American Pipe & Construction Co. v. UtahAnnotate this Case
414 U.S. 538 (1974)
U.S. Supreme Court
American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974)
American Pipe & Construction Co. v. Utah
Argued November 12, 1973
Decided January 16, 1974
414 U.S. 538
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Eleven days short of a year after a final consent judgment had been entered against petitioners in civil actions by the Government to restrain federal antitrust violations (which actions had been filed almost four years before entry of that judgment), the State of Utah commenced a Sherman Act treble damages class action against petitioners, in which the State purported to represent various state and local agencies and certain other Western States. The action was found to be timely under the federal four-year statute of limitations governing antitrust suits (§ 4B of the Clayton Act) because of § 5(b) of that Act providing that, whenever the United States institutes any proceeding to restrain antitrust violations, the running of the statute of limitations in respect of every private right of action arising under such laws and based on any matter complained of in such proceeding shall be suspended during the pendency thereof and for one year thereafter. The District Court thereafter granted petitioners' motion for an order pursuant to Fed.Rule Civ.Proc. 23(c)(1) that the suit could not be maintained as a class action, the court finding that, although the prerequisites to a class action contained in Rule 23(a)(2) through (4) had been met, the requirement of Rule 23(a)(1) that "the class [be] so numerous that joinder of all members is impracticable" was not satisfied. Eight days after entry of this order, respondent towns,municipalities, and water districts, all of which had been claimed as members of the original class, moved to intervene as plaintiffs in Utah's action, either as of right under Fed.Rule Civ.Proc. 24(a)(2) or by permission under Rule 24(b)(2), but the District Court denied this motion, concluding that the limitation period had run as to all those respondents, and had not been tolled by institution of the class action. The Court of Appeals reversed as to denial of permission to intervene under Rule 24(b)(2), finding that as to the members of the class Utah purported
to represent, suit was actually commenced by Utah's filing of the class action.
1. The commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the requirement of Rule 23(a)(1) been met, and here, where respondents, who were purported members of the class, made timely motions to intervene after the District Court had found the suit inappropriate for class action status, the institution of the original class suit tolled the limitations statute for respondents. Pp. 414 U. S. 552-556.
2. A judicial tolling of the statute of limitations does not abridge or modify a substantive right afforded by the antitrust acts; the mere fact that a federal statute providing for substantive liability also sets a time limitation upon the institution of suit does not restrict the power of the federal courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent with the legislative purpose. Pp. 414 U. S. 556-559.
3. The District Court's determination, in denying permission to intervene, that respondents were absolutely barred by the statute of limitations was not an unreviewable exercise of discretion, but rather a conclusion of law which the Court of Appeals correctly found to be erroneous. Pp. 414 U. S. 559-560.
4. The commencement of the class action suspended the running of the limitations period only during the pendency of the motion to strip the suit of its class action character. Since the class action was filed with 11 days yet to run in the period as tolled by § 5(b), the intervenors had 11 days after entry of the order denying them participation in the class suit in which to move to file their intervention motion. Their filing only 8 days after the entry of such order was thus timely. Pp. 414 U. S. 560-561.
473 F.2d 580, affirmed.
STEWART, J., delivered the opinion for a unanimous Court. BLACKMUN, J., filed a concurring opinion, post, p. 414 U. S. 561.
MR. JUSTICE STEWART delivered the opinion of the Court.
This case involves an aspect of the relationship between a statute of limitations and the provisions of Fed.Rule Civ.Proc. 23 regulating class actions in the federal courts. While the question presented is a limited one, the details of the complex proceedings, originating almost a decade ago, must be briefly recounted.
On March 10, 1964, a federal grand jury returned indictments charging a number of individuals and companies, including the petitioners here, with criminal violations of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1. The indictments alleged that the defendants combined and conspired together in restraint of trade in steel and concrete pipe by submitting collusive and rigged bids for the sale of such pipe and by dividing and allocating business among themselves. Shortly thereafter, on June 19, 1964, pleas of nolo contendere were accepted, and judgments of guilt were entered. Four days later, on June 23, 1964, the United States filed civil complaints in the United States District Court for the Central District of California against the same companies, which complaints, as subsequently amended, sought to restrain further violations of the Sherman Act and violations of the Clayton and False Claims Acts. These civil actions were the subject of extended negotiations between the Government and the defendants which culminated in a "Final Judgment," entered on May 24, 1968, in which the companies consented to a decree enjoining
them from engaging in certain specified future violations of the antitrust laws. [Footnote 1]
Eleven days short of a year later, on May 13, 1969, the State of Utah commenced a civil action for treble damages against the petitioners in the United States District Court for the District of Utah, claiming that the petitioners had conspired to rig prices in the sale of concrete and steel pipe in violation of § 1 of the Sherman Act. The suit purported to be brought as a class action in which the State represented "public bodies and agencies of the state and local government in the State of Utah who are end users of pipe acquired from the defendants" and also those States in the "Western Area" which had not previously filed similar actions. This action was found to be timely under the federal statute of limitations governing antitrust suits [Footnote 2] because of the provision of § 5(b) of the Clayton Act, 38 Stat. 731, as amended, 15 U.S.C. § 16(b), which states that
"[w]henever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, . . . the running of the statute of limitations in respect of every private right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended
during the pendency thereof and for one year thereafter. . . . [Footnote 3]"
Since the Government's civil actions against the petitioners had ended in a consent judgment entered on May 24, 1968, Utah's suit, commenced on May 13, 1969, was timely under § 5(b), with 11 days to spare. [Footnote 4]
On a motion made by the majority of the petitioners, the suit was subsequently transferred by the Judicial Panel on Multidistrict Litigation from Utah to the United States District Court for the Central District of California for trial by Judge Martin Pence, Chief Judge of the District of Hawaii, sitting in the California District by assignment. The transfer and assignment were found appropriate because of the prior concentration of more than 100 actions arising out of the same factual situation in the Central District of California before Judge Pence. In re Concrete Pipe, 303 F.Supp. 507, 508-509 (JPML 1969).
In November, 1969, the petitioners moved for an order pursuant to Fed.Rule Civ.Proc. 23(c)(1) that the suit could not be maintained as a class action. [Footnote 5] This motion
was subsequently granted. In his memorandum opinion in support of the order granting the motion, Judge Pence found that those "Prerequisites to a class action" contained in Rule 23(a)(2) through (4) appeared to have been met, or at least that minor deficiencies in meeting those standards for determining the suitability of proceeding as a class would "not be fatal to the plaintiffs' class action." 49 F.R.D. 17, 20. [Footnote 6] But the requirement of Rule 23(a)(1) that "the class [be] so numerous that joinder of all members is impracticable" was found by Judge Pence not to be satisfied: while the complaint had alleged that the members of the class totaled more than 800, Judge Pence, relying on his extensive experience in dealing with litigation involving the same defendants and similar causes of action, concluded that the number of entities which ultimately could demonstrate injury from the trade practices of the petitioners was far lower, and, further, that,
"[f]rom prior actual experience in like cases involving the same alleged conspiracy, this court could not find that number so numerous that joinder of all members was impracticable. . . ."
49 F.R.D. at 21.
On December 12, 1969, eight days after entry of the order denying class action status, [Footnote 7] the respondents, consisting
of more than 60 towns, municipalities, and water districts in the State of Utah, all of which had been claimed as members of the original class, filed motions to intervene as plaintiffs in Utah's action either as of right, under Rule 24(a)(2) [Footnote 8] or, in the alternative, by permission under Rule 24(b)(2), [Footnote 9] and for other relief not pertinent here. On March 30, 1970, the District Court denied the respondents' motion in all respects, concluding that the limitations period imposed by § 4B of the Clayton Act, as tolled by § 5(b), had run as to all these respondents and had not been tolled by the institution of the class action in their behalf. 50 F.R.D. 99.
On appeal, the Court of Appeals for the Ninth Circuit affirmed as to the denial of leave to intervene as of right under Rule 24(a)(2), but, with one judge dissenting, reversed as to denial of permission to intervene
under Rule 24(b)(2). [Footnote 10] 473 F.2d 580. Finding that,
"as to members of the class Utah purported to represent, and whose claims it tendered to the court, suit was actually commenced by Utah's filing,"
the appellate court concluded that,
"[i]f the order [denying class action status], through legal fiction, is to project itself backward in time, it must fictionally carry backward with it the class members to whom it was directed and the rights they presently possessed. It cannot leave them temporally stranded in the present."
Id. at 584. We granted certiorari to consider a seemingly important question affecting the administration of justice in the federal courts. 411 U.S. 963.
Under Rule 23 as it stood prior to its extensive amendment in 1966, 383 U.S. 1047-1050, a so-called "spurious" class action could be maintained when
"the character of the right sought to be enforced for or against the class is . . . several, and there is a common question of law or fact affecting the several rights and a common relief is sought. [Footnote 11]"
The Rule, however, contained no mechanism
for determining at any point in advance of final judgment which of those potential members of the class claimed in the complaint were actual members and would be bound by the judgment. Rather,
"[w]hen a suit was brought by or against such a class, it was merely an invitation to joinder -- an invitation to become a fellow traveler in the litigation, which might or might not be accepted."
3B J. Moore, Federal Practice
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