Opinion ID: 3011254
Heading Depth: 2
Heading Rank: 1

Heading: Accrual of Plaintiffs' Claim

Text: The first question we address is when plaintiffs' Count I claim accrued. While RICO does not include a limitations period for civil claims, the Supreme Court held in Agency Holding Corp. v. Malley-Duff Assocs., 483 U.S. 143, 156, 107 S.Ct. 2759, 2767 (1987), that the four-year limitations period in civil antitrust actions seeking treble damages under the Clayton Act is applicable to RICO actions. 4 See also Klehr v. A.O. Smith Corp., 521 U.S. 179, 183, 117 S.Ct. 1984, 1987 (1997). That conclusion, however, did not establish when a RICO claim accrues, i.e., when the fouryear term starts running. Following the Supreme Court's decision in Malley-Duff, we established our accrual rule in Keystone Insurance Co. v. Houghton, 863 F.2d 1125 (3d Cir. 1988), as follows: The rule which we announce provides that the limitations period for a civil RICO claim runs from the date the plaintiff knew or should have known that the elements of a civil RICO cause of action existed, unless, as a part of the same pattern of racketeering activity, there is further injury to the plaintiff or further predicate acts occur which are part of the same pattern. In that case, the accrual period shall run from the time when the plaintiff knew or should have known of the last injury or the last predicate act which is part of the same pattern of racketeering activity. The last predicate act need not have resulted in injury to the plaintiff but must be part of the same `pattern.' Id. at 1126. However, due to two Supreme Court opinions, the rule governing the accrual of civil RICO claims has changed several times in recent years and thus Keystone does not remain the law. First, in Klehr the Court specifically rejected the last predicate act portion of our rule in Keystone on the ground that it creates a limitations period that is longer than Congress could have contemplated. See _________________________________________________________________ 4. We are exercising plenary review on this appeal. See Nelson v. Upsala College, 51 F.3d 383, 385 (3d Cir. 1995). 21 521 U.S. at 187, 117 S.Ct. at 1989. The Court noted that other courts of appeals had adopted one of two accrual rules for RICO claims: (1) an injury and pattern discovery rule, under which a RICO claim accrues when the plaintiff discovers, or reasonably should have discovered, both the existence and source of his injury and that the injury is part of a pattern of racketeering activity, and (2) an injury discovery rule, under which a RICO claim accrues when the plaintiff simply discovers or should have discovered his injury. See id. at 185, 117 S.Ct. at 1988-89; Annulli v. Panikkar, 200 F.3d 189, 195 (3d Cir. 1999). The Court declined to resolve this conflict, however, choosing instead to leave the matter for another day as the statute of limitations barred the action before it under either formulation. See id. at 191-93, 117 S.Ct. at 1991-92. In the wake of Klehr, we chose to follow theinjury and pattern discovery rule; in effect, we adhered to the Keystone rule minus the last predicate act exception which the Supreme Court had rejected in Klehr . See Annulli, 200 F.3d at 192, 195; see also Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 656 (3d Cir. 1998). Thus, under Annulli, a civil RICO claim accrues and the statute of limitations begins to run when the plaintiff knew or should have known that each element of a civil RICO claim existed--namely, that he was injured, that the defendant was the source of this injury, and that a pattern of activity prohibited by RICO caused this harm. Annulli, 200 F.3d at 195. The district court applied theinjury and pattern discovery rule in this case. See Forbes, 19 F. Supp.2d at 356-57. Earlier this year, however, the Supreme Court rejected the injury and pattern discovery rule. See Rotella v. Wood, 120 S.Ct. 1075, 1078-80 (2000). In its place, the Court contemplated that it eventually would adopt one of two accrual rules: (1) an injury discovery rule, or (2) an injury occurrence rule under which knowledge of injury would be irrelevant. The Court, however, again left the matter unsettled, as it decided that at that time it would not choose between the rules. See id. at 1080 n.2. Thus, once again we must make a decision regarding when a RICO action accrues even though we are aware that 22 the Supreme Court ultimately may accept or reject our choice. After careful consideration, we will adopt an injury discovery rule rather than an injury occurrence rule. We do so for what seems to us to be the sound reason that the injury discovery rule is in harmony with the general notion that a discovery rule applies whenever a federal statute of limitation is silent on the issue.5 Under the injury discovery rule, we must determine when the plaintiffs knew or should have known of their injury. Thus, we alter the judicial landscape unfavorably to the plaintiffs from the shape in which it existed when this case was before the district court and consider the case under an accrual rule more adverse to plaintiffs than that the district court applied. We, of course, start with the complaint. Count I of plaintiffs' fourth amended complaint describes the alleged injury as follows: 64. The object and purpose of the racketeering act ivity . . . was to cause Eagleson . . . and the NHLPA to come under the influence and control of the NHL, the Member Clubs, Ziegler, and Wirtz, and to fail to aggressively represent the interests of the NHLPA players by granting unreasonable concessions to and failing to seek benefits from the NHL and the Member Clubs during the period from the mid-1970's through at least the end of 1991 . . . . The further object and purpose was to enable the Member Clubs to pay far less in compensation to the NHLPA players then they would otherwise have paid, thereby unjustly enriching themselves at the players' expense. . . . . 72. As a direct and proximate result of the conduc t of defendants described above, the plaintiffs and each member of the plaintiff class have been injured in their business or property, as provided, in 18 U.S.C. S 1964(c), including, but not limited to, losses of hundreds of thousands of dollars, each, in salary and other benefits which they would have earned as _________________________________________________________________ 5. The parties do not dispute that Rotella applies retroactively to this case. 23 employees of the Member Clubs but for the illegal activity set forth above. App. at 67-68. On the record before us, it is clear as a matter of law that plaintiffs were aware, or should have been aware, of the injuries they alleged at least as early as 1989. The Garvey report, issued to NHLPA members that year, argued extensively that NHL players were receiving reduced salary and benefits as a result of Eagleson's failure to engage in vigorous collective bargaining. The report stated that [n]o benefits of any significance have been achieved in the entire decade of the 80's through collective bargaining and charged that the [NHLPA] has gone backward while sports unions in all other sports have made major gains. The report presented statistics to show that NHL players are last [in professional sports] in salaries, benefits, percentage of gross, and in information. App. at 106. The report argued that Eagleson's failure to bargain vigorously against the NHL owners was the reason for the players' poor situation: Frankly, if any other union leader did what Alan Eagleson has done over the past 22 years, the news media would be screaming for an investigation. The conflicts of interest are shocking, but even more shocking is a pattern of sweetheart agreements with the NHL over all these years. It may sound harsh, but he has not pursued player interests at critical times in your history as a union. There is a legitimate question whether there is, in fact, a `players' association. For the most part, it seems that Alan runs the Association as his private preserve . . . . . . . . Last on the list [of professional sports with respect to such matters as free agency, impartial arbitration, and players' percentage of gross revenues] is the NHL. Last because the Players Association under Alan Eagleson has never been prepared for bargaining. We don't know how tough the NHL is at the bargaining table because they have never been tested. Never a serious law suit filed against the league to obtain free agency, and, 24 when they had it handed to them on a plate with the proposed WHA-NHL merger, Eagleson gave away player freedom without a whimper. . . . . Alan Eagleson is a brilliant attorney and politician. He admits that John Ziegler is one of his best friends and Bill Wirtz, who lives near him in Florida, is an extremely close friend despite the fact that Wirtz is the chief negotiator for the NHL. Given his brilliance, there is really no excuse for the lack of preparation for bargaining except one--he does not take bargaining seriously because he is comfortable with the cozy relationship that has been so good for him . . . . . . . . Alan Eagleson has been a vital part of the NHL establishment. He has contributed greatly [through his failure to bargain aggressively with the owners] to keeping salaries down, profits up. He has helped maintain [the NHL's] monopoly status, he keeps players tied up [by failing to bargain for free agency], he allows the League to control through non-impartial arbitration; he eliminates freedom whenever it raises its ugly head; and he keeps you in the dark on the economics of the League while singing management's song about the `fragile' NHL. App. at 109, 110, 112, 145 (emphases in original). We have no doubt that by 1989 (and probably earlier), NHL players were aware that they did not enjoy similar salaries, free agency rights, or other advantages available to players in other professional sports. Furthermore, we do not understand how anyone who has considered the Garvey report--which was commissioned at the behest of some 200 NHL players--can doubt that it should have led the players to believe that their situation was largely a result of the cozy collective bargaining relationship between Eagleson on the one hand and Ziegler, Wirtz, and the owners on the other. Thus, by 1989 at the latest, plaintiffs were aware, or should have been aware, of the injury which they allege in Count I (reduced salary and benefits) and the source of the 25 injury (the improper bargaining behavior by Eagleson). Under an injury discovery rule, nothing more was required to trigger the running of the four-year limitations period. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1386 (3d Cir. 1994) (limitations period commences when plaintiff has discovered or, by exercising reasonable diligence, should have discovered (1) that he or she has been injured, and (2) that this injury has been caused by another party's conduct; We have in the past stated that a claim accrues in a federal cause of action upon awareness of actual injury, not upon awareness that this injury constitutes a legal wrong).6 Indeed, possibly aware that clearly their Count I claim accrued prior to November 7, 1991, the plaintiffs argue that --regardless of their awareness of the alleged injury--the statute of limitations was tolled until 1994 (when Eagleson was indicted) because defendants' acts of fraudulent concealment prevented them from learning facts essential to pleading the predicate acts of bribery underlying their Count I claim. Thus, we now turn to the issue of fraudulent concealment.