throughout that time from two thousand and seven to two thousand and nine during that period lock her marched up in increments the price of wax accidents over seventy percent in two thousand and nine the f t c intervened in issued a complaint consent order and ordered the divestiture of the loc her group assets from lubrizol including permission for additives international the company to which these assets were to be tied vested  also to be given permission to operate a flint plant and manufacture accidents it took an additional two years for additives international to begin manufacturing a product that was competitive and that c technologies and other purchasers could use as a substitute product and within approximately one year of that time c technologies brought this action and the key question with respect to plaintiff section to clean is whether those price increases comprise overt action such that the statute of limitations is told under the continuing violations doctrine has noted on briefs there are very few cases dealing with this fact pan and specifically which is to say an acquisition or a merger to monopoly there are a number of cases in the broader context of section two in the even more broad context of the sherman act which hold that over price increases are over actions for the purpose of the continuing violations that th closers one i think your honor is free free hand which is out of the northern district of california and in that case it's a little bit difficult to figure out exactly what the court was referring to when it decided that the continuing violations doctrine implied there were several things there were first the overcharges there were also additional acts taken by the defendant in that case to continue its monopoly power in the court referred to all three of those it might have been four things but the court referred to all of those things when it held that the continuing violations doctrine did told the plaintiffs the section to claim now the court simultaneously was dealing with a section seven case and so that in that case involved an acquisition was factually extremely similar to this case well but the problem is this isn't a ribbon matching exercise that we're in and the fact that some district court in northern california thought that that the continuum by way sions doctrine are applied to a merger even it was clear isabel that that was the holding wouldn't it certainly wouldn't persuade me if there was no other authority no six circuit authority no nothing from the supreme court just nothing but a district court opinion from california i'm afraid that's not terribly serious way so what else is there while you're out of there is the broader framework that i'm talking about in section two in section one cases under the sherman act courts including courts in the circuit routinely apply this to the continuing violations doctrine defendant would have us excusing lubrizol would have us adopt this approach by which we look at this case you didn't ball's in acquisition and so we apply the section seven framework in the new use doctrine well that that approach doesn't work for a number of reasons first it's unsupported by a lot and although know no specific case from the supreme court of the six circuit as you mentioned there's also no case that suggests that regardless of how the plaintiff pleads its case we apply whatever the grabs and whatever the cases that do that suggest that it isn't done i mean it's a it's a negative authority situation now you can argue that we are about to pull the rabbit out of the hat do it but i don't know how else you get there well your honor i'm getting there because this is although it's also a section seven case this is also a sherman case in the sherman act this court applies the continuing violations doctrine there is no reason that we shouldn't do that the question in the lots of different reasons you you knew what these price increases were you paid the higher prices what three or four times in the first year after the merger and then you sat on your hands for five years so why under the facts of this case even if we were inclined to go that way would that support adopting the doctor in this case well your honor the there are a couple things a couple things working against you technologies is the plaintiff number one while it is taking those prices in the within that for your limitations period it's purchasing from it's the only possible seller of this product it would essentially be suing that supplier obviously their business reasons at work there and it doesn't want to do that it waited until it had an alternate source to file the sanction second so let's assume there was no alternative source that came along five years later that under your theory you could wait twenty years you could pay the additional prices every year for twenty years and then you could still sue and say continue a violation well what's the point of the court adopting a doctrine of that type when there is no conspiracy or the point your honor is the principle still applies the principle behind the continuing violations doctrine principle is we have a statute of limitations for a purpose so what would be the principle of the exception swallowing the rule for in my example that twenty year period well around the twenty year period in that hypothetical where you didn't have another supplier i'm not sure how that really helps the argument well it provides to the underpinning the rationale behind applying the continuing violations act but the whole point of the n h s doctrines with respect to mergers is that you have you gain monopoly power the the perceived concern or fear of that is that you will use your monopoly power to take advantage of your customers in this case by increasing prices so if we adopt the doctrine that you're suggesting there is no statue of limitations why don't know that's true judge i think there is then what would two cases the first case is the section two case in a section two case you have to prove in a competitive conduct and i competitive conduct is the price increases and that should be the touch tone for calculating the statute of limitations every time if a price increase would it would create a told me that you trigger the statute that's right for you would have a rolling factor at them with every new thing that's correct and that's what that's how price increases have been handled under section one cases and other section two cases that don't involve mergers and then you would have to go back and determine how much of the price increase was due to the monopoly power versus how much was due to the price of increase in underlying supplies or whatever that's correct and that's the case in every i trust case you honor there's always that and that expert dance where a regression analysis is performed and that those damages are calculated but nobody performs that regression analysis in terms of the beginning of the statue of limitations calculation i th ink that you avoid all of that's the purpose of avoiding that by only applying this to conspiracies well i when you say nobody applies that i'm not sure that i agree with you i think that it's a simple matter for  it's no different for an economists for an expert for a party to establish its analysis based upon different points are there any cases that have done that in connection with the merger case not to my knowledge you're right in frankly i haven't analyzed the damages aspect of the case and add to the tale so i'm not certain i can completely answer that question you did allude earlier to a good point though the point of a merger is we're worried about the merger affecting things or should be a calculation of the statue of limitations while under section seven the proofs at trial are different you don't need to prove and competitive conduct it makes sense under a section seven case to make a statute more limited and that's why the doctor news new use it's more limited in that side of the case plaintiff doesn't have to prove that in a competitive conduct at trial instead we have the new use doctrine applying that's why there's a distinction and so while it seems it may seem to the court and it certainly seem to the court below that well this is just a murder case the fact of the matter is at trial then and i can bet it of conduct will have to be proven and that's not necessarily a small task because as you mentioned you have to prove the difference in prices so that analysis becomes well this price increase was not just  to competitive conduct market power you know it was in spite of the fact that there weren't underlying cost increases with the the raw product and so forth so those additional proofs don't mean this is an automatic it's not as simple as the clayton act claim hence the difference the actual imitations and then only the you know the key point there is well worth what you would have exactly the same fact patter have resulting price increases you say those are super competitive prices and you would analyze the statue limitations differently under sherman and clayton yes your honor and has any court done that well three freehand comes to mind just because  answered the question earlier again that's out of the northern district of california but the your side to that case and your brief simply is cited to say when the acquiring firm changes the way he uses the acquired assets the statue of limitations is restarted that's the purpose for which you cite that case now may say other things in the case but that's not that's not what we're discussing here there aren't any there's no change in the way the assets are used here in connection with the price increases well with respect to plant section to claim that's correct play it does argue about the the limitations on the use of the flint plant that's right there is that allegation with respect to the section seven case the second prong this argument and specifically the plain position there is that the court said let's stick with the price increase for just a second ok so free doesn't doesn't help you in connection with applying it different statue limitations calculation under one activist says the other for a merger and  so but thank you plans claim here is pretty simple the court found facts contrary to the standard of review essentially plaintiff allege based on the f t c complaint that there was some subsequent action taken to prevent the releasing of that flint plant as i stand here today i don't know what that was the court below doesn't know what that was it's entirely possible that the lubrizol simply said  complaint it said there was a subsequent action which indicated that this plane couldn't be released if that does if that means that it was based on the initial not compete ok when you come back could you point out to us we're in that please the court i'm beth grove chief litigation counsel for the lubrizol corporation the at pelly in this case and the decision of the district court dismissing z tex claims on statute of limitations grounds should be affirmed and it should be affirmed for several reasons number one the district court was correct in finding that the continuing violation theory does not apply in a context of a merger monopoly like this one and it was also correct in finding that the hold and use doctrine does not extend the statute of limitations if in fact the court below had found otherwise it would have been contrary to a number of principles that this court over about a six case time period has developed around the continuing use doctrine admittedly those principles were developed in the context of the kinds of cases where continuing use is to excuse me continuing violation is typically applied and that is conspiracies but several important principles have come through all of those cases that apply here and had judges cough decided to extend the the litigation and extend the statute of limitations that would have been contrary to those princip the most important of those principles is statute of limitations matter there's a reason why we have them statute of limitations are intended to curb indefinite claims to prohibit plaintiffs from sitting on their rights and to provide defendants with some kind of legal piece as the court said most recently in the travel agent commission and i trust litigation it's important to avoid a situation where an antitrust plaintiff can routinely salvage an otherwise untimely claim so that's the first principle the judge that coffee would have violated the second principle is exceptions to the statute of limitations can only happen in extraordinary circumstances now that is evidence the dismissal of the case of the claim based on statute of limitations grounds finding the continuing violation cannot apply in those circumstances five out of six that's extraordinary and this court has also set forth a very nice singly stated analysis for how you determine whether those extraordinary circumstances exist and that's found ironically in the one case where the court did allow continuing violation to go forward and that's the d x s case and what the court said india access is after going through and struggling with the analysis not struggling but trying to create the analysis in the barn case and the martin temple case and in the pet case finally india access the court said here's what we're going to do with continuing violation number one you need to look at what the first act was in the chronology and determine was there an anti competitive effect from that act then you look at the subsequent acts and you ask yourself do these subsequent acts on their own constitute overt acts overt acts that are different to two requirements for that that the court set forth number one it has to be independent of the original violation of that original act that you looked at in the first place independent and different and number two it has to cause an injury to the plaintiff different new from any harm that might have been caused by that original act had judges at kaf gone ahead and allowed this case to proceed it would have done so in the face of all of that analysis that that this court has put forth and it would have found contrary to the way this court is typically found now your honour's are correct the question of whether or not continuing violation applies in a merger monopoly has not been addressed by this court in fact it's been addressed by very few court and i'd like to simply qualify it's my reading of the freehand case your honors and granted that is a california case but if you read that case judge cole was struggling with whether or not the transaction itself the purchase by adobe of free hand constituted in and of itself a sufficient violation what she fell back on when you look at the continuing violation analysis that she puts forward are the subsequent  and that of their own could have constituted independent acts the decision to stop create to stop manufacturing the freehand software the decision to start to move customers toward adobe's own products these in and of themselves could have been independent and in that context she allowed that case to go forward and so in the context of it would be look results position judged r t u you asked the question is there any case where anywhere where continuing violation has been applied in the context of a merger monopoly and i would submit that freehand does not stand for that proposition judge who looked for additional information she looked for another violation and interestingly enough let me point out the other case that the tech relies on heavily is the wholesale grocery case to argue that price increases after a merger can can allow application of the continuing violation analysis well a couple of interesting things about that case the first is that a district court of minnesota case which as you know is in the eighth circuit and was following the midwestern machinery case which i would submit to you is a very important case while not controlling authority important authority and a good way to think about how to apply this case what the judge what judge my camry did in that case was to look at whether or not merger the agreement between the two grocery wholesalers the original act necessarily cause the price increases and it's interesting when you read that opinion because that was a market allocate the first act was a market allocation agreement between two wholesalers they agreed to allocate the market between the midwest and new england but then when you read that the court's analysis the continuing violation theory was applied because after that these  independent entities separately conspired to fix prices and so the price increases the super competitive prices judgment comrie found were the result of the conspirator that's right and interestingly enough i have news subsequently about six weeks ago judge montgomery decided another similar case in which she specifically said in that in that case for those who are offering any opinions in this case that cases insulate versus advanced finishing systems two thousand and fourteen west law ninety four three two to four it was decided march eleventh two thousand and fourteen same judge as wholesale grocery and in that case there was an argument that great co purchased its only competitors in the marketplace for fixed plastic fittings and subsequently raised prices did a few other things as well but what's interesting about that case when you read it is when she is determining whether or not the sherman act should whether or not the continuing violation should apply to the sherman act claim she talks about there is she denies it and she says there's no allegation in the complaint of a subsequent conspiracy or any activity after the merger now granted she doesn't come right out and say i'm not going to fly continuing violation to emerge under section two of the sherman act but what she does do and what her analysis shows she's looking for more now let's apply these concepts to this case in this case we have alleged two thousand and seven lubrizol purchases the wax oxidase line of products from lockhart in two thousand and seven a month later according to the allegations of the complaint lubrizol raises prices to super competitive levels and that's important because these are and these are alleged to be super competitive prices and you can only charge a super competitive price if you're a monopolist or we not a monopolist we could have raised prices to have a super competitive price as alleged in the complaint there must be an initial violation in the first place so essentially that's a concession that this was not an independent act and necessarily had to be related to the monopoly that lubrizol attained and the and the other important day so we've got the important dates of february two thousand seven for the the purchase of the product line we've got march two thousand and seven for the beginning of the raising to super competitive prices and then we are sued in may of two thousand and twelve five years and three months later alleged monopoly and what is the next act the tech makes it easy for us the next act is the raising of prices to super competitive levels you can't have that unless there's a violation first so by definition are you going to get to the noncompetitive close i'd be happy to talk to you about the night you run out of your time sure i see where i hear you so let's talk about the holding news doctrine and the allegation in the complaint a couple important things to keep in mind before we get to that antitrust analysis of that let's talk about the ecb ultimately analysis of that which i believe is very important that allegation and it's and it's important to note that allegation was added to the amended complaint it didn't appear in the original complaint the original complaint was filed based solely on the price increases i filed a motion to dismiss not unlike the one i filed later making all these same arguments the amended complaint came around in a poll this language lubrizol subsequently indicated that the non compete provision would prohibit releasing of the lockhart plant the lockhart plant just factually so you understand still existed lubrizol moved into the lockhart plant to produce the product line that it purchased from lockhart but there was still capacity within the lockhart plant there was still the potential for additional capacity for a competitor alternately that's where additives international went in and operated out of the same plant but a couple important procedural points number one that language was lifted out of the f t c is complaint which is not subject to rule eight requirements for the allegation of specific facts is not subject to it paul twamley it's an administrative complaint and if you note the decision in order that's attached to that complaint specifically says lubrizol will waive its rights under the non compete to allow additives international to move into the lockhart plant and use that excess capacity now if in fact these were separate acts there would be no reason for lubrizol to waive its rights under the non compete the non compete was part of the asset purchase agreement the non compete itself was in place at the time of the merger and so for assuming that the it will result indication and there are some allegations by the way or arguments in the brief that will result actually took an action to prohibit releasing i think that that is speculative at best to put it nicely there are no there are no facts to support that there is no information to support that i mean there is a pleading standard that a plaintiff has to meet before a defendant can be subjected to the potential for trouble damages or in any case it's the tech has to meet and scitech hasn't met that but assuming for the for the sake of argument that in fact there was indication and an action the action of take of enforcing a non computer agreement that's part of a merger is not a new and different use it is pro him by definition prohibiting competition to come into the lockhart plant that's exactly what the provision was when the asset purchase agreement was signed and the allegation for the original act here is that lubrizol was a monopolist and had no competitors i submit to you that enforcing an asset purchase agreement non compete provision to prevent competition later is not a new or a different use and so from lubrizol perspective the whole the news doctrine would not apply here and ironically you know busy tech sites to  midwestern machinery which it doesn't want to pay attention to for this section seven clinton act violations or apply to the section two sherman act violations but it cites to midwestern machinery and concord vote in both of those cases the court rejected n a way that is procedurally sufficient it is well fully short of the standard it is lifted out of a complaint that was never subject to the ball twamley standard or the rule eight requirements for what must be in a complaint in federal court as opposed to as part of an administrative settlement that's never going to be challenged by the commissioners the federal trade commission because that is a decision in order settling a case point one and point t it is not a new or a different use is exactly the same use that it was intended for at the time the merger was entered into your honors from from this court's perspective this court has looked at six different cases in each case this court has held that the continuing violation doctrine cannot be applied if the original action is essentially the same as causes the same harm as the subsequent violations and so one could argue although this court i don't believe has other ever applied to hold a news doctor and certainly i haven't found it in the antitrust context the same principles that apply to continu violation the importance of the statute of limitations the importance of exceptions being extraordinary could carry over to the hold a news analysis as well i thought you were ripping up may please the court judge you asked for the citation plaintiff's allegation is paragraph twenty five of the first a minute a complaint which is the record page seventy the f t c complaint was attached as exhibit one to complaint page eighty six i was thinking that when you referred to that and i made have caught it correctly that it was an order from the f t c this is as your opposing counsel says simply in a complaint well there when  complaints it does a couple things it's practice is when it negotiates a consent order is to issue the complaint at the same time as the consent order the consent order is issued for public comment and because finalized after a public comment was that there is a really interesting question that somebody files a complaint against somebody whether it's a government agency or not that then satisfies it ball and twamley as well because somebody allege something someplace well it certainly doesn't satisfy the standard of proof at trial but it does provide a factual basis and a good faith basis to file a complaint and then it's not intended to be a mystery and you know i candidly admit this is what we know in this is why we know it that's never been an issue here and if that's not satisfy that doesn't satisfy the court if that's not enough and i guess that's the case but i don't what is your suspicion here as far as what this this new act was the f t c in this was paraphrased by counsel the f t c indicates in its language  subsequently indicated that this provision bar block her from leasing its plane and flint both assume let's take that at face value you enter into a not compete agreement that says nobody else can use this facility somebody down the road asked to use the facility and you say no it's prohibited by the by this particular agreement how is that a new act well even if true read in that late judge or if you're absolutely right that wouldn't be a new act ok then with them what are you so you must be suspect then the the f t c complaint language refers to something else what do you suspecting that it means what i'm suspecting it means and what i would put to this court is the light most favorable to the  it wasn't language in the nine compete because the result had to subsequently indicate and i don't know if that was something done with a wink and a nod or if that's perfectly acceptable and is merely as you mention an affirmation of that compete could be either way but i think in the light most favorable to the plaintiff that is a new use it may be a very small amount of discovery that tells us otherwise a light most favorable to the plaintiff has to have some has to be grounded in something and where do you derive that out of that language well and frankly it's it's the language subsequently indicated i don't understand why the why the result would have to subsequently indicate something that's in the contract because how would somebody know that what was in the original contract if they didn't subsequently indicate why somebody couldn't do something well i mean i'm trying to figure out what the logical basis is to read something into subsequently indicated that's different than what arises out of the original nine  compete i'm not saying that you're that you don't have an argument there i just don't obviously i just don't understand it well i read this as they have to subsequently indicate the provision bar block her they're telling lock her this is the entity with which they negotiated the nine compete lock has knowledge of what's in that one compete why do they have to they subsequently indicate anything to a party that they were negotiating with and that entered into the agreement with i see that's my point  right thank you thank you for your time today