Z Techs. Corp. v. Lubrizol Corp.

753 F.3d 594

Z TECHNOLOGIES CORPORATION, Plaintiff–Appellant,

v.The LUBRIZOL CORPORATION, Defendant–Appellee.

No. 13–1254.

United States Court of Appeals, Sixth Circuit.

Argued: May 1, 2014.

Decided and Filed: May 23, 2014.

ARGUED:Justin J. Hakala, Morgan & Meyers, PLC, Dearborn, Michigan, for Appellant. Elizabeth A. Grove, The Lubrizol Corporation, Wickliffe, Ohio, for Appellee. ON BRIEF:Justin J. Hakala, Morgan & Meyers, PLC, Dearborn, Michigan, for Appellant. Elizabeth A. Grove, The Lubrizol Corporation, Wickliffe, Ohio, for Appellee.

Before: DAUGHTREY, McKEAGUE, and DONALD, Circuit Judges.

OPINION

McKEAGUE, Circuit Judge.

Z Technologies alleges that The Lubrizol Corporation violated the Sherman, Clayton, and analogous state-law antitrust acts by raising prices and enforcing a non-compete clause following Lubrizol's acquisition of the assets of another company, which established a monopoly in the market for petroleum wax-based oxidates. Lubrizol moved to dismiss the claim on the pleadings. The primary question presented on appeal is whether Z Technologies's claims are barred by the statute of limitations. Z Technologies contends that the continuing violations and hold-and-use doctrines extend the statute of limitations on the Sherman and Clayton Acts, respectively. The district court rejected the continuing-violations argument after determining that the increase in prices by Lubrizol and the alleged implementation of a non-compete clause did not constitute a “new and independent” injury. The district court likewise found the hold-and-use argument inapplicable because Lubrizol's alleged implementation of a non-compete clause from the acquisition agreement was not a “new use” of an “asset” extending the statute of limitations. As the district court correctly rejected Z Technologies's continuing-violations and hold-and-use arguments, we AFFIRM.

I. BACKGROUND

The Lubrizol Corporation is a chemical manufacturer that produces petroleum wax-based oxidates, which are used to create anti-corrosion products. Z Technologies is a purchaser of such oxidates and makes anti-corrosion products for car manufacturers. On February 7, 2007, Lubrizol acquired the Lockhart Company's (“Lockhart”) oxidate business and oxidate assets. This acquisition left Lockhart's oxidate production facility in Flint, Michigan (“the Flint Plant”) partially unused.

As part of the purchase agreement, Lockhart agreed to a non-compete clause that “prohibited Lockhart, for a period of five years from the date of the purchase agreement, from directly or indirectly engaging in any business competitive with the assets it sold to Lubrizol.” Though it is not clear how or when it happened, Lubrizol allegedly later employed the non-compete clause “to prevent the use or re-lease of the [Flint Plant] to another oxidates manufacturer.”

All the parties agree that the purchase of Lockhart provided Lubrizol with a monopoly in the oxidate market. At the time of the acquisition, Lubrizol and Lockhart together accounted for 98% of oxidate sales in the United States. After acquiring Lockhart, Lubrizol increased prices for oxidates in March, July, and November of 2007, and again in May, July, and September of 2008. These increases taken together raised the price of oxidates by approximately 70%.

Following the price increases, on February 26, 2009, the Federal Trade Commission brought a complaint alleging that, by acquiring Lockhart, Lubrizol created a monopoly in the oxidate market for rust-preventative additives and thereby violated Section 5 of the Federal Trade Commission Act and Section 7 of the Clayton Act. On April 7, 2009, Lubrizol entered into a consent agreement with the Federal Trade Commission in which Lubrizol promised: (1) to divest the oxidates assets acquired from Lockhart to a third company, Additives International, Inc.; (2) to “remove and rescind any prohibition or restraint including ... any noncompete agreements, on the sale or use of all or any part of respondent Lockhart's Flint Plant for the manufacture and sale of any products produced at the Flint Plant by Additives International or any other person;” and (3) to lease the Flint Plant to Additives International.

Z Technologies filed its Complaint on May 18, 2012. The Complaint alleged, among other things, that Lubrizol had violated the Sherman and Clayton Acts and Michigan antitrust laws by purchasing Lockhart's oxidate business and obtaining a monopoly in the oxidate-production market. On August 17, 2012, Lubrizol filed a motion to dismiss the First Amended Complaint for failure to state a claim upon which relief might be granted, and on February 5, 2013, the district court granted the motion after determining that all of the claims were time-barred. Z Technologies appeals the dismissal.

II. ANALYSIS

All of Z Technologies's claims, including the Sherman Act, Clayton Act, and Michigan Antitrust claims, are subject to a four-year and forty-day statute of limitations.¹See15 U.S.C. § 15b (“Any 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. No cause of action barred under existing law on the effective date of this Act shall be revived by this Act.”); Mich. Comp. Laws §§ 445.781, 445.784(2) (2009) (“It is the intent of the legislature that in construing all sections of this act, the courts shall give due deference to interpretations given by the federal courts to comparable antitrust statutes, including, without limitation, the doctrine of per se violations and the rule of reason.”); see also DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 467 (6th Cir.1996).

Lubrizol acquired Lockhart's oxidate business on February 7, 2007, and Z Technologies filed its Complaint on May 18, 2012, approximately five years and three months later. At first glance, Z Technologies's claims appear to be barred by the statute of limitations. The primary question presented on appeal, then, is whether Lubrizol's conduct subsequent to the acquisition, including charging “supra-competitive” prices and enforcing a non-compete clause from the acquisition agreement, retriggered the date from which the statute of limitations is measured. We assess this question claim by claim.

1. Standard of Review

This court reviews de novo a district court's ruling granting a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Dubay v. Wells, 506 F.3d 422, 427 (6th Cir.2007). When reviewing pleadings, “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

“In deciding whether to grant a Rule 12(b)(6) motion, we must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations [of the plaintiff] as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief.” Ricco v. Potter, 377 F.3d 599, 602 (6th Cir.2004) (internal citation and quotation marks omitted). “Although this standard for Rule 12(b)(6) dismissals is quite liberal, more than bare assertions of legal conclusions is ordinarily required to satisfy federal notice pleading requirements.” Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 319 (6th Cir.1999) (internal citation and quotation marks omitted).

2. Sherman Act Claim

Z Technologies first alleges a violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. The district court determined that the statute of limitations prevented the claim from proceeding. We agree.

The Sherman Antitrust Act makes it an offense to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States.” Id. Claims brought under the Act are subject to a four-year statute of limitations from the date “the cause of action accrued.” Id. § 15b; see also Zenith Radio Corp. v. Hazeltine Research Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971).

Z Technologies alleges a “continuing antitrust” violation; that is, a violation where Z Technologies's interests “[we]re repeatedly invaded.” Peck v. Gen. Motors Corp., 894 F.2d 844, 849 (6th Cir.1990) ( per curiam ). When a continuing violation occurs, “the statute of limitations runs from the commission of the act that causes the plaintiff's damage.” Id. As the Peck court further clarified, “even when a plaintiff alleges a continuing violation, an overt act by the defendant is required to restart the statute of limitations and the statute runs from the last overt act.” Id. (emphasis added) (internal citation and quotation marks omitted). Before assessing, however, whether the overt act requirement has been satisfied in the present case, we must determine whether the continuing violations doctrine even applies to price increases following a merger or acquisition. We conclude that it does not.

A. The Continuing Violations Doctrine Does Not Apply to Price Increases Following a Merger or Acquisition

Z Technologies argues that the continuing violations doctrine applies to a price increase following a merger or acquisition.² There is simply no support for this contention. With only two exceptions, all of the cases cited by Z Technologies in which a price increase extended the statute of limitations involved antitrust conspiracy claims,³ and the excepted cases involved monopolization claims where a party unilaterally monopolized a market or undertook action, in addition to price...