Ryan v. Microsoft Corp.
147 F. Supp. 3d 868
N.D. Cal.2015Background
- Plaintiffs Ryan and Rau (former Microsoft employees) brought a putative class action alleging Microsoft entered into multiple mutual non-solicitation ("hands-off") agreements with dozens of companies (first alleged beginning in 2005; specific agreements last alleged by 2009), which suppressed wages and restricted employee mobility.
- Plaintiffs asserted claims under Section 1 of the Sherman Act and California statutes (Cartwright Act, UCL, and Cal. Bus. & Prof. Code § 16600), seeking damages and injunctive relief.
- Microsoft moved to dismiss the First Amended Complaint (FAC) on statute-of-limitations, standing, and California-contacts grounds; the court previously dismissed the original complaint as time-barred with leave to amend.
- In the FAC plaintiffs attempted to plead tolling/late accrual via (1) statutory tolling under 15 U.S.C. § 16(i) tied to DOJ investigations/lawsuits, (2) federal "continuing violation" doctrine, (3) fraudulent concealment, (4) California discovery rule for UCL, and (5) California continuous-accrual doctrine.
- The court held that (a) statutory tolling under § 16(i) did not apply because DOJ never sued Microsoft and the government suits that existed did not involve Microsoft; (b) plaintiffs failed to plead new overt acts after 2009 required for continuing-violation tolling; (c) fraudulent-concealment allegations failed Rule 9(b) particularity and did not plausibly show affirmative concealment or reasonable reliance; (d) California accrual exceptions (discovery rule, continuous accrual) did not apply.
- Because plaintiffs could not show tolling or a later accrual date, all claims accrued by 2009 and were barred by four-year limitations periods; the FAC was dismissed with prejudice as amendment would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statutory tolling under 15 U.S.C. § 16(i) applies | DOJ investigation/lawsuits related to the "high-tech" matters tolled limitations | §16(i) tolling requires a government complaint ‘‘based in whole or in part’’; DOJ never sued Microsoft and government complaints did not involve Microsoft | Tolling under §16(i) denied (no government suit against Microsoft; no "real relation") |
| Whether federal continuing-violation doctrine extends accrual past Oct. 16, 2010 | Microsoft repeatedly entered/renewed non-solicit agreements through at least 2013, causing continuing injury | Maintenance/reaffirmation of pre-2009 agreements is not a new overt act; plaintiffs allege no new independent acts after 2009 | Continuing-violation inapplicable; no new overt acts alleged after 2009 |
| Whether fraudulent concealment tolls limitations | Microsoft affirmatively concealed agreements via misleading HR statements, public filings, limited document circulation, and DOJ redactions | Allegations are conclusory, lack Rule 9(b) particularity, and plaintiffs did not plausibly rely on public statements; document-redaction practices are not shown to be deceptive concealment | Fraudulent-concealment claim fails for lack of particularized affirmative acts and reasonable reliance (Rule 9(b) and substantive failure) |
| Whether California accrual exceptions apply to state claims (UCL, Cartwright) | Discovery rule or California continuous-accrual should postpone accrual | UCL discovery rule applies only to fraud-based UCL claims; continuous accrual requires separate recurring wrongful acts (e.g., periodic obligations), not mere ongoing duty | California accrual exceptions rejected; state claims accrued by 2009 and are time-barred |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must state a plausible claim; courts need not accept conclusory allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (antitrust complaint must plead plausible conspiracy; Twombly/Iqbal pleading standard)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) (antitrust action accrues when defendant commits act that injures plaintiff)
- Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997) (continuing-violation doctrine restarts limitations period when new, independent overt act occurs)
- Leh v. Gen. Petroleum Corp., 382 U.S. 54 (1965) (statutory tolling under government antitrust suits requires real relation between suits)
- Pace Indus. v. Three Phoenix Co., 813 F.2d 234 (9th Cir. 1987) (continuing violation requires new and independent overt act that inflicts new injury)
- Beneficial Standard Life Ins. Co. v. Madariaga, 851 F.2d 271 (9th Cir. 1988) (accrual in antitrust actions governed by date of injury; plaintiff knowledge generally irrelevant)
- Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (Rule 9(b) requires particularity: time, place, content of fraudulent representations)
- Conmar Corp. v. Mitsui & Co., 858 F.2d 499 (9th Cir. 1988) (fraudulent concealment requires affirmative acts to mislead; passive concealment insufficient absent fiduciary duty)