ED Cal: ACPERA Damages Limitation Extends to RICO Claims | Practical Law

ED Cal: ACPERA Damages Limitation Extends to RICO Claims | Practical Law

Judge Kimberly J. Mueller of the US District Court for the Eastern District of California held in The Morning Star Packing Company v. S.K. Foods, L.P. that the cap on antitrust damages under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) extends to RICO and other antitrust claims related to underlying antitrust violations when a defendant is party to a Leniency Agreement with the Department of Justice (DOJ).

ED Cal: ACPERA Damages Limitation Extends to RICO Claims

Practical Law Legal Update 9-616-6947 (Approx. 3 pages)

ED Cal: ACPERA Damages Limitation Extends to RICO Claims

by Practical Law Antitrust
Published on 23 Jun 2015 • USA (National/Federal)
Judge Kimberly J. Mueller of the US District Court for the Eastern District of California held in The Morning Star Packing Company v. S.K. Foods, L.P. that the cap on antitrust damages under the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) extends to RICO and other antitrust claims related to underlying antitrust violations when a defendant is party to a Leniency Agreement with the Department of Justice (DOJ).
On June 18, 2015, Judge Kimberly J. Mueller of the US District Court for the Eastern District of California held that the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA), which caps civil antitrust damages for defendants who entered into a Leniency Agreement with the Department of Justice (DOJ), extends to RICO and other antitrust claims related to the underlying antitrust violations (The Morning Star Packing Company v. S.K. Foods, L.P., No. 2:09-cv-00208 (E.D. Cal. June 18, 2015)). In Morning Star, plaintiffs alleged that defendants committed various antitrust and RICO violations during their participation in a processed tomato products industry cartel. Before the complaint was filed, certain defendants entered into a Leniency Agreement with the DOJ regarding alleged violations of Section 1 of the Sherman Act, including:
  • Price fixing.
  • Bid rigging.
  • Market allocation.
The DOJ's Leniency Program offer companies and individuals that are first to self-report antitrust violations immunity from criminal prosecution and possible reduced exposure to civil litigation and fines, contingent on their full cooperation with the ensuing investigation. Under ACPERA, damages from companies and individuals party to a Leniency Agreement for violations of the Sherman Act or similar state law are limited to actual damages, rather than treble damages, attributable to the defendant's illegal conduct.
In Morning Star, the defendants party to the Leniency Agreement argued, and the court agreed, that ACPERA limits damages for:
  • The Sherman Act violations on which the agreement is based.
  • Alleged RICO and other antitrust violations committed in connection with the Sherman Act violations.
The court reasoned that both the plain reading of ACPERA and the congressional intent in drafting ACPERA allow for extending the damages limitation to charges relating to Sherman Act violations. The court noted that:
  • The plain language of the statute requires that for a leniency applicant to be eligible for a damages cap:
    • the civil action must allege a Sherman Act violation; but
    • a Sherman Act violation need not be the only allegation in the complaint.
  • The ACPERA damages limitation is not expressly tied to damages stemming from Sherman Act violations, but also applies to damages from actions committed in connection with those Sherman Act violations.
  • The court's reading of ACPERA is consistent with legislative intent, as the legislative history of the Leniency Program and ACPERA has been to expand immunity and damages protections.
  • The DOJ lists in its frequently asked questions that its Leniency Program provides leniency for antitrust violations as well as related offenses, including conspiracies to defraud.
For more information on the DOJ's Leniency Program, see Practice Note, Leniency Program for Antitrust Violations.