General Electric Company v. Whirlpool Corporation et al

Filing 110

OPINION and ORDER re 64 MOTION to Dismiss the Complaint. (Supplemental Briefs due by 4/3/2015) Signed by District Judge Sean F. Cox. (JMcC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
In re: Refrigerant Compressors
Antitrust Litigation

Case No. 2:09-md-02042
Honorable Sean F. Cox
United States District Court

___________________________/
OPINION & ORDER
The Indirect Purchaser and Direct Purchaser putative class action cases in this
multidistrict litigation (“MDL”) proceeding have been resolved. All that remains in this MDL
proceeding is Plaintiff General Electric Company’s (“GE”) individual claims. GE asserts claims
against Defendants Danfoss A/S, Danfoss Flensburg GmbH, and Danfoss, LLC (collectively the
“Danfoss Defendants”). GE is pursuing its claims against the Danfoss Defendants on its own
behalf after having opted out of the Direct Purchaser Class Action Settlement.1
The matter is currently before the Court on a “Motion By Defendants Danfoss Flensburg
GMBH And Danfoss LLC To Dismiss The Complaint” (Docket Entry No. 470/64) which asserts
several grounds for relief. The parties have briefed the issues. The Court finds that oral
argument would not aid the decisional process at this time.
For the reasons set forth below, with respect to GE’s federal antitrust conspiracy claims,
the Court: 1) declines to rule on two issues (whether GE has federal antitrust standing to assert
claims based on MABE purchases and whether those purchases are barred under the Foreign

1

GE asserted claims against the Whirlpool Defendants but those claims have been settled.
GE also asserts claims against the ACC Defendants and GE has a default judgment as to liability
against ACC.
1

Trade Antitrust Improvement Act) until after the parties have had the opportunity to file
supplemental briefs addressing the Seventh Circuit’s recent decision in Motorola Mobility LLC
v. AU Optronics Corp., 775 F.3d 816 (7th Cir. Jan. 12, 2015); 2) rules that GE is not entitled to
tolling under the “American Pipe tolling doctrine;” 3) rules that GE is entitled to Section 5(i)
tolling; 4) rejects Defendants’ argument that GE cannot pursue damages for the time period after
February 2009; and 5) rules that GE has sufficiently alleged fraudulent concealment for the time
period preceding September 2006.
With respect to GE’s state-law fraud and conspiracy claims, the Court: 1) rules that GE’s
state-law fraud claim is barred by the applicable statute of limitation; and 2) rejects Defendants’
statute of limitations challenge to the state-law conspiracy count.
Finally, the Court finds Defendant Danfoss Flensburg GmbH’s personal jurisdiction
challenge without merit.
BACKGROUND
There is a lengthy history to this MDL proceeding. The Court includes here only those
facts that are relevant for the purposes of the pending motion.
GE filed its Complaint on February 15, 2013, in the United States District Court for the
Western District of Kentucky, Louisville Division. The action was transferred to this Court by a
June 17, 2013 Order of the United States Judicial Panel on Multidistrict Litigation, which
transferred the action to this Court for inclusion in the coordinated or consolidated pretrial
proceedings in this MDL proceeding, which began in 2009.
GE’s eighty-three page Complaint asserts claims against three different groups of
Defendants: 1) the “Embraco Defendants,” which include Whirlpool Corporation, Whirlpool

2

S.A., and Embraco North America, Inc.; 2) the “Danfoss Defendants,” which include Danfoss
A/S, Danfoss Flensburg GMBH, and Danfoss, LLC; and 3) the “ACC Defendants,” which
include Household Compressors Holding SpA, and ACC USA, LLC. GE’s Complaint
summarizes the nature of the action as follows:
1.

This lawsuit arises from a long-standing cartel created, maintained, and
enforced by the Defendants and their co-conspirators (collectively, the
“Conspirators”) for anticompetitive acts and behavior. They have agreed
to, and in fact did, illegally inflate, raise, fix, and artificially stabilize the
price of refrigerant compressors sold in the United States and elsewhere
in the world. The Defendants also have agreed to, and in fact did
illegally, restrict capacity, restrict innovation, stabilize market
shares, allocate customers, territories, and product types, and
otherwise restrain competition in the manufacture and sale of
refrigerant compressors in the United States and elsewhere in the
world. The result of the Conspirators’ conduct has been to
raise the prices paid by their customers, including Plaintiff, to
supra-competitive levels, reducing the attractiveness of their
customers’ products in terms of price and quality, and thereby
damaging their customers’ businesses. The cartel started at least as
early as January 1, 1996 and the cartel and its effects will continue
at least into 2013 (the “conspiracy period”). The exact dates of the
conspiracy period are not known to Plaintiff, but are likely to be
revealed during the course of discovery in this litigation.

2.

A refrigerant compressor, in the context of this case, is a device that
compresses a refrigerant gas. When the gas is later permitted to expand, it
absorbs and thereby transfers heat, producing a cooling effect used in a
wide variety of refrigeration products. For example, refrigerant
compressors are used in household refrigerators, in which the compressors
are part of the system that creates cold air that keeps food fresh or frozen.

3.

During the conspiracy period, Defendants and their co-conspirators
Tecumseh and Panasonic have dominated the global and U.S. markets for
refrigerant compressors. Indeed, the three largest suppliers to the U.S.
market – Embraco, Panasonic, and Tecumseh – had as of 2008
a collective market share in the United States of approximately 85%.

3

4.

Plaintiff General Electric Company is one of the largest manufacturers and
sellers of refrigeration equipment in the United States. As such, it is one of
the largest purchasers of refrigerant compressors in the United States.
Plaintiff General Electric Company has been a target and a victim of the
Conspirators’ cartel. In particular, Plaintiff is one of the largest
manufacturers of household refrigerators in the United States and globally,
and throughout the conspiracy period, household refrigerators
manufactured and/or sold by Plaintiff have included refrigerant
compressors supplied by Conspirators. As a result of the cartel, Plaintiff
has paid supra-competitive prices for compressors and has been deprived
of innovation that would have resulted in increased efficiency, as well as
increased sales and profits, in its sales of refrigerators and other
refrigeration equipment.

(Compl. at 1-2).
GE’s Complaint alleges a longer conspiracy period than did the Direct Purchaser or the
Indirect Purchaser Plaintiffs – one that begins in 1996.
GE’s Complaint asserts three causes of action: 1) “Violation of Section 1 of the Sherman
Act, 15 U.S.C. § 1,” its First Cause of Action; 2) “Fraud,” its Second Cause of Action; and 3)
“Conspiracy,” its Third Cause of Action.
GE’s Complaint contains allegations regarding “MABE purchases” that are relevant to
issues in the motion. GE’s Complaint alleges that, throughout the conspiracy period, “GE has
been a minority owner of a joint venture named Controladora Mabe, S.A. de C.V. (‘MABE’).”
(Compl. at ¶ 46). GE alleges that “[d]uring the conspiracy period (and today), GE has owned
(and today owns) slightly more than 48% interest in MABE. GE also has minority
representation on MABE’s board of directors, and a veto right with respect to some” unspecified
“categories of board decisions.” (Id.).
GE alleges that as part of its joint venture relationship with GE, during the conspiracy
period MABE has manufactured residential refrigerators for GE for sale in the United States
4

pursuant to contract manufacturing agreements between GE and Mabe.” (Compl. at ¶ 47).
It also alleges that GE’s procurement teams in the United States have controlled and determined
the price and quantity of refrigerant compressors MABE has incorporated into refrigerators it has
manufactured for sale by GE in the United States.
STANDARD OF DECISION
When ruling on a motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6), the court must
construe the complaint in a light most favorable to the plaintiff and accept all the well-pleaded
factual allegations as true. Evans-Marshall v. Board of Educ., 428 F.3d 223, 228 (6th Cir. 2005).
However, “the tenet that a court must accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937,
1948 (2009). Although a heightened fact pleading of specifics is not required, the plaintiff must
bring forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).
In determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the
allegations in the complaint, although matters of public record, orders, items appearing in the
record of the case and exhibits attached to the complaint may also be taken into account. Amini
v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (citing Nieman v. NLO, Inc., 108 F.3d
1546, 1554 (6th Cir. 1997)).
ANALYSIS
The Motion to Dismiss filed by Danfoss Flensburg and Danfoss LLC contains several
challenges to GE’s Complaint.
I.

Challenges To GE’s Ability To Assert Claims for Mabe’s Compressor Purchases
5

During the course of briefing the pending motion, Defendants raised the issue of
whether GE has federal antitrust standing to assert claims based on MABE purchases and
whether those purchases are barred under the Foreign Trade Antitrust Improvement Act, 15
U.S.C. § 6(a) (the “FTAIA”).
After the primary briefs had been filed, both parties continued to seek leave to file
additional briefs, which were based on Motorola Mobility, Inc. v. AU Optronics Corp, 2014 WL
258154 (N.D. Ill. Jan. 23, 2014) and developments relating to it.
As the parties noted in their briefs, Motorola filed a petition for interlocutory appeal,
pursuant to 28 U.S.C. § 1292(b), from the district court’s order. The United States Court of
Appeals for the Seventh Circuit granted the petition for interlocutory appeal. In a decision
issued on March 27, 2014, without holding oral argument, a three-judge panel of the Seventh
Circuit affirmed the district court’s order. But in a subsequent order, the Panel stated that it had
decided to rehear the appeal and vacated its prior opinion. The Panel took that action after
having received an amicus curiae brief from the United States, filed jointly by the Federal Trade
Commission and the Departments of State, Commerce and Justice. The Seventh Circuit recently
issued its amended decision in that case. Motorola Mobility LLC v. AU Optronics Corp., 775
F.3d 816 (7th Cir. Jan. 12, 2015).
Given the numerous briefs filed by the parties devoted to the Motorola decision, and its
recent developments, this Court declines to rule on the these two issues (whether GE has federal
antitrust standing to assert claims based on MABE purchases and whether those purchases are
barred under the FTAIA) until after both parties have had an opportunity to file a supplemental
brief addressing Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. Jan. 12,
6

2015). Defendants shall file a supplemental brief, of no more than eight (8) pages, addressing
the above issues and case, no later than April 3, 2015; and 2) GE shall file a supplemental brief,
of no more than eight (8) pages, addressing the above issues and case, no later than April 3,
2015.
II.

Are GE’s Antitrust Claims Barred By The Statute of Limitations?
Pursuant to the Clayton Act, 15 U.S.C. § 15(a), private parties may bring private actions

for violation of the Sherman Act. Static Control Components, Inc. v. Lexmark Intern., Inc., 697
F.3d 387, 401 (6th Cir. 2012). The controlling section of the statute provides that “[a]ny action
to enforce any cause of action under section 15, 15a, or 15c of this title shall be forever barred
unless commenced within four years after the cause of action accrued.” 15 U.S.C. § 15b.
GE filed this action on February 15, 2013. The parties agree that, without tolling, GE’s
Sherman Act claims may reach back to February 15, 2009. (See Defs.’ Br. at 7; Pl.’s Br. at 6).
The pending motion addresses whether various types of tolling may be applied to extend GE’s
antitrust claims.
A.

Does American Pipe Toll The Statute Of Limitations For GE’s Antitrust
Claims?

The first putative class action brought on behalf of direct purchasers, which was later
transferred to this Court, was filed on February 25, 2009. GE filed its own action on February
15, 2013. GE’s action was filed after the putative class actions were filed and transferred to this
Court in this MDL proceeding, but before the motion seeking approval of the Direct Purchaser
class action settlement had been filed or granted. This Court preliminarily approved the Direct
Purchaser settlement class on January 9, 2014, and granted final approval on June 16, 2014.

7

(Docket Entry Nos. 460 & 495).
In their motion, Defendants contend that the American Pipe2 tolling doctrine does not toll
the statute of limitations for GE’s antitrust claims in its independent action that was filed on
February 15, 2013.
Under the American Pipe tolling doctrine, “the commencement of a class action suspends
the applicable statute of limitations as to all asserted members of the class who would have been
parties had the suit been permitted to continue as a class action.” American Pipe, 414 U.S. at
554. As explained by one of the leading treatises on class actions:
In American Pipe and Crown, Cork, the Supreme Court addressed the
statute of limitations as it applied to putative class members who pressed their
claims after the district court ruled on class certification. However, the Supreme
Court has never addressed the question of whether the American Pipe doctrine
inures to the benefit of plaintiffs who choose to bring individual actions in the
time period that begins at the filing of the class action complaint and ends when
the trial court denies class certification.
The lower courts conventionally held that, given the policy rationales that
underlie it, American Pipe does not apply to putative class members who
commence individual actions before the district court rules on class certification.
This approach is known as the “forfeiture rule” as these courts hold that the
plaintiff who files in this precertification decision period has “forfeited” her
opportunity to rely on American Pipe. Why? First, when a plaintiff files his own
lawsuit, he “affiirmatively demonstrate[s] his choice not to rely on the class
action mechanism.” Second, the early-filing plaintiff “create[s] the very
inefficiency that American Pipe sought to prevent – he generate[s] more litigation
and expense concerning the same issues that were litigated by a class of which he
was a member.
NEWBERG ON CLASS ACTIONS §9:63 (5th Ed.) (emphasis in original) (citations omitted).
“Despite the rationale for the forfeiture rule, courts have not universally adopted it.

2

American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974).
8

Creating the ‘non-forfeiture rule,’ a number of courts have held that American Pipe does, in fact,
apply to putative class members who commence individual actions before the district court rules
on class certification.” Id. (citing several cases, including In re Hanford Nuclear Reservation
Litig., 534 F.3d 986, 1009 (9th Cir. 2008) and State Farm Mut. Auto. Ins. Co. v. Boellstorff, 540
F.3d 1223, 1232 (10th Cir. 2008)).
In opposing Defendants’ motion, GE relies on In re Hanford Nuclear Reservation Litig.
and State Farm Mut. Auto. Ins. Co. v. Boellstorff and asserts that, if presented with this issue,
the Sixth Circuit would follow those decisions and hold that class-action tolling applies to an
individual suit filed before class certification. (Pl.’s Br. at 18).
Defendants, however, direct the Court to two Sixth Circuit cases that shed light on how
the Sixth Circuit might rule on this issue: 1) Wyser-Pratte Mgmt. Co. v. Telxon Corp., 413 F.3d
553 (6th Cir. 2005); and 2) In re Vertrue Inc. Mktg. & Sales Practice Litig., 719 F.3d 474 (6th
Cir. 2013).
In Wyser-Pratte Mgmt. Co., the Sixth Circuit agreed with those courts that have
concluded that class-action tolling applies only after a ruling on class certification:
While our research reveals no circuit court decisions addressing this “forfeiture”
argument, a number of district courts have held that a plaintiff who chooses to file
an independent action without waiting for a determination on the class
certification issue may not rely on the American Pipe tolling doctrine. The
reasoning rests in part on the holding in Crown that “[o]nce the statute of
limitations has been tolled, it remains tolled for all members of the putative class
until class certification is denied. At that point, class members may choose to file
their own suits or to intervene as plaintiffs in the pending action.” 462 U.S. at
354, 103 S.Ct. 2392. The purposes of American Pipe tolling are not furthered
when plaintiffs file independent actions before decision on the issue of class
certification, but are when plaintiffs delay until the certification issue has been
decided. One district court explained:

9

Many good purposes are served by such forbearance, as American
Pipe and Crown, Cork themselves spell out. The parties and courts
will not be burdened by separate lawsuits which, in any event, may
evaporate once a class has been certified. At the point in a
litigation when a decision on class certification is made, investors
usually are in a far better position to evaluate whether they wish to
proceed with their own lawsuit, or to join a class, if one has been
certified.
In re WorldCom, Inc. Sec. Litig., 294 F.Supp.2d 431, 452 (S.D.N.Y.2003) (citing
cases), reconsid. denied, 308 F.Supp.2d 214, 230 (S.D.N.Y.2004). As is
exemplified by In re Worldcom, this limitation on class action tolling has taken
hold in a number of district courts, with no courts rejecting it, and is not a new
proposition. See, e.g., In re Ciprofloxacin Hydrochloride Antitrust Litig., 261
F.Supp.2d 188, 221 (E.D.N.Y.2003); Rahr v. Grant Thornton LLP, 142 F.Supp.2d
793, 800 (N.D.Tex.2000); Stutz v. Minn. Mining & Mfg. Co., 947 F.Supp. 399,
404 (S.D.Ind.1996); Wachovia Bank & Trust Co. v. Nat’l Student Mktg. Corp.,
461 F.Supp. 999, 1012 (D.D.C.1978). The reasoning supporting this approach
is both sound and persuasive. Even if the limitations period did not commence
until July or August 1999, we find in the alternative that WPMC may not rely on
the PwC class action to suspend the limitations period on its fraud claims against
PwC.
Wyser-Pratte Mgmt. Co., 413 F.3d at 568-69 (emphasis added); see also In re Vertrue Inc. Mktg.
& Sales Practice Litig., 719 F.3d at 480 (noting that in Wyser-Pratte Mgmt. Co., “we held that ‘a
plaintiff who chooses to file an independent action without waiting for a determination on the
class certification issue may not rely on the American Pipe tolling doctrine.’”)
GE attempts to minimize the decision in Wyser-Pratte Mgmt. Co. because one of the
district court decisions the Sixth Circuit relied on, In re WorldCom, Inc. Sec. Litig., was later
reversed by the Second Circuit. But that was not the only decision that the court relied on and,
more importantly, regardless of what the Second Circuit later decided, the Sixth Circuit found
that the “reasoning supporting this approach” to be “both sound and persuasive.” Wyser-Pratte
Mgmt. Co., 413 F.3d at 569.
10

This Court concludes that GE is not entitled to tolling under the American Pipe tolling
doctrine because GE filed its own action after the putative Direct Purchaser actions were filed
but before there was any determination as to class action in this MDL proceeding.
B.

Does Section 5(i) Tolling Apply?

GE also contends that Section 5(i) of the Clayton Act extends GE’s damages period back
to September 2006. (Pl.’s Br. at 16).
The section at issue, Section 5(i) of the Clayton Act, governs “suspension of limitations”
and provides as follows:
(i) Suspension of limitations
Whenever any civil or criminal proceeding is instituted by the United States to
prevent, restrain, or punish violations of any of the antitrust laws, but not
including an action under section 15a of this title, the running of the statute of
limitations in respect to every private or State right of action arising under said
laws and based in whole or in part on any matter complained of in said
proceeding shall be suspended during the pendency thereof and for one year
thereafter: Provided, however, That whenever the running of the statute of
limitations in respect of a cause of action arising under section 15 or 15c of this
title is suspended hereunder, any action to enforce such cause of action shall be
forever barred unless commenced either within the period of suspension or within
four years after the cause of action accrued.
15 U.S.C. § 16(i) (italics in original; bolding added for emphasis). As concisely explained by the
district court in In re Microsoft Corp. Antitrust Litig., Inc., 2005 WL 1398643 (D. Md. 2005):
The broad principles governing the tolling issue may be briefly stated. The
governing test is whether the matters complained of in the private action “bear a
real relation” to a matter complained of in the government suit. Leh v. Gen.
Petroleum Corp., 382 U.S. 54, 59, 86 S.Ct. 203, 15 L.Ed.2d 134 (1965). “The
private plaintiff is not required to allege that the same means were used to achieve
the same objectives of the same conspiracies by the same defendants,” id. at 59,
but simply must allege “a significant, although incomplete, overlap of subject
matter” to toll the statute, “even as to the differences.” Morton’s Market, Inc. v.
11

Gustafson's Dairy, Inc., 198 F.3d 823, 830 (11th Cir.1999). “In general,
consideration of the applicability of ... [section 16(i)] must be limited to a
comparison of the two complaints on their face.” Leh, 382 U.S. at 65; Greyhound
Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 331, 98 S.Ct. 2370, 57 L.Ed.2d 239
(1978). FN2 Section 16(i) is not to be given a “niggardly construction” and must
be “read in light of Congress' belief that private antitrust litigation is one of the
surest weapons for effective enforcement of the antitrust laws.” Leh, 382 U.S. at
59 (quoting Minn. Mining & Mfg. Co. v. N.J. Wood Finishing Co., 381 U.S. 311,
318, 85 S.Ct. 1473, 14 L.Ed.2d 405 (1965)).
In re Microsoft Corp. Antitrust Litig., Inc., 2005 WL 1398643 (D. Md. 2005).
GE’s Complaint alleges as follows as to the issue of whether Section 5(i) of the Clayton
Act tolls the limitations period:
132.
133.

134.

135.

. . . the limitations periods are tolled under Section [5(i)] of the Clayton
Act . . .
Tolling under Section [5(i)] began on September 20, 2010, when the DOJ
initiated criminal proceedings against Panasonic Corp. and Embraco NA.
Those criminal proceedings terminated on November 23, 2010 and
January 6, 2011, respectively. Accordingly, absent the filing of any
further related criminal proceedings, the limitations period was extended
until January 6, 2012.
On September 27, 2011, the DOJ initiated related criminal proceedings
against Messrs. Verissimo, Ernesto Heinzelmann, and Adachi. As this
criminal proceeding was filed prior to January 6, 2012, it had the effect of
extending the already-existing tolling period under Section [5(i)]. The
criminal proceeding against Messrs. Verissimo, Ernesto Heinzelmann, and
Adachi is still pending and hence the tolling period under Section [5(i)]
has not concluded.
On October 4, 2011, the DOJ commenced related criminal proceedings
against Danfoss Flensburg, which were terminated December 19, 2011.
Absent the filing of another related criminal proceeding, the limitations
period was extended under Section [5(i)] until December 19, 2012.
However, because of the pending criminal proceeding against Messrs.
Verissimo, Ernesto Heinzelmann, and Adachi, the tolling period under
Section [5(i)] did not conclude on December 19, 2012, and to the date of
filing this Complaint has not concluded.

(GE’s Compl. at 42-43).
12

GE’s response to the pending motion appears to acknowledge that, in order for its
damages period to extend back to to September 2006, the Court must find that Section 5(i)
tolling based on the “Heinzelmann Action” is appropriate.
In Criminal Case No. 11-20605, the following three individuals were indicted and
charged with conspiracy to restrain trade in violation of the Sherman Antitrust Act: 1) Ernesto
Heinzelmann; 2) Gerson Verissimo; and 3) Naoki Adachi. (See Criminal Case No. 11-20605,
Docket Entry No. 1). Those three individuals are former executives of the Embraco, Tecumseh,
and Panasonic Defendants. The case is pending before Judge Bernard Friedman. The
Indictment describes the charged offense as follows:
2.

3.

Beginning at least as early as October 14, 2004, and continuing until on or
about December 31, 2007, the exact dates being unknown to the Grand
Jury, the defendants ERNESTO HEINZELMANN, GERSON
VERISSIMO, and NAOKI ADACKI, and other co-conspirators entered
into and engaged in a combination and conspiracy to suppress and
eliminate competition by fixing prices of refrigerant compressors to
customers in the United States and elsewhere. The combination and
conspiracy engaged in by the defendants . . . was in unreasonable restraint
of interstate and foreign trade and commerce in violation of Section 1 of
the Sherman Act (15 U.S.C. § 1).
The charged combination and conspiracy consisted of a continuing
agreement, understanding, and concert of action among the defendants and
co-conspirators, the substantial terms of which were to fix prices by
coordinating price increases of refrigerant compressors in the United
States and elsewhere.

(Id. at 2). That criminal case is still open but the Indictment is the only thing found on the
docket.
The Danfoss Defendants contend that GE is not entitled to Section 5(i) tolling, based on
the Heinzelmann Action, for two reasons. First, Defendants argue that there is an insufficient

13

overlap between GE’s Complaint in this case and the Indictment in the Heinzelmann Action.
Second, given the status of the Heinzelmann Action, the Danfoss Defendants argue that to allow
tolling based upon it would violate the purposes behind the tolling provision.
The first argument can be disposed of quickly. In arguing that there is insufficient
overlap, Defendants note that GE’s Complaint alleges a longer conspiracy period than is alleged
in the criminal action and that GE’s Complaint alleges additional conduct not alleged in the
criminal action. But there only needs to be limited overlap and a “private action that is
substantially broader than a prior Government action may still benefit from § 16(i) tolling where
the allegations in the private action incorporate the subject matter of the Government action.”
Hinds County, Miss. V. Wachovia Bank, N.A., 895 F.Supp.2d 617, 627 (S.D. N.Y. 2012) (citing
In re Antibiotic Antitrust Actions, 333 F.Supp. 317, 321 (S.D.N.Y.1971); see also Zenith Radio,
401 U.S. 321, 91 S.Ct. 795 and In re Scrap Metal Antitrust Litig., No. 02 Civ. 0844, 2006 WL
2850453, at *22 (N.D.Ohio 2006)).
Defendants’ second argument focuses on the fact that since the Indictment was filed on
September 27, 2011 – several years ago – there has been no activity in the Heinzelmann Action.
Defendants assert that the Indictment is “not an indictment; it is an assurance of exile. This
indictment may, as a narrow technical matter, remain open until the last of the indictees dies, but
there is no realistic possibility the case will ever proceed.” (Defs.’ Br. at 11). Defendants
contend that, as a result of this situation, to allow tolling based on the Heinzelmann Action
would violate the purposes behind Section 5(i) tolling.
Unfortunately, the parties have not cited, and this Court has been unable locate, any Sixth
Circuit cases discussing Section 5(i) tolling.

14

Directing the Court to various other courts, Defendants contend that the purposes behind
Section 5(i) do not supporting tolling here. They contend Section 5(i)’s purposes are: 1) “to
permit private claimants to obtain the benefit of the evidence and legal rulings involved in the
Government’s action” (Defs.’ Br. at 10); and 2) to further the goals of “certainty and
predictability” as to limitations periods. (Id. at 11).
But the parties have not cited, and this Court has not found, any decisions that deal with
this narrow issue – whether Section 5(i) tolling applies when there is a related indictment but the
persons indicted are fugitives and that case is not actively proceeding.
There is authority to support the Danfoss Defendants’ position as to the purposes behind
Section 5(i) tolling. See, e.g., Charley’s Tour & Transp., Inc. v. Interisland Resorts, Ltd., 618
F.Supp. 84, 86 (D. Haw. 1985) (“Section 5(i) was enacted for two purposes. The first was to
ensure that private litigants would have the benefit of prior Government antitrust enforcement
efforts. The second was to create a more certain running of the statute of limitations.”) (citing
Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 333-34 (1978)).
Defendants assert that, because the Indictment in the Heinzelmann Action “is likely to
remain open indefinitely,” that action will not provide any evidentiary assistance to GE that
would benefit it in this case. But that argument, of course, assumes that the Heinzelmann Action
will not proceed. We do not know that is the case. Indeed, GE attached an April 4, 2014 Press
Release from the Department of Justice (Ex. 16 to Schnorrenberg Decl.) that states that an Italian
national was recently extradited from Germany on a charge of participating in a price-fixing
conspiracy. Thus, a prior criminal action that had been filed on August 26, 2010 is proceeding
after being on hold for several years.

15

The Danfoss Defendants correctly note that the Supreme Court has recognized that one of
the goal’s of Section 5(i) is to ensure certainty and predictability as to the application of the
statue of limitations:
The Senate Report accompanying the 1955 amendments reflects congressional
policy against “undue prolongation of [antitrust] proceedings” by extending the
limitations period. It noted:
“While the committee believes it important to safeguard the rights of plaintiffs by
tolling the statute during the pendency of Government antitrust actions, it
recognizes that in many instances the long duration of such proceedings taken in
conjunction with a lengthy statute of limitations may tend to prolong stale claims,
unduly impair efficient business operations, and overburden the calendars of
courts. The committee believes the provision of this bill will tend to shorten the
period over which private treble-damage actions will extend by requiring that the
plaintiff bring his suit within 4 years after it accrued or within 1 year after the
Government's case has been concluded.
“While the committee considers it highly desirable to toll the statute of limitations
during a Government antitrust action and to grant plaintiff a reasonable time
thereafter in which to bring suit, it does not believe that the undue prolongation of
proceedings is conducive to effective and efficient enforcement of the antitrust
laws.” S.Rep.No. 619, 84th Cong., 1st Sess., 6 (1955), U.S.Code Cong. &
Admin.News 1955, pp. 2328, 2332.
Greyhound Corp., 437 at 335.
But a closer reading of the Greyhound Corp. case causes this Court to question whether
this Court should look past the plain language of Section 5(i), and consider the purposes behind
the section, at all. In that case, the trial court held that the Government’s petition to intervene in
an Interstate Commerce Commission (“ICC”) proceeding served to toll the statute of limitations
under Section 5(i). The United States Court of Appeals for the Ninth Circuit affirmed. The
United States Supreme Court disagreed and held that the Clayton Act’s statute of limitations was
not tolled, under Section 5(i), by the Government’s petition to intervene in the ICC proceeding.
16

Id. at 336-37. The Court explained:
In holding that the United States’ intervention in the ICC proceeding served to
toll, by reason of § 5(i), the Clayton Act's period of limitations, the Court of
Appeals stated that “[t]he literal wording of section [5(i)] is not controlling.” 555
F.2d, at 699. The court, therefore, sought to identify the congressional purpose
behind § 5(i) and to effectuate that purpose. 555 F.2d, at 699. In the court’s view,
the purpose of § 5(i) “is to further effective enforcement of the antitrust laws by
permitting private litigants to have the benefits that may flow from governmental
antitrust enforcement efforts.” 555 F.2d, at 699. The Court of Appeals, quoting
the District Court (App. 80), declared that this purpose would be advanced by
“‘treating intervention by Antitrust Division lawyers as the functional equivalent
of a direct action by them.’” 555 F.2d, at 700.
We find this reasoning unpersuasive. In particular, we are unable to agree that the
language of § 5(i) is so unhelpful.
Id. at 330. “Logic and precedent dictate that ‘[t]he starting point in every case involving
construction of a statute is the language itself.’” Id. (citations omitted). “Section 5(i) begins:
‘Whenever any civil or criminal proceeding is instituted by the United States . . .” Id. at 330-31
(emphasis added). “[A]s the Court of Appeals acknowledged, ‘Mt. Hood rather than the United
States instituted the proceedings.’” Id. The Court concluded that it “strains accepted usage to
argue that a party who intervenes in a proceeding instituted by someone else has also ‘instituted’
that proceeding.” Id. at 331. The Court further concluded that “[j]ust as the United States
cannot be said to have ‘instituted’ the ICC proceeding, neither had it ‘complained of,’ within the
meaning of § 5(i), anything on which the present action is based.” Id. The Court went on to also
reject the Government’s arguments as to tolling being justified by the intent in enacting the
statute. But the opinion is clear that the Court concluded that the district court and appellate
court should not have gone beyond the language of the statute.
Here, as in Greyhound, Defendants argue that the literal wording of the statute should not
17

control and the Court should look to the intent behind the statue.
As Greyhound instructs, however, logic and precedent dictate that the starting point of
this Court’s analysis is the language of the statute itself. Here, Section 5(i) provides, in pertinent
part, that “[w]henever any civil or criminal proceeding is instituted by the United States to
prevent, restrain, or punish violations of any of the antitrust laws, but not including an action
under section 15a of this title, the running of the statute of limitations in respect to every private
or State right of action arising under said laws and based in whole or in part on any matter
complained of in said proceeding shall be suspended during the pendency thereof and for one
year thereafter.” 15 U.S.C. § 16(i) (bolding added for emphasis). Congress could have limited
the applicability of Section 5(i) in situations like this but it did not do so. Rather, the statute
contains the all-inclusive word “whenever” a criminal action is instituted by the United States
and uses the mandatory word “shall” as to tolling of the limitations period “during the pendency”
of the action. The Government initiated a criminal action in the Heinzelmann action and that
action is still pending. Thus, tolling appears to be required under the plain language of the
statute.
Given the lack of authority addressing the situation seen in this case, and in light of the
plain language of the statute, this Court concludes that GE is entitled to Section 5(i) tolling.
C.

Other Challenges To GE’s Antitrust Conspiracy Claims

Given the above rulings, government-suit tolling under Section 5(i) means that GE can
assert damage claims back to September 2006. But this Court still must consider two other
challenges as to the period covered by the antitrust conspiracy claims.
1.

Damages Claimed For Time Period After February 2009

18

In their motion, Defendants ask the Court to rule that GE cannot pursue damages for the
period after February 2009 for two reasons.
First, Defendants contend that “[f]or the time period after February 2009, GE’s
Complaint fails to meet Twombly because it fails to provide a single fact that supports the notion
that the conspiracy continued after February 2009 and it is simply implausible that Defendants
continued to conspire to fix the price of refrigerant compressors sold in the U.S. and elsewhere
after the DOJ, EC, and SDE began investigating Defendants for anticompetitive practices in the
refrigerator compressor industry and after multiple treble damage class actions were filed.”
(Defs.’ Br. at 16). Defendants rely on, as they did previously in this MDL action, on In re
Urethane Antitrust Litig., 663 F.Supp.2d 1067 (D. Kan. 2009).
The Court rejects this challenge, as it did in ruling on a prior motion to dismiss in the
Direct Purchaser case:
This Court shall deny Defendant' request to dismiss claims prior to June 2004, or
after December 2006, under Twombly.
In order to survive a motion to dismiss, DP Plaintiffs must plead “enough factual
matter” that, when taken as true, “state[s] a claim to relief that is plausible on its
face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167
L.Ed.2d 929 (2007). “In Twombly, the Supreme Court held that a complaint
alleging violations under § 1 of the Sherman Act cannot survive a motion to
dismiss unless it avers facts that raise a reasonable expectation that discovery will
reveal evidence of an illegal agreement.” In re Travel Agent Commission Antitrust
Litigation, 583 F.3d 896, 902 (6th Cir.2009). Under Twombly, “the complaint's
factual allegations must be enough to raise a right to relief above the speculative
level.” Id. “Of course [the court] must still ‘construe the complaint in the light
most favorable to the plaintiff, accept its allegations as true, and draw all
reasonable inferences in favor of the plaintiff.’ ” Id. “Yet, to survive a motion to
dismiss, the complaint must contain either direct or inferential allegations
respecting all material elements to sustain a recovery under some viable legal
theory.” Id. (internal quotation and citation omitted). Twombly does “not require
19

heightened fact pleadings of specifics, but only enough facts to state a claim to
relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955.
Defendants’ request is based primarily on In re Urethane Antitrust Litig., 663
F.Supp.2d 1067 (D.Kan.2009)—a district court case from outside the Sixth
Circuit. In that case, the district court concluded that the plaintiffs' allegations
regarding the existence of a conspiracy were sufficient for a period of time
beginning in 1999. The district court agreed with the defendants, however, that
the plaintiffs “failed to state a cause of action for antitrust liability under the
Twombly standard for the period prior to 1999.” Id. at 1076. In that case, the
district court stated that:
Under Twombly, plaintiffs cannot simply allege a conspiracy
beginning at a particular time; rather, they must allege facts to
support the existence of a conspiracy during the entire period.
Plaintiffs may not need to allege meetings occurring at any
particular intervals; they must at least provide a factual basis for
their starting date, however, in order to show an entitlement to
relief beginning on that date. Plaintiffs have not done so here;
accordingly, plaintiffs have not stated a claim for antitrust liability
(under either the federal or state statutes or European law) for the
period from 1994 to 1998, and therefore such claims are subject to
dismissal.
Id. at 1077.
The district court in In re Urethane Antitrust Litig. acknowledged, in a footnote,
that the “parties have not pointed the court to any other case in which the
defendants attempted to carve out a portion of the alleged conspiracy in this
manner.” Id. at 1077 n. 6. Thus, the ruling in that case is hardly a main-stream
position. Defendants have not identified any Sixth Circuit decisions that support
that approach.
Moreover, this Court concludes that Twombly does not support such a
“dismemberment” or “carve out” approach to assessing the sufficiency of a
complaint. Twombly does “not require heightened fact pleadings of specifics, but
only enough facts to state a claim to relief that is plausible on its face.” Twombly,
550 U.S. at 570, 127 S.Ct. 1955. Here, the MAC contains direct or inferential
allegations respecting all material elements to sustain a recovery under the
Sherman Act. Thus, under Twombly, DP Plaintiffs have stated a claim to relief
20

under the Sherman Act.
In re Refrigerant Compressors Antitrust Litig., 795 F.Supp.2d 647, 660-61 (E.D. Mich. 2011);
see also In re Pressure Sensitive Labelstock Antitrust Litig., 566 F.Supp.2d 363, 374 (M.D. Pa.
2008) (“[n]othing in Twombly . . . contemplates this ‘dismemberment’ approach to assessing the
sufficiency of complaint.’”).
Second, Defendants assert that GE’s claims for damages for the post-February 2009
period fail because GE has not sufficiently alleged fraudulent concealment. (Defs.’ Br. at 16).
As GE notes in its response, however, “GE does not need tolling to reach damages within
four years of filing. See 15 U.S.C. §15b.” (Pl.’s Br. at 10). Because GE filed its action on
February 15, 2013, even without any tolling, it can pursue damages back to February 15, 2009.
As such, the Court finds this challenge without merit.
2.

Damages Claimed For Time Period Preceding September 2006

As explained above, GE is not entitled to tolling under American Pipe, but because
government-suit tolling under Section 5(i) applies, GE can seek damages back to September
2006. In order to assert claims for damages before September 2006, extending back to 1996, GE
must sufficiently allege fraudulent concealment.
As explained by the Sixth Circuit in Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430 (6th
Cir. 2012):
“Three elements must be pleaded in order to establish fraudulent concealment: (1)
wrongful concealment of their actions by the defendants; (2) failure of the
plaintiff to discover the operative facts that are the basis of his cause of action
within the limitations period; and (3) plaintiff's due diligence until discovery of
the facts.” Dayco Corp. v. Goodyear Tire & Rubber Co., 523 F.2d 389, 394 (6th
Cir.1975). A plaintiff must plead the factual allegations underlying a claim of
fraudulent concealment with particularity. Friedman v. Estate of Presser, 929
21

F.2d 1151, 1160 (6th Cir.1991).
Carrier Corp., 673 F.3d at 446. Notably, Carrier was issued after this Court ruled on the
Motion to Dismiss in the DP case.
Defendants’ motion asserts that GE has failed to allege the wrongful concealment and
due diligence elements of fraudulent concealment.
a.

Wrongful Concealment

“With regard to the ‘wrongful concealment’ element the plaintiff must point to
‘affirmative acts of concealment.’” Carrier Corp., 673 F.3d at 446 (citing Hamilton Cnty. Bd. of
Comm'rs v. Nat'l Football League, 491 F.3d 310, 319 (6th Cir. 2007)). “[M]ere silence or
unwillingness to divulge wrongful activities is not sufficient.” Browning v. Levy, 283 F.3d 761,
770 (6th Cir.2002). “Instead, there must be some ‘trick or contrivance intended to exclude
suspicion and prevent inquiry.’” Carrier Corp., 673 F.3d at 446-47 (citations omitted).
In Carrier, the Sixth Circuit distinguished, as to wrongful concealment, those allegations
that lacked specificity from those that met the applicable standard. As Judge Battani
acknowledged in a post-Carrier decision looking at this issue, the allegations found to be
sufficient for wrongful concealment in Carrier “were not extensive.” In re Automotive Parts
Antitrust Litig., 2014 WL 4272772 at *12 (E.D. Mich. 2014). In Carrier, the Sixth Circuit
stated:
Here, Carrier's complaint points to numerous instances in which the
conspirators actively tried to hide their conduct. Some of these allegations lack
any specificity, and therefore fall short of meeting the standard required to
support a claim of fraudulent concealment. For instance, the complaint alleges
that in 2001, after the EC began investigating Outokumpu, Outokumpu denied
any wrongdoing. As stated above, however, an unwillingness to provide
information is not an “affirmative act.” Furthermore, the complaint alleges that
22

the Defendants “utiliz[ed] covert meetings” and “[gave] false and pretextual
reasons for the pricing of ACR Copper Tubing sold ... during the Relevant Period
and [described] such pricing falsely as being the result of competitive factors
rather than collusion.” J.A. at 0051–52 (Am. Compl. ¶ 104(a), (c)). This also
lacks the requisite particularity, as it fails to specify “the time, place, and content
of the alleged” fraudulent acts. U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501
F.3d 493, 505 (6th Cir.2007) (internal quotation marks omitted).
Other portions of the complaint, however, provide specific details
regarding the nature of the alleged cover-up. For example, the complaint quotes
the EC's findings that the conspirators “‘established security rules to prevent a
paper trail ... and used a coding-system to hide the identity of the producers in
their documents and spreadsheets.’” J.A. at 0052 (Am. Compl. ¶ 105). In contrast
to those discussed above, these allegations—especially when coupled with the
details referenced in the cited portion of the EC decision and associated
cross-references—are sufficiently particular to meet the pleading standard for
fraudulent concealment. See J.A. at 0330 (EC ACR Dec. ¶ 218); In re Elec.
Carbon Prods. Antitrust Litig., 333 F.Supp.2d 303, 316 (D.N.J.2004) (concluding
that a plaintiff “injected precision” into its fraudulent-concealment claim “by
pleading the findings of the United States Department of Justice and the European
Commission” (internal quotation marks omitted)). Furthermore, such conduct is
sufficiently affirmative for purposes of satisfying the “wrongful concealment”
element because the alleged actions involved taking active steps to hide evidence,
as opposed to simply meeting in secret. See Bridgeport Music, Inc. v. Diamond
Time, Ltd., 371 F.3d 883, 891 (6th Cir.2004) (explaining that “hiding evidence”
can constitute affirmative concealment). Finally, Carrier alleges that because of
the co-conspirators’ misstatements and attempts at suppressing evidence of illegal
conduct, it had no knowledge of the Defendants’ conspiracy until the release of
the EC decision on December 16, 2003. Taken as true, these actions would have
both concealed from Carrier the very “means of discovering [its] cause of action,”
Campbell, 676 F.2d at 1127, and prevented Carrier from discovering the basis for
its antitrust claim within the limitations period. Carrier has thus adequately
pleaded the first two prongs of a fraudulent-concealment claim.
Carrier Corp., 673 F.3d at 447-48.
Moreover, as GE notes in its papers, it does not have to be the Danfoss Defendants who
engaged in the relevant concealment because “[f]raudulent concealment . . . may be established
through the acts of co-conspirators.” In re Scrap Metal Antitrust Litig., 527 F.3d 517, 538 (6th
23

Cir. 2008); see also Carrier, 673 F.3d at 447 n.8 (citing that case); In re Automotive Parts
Antitrust Litig., 2014 WL 4272772 at *12 (E.D. Mich. 2014). Thus, to the extent that the
Danfoss Defendants argue that GE has not identified wrongful concealment by them, that
argument must be rejected. In looking at the alleged wrongful concealment, the Court is to
consider the alleged wrongful concealment by any of the alleged co-co-conspirators because
those acts can be imputed to the Danfoss Defendants.
In this case, GE’s allegations include that Defendants “exchanged emails with false
subject lines as code for conspiracy-related communications.” (Compl. at ¶ 138). That
allegation is very similar to the allegation found sufficient in Carrier.
GE’s Complaint also includes allegations that Embraco, ACC, and Panasonic entered into
contracts that were subject to terms and conditions under which the suppliers (Embraco, ACC
and Panasonic) warranted that they had not engaged in any sharing of prices, costs, or other
competitive information, and those terms and conditions were used from 1999 to 2004. GE
alleges those representations of non-collusion were false and fraudulent, in that the Defendants
were colluding and agreeing to fix prices, and that these actions fraudulently concealed the
existence of the conspiracy. (Compl. at ¶¶ 141-47).
Like the DP Plaintiffs, GE’s Complaint alleges that Defendants made representations that
their pricing activities were based on market forces and it alleges that the Defendants concealed
their conspiracy by announcing higher price increase ranges than the agreed-upon price ranges.
But unlike the DP Plaintiffs, GE’s Complaint does not group all Defendants together, without
allegations as to the various Defendants. Rather, GE’s Complaint includes allegations as to
specific dates on which these actions were taken. (Compl. at ¶¶ 148-171).

24

This Court concludes that GE has sufficiently alleged wrongful concealment at this early
stage of the litigation.
b.

Due Diligence

In deciding whether GE satisfied its burden as to this element, this Court again looks to
Carrier. Carrier, 673 F.3d at 448-49 (declining to hold that the plaintiffs’ efforts were
insufficient to satisfy this element “at such an early stage of litigation and without the benefit of
discovery” to guide its analysis.).
“[I]n evaluating the due-diligence element, the court should evaluate such acts of active
concealment as a factor in determining whether the plaintiff's investigation was reasonable under
the circumstances.” Carrier Corp., 673 F.3d at 447 (citing Campbell v. Upjohn Co., 676 F.2d
1122, 1128 (6th Cir.1982)). “Thus ‘[a]ctions such as would deceive a reasonably diligent
plaintiff will toll the statute; but those plaintiffs who delay unreasonably in investigating
circumstances that should put them on notice will be foreclosed from filing, once the statute has
run.’” Id.
In Carrier, the Sixth Circuit was satisfied that due diligence had been pleaded because
the plaintiff detailed, in its complaint, the steps it had taken once if became aware of the
Commission of the European Communities’ investigation. Carrier, 673 F.3d at 448. The
Carrier Court then explained:
We are not prepared to conclude that such efforts were insufficient to satisfy
Dayco’s “due diligence” requirement at such an early stage of litigation and
without the benefit of discovery. Cf. Jones v. TransOhio Sav. Ass’n, 747 F.2d
1037, 1043 (6th Cir.1984) (noting the panel’s reluctance to dismiss
fraudulent-concealment allegations prior to discovery); Duncan v. Leeds, 742
F.2d 989, 993 (6th Cir.1984) (addressing the need to construe allegations of
fraudulent concealment liberally and in the plaintiff's favor at such an early stage
25

in the litigation). Although we may dismiss a claim of fraudulent concealment
when it is obvious from the complaint that the plaintiff conducted absolutely no
investigation, see, e.g., Ruth v. Unifund CCR Partners, 604 F.3d 908, 911–14 (6th
Cir.2010), when there is some question as to the depth and scope of that
investigation, a plaintiff should be allowed to proceed forward. We therefore
conclude that, taking the allegations in Carrier’s favor as we must at this stage in
the litigation, Carrier has adequately pleaded its fraudulent-concealment claim,
and its cause of action should not be dismissed as time-barred.
Carrier, 673 F.3d at 448-49.
The same is true here. That is, taking the allegations in GE’s Complaint true as to: 1) the
actions it took prior to governmental investigations (i.e., getting non-collusion warranties,
seeking explanation about prices, etc.); and 2) the actions it took after it learned that the
Department of Justice had commenced an antitrust investigation concerning the compressor
industry (ie., starting its own investigation, monitoring the class actions and criminal
investigations, hiring outside counsel to pursue a cooperation agreement with a suspected
conspirator, see Compl. at ¶¶ 141-47, 159-71, 183-194, 198-202), that is sufficient at this early
stage of the litigation under Carrier. See also Lutz v. Chesapeake Appalachia, LLC, 717 F.3d
459, 476 (6th Cir. 2013) (“these are questions for summary judgment or for trial, and they should
not be resolved on a motion to dismiss. Where there is ‘some question as to the depth and scope
of [the plaintiffs’] investigation, [the plaintiffs] should be allowed to proceed forward.’”).

III.

Are GE’s Common Law Fraud And Conspiracy Claims Barred Entirely Or
Severely Limited By The Statute Of Limitations?
Again, GE’s Complaint asserts three causes of action: 1) “Violation of Section 1 of the

Sherman Act, 15 U.S.C. § 1,” its First Cause of Action; 2) “Fraud,” its Second Cause of Action;
and 3) “Conspiracy,” its Third Cause of Action. The parties agree that the Second and Third
26

Causes of Action are brought under Kentucky law. Defendants challenge of both of these statelaw claims.
A.

State-Law Fraud Count

Defendants contend that GE’s fraud claim against them is time-barred.
In responding to this challenge, GE asserts that Defendants ignore “that a fraud claim
does not accrue ‘until discovery of the fraud,’ and that a plaintiff may reach fraud committed up
to 10 years before a complaint is filed.” (GE’s Br. at 19). GE’s brief does not, however, direct
the Court to any fraud allegations as to the Danfoss Defendants that occurred within ten years of
the filing of its complaint.
In their Reply Brief, Defendants state that “GE’s claim that, under Ky. Rev. Stat. Ann. §
413.130(3), it can reach fraud committed ten years prior to the Complaint, is of no assistance to
GE since the only fraud that could possibly be alleged against Danfoss is based on sales between
1996 and 1998 (Compl. ¶ 33), which is more than ten years prior to the Complaint.” (Defs.’
Reply Br.). The Court agrees.
According to Kentucky law, an “action for relief or damages on the ground of fraud or
mistake” “shall be commenced within five (5) years after the cause of action accrued.” K.R.S.
413.120(12). The Kentucky accrual statute relating to a claim for fraud provides that in “an
action for relief or damages for fraud or mistake, referred to in subsection (12) of KRS 413.120,
the cause of action shall not be deemed to have accrued until the discovery of the fraud or
mistake. However, the action shall be commenced within ten (10) years after the time of making
the contract or the perpetration of the fraud.” K.R.S. 413.130(3) (emphasis added). Thus, the
statute “provides an exception to § 412.130(3) as well as an absolute limitation on a fraud

27

claim.” 500 Associates, Inc. v. Vermont American Corp., 496 F. App’x 589, 593 (6th Cir. 2012)
(emphasis added).
With respect to the Danfoss Defendants, GE’s fraud claim appears to be based on its
sales of refrigerant compressors to GE “each year from 1996 to 1998.” (GE’s Compl. at ¶ 33).
GE does not affirmatively state when it discovered its fraud claim but states that “[e]ven if
Danfoss were right that GE ‘discovered its claim’ in February 2009,” its claim against Danfoss is
still timely. (GE’s Reply Br. at 19). But “[e]ven if [GE] never discovered the fraud, the accrual
statute provides a ten year limit ‘after the time of making the contract or the perpetration of the
fraud.’ K.R.S. 413.130(3). Thus, the time limit would have expired” in 2008 at the latest.
Bowden v. City of Franklin, Kentucky, 13 F. App’x 266, 274 (6th Cir. 2001). The Court
concludes that GE’s fraud claim against the Danfoss Defendants is barred by the statute of
limitations. Id.; K.R.S. 413.130(3).
C.

State-Law Conspiracy Count

As to this count, Defendants assert that it is “barred entirely or substantially limited by
the statute of limitations. Because a one year statute of limitations applies to GE’s conspiracy
claim (Ky. Rev. Stat. Ann. § 413.140) and GE filed its Complaint more than one year after GE’s
discovery of the conspiracy in February 2009, such claim is barred by the statute of limitations.”
(Defs.’ Br. at 25).
In response, GE asserts that “under Kentucky law, the limitations period does not begin
‘until the last overt act performed in compliance with the objective of the conspiracy has been
accomplished.’ Dist. Union Local 227 v. Fleischaker, 384 S.W.2d 68, 72 (Ky. 1964). GE has
alleged that the cartel agreed to allocate the market for high-efficiency, variable-speed

28

compressors and delayed GE’s access to them even up to the date GE’s Complaint was filed in
February 2013. (Compl. ¶¶ 75, 79).” (GE’s Br. at 19-20). GE further asserts that its state-law
conspiracy claim is also timely because fraudulent concealment tolled the limitations period.
(GE’s Br. at 20).
Given the Court’s ruling that GE has sufficiently pleaded fraudulent concealment for
purposes of its conspiracy claim under the Sherman Act, it also finds this challenge without
merit.
IV.

Personal Jurisdiction
Also included in this motion was a challenge to this Court’s exercise of personal

jurisdiction over Defendant Danfoss Flensburg GmbH. In Defendants’ Reply Brief, however,
Flensburg appears to agree that personal jurisdiction can be exercised over it, due to “its alleged
sales of household compressors in the U.S.,” “if the appropriate conspiracy period encompasses
years in the 1990s.” (Defs.’ Reply Br. at 14 n.12). Given the Court’s ruling on fraudulent
concealment, this challenge fails.
CONCLUSION & ORDER
For the reasons stated above, the Court hereby DECLINES TO RULE on the issues of
whether GE has federal antitrust standing to assert claims based on MABE purchases, and
whether those purchases are barred under the FTAIA, until after both parties have had an
opportunity to file a supplemental brief addressing Motorola Mobility LLC v. AU Optronics
Corp., 775 F.3d 816 (7th Cir. Jan. 12, 2015). The Court ORDERS that: 1) Defendants shall file
a supplemental brief, of no more than eight (8) pages, addressing the above issues and case, no
later than April 3, 2015; and 2) GE shall file a supplemental brief, of no more than eight (8)
29

pages, addressing the above issues and case, no later than April 3, 2015.
IT IS FURTHER ORDERED that:
1) this Court RULES that GE is not entitled to tolling under the “American Pipe tolling
doctrine,” but that GE is entitled to Section 5(i) tolling, as set forth in this Opinion and Order;
2) this Court REJECTS Defendants’ argument that GE cannot pursue damages for the
time period after February 2009 and also RULES that, at this stage of the litigation, GE has
sufficiently alleged fraudulent concealment for the time period preceding September 2006;
3) with respect to GE’s state-law fraud claim, the Court RULES that claim is barred by
the applicable statute of limitations;
4) the Court REJECTS Defendants’ statute of limitations challenge to the state-law
conspiracy count; and
5) the Court REJECTS Defendant Danfoss Flensburg GmbH’s personal jurisdiction
challenge.
IT IS SO ORDERED.

S/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: March 13, 2015

30

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
In re: Refrigerant Compressors
Antitrust Litigation

Case No. 2:09-md-02042
Honorable Sean F. Cox
United States District Court

___________________________/
PROOF OF SERVICE
I hereby certify that a copy of the foregoing document was served upon counsel of record
on March 13, 2015, by electronic and/or ordinary mail.
S/Jennifer McCoy
Case Manager

31