchanges from the plain-

tiffs. Such contentions, however, seem to us to be inextricably

intertwined with the question of whether the 1950 Agreement

itself was violated, a question which should be addressed,

at least first, to the wisdom and expertise of the ICC.

The district court also held that the legislative history of

Reed-Bulwinkle shows that Congress intended to exclude

anticompetitive conspiracies from the antitrust exemption.

The court inferred this from legislative history indicating that

Reed-Bulwinkle left intact the Supreme Court’s decision in

Georgia v. Pennsylvania Railroad Co., 324 U.S. 439 (1945).

600 F. Supp. at 871, 873-74. We are unable to agree.

In Georgia, the State of Georgia sued several northern and

southern railroads under the antitrust laws. Georgia alleged

that the railroads conspired to fix rates in a manner that pre-

vented her shippers and sellers from gaining access to

national markets. Georgia also alleged that the northern rail-

roads forced the southern railroads to take part in the con-

spiracy. The rates were approved by the ICC. However, the

defendants acted through rate bureaus that were not

approved by the ICC; at the time the law did not provide

for ICC approval of rate bureaus. Georgia alleged that the

setting of rates through rate bureaus violated the antitrust

laws. The complaint asked for damages and an injunction

to end the conspiracy. 324 U.S. at 443-44, 455.

The Court held that Keogh barred the claim for damages

because the rates were approved by the ICC. 324 U:S. at 453.

és — EE

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Pinney Dock v. Penn Central, et al.

But because Keogh only addresses damage claims, the Court

allowed the injunctive claim to proceed. Jd. In this regard

the Court made a statement that the plaintiffs in the present

case rely on to argue that there is no immunity for a anticom-

petitive conspiracy:

[W]e find no warrant in the Interstate Commerce

Act and the Sherman Act for saying that the author-

ity to fix joint through rates clothes with legality a

“conspiracy to discriminate against a State or a

region, to use coercion in the fixing of rates, or to

put in the hands of a combination of carriers a veto

power over rates proposed by a single carrier.

Id. at 458.

The legislative history that led the district court to conclude

that Reed-Bulwinkle left Georgia intact included several

statements to that effect by the law’s sponsors. For example,

after the law passed Representative Bulwinkle said:

The charge made against the railroads in the Georgia

case is that they combined and conspired to fix rates

by coercion and to discriminate against Georgia. A

combination or conspiracy of that kind would not

be protected or immunized [under the new law].

600 F. Supp. at 871 (quoting 94 Cong. Rec. App. 4033-34

(1948)). The district court also cited the final House and Sen-

ate Reports:

The bill leaves the antitrust laws to apply with full

force and effect to carriers, so far as they are now

applicable, except as to such agreements or arrange-

ments between them as may have been submitted to

the Interstate Commerce Commission and approved

by that body upon a finding that, by reason of fur-

therance of the national transportation policy as

declared in the Interstate Commerce Act, relief from

the antitrust laws should be granted.

27a

Pinney Dock v. Penn Central, et all.

600 F. Supp. at 871 (quoting H.R. Rep. No. 1100, 80th Cong.,

2d Sess., reprinted in 1948 U.S. Code Cong. & Admin. News

1848 (1948)) (emphasis added).

We do not read the statement from the House and Senate

Reports that “The bill leaves the antitrust laws to apply with

full force and effect” as preserving the Georgia rule ‘that

injunctive relief is available against anticompetitive conspir-

acies. This statement was qualified, as emphasized above, by

a statement that the antitrust laws will not apply to agree-

ments that have been approved by the ICC. Thus, if the

Georgia. case had arisen after the enactment of Reed-

Bulwinkle, and if the rate agreement had been approved by

the ICC, the Supreme Court would have dismissed the

injunctive claim.

Our view of the legislative history finds support in two

Supreme Court cases. In #an American World Airways v.

United States, 371 U.S. 296 (1963), the Court stated that the

result in Georgia “might today be different as a result of the

Act of June 17, 1948, 62 Stat. 472, which gives the Interstate

Commerce Commission authority to approve combinations

of the character involved in that case and give them immu-

nity from the antitrust laws.” Jd. at 306 n.11. Similarly, in

Square D the Court stated: |

The legislative history of Reed-Bulwinkle explains

that it was enacted, at least in part, in response to

this Court’s decision in Georgia .... In that case,

after restating the holding in Keogh, the Court held

that, although Georgia could not maintain a suit

under the antitrust laws to obtain damages, it could

obtain injunctive relief against the collective rate-

making procedures employed by the railroads. The

Reed-Bulwinkle Act thus created an absolute immu-

nity from the antitrust laws for approved collective

ratemaking activities.

106 S. Ct. at 1927-28 (footnotes omitted).

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Pinney Dock v. Penn Central, et al.

In light of plaintiffs’ waiver of claims that defendants failed

to comply with the rate agreement, there is no need to remand

the compliance issue to the district court. Indeed, if such

claims were to go forward, the question would arise whether

they should be referred to the ICC. Such a referral is what

plaintiffs wanted to avoid by waiving claims of non-

compliance with the rate agreement. In sum, the effect of

Reed-Bulwinkle together with the waiver is that all

rate-related claims should be dismissed.**

8In United States v. Bessemer and Lake Erie R. Co., 717 F.2d 593

(D.C. Cir. 1983), the D.C. Circuit upheld the criminal conviction of

appellant railroad for Sherman antitrust violations arising out of a

1956 agreement to eliminate or inhibit competition from private docks

in handling iron ore on Lake Erie. Speaking of intent, the court

observed:

The activities described in the indictment do not fit within

the narrow [§ 10706] privilege. First, the indictment does not

attack the rate bureau itself. It alleges, instead, that some mem-

bers of the rate bureau entered into a separate agreement. This

agreement only incidentally touched upon the setting of rates;

its real purpose was to ward off the outside competition her-

alded by the advent of the self-unloaders.

More than mere purpose or “intent” distinguished this sepa-

rate conspiracy from the rate bureau. Several of the actions

taken by this separate conspiracy were not “in conformity

with” the rate bureau’s [10706] rate agreement.

Some of the actions were procedurally inconsistent with sec-

tion [10706]. Paragraph 23(d) of the indictment alleges that

defendants “quot{ed] the same charges for handling iron ore

from self-unloaders as from bulkers even though services iden-

tified in the applicable tariffs were not to be performed.” The

crux of this charge is that handling the self-unloaders repre-

sented a significantly different type of service. Rather than pro-

mulgating a new rate for this new service in accordance with

ICC requirements, the conspirators shielded the new joint rate

from ICC scrutiny.

Id. at 600-01 (citations and footnotes omitted). The D.C. Circuit also

correctly confined itself to the special role of the United States in

enforcing the criminal aspects of the Sherman Act, noting that:

ee

Ag

Pinney Dock v. Penn Central, et al.

V. ANTITRUST STANDING

Defendants argue that Pinney does not have standing to

bring claims concerning the assessment of handling charges

on self-unloaders, the refusal to let self-unloaders operate at

docks owned by the railroads, and the refusal to sell or lease

dock space to Litton. Defendants also argue that Litton lacks

standing to recover for the refusal to grant Pinney a competi-

tive rail rate, the assessment of handling charges on

self-unloaders, and the monopolization of land transporta-

tion.

In the district court, defendants challenged Pinney’s stand-

ing on certain claims, including apparently the ones on which

defendants argue lack of standing now. But defendants did

not challenge Litton’s standing below. Plaintiffs argue that

because of this the court should not address the arguments

about Litton’s standing.

“It is the general rule . . . that a federal appellate court does

not consider an issue not passed upon below.” Singleton v.

Wulff, 428 U.S. 106, 120 (1976).** This rule is not jurisdic-

The offense charged in this case is not subject to ICC reme-

dial jurisdiction. The government does not seek to amend the

[10706] rate agreement or to alter prospectively the rates set

by the [10706] rate bureau; it seeks to punish an illegal anti-

trust combination which happened to employ a rate bureau.

The ICC is not equipped to “remedy” criminal violations of

the antitrust laws.

Id. at 600. The court rejected the concept of an immunity argument

under Bulwinkle as untimely and declined to address a primary juris-

diction argument. /d. at 599-600. We do not find our holdings here

necessarily at odds with those in U.S. v. Bessemer involving entirely

different considerations of the role of the United States in the criminal

enforcement of the Sherman Act.

‘This rule applies to a party seeking reversal. Cf Dandridge v. Wil-

liams, 397 U.S. 471, 475 n.6 (1970) (“The prevailing party may ...

assert in a reviewing court any ground in support of his judgment,

whether or not that ground was relied upon or even considered by the

trial court.”)

:

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Pinney Dock v. Penn Central, et al.

tional; the Supreme Court has referred to it as a “practice”

and a “rule of procedure.” Hormel v. Helvering, 312 U.S. 552,

557 (1941). Deviations are permitted in “exceptional cases

or particular circumstances,” id., or when the rule would pro-

duce “a plain miscarriage of justice.” Jd. at 558. The Supreme

Court has declined to list comprehensively the circumstances

that should prompt an appellate court to reach an issue not

raised below. See Singleton v. Wulff, 428 U.S. at 121. Further-

more, the Court has stated that this matter is “left primarily

to the discretion of the courts of appeals, to be exercised on

the facts of individual cases.” Jd. We have carefully consid-

ered the case law of our circuit and elsewhere involving the

exercise of this limited area of discretion and conclude that

to the extent the issue is presented with sufficient clarity and

completeness and its resolution will materially advance the

progress of this already protracted litigation, we should

address it. Alexander v. Aero Lodge No. 735, 565 F.2d 1364,

1370-71 (6th Cir. 1977). We realize that the importance of

our discussion of this issue has been largely subsumed by our

rulings on the Keogh and Reed-Bulwinkle issues.

A. General Principles of Antitrust Standing

In Associated General Contractors of Cal., Inc. v. California

State Council of Carpenters, 459 U.S. 519 (1983) (hereinafter

AGC), the Supreme Court took a fresh look at antitrust stand-

ing. See Southaven Land Co., Inc. v. Malone & Hyde, Inc.,

715 F.2d 1079, 1085 (6th Cir. 1983) (AGC was “an obvious

attempt to implement uniformity among the circuits”). AGC

did not repudiate the Supreme Court’s previous antitrust

standing cases, but rather tried to synthesize them.

Our court has summarized the AGC factors:

(1) the causal connection between the antitrust

violation and the harm to the plaintiff and

whether that harm was intended to be caused:

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Pinney Dock v. Penn Central, et al.

(2) the nature of the plaintiff's alleged injury

including the status of the plaintiff as consumer

or competitor in the relevant market;

(3) the directness or indirectness of the injury, and

the related inquiry of whether the damages are

speculative;

(4). the potential for duplicative recovery or com-

plex apportionment of damages; and

(5) the existence of more direct victims of the

- alleged antitrust violation.

Province v. Cleveland Press Publishing Co., 787 F.2d 1047,

1050-51 (6th Cir. 1986) (quoting Southaven Land Co., 715

F.2d at 1085). Southaven said this list of factors is not exhaus-

tive. See Southaven Land Co., 715 F.2d at 1085 n.6. This

reading of AGC seems correct. See 459 U.S. at 538.

AGC’s attempt to synthesize precedents reflected the

Court’s view that the antitrust standing doctrine is rooted

in the common law. The Court argued that when Congress

enacted the first antitrust laws in 1890, it assumed they

“would be subject to constraints comparable to well-accepted

common-law rules.” /d. at 533. These include “foreseeability

and proximate cause, directness of injury, certainty of dam-

ages, and privity of contract.” Jd. at 532-33. Like common-

law adjudication, antitrust standing analysis must be done

case-by-case:

There is a similarity between the struggle of com-

mon-law judges to articulate a precise definition of

the concept of “proximate cause,” and the struggle

of federal judges to articulate a precise test to deter-

mine whether a party injured by an antitrust viola-

tion may recover treble damages. It is common

ground that the judicial remedy cannot encompass

every conceivable harm that can be traced to alleged

wrongdoing. In both situations the infinite variety

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Pinney Dock v. Penn Central, et al.

of claims that may arise make [sic] it virtually

impossible to announce a black-letter rule that will

dictate the result in every case.

Id. at 535-36. Therefore, while the AGC checklist is the start-

ing point of antitrust standing analysis, a consideration of

earlier cases is relevant to the interpretation of the AG

factors.

B. Defendants’ Standing Arguments

(1) The refusal to grant Pinney a commodity line-haul

rate and the imposition of handling charges on

self-unloaders

The steel companies, who in the course of shipping iron

ore paid the rail and handling charges, were the immediate

victims of the defendants’ refusal to grant Pinney a commod-

ity line-haul rate and imposition of handling charges on

self-unloaders at defendants’ docks. Defendants argue that

plaintiffs’ damages from the handling charges are too indi-

rect. The same argument can be made about Litton’s damages

from the rail rate. We must apply the five AGC factors to

determine whether defendants’ contention has merit.

The first AGC factor focuses both on the directness of the

injury and the intention of the defendant. The leading case

on directness of injury is Jilinois Brick Co. v. Illinois, 431

U.S. 720 (1977), where the Supreme Court held that an indi-

rect purchaser cannot sue a manufacturer for overcharges

imposed on a middleman and passed on to the indirect pur-

chaser.

In Jilinois Brick the State of Illinois alleged that the defen-

dant, a manufacturer of concrete block, engaged in a

price-fixing conspiracy in violation of the antitrust laws. The

defendant sold block to masonry contractors, who used the

block in masonry structures that they sold to general contrac-

tors. The general contractors incorporated the masonry struc-

eee

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Pinney Dock v. Penn Central, et al.

tures into larger structures that the state bought. The state

sued the manufacturer for the amount of the overcharge that

passed from the masonry contractors through the general

contractors and then on to the state.

The Court held that the state did not have standing to sue

the manufacturer for antitrust damages. The primary reason

for this holding was that allowing indirect purchasers to sue

“would transform treble-damages actions into massive efforts

to apportion the recovery among all potential plaintiffs that

could have absorbed part of the overcharge—from direct pur-

chasers to middlemen to ultimate consumers.” 431 U.S. at

737. See id. at 741-45. Apportioning damages along the chain

of distribution would “weigh[ ] down treble-damages actions

with ... ‘massive evidence and complicated theories.’ ” /d.

at 741 (quoting Hanover Shoe, Inc. v. United Shoe Machinery

Corp., 392 U.S. 481, 493 (1968)).

The Court also refused to make an exception for businesses

in which the direct purchaser typically passes on the entire

cost of a certain component, for example an item that is

resold without alteration. The Court reasoned that proving

that this is the practice would also entail “massive evidence

and complicated theories.” //linois Brick, 431 U.S. at 745

(quoting Hanover Shoe).

The other reason for the Court’s allowing only direct pur-

chasers to recover was that such a rule would best serve anti-

trust enforcement. /d. at 745-47. Because the injury to direct

purchasers is usually greater than the injury to indirect pur-

chasers, direct purchasers have a greater stake in the outcome

of litigation and are more likely to sue. /d. at 747. Direct pur-

chasers will have even more incentive to sue if they are

allowed to recover the full amount of the overcharge. Thus,

the Court “elevat[ed] direct purchasers to a preferred position

as private attorneys general... .” /d. at 746.

While directness of injury favors the defendants, the other

consideration in the first AGC factor, intent, tends to favor

———————<<<—

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the plaintiffs. They allege that the object of defendants’ rate-

making decisions has been to drive plaintiffs out of business.

The Court stated that “there no doubt are cases in which such

an allegation [of defendants’ intent] would adequately sup-

port a plaintiff's claim.” AGC, 459 U.S. at 537 n.35. The

Court- also: cited an article for the proposition that the

“specific intent of [a] defendant to cause injury to a particular

class of persons should ‘ordinarily be dispositive’ in creating

standing to sue.” /d. (citing Handler, The Shift from Substan-

tive to Procedural Innovations in Antitrust Suits, 71 Colum.

L. Rev. 1, 30 (1971)). The Court further cited an article that

“suggest(ed ] that standing in a group boycott situation should

be based on the purpose of the boycott.” 459 U.S. at 537 n.35

(citing Lytle & Purdue, Antitrust Target Area Under Section

4 of the Clayton Act: Determination of Standing in Light of

the Alleged Antitrust Violation, 25 Am. U. L. Rev. 795,

814-16 (1976)). However, the Court stated that “an allegation

of improper motive ... is not a panacea that will enable any

complaint to withstand a motion to dismiss.” AGC, 459 U.S.

at 537. Thus, intent must be balanced with the rest of the

AGC factors.

The second AGC factor relates to the status of the plaintiff

as consumer or competitor. As Pinney competes with defen-

dants in the provision of dock services, and Litton also tried

to enter that business, this factor also favors the plaintiffs.

The third AGC factor, the degree to which the damages

involved are speculative, favors the defendants. To assess the

effects of a hypothetical change in line-haul rates or handling

charges, the district court would need to undertake the diffi-

cult and uncertain task of ascertaining demand elasticities,

the input of the challenged charge and other costs in the prices

charged by the plaintiff and its competitors, and the role of

non-profit considerations in pricing decisions. See Illinois

Brick, 431 U.S. at 742-43. Further, for Pinney and Litton

to prove the extent of their losses from the unavailability of

the commodity rail rate and from the imposition of handling

a

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Pinney Dock v. Penn Central, et al.

charges, they would have to produce evidence on the follow-

ing questions: What non-price factors (such as relationships

with railroads, docks, and water transport companies) influ-

enced the steel mills’ purchase of transport for iron ore?

Assuming plaintiffs can prove how much more demand there

would have been for shipment by self-unloader, how much

of the increase could Pinney and Litton have absorbed?

Assuming that Pinney and Litton could have absorbed all

the extra demand for shipping iron ore by self-unloader,

would competitors have taken business away from them? If

there were no competitors during the time in question, would

new competitors have appeared to take advantage of the

increased opportunities? Under Jilinois Brick and AGC courts

cannot be saddled with the time-consuming and speculative

task of sifting through massive evidence to decide such ques-

tions.

AGC’s fourth factor, the potential for complex apportion-

ment of damages between plaintiffs, also favors defendants.

Pinney and Litton could themselves become adversaries: Pin-

ney could argue that lower water transport charges would

have caused increased demand for dock services, which

would have led to higher charges for dock services; Litton

could argue that cheaper dock services would have caused

greater demand for shipment by self-unloaders, which in turn

would have led to higher prices for Litton’s services.

AGC’s fifth and final factor is the existence of more direct

victims. Plaintiffs argue that the direct purchasers here, the

steel mills, cannot sue because of Keogh. Thus, if Pinney and

Litton cannot sue there will be no “private attorney general”

to enforce the antitrust laws in this case.’”? While the steel

mills cannot sue for antitrust damages, the mills do, however,

7It does appear, however, that the same area of activity challenged

here has been made the subject of scrutiny by the Justice Department.

See note 15, supra.

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Pinney Dock v. Penn Central, et al.

have a role that takes antitrust policy into account. As Keogh

mentions, the shippers can challenge rates under the ICA.

In adjudicating such a challenge, one factor that the ICC will

consider is whether the benefits to transportation policy of

uniform rates, which are anticompetitive by nature, outweigh

the procompetitive policies of the antitrust laws. Thus, it

appears that this factor favors the defendants.

On balance, the AGC factors clearly favor the defendants.

It is true that plaintiffs are defendants’ competitors and that

these claims involve allegations of intentional harm. How-

ever, it is more significant that plaintiffs are not the direct

victims of the defendants’ acts. Further, it would be an

extremely complex, if not impossible task for the district

court to cope with the problems of computation and appor-

tionment of damages. Given these factors, we conclude that

we must dismiss the handling charge claim as to both defen-

dants and the rate claim as to Litton.

(2) The refusal to handle self-unloaders at railroad docks

or to sell or lease docks to Litton

Defendants argue that Pinney cannot claim damages for

the refusal to handle self-unloaders at railroad docks, because

this would have sent the self-unloaders to Pinney. This argu-

ment finds support in a recent decision, Matsushita Electric

Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986),

where the Supreme Court stated that a conspiracy to charge

higher than competitive prices is an antitrust violation but

“actually benefit/s/” the conspirators’ competitors. Jd. at 583

(emphasis in original).

As for the refusal to sell or lease docks to Litton, defendants

apparently overlooked the fact that this claim is not in Pin-

ney’s complaint.

(3) The monopolization of land transportation of iron

ore

The district court dismissed Pinney’s claim based on the

monopolization of land transport, and defendants argue that

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Pinney Dock v. Penn Central, et al.

Litton’s claim is even more remote than Pinney’s. Plaintiffs

do not contest this argument.

Thus, for the reasons enumerated above, we reverse the

holding of the district court and find plaintiffs Pinney and

Litton lack standing to assert the claims addressed above.

VI. FEDERAL STATUTE OF LIMITATIONS

A. Fraudulent Concealment

In the district court, the defendants moved to dismiss the

plaintiffs’ claims insofar as they were based upon events or

activities which occurred before the four-year limitations

period of section 4B of the Clayton Act, 15 U.S.C. § 15b.

Treating these motions as motions for summary judgment

under Rule 56 of the Federal Rules of Civil Procedure, the

district court found that there was a genuine issue of material

fact whether the defendants had fraudulently concealed

plaintiffs’ causes of action which may have accrued before

the four-year limitations period. The district court therefore

denied the motions. Pinney Dock & Transport Co. v. Penn

Central Corp., 1983-2 Trade Cas. (CCH) 1 65,608 (N.D. Ohio

1983).

Under the doctrine of fraudulent conceaiment, if a defen-

dant conceals from the plaintiff the existence of a cause of

action, the statute of limitations is tolled. To toil the statute,

the plaintiff must allege in the complaint that: (1) the defen-

dant concealed the conduct that constitutes the cause of

action; (2) defendant’s concealment prevented plaintiff from

discovering the cause of action within the limitations period;

and (3) until discovery plaintiff exercised due diligence in

trying to find out about the cause of action. Dayco Corp. v.

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

1975). The burden of proving the elements of fraudulent con-

cealment is upon plaintiff. Akron Presform Mold Co. vy.

McNeil Corp., 496 F.2d 230, 233, 234 n.5 (6th Cir. 1974);

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Pinney Dock v, Penn Central, et al.

In re Beef Industry Anti-Trust Litigation, 600 F.2d 1148, 1171

(Sth Cir. 1979), Bur see Hobson v. Wilson, 737 F.2d 1, 35

(D.C. Cir. 1984), holding that the burden of showing lack

of due diligence shifts to defendant.

In denying the defendants’ motions for summary judgment

the district court ruled that a genuine issue of material fact

existed as to each element of Dayco. Defendants attack this

ruling and also argue that the district court applied the wrong

theory to the first Dayco element.

The equitable doctrine of fraudulent concealment repre-

sents a longstanding exception to the rule that the plaintiff

must commence his action within the period provided by the

relevant statute of limitations. “[TJhe authorities are without

conflict in support of the doctrine that where the ignorance

of the fraud has been produced by affirmative acts of the

guilty party in concealing the facts from the other, the statute

will not bar relief provided suit is brought within proper time

after the discovery of the fraud.” Bailey v. Glover, 88 U.S.

(21 Wall.) 342, 347-48 (1874). However, because “statutes

of limitation are vital to the welfare of society and are favored

in the law,” the plaintiff who invokes the doctrine of fraudu-

lent concealment will be “held to stringent rules of pleading

and evidence, ‘and especially must there be distinct aver-

ments as to the time when the fraud, mistake, concealment,

or misrepresentation was discovered, and what the discovery

is, sO that the court may clearly see whether, by ordinary dili-

gence, the discovery might not have been before made.’”

Wood v. Carpenter, 101 U.S. 135, 139-40 (1879) (citation

omitted).™*

This rule of “particularity” has been codified in Rule 9(b) of the

Federal Rules of Civil Procedure, which states in part: “In all aver-

ments of fraud or mistake, the circumstances consistituting fraud or ©

mistake shall be stated with particularity.” In the instant case, there —

is no dispute that plaintiffs failed to comply with this rule.

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Pinney Dock v. Penn Central, et al.

In the context of private anti-trust actions the doctrine of

fraudulent concealment is well recognized by the federal

courts, including our own court. See Akron Presform Mold

Co. v. McNeil Corp., 496 F.2d 230 (6th Cir. 1974); Dayco

Corp. v. Goodyear Tire & Rubber Co., $23 F.2d 389 (6th Cir.

1975). See also Annotation, Application of Fraudulent Con-

cealment Doctrine to Statute of Limitations in Antitrust Cases

(15 U.S.C.S. § 156), 72 A.L.R. Fed. 431. As we held in Dayco:

“We have recognized that the statute of limitations applicable

to private anti-trust actions may be tolled where a plaintiff

did not file its action in time because of ignorance resulting

from a defendant's fraudulent concealment.” $23 F.2d at

394,

B. The element of wrongful concealment.

On appeal, the defendants initially contend that the district

court below erred in holding that Dayco’s first element,

“wrongful concealment,” does not require proof of affirma-

tive acts of concealment. The district court, however, held:

It does not make sense to rigidly apply a statute of

limitations where the defendant has carried out its

illegal activities in “a manner which precluded

detection.” As the Supreme Court stated in Bailey

v. Glover, 88 U.S. 342 (1874):

[Statutes of Limitation] were enacted to prevent

frauds; to prevent parties from asserting rights

after the lapse of time had destroyed or impaired

the evidence which should show that such rights

never existed, or had been satisfied, transferred,

or extinguished, if they ever did exist. To hold

that by concealing a fraud, or by committing a

fraud in a manner that it concealed itself until

such time as the party committing the fraud could

plead the statute of limitations to protect it. is

to make the law which was designed to prevent

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Pinney Dock v. Penn Central, et al.

fraud the means by which it is made successful

and secure. [Emphasis added.]

Pinney Dock, 1983-2 Trade Cas. (CCH) 1 65,608 at 69,041

n.6. According to the defendants, the district court’s reliance

upon Bailey v. Glover for the proposition that “wrongful

concealment” may also be established by conduct which

causes a conspiracy to be carried out “in a manner which

precludes detection” or “self-concealing misconduct” is mis-

placed. We agree with defendants at least to the extent that

the Sixth Circuit has apparently not conclusively decided the

issue of whether the element of wrongful concealment

requires proof of affirmative acts.

In Campbell v. Upjohn Co., 676 F.2d 1122 (6th Cir. 1982),

the Sixth Circuit, although not actually confronted with the

issue of whether fraudulent concealment required proof of

affirmative acts, did recognize that there was a distinction

between non-active and active concealment. Plaintiff alleged

that a corporation fraudulently induced him to sign a merger

agreement and then took additional steps to fraudulently con-

ceal from him the terms of that agreement. The district court

held that because the plaintiff failed to satisfy the require-

ment of due diligence in discovering his cause of action, he

was barred by the statute of limitations. On appeal, the plain-

tiff argued that the due diligence requirement should not

apply to cases of “active” fraudulent concealment where the

defendant has engaged in affirmative acts of concealment

beyond the original fraud itself. Our court rejected this argu-

ment, holding “that alleged additional acts of concealment

by the defendant beyond the original fraud did not exempt

the plaintiff from the requirement of diligence in pleading

the federal equitable tolling doctrine of fraudulent

concealment.” Jd. at 1128. The court did state, however, that

“[a]ctive concealment by the defendant will be considered

in determining the reasonableness of the behavior of the

plaintiff under the circumstances” in discovering his cause

hain — me

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Pinney Dock v. Penn Central, et al.

of action. Jd. In reaching this conclusion, the court empha-

sized that:

[Plaintiff] would have the statute tolled indefinitely,

while evidence stales, memories fade and courts and

adversaries wait, until the plaintiff at his leisure

alleges actual discovery, despite the avalanche of

evidence that would put all but the most indiligent

plaintiffs on notice of a cause of action.

Statutes of limitations are vital to the welfare of

' society and are favored in the law. Stale conflicts

should be allowed to rest undisturbed after the

passage of time has made their origins obscure

- and the evidence uncertain. Dayco Corp. v. Good-

year Tire & Rubber Co., supra, 523 F.2d 389 at

394 (citations omitted).

A plaintiff wh requests the avoidance of these

important objectives owes the courts, the public and

his adversaries a duty of diligence in discovering and

flling his lawsuit.

Id. In holding that affirmative acts of concealment by the

defendant beyond the original fraud do not relieve the plain-

tiff of the requirement of due diligence, the court therefore

joined “those circuits which have declined to formulate a sep-

arate rule for cases involving active concealment by the

defendant.” /d.

The Supreme Court has apparently had only two occasions

to discuss the doctrine of fraudulent concealment at any

length, and both of these cases are quite old. In Bailey v.

Glover, 88 U.S. (21 Wall.) 342 (1874), which the district court

placed heavy reliance upon in the instant case, the Supreme

Court held upon the facts then before it that plaintiff's action

was not barred by the statute of limitations because, “[t]o

hold that by concealing a fraud, or by committing a fraud

in a manner that it concealed itself until such time as the

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Pinney Dock v. Penn Central, et all.

party committing the fraud could plead the statute of limita-

tions to protect it, is to make the law which was designed

to prevent fraud the means by which it is made successful

and secure.” Jd. at 349.

In Wood.v. Carpenter, 101 U.S. 135 (1879), however, the

Supreme Court held:

_ Concealment by mere silence is not enough. There

must be some trick or contrivance intended to

exclude suspicion and prevent inquiry.

There must be reasonable diligence; and the

means of knowledge are the same thing in effect as

knowledge itself.

The circumstances of the discovery must be fully

stated and proved, and the delay which has occurred

must be shown to be consistent with the requisite

diligence.

Id. at 143.

Thus, while Bailey v. Glover indicates that the commission

of a fraud which “is of such a character as to conceal itself,”

may be sufficient to toll the statute of limitations under the

fraudulent concealment doctrine, Wood v. Carpenter holds

that “concealment by mere silence is not enough. There must

be some trick or contrivance intended to exclude suspicion

and prevent inquiry.”

”

Bailey v. Glover was subsequently followed by the Supreme

Court in Exploration Co. v. United States, 247 U.S. 435

(1918). The government argued that the principles of Bailey

v. Glover were applicable to the instant action, and argued

further that “[t]here were affirmative acts of concealment; but

it is enough that the fraud was such as to conceal itself.” Jd.

at 445.

The Supreme Court affirmed the court of appeals, holding:

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Pinney Dock v. Penn Central, et al.

When Congress passed the Act in question the rule

of Bailey v. Glover was the established doctrine of

this court. It was presumably enacted with the ruling

of that case in mind. We cannot believe that Con-

gress intended to give immunity to those who for

the period named in the statute might be able to con-

ceal their fraudulent action from the knowledge of

the agents of the government. We are aware of no

good reason why the rule, now almost universal, that

statutes of limitations upon suits to set aside fraudu-

lent transactions shall not begin to run until the dis-

covery of the fraud, should not apply in favor of the

government as well as a private individual.

Id. at 449. See also United States v. Diamond Coal Co., 255

U.S. 323 (1921).

Bailey v. Glover was likewise followed in Rosenthal v.

Walker, 111 U.S. 185 (1884), which also distinguished Wood

v. Carpenter. In Walker, plaintiff alleged that the bankrupt

transferred certain property to the defendant in order to pre-

vent the plaintiff from claiming an interest in that property

in bankruptcy proceedings. Aithough the action was brought

after the applicable statute of limitations had expired, plain-

tiff alleged that the bankrupt and the defendant kept con-

cealed from him the fact of the sale, transfer, and conveyance

of the goods.

On appeal to the Supreme Court, the defendant argued that

plaintiff's action was barred by the statute of limitations. The

Supreme Court rejected this argument stating:

The case of Bailey v. Glover is a decision constru-

ing the statute which is relied on in this case, and

unless subsequently overruled by this court is con-

clusive of. the point under discussion. It has never

been overruled. The plaintiff in error relies on the

case of Wood v. Carpenter, 101 U.S. 135, and

National Bank v. Carpenter, Id. 567. The first was

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Pinney Dock v. Penn Central, et al.

an action at law, the second a suit in equity. The

court in both cases was called on to construe a stat-

ute of limitations of the State of Indiana, and it fol-

lowed the adjudication of the Supreme Court of that

State upon the same statute. Neither case refers to

the opinion of the court in Bailey v. Glover, or can

be held to overrule or modify it. The case of Bailey

v. Glover has been often cited by this court, but has

never been doubted or qualified. Wood v. Bailey, 21

Wall. 640; Wiswail v. Campbell, 93 U.S. 347; Gifford

v. Helms, 98 U.S. 248; Upton v. McLaughlin, 105

U.S. 640. We are of opinion, therefore, that the

assignment of error under consideration is not well

founded.

Walker, 111 U.S. at 190-91. Thus, according to Rosenthal

v. Walker, Wood v. Carpenter is limited to the particular case

in which the Court was construing a state statute of limita-

tions and following the adjudications of the Supreme Court

of Indiana. See also Traer v. Clews, 115 U.S. 528, 538 (1885)

(‘The ease of Bailey v. Glover, has never been overruled,

doubted, or modified by this court. On the contrary, in

Rosenthal v. Walker, it was reaffirmed, and was distinguished

from the case of Wood v. Carpenter . . .”). See, however, Felix

v. Patrick, 145 U.S. 317 (1892), which neither cites to, nor

makes any attempt to reconcile, Bailey v. Glover with Wood

v. Carpenter.

The last reference made to Wood v. Carpenter by the

Supreme Court occurred in United States v. Kubrick, 444 U.S.

111, 117 (1979), where the Supreme Court cited that case

for the proposition that, “[s]tatutes of limitations, ... ‘are

found and approved in all systems of enlightened jurispru-

dence,’ Wood v. Carpenter, 101 U.S. 135, 139 (1879) ....”

Apart from one oblique reference in Kubrick, however, the

Supreme Court has not recently had occasion to cite or other-

wise discuss either Wood v. Carpenter or Bailey v. Glover.

One distinguished commentator has explained the difference

| ’

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Pinney Dock v. Penn Central, et al.

between active and passive fraudulent concealment as fol-

lows:

Where undiscovered “fraud” was the basis of liabil-

ity, it was universally agreed that no new conceal-

ment was necessary and the wrongdoer might

remain wholly passive, provided no avenues were

open to the plaintiff for discovery of the fraud. But

in cases that fell outside the elastic boundaries of

the “fraud” exception new difficulties appeared. To

permit suspension of the statute of limitations in all

cases where the suitor was ignorant of his claim must

have seemed hazardous. Behind the decisions there

must have lain a conviction that for suspension of

the statute outside the ficld of “fraud” there should

be added to the suitor’s ignorance some affirmative

misconduct by the opposite party, preventing dis-

covery and excusing delay. And when the

“fraudulent concealment” exception had once been

formulated, the language of the formula itself gave

a new direction to judicial inquiries. In examining

the factual cases for suspension of the statute they

were led beyond a scrutiny of the original cause of

action and of the plaintiff's later opportunities for

discovery, to an emphasis on the means by which

the defendant obstructed discovery.

There can be found in the cases innumerable

statements that “fraudulent concealment” involves

affirmative efforts by the defendant to prevent dis-

covery. But qualifications are often attached. It is

said that the defendant’s concealment need not be

subsequent to the original wrongdoing, but may pro-

ceed or accompany it, provided all his conduct taken

together is calculated to mislead or allay suspicion.

It is sometimes added that all requirements are satis-

fied if the original misconduct was of such a kind

as to “conceal itself.” And finally, in some cases the

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Pinney Dock v. Penn Central, et al.

further requirement is added that defendant’s

efforts must include some element of “fraud” or

moral turpitude, though numerous decisions reject

such a test. From such a welter of conflicting general-

ities one can only draw the conclusion that generali-

ties are being overworked, that in each case too wide

a variety of fact situations is being included in a sin-

gle formula.”

Dawson, Fraudulent Concealment and Statutes of Limitation,

31 Mich. L. Rev. 875, 880-82 (1933) (footnotes omitted).

Most of the appellate cases which have addressed the issue

in the context of antitrust actions have required allegations

or proof of affirmative concealment under the first element

of the doctrine of fraudulent concealment. See, e.g., Henne-

gan v. Pacifico Creative Service Inc., 787 F.2d 1299 (9th Cir.

1986); Berkson v. Del Monte Corp. 743 F.2d 53 (lst Cir.

1984); Rutledge v. Boston Woven Hose and Rubber Co., 576

F.2d 248 (9th Cir. 1978); City of Detroit v. Grinnell Corp.,

495 F.2d 448, 461 (2d Cir. 1974); Laundry Equipment Sales

Corp. v. Borg-Warner Corp., 334 F.2d 788, 792 (7th Cir.

1964).

The defendants rely on these and other cases to argue that

“proof of affirmative acts of concealment such as those

involved is the cases cited ... is essential to protect the

importani policies underlying the statute of limitations.” As

defendants point out:

In Dayco, after noting that the statute of limitations

in private antitrust cases may be tolled by fraudulent

concealment, this court cautioned nonetheless that,

“as the Supreme Court observed in Wood v. Carpen-

ter, 101 U.S. [at 139]: “Statutes of limitations are

vital to the welfare of society and are favored in the

law.” Stale conflicts should be allowed to rest undis-

turbed after the passage of time has made their ori-

gins obscure and the evidence uncertain.” 523 F.2d

47a

Pinney Dock v. Penn Central, et al.

at 394. The policies of protecting defendants and

courts from stale claims counsel against a broad

interpretation of tolling doctrines, and the reasons

for that approach “are particularly persuasive when

viewed against the strong congressional policy in

favor of repose in antitrust suits.” (citations omit-

ted).

Although the district court below acknowledged the Ninth

Circuit’s opinion in Rutledge, Pinney Dock & Transport v.

Penn Central Corp., 1983-2 Trade Cas. 1 65,608 at 69,040,

the court nevertheless concluded that the first Dayco element

did not necessarily require proof of affirmative acts of con-

cealment. According to the district court:

Thus, under Dayco’s first element, the type of

actions of defendants which might wrongfully con-

ceal a conspiracy to violate the antitrust laws can

embrace, but are not limited to, fraudulent misrep-

resentations as articulated in the Rutledge reference,

supra. The actions of defendants can also be those

which cause a conspiracy to be carried out in “a

manner which precludes’ detection,” e.g.

“self-concealing misconduct.” See Gaetzi v. Carling

Brewing company, 205 F. Supp. 615, 620-621 (E.D.

Mich. 1962). Cf King & King Enterprises v. Cham-

plin Petroieum Co., 657 F.2d 1147, 1154 (10th Cir.

1981), cert. denied, 454 U.S. 1164 (1982). Hence,

the Court finds impermissible the implication of the

defendants that “[{i]n order to make out the first ele-

ment of fraudulent concealment Pinney must show

affirmative acts of concealment by the defendants”

which constitute fraudulent misrepresentations.

Id. at 69,041.

While Judge Thomas appropriately cites Gaetzi, Judge

McCree’s analysis in that opinion leads us to a different

result. In Gaetzi, a former distributor of Carling Beer brought

48a

Pinney Dock v. Penn Central, et al.

an antitrust action in 1961 seeking damages for defendant’s

allegedly wrongful termination of his Carling distributorship.

Defendant then filed a motion for summary judgment on the

ground that the cause of action was barred by the four year

statute of limitations applicable to private antitrust actions.

Plaintiff in turn argued that the period of limitations was sus-

pended by reason of the defendant’s fraudulent concealment.

In addressing this issue, then District Judge Wade H.

McCree, Jr., initially noted that, “[t]he contours of this doc-

rine in relation to private antitrust actions unfortunately are

vy nO means as precise as either of the parties insists.” 205

*, Supp. at 619-20. In this regard, plaintiff argued that fraud-

lent concealment did not require proof of affirmative acts,

vhile the defendant argued that the doctrine did require such

yroof. Judge McCree initially observed:

It does appear to be settled that where the grava-

men of an action is fraud and “the party injured by

the fraud remains in ignorence of it without any

fault or want of diligence or care on his part, the

bar of the statute does not begin to run until the

fraud is discovered, though there be no special cir-

cumstances or efforts on the part of the party com-

mitting the fraud to conceal it from the knowledge

of the other party.” Bailey v. Glover, supra, 88 U.S.

at 348.

ee

The cause of action asserted in the present case,

however, is predicated neither on fraud nor on

breach of a fiduciary duty, but on violation of the

antitrust laws. The first question to be considered

then is whether plaintiff is correct in his assertion

that in an antitrust action ignorance of the facts con-

stituting the cause of action suspends the prescrip-

tive period, absent affirmative acts of concealment

by defendant.

49a

Pinney Dock v. Penn Central, et al.

Gaetzi, 205 F. Supp. at 620. After examining the cases cited

by plaintiff, Judge McCree noted that “each of the cases upon

which plaintiff relies involved something more than mere

silence on the part of the defendant.”/Jd. He further noted:

The illegal conspiracies proceeded in a manner

which precluded detention [sic]. The activities of the

defendants can be characterized as ‘self-concealing.’

The fact that the defendant did not take further steps

to impede discovery after the plaintiff had sustained

injury is unimportant, for the conduct which is

denominated ‘concealment’ may take place before

the cause of action accrues as well as afterwards.

Id.

Next, Judge McCree examined the cases cited by defendant

for the proposition that an affirmative act of concealment is

required in order to toll the statute of limitations. After exam-

ining these cases, Judge McCree concluded:

Although the cases cited by plaintiff have some-

times been regarded as supporting the argument that

no affirmative act of concealment is required to toll

the statute in restraint of trade conspiracy cases, on

analysis they all involve self-concealing misconduct

and are not incompatible with the rationale underly-

ing the principle that affirmative acts of concealment

must be shown except in cases founded on fraud or

breach of fiduciary duty.

Id. at 621.

Applying the foregoing principles to the facts of Gaetzi,

Judge McCree concluded that no genuine question of fact

existed with respect to circumstances which would toll the

four year statute of limitations. At least two of Judge

McCree’s factual conclusions are instructive:

2. Failure to respond to plaintiffs inquiries. Plain-

tiff states that his repeated efforts to obtain from

50a

Pinney Dock v. Penn Central, et al.

defendant an explanation as to the reason for his

loss of the Carling distributorship were unsuccessful.

He does not claim that defendant, by a false but

plausible explanation, dissuaded him from seeking

out the facts. All that defendant did was to remain

silent. Clearly the silence of defendant could not

have been calculated to deter plaintiff from other

inquiry, but could only have compounded plaintiff's

. Suspicions. With reason to suspect that the loss of

his business was the result of illegal conduct by

defendant, plaintiff was obliged to do more by way

of investigation then simply to make fruitless inqui-

ries of the suspected wrongdoer. We have previously

indicated that concealment necessitates the commis-

sion of affirmative acts. Mere silence, where there

is no duty to speak, does not toll the statute.

Id. at 622. Judge McCree also concluded:

- 4. Self-concealment of the alleged conspiracy.

“Self-concealment” of a conspircy sufficient to toll

the statute of limitations refers to activities in fur-

therance of the conspiracy which by their nature

defy detection. Plaintiff asserts that defendant con-

cealed its unlawful activities by operating through

its parent corporation. However, unlike the

American Tobacco case, supra, the relationship

existing between the two companies was well known

or readily ascertainable. As the uncontroverted affi-

davit of the executive vice-president of Canadian

Breweries Ltd. indicates, the parent-subsidiary rela-

tionship between Canadian Breweries and defen-

dant has been a matter of record in Canadian’s

annual report to shareholders since 1945. Further-

more, there is quoted in defendant’s brief an excerpt

from the plaintiff's deposition in the United States

District Court suit in Pennsylvania, in which plain-

tiff admitted that he had been informed in 1952 that

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Pinney Dock v. Penn Central, et al.

the controlling interest in defendant had been pur-

chased by someone in Canada.

The report condemned the acquisition by Cana-

dian Breweries as a monopolistic activity. Since this

official document was printed and available to the

public according to plaintiff's own allegation, even

before plaintiffs distributorship had been termi-

nated, it would appear that the alleged conspiracy

was no longer concealed and could have been dis-

covered by due diligence well within the statutory

period for bringing suit.

Id. at 623. Based in part on the foregoing, Judge McCree

therefore granted the defendant’s motion for summary judg-

ment dismissing the plaintiffs complaint as_ being

time-barred by the Clayton Act’s four year statute of limita-

tions period. Apparently, this case was not appealed to the

Sixth Circuit.'®

Thus, according to Gaetzi, although self-concealing mis-

conduct may be sufficient for purposes of the first element

of fraudulent concealment, the cases involving such conduct

“are not incompatible with the rationale underlying the prin-

ciple that affirmative acts of concealment must be shown

except in cases founded on fraud or breach of fiduciary duty.”

‘°The other case cited by the district judge here to support his conclu-

sion is King & King Enterprises v. Champlin Petroleum Co., 657 F.2d

1147 (10th Cir. 1981), wherein the Tenth Circuit held “{bJjoth of the

tests which were set forth in Ashland Oil Co., [567 F.2d 984], were

met here. The evidence showed that the defendant actively sought to

conceal its price fixing activities, and the defendant’s conduct, by rea-

son of its fraudulent nature, was inherently self concealing.” /d. at

1156. See also Baker v. F. & F. Investment, 420 F.2d 1191, 1199 (7th

Cir. 1970) (“{w]here, as in the case of many conspiracies in violation

of federal antitrust laws, the wrong is self-concealing, little need be

added in order to justify tolling the statute.”).

52a

Pinney Dock v. Penn Central, et al.

Gaetzi, 205 F. Supp. at 621. Moreover, Judge McCree

emphasized that “‘self-concealment’ of a conspiracy sufh-

cient to toll the statute of limitations refers to activities in

furtherance of the conspiracy which by their nature defy

detection.” Id. at 623. Mere silence, or one’s unwillingness

to divulge one’s allegedly wrongful activities, is not sufficient.

As the underlying cause of action here is based upon alleged

antitrust violations not fraud, we agree with Judge McCree’s

rationale in Gaetzi that a plaintiff should be required to prove

affirmative acts of concealment, particularly in light of the

strong policy in favor of statutes of limitations.

3. Scope of Review of Denial of Summary Judgment

When an appellate court reviews a grant of summary judg-

ment, the district court decision is reviewed de novo. See,

e.g. National Bank of Detroit v. Shelden, 730 F.2d 421, 423

(6th Cir. 1984); Glenway Industries, Inc. v. Wheelabrator-Frye

Inc., 686 F.2d 415, 417 (6th Cir. 1982).

However, in reviewing a district court’s ruling denying a

summary judgment motion on grounds that a material issue

of fact exists appellate review is governed by an “abuse of

discretion” standard. See, e.g., United States v. Merchants

National Bank of Mobile, 772 F.2d 1522, 1524 (11th Cir.

1985); Marcus v. St. Paul Fire & Marine Ins. Co., 651 F.2d

379, 382 (Sth Cir. 1981); McLain v. Meier, 612 F.2d 349,

356 (8th Cir. 1979). The difference in the standards of review

has been explained as follows:

Discretion plays no real role in the grant of summary

judgment: the grant of summary judgment must be

proper under the above principles or the grant is

subject to reversal. The trial court may, however,

exercise a sound discretion in denying summary

judgment where, although the movant may have

technically shouldered his burden, the court is not

reasonably certain there is no triable issue of fact;

53a

Pinney Dock v. Penn Central, et al.

where a portion of an action may be ripe for sum-

mary judgment but is intertwined with another

claim(s) that must be tried; and in certain other situ-

ations.

6 Moore’s Federal Practice 1 56.15[8] (2d ed. 1985).

4. Review of Evidence on Whether there are Issues of

Fact on Dayco Elements

.@. Whether there is Sufficient Evidence of

Affirmative Acts of Concealment in Pinney Dock

The defendants apparently do not dispute the district

court’s conclusion that their conduct was sufficient to satisfy

the self-concealment standard. That is, if our court should

conclude that a self-concealment standard is appropriate in

this case, defendants apparently would concede that the dis-

trict court’s application of that standard to the facts of this

case and his factfindings was not erroneous.

We have, however, concluded that defendants are correct

in their argument that the doctrine of fraudulent concealment

requires proof of affirmative acts under facts such as those

presented here and in Gaetzi. The issue then becomes what

kind of conduct is sufficient to satisfy that standard and

whether that standard was satisfied here. According to the

defendants “[t]he weight of judicial authority holds that in

order to demonstrate affirmative concealment, a plaintiff

must present evidence of destruction of records, falsification

of accounts, or the use of other covert devices ....” The

defendants note that the district court in Pinney found evi-

dence of two instances of acts of concealment: (1) that Penn

Central had not been “open and honest with Pinney as to

the reasons Pinney was denied a commodity rate,” Pinney

Dock, 1983-2 Trade Cas. (CCH) 1 65,608 at 69,046; and (2)

that Penn Central had “affirmatively misled Pinney into

believing that it was willing to ‘take care’ of Pinney Dock’s |

54a

Pinney Dock v. Penn Central, et al.

iron ore requests.” Jd. They contend that this evidence, when

analyzed, does not constitute affirmative acts of concealment

sufficient to meet Dayco’s reqirements.

In Ohio Valley Electric Corp. v. General Electric Co., 244

F. Supp. 914 (S.D.N.Y. 1965), a case involving an alleged

antitrust conspiracy in the electric industry, Judge Feinberg

held that the plaintiffs had presented:

abundant proof that defendants affirmatively and

deliberately concealed the existence of the conspir-

acy. The conspirators concealed their activities from

their customers, the government, and officers and

employees of defendants who did not participate.

To achieve and preserve secrecy, the conspirators

falsified their expense accounts to hide the true

nature and purpose of their meetings and trips,

made telephone calls at night from pay telephones

rather than from their offices, destroyed notes taken

at conspiratorial meetings, and instructed newcom-

ers to the conspiracy not to divulge its existence.

Id, at 931-32. Significantly, Judge Feinberg believed that his

conclusion was consistent with both Judge McCree’s analysis

in Gaetzi, 205 F. Supp. 615 and with the policies underlying

the doctrine of fraudulent concealment discussed by the

Supreme Court in Bailey v. Glover, 88 U.S. 342.

In Ingram Corp. v. J. Ray McDermott & Co., 1980-1 Trade

Cas. (CCH) 1 63,277 (E.D. La. 1980), rev'd on other grounds,

698 F.2d 1295 (Sth Cir. 1983), another case cited by the

defendants, the district court discussed what kind of acts are

and are not sufficient for purposes of affirmative conceal-

ment. According to the district court:

Subparagraph (a) speaks of “clandestine meetings

in hotel rooms” at which the rigging of bids was dis-

cussed. This allegation amounts to very little, for

there is no obligation on the part of antitrust con-

eae ie

55a

Pinney Dock v. Penn Central, et al.

spirators to advertise their conduct. One cannot

expect bid riggers to hold a public meeting for that

purpose. However subparagraphs (b) and (c) are

quite different. In each plaintiffs allege that the

defendants performed certain acts in furtherance of

the conspiracy which created the false impression

that project bids were competitively made rather

than rigged. This is something more than silence;

if true, it constitutes an attempt to deceive both the

competition and the public into the belief that all

of.their bids were made legitimately and as the result

of competitive considerations. It is precisely the sort

of affirmative act of deception required by the juris-

prudence.

Id. at 78,414. The affirmative acts referred to in subpara-

graphs (b) and (c) included submitting prearranged losing

bids by the company that had agreed not to receive the award,

in order to give the illusion of competition among the corpo-

rate defendants, and maintaining agreed-upon ratios of major

equipment spreads and positioning equipment in particular

localities throughout the world, so as to give the false impres-

sion that excessive bids on particular projects were the result

of equipment availability rather than of the unlawful conspir-

acy.

In the instant case, Judge Thomas discussed several

instances in which he believed the defendants’ actions consti-

tuted affirmative acts of concealment, notwithstanding his

general conclusion that the defendants’ alleged antitrust con-

spiracy was self-concealing conduct for purposes of the fraud-

ulent concealment exception to the statute of limitations. The

first instance of affirmative acts discussed by Judge Thomas

involved certain memoranda and letters written in late 1969

and early 1970. In this regard plaintiff submitted evidence

of a series of meetings in 1968 and 1969 and argued that they

were deliberately kept concealed. For example, a July 17,

1968, letter from J. K. Thorney, B & O director of coal com-

|

56a

Pinney Dock v. Penn Central, et al.

mercial planning, to the general coal traffic managers-rates

of Penn Central and N & W, stated, inter alia:

following our day long meeting held in New York

on July 9, the matter of handling charges on ex-lake

iron ore received from self-unloader vessels was very

briefly discussed ....

... Our records also indicate that there was a

verbal agreement made by all lines to assess the same

charges as bulk freights. [Emphasis added by district

court.}

Pinney Dock, 1983-2 Trade Cas. (CCH) 1 65,608 at 69,043.

As additional evidence of the defendants’ secrecy, the dis-

trict court notes that on August 25, 1969, Thorney again

wrote to C. S. Baxter, Chairman, Coal, Coke & Iron Ore Com-

mittee (CCIOC) - Eastern Railroads, and stated:

I have just received information that some of the

members of the Coal, Coke & Iron Ore Committee,

are now in the process of reissuing their ex-lake iron

ore tariffs, and there are indications that deviations

may be made from the previous tariffs insofar as the

manner of publication of such reissues. Under the

circumstances, I believe this matter should be dis-

cussed by all members at the conclusion of the next

meeting, which is to be held on September 11.

This subject, of course, should not be listed on the

regular docket but handled informally after the regu-

lar meeting. [Emphasis added by district court.]

Id. at 69,043-44.

In addition, the district court notes that on March 26,

1970, Thorney also sent a memo to G. A. Sandmann marked

“Personal” detailing a discussion on March 24, 1970, about

ex-lake iron ore handling charges. In that letter, Thorney

stated:

es

57a

Pinney Dock v. Penn Central, et al.

There was no committee record other than the sub-

ject had been reviewed. ... The above for your per-

sonal information only, and not to be disclosed to

anyone in any manner at this time.

Id. at 69,044.

Although defendants apparently did not controvert Pinney

Dock’s assertion that the above mentioned meetings and

dealings were kept secret, they argued that they were not obli-

gated to disclose their private business communications and

proposals. Pinney Dock, in turn, argued that under the terms

of the railroads’ SA Agreement, they had a duty to issue pub-

lic notices of meetings, proposals, and rate decisions.”°

In sum, Judge Thomas concluded that the memoranda and

letters discussed above permit an inference that the defen-

dants took steps to insure that their actions would not become

public. According to Judge Thomas, “f{t]hese affirmative acts

may be found by the trier of fact to constitute both wrongful

concealment of the alleged conspiracy in violation of the anti-

trust laws and acts in furtherance of the conspiracy.” /d.

2°T> the extent that plaintiffs are arguing that the defendants kept

their meetings and dealings secret in violation of their statutory duty

to issue public notices of meetings, proposals, and rate decisions, it

would appear that plaintiffs’ argument would involve an interpretation

of ICC rules, regulations and statutes. This in turn would seem to impli-

cate the issue of primary jurisdiction, an argument which the defen-

dants also raised in support of their contention that this action should

be dismissed, or at least deferred to until the ICC has an opportunity

to address the issues. However, Judge Thomas seems to have antici-

pated this problem because he states: “The present issue is not whether

defendants had a sta.utory duty to disclose to plaintiff the details of

their informal discussions. For purposes of the present motion, the

court need only decide whether a genuine issue of fact exists as to the

alleged agreement and communications being carried out in a manner

which eluded discovery by plaintiff.” Pinney Dock, 1983-2 Trade Cas.

(CCH) 165,608 at 69,044.

58a

Pinney Dock v. Penn Central, et al.

In their brief, the defendants apparently do not dispute

these findings of “affirmative acts” by the district judge.

Indeed, it would appear that these meetings and dealings,

which were apparently done in secret and possibly not in

compliance with the ICC requirements requiring open and

public meetings, are analogous to the secret phone calls in

Ohio Valley Electric Corp. On the other hand, such secret

meetings may be more analogous to the “clandestine meet-

ings in hotel rooms” which were not deemed sufficient for

purposes of affirmative concealment in /ngram Corp.

Apart from this evidence, the district court also concluded

that a genuine issue of fact existed as to whether a series of

letters written in 1968 and 1969 by Penn Central in response

to Pinney’s request for a line-haul commodity rate demon-

strated that the defendants concealed the antitrust conspiracy

through affirmative misrepresentations to Pinney. Signifi-

cantly, Judge Thomas found that this evidence was consistent

with the Rutledge requirement that “one means of wrongful

concealment of an ongoing antitrust conspiracy is a

co-conspirator’s fraudulent misrepresentations.” Pinney

Dock, 1983-2 Trade Cas. (CCH) 165,608 at 69,044.

According to Pinney, this correspondence led Pinney to

believe that Penn Central was acting unilaterally in denying

Pinney a line-haul rate and that it was also working to get

a commodity iron ore rate established off Pinney’s dock.

Sometime in 1968 George Weir, who was fifty percent

owner of Pinney, requested from Penn Central a commodity

line-haul rate off Pinney Dock equivalent to that which was

applied to the railroad owned docks. Penn Central's Wilkins

wrote to Weir on September 4, 1968, stating:

I am informed by our rate people that the subject

of publishing rates on pellets originating at private

docks on Lake Erie has been considered at a recent

meeting of the Coal, Coke & Iron Ore Committee

at which time there was a recommendation against

59a

Pinney Dock v. Penn Central, et al.

extending the application of ex-lake iron ore rates

to apply from privately owned docks other than

those equipped to handle iron ore from bulk carri-

ers. Under the circumstances, Penn Central must be

governed by this recommendation.

Id. at 69,045. On October 3, 1968, Weir responded to this

letter by stating that he was “still le[ft] . . . in the dark because

you have not given me the justification on which this recom-

mendation was supposedly based.” Jd.

Funkhouser, who was also an executive of Penn Central,

responded to this letter by explaining that the basic reason

for Penn Central's refusal to publish ex-lake rates from the

Pinney Dock was that it would be financially unsound to do

sO:

[T]he Coal, Coke, and Iron Ore Committee of the

Eastern Rallroads has recommended against extend-

ing the application of ex-lake iror ore rates from

additional docks. Traditionally, rates have been

confined to apply from a relatively few docks from

which ore moves in large and steady volume... .

This had been advantageous to the shipping public

and to the railroads. It seems clear that to depart

from this scheme ... would be damaging both to

the railroads and to the iron ore shippers.”

Id.

Notwithstanding this apparently valid explanation for Penn Cen-

tral’s refusal vo extend an ex-lake rate from Pinney Dock, the district

court concluded that “[t}he trier of fact could find from the documents

in the record that the true justification for the ‘recommendation against

extending the application of ex-lake iron ore rates from private-

ly-owned docks other than those equipped to handle iron ore from bulk

Carriers’ was the continuing secret agreement of February 26, 1958,

to deny an iron ore commodity rate from Pinney’s dock.” Pinney Dock.

1983-2 Trade Cas. (CCH) 165,608 at 69,045.

60a

Pinney Dock v. Penn Central, et al.

On March 28, 1969, Weir made a further request that Penn

Central extend its ex-lake iron ore rates to Pinney Dock, to

which Funkhouser again responded: “It seems clear that to

depart from this scheme of transportation by making the

ex-lake iron ore rates applicable on spasmodic shipments

from what would unquestionably grow to be a sizeabie num-

ber of small docks would be at variance with the concept

underlying said rates and would be damaging both to the rail-

roads and to the iron ore shippers.” Jd.

Pinney argued before the district court that this correspon-

dence led Pinney to believe that the reason why Penn Central

was unwilling to publish a rate was its unilateral concern

about Pinney’s ability to meet volume requirements. Accord-

ing to Pinney, as late as August 19, 1974, Penn Central con-

tinued informing Pinney “that the level of ex-lake ore rates

was constructed on a volume basis and the extensions of these

rate{s] to facilities which could load only relatively small

amounts of ore would make the rates unrealistic.” /d.

Although the defendants attempted to argue before the dis-

trict court that this correspondence, rather than misrepre-

senting its actions, actually disclosed both to Pinney and to

the ICC that its refusal to extend a commodity rate to Pinney

was related to efficiency considerations, Judge Thomas never-

theless concluded that a genuine issue of fact existed as to

whether the defendants had misrepresented their reasons for

denying the rate to Pinney. According to Judge Thomas:

The inference drawn by defendants can properly

be argued to the trier of fact. However, the evidence,

read in a light most favorable to Pinney, does not

as a matter of law show that defendants were open

and honest with Pinney as to the reasons Pinney was

denied a commodity rate. A genuine issue of fact

exists as to whether Penn Central misrepresented

the reasons for its actions so as to conceal the alleged

conspiracy.

6la

Pinney Dock v. Penn Central, et al.

Id. at 69,046,

Thus, Pinney initially alleges that the reasons why the

defendants denied it a line-haul commodity rate was in order

to effect the conspiracy to drive self-unloaders off Lake Erie.

The defendants then brought forth evidence in the form of

memoranda and correspondence that the reason they denied

Pinney such rates was due to a concern with Pinney’s low

volume.

The final instance of affirmative acts of concealment dis-

cussed by the district court involves certain memoranda and

correspondence between Pinney Dock and Penn Central dur-

ing the period of 1973 to 1975. Based on these documents

Pinney Dock argued before the district court that “Penn Cen-

tral periodically misled Pinney into believing that it was

ready, willing and able to do business with it. The effect of

such misrepresentations was to leave Pinney with the clear

impression that Penn Central could, and might, change its

mind on rates from Pinney at any moment.” Jd. at 69,046.

As the district court noted, Pinney pointed to communica-

tions it had with George Wallace of Penn Central in 1970

about granting Pinney a rate. “Several Wallace letters to Pin-

ney indicate that Penn Central was ‘glad to discuss ... the

question of a modern rail loading facility to be built by [Pin-

acy],’ a facility which Penn Central might use in return for

issuing an ex-lake iron ore rate from Pinney Dock. Yet, other

exhibits show that during this same period, Mr. Wallace was

actively participating in meetings and discussions with other

railroads on how to limit the use of seif-unloaders.” /d.

As further evidence of misrepresentations by the defen-

dants during the 1973-1975 period, the district court pointed

to the deposition of Maynard Walker, president of Pinney

Dock, who testified that:

Jim Royston at one time said to me, “Don't worry,”

he said to me and Joe Del Priore, “Don’t worry.

boys, Uncle Jim will take care of you.”

62a

Pinney Dock v. Penn Central, et al.

Id. The district court also noted that in an internal memoran-

dum of October 1, 1975, which was prepared by Royston of

Penn Central it was stated that:

Pinney was reassured that our modification plans

for Ashtabula included serious consideration of

including Pinney Dock in, or as an adjunct to the

consolidated A & B and Union Docks.

Id.

Finally, the district court noted that Pinney presented evi-

dence to show that Royston may have been intentionally mis-

leading Pinney. For example, a former Penn Central

employee testified in a special proceeding that:

I was told to meet with Mr. Royston up at Pinney

Dock to discuss it. Pinney Dock had offered to pay

the entire cost of this conveyor system that would

traverse from Pinney Dock over the Union fence

tracks. After the meeting we went back. I discussed

it with Mr. Ward, and I discussed it with Mr. Roys-

ton. Mr. Royston said that it was a lesson in futility,

that we were just trying to appease Pinney Dock and

keep them quiet. He said Pinney Dock would never

get into the Ashtabula switching district, and it

would be over his dead body before it got there.

Those were the exact words used.

Id. According to Judge Thomas, “[t]hese letters and state-

ments of Penn Central in the 1970’s would permit the trier

of fact to find that Penn Central affirmatively misled Pinney

into believing that it was willing to ‘take care’ of Pinney

Dock’s iron ore requests.” Jd.

The defendants argue in their brief that both of these con-

clusions by the district court should be rejected because the

evidence in the record as a whole establishes as a matter of

law that Pinney’s purported reliance on Penn Central’s repre-

sentations was not “reasonable.” See Rutledge v. Boston

63a

Pinney Dock v. Penn Centrai, et al.

Woven Hose & Rubber Co., 576 F.2d at 250. In support of

this argument, the defendants claim:

As early as August 31, 1971, Mr. Walker, Pinney’s

president, stated that he expected Penn Central to

“say ‘no’ to our rate request or, at the least, attempt

to stall us, as they had been doing in the past.” On

October 7, 1971, Mr. Walker again stated his belief

that “Penn Central and the B & O/ C & O do not

want a private dock with lower handling rates in the

picture during this time period, which could well be

5/10 years, due to the effect this new rate would have

on existing handling rates of their lessees and possi-

bly themselves.” On February 4, 1972, Mr. Walker

wrote to Pinney’s legal counsel, Mr. Beery, that it

“does appear that we will not obtain the iron ore

rate from Penn Central on a friendly basis,” to which

Beery on February 10, 1972 responded that “the

present combination will last for at least another

decade.”

As described above, in 1968 and 1969, when Pinney asked

Penn Central for a line-haul rate, Penn Central refused. Penn

Central explained that it was following a recommendation

made at a CCIOC meeting and that the reason for the refusal

was that the interest of the railroads and the iron ore shippers

was to restrict line-haul rates to a few docks from which ore

moved in large and steady volume. However, Pinney’s Mr.

Weir testified in a deposition that he did not believe that

Penn Central was governed by the CCIOC recommendation,

because he “knew that the Penn Central had the right” to

act independently of the CCIOC. Pinney Dock, 1983-2 Trade

Cas. (CCH) 1 65,608 at 69,049. Weir also testified that he

believed the reason that Penn Central gave for the recommen-

dation: “Being a traffic man, I could conceive of no other

reason [for Penn Central denying a commodity rate] than that

they had some reservations as to whether we could handle

64a

Pinney Dock v. Penn Central, et al.

the minimum tonnage required on this iron ore rate.” Jd. at

69,049 n.16.

In denying summary judgment, the district court stated

that it was unclear whether Weir should have known that

Penn Central had submitted to the CCIOC recommendation.

The judge stated that “the trier of fact may infer. . . that Weir

was warranted” in doubting that Penn Central had surren-

dered its right of independent action. Jd. Also, the court ruled

that Penn Central’s report of the CCIOC recommendation

“did not as a matter of law inform Pinney of the existence

of the alleged railroad conspiracy.” Jd. at 69,050.

We have, as did the district judge, reviewed the evidence

concerning the relationship of the parties quite thoroughly.

We conclude that it may contain the seeds of support for the

finding of the district judge that a factual question of actual

concealment was presented. However, we also conclude that

the record leads us to the same conclusion reached by Judge

McCree in Gaetzi, namely that the time eventually arrived

when “the alleged conspiracy was no longer concealed and

could have been discovered by due diligence well within the

statutory period for bringing suit.” Gaetzi, 205 F. Supp. at

623.

In August 1970 Beery wrote a file memo that was a record

of his meeting with Weir and Pinney’s president, Walker. The

memo said: “It appears that we have an antitrust action... .

I advised that I had no knowledge as to antitrust actions but

that I would obtain and consult the services of someone who

is knowledgeable.” Walker’s desk calendar contains a nota-

tion referring to the meeting: “Will sue [Penn Central] under

antitrust laws....” A memo by Weir also mentions the possi-

bility “of filing an antitrust action.”

In September 1971 Beery wrote to Walker:

[YJou should consider the formal complaint to the 3

Interstate Commerce Commission possibly fol- i

65a

Pinney Dock v. Penn Central, et al.

lowed by an anti-trust action against Penn Central.

It would appear that the first action taken must be

to the Interstate Commerce Commission, as that

agency has the jurisdiction of the dispute.

* *£ *& &

We are considering coupling any administrative

action with some widely based investigation of the

conditions now prevailing upon the Great Lakes in

relation to the unloading of iron ore and the monop-

olistic conditions there that may significantly affect

the public.

In February 1972 Beery wrote Walker a letter strongly urg-

ing that Pinney fight Penn Central under the antitrust and

interstate commerce laws. This four-page letter contained

only one legal argument: “If you can show that the

self-unloader vessel will only be built after the rates are estab-

lished for this type of unloader, then you can show that you

are being damaged by Penn Central’s refusal to publish com-

petitive rates.” The rest of the letter emphasized the business

advantages to Pinney Dock of fighting. The tone of the letter

is captured in its final sentence: “We can provide the techni-

cal means with which to fight this combination, but you have

to provide the spirit and the perseverance.” In a postscript

Beery offered to go to Pinney Dock’s office the next month

to discuss “possible solutions and alternatives.”

In January 1973 Walker responded that he thought that

legal action “would be a waste of time and money,” that he

preferred to wait until Pinney had more self-unloader capac-

ity, and that it would not harm Pinney to “delay court action”

until then.

In holding that there is an issue of fact as to whether Pinney

knew of its cause of action, the district court relied on Walk-

er’s testimony that Beery “didn’t know what he was saying”

about monopolistic conditions and on Beery’s testimony that

66a

Pinney Dock v. Penn Central, et al.

he was not familiar enough with the federal antitrust laws

to understand what “monopoly” means under them. Pinney

Dock, 1983-2 Trade Cas. (CCH) at 69,051. Defendants

argued in the district court that if Pinney had been diligent,

Beery’s advice would have at least prompted the filing of an

antitrust action, which “would have provided broad-based

liscovery of the detailed facts now alleged by Pinney.” The

‘ourt rejected the notion that obtaining discovery would have

een a proper motive for filing an antitrust action. Jd. at

19,055. This observation may in itself have been correct, but

t has little relevancy to the realistic question of concealment.

“he knowledge that the railroads were acting in concert

hrough their joint rate-making activities and any plain

nderstanding of their self-interest was, in our opinion,

ound to dispel any uncertainty as to their motive in failing

o publish competitive rates. To hold that a tolling or suspen-

sion of the limitation of actions must continue unless or until

proof positive existed of a wrong (which might never be estab-

lished in fact) would abort the policy of the law of repose

in statutes of limitations of diligence in the equitable princi-

ples permitting suspension of them. The plaintiffs are there-

fore limited in their remaining causes of action to acts and

damages occurring within the statutory four year period pre-

ceding the filing of their action.

b. Affirmative Acts of Concealment of Litton’s

Cause of Action

The district court ruled that there also existed an issue of

fact whether the Chesapeake & Ohio and Baltimore & Ohio

Railroad Companies (C&O/B&O) created a false impression

that they were willing to lease dock facilities to Litton.

The district court based its ruling on evidence of a meeting

on April 30, 1971 between Litton’s president, Preisser, and

C&O/B&O’s vice president, Sandmann. Before the meeting,

Sandmann said in an internal memo that he planned to tell

Preisser that C&O/B&O was willing to negotiate for the rental

67a

Pinney Dock v. Penn Central, et al.

of “the so-called Grove Storage area.” Sandmann also stated

in the memo:

A lease to Litton would, in effect, create a private

dock, and the ore could conceivably be trucked ...

to inland mills. The railroad would lose control of

the.property. Other efforts have been made over the

years to establish such private docks along Lake Erie

and have been successfully resisted by the railroads.

Defendants argue that the ruling below was wrong, because

the district court did not cite evidence that the railroad’s

expressions of interest in leasing were false or purposely mis-

leading. As for Sandmann’s statements that the railroad

feared that a lease would allow Litton to “create a private

dock” and that the railroads had in the past “successfully

resisted” attempts to create such private docks, defendants

argue that such statements “merely recognized one disadvan-

tage of arranging a lease.”

The district court also based its holding on a letter that

Litton received from Penn Central on March 19, 1971. Penn

Central had filed a proposal with the CCIOC to establish a

charge of $1.41 a ton for handling ore from self-unloading

vessels. Litton protested what it described as an increase over

the current rate of $.41 a ton. Penn Central responded in the

March 19 letter that that rate of $.41 had never applied to

self-unloaders. Penn Central closed the letter with the state-

ment that the district court read as evidence of misrepresen-

tation:

As I have indicated to your Company before, we are

ready at any time to join with you in attempting to

improve the facilities and resolve the cost problems

involved in lake-rail movements of iron ore and pel-

lets.

Defendants argue that this “conclusory expression of good

will cannot, without more, constitute evidence of active con-

—_—

”

68a

Pinney Dock v. Penn Central, et al.

cealment of the alleged railroad conspiracy.” We are com-

pelled to agree. No reasonable person could read this letter

in its context as anything other than a stiff rebuff of Litton’s

protest.

Further, defendants argue that the record shows that Litton

was not misled by Penn Central’s expression of good will.

We agree. It was error to conclude otherwise upon this record.

The district court ruled that there existed a question of fact

as to whether Litton knew of the facts constituting its cause

of action before the statute of limitations expired. Some of

the evidence at issue concerns the railroads’ setting handling

charges together. In March 1970 one Andberg, the president

of a Litton subsidiary, told Preisser that the “[rJailroads are

meeting next week to discuss rate and future position.” In

an undated letter, Andberg said that he was told that Litton

“could have difficulties with the railroads banding against

{it].” Also, Andberg testified in a deposition that “it was com-

mon knowledge to me before I ever went to work for Wilson

{the Litton subsidiary] that the railroads didn’t want

self-unloaders delivering iron ore.” Jd. Preisser knew that

Sandmann, before their meeting on April 30, 1971, was plan-

ning to meet with other railroads “to discuss their terminal

strategy on the Great Lakes and the relationship of that strat-

egy to the new jumbo self-unloaders.” In the same file memo-

randum Preisser described another conversation in which he

had said that “we would not like the idea of the railroads

colluding and/or meeting to determine their strategy on lake

transfer terminals.”

Andberg gave the following testimony in a deposition.

When he was told that the railroads were banding against

Litton, he “didn’t know really” what that meant. He was

aware of the rate bureau meetings but he “was not aware that

they had meetings after their rate meetings and collectively

got together” to make decisions directed against Litton. Preis-

ser testified similarly:

meet ee Ooo

i —— -_—-

69a

Pinney Dock v. Penn Central, et al.

There were ... ratemaking bureaus and rate filings

which were published; and I presumed if they were

having a meeting and they were going to discuss

rates, they would do so in, you know, the proper

form, whether it was at rate bureau meetings or pub-

lic filing of a rate change or decision.

The district court held that there was an issue of fact as

to whether Litton knew that the raliroads acted collectively

apart from rate bureau meetings.

On April 30, 1971 Sandmann told Preisser that C&O/B&O

would not give Litton a lower handling charge for self-

unloaders. After the meeting Preisser said that Sandmann

“was intimidated by the other railroads and capitulated. He

will not offer us an advantageous rate over their existing

docks.” In June 1971 Andberg was toid that if C&O/B&O

reduced its charges, “Penn Central would equalize. This

would start a rate war.”

Preisser testified about what he meant by his comment that

Sandmann was intimidated:

[H]e may have been intimidated by the other rail-

roads’ financial power, their responsiveness, their

engineering, their car fleet size, the rapidity with

which they could move and update their docks,

arrangements which they might proceed to enter

into with American Ship Building or some other

Lake transportation carrier.

Plaintiffs argued in the district court that when they heard

that Penn Central would match any reduction in C&O/B&O’s

handling charges, plaintiffs thought this meant that the rail-

roads were willing to compete with each other, not that they

were conspiring against Litton.

The district court held that Litton indeed might have

understood Penn Central’s threat “as a sign of competition

70a

Pinney Dock vy. Penn Central, et al.

and not collusion.” As for the meeting in which Sandmann

succumbed to the other railroads’ pressure, the court stated:

Even if plaintiffs knew that defendants met privately

on April 29, this is not as a matter of law the equiva-

lent of plaintiffs having knowledge that defendants

had previously entered into and were furthering

their alleged conspiracy to restrain the use and

development of self-unloaders. Further, it may be

found, as Preisser testified, that when he stated

Sandmann was “intimidated” by the April 29 meet-

ing, Preisser was referring to natural economic pres-

sures rather than pressure resulting from a

conspiracy ....

When Preisser became aware of Sandmann’s meeting with

1e other railroads on April 29, 1971, Preisser knew in defen-

.ants’ words “that the defendants were acting jointly to Lit-

ton’s detriment with respect to handling charges,” and should

have suspected and investigated a possible conspiracy. As we

have described above, on April 30, 1971 Sandmann and Pre-

isser discussed C&O/B&O’s handling charges and the possi-

bility of Litton’s leasing C&O/B&O dock facilities. The

district court held that this meeting and other negotiations

continuing through mid-1972 may have reasonably deterred

Litton from investigating any suspicion of a conspiracy.

Once again our review of the evidence satisfies us that even

if the defendants might conceivably have misled Litton ini-

tially, no reasonable person in the position of Litton could

have long relied on such impressions nor have been dissuaded

from exercising due diligence in investigating possible anti-

trust liability within the statutory period.

In conclusion, while we could properly have declined to

address the statute of limitations issue upon the basis that

a lenient standard of abuse of discretion applies to the denial

of motions for summary judgment, we have concluded that

the principles of Alexander v. Aero Lodge, 565 F.2d 1364,

7la

Pinney Dock v. Penn Central, et al.

strongly counselled us to reach and decide this issue. There

was as much before the district court and before us as there

is likely ever to be. And since we conclude that no genuine

issue of fact exists to warrant the tolling of the federal four

year statute of limitations, the task for the parties and the

court will be substantially lessened by our so ruling at this

juncture. In short, therefore, the plaintiffs are limited in their

proof of federal antitrust violations to conduct occurring

' within four years of their commencement of action.

As we shall shortly illustrate, we realize that this ruling does

not affect plaintiffs’ cause of action under the Valentine Act.

The impact of our ruling will be summarized in the

“conclusion” section of this opinion.

VII. PREEMPTION OF OHIO’S NO-LIMITATION

STATUTE

Ohio Revised Code § 1331.12 provides: “No statute of lim-

itation shall prevent or be a bar to any suit or proceeding

for any violation of” Ohio’s antitrust law, the Valentine Act,

Ohio Rev. Code §§ 1331.01-1331.14. Federal antitrust

actions are limited by the four-year period of section 4B of

the Clayton Act, 15 U.S.C. § 15b. Plaintiffs appeal the district

court’s ruling that section 4B preempts application of section

1331.12 to pendent claims that are brought under the Valen-

tine Act and could be brought under federal antitrust law if

not for the statute of limitations.

The standards for deciding a preemption question are well

established. State law in a given field can be preempted either

entirely or to the extent that it conflicts with federal law. A

conflict between state and federal law arises when

“*compliance with both federal and state regulations is a

physical impossibliity,’... or when state law ‘stands as an

obstacle to the accomplishment and execution of the full pur-

poses and objectives of Congress.’ ” Hillsborough County v.

Automated Medical Labvratories, Inc., 471 U.S. 707, 713

,

72a

Pinney Dock v. Penn Central, et al.

(1985) (citations omitted). See also Jones v. Rath Packing Co.,

430 U.S. 519, 525-26 (1977).

In the present case there is no suggestion that Congress has

preempted the entire field of antitrust regulation or that it

is impossible to comply with both federal and Ohio law. The

issue, then, is whether Ohio’s no-limitation statute “stands

as an obstacle to the accomplishment of the full purposes and

»bjectives of Congress” in enacting a four-year statute of limi-

ations.

Before the enactment of section 4B of the Clayton Act in

1955, there was no federal statute of limitations for antitrust

slaims, and courts borrowed analogous state limitation peri-

»ds and applied them to federal claims. See Chattanooga

Foundry & Pipeworks v. Atlanta, 203 U.S. 390 (1906). When

Congress was considering the proposed section 4B, twen-

ty-two of the forty-eight states were applying limitations peri-

ods of over four years. See S. Rep. No. 619, 84th Cong., Ist

Sess., reprinted in 1955 U.S. Cong. & Admin. News 2328,

2331-32. Some states had enacted their own antitrust laws

by then, and Congress presumably knew that courts might

continue to apply statutes of limitation longer than four years

to state claims. Congress’ silence in the face of this possibility

can be seen as acquiescence.

Ohio’s no-limitation provision was itself in effect when sec-

tion 4B was enacted. See Act of May 18, 1910, 101 Ohio Laws

274, 276 (1910). We cannot apply the normal presumption

that Congress knew of the existence of the provision, see New

York State Dept. of Social Services v. Dublino, 413 U.S. 405,

414 (1973), because in fact Congress did not know of it. In

1952 a United States district judge in the Northern District

of Ohio, ignoring the no-limitation provision. held that fed-

eral antitrust claims were governed by Ohio's six-year limita-

tion on actions to enforce a liability created by statute. See

Reid v. Doubleday & Co., 109 F. Supp. 354 (N.D. Ohio 1952).

The Senate Report. supra, at 2331, cited this case as the

hep

2 reer

73a

Pinney Dock v. Penn Central, et al.

source for the Ohio statute of limitations applicable to anti-

trust claims and did not cite the Valentine Act.

One apparent reason for enacting section 4B of the Clayton

Act was that Congress at the same time enacted section 4A,

15 U.S.C. § 15a, which provides for antitrust damages actions

by the United States. See Act of July 7, 1955, Pub. L. 84-137,

69 Stat. 282 (1955). These actions are also subject to the limi-

tation period in section 4B. 15 U.S.C. § 1 5b. In allowing the

federal government to sue for damages, Congress had good

reasons to set a federal statute of limitations. If Congress had

not set a federal statute of limitations, damage suits by the

federal government would have been hampered in states hav-

ing a limitation period of less than four years. Furthermore,

it would look unfair for the federal government to sue one

party and not another, when the conduct of both violated

federal antitrust law but they operated in different states.

Thus, enforcement of federal law would have justified enact-

ing section 4B and leaving state limitation periods intact.

There are indications, however, that Congress might have

intended to preempt state statutes of limitation. The Senate

Report noted the following problems that inconsistent stat-

utes cause:

(1) Plaintiffs in different states injured by the same interstate

conduct do not have the same opportunities to recover.

(2) The plaintiff can shop for the forum with the longest stat-

ute of limitations, and “the defendant remains in constant

jeopardy until the longest period of limitations has

transpired.”

(3) When there is a choice between two states’ statutes of limi-

tation, the question of which state’s law applies—that of the

forum or that of the situs of the injury—creates confusion.

After setting out these problems, the Senate Report stated:

“It is one of the primary purposes of this bill to put an end

74a

Pinney Dock v. Penn Central, et al.

to the confusion and discrimination present under existing

law ....” Senate Report, supra, at 2331.

The main reason for the district court’s decision was that

if state statutes of limitation are not preempted—a question

that has arisen only recently and only in regard to Ohio, see

Ohio ex rel. Brown v. Klosterman French Baking Co., 1977-1

Trade Cas. (CCH) 1 61,361 (S.D. Ohio 1976)—the confusion

in choice of law may return along with differences in defen-

dants’ exposure time and plaintiffs’ ability to recover.

We have very carefully considered the trial court’s conclu-

sion that Ohio’s antitrust law, as provided under the Valen-

tine Act, should be subject to the federal four-year limitation

period notwithstanding Ohio’s provision that no statute of

limitation should be a bar to any proceeding for the violation

of its antitrust law. The trial judge’s ruling is appealing in

many respects. Although we recognize the disadvantages

which must inherently exist in a statute which is subject to

no limitation, we are not convinced that the correct result

was reached below.

Congress primarily focused on limiting federal antitrust

actions. It was concerned that private enforcement of federal

rights would be subject to a wide variety of state borrowing

statutes. Congress was even more intent upon limiting the

enforcement powers of the federal government itself. The

establishment of a federal statute of limitations eliminated

the possibility that federal enforcement would vary with the

law of the jurisdiction in which the cause of action arose.

We believe this is what the Senate Report was primarily

addressing. Since Congress was well aware that there were

state antitrust laws in effect and chose not to preempt them,

we believe that neither did it intend to preempt anything in

them, including statutes of limitations or provisions exclud-

ing them. We make no comment, of course, on what other

constitutional, statutory or common law inhibitions there

may be under Ohio law which might act as a bar to keeping

75a

Pinney Dock v. Penn Central, et al.

such actions open in perpetuity. In short, to the extent to

which the district court has pendent jurisdiction to adjudi-

cate the rights of the parties under the Valentine Act, we hold

that the four-year federal statute of limitations does not pre-

empt Ohio Revised Code § 1331.12.

CONCLUSION

We harbor no illusions that we have resolved all of the

problems which face the parties and the court in this

extended litigation. Given the nature of the many rulings and

the vagueness of the certification procedure employed both

by the district court and by our court, we are not even certain

that we have addressed all of the issues which arguably may

have been included in the certification. To the extent the trial

court and the parties are unable to glean any resolution of

those unresolved questions that may have been certified,

those questions are decertified.

Summarizing what we have reached here and decided on

interlocutory appeal, we hold as follows:

(1) With regard to immunity under Keogh and under the

Interstate Commerce Act all rate-related claims made by the

plaintiffs, whether state or federal, must be dismissed.

(2) Following Square D and its disposition by the Supreme

Court on remand, certain non-rate-related claims must sur-

vive, at least at this stage, and are therefore remanded to the

district court for further proceedings, as follows:

(a) the claim that the defendants refused to permit Litton

to purchase, lease or use dock facilities that could take

self-unloaders;

(b) the claim that defendants used harassing tactics to

try to forestall legitimate business activities of competitors

[to the extent that this claim is not rate-related];

(c) the claim that defendants refused to handle

self-unloading vessels at defendants’ docks;

76a

Pinney Dock v. Penn Central, et al.

(d) plaintiffs’ claim that defendants boycotted Pinney;

(e) the claim that defendants divided markets; and

(f) any other non-rate claim that plaintiffs might make

by amendments, subject always of course to the exercise of

its discretion.in that regard by the trial court.

(3) With respect to standing, all rate-related claims except

for Pinney’s claim that defendants did not grant it a commod-

ity line-haul rate, which were not raised on appeal, again are

subject to dismissal on the alternate basis of standing. Fur-

ther, claims (a) anu (c), referring to the defendants’ refusal

to permit Litton to purchase, lease or use dock facilities and

the defendants’ refusal to handle self-unloading vessels at

their own docks, are dismissed as to Pinney Dock in their

entirety.

(4) The federal four-year statute bars all claims under fed-

eral law that occurred four years before the lawsuit was com-

menced. Plaintiffs’ claim in that regard that accrual of the

cause of action was tolled by fraudulent concealment is

rejected because if in fact concealed, any such causes of action

were nonetheless discovered or could with reasonable dili-

gence have been discovered notwithstanding such a conceal-

ment and well within the appropriate time for commencing

such actions. We do not hold that all claims are time-barred

and the defendants’ motion to dismiss on that has not sought

such relief.

(5) The provision in Ohio’s Valentine Act providing for

no statute of limitations is not preempted by the federal

four-year statute.

(6) All issues not otherwise addressed in this opinion are

decertified and the case is remanded to the district court for

further proceedings consistent herewith.

APPENDIX B

77a

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

NOS. 84-3653/3654

84-3876/3877

PINNEY DOCK AND TRANSPORT Co.,

Plaintiff -Appellant

(84-3653),

Plaintiff-Cross Appellee

(84-3654),

and

Litton INDustRIEs, INC., ef al.,

Plaintiff-Appellees

(84-3876),

Plaintiffs-Cross

Appellants

(84-3877),

Vv

PENN CENTRAL Corpe., et ai.,

Defendants- Appellees

(84-3653),

Defendants-Cross

Appellants

(84-3654),

Defendants- Appellants

(84-3876),

Defendants-Cross

Appellees

(84 3877),

CHESAPEAKE & OHIO RAILROAD CoO., et al,

Defendants- Appellants

(84-3876),

Defendants-Cross

Appellees

(84-3477),

Before: ENGEL AND KENNEDY, Circuit Judges;

and Hicains, Distnct Judge.

78a

JUDGMENT

ON APPEAL from the United States District Court for the

Northern District of Ohio.

THIS CAUSE came on to be heard on the record from the

said district court and was argued by counsel.

ON CONSIDERATION WHEREOF. It is now here or-

dered and adjusted by this court that the judgment of the said

district court in this case be and the same is hereby reversed in

part and the case is remanded in part not inconsistent with this

opinion.

Each party is to bear its own costs on appeal.

ENTERED BY ORDER OF THE COURT

John P. Hehman, Clerk

/s/ JoHN P. HEHMAN

Clerk

ISSUED AS MANDATE:

April 21, 1988

COSTS: None

APPENDIX C

ee cs

79a

No. 84-3653/4/3876/7

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

PinNEY Dock & TRANSPORT Co.,

Plaintiff -Petitioner,

Vv.

PENN CENTRAL Corp.,

THE CHEssIe SYSTEM Co., News, INC.,

BesSEMER & LAKE Erie RaILRoaD Co.,

Defendants- Respondents.

BEFORE: ENGeL, Chief Judge, KENNEDY, Circuit Judge, and

HiGGmws*, United States District Judge

The Court having received a petition for reheanng en

banc, and the petition having been circulated not only to the

Original panel members but also to all other active judges of

this Court, and no judge of this Court having requested a vote

on the suggestion for rehearing en banc, the petition for

rehearing has been referred to the original hearing panel.

The panel has further reviewed the petition for rehearing

and concludes that the issues raised in the petition were fully

considered upon the original submission and decision of the

case. Accordingly, the petition is denied.

ENTERED By ORDER OF THE COURT

/s/ JOHN P. HEHMAN

April 13, 1988 John P. Hehman, Clerk

* Hon. Thomas A. Higgins sitting by designation from the Middle District of

Tennessee.

APPENDIX D

8la

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

C80-1733

Plaintiff

Vv.

PENN CENTRAL CORPORATION, ef ai.

Defendants and

Third-Party

Plaintiffs

We

CONSOLIDATED RaIt CORPORATION

Third-Party

PinnNEY Dock & Transport COMPANY

Defendant

MEMORANDUM AND ORDER

THOMAS, Senior Judge

In separate but related motions filed on Apmi 15, 1982,

defendants Baltimore & Ohio Railroad Company (B&O),

Chesapeake & Ohio Railway Company (C&O), CSX Corpo-

ration, Chessie Systems, Inc. (sometimes coliectively referred to

as Chessie), Norfolk & Western Railway Company (N&W),

and Bessemer & Lake Erie Railroad Company (B&LE) move

to dismiss plainuff Pinney Dock & Transport Company’s

(Pinney) complaint seeking damages for alleged

injunes to plaintiffs business and property caused by

defendants’ violations of sections | and 2 of the Sherman

82a

Act, 15 U.S.C. §§ | and 2, section 3 of the Clayton Act, 15

U.S.C. § 14.... and Ohio’s Valentine Act.'

Each defendant argues that the alleged activities underlying

plaintiff's claims are expressly and impliedly immunized from

the antitrust laws by the Interstate Commerce Act (ICA), and

that the Interstate Commerce Commission (ICC) has exclusive

jurisdiction over the substance of plaintiffs claims. Each

defendant additionally asserts that plaintiff's treble damage

claims are barred by the doctrine of Keogh v. Chicago &

Northwestern Ry., 260 U.S. 156 (1922). Defendant B&LE

further contends that certain of plaintiff's claims should be

dismissed either for lack of standing or “because they could not

as a matter of law have caused direct or cognizable injury to

plaintiffs.” Finally, each defendant asserts that if this court

does not dismiss plaintiffs complaint, “the case should be

referred to the [CC under the doctrine of primary junsdiction.”

Since each of the parties has submitted factual exhibits in

arguing the various issues, the court will apply Rule 56 of the

Federal Rules of Civil Procedure’s summary judgment stan-

dards. Defendants’ motions will be granted only if “there is no

genuine issue as to any material fact and [defendants are]

entitled to a judgment as a matter of law.”

Before analyzing the various branches of defendants’

motions, it is essential to review the principal allegations in this

antitrust case.

Plaintiff, an Ohio corporation, provides dock and terminal

services in Ashtabula, Ohio for goods moving over the Great

Lakes. In its first amended complaint, plaintiff alleges that

“from at least the mid-1950’s” the defendants conspired and

acted to monopolize “the business of providing dock services

for iron ore and other goods moving over docks on the lower

Great Lakes, and the business of providing land transportation

for iron ore and other goods moving over such docks.” Plaintiff

further alleges that defendants concomitantly conspired and

acted to “restrain trade in the business of providing water

‘The court does not address the related motion of defendant Penn

Central Corporation at this time. See this court’s memorandum and order of

November 9, 1982.

> in ee a al

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carriage for iron ore and other goods moving over docks on the

lower Great Lakes, and in the business of buiiding ships for

such carnage.”

Plaintiff asserts that defendants advanced the ends of the

alleged conspiracy through a series of overt acts and practices,

some of which are specifically set forth in the first amended

complaint. The alleged overt acts include refusing to grant a

competitive rail rate for the carriage of iron ore from Pinney

Dock, arbitrarily placing Pinney Dock in a switching district

where it was ineligible for competitive rail rates, and imposing

unjustifiably high switching charges on the cars of a railroad

competitor which sought to carry iron ore from Pinney Dock at

competitive rail rates. Defendants are additionally accused of

“deliberately and purposefully foreclosing Pinney Dock’s de-

velopment as an iron ore handling facility by ... preventing

and postponing the construction and use of the self-unloading

vessels which Pinney Dock was designed to serve.”

Plaintiff maintains that the above alleged overt acts and

practices (and others) were planned and carried out through a

series of unauthorized secret meetings and discussions and that

coercion and intimidation were used to

(1) [force] railroads to forego their night of inde-

pendent action with respect to rail rates and services

and other matters;

(2) [force] railroads not to serve self-unloading

vessels at railroad-owned docks; and

(3) [force] railroads not to lower their dock han-

dling charges on iron ore.

Plaintiff charges that defendants’ alleged antitrust viola-

tions have effectively stifled technological progress and devel-

opment in the construction and use of efficient dock facilities

and vessels and impeded and prevented the development of

nonrail modes of land transportation. Additional effects alleg-

edly resulting from the charged conspiracy are: (1) that

shippers were subjected to artificially and unjustifiably high

rates and charges for dock and land transport services; and (2)

that needed improvements in the efficiency, economy and

competitiveness of dock and transport facilities were subverted.

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