Judges Say ‘Tough Luck’ to Antitrust Plaintiffs Who Sue Too Late

US district courts are rigidly enforcing a four-year statute of limitations in private antitrust cases, a cautionary tale for plaintiffs seeking to justify later lawsuits with exceptions to the rule.

The latest example came last month when a California federal judge dismissed a nearly $6 billion case against Alphabet Inc.'s Google, saying plaintiff Rumble Inc.'s complaint was time-barred and finding no reason to pause the Sherman Act’s four-year window for bringing cases.

Courts are quite “unforgiving” about the clock beginning when the plaintiff suffers injury, said Andrew Gavil, antitrust law professor at Howard University and senior of counsel at Crowell & Moring LLP.

“If you have a valid claim, don’t delay,” Gavil said. “The sooner you bring it, the better.”

Federal judges in recent months rejected bids from plaintiffs including basketball players, eye care centers, and a railroad company to get around the four-year rule with exemptions such as fraudulent concealment, equitable tolling, and continuing violations.

Meanwhile, defendants including the NCAA and Norfolk Southern Corp. used the statute of limitations as an affirmative defense to shut down antitrust claims.

Valid Pauses

Certain circumstances can pause or restart the limitations period, including fraudulent concealment.

If a hidden conspiracy is later revealed, the clock on the statute of limitations wouldn’t run until the plaintiffs discover the violation.

That’s why there is often a rush of follow-on suits after the government announces a price-fixing case. “The bell has rung and you need to bring the case,” Gavil said.

Another doctrine, equitable tolling, allows plaintiffs to pause the statute of limitations if some extraordinary circumstance stood in the way of bringing a suit.

In a case brought by basketball player Mario Chalmers and other members of the 2008 Kansas Jayhawks national championship team against the NCAA last year, the athlete plaintiffs argued they were entitled to equitable tolling of their claims because they signed away publicity rights “barely at the age of maturity,” calling that an extraordinary circumstance.

But a New York federal judge in April shut down that argument, saying the plaintiffs knowingly signed the agreements at issue and don’t claim to have been unaware that the NCAA had a practice of commercially using student-athletes’ name, image, and likeness.

Continuing Violations

The continuing violation doctrine allows plaintiffs to bring claims beyond the four-year limit if they can demonstrate the harm is in progress.

“You can’t just keep inflicting harm on people and be able to get away with it because you started more than four years earlier,” said Kathleen Bradish, vice president and director of legal advocacy for the American Antitrust Institute. “If the injury keeps getting inflicted, that restarts the clock.”

CSX Corp. tried to use that argument in a case against railroad rival Norfolk Southern, brought nine years after its claims first accrued.

CSX argued the four-year statute didn’t apply because Norfolk Southern’s alleged continuing violations of the law restarted the clock on its claims that Norfolk cut it off from key terminal access by charging it an exorbitantly high fee.

The US Court of Appeals for the Fourth Circuit declined last year to find a continuing conspiracy based on the alleged conduct.

In the Google case, the judge held that Rumble failed to adequately allege both fraudulent concealment and a continuing violation.

Purpose of Statutes

The judicial rejections of plaintiffs’ attempts to extend the statute of limitations also reflect the economy and efficiency of bringing cases earlier.

The core purpose of the antitrust statute of limitations is to encourage plaintiffs to bring cases when the evidence is “most fresh,” Gavil said. Timeliness ensures access to evidence in documents, emails, and other data, as well as witnesses.

“You sue somebody six years after something happened and they may not even have the records,” Gavil said. By bringing antitrust suits on time within the four-year window, plaintiffs can enforce a litigation hold to “freeze the documents in place,” he said.

The time limits are also designed to give plaintiffs a reasonable window to bring claims, thus giving defendants a sense of eventually being free and clear of any potential threats or liability.

“Defendants should have peace at some point,” Matthew Cantor, partner with Shinder Cantor Lerner LLP, said. “They should have an understanding that they are not going to be sued for their historic conduct.”