359 F.3d 226 | 3rd Cir. | 2004
MINERAL PRODUCTS COMPANY; ROTH, Circuit Judges
KEENE CORPORATION; PFIZER,
INC.; ASBESTOSPRAY (Filed: February 20, 2004)
CORPORATION; JOHN DOE
COM PANIES, fictitious names for presently unidentified entities Robert J. Gilson (Argued) (District of New Jersey Civil No. Khaled J. Klele 87-cv-4227) Riker, Danzig, Scherer, Hyland & Perretti Morristown, NJ 07962
THE PRUDENTIAL INSURANCE
COMPANY David Boies Robin A. Henry v. Boies, Schiller & Flexner Armonk, NY 10504
NATIONAL GYPSUM COMPANY
Attorneys for Appellants (District of New Jersey Civil No. 87-cv-4238) Kell M. Damsgaard claims under the Racketeer Influenced and Kevin M. Donovan (Argued) Corrupt Organizations Act (“RICO”), 18 Morgan, Lewis & Bockius U.S.C. § 1961 et seq., as time-barred by Philadelphia, PA 19103 the statute of limitations. Prudential
argues that the District Court erred in Attorneys for Appellee applying the “injury discovery rule” in US Gypsum Company ascertaining when Prudential’s RICO claims began to accrue, that there exist Nancy McDonald disputed issues of material fact concerning Meredith Walling when Prudential knew or should have McElroy, Deutsch & Mulvaney know of its injuries from ACMs in its Morristown, NJ 07962 properties, and that the statute of
limitations for Prudential’s RICO claims Attorneys for Appellee should have been tolled due to Gypsum’s US Mineral Products active and fraudulent concealment of
known health risks associated with ACMs. OPINION OF THE COURT We will affirm.
INTRODUCTION
SLOVITER, Circuit Judge. Prudential, a mutual insurance This case, one of the myriad company, is one of the largest life, asbestos cases that have besieged the pr op er ty, a nd c as ualty insurance courts, both state and federal, comes to us underwriters in the world. It is also one of from a somewhat different perspective the largest real estate investors in North than most of the others. The plaintiffs, America, maintaining from the 1970s to The Prudential Insurance Company of the early 1980s “the largest real estate America, PIC Realty Corporation, and 745 portfolio of any company in the world” Property Investments (hereinafter referred with hundreds of commercial real estate to collectively as “Prudential”), are owners properties. App. at 394a. Gypsum and and operators of buildings that installed USMP previously engaged in the manufacturing and sale of ACMs. Their asbestos-containing materials (“ACM s”) that sued asbestos manufacturers to products were widely used as construction recover the costs of monitoring and materials throughout the United States. remediation. Prudential appeals the District Court’s orders granting the Prudential contends that ACMs motions of defendants United States manufactured by both Gypsum and USMP, Gypsum Company (“Gypsum”) and United as well as other defendants not parties to States Mining Company (“USMP”) for this appeal, were used for fireproofing in summary judgment dismissing Prudential’s its buildings. [1] at least eighteen of demolition of buildings containing According to Prudential, it only began to fireproofing and insulation ACMs. 38 appreciate the hazards associated with in- Fed. Reg. 8829 (Apr. 6, 1973). That place asbestos in 1984 at the time it had to standard regulated spray-on ACMs by remove ACM s from one of its properties, limiting the concentration of asbestos in the Chubb Building in Short Hills, New such ACM s and forbidding the visible Jersey, before its demolition. The ACMs emission of such materials to the outside were removed at a cost of approximately air during the spraying process. Id. at one million dollars. In late 1984, 8830. It also required that “[a]ny owner or Prudential established a task force to operator of a demolition operation who investigate the in-place ACMs in its intends to demolish any institutional, buildings. A Prudential internal survey commercial, or industrial building . . . conducted between 1985 and 1986 which contains any boiler, pipe, or lead- discovered that most of the buildings supporting structural member that is involved in this litigation, as well as insulated or fireproofed with friable approximately 100 others, contained asbestos material” shall notify the EPA in ACM s. As a result, Prudential incurred advance of the demolition and follow hundreds of millions of dollars in expenses proper ACM -removal procedures set forth relating to the maintenance, testing, and in the standard. Id. at 8829. In 1975, the removal of ACMs in its buildings. It has EPA expanded this National Emission refused to acquire or mortgage properties Standard to cover renovation activities containing ACMs since 1986. involving buildings containing ACMs by
mandating specific notification and Asbestos had, however, already removal procedures for such in-place become a well-known and important ACM s. 40 Fed. Reg. 48,299-,300 (Oct. public health and safety issue in the United 14, 1975). It further amended the standard States prior to 1984. In April 1973, the in 1978 to “extend coverage of the E nvironmental Pro tection Ag ency demolition and renovation provisions . . . (“EPA”) established a National Emission to all friable asbestos materials and extend Standard for Asbestos that severely the scope of the asbestos spraying restricted the manufacturing and provisions . . . to all materials that contain application of ACMs, as well as the more than 1 percent asbestos.” 43 Fed.
Reg. 28,372 (June 19, 1978). The EPA also published various [1] Although Prudential’s initial claims guidelines and regulations on asbestos covere d a p p r o x i m a t e l y s i x ty -o n e management. One such EPA document buildings, that number was reduced to from 1978, titled “Hazard Abatement from eighteen buildings by the time the District Sprayed Asbestos-Containing Materials in Court entered a Final Pretrial Order in Buildings: A Guidance Document” that 1996. was prepared “for those involved in the a s b e s t o s p r o d u c t s i n use, removal, and disposal of asbestos buildings, but the EPA had materials in the building trades,” states that issued numerous guidance “[a]sbestos in all its forms is considered a documents detailing for serious respiratory hazard. . . . Unlike most b u i l d in g o w n e r s t h e chemical carcinogens, the mineral fibers widespread use of asbestos- persist in the environment almost c o n t a i n i n g b u i l d i n g indefinitely and, when present in a materials, the association building space open to its occupants, between asbestos exposure represent a continuous source of and disease, the potential exposure.” App. at 439a. The document risks of in-place asbestos- also includes information on asbestos c o n t a i n i n g p r o d u c t s , exposure, control, containment, and methods to detect asbestos, removal. App. at 480a-500a. The EPA and recommendations for issued a similar “guidance document” for proper actions to be taken ACMs in school buildings in 1979 and once asbestos-containing another report on controlling friable ACMs products are identified. in buildings in March 1983. App. at 556a- 626a, 736a-817a. Appellee Gypsum’s Br. at 13.
In addition, the Occupational Safety There is record evidence that and Health Administration (“OSHA”) had various Prudential employees were aware issued regulations on construction of the existence of ACMs in at least some workers’ exposure to asbestos. The of Prudential’s properties prior to 1984. imposition of these regulations and the Arcadius E. Zielinski, an architect increasing public debate regarding the formerly in Prudential’s Corporate health hazards of asbestos led various Services and Building Department, asbestos man u fac turers, in cludin g testified in a deposition that he surveyed Gypsum, to disseminate additional filed specifications of Prudential’s home information regarding the use and risks of office buildings to determine whether they ACM s. contained ACM s. He stated that he told
the Vice President of Prudential’s As Gypsum correctly states in its Co rpora te Services and B uildin g brief: Department in May 1981 that such ACMs would not be hazardous so long as they In sum, before October 20, were firm and remained in-place. An 1983, not only had the affidavit of David Holick, Jr., the director federal government (OSHA of architecture at Prudential’s real estate and EPA) issued mandatory investment department in Houston from r e g u l a ti o n s r e g a r d i n g 1979 to 1984, states that ACM s were a
topic discussed among some of jurisdiction in this case. Prudential’s employees. In addition, asbestos testings were conducted, either by In its First Amended Complaint, or at the request of local tenants, in several P r u d e n t ia l a l l e g e d t h a t A C M s of Prudential’s buildings prior to 1984. manufactured by defendants and used in its For example, in 1979 IBM Corporation, as properties pose a potential health risk, and tenant, tested the airborne asbestos levels that it has expended and will continue to at Prudential’s Jacksonville, Florida expend resources to inspect, monitor, building and forwarded the results to maintain, and abate any problems caused Prudential. App. at 48a-49a, 1053a-1151a. by the presence of ACM s. It also asserted Asbestos testing was also conducted at past and future damages resulting from least twice on the premises of Five Penn actual property damages, diminution of Center in Philadelphia prior to 1981. property values, loss of rental income, and Similar asbestos testings were also disruption to tenants’ businesses. App. at conducted in several Prudential buildings 11,107a-08a. not at issue in this litigation.
After several years of discovery, Prudential initiated this action on Gypsum and W.R. Grace, another October 20, 1987 in the United States defendant, filed a motion for summary District Court for the District of New judgment in October 1991 to dismiss Jersey, asserting a claim under the Prudential’s RICO claims on both Comprehensive Environmental Response, substantive and statutes of limitations Compensation, and L iability A ct grounds. They also sought to dismiss (“CERCLA”), 42 U.S.C. § 9601 et seq., Prudential’s state law claims based on and state claims under theories of absolute statutes of limitations. Prudential, in turn, liability, strict liability, negligence, breach filed a motion to strike defendants’ statute of express and implied warranties, fraud, of limitations defenses. The District misrepresentation, fraudulent concealment, Court, in a published opinion dated July unfair and deceptive trade practices, civil 21, 1993, denied defendants’ motion for c o n s p i r a c y , r e s t i t u t i o n , a n d summary judgment to dismiss Prudential’s indemnification. App. at 11,097a-11,153a. RICO claims on substantive grounds and The District Court, upon motions by also denied Prudential’s motion to strike defendants, dismissed Prudential’ s defendants’ statute of limitations defenses. CERCLA claim, but granted Prudential’s Prudential Ins. Co. of Am. v. U.S. Gypsum motion for leave to amend its complaint to Co., 828 F. Supp. 287 (D.N.J. 1993). add claims under the RICO statute. Focusing on the causation requirement of Prudential Ins. Co. of Am. v. U.S. Gypsum a RICO claim, the District Court stated Co., 711 F. Supp. 1244 (D.N.J. 1989). that it “cannot rule as a matter of law” that Prudential’s RICO claims thus form the causation did not exist between sole basis for federal subject matter defendants’ alleged violations and Prudential’s injuries. Id. at 296. It also After oral argument, the District Court on ruled that “there are disputed issues of fact June 20, 2001 granted Gypsum’s motion as to whether Prudential actually knew of for sum mary jud gment dismissing its injury prior to 1984; and . . . the Prudential’s RICO claims as barred by the defendants are entitled to argue to a jury statute of limitations. It also granted the that Prudential should have known of its motion with respect to USMP on July 12, injury prior to 1984.” Id. at 297. 2001. Noting developments subsequent to
its 1993 and 1994 opinions in both the On June 9, 1994, the District Court Supreme Court and this court regarding denied the motion for summary judgment when a civil RICO claim accrues, the by Gypsum and another defendant, District Court held that Prudential “should Asbestospray Corporation, to dismiss have known” of its injury before October Prudential’s RICO claims on statute of 20, 1983, the relevant date for purposes of limitations grounds, finding that disputed the four-year RICO statute of limitations. issues of material fact existed as to Prudential Ins. Co. of Am. v. U.S. Gypsum whether Prudential had knowledge of the Co., Nos. 87-4227, 87-4238 (D.N.J. June elements of its RICO claims more than 20, 2001). In stating that “it should not four years prior to filing the suit. have reserved the issue of what Prudential Prudential Ins. Co. of Am. v. U.S. Gypsum should have known [regarding its RICO Co., No. 87-4238 (D.N.J. June 9, 1994). claims] for trial” in its 1994 opinion, the Based on its 1993 ruling, the District Court District Court explained: also reserved the issue of what Prudential should have known for trial. The District While Prudential’s 1993 Court then denied defendants’ summary m o t i o n f o r s u m m a r y judgment motions dismissing Prudential’s judgment raised the issue of state law claims, although it did dismiss whether Grace and Gypsum Prudential’s breach of warranty claims. could provide evidence
sufficient to show that The parties proceeded to complete Prudential should have pretrial discovery, and the District Court known of its injuries, Grace entered its Final Pretrial Order in 1996. and Gypsum’s 1994 motion Thereafter Gypsum, joined by W.R. Grace, for summary judgment filed summary judgment motions to asked a different question: dismiss Prudential’s RICO claims on statute of limitations and substantive
whether Prudential could The District Court also had supplemental provide evidence sufficient jurisdiction over Prudential’s state law to refute the claim that it claims pursuant to 28 U.S.C. § 1367. We should have known of its have jurisdiction over the District Court’s injuries. final judgment pursuant to 28 U.S.C. §
1291. App. at 34a (emphasis in original). We exercise plenary review of a The District Court then concluded district court’s grant of summary that based on its reconsideration of the judgment. SEC v. Hughes Capital Corp., record and facts before it, and in light of 124 F.3d 449, 452 (3d Cir. 1997). changes in the law regarding the accrual Summary judgment may be granted “if the period under RICO, Prudential did not pleadings, depositions, answers to satisfy its summary judgment burden with interrogatories, and admissions on file, respect to that latter question. App. at 53a. together with the affidavits, if any, show Having thus dismissed Prudential’s only there is no genuine issue as to any material federal claim, the District Court declined fact and that the moving party is entitled to to exercise supplemental jurisdiction and a judgment as a matter of law.” Fed. R. dismissed Prudential’s remaining state law Civ. P. 56(c). claims against Gypsum and USM P without prejudice. Shortly thereafter, both DISCUSSION Gypsum and USM P filed for bankruptcy.
Although the RICO statute does not Prudential timely appealed the June expressly provide a statute of limitations, 20, 2001 order after securing a stay of the Supreme Court, by analogy to the Gypsum’s and USMP’s federal bankruptcy Clayton Act, has established a four-year proceedings as well as certification by the limitations period for civil RICO claims. District Court under Federal Rule of Civil Agency Holding Corp. v. Malley-Duff & Procedure 54(b). The only issue on appeal Assoc. Inc., 483 U.S. 143, 156 (1987). is whether the District Court erred in Prudential filed this action on October 20, dismissing, on summary judgment, 1987. Therefore, we may uphold the District Court’s summary judgment order Prudential’s RICO claims as time-barred.
only if the statute of limitations for JURISDICTION AND Prudential’s RICO claims did not begin to accrue before October 20, 1983. STANDARD OF REVIEW The District Court properly A. Test for Accrual of Civil RICO
exercised jurisdiction over this action Claims under 28 U.S.C. § 1331 based on Prudential’s claims arising under RICO. In Malley-Duff, the Supreme Court left open the question of when the statute statute of limitations begins to run when of limitations for civil RICO claims begins the plaintiff knew or should have known to accrue. It has not resolved that issue but that each element of a civil RICO claim it has rejected several standards this court existed: the injury, the source of the injury, had used to determine when the RICO and the pattern of activities prohibited statute of limitations period accrues. under RICO causing the injury. Id. at 554. Although most of the Courts of Appeals at However, the Court did not “settle upon a that time applied forms of an “injury and final rule,” noting that among available pattern discovery rule” for determining the remaining alternatives were the injury accrual of RICO claims, this court applied discovery rule and the injury occurrence a “last predicate act” exception under rule. Id. at 554 n.2. which “[if], as a part of the same pattern of racketeering activity, there is further injury After Rotella, we adopted the injury to the plaintiff or further predicate acts discovery rule in Forbes v. Eagleson, 228 occur, . . . the accrual period shall run from F.3d 471 (3d Cir. 2000), holding that in the time when the plaintiff knew or should determining statute of limitations issues in have known of the last injury or the last civil RICO claims “we must determine predicate act which is part of the same when the plaintiffs knew or should have pattern of racketeering activity. The last known of their injury.” Id. at 484. In predicate act need not have resulted in addition to the injury, the plaintiffs must injury to the plaintiff but must be part of also have known or should have known of the same ‘pattern.’” Keystone Ins. Co. v. the source of their injury. Id. at 485. As Houghton, 863 F.2d 1125, 1126 (3d Cir. we explained in Forbes, “nothing more” 1988). In Klehr v. A.O. Smith Corp., 521 than these two requirements “was required U.S. 179 (1997), the Supreme Court to trigger the running of the four-year rejected the Third Circuit exception. The limitations period [of a civil RICO Court reasoned that such a test would claim].” Id. (citations omitted). result in a limitations period longer than that which Congress could have Prudential does not dispute that the contemplated, as well as would improperly injury discovery rule is the governing legal allow claimants to recover for injuries standard in this case. It quarrels, rather, outside of the limitations period by with that rule’s application in this case. “bootstrapping” them onto a later and Specifically, Prudential argues that, based independent predicate act. Klehr, 521 U.S. on the record of this case, it could not have at 187-90. known its injuries prior to October 20,
1983, and that in any event, the injury it A few years later, in Rotella v. suffered must be an “actual” injury before Wood, 528 U.S. 549 (2000), the Supreme the statute of limitations is triggered. Court also rejected the “injury and pattern discovery rule” itself, under which the B. Whether Prudential Should Have
Known of Its Injuries Prior to that included both past and future harm to October 20, 1983 Prudential. More specifically, the
complaint alleges injuries that include To evaluate Prudential’s argument, prospective damages for complying with we start by looking to the injury it alleged federal regulations concerning the in its amended complaint. App. at renovation, alteration, or demolition of 11,097a-11,153a. In that complaint, buildings containing ACMs: Prudential alleges injuries:
Because of the potential relating to abatement and health and contamination building monitoring actions, dangers, plaintiffs have been building survey and testing compelled to determine the costs, tenant relocation extent to which asbestos- c o s t s , ope ra t i o n s a n d containing materials are maintenance program costs present in their buildings for asbesto s-con tainin g and the extent to which the mater ials before their buildings and their contents removal from buildings, have been or may be substantial disruption to contaminated with asbestos their business, substantial fibers. Where such materials property damage to their or contamination have been property (such as carpeting, or are found, plaintiffs have ceilings, curtains, etc.), and adopted or will have to other costs associated with a d o p t , p u r s u a n t t o t h e c o n t a m i n a ti o n o r governmental regulations potential contamination of and common-law duties, the buildings. Plaintiffs costly abatement measures have also suffered and will to remove and replace, s u f f e r , a m o n g o t h e r enclose, encapsulate, or damages, the loss of rental repair such materials in income from the buildings order to eliminate the d u r i n g a b a t e m e n t potential asbestos health procedures or due to hazard created by such premature tenant departures, c o n t a mi n a t io n o f th e and the diminution in the buildings. commercial value of the properties. App. at 11,107a. Prudential’s amended
complaint thus seeks recovery for both App. at 11,108a (emphasis added). This past and future injuries caused by the language explicitly states broad injuries presence of ACMs in Prudential’s properties. incidents and tenant complaints in
Prudential’s own buildings should have In holding that Prudential has not, also provided Prudential notice of the and could not, produce evidence sufficient ACM -related injuries it alleges in the to refute the defendants’ claims that amended complaint. At Five Penn Center Prudential should have known of the injury in Philadelphia, Prudential knew that the it alleged in its amended complaint prior to ACMs were used for fireproofing, and that October 20, 1983, the District Court the ACMs were sources of potential future reviewed government regulations and hazards; it sent a letter on September 29, publications as well as evidence pertinent 1976 to the building’s seller, giving formal to Prudential’s own buildings and notice that the seller was in breach of the employees regarding the hazards of ACMs Agreement of Sale because, among other and related precautions. Some of the things, “it appears that the building was in evidence examined by the District Court is v i o l a ti o n of law pertain in g t o recited in the introductory section of this concentration of air-borne asbestos on and opinion. In reviewing the effect of prior to the date of settlement under said government information regard ing Agreement of Sale.” App. at 936a. asbestos on Prudential’s awareness of Colonial Penn, a major tenant in the ACM hazards, it is important to note that building, complained in 1981that ACMs Prudential is a very sophisticated company fell from ceiling in one of its offices, and that operates a large casualty insurance Prudential incurred cleaning and business and an extensive estate encapsulating expenses related to the investment business. Such a sizable incident. business operation not only provided Prudential with more opportunities than an Similarly, Prudential was aware of average plaintiff to access ACM-related the presence of ACMs in the IBM information, but it should have also given Building in Jacksonville, Florida as early Prudential a greater incentive to diligently as 1979, when tenant IBM requested research and investigate any potential Prudential’s assistance in surveying the injuries it may suffer through the presence fireproofing material in the building. of ACM s in its own properties. As the Based on its own testing, IBM informed District Court correctly pointed out, Prudential in January 1980 that a sample because Prudential’s liability exposure was of the fireproofing material contained six magnified by the large size of its real percent of Chrysotile asbestos. App. at estate portfolio, “prudence dictates that 1055a. At Prudential’s own request, IBM Prudential should have remained informed forwarded a copy of its asbestos and air of its legal responsibilities.” App. at 43a. sample analyses to Prudential in March
1980. These incidents and tenant Nor was Prudential obliged to rely complaints, combined with government solely on government warnings. Multiple information, should therefore have provided Prudential inquiry notice We note, however, that the injury regarding the potential hazards of ACMs discovery rule in Forbes allows the in its properties. [3] limitations period of civil RICO claims to
accrue not only if Prudential actually knew Despite the facts supporting the of its injuries, but also if Prudential should District Court’s legal conclusion, have known of its injuries. Forbes, 228 Prudential argues that because these F.3d at 484. As the District Court incidents did not reflec t ac tual explained in its opinion, because Gypsum contamination prior to 1984, they do not and USMP in support of their motions for show the same type of injuries for which summary judgment provided sufficient Prudential currently seeks damages. It evidence that Prudential “should have contends that pre-1984 government known” before October 20, 1983 of the regulations and information were not injuries it alleged in the amended directly related to in-place ACMs, and that complaint, Prudential was required to its actions with respect to building tenants provide sufficient evidence to refute that merely demonstrated business decisions to claim in order to defeat summary placate tenants rather than actual judgment. Given the above facts, we agree awareness of potential hazards related to with the District Court that: ACM s. These contentions are to support Prudential’s principal argument that it had P r u d e n t i a l ’ s s h o w i n g no reason to know of its ACM-related r e g a r d i n g i t s a c t u a l injuries until it took on the demolition of knowledge falls far short . . the Chubb Building in 1984, when ACMs . of demonstrating why in that building released sufficient asbestos P r u d e n t i a l r e m a i n e d fibers so as to contaminate its building. unaware of the potential
hazard asbestos posed in its holdings. While the court may accept for the purposes [3] As the proprietor of a large real estate o f t h i s m o t i o n th a t portfolio, Prudential should have also Prudential was not aware of become aware of ACM-related hazards t h e E P A ’ s r e p e a t e d through the existence of ACMs in other warnings about the potential Prudential properties not at issue in this hazards of in-place asbestos litigation. Evidence show, for example, . . . such events should have that Prudential was aware of the presence t r i g g e r e d P r u d e n t i a l ’ s of ACM s in Prudential Center, Boston as inquiry into the hazards early as 1978; it received multiple posed by asbestos. inquiries and from tenants, OSHA, and the Massachusetts Office of Occupational
App. at 37a. For example, the EPA Hygiene regarding ACM -related issues. regulations on the removal of asbestos App. at 50a-51a, 1006a-25a. during building demo litions were regarding the timing of its awareness of promulgated in the 1970s. Therefore even ACM -related hazards, Prudential argues if the demolition of the Chubb Building in that the Forbes standard requires actual, 1984 was the first demolition of any of rather than potential, harm to a civil RICO Prudential’s buildings, it should have had plaintiff. It asserts that it suffered no prior awareness, as a major real estate injuries either from its knowledge of the investor, of the regulations and the ACM- existence of in-place ACMs in its related danger to which they were aimed. properties or from the risk of injuries As stated in an EPA training document stemming from those ACMs. Prudential from February 1983: asserts that ACMs only cause injury when
they deteriorate and begin releasing A building owner might hazardous levels of asbestos fibers that choose to believe there is no contaminate buildings, and therefore it problem in his/her building, suffered injury only when actual but, as we have seen, it is contamination required it to address or clearly prudent to find out remedy the hazards such contaminations the facts. With the rising posed. Appellants’ Br. at 21-22. public awareness of asbestos hazards, most any building A s we prev iously no ted, owner would be hard Prudential’s amended complaint clearly pressed to justify n o seeks damages for both past and future reasonable knowledge of the injuries. Consequently, Prudential cannot hazard. also argue that the statute of limitations for
its RICO claims should not have begun to App. at 46a. run until those injuries became “actual” injuries and it needed to take remedial Prudential also admits that some of measures and incurred expenses for its own employees “had some awareness remediation. Such a legal rule would of asbestos as an issue in certain of place too much discretion in the plaintiff’s Prudential’s buildings during the late hands, and would be antithetical to the 1970s and early 1980s.” Appellants’ Br. “basic policies of all limitations at 34. We therefore agree with the District provisions: repose, elimination of stale Court that Prudential should have known claims, and certainty about a plaintiff’s of the injuries alleged in its complaint opportunity for recovery and a defendant’s prior to October 20, 1983. potential liabilities.” Rotella, 528 U.S. at
550. RICO’s provision of a civil remedy C. Pruden tial’s “Actual Injury” was enacted to “turn [plaintiffs] into Argument prosecutors, ‘private attorneys general,’ dedicated to eliminating racketeering In addition to its factual contentions activity. . . . It would, accordingly, be strange to provide an unusually long basic conjunction with the abatement of limitations period that could only have the asbestos-containing materials in their effect of postponing whatever public structures . . . .” Id. at 230. The injury benefit civil RICO might realize.” Id. at analysis in that case, therefore, turned on 557-58. Prudential’s proposed “actual the interpretation of contract provisions injury” standard would allow a civil RICO rather than on any statute of limitations. plaintiff to control when the relevant limitations periods accrue through its Similarly, the plaintiff in MDU timing of the assessment, investigation, Resources Group v. W.R. Grace and Co., and correction of its injuries, thereby 14 F.3d 1274 (8th Cir. 1994), filed claims producing precisely the long limitations under North Dakota state-law theories of periods frowned upon in Rotella. negligence, strict liability, failure to warn,
and breach of warranty, and only sought Prudential cites, as support for the recovery for the costs of removing ACMs “actual injury” standard it puts forth, from one of its buildings. Id. at 1276. The several federal and state cases supporting MDU court, therefore, focused on actual its argument that in-place ACMs only asbestos contamination as the point when cause injuries when they release hazardous injury occurs, because under North levels of asbestos fibers into buildings. Dakota’s economic-loss doctrine MDU Appellants’ Br. at 20-22. We note, could not have brought suit until the only however, that it is Prudential itself that injury it asserted – the ACM-removal costs chose to pursue redress under RICO for it already incurred – materialized. See id. both monitoring and testing costs at 1279 n.8 (suggesting that the statute of associated with potential contamination as limitations could have begun to run earlier well as costs for abatement and repair in had MDU claimed different injuries). its amended complaint. In contrast, the plaintiffs in the cases cited by Prudential The different legal principles confined their claims to costs of governing the claims and the limited remediation, and pursued their redress scopes of injury involved in these cases through state-law claims that require required different considerations for different accrual analyses than used in calculating statute of limitations periods RICO cases. The plaintiffs in Port that are not applicable to Prudential’s Authority of New York and New Jersey v. broad RICO claims here. We therefore Affiliated FM Insurance Co., 311 F.3d 226 join the District Court in rejecting (3d Cir. 2002), for example, pursued their Prudential’s “actual injury” concept as it asbestos claims under New Jersey state relates to the accrual of the statute of law based on first-party insurance limitations for Prudential’s civil RICO contracts rather than on RICO or tort claims. liability grounds. They also sought recovery only “for expenses incurred in D. Fraudulent Concealment
Finally, Prudential contends that the ( 3) wh eth er ther e is statute of limitations should have been sufficient evidence to equitably tolled because defendants support a finding that fraudulently concealed from Prudential plaintiffs were not aware, that it could be or had been injured by in- nor should they have been place ACMs manufactured by defendants. a w a r e , o f t h e f a c ts It argues that despite long-standing supporting their claim until knowledge of the adverse health effects of a time within the limitations asbestos, defendants did not publicly period measured backwards disclose these risks and instead advertised from when the plaintiffs their products as safe in pamphlets, filed their complaint. brochures, direct mailing catalogs, and other forms of advertisement. Prudential Id. at 487 (emphasis in original). contends that because of these efforts by defendants to conceal hazards associated The Supreme Court has stated that with ACM s, there exists a genuine issue of to equitably toll the running of a material fact regarding fraudulent limitations period in the civil-RICO concealment that is sufficient to toll the c o n t e x t b y c la i m i n g f ra u d u le n t limitations period for its RICO claims. conce alme nt, plaintiff s mu st have Appellants’ Br. at 9-14. exercised “reasonable diligence” to
discover their claim. Klehr, 521 U.S. at In Forbes, we held that fraudulent 194. We also stated in Mathews v. Kidder, concealment could be a basis for equitably Peabody & Co., Inc., 260 F.3d 239 (3d Cir. tolling the RICO limitations period. 228 2001), where we rejected an equitable F.3d at 486-88. At the summary judgment tolling claim after finding that the plaintiff stage, a court must determine: should have known of its injuries, that
“[i]n order to avoid summary judgment, (1) whether there is there must be a genuine issue of material sufficient evidence to fact as to whether the Appellants exercised support a finding that reasonable due diligence in investigating defenda nts engaged in their claim.” Id. at 257. a f f i r m a t i v e a c t s o f concealment designed to We conclude that Prudential has mislead the pla intiffs failed to satisfy the Forbes standard for regarding facts supporting tolling the limitations period for its RICO their. . .claim, (2) whether claims. Even assuming, as the District there is sufficient evidence Court did, that Gypsum engaged in to support a finding that fraudulent concealment, Prudential had not p l a i n t i f f s e x e r c i s e d demonstrated that it exercised reasonable reasonable diligence, and diligence in discovering or investigating its
injuries. As the discussion above shows, statute of limitations grounds and irrespective of defendants’ attempts to dismissing Prudential’s remaining state conceal from Prudential the hazards posed law claims without prejudice. by ACM s in Prudential’s buildings, Prudential had many other sources of information sufficient to place it on inquiry notice of such ACM-related injuries. Prudential should have, for example, given heed to government warnings and regulations to undertake surveys and testing of its buildings. Moreover, as we noted in Mathews, “to determine what constitutes ‘reasonable’ due diligence [for determining if a plaintiff should have known of its injury], we must consider the magnitude of the existing storm warnings. The more ominous the warnings, the more extensive the expected inquiry.” 260 F.3d at 255. Here, given the magnitude of Prudential’s commercial real estate investments and the significance of the threat ACMs posed to that investment, a substantial and diligent investigation by Prudential was called for prior to October 20, 1983. Its failure to have undertaken such an investigation regarding ACM- related hazards was, as a matter of law, the failure to exercise due diligence. We therefore conclude that the limitations period for Prudential’s RICO claims was not tolled under a fraudulent concealment theory.
CONCLUSION
For the foregoing reasons, we will affirm the District Court’s orders granting Gypsum and USMP summary judgment on
NOTES
grounds.
[2] USMP joined in these motions. voluntary relief pursuant to Chapter 11 of the United States Bankruptcy Code. This action therefore was automatically stayed
[2] Subsequent to the filing of these as to W.R. Grace pursuant to 11 U.S.C. § motions, W.R. Grace filed a petition for 362(a).
