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PENNSYLVANIA v. MILK INDUS. MGMT. CORP.

October 14, 1992

COMMONWEALTH OF PENNSYLVANIA on behalf of itself and THE SCHOOL DISTRICT OF PHILADELPHIA
v.
MILK INDUSTRY MANAGEMENT CORP. t/a BALFORD FARMS and SPRING VALLEY FARMS, INC.



The opinion of the court was delivered by: BY THE COURT; J. CURTIS JOYNER

 JOYNER, J.

 This anti-trust action, which was instituted on November 26, 1991, by the Commonwealth of Pennsylvania on behalf of itself and the School District of Philadelphia, is presently before this Court pursuant to the Defendants' Joint Motion for Summary Judgment. That motion is denied for the reasons set forth below.

 I. FACTUAL BACKGROUND AND HISTORY OF THE CASE

 The Plaintiffs' Complaint alleges that beginning in early Spring, 1986, the Defendants, Milk Industry Management Corp. t/a Balford Farms (hereinafter "Balford Farms") and Spring Valley Farms, Inc. entered into and engaged in a conspiracy to suppress and eliminate competition for the Philadelphia School District's fluid milk contract by submitting collusive, non-competitive and rigged bids. Ostensibly, during the time period covered by the Complaint, the School District had invited dairies and other milk producers to submit sealed, competitive bids for fluid milk products to be supplied to the schools in the Philadelphia District for the 1986-87 school year. Spring Valley Farms and Balford Farms were the only bidders and the contract was subsequently awarded to Balford Farms. The School District thereafter exercised its two options to renew that contract for the 1987-88 and 1988-89 school years.

 The Plaintiffs further contend that the Defendants and certain other unnamed co-conspirators fraudulently concealed the fact that their bids for the School District's 1986-87 contract were collusive and non-competitive with the result that the School District and the Commonwealth were prevented from discovering the existence of the alleged conspiracy until June, 1991. According to the Plaintiffs' Complaint, the Defendants' actions constituted violations of the Sherman Act, 15 U.S.C. § 1 et seq. (entitling them to damages under the Clayton Act, 15 U.S.C. § 12 et seq.) and the Pennsylvania Antibid-Rigging Act, 73 P.S.§ 1611, et seq. as well as common law fraud. *fn1"

 In response, both Defendants filed answers in which they denied that they had conspired in any way to rig the bids submitted for the School District's milk contract and raising, inter alia, the affirmative defenses of the statute of limitations and failure to state a claim upon which relief may be granted. Discovery has since proceeded and Defendants now argue that the record in this case reflects the absence of a genuine issue as to any material fact and that they are entitled to judgment in their favor as a matter of law with respect to both the federal and state law claims.

 II. LEGAL STANDARDS GOVERNING SUMMARY JUDGMENT

 Federal Rule of Civil Procedure 56(c) sets forth the primary principles governing the entry of summary judgment. That rule states, in relevant part:

 
. . . The judgment sought shall be rendered if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law . . ."

 A summary judgment motion thus requires the court to look beyond the bare allegations of the pleadings to determine if they have sufficient factual support to warrant their consideration at trial. Liberty Lobby, Inc. v. Dow Jones & Co., 267 U.S. App. D.C. 337, 838 F.2d 1287 (D.C. Cir. 1988), cert. denied, 488 U.S. 825, 109 S. Ct. 75, 102 L. Ed. 2d 51 (1988). Generally speaking, the party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In resolving a motion for summary judgment and in determining whether the movant has met its burden of proof, the court must view the evidence submitted and any inferences as may arise therefrom in the light most favorable to the non-moving party. O'Donnell v. U.S., 891 F.2d 1079 (3rd Cir. 1989); McLaughlin v. Liu, 849 F.2d 1205 (9th Cir. 1988). Conversely, in the face of a properly supported motion for summary judgment, the adverse party may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Liberty Lobby, Inc. v. Dow Jones & Co., supra. Caution must be exercised in granting summary judgment, however, where state of mind is at issue. Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472 (11th Cir. 1991); Bryant v. Maffucci, 923 F.2d 979 (2nd Cir. 1991).

 By way of the present motion, Defendants argue that they are entitled to the entry of judgment in their favor as a matter of law because: (1) the four year statutes of limitations governing both the federal and state law causes of action expired prior to the commencement of this lawsuit and Plaintiffs cannot produce any evidence which would justify a finding that these four-year limitations periods should be tolled; (2) the Commonwealth of Pennsylvania had no standing to bring or maintain this action; (3) the Plaintiffs have not and cannot show that any violations of federal or state law occurred or that they suffered any actual injury or damage as a result of the Defendants' alleged actions. We now address each of these arguments in turn in the following paragraphs.

 III. STATUTE OF LIMITATIONS

 15 U.S.C. § 15b establishes a four-year limitations period for all private anti-trust actions. That statute reads:

 
Any action to enforce any cause of action under sections 15, 15a, or 15c of this title shall be forever barred unless commenced within four years after the cause of action accrued. No cause of action barred under existing law on the effective date of this Act shall be revived by this Act.

 Accrual of a private anti-trust cause of action for purposes of the statute of limitations occurs when the defendants commit an act which injures the plaintiff's business. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S. Ct. 795, 28 L. Ed. 2d 77 (1971), rehearing denied, 401 U.S. 1015, 91 S. Ct. 1247, 28 L. Ed. 2d 552 (1971); NL Industries, Inc. v. Gulf & Western Industries, Inc., 650 F. Supp. 1115 (D. Kan. 1986). Even when defendants continue to perform overt acts in furtherance of an anti-trust conspiracy within the statutory period, plaintiff's injuries also must fall within the limitations period in order not to be time-barred. Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211, 218 (4th Cir. 1991).

 An exception to this general rule arises, however, where the defendant has fraudulently concealed its illegal activities from the plaintiff. Commonwealth of Pennsylvania v. Lake Asphalt and Petroleum Company of Pennsylvania, 610 F.Supp. 885 (M.D. Pa. 1985). In establishing fraudulent concealment, the plaintiff bears the burden of proving: (1) wrongful concealment of its cause of action by defendants; (2) failure of the plaintiffs to discover the operative facts or the basis of their cause of action within the limitations period; and (3) plaintiffs' due diligence until discovery of the facts. Id. at 887. Under some circumstances, the fraud may be self-concealing or the conspiracy of such a character that its successful operation conceals itself. In such cases, evidence of a self-concealing conspiracy may satisfy the wrongful concealment element of the fraudulent concealment doctrine. Bethlehem Steel Corp. v. Fischbach and Moore, Inc., 641 F.Supp. 271 (E.D. Pa. 1986). Bid-rigging conspiracies are not necessarily self-concealing in and of themselves, however. Texas v. Allan Construction Co., 851 F.2d 1526 (5th Cir. 1988).

 The Pennsylvania Antibid-Rigging Act also has a four-year limitations period and specifically provides that the statute of limitations does not begin to run until such time as a violation is discovered or should have been discovered by the plaintiff. Indeed, Section 4 of the Act, 73 P.S. § 1614 reads in pertinent part:

 
. . . The cause of action shall arise at the time the governmental agency which entered into the contract discovered, or should have discovered, the conduct amounting to the offense declared to be unlawful by this act. The action shall be brought within four years of the date that the cause of action arose. No civil action shall be maintained ...

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