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In re Pre -Filled Propane Tank Antitrust Litigation

United States Court of Appeals, Eighth Circuit

June 23, 2017

In re: Pre -Filled Propane Tank Antitrust Litigation
Ferrellgas Partners, L.P. a limited partnership; Ferrellgas, L.P. a limited partnership, doing business as Blue Rhino; AmeriGas Partners, LP a limited partnership; UGI Corporation; AmeriGas Propane, Inc., doing business as AmeriGas Cylinder Exchange; AmeriGas Propane, LP Defendants - Appellees Hartig Drug Company; Jason Moore's Texaco, L.L.C., doing business as Moore's Texaco; Mario Ortiz; Stephen Morrison; Steven Tseffos; Glenville Shell, LLC;Zarco USA, Inc.; AQ Investments, LLC; LJax Enterprises, Inc.; J & V Management, LLC; Butch's Central Coastal, Inc.; Zerka's Party Store, Inc.; OM Commercial Neenah Oil, Inc.; CCLAS, Inc.; Hopewell Exxon, LLC; Tuban Petroleum, LLC; 33 and a Third, LLC; Tuban 610, LLC; Highway 182, LLC; West Main Street, LLC; Roth's Country Corner, Inc.; 1919 Airline Hwy., LLC; East Airline, LLC; Gramercy Cheap Smokes, LLC; Conti's Service Center, Inc.; Route 49 Gas & Go, Inc.; Surinder Kaur, Inc. Plaintiffs Morgan-Larson, LLC Plaintiff- Appellant Ashville General Store, Inc.; Sean Venezia; Michael S. Harvey; Gregory Ludvigsen; Arthur Hull; Alan Rockwell; James Halgerson; Thomas R. Clark; Bryce Mander; Alex Chernavsky; Arrow Hardware, LLC; Birdie's, Inc.; Alex Chernavsky; Lochraven Sunoco, Inc.; American Auto Repair Plaintiffs Johnson Auto Electric, Inc. Plaintiff- Appellant Cedar Holly Investments, LLC; Tuckerton Lumber Company; Ace High Auto Repair & Propane; CEFO Enterprise Corp.; Jon Wall, Inc.; RC Gasoline Plaintiffs Speed Stop 32, Inc. Plaintiff- Appellant Zarco USA, Inc.; Dunmore Oil Co., Inc.; JoJo Oil Co., Inc.; Ekonomy Enterprises, Inc. Plaintiffs Yocum Oil Company, Inc. Plaintiff- Appellant

          Submitted: April 4, 2017

         Appeal from United States District Court for the Western District of Missouri - Kansas City

          Before SMITH, Chief Judge, WOLLMAN, LOKEN, RILEY, COLLOTON, GRUENDER, BENTON, SHEPHERD, and KELLY, Circuit Judges, En Banc.

          BENTON, Circuit Judge.

         Plaintiffs Morgan-Larson, LLC, Johnson Auto Electric, Inc., Speed Stop 32, Inc., and Yocum Oil Company, Inc. sued Defendants Ferrellgas Partners, L.P., Ferrellgas, L.P. (collectively "Ferrellgas"), AmeriGas Partners, L.P., AmeriGas Propane, Inc., and AmeriGas Propane, L.P. (collectively "AmeriGas") under Section 1 of the Sherman Act, 15 U.S.C. § 1. The district court dismissed the claims as barred by the statute of limitations. Having jurisdiction under 28 U.S.C. § 1291, this court reverses.


         Ferrellgas[1] and AmeriGas are the largest distributors of pre-filled propane exchange tanks, which come in a standard size. Before 2008, Defendants filled the tanks with 17 pounds of propane. In 2008, due to rising propane prices, Defendants reduced the amount of propane in each tank from 17 to 15 pounds, but maintained the same price. According to the amended complaint, "this amounted to an effective price increase of 13%."

         In 2009, a group of plaintiffs-indirect purchasers who bought tanks from retailers-filed a class action alleging Defendants conspired to reduce the amount of propane in the tanks while maintaining the price, in violation of Section 1 of the Sherman Act and state antitrust and consumer protection laws. In 2010, the parties settled. See In re Pre-Filled Propane Tank Mktg. & Sales Practices Litig., No. 09-2086-MD-W-GAF, 2010 WL 2008837 (W.D. Mo. May 19, 2010) (approving first amended settlement agreement).

          In 2014, the Federal Trade Commission issued a complaint against Defendants-later settled-for conspiring to artificially inflate tank prices. See In re Ferrellgas Partners, L.P., et al., Docket No. 9360, 2014 WL 1396496 (Mar. 27, 2014). Later that year, Plaintiffs in this case-direct purchasers who bought tanks directly from Defendants for resale-sued. They allege Defendants colluded to decrease the fill level of tanks and continued to charge "supracompetitive prices . . . throughout the Class Period."

         The district court dismissed Plaintiffs' claims as barred by the statute of limitations. On appeal, a divided panel of this court affirmed. In re Pre-Filled Propane Tank Antitrust Litig., 834 F.3d 943 (8th Cir. 2016), as corrected (Aug. 25, 2016), reh'g en banc granted, opinion vacated (Dec. 29, 2016). This court granted rehearing en banc, vacated the panel decision, and now reverses.


         This court reviews de novo the grant of a motion to dismiss. Christiansen v. West Branch Cmty. Sch. Dist., 674 F.3d 927, 933-34 (8th Cir. 2012). To survive a motion to dismiss for failure to state a claim, the complaint must show the plaintiff "is entitled to relief, " Fed.R.Civ.P. 8(a)(2), by alleging "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A plausible claim must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id., quoting Twombly, 550 U.S. at 556. "The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully." Id., citing Twombly, 550 U.S. at 556. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id., quoting Twombly, 550 U.S. at 555, 557 (citation omitted). Rather, the facts alleged "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.

         Also reviewed de novo is whether a claim is barred by the statute of limitations. McDonough v. Anoka Cnty., 799 F.3d 931, 939-40 (8th Cir. 2015). "A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) as barred by a statute of limitations if the complaint itself shows that the claim is time-barred." Wong v. Wells Fargo Bank N.A., 789 F.3d 889, 897 (8th Cir. 2015), citing Illig v. Union Elec. Co., 652 F.3d 971, 976 (8th Cir. 2011). Actions under Section 1 of the Sherman Act must be filed "within four years after the cause of action accrued." 15 U.S.C. § 15b. "Generally, the period commences on the date the cause of action accrues, that being, the date on which the wrongdoer commits an act that injures the business of another." Varner v. Peterson Farms, 371 F.3d 1011, 1019 (8th Cir. 2004), citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971).

         Plaintiffs allege a continuing violation-an exception to the general rule-which restarts the statute of limitations period each time the defendant commits an overt act. See id. "An overt act has two elements: (1) it must be a new and independent act that is not merely a reaffirmation of a previous act, and (2) it must inflict new and accumulating injury on the plaintiff." Id., citing Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 238 (9th Cir. 1987).


         Plaintiffs allege two types of overt acts within the limitations period: (1) Defendants' sales to Plaintiffs at artificially inflated prices; and (2) conspiratorial communications between Defendants about pricing and fill levels. The first type of act is at issue here-whether sales at artificially inflated prices are overt acts that restart the statute of limitations.[2] Also at issue is whether Plaintiffs allege a continuing violation exception sufficient to restart the statute of limitations.


         The Supreme Court of the United States addressed the first issue in Klehr v. A.O. Smith Corporation, 521 U.S. 179 (1997). The Supreme Court defined a continuing violation under antitrust law:

Antitrust law provides that, in the case of a "continuing violation, " say, a price-fixing conspiracy that brings about a series of unlawfully high priced sales over a period of years, "each overt act that is part of the violation and that injures the plaintiff, " e.g., each sale to the plaintiff, "starts the statutory period running again, regardless of the plaintiff's knowledge of the alleged illegality at much earlier times."

Klehr, 521 U.S. at 189, quoting 2 P. Areeda & H. Hovenkamp, Antitrust Law ¶ 338b, p. 145 (rev. ed. 1995) (hereinafter 2 Areeda & Hovenkamp).

         Defendants argue Klehr does not apply because it is a RICO case, and the quoted language is dicta. This court and others have held that "federal courts 'are bound by the Supreme Court's considered dicta almost as firmly as by the Court's outright holdings, particularly when . . . [the dicta] is of recent vintage and not enfeebled by any [later] statement.'" Jones v. St. Paul Co., Inc., 495 F.3d 888, 893 (8th Cir. 2015), quoting City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d 554, 557 (8th Cir. 1993), quoting McCoy v. Massachusetts Inst. of Tech., 950 F.2d 13, 19 (1st Cir. 1991). See American Civil Liberties Union of Ky. v. McCreary Cnty., Ky., 607 F.3d 439, 447 (6th Cir. 2010) ("Lower courts are obligated to follow Supreme Court dicta, particularly where there is not substantial reason for disregarding it, such as age or subsequent statements undermining its rationale.") (internal quotation marks omitted); Gaylor v. United States, 74 F.3d 214, 217 (10th Cir. 1996) ("While these statements are dicta, this court considers itself bound by Supreme Court dicta almost as firmly as by the Court's outright holdings, particularly when the dicta is recent and not enfeebled by later statements.").

         Although panels have held that federal courts are "bound" by Supreme Court dicta, this goes too far. Appellate courts should afford deference and respect to Supreme Court dicta, particularly where, as here, it is consistent with longstanding Supreme Court precedent. See Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548, 561 (3d Cir. 2003) (en banc) ("Although the Committee is doubtless correct that the Supreme Court's dicta are not binding on us, we do not view it lightly. . . . [W]e should not idly ignore considered statements the Supreme Court makes in dicta."); United States v. Montero-Camargo, 208 F.3d 1122, 1132 n.17 (9th Cir. 2000) (en banc) ("We do not treat considered dicta from the Supreme Court lightly. Rather, we accord it appropriate deference. . . . As we have frequently acknowledged, Supreme Court dicta have a weight that is greater than ordinary judicial dicta as prophecy of what that Court might hold; accordingly, we do not blandly shrug them off because they were not a holding.") (citations and internal quotation marks omitted); Nichol v. Pullman Standard, Inc., 889 F.2d 115, 120 n.8 (7th Cir. 1989) ("This Court should respect considered Supreme Court dicta."); Pierre N. Leval, Judging Under the Constitution: Dicta About Dicta, 81 N.Y.U.L. Rev. 1249, 1269-75 (2006).

         Klehr's definition of a continuing violation follows longstanding Supreme Court precedent. The Supreme Court first applied the doctrine in Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). Hanover alleged that United, its shoe machinery manufacturer and distributor, monopolized the industry in violation of Section 2 of the Sherman Act. Hanover Shoe, 392 U.S. at 483-84. United moved to dismiss the claims as time-barred because "the earliest impact on Hanover of United's lease only policy occurred in 1912." Id. at 502 n.15. Rejecting that argument, the Supreme Court said:

We are not dealing with a violation which, if it occurs at all, must occur within some specific and limited time span. . . . Rather, we are dealing with conduct which constituted a continuing violation of the Sherman Act and which inflicted continuing and accumulating harm on Hanover. Although Hanover could have sued in 1912 for the injury then being inflicted, it was equally entitled to sue in 1955.


         The Supreme Court again applied the doctrine in Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971), a case alleging antitrust violations by unlawful participation in patent pools. The issue was "whether Zenith can recover in its 1963 suit for damages suffered after June 1, 1959, as the consequence of pre-1954 conspiratorial conduct." Zenith, 401 U.S. at 338. Describing when an antitrust claim accrues under 15 U.S.C. § 15b, the Court said:

Generally, a cause of action accrues and the statute begins to run when a defendant commits an act that injures a plaintiff's business. . . . In the context of a continuing conspiracy to violate the antitrust laws, such as the conspiracy in the instant case, this has usually been understood to mean that each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act.

Id. Klehr thus is consistent with the Supreme Court's continuing violation doctrine as established in Hanove ...

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