Opinion ID: 6332192
Heading Depth: 3
Heading Rank: 3

Heading: The District Court’s Grant of Swisher’s Motion

Text: for Relief from Judgment Due To Newly Discovered Evidence and Fraud Trendsettah asserts that the district court abused its discretion in granting Swisher’s motion for relief from judgment as to Trendsettah’s antitrust claims pursuant to Rules 60(b)(2) and (b)(3) based on fraud and newly discovered evidence. Trendsettah posits that Swisher’s motion was untimely under the one-year limitation period imposed by Rule 60(c)(1), and that no equitable exceptions applied to toll the limitations period. In Nevitt v. United States, 886 F.2d 1187 (9th Cir. 1989), a case relied on by Trendsettah, we explained that “[a] motion for relief from judgment based on a mistake (Rule 60(b)(1)), newly discovered evidence (Rule 60(b)(2)), or fraud (Rule 60(b)(3)) shall be made not more than one year after the judgment, order, or proceeding was entered or taken.” Id. at 1188 (citation and internal quotation marks omitted). The “one-year limitation period is not tolled during an appeal.” Id. (citation omitted). The present appeal is distinguishable from Nevitt because Swisher did not seek to toll the time limitations imposed by Rule 60(c)(1) while its appeal was pending. Rather, the 22 TRENDSETTAH USA V. SWISHER INT’L district court determined that Swisher’s motion was timely because “the Ninth Circuit’s decision substantially altered the judgment, and the time for bringing a Rule 60(b) motion restart[ed].” Although we have not extensively addressed this issue, other courts have concluded that the limitations period imposed by Rule 60(c)(1) may be restarted subsequent to an appeal. For example, in Jones v. Swanson, 512 F.3d 1045, 1048 (8th Cir. 2008), the Eighth Circuit explained that courts “have recognized that a new, one-year period under Rule 60(b) might be triggered if a subsequent appellate ruling substantially alters the district court’s judgment in a manner that disturbs or revises the previous, plainly settled legal rights and obligations of the parties.” (citations and alteration omitted); see also Martha Graham Sch. and Dance Found., Inc. v. Martha Graham Ctr. of Contemporary Dance, Inc., 466 F.3d 97, 100–01 (2d Cir. 2006), as amended (concluding that the one-year limitations period for a Rule 60(b) motion was not restarted because its prior “ruling made no substantive change in [the] legal position from that established by the judgment of the district court”) (citation omitted); The Tool Box, Inc. v. Ogden City Corp., 419 F.3d 1084, 1089 (10th Cir. 2005) (acknowledging that a new “oneyear period under Rule 60(b) might be triggered if the subsequent appellate ruling substantially alters the district court's judgment”) (citations omitted). The reasoning of these cases informs our agreement with the district court that Swisher’s motion under Rule 60(b)(2) and (b)(3) was timely because our remand decision “substantially alter[ed] the district court’s judgment in a manner that disturb[ed] or revise[d] the previous, plainly settled legal rights and obligations of the parties.” Jones, TRENDSETTAH USA V. SWISHER INT’L 23 512 F.3d at 1048 (citations omitted). The jury rendered a verdict in favor of Trendsettah on its antitrust and breach of contract claims. On Swisher’s motion for judgment as a matter of law, the district court entered judgment in favor of Trendsettah on the breach of contract claims, but entered judgment “in favor of [Swisher] and against [Trendsettah] on all of [Trendsettah’s] other claims, including [Trendsettah’s] claims for violation of Section 2 of the Sherman Act.” On appeal, we ruled that in pertinent part: The district court’s grant of summary judgment to Swisher as to its antitrust claims is REVERSED. The district court’s grant of a new trial to Swisher as to the attempted monopolization claim is REVERSED. . . . The district court’s grant of [judgment as a matter of law] to Swisher as to the monopolization claim is REVERSED. . . . On remand, the district court is directed to reinstate the jury’s verdict in its entirety. . . . Trendsettah USA, Inc., 761 F. App’x at 718. Our remand decision “substantially alter[ed]” the district court’s judgment in favor of Swisher regarding the antitrust claims, rendering Swisher’s Rule 60 motions timely as to those claims. Jones, 512 F.3d at 1048 (citations omitted). Contrary to Trendsettah’s assertions, construing Swisher’s motion as timely does not contravene Rule 60(c)(1) or Rule 6(b)(2) of the Federal Rules of Civil Procedure. Rule 60(c)(1) provides that “[a] motion under Rule 60(b) must be made within a reasonable time—and for [Rule 60(b)] (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.” Fed. R. Civ. P. 60(c)(1). 24 TRENDSETTAH USA V. SWISHER INT’L The rule that we apply in conformity with our sister circuits is consistent with Rule 60(c)(1) because it is tethered to the judgment itself, and substantial alterations in the judgment from an appellate ruling. This rule is also consistent with Rule 6 of the Federal Rules of Civil Procedure, which prohibits a court from “extend[ing] the time to act under” Rule 60(b). Fed. R. Civ. P. 6(b)(2). We are not extending the time for filing a Rule 60(b) motion, but recognizing the beginning of a new limitations period as a result of an appellate decision that has “substantially alter[ed] the district court’s judgment in a manner that disturbs or revises the previous, plainly settled legal rights and obligations of the parties.” Jones, 512 F.3d at 1048. Addressing the merits of Swisher’s motion, Trendsettah contends that the district court erred in granting Swisher’s Rule 60(b) motion because issues relating to federal excise taxes were irrelevant at trial, and Swisher did not exercise reasonable diligence in discovering Alrahib’s fraud. We disagree. “Rule 60(b) allows for relief from a final judgment, order, or proceeding for any of six reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that could not have been discovered in time to move for a new trial; (3) fraud, misrepresentation, or misconduct; (4) the judgment is void; (5) the judgment has been satisfied; or (6) any other reason that justifies relief.” Hanson v. Shubert, 968 F.3d 1014, 1017 n.1 (9th Cir. 2020) (citation and internal quotation marks omitted). “Relief from judgment on the basis of newly discovered evidence is warranted if (1) the moving party can show the evidence relied on in fact constitutes newly discovered TRENDSETTAH USA V. SWISHER INT’L 25 evidence within the meaning of Rule 60(b); (2) the moving party exercised due diligence to discover this evidence; and (3) the newly discovered evidence must be of such magnitude that production of it earlier would have been likely to change the disposition of the case.” Feature Realty, Inc. v. City of Spokane, 331 F.3d 1082, 1093 (9th Cir. 2003) (citation and internal quotation marks omitted). “Rule 60(b)(3) permits a losing party to move for relief from judgment on the basis of fraud, misrepresentation, or other misconduct of an adverse party.” De Saracho v. Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000) (citation, alteration, and internal quotation marks omitted). “To prevail, the moving party must prove by clear and convincing evidence that the verdict was obtained through fraud, misrepresentation, or other misconduct and the conduct complained of prevented the losing party from fully and fairly presenting the defense.” Id. (citations omitted). “Rule 60(b)(3) is aimed at judgments which were unfairly obtained, not at those which are factually incorrect. . . .” Id. (citation and internal quotation marks omitted). Trendsettah contends that Swisher failed to meet the standard for relief from judgment premised on fraud and newly discovered evidence due to “the facial irrelevance of excise taxes” to the damages calculations performed by Trendsettah’s expert. As previously noted, however, Trendsettah’s tax evasion allowed it to set artificially low prices and continue to compete effectively in the relevant markets, thereby incurring its asserted damages. Moreover, Alrahib stated in his interview with an internal revenue agent that he was aware of the tax evasion and “that’s how we could compete in the marketplace.” Alrahib 26 TRENDSETTAH USA V. SWISHER INT’L explained that “there’s no way [they] could compete” without the benefits bestowed by the fraudulent evasion of federal excise taxes. Trendsettah does not dispute that, in support of Trendsettah’s antitrust claim, Alrahib testified about the impact of Swisher’s purported anticompetitive behavior on Trendsettah’s business. Alrahib’s concealment of his excise tax fraud scheme and its impact on Trendsettah’s competitive viability precluded Swisher’s defense to the antitrust claims “from being fully and fairly presented.” Wharf v. Burlington N. R.R. Co., 60 F.3d 631, 638 (9th Cir. 1995). Tellingly, Trendsettah does not advance any contention that the jury would have reached the same verdict for antitrust liability and damages if it were fully apprised of Alrahib’s fraudulent evasion of federal excise taxes. We are also unpersuaded by Trendsettah’s contentions that Swisher did not exercise reasonable diligence in discovering the fraud. First, Trendsettah maintains that Swisher belatedly realized the import of federal excise taxes relative to the damages calculation for the antitrust claims. However, Trendsettah’s reliance on this hypertechnical aspect of damages calculations, which it describes as “a methodological criticism that was available all along,” misses the point. Trendsettah’s fraud implicated more than “a methodological criticism.” Instead, it undermined Trendsettah’s allegations that its business was constrained by Swisher’s anticompetitive acts. Dr. Cox explained that “[a]bsent such fraud, [Trendsettah] would have had to increase prices (and sell fewer products) or shut down. Its demonstrated inability to compete effectively in the relevant markets [absent the tax fraud] also indicates that Swisher’s alleged actions could not have harmed competition as [Trendsettah] alleged.” TRENDSETTAH USA V. SWISHER INT’L 27 Second, Trendsettah maintains that Swisher had in its possession invoices “showing that [Trendsettah] paid Havana 59 nearly $40,000 per container in excise tax,” “hundreds of copies of the tax filings themselves,” “along with the details of the calculations and the canceled checks showing those payments.” According to Trendsettah, Swisher was compelled to wade through these documents and piece together the fraudulent tax evasion scheme concealed by Alrahib. But Swisher was not required to engage in a fishing expedition to establish reasonable diligence. Indeed, it bears noting that Trendsettah’s own expert did not detect the fraud that Trendsettah posits was hidden in plain sight. Finally, Trendsettah asserts that the district court “adopted Swisher’s factual premise that any line of questioning about excise-tax evasion would likely have led to the disclosure of the fraudulent scheme.” Trendsettah apparently maintains that the district court made a factual finding that Swisher could have discovered Alrahib’s tax fraud scheme if only it had asked questions about excise taxes at trial. But this notion is not supported by the district court’s order. The district court explained that: based on [Trendsettah’s] inaccurate arguments that Alrahib’s federal excise tax violations were merely past wrongs, Swisher was foreclosed from asking Alrahib about excise tax evasion, a line of questioning that, absent perjury, would likely have led to the disclosure of the fraudulent scheme he later disclosed to federal . . . agents. In context, the district court’s observation was related to Alrahib’s deposition testimony and Trendsettah’s motion in 28 TRENDSETTAH USA V. SWISHER INT’L limine. In his deposition, Alrahib acknowledged that he failed to pay state excise taxes for a business in Arizona. However, Swisher was unable to pursue this issue at trial because the district court granted Trendsettah’s motion in limine “to exclude evidence that Trendsettah’s principal Akrum Alrahib . . . failed to pay excise taxes on tobacco products purchased through an Arizona company and later resold in California.” Far from making a factual determination that “any line of questioning about excise-tax evasion” would have revealed Alrahib’s fraud, the district court concluded that Swisher’s failure to further question Alrahib concerning tax fraud was due to the grant of Trendsettah’s motion in limine rather than a lack of diligence by Swisher. As a result, the district court correctly concluded that “the evidence demonstrating fraud—Alrahib’s May 2017 interview which was revealed to the public in April 2019—was not available” when Swisher could have filed a motion for new trial. We conclude that Swisher timely filed its Rule 60(b) motion and exercised reasonable diligence in discovering Alrahib’s fraudulent evasion of federal excise taxes. If Swisher had been able to present evidence of Alrahib’s fraud to the jury, it “would have . . . likely . . . change[d] the disposition of the case,” Feature Realty, Inc., 331 F.3d at 1093 (citation omitted), and enabled Swisher to “fully and fairly present[ ]” its defense to the antitrust claims, Wharf, 60 F.3d at 638. The district court, therefore, properly vacated the judgment in accordance with Rules 60(b)(2) and (b)(3).4 4 Because we affirm the district court’s order granting Swisher’s motion for relief from judgment under Rule 60(b), we decline to grant Trendsettah’s request that this case be reassigned to a different district