Filing 314

MEMORANDUM Opinion and Order Signed by the Honorable Robert M. Dow, Jr on 1/18/2013. Mailed notice(tbk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: DAIRY FARMERS OF AMERICA, INC. )
CHEESE ANTITRUST LITIGATION
)
)
)
THIS DOCUMENT RELATES TO:
)
)
Direct Purchaser Actions
)

Master File No. 9 CR 3690
MDL No. 2031
Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendant Schreiber Foods, Inc.’s motion to dismiss
Direct Purchaser Plaintiffs’ second amended consolidated class action complaint [265]. For the
reasons set forth below, the Court grants in part and denies in part Defendant Schreiber’s motion
to dismiss [265].
I.

Background
This MDL action was reassigned from Judge Hibbler’s docket to this Court’s docket on

April 30, 2012.
A.

Procedural History for Direct Purchaser Actions

The direct purchaser cases have been consolidated for pre-trial proceedings on this
docket. The direct purchasers’ amended corrected consolidated class action complaint (“initial
complaint”) [86] alleged that Defendants violated Sections 1 and 2 of the Sherman Act (Counts
1-3), violated the Commodity Exchange Act (“CEA”), 7 U.S.C. §1 et seq, (Count 4), were
unjustly enriched at Plaintiffs’ expense (Count 5), and violated the Racketeer Influenced and
Corrupt Organizations Act (“RICO”) (Count 6). The named Plaintiffs in that complaint were
Indriolo Distributors, Inc., Knutson’s, Inc. and Valley Gold, LLC, and Defendants were (a) Dairy
Farmers of America, Inc. (“DFA”), (b) Gary Hanman, (c) Gerald Bos, (d) Keller’s Creamery,

LP, (e) Keller’s Creamery, L.L.C., (f) Keller’s Creamery Management, LLP, (g) Frank Otis, and
(h) Glenn Millar (the “Initial Defendants”). The initial Defendants collectively filed motions to
dismiss, which Judge Hibbler denied in part and granted in part [141 and 142]. All parties
named in the initial complaint have reached a settlement in principle and are in the process of
drafting settlement documents.
On March 22, 2012, Plaintiffs filed a second amended class action complaint [245],
which added Schreiber Cheese, Inc. (“Schreiber”) as a named Defendant and added a Cartwright
Act claim under California law. Schreiber has moved to dismiss the second amended class
action complaint.
B.

Factual History1

According to the complaint, in 2004, Defendants DFA, a cooperative group of dairy
farmers, and Keller’s Creamery, a producer of dairy products, engaged in a conspiracy to inflate
the price of milk (for the benefit of DFA’s members) and the price of Class III milk futures on
the Chicago Mercantile Exchange (“CME”) (for the benefit of both Defendants, who had
purchased excessive “long” positions in milk futures). The conspiracy was led by Gary Hanman,
then-CEO of DFA, Gerald Bos, then-CFO of DFA, Frank Otis, then-CEO of Keller’s, and Glenn
Millar, then-vice president at Keller’s. As part of the scheme, DFA purchased large quantities of
unneeded block cheddar cheese delivery contracts on the CME throughout May and June. These
purchases were designed to inflate and support the price of spot block and barrel cheddar cheese
(two forms of cheddar commodities). CME cheese prices influence the market price of cheese,
which in turn influences the price of milk and the settlement price of milk futures. Thus, an

1

Judge Hibbler’s memorandum opinion and order of February 4, 2011, sets forth a detailed factual
history, which the Court adopts and incorporates in this opinion. Thus, the Court only briefly recounts
the facts alleged in Plaintiffs’ second amended complaint, primarily as they pertain to Defendant
Schreiber.

2

increase in the price of spot cheese at the appropriate time will increase the price that a holder of
long positions in milk futures will reap when he unwinds his futures contracts.
After DFA allegedly spent most of the month of May holding the block price above $2.00
per pound, it became clear that its purchases were insufficient to sustain the price of cheese, in
part because the “spread” between the price of blocks—which DFA was supporting—and the
price of barrels—which had dropped to lower levels—created an incentive for arbitrage leading
to a natural realignment to the traditional margin. The usual spread was for blocks to be priced
at approximately three cents above barrels. On May 18, Millar told DFA that, if the price of
blocks dropped below $2.00, barrel purchasers (including Defendant Schreiber, a processed
cheese producer and one of DFA’s largest customers) would close the spread by purchasing
barrels. If purchasers supported the barrel side, Millar implied, then the barrel price would rise
to meet the block price instead of causing the block price further to decline.
On May 21, the price of blocks dropped to $1.80 per pound and the barrel price dropped
to $1.61, and the next week, on May 24, the price of barrels rose to $1.77 per pound. In the
week during which the price of barrel cheese rose from $1.61 to $1.77, Schreiber purchased five
of the eight loads of barrels purchased. Thereafter, Schreiber continued purchasing barrels, and
the price remained at $1.77 per pound. Between May 24 and June 22, Schreiber allegedly
purchased 90% of the loads of barrel cheese traded on the CME. The second amended complaint
alleges that, during the exact same period, DFA purchased 100% of the loads of block cheese
traded on the CME, all at $1.80 per pound.

While it was doing so, DFA and Keller’s

“unwound” their long positions in milk futures at a large profit. On June 23, DFA and Schreiber
allegedly stopped buying spot cheese simultaneously, and the price of blocks and barrels dropped
30-35 cents by June 25.

3

The complaint also alleges that DFA and Schreiber have a close relationship and engage in
frequent communications. The second amended complaint refers to certain communications in
which DFA and Keller’s discussed prices and prospective prices on the public markets, including
the CME Cheese Spot Call market, and the firm’s costs and profits resulting from prices. The
complaint also alleges that DFA and Keller’s personnel and Schreiber personnel routinely
discussed where they thought the prices on such CME cheese contracts should be, when
Schreiber would buy in the market, when Schreiber would make profits on transactions, and how
long the prices on the CME took until they registered in Schreiber’s costs or profits. In 2004,
Gary Hanman, then-CEO of DFA, and Larry Ferguson, then-CEO of Schreiber, who allegedly
were close friends, met privately to negotiate a sale of 5 million pounds of cheese to Schreiber.
That sale allegedly was announced on July 13, 2004, the month after the alleged conspiracy
period.
In 2008, the DFA and Keller’s Defendants entered into consent decrees with the
Commodity and Futures Trading Commission (“CFTC”) for violations of the Commodity
Exchange Act (“CEA”) based on their alleged manipulation of milk futures and spot cheese
contracts. DFA, Keller’s, and Defendants Hanman, Kos, Millar, and Otis did not admit liability,
but they agreed to pay fines to settle the CFTC’s charges.
II.

Legal Standard
The purpose of a Rule 12(b) motion to dismiss is not to decide the merits of the case. A

Rule 12(b)(6) motion tests the sufficiency of the complaint, Gibson v. City of Chi., 910 F.2d
1510, 1520 (7th Cir.1990), while a Rule 12(b)(1) motion tests whether the Court has subject
matter jurisdiction. Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). In
reviewing a motion to dismiss under either rule, the Court takes as true all factual allegations in

4

Plaintiffs’ complaint and draws all reasonable inferences in their favor. Killingsworth v. HSBC
Bank Nev., N.A., 507 F.3d 614, 618 (7th Cir. 2007); Long, 182 F.3d at 554. To survive a Rule
12(b)(6) motion to dismiss, the claim first must comply with Rule 8(a) by providing “a short and
plain statement of the claim showing that the pleader is entitled to relief” (Fed. R. Civ. P.
8(a)(2)), such that the defendant is given “fair notice of what the * * * claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the claim must be sufficient
to raise the possibility of relief above the “speculative level,” assuming that all of the allegations
in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th
Cir.2007) (quoting Twombly, 550 U.S. at 555). “A pleading that offers ‘labels and conclusions’
or a ‘formulaic recitation of the elements of a cause of action will not do.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). However, “[s]pecific facts are
not necessary; the statement need only give the defendant fair notice of what the * * * claim is
and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing
Twombly, 550 U.S. at 555) (ellipsis in original).
III.

Analysis
Defendant Schreiber’s motion to dismiss presents two primary arguments.

First,

Schreiber contends that the second amended complaint fails to adequately allege that Schreiber
joined the antitrust conspiracy conceived by DFA and Keller’s in 2004 to inflate the price of
milk and milk futures by purchasing excessive loads of “spot” cheese on the CME. Second,
Schreiber maintains that Plaintiffs’ claims against Schreiber, which were filed almost eight years
after the alleged conspiracy took place, are barred by the four-year statute of limitations in the

5

Clayton Act and the two-year statute of limitations in the Commodity Exchange Act. The Court
addresses each argument in turn.
A.

Plausibility of Counts 1 and 5 (Violations of § 1 of Sherman Act and
California’s Cartwright Act

Defendant Schreiber maintains that Counts 1 and 5 of the operative complaint (alleging
violations of § 1 of the Sherman Act and California’s Cartwright Act) should be dismissed for
failure to plead a plausible conspiracy. A plaintiff alleging an antitrust conspiracy “generally
must prove three things: (1) that defendants had a contract, combination, or conspiracy (‘an
agreement’); (2) that as a result, trade in the relevant market was unreasonably restrained; and (3)
that they were injured.” Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 705 (7th Cir.
2011). Schreiber contends that Plaintiffs’ conspiracy claims fail on the first requirement.
Plaintiffs allege that DFA and Schreiber simultaneously purchased CME spot cheese
contracts at inflated levels, thereby driving up the price of cheese and milk in general and,
indirectly, the price of milk futures.

The question then is “whether the challenged

anticompetitive conduct stem[s] from independent decision or from an agreement, tacit or
express.” Twombly, 550 U.S. at 553. This requires plausible allegations that the “conspirators
‘had a conscious commitment to a common scheme designed to achieve an unlawful objective’”
or, in other words, “‘a unity of purpose or a common design and understanding, or a meeting of
minds in an unlawful arrangement.’” Omnicare, Inc., 629 F.3d at 706; see also McCoy v.
Gamesa Tech. Corp., 2012 WL 245166, at *5 (N.D. Ill. Jan. 26, 2012).
Defendants repeatedly reference the language in Twombly and suggest, like DFA and
Keller’s did in their motion to dismiss, that it requires Plaintiffs to not only plead facts from
which the Court can draw the inference of an agreement, but that the inference of an agreement
must be stronger than other competing inferences. This is an incorrect reading of Twombly.

6

The Twombly Court made clear that a plaintiff could not proceed simply by pleading facts that
were consistent with an agreement and therefore made such an agreement possible. Id.
However, the Court also made clear that it was not “impos[ing] a probability requirement at the
pleading stage.” Id. at 556, 127 S.Ct. at 1965. Instead, an antitrust plaintiff must provide
something in between possibility and probability—plausibility. Id. at 556–57, 127 S.Ct. at 1965–
66; see also Iqbal, 129 S.Ct. at 1949 (“The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.”).

In order to nudge their claims across the line between possibility and

plausibility, Twombly requires Plaintiffs to allege “enough fact to raise a reasonable expectation
that discovery will reveal evidence of illegal agreement.” Twombly, 550 U.S. at 556. Stated
differently, they must allege enough to raise a reasonable inference of an agreement, drawing all
reasonable inferences in Plaintiffs’ favor. Iqbal, 129 S.Ct. at 1949; Bonte v. U.S. Bank, N.A., 624
F.3d 461, 463 (7th Cir. 2010). It follows that the inference of an agreement need not be more
reasonable than the inference of independent parallel conduct. Swanson v. Citibank, N.A., 614
F.3d 400, 404 (7th Cir. 2010) (interpreting Twombly and Iqbl to mean that “it is not necessary to
stack up inferences side by side and allow the case to go forward only if the plaintiff’s inferences
seem more compelling than the opposing inferences”). To hold otherwise would to require the
very “probability requirement” eschewed by the Supreme Court. Id.; cf. Twombly, 550 U.S. at
554, 127 S.Ct. at 1964 (noting that evidence tending to exclude the possibility of independent
action is required at the summary judgment and trial stages).
Defendant’s primary point, stated various ways, is that Plaintiffs have not demonstrated
an agreement between Schreiber and DFA and Keller’s. Defendants concede that Plaintiffs
plead communications among Defendants followed by parallel conduct, but they argue that

7

Plaintiffs have not provided enough additional facts to plausibly suggest that this parallel
conduct was the result of some agreement between Defendants.

At this stage, the Court

disagrees.
The complaint alleges complex and unusual pricing practices by Defendants, which are
not explained by forces of supply and demand.

Judge Hibbler previously concluded that

Plaintiffs plausibly alleged that DFA and Keller’s conspired to and did manipulate CME cheese
prices in order to create profits on the CME milk futures contract positions and DFA’s milk
sales. In re Dairy Farmers of America, Inc. Cheese Antitrust Litig., 767 F. Supp. 2d 880, 897901 (N.D. Ill. 2011). Plaintiffs now take the scenario a step further, and allege that, in the middle
of the execution of their conspiracy to manipulate the milk futures market, DFA and Keller’s
realized that they could not succeed without another co-conspirator to inflate the price of CME
barrel cheese. They thus enlisted Schreiber to serve as the prop for the barrel market, as the price
of each of the block and barrel contracts influences the price of the others. Plaintiffs allege that
DFA’s CEO and Schreiber’s CEO had many private communications and meetings about where
the market “was going” and “how that would affect business,” and that Schreiber agreed to
purchase enough cheese to maintain a particular price before dropping out of the market at the
same time as DFA. The parties then acted in conformity with this scheme and, according to
Plaintiffs, the price of barrel cheese defied the laws of supply and demand.

Specifically,

Plaintiffs allege that DFA bought every load of CME block cheese and Schreiber bought every
load of CME barrel cheese for the weeks ending June 11, 18, and 25, 2004, and Schreiber and
DFA each purchased, between May 22 and June 24, an unusually or unprecedentedly high
volume of CME Spot Cheese Contracts which caused highly usual or record volume in the CME
Spot Cheese Contract.

For the weeks ending May 28 through June 25, Schreiber bought

8

approximately 90% of the loads of barrel cheese traded on the CME.

According to the

complaint, not only was Schreiber’s conduct usual for it and the market in general, the conduct
also resulted in “unprecedented,” record “flat line” CME barrel cheese prices and a record
simultaneous “flat line” in both CME block and barrel prices over 22 consecutive trading days.
Unusual and sustained pricing stability is not expected in a competitive market and, as a
“plus factor,” can indicate collusion. In re TFT-LCD Antitrust Litig., 586 F. Supp. 2d 1109,
1115-16 (N.D. Cal. 2008) (“the TFT-LCD product market ha[d] been characterized by unnatural
and sustained price stability which is inconsistent with natural market forces”; allegations of
“such unusual pricing practices state a cause of action under Twombly”). Furthermore, paying
more than one has to pay suggests conduct contrary to economic interest and also can indicate
collusion. See In the Matter of Anthony J. DiPlacido, 2008 WL 4831204, at *10 (CFTC Nov. 5,
2008). Perhaps Schreiber has a legal reason for, on its own, deciding to buy unprecedentedly or
usually high volumes of CME cheese at a price higher than it had to pay, but at this stage,
Plaintiffs’ allegations plausibly suggest an agreement to manipulate prices. See also Re/Max
Intern., Inc. v. Realty One, Inc., 173 F.3d 995, 1009 (6th Cir. 1999) (“whether the defendants’
actions, if taken independently, would be contrary to their economic self-interest” is a plus
factor); Apex Oil Co. v. DiMauro, 822 F.2d 246, 254 (2d Cir. 1987) (a showing that the parallel
acts were “against the apparent individual economic self-interest of the alleged conspirators” “if
successful, might tend to exclude the possibility of independent parallel behavior”); Blomkest
Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1028, 1044 (8th Cir. 2000) (“[A]cts
that would be irrational or contrary to the defendant’s economic interest if no conspiracy existed,
but which would be rational if the alleged agreement existed, do tend to exclude the possibility
of innocence.”). When one adds to these factors the additional allegations that (i) DFA and

9

Schreiber are alleged to have simultaneously ended their parallel, hyperactive conduct (resulting
in a 22% drop in prices) and (ii) shortly thereafter announced a private deal on “favorable” terms
to Schreiber,2 it becomes reasonable to infer that the private deal was additional consideration by
DFA for Schreiber’s agreement to support CME prices. See also In re Dairy Farmers of
America., 767 F. Supp. at 900 (drawing reasonable inferences in favor of Plaintiffs, “quid pro
quo agreement involving DFA’s purchase of cheese” provided “additional factual support * * *
for an inference that there was an agreement between the individual defendants, whether express
or tacit.”).
Plaintiffs further allege that Schreiber’s motive for its conduct was to increase (i) the
prices at which Schreiber sold its cheese to its customers, and (ii) its profits on such sales, and
that these things in fact happened. Although Schreiber has raised some notable arguments that
cut against Plaintiffs’ theory regarding Schreiber’s motive, Plaintiffs’ allegations, read in the
light most favorable to Plaintiffs, suggest a plausible motive for Schreiber’s unusual conduct.
Taken together, the conduct of DFA and Keller’s (already found to plausibly suggest a
conspiracy), Schreiber’s parallel and simultaneous conduct, the alleged communication between
DFA and Schreiber’s, the unnatural effect on the market, and Schreiber’s alleged motive, all
raise a reasonable inference of an agreement between Schreiber and DFA and Keller’s.
Therefore, Defendant Schreiber’s motion as it pertains to Counts 1 and 5 of the operative
complaint (alleging violations of § 1 of the Sherman Act and California’s Cartwright Act) is
denied.
B.

Counts 2 and 3 (Monopolization in Violation of § 2 of the Sherman Act)

2

Plaintiffs allege that in June 2004, DFA sold Schreiber 5,000,000 pounds of cheese for $1.40 per
pound, despite the fact that DFA had just been paying $1.80-$2.15 per pound.

10

Plaintiffs do not appear to allege a violation of § 2 of the Sherman Act as Plaintiffs make
no allegations against or even mention Schreiber under Count 3 (attempted monopolization) of
the second amended complaint, and their only allegation against Schreiber in Count 2
(monopolization) is that “Defendants’ anticompetitive conduct * * * has also resulted in
monopolistic profits for Defendants and Schreiber.” Further, in their response brief, they fail to
mention let alone defend a reading which extends the monopolization counts to Schreiber.
Therefore, the Court grants Schreiber’s motion to dismiss Counts 2 and 3 of the second amended
complaint, to the extent that those counts were intended to pertain to Schreiber.
C.

Count 4 (CEA Claim)

Plaintiffs allege that Schreiber violated the CEA by manipulating the price of Class III
milk futures. A plaintiff may recover either from a principal violator or from one who aids and
abets another’s violation. At this stage, it is sufficient for Plaintiffs to plead an entitlement to
recovery under either theory. To state an aiding and abetting claim under § 25(a) of the CEA,
Plaintiffs first must allege the components of a manipulation claim against a principal. See
Damato v. Hermanson, 153 F.3d 464, 471 (7th Cir. 1998). Plaintiffs then must allege that
Schreiber (1) knew of the principals’ intent to manipulate milk futures; (2) had the intent to
further that manipulation; and (3) committed some act in furtherance of the scheme. In re
Platinum and Palladium Commodities Litig., 2011 WL 4048780, at *8 (S.D.N.Y. Sept. 13,
2011). With respect to aider and abettor liability, Schreiber merely states that for “the reasons
explained above [in arguing for the dismissal of Counts 1 and 5], the Complaint does not
plausibly allege that Schreiber agreed to purchase spot cheese, knew of DFA and Keller’s plan to
manipulate milk futures, or specifically intended such a result from its purchase of cheese.” The
Court already rejected this argument in addressing Counts 1 and 5, concluding that Plaintiffs

11

have plausibly alleged a conspiracy to manipulate the prices of the CME spot cheese market.
Therefore, for the same reasons set forth in discussing Counts 1 and 5, Defendants’ motion as it
pertains to Count 4 is denied.
D.

Count 6 (Unjust Enrichment)

In denying without prejudice the motion to dismiss these claims as against the other
Defendants, Judge Hibbler determined that “a claim for unjust enrichment generally must state
that the defendant has been unjustly enriched at the expense of plaintiffs.” In re Dairy Farmers
of America, Inc. Cheese Antitrust Litigation, 767 F. Supp.2d 880, 909 (N.D. Ill. 2011) (citing
Montana v. Crow Tribe of Indians, 523 U.S. 696, 721 (1998)). He concluded that Plaintiffs had
sufficiently alleged both that Plaintiffs had been injured and that Defendants “profited
enormously as a result of their scheme,” but left for another day any argument that specific state
law requirements were not met. Id. Schreiber now moves to dismiss Plaintiffs’ claim for unjust
enrichment and restitution, contending only that Plaintiffs “fail to state a claim for any fraudulent
conduct against Schreiber under these predicate statutes [Sherman Act and the CEA]” and
therefore their claims for unjust enrichment fail. As discussed earlier, the Court has concluded
that dismissal of Plaintiffs’ claims under Section 1 of the Sherman Act and the CEA is not
appropriate at this stage. Accordingly, the Court denies the motion to dismiss as it pertains to
Count 6.
E.

Statute of Limitations Defense

Schreiber’s final argument is that Plaintiffs’ CEA and antitrust claims as pleaded are
time-barred as a matter of law. Plaintiffs allege that Schreiber “conspired with the Defendants
from May 25, 2004 until June 23, 2004 in order to artificially inflate CME cheese prices, which
necessarily resulted in higher CME Class III milk futures contract prices.” As pointed out by

12

Schreiber, Plaintiffs did not sue Schreiber until March 22, 2012, almost eight years after the
alleged conduct underlying Plaintiffs’ claims and more than three years after the CFTC issued
orders finding that DFA and Keller’s had manipulated milk futures and cheese contracts.
Private actions under the CEA are subject to a two-year statute of limitations. 7 U.S.C. §
25(c); Indemnified Capital Invs., SA v. R.J. O’Brien & Assocs., Inc., 12 F.3d 1406, 1411 (7th Cir.
1993). The statute begins to run “when the plaintiff knew or in the exercise of reasonable
diligence should have known of defendant’s alleged misconduct.”

Dyer v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 928 F.2d 238, 240 (7th Cir. 1991). The Clayton Act subjects
Plaintiffs’ federal antitrust claims to a four-year statute of limitations. 15 U.S.C. § 15b. An
antitrust “‘cause of action accrues and the statute begins to run when a defendant commits an act
that injures a plaintiff’s business.’” Rotella v. Wood, 528 U.S. 549, 558 (2000). Under the
federal discovery rule, the limitations period does not begin to run until the plaintiff “discovers
(or should if diligent have discovered) both the injury that gives rise to his claim and the injurer
or * * * injurers.” Jay E. Hayden Found. v. First Neighbor Bank, 610 F.3d 382, 386 (7th Cir.
2010); see also In re Copper Antitrust Litig., 436 F.3d 782, 789 (7th Cir. 2006) (“Under the
discovery rule, the statute does not begin running until the plaintiff discovers that he has been
injured and who caused the injury.”).
Schreiber’s timeliness arguments misapprehend the law surrounding statute-oflimitations defenses raised at this stage of a case. Schreiber chides Plaintiffs for failing to allege
that they were “unaware of their injuries before 2008 or that they could not reasonably have
discovered their injuries had they been diligent.” Schreiber’s Memorandum at 20; see also id. at
25 (“Plaintiffs do not allege that they diligently pursued their claims, that anyone concealed
Schreiber’s alleged role in the conspiracy, or that anything prevented Plaintiffs from learning of

13

the basis of their claims against Schreiber.”). As recent cases demonstrate, Plaintiffs were not
obligated to plead around a potential limitations defense. The Seventh Circuit recently has been
very clear in its assessment of the limitations periods: “[O]n the subject of the statute of
limitations * * * * [w]hat a complaint must plead is enough to show that the claim for relief is
plausible. Complaints need not anticipate defenses and attempt to defeat them. The period of
limitations is an affirmative defense * * * * We have held many times that, because complaints
need not anticipate defenses, Rule 12(b)(6) is not designed for motions under Rule 8(c)(1).”
Richards v. Mitcheff, 696 F.3d 635, 637-38 (7th Cir. 2012) (internal citations omitted); see also
United States Gypsum Co. v. Indiana Gas Co., 350 F.3d 623 (7th Cir. 2003); United States v.
Northern Trust Co., 372 F.3d 886 (7th Cir. 2004); Xechem, Inc. v. Bristol—Myers Squibb Co.,
372 F.3d 899 (7th Cir. 2004). In Mitcheff, the Court concluded by reminding judges to “respect
the norm that complaints need not anticipate or meet potential affirmative defenses.”
Here, Plaintiffs have not pleaded themselves out of court by alleging facts that are
sufficient to establish a statute-of-limitations defense for Schreiber. See Walker v. Thompson,
288 F.3d 1005, 1010 (7th Cir. 2002) (in cases in which a plaintiff effectively pleads herself out
of court, the validity of the defense must be “apparent from the complaint itself, and
unmistakable, so that the suit is fairly describable as frivolous”; “[t]hus a personal-injury suit
filed 100 years after the date of the injury as stated in the complaint would be frivolous, even
though expiration of the time within which to sue is an affirmative defense.”); Xechem, Inc. v.
Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004) (“Only when the plaintiff pleads
itself out of court—that is, admits all the ingredients of an impenetrable defense—may a
complaint that otherwise states a claim be dismissed under Rule 12(b)(6).”). “A complaint that
invokes a recognized legal theory (as this one does) and contains plausible allegations on the

14

material issues (as this one does) cannot be dismissed under Rule 12.”

See Erickson v.

Pardus, 551 U.S. 89 (2007). Schreiber’s statute of limitations defense—arguably brought under
the wrong part of Federal Rule of Civil Procedure 12 (see Mitcheff, 696 F.3d at 637-38) and
asking the Court to consider various documents which, even prior to Mitcheff, would have been
off limits—is premature.
IV.

Conclusion
For these reasons, the Court grants in part and denies in part Defendant Schreiber’s

motion to dismiss [265]. The motion is granted as it pertains to Counts 2 and 3 and denied as it
pertains to the remaining counts asserted against Schreiber.

Dated: January 18, 2013

______________________________
Robert M. Dow, Jr.
United States District Judge

15