Forbes v. Eagleson , 228 F.3d 471 ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
10-17-2000
Forbes v. Eagleson
Precedential or Non-Precedential:
Docket 99-1803
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"Forbes v. Eagleson" (2000). 2000 Decisions. Paper 222.
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Filed October 17, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-1803
DAVID S. FORBES; RICHARD D. MIDDLETON;
D. BRADFORD PARK; ULF NILSSON;
DOUGLAS D. SMAIL, suing individually and on behalf of
a class of similarly situated individuals, to wit, all persons
employed as professional hockey players by any of the
defendant professional hockey teams during the time
period in which defendant R. Alan Eagleson served as
Executive Director of the National Hockey League Players
Association
v.
R. ALAN EAGLESON; THE NATIONAL HOCKEY LEAGUE;
PHILADELPHIA FLYERS LIMITED PARTNERSHIP; BOSTON
PROFESSIONAL HOCKEY ASSOCIATION, INC.; NIAGARA
FRONTIER HOCKEY, L.P.; CALGARY FLAMES LIMITED
PARTNERSHIP; CHICAGO BLACKHAWK HOCKEY TEAM,
INC.; DALLAS HOCKEY CLUB, INC.; DETROIT RED
WINGS, INC.; EDMONTON OILERS HOCKEY CORP.; KTR
HOCKEY LIMITED PARTNERSHIP; LAK ACQUISITION
CORP.; LE CLUB DE HOCKEY CANADIEN, INC.;
MEADOWLANDERS, INC.; NEW YORK ISLANDERS
HOCKEY CLUB, L.P.; RANGERS HOCKEY CLUB, A
DIVISION OF MADISON SQUARE GARDEN CENTER,
INC.; PITTSBURGH HOCKEY ASSOCIATES; COMSAT
ENTERTAINMENT GROUP, INC.; a subsidiary of COMSAT
CORPORATION; ST. LOUIS BLUES HOCKEY CLUB, L.P.;
SAN JOSE SHARKS CORP.; MAPLE LEAF GARDENS,
LIMITED; VANCOUVER HOCKEY CLUB, LTD.;
WASHINGTON HOCKEY LIMITED PARTNERSHIP; JETS
HOCKEY VENTURES, (A LIMITED PARTNERSHIP); JOHN
ZIEGLER; WILLIAM W. WIRTZ; SAMUEL SIMPSON;
ARTHUR HARNETT; MARVIN GOLDBLATT; IRVING
UNGERMAN; HOWARD UNGERMAN; ARTHUR HARNETT
ENTERPRISES, LTD.; HARCOM CONSULTANTS, LTD.;
HARCOM STADIUM ADVERTISING; ALL CANADA SPORTS
PROMOTIONS, LTD.; RAE-CON CONSULTANTS, LTD.;
SPORTS MANAGEMENT, LTD.; EAGLETON, UNGERMAN,
a law firm; JIALSON HOLDINGS, LTD.; COLORADO
AVALANCHE LLC
David S. Forbes; Richard D. Middleton;
D. Bradford Park; Ulf Nilsson;
Douglas D. Smail,
Appellants
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 95-07021)
District Judge: Honorable Thomas N. O'Neill, Jr.
Argued September 12, 2000
BEFORE: NYGAARD, ROTH, and GREENBERG,
Circuit Judges
(Filed: October 17, 2000)
Martin J. Oberman (argued)
36 S. Wabash Avenue, Suite 1310
Chicago, IL 60603
Alice W. Ballard
Law Office of Alice W. Ballard, P.C.
225 South 15th Street, Suite 1700
Philadelphia, PA 19102
Judson H. Miner
Carolyn Shapiro
Miner, Barnhill & Galland
14 West Erie Street
Chicago, IL 60610
2
Charles Barnhill, Jr.
Miner, Barnhill & Galland
33 East Miflin Street, Suite 803
Madison, WI 53703
Edward R. Garvey
Garvey & Stoddard
634 West Main Street
Madison, WI 53703
Arlin M. Adams
Nancy Winkelman
Schnader, Harrison, Segal & Lewis,
L.L.P.
1600 Market Street, Suite 3600
Philadelphia, PA 19103-7286
Attorneys for Appellants
Michael A. Cardozo (argued)
Steven C. Krane
Tandy M. O'Donoghue
Proskauer Rose L.L.P.
1585 Broadway
New York, NY 10036
Bennett G. Picker
Ellen Rosen Rogoff
Stradley, Ronon, Stevens & Young,
L.L.P.
2600 One Commerce Square
Philadelphia, PA 19103
3
Shepard Goldfein
Skadden, Arps, Slate, Meagher &
Flom, L.L.P.
Four Times Square
New York, NY 10036
Attorneys for Appellees
The National Hockey League;
Philadelphia Flyers Limited
Partnership; Boston Professional
Hockey Association, Inc.; Niagara
Frontier Hockey, L.P.; Calgary
Flames Limited Partnership;
Chicago Blackhawk Hockey Team,
Inc.; Dallas Hockey Club, Inc.;
Detroit Red Wings, Inc.; Edmonton
Oilers Hockey Corp.; KTR Hockey
Limited Partnership; LAK
Acquisition Corp.; Le Club De
Hockey Canadien, Inc.;
Meadowlanders, Inc.; New York
Islanders Hockey Club, L.P.;
Rangers Hockey Club, a division of
Madison Square Garden Center,
Inc.; Pittsburgh Hockey Associates;
Comsat Entertainment Group, Inc.,
a subsidiary of Comsat
Corporation; St. Louis Blues
Hockey Club, L.P.; San Jose
Sharks Corp.; Maple Leaf Gardens,
Limited; Vancouver Hockey Club,
Ltd.; Washington Hockey Limited
Partnership; Jets Hockey Ventures,
(A limited partnership); John
Ziegler, William W. Wirtz; Colorado
Avalanche L.L.C.
R. Alan Eagleson
Box 282
Clarkburg, Canada N0H1J0
Attorney pro se
4
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. BACKGROUND
Five former National Hockey League ("NHL") players,
David S. Forbes, Richard D. Middleton, D. Bradford Park,
Ulf Nilsson, and Douglas D. Smail, have brought this RICO
class action on behalf of all individuals who played NHL
professional hockey during the time in which defendant R.
Alan Eagleson served as executive director of the National
Hockey League Players' Association ("NHLPA"). The
complaint, as amended, alleges that Eagleson committed a
variety of wrongful acts during his two-plus decades as
head of the NHLPA which led to his criminal prosecution
and conviction based on his pleas of guilty in both the
United States and Canada. Count I of the complaint alleges
that the NHL, its member teams, its president, John
Ziegler, and the chairman of its board of governors, William
Wirtz (collectively, the "NHL defendants"), conspired to bribe
Eagleson to sell out the players' interests in collective
bargaining. Count II of the complaint alleges that Eagleson
and certain companies with which he was affiliated
conspired to pilfer NHLPA funds over the course of many
years. The principal issue on this appeal is whether the
district court correctly granted Eagleson and the NHL
defendants summary judgment on Count I on statute of
limitations grounds. While Count II remains pending before
the district court, and thus is not at issue on appeal, we
nevertheless have jurisdiction under 28 U.S.C. S 1291, as
the district court properly certified its summary judgment
as final on Count I pursuant to Fed. R. Civ. P. 54(b).
The district court set forth the relevant background
relating to Count I in its published opinion:
Defendant R. Alan Eagleson was executive director of
the NHLPA, the exclusive bargaining unit of NHL
players, from the union's inception in 1967 until the
end of 1991. Essentially singlehandedly, he operated
the union's daily business and conducted the players'
5
collective bargaining negotiations with the NHL. He
also engaged in business for himself as an agent and
lawyer representing players and even management
personnel in their individual contract negotiations with
club owners.
Plaintiffs allege that from 1976 through 1991 the
NHL defendants gave Eagleson unsupervised control of
a joint NHL-NHLPA venture which participated in
international hockey tournaments. They also granted
permission for NHL players to participate in the extra-
NHL events, which would otherwise have been
prohibited by the players' contracts. The participation
of the best NHL players was essential to the success of
the tournaments.
As head of the joint venture and as chief negotiator
for the International Committee of Hockey Canada, a
non-profit organization which negotiated international
hockey events for Canada, Eagleson organized some
two dozen or more tournaments from 1976 to 1991,
including five Canada Cups and nearly annual World
Championships and Soviet Union team exhibition
tours. For each Canada Cup, Hockey Canada was to be
paid the first $600,000 of net tournament proceeds
after expenses and 15% of net revenues above $2
million. All other net revenues were to be split equally
between the NHL clubs and the NHLPA. The NHL
players earned little additional pay for playing in the
tournaments and were induced to participate on the
understanding that they would be benefitting their
pension fund. In fact, plaintiffs allege, with Eagleson's
assent the NHL defendants simply reduced their
contributions to the pension fund by however much
the players contributed through international hockey.
Eagleson allegedly used his control over international
hockey to enrich himself and his associates. He (1)
directed revenue from sales of television and rinkboard
advertising rights to himself and associates; (2)
appropriated air travel passes obtained from Air
Canada in exchange for advertising rights for his
personal use and that of family and associates; (3)
charged excessive rents for office space; and (4)
6
obtained excessive reimbursement for the legal services
of his law firm and for the services and expenses of
employees of other of his private businesses who were
`lent' to the international hockey venture to coordinate
the tournaments. Many of these schemes reduced the
net proceeds to be divided between the NHLPA and the
NHL pursuant to their joint venture.
In addition, from 1977 to 1986 the NHL defendants
gave Eagleson the power to place the NHL's disability
insurance policies for the players. (He also controlled
the NHLPA's insurance funds.) Eagleson allegedly used
his control over the disability insurance funds to extort
personal benefits from insurance brokers and sham
legal fees from players seeking disability benefits.
The crux of plaintiffs' claim against the NHL
defendants is that they knew that Eagleson was using
his control of international hockey and NHL disability
insurance funds to enrich himself, but nonetheless
allowed him to continue to exercise these powers
unconstrained. This acquiescence, plaintiffs allege,
amounted to a pattern of violations of S 302 of the
Labor-Management Relations Act (LMRA), 29 U.S.C.
S 186. Violations of S 302 constitute predicate acts of
racketeering under [RICO] 18 U.S.C. S 1961(1)(C)
(defining as a `racketeering activity' any act indictable
under 29 U.S.C. S 186).
Section 302 prohibits employers, employer
associations, and their agents from paying money or
any other `thing of value' to employee representatives,
and prohibits employee representatives from accepting
any such payment. 29 U.S.C. S 186(a), (b). Plaintiffs
allege that the NHL defendants violated S 302(a) each
time they permitted NHL players to participate in an
international tournament, gave Eagleson unsupervised
control over a tournament and its revenues, failed to
hold Eagleson accountable for the revenues and/or
overlooked his financial improprieties, and allowed him
control over placement of the NHL's disability
insurance premiums. Concomitantly, Eagleson
allegedly violated S 302(b) every time he accepted
control of an international tournament or the purchase
7
of disability insurance. Count I also alleges that
Eagleson committed predicate acts of mail fraud and
obstruction of justice in violation of 18 U.S.C.SS 1341,
1346, and 1512(b) in attempting to conceal his
wrongdoing. See 18 U.S.C. S 1961(1). In addition,
plaintiffs contend that Eagleson's predicate acts can be
imputed to the NHL defendants and vice versa because
they were co-conspirators.
In return for the NHL defendants' facilitation of and
acquiescence in his self-enriching schemes, Eagleson
allegedly betrayed the interests of the players in
collective bargaining. Without attempting to gain
concessions in return or marshal the players' collective
leverage, he agreed to the 1979 merger of the NHL and
World Hockey Association (WHA) [which allegedly
caused player salaries to drop by eliminating
competition from the WHA], lack of free agency,
supplemental drafts, equalization rules, and non-
disclosure of players' salaries; he acquiesced in the
removal of player representatives from the board of the
players' pension funds and in the owners' practice of
offsetting pension contributions by the amount the
players contributed via international hockey; and he
agreed to inadequate minimum salaries. As a result,
the players' compensation was substantially
suppressed from what it would have been had they
been represented by an un-compromised and
aggressive union negotiator.
Eagleson negotiated collective bargains between the
NHL and the NHLPA signed in 1976, 1981, 1984, and
1988. The last Eagleson-negotiated collective bargain
expired in September 1991 and Eagleson's employment
with the NHLPA terminated in December 1991.
Forbes v. Eagleson, 19 F. Supp. 2d 352, 359-60 (E.D. Pa.
1998) (footnotes and citations omitted except that footnote
10 is in the quoted text).
Plaintiffs filed this action on November 7, 1995, and later
amended their complaint several times. Eagleson and the
NHL defendants moved to dismiss, or, in the alternative, for
a summary judgment on the ground that the four-year
8
statute of limitations applicable to civil RICO claims barred
Count I of the fourth amended complaint. The district court
treated the motion as being for summary judgment and
granted the motion in an opinion and order dated August
27, 1998. The court held that plaintiffs' claim with respect
to injuries incurred before November 7, 1991 (four years
prior to the filing of the action) was time-barred, and
further held that plaintiffs failed to state a claim with
respect to alleged "new and independent" injuries incurred
on or after November 7, 1991. See id. at 378.
Relying on our then extant case law, the district court
held that a civil RICO cause of action accrues for
limitations purposes when a plaintiff "knew or should have
known that the elements of a civil RICO cause of action
existed." Id. at 357 (citation and internal quotation marks
omitted). In the court's words, "plaintiffs' claims accrued
and the statute of limitations began to run when they
discovered or should have discovered that defendants had
possibly engaged in conduct constituting the alleged
pattern of racketeering and that this conduct had possibly
caused them injury." Id. Within this formulation plaintiffs
argued that they did not possess sufficient verifiable
information to plead their Count I claim until 1994 when a
federal grand jury indicted Eagleson for racketeering,
embezzlement from a labor union, receipt of kickbacks
affecting an employee welfare benefit plan, mail fraud, and
obstruction of justice. Id. at 361. Defendants, by contrast,
argued that plaintiffs had or should have had sufficient
knowledge of the circumstances asserted in their Count I
claim to bring this action by September 1991 at the latest,
based on four sets of documents: (1) a 1984 Sports
Illustrated article discussing allegations of wrongdoing by
Eagleson; (2) a 1989 report on Eagleson's leadership of the
union drafted by an attorney, Edward R. Garvey, on behalf
of a large number of NHL players; (3) a June 1991
complaint brought by two NHL players before the Alberta
Labour Relations Board alleging collusion between Eagleson
and the owners during collective bargaining; and (4) a
series of investigative articles about Eagleson published by
The Eagle-Tribune of Lawrence, Massachusetts, in
September 1991. Id. at 360-61. The district court, agreed
with defendants, indicating as follows:
9
Even the most cursory of perusals of any one of these
. . . publications would have revealed to plaintiffs the
gist of their claim: Eagleson was enriching himself by
means of international hockey and the disability
insurance and the NHL defendants knew so but
apparently took no action to remove those
opportunities from him. Moreover, examination of
either the Sports Illustrated or The Eagle-Tribune
article[s] would have revealed almost every detail of the
schemes plaintiffs now allege in their complaint, as
well as sources to whom they could have gone for
verification or further information. From them,
plaintiffs learned or should have learned the following
facts (as discussed below, plaintiffs contest in any
significant way only their notice of the third fact listed
below):
1. Eagleson controlled international hockey on behalf
of the NHL-NHLPA joint venture and Hockey Canada.
He controlled the organization, administration,
expenses, and revenues of the tournaments.
2. Eagleson was indisputably benefitting him self and
his associates from international hockey. For example,
Eagleson admitted that he lent his employees to
international hockey at higher rates than he paid them
and pocketed the difference, and that he gave control
of the sale of advertising rights to businesses headed
by his close associate and client, Arthur Harnett.
3. Eagleson was possibly benefitting himself and his
associates from international hockey in other ways he
did not admit. For example, he might have controlled
the Harnett companies to whom he gave tournament
advertising rights and directly benefitted from their
sales, and he might have subsidized his private
businesses' office expenses by charging excessive
amounts to international hockey just as he subsidized
the salaries of his employees.
4. Eagleson's control over international hocke y and
its finances was not possible without the assent of the
NHL defendants, who agreed to permit their players to
play in the tournaments and agreed to Eagleson's
leadership of the NHL-NHLPA partnership.
10
5. The NHL defendants knew or should have know n,
if only from the same public allegations of which
plaintiffs were aware, of charges that Eagleson's control
over international hockey was a conflict of interest and,
more specifically, that Eagleson was enriching himself
and his associates by means of international hockey.
They nonetheless continued to permit their players to
play in the tournaments and to allow Eagleson to run
them without making any apparent move to police or
otherwise constrain Eagleson's conduct.
6. Eagleson may have extorted personal benefits
from brokers for placing disability insurance with them
and may have charged players illegitimate fees for
helping them get paid off on their union and NHL
policies.
7. The NHL and Member Clubs allowed Eagleson t o
place their insurance funds despite notice of charges
that he had leveraged this power for his personal
benefit.
These facts were more than sufficient to provide
plaintiffs with notice that the NHL defendants might be
turning a blind eye to Eagleson's use of international
hockey and NHL disability insurance funds to enrich
himself, and thus with notice of a claim that both the
NHL defendants and Eagleson were continuously
violating S 302 of LMRA. Indeed, on the basis of these
facts plaintiffs could have actually [pled] almost every
allegation in their complaint concerning defendants'
alleged S 302 violations. That they may not have
recognized that these facts added up to unlawful bribes
is irrelevant.
Plaintiffs also knew or should have known of their
alleged injuries. Each of the inadequacies in the
Eagleson-negotiated collective bargaining agreements
alleged in plaintiffs' complaint . . . [was] detailed in the
Garvey report and most were also discussed in the
Sports Illustrated and The Eagle-Tribune articles.
Plaintiffs cannot seriously argue that players were
unaware of their injuries as alleged in this action.
. . . .
11
To summarize, I find (1) it is undisputed and
indisputable that plaintiffs had inquiry notice of their
claim by 1990 at the latest; (2) in the exercise of
reasonable diligence plaintiffs should at the very least
have inquired into the specific factual allegations in the
Garvey and Sports Illustrated reports; (3) these reports,
as well as The Eagle-Tribune articles . . . provided
notice to plaintiffs by October 1991 at the latest of
more than sufficient facts to show the existence of their
claim that the NHL defendants and Eagleson had
engaged in a pattern of S 302 violations resulting in
inadequate representation and bad deals for the
players; and (4) no reasonable jury could find that
plaintiffs were mislead as to their cause of action so as
to toll the statute of limitations. Accordingly, I conclude
that plaintiffs' claims [as] to injuries incurred prior to
November 7, 1991 are barred as untimely.
Id. at 370-72, 377 (footnotes and citations omitted).
Following entry of the August 27, 1998 order, the district
court granted plaintiffs leave to file a fifth amended
complaint to plead a valid claim for new and independent
injuries incurred after November 7, 1991. See Forbes v.
Eagleson, No. CIV. A. 95-7021, 1999 WL 712571, at *1
(E.D. Pa. Sept. 10, 1999). After defendants moved for
dismissal or summary judgment with respect to Count I of
the fifth amended complaint, the district court granted
summary judgment in their favor on September 10, 1999.
See id. at *5. The district court then on October 14, 1999,
entered its Rule 54(b) order following which plaintiffs
appealed.
The questions presented on this appeal are (1) as we have
indicated, whether the district court erred in holding that
plaintiffs' Count I claim for injuries incurred prior to
November 7, 1991, is time-barred, and (2) whether the
district court erred in dismissing the Count I claim in the
fifth amended complaint for injuries incurred after
November 7, 1991. We, however, will not address the
district court's order granting summary judgment on the
claim for injuries incurred after November 7, 1991, as we
are satisfied that the court reached the correct result on
that disposition, including its limitation on discovery, and
12
that an opinion on the point would not have precedential
value. Thus, we focus on the first question which requires
us to determine when plaintiffs were on actual or
constructive knowledge of their Count I claim. To that end,
we review the four sets of documents upon which the
district court relied in making its ruling on the timeliness
issue as they are no less important to our result than they
were to the result the district court reached.
The 1984 Sports Illustrated article
The July 1984 Sports Illustrated article made the
following principal assertions regarding the conduct of
Eagleson, the NHL and the NHLPA:
1. In his capacity as executive director of the
NHLPA, Eagleson abused his positions as chief
negotiator for Hockey Canada and as personal
representative of many NHL players for his own gain
and for the benefit of his friends.
2. Eagleson had numerous conflicts of interest in
his capacities as executive director of the NHLPA, chief
negotiator for Hockey Canada, and player
representative.
3. Eagleson engaged in acts of self-dealing and
assessed improper fees in connection with his
administration of international hockey and player
disability funds.
4. Eagleson may have failed properly to represent
NHL players in collective bargaining between the NHL
and the NHLPA as a result of his conflicts of interest.
5. Eagleson improperly diverted international
hockey funds to his private businesses and may have
used such funds improperly to cover his private
business expenses.1
The 1989 Garvey report
The district court described the Garvey report and the
events which precipitated it as follows:
_________________________________________________________________
1. The district court described and quoted the Sports Illustrated article
at
great length. See Forbes, 19 F. Supp. 2d at 361-62.
13
Beginning in late 1988, plaintiffs allege, agents of some
hockey players began seeking information about the
finances of international hockey tournaments. In
November 1988, they `issued a "Position Paper" to the
public in which, inter alia, they questioned Eagleson's
conflicts as union leader and player agent as well as
his role in international hockey,' contended that it was
his fiduciary duty to disclose information on the
tournaments' finances, and asserted that `[a]udited
information should have been prepared regarding all
monies received by Mr. Eagleson directly, or indirectly,
in relation to his efforts in organizing the international
hockey events.' About the same time, Ed Garvey, one of
plaintiffs' counsel in this action, began an investigation
of Eagleson and the union's affairs at the request of a
`substantial number of members of the plaintiff class.'
Garvey and other investigators unsuccessfully sought
financial information about international hockey and
the union from Eagleson, the union, the NHL, Hockey
Canada, and the Canadian government.
Forbes, 19 F. Supp. 2d at 363.
The Garvey report made numerous allegations regarding
Eagleson. In addition to citing the 1984 Sports Illustrated
article and recommending it for reading to all players, the
Garvey Report cited instances of self-dealing and improper
player representation against Eagleson. Moreover, it noted
inadequacies in collective bargaining agreements and
multiple bargaining concessions affecting NHL players
attributable to Eagleson's compromised position. The report
also criticized Eagleson for withholding information
regarding international hockey, the NHL, the players' union
and the pension fund, including information required to be
disclosed by law.
Comments in the Garvey report indicated that its author
suspected that Eagleson was selling out the players in
exchange for the ability to draw profits from international
tournaments. The report stated that "[t]he conflicts of
interest [involving Eagleson] are shocking, but even more
shocking is a pattern of sweetheart agreements with the
NHL over all these years. It may sound harsh, but he has
not pursued player interests at critical times in your history
14
as a union." App. at 109. The report stated as follows with
regard to Eagleson's financial take from international
hockey:
The $25,000 Alan [Eagleson] received from the NHLPA
[as a bonus for organizing international tournaments]
may be the tip of the iceberg. We have asked Hockey
Canada to tell us how much money goes to Alan, his
law firm, holding companies he controls, family
members or other legal entities. The result of our
investigation is a big goose egg. The Hockey Canada
spokesman, Ron Robinson told me: `We cannot tell you
how much money went to Eagleson without Alan's
permission, but he has the information if he wants to
share it with you . . . .'
. . . .
And, the man with the information, Alan Eagleson,
won't give us an answer. While he has always
maintained that he `doesn't take a dime from
international hockey', former employees dispute that
and now he admits that Hockey Canada pays some
`overhead'. How much overhead? He won't say. Does he
get money from promoting Intl. [sic] Hockey; from rink-
board advertising as one player assured us he does?
App. at 118-19 (emphasis added). The report further stated:
[Eagleson] is a different person when he negotiates for
you against his friends Wirtz and Ziegler [as compared
to when he negotiates his own contract with the
NHLPA]. Our tiger becomes a pussycat. No research, no
preparations, no surprise attacks, no strike threats, no
goals. As one G.M. put it [as quoted in the Sports
Illustrated article]: `Al delivers us the players and we
give him international hockey. It's that simple.' A quid
pro quo. It is no wonder the League put him in the
Hockey Hall of Fame . . . .
. . . .
. . . Harold Ballard called the 1982 collective
bargaining agreement `a joke on the players'. Alan
[Eagleson] wants to head international hockey. He can
only do so if the NHL owners and Ziegler agree.
15
Therefore, he must not do things at the bargaining
table to antagonize them too much or they will dump
him--simple as that. Again, Trottier's agent commented
on Alan's conflict: `They can take international hockey
away from Alan so they have him where they want and
that isn't right.'
App. at 121-22, 155 (emphasis in original).2
The 1991 Alberta Labour Relations Board petition
In June 1991, agent Rich Winter--whose name is listed
along with Garvey's on the 1989 report--filed a petition
with the Alberta Labour Relations Board on behalf of two
NHL players seeking to void the 1988 CBA on the grounds
of collusion between Eagleson and the owners. See Forbes,
19 F. Supp. 2d at 365. The petition alleged that there was
an "arrangement between the NHL and Eagleson pursuant
to which Eagleson delivers the players to the NHL under
the terms of a Collective Agreement more advantageous to
the NHL than it would have been had Eagleson negotiated
for the NHLPA in good faith in exchange for which the NHL
granted Eagleson the permission he needs to run
international hockey." App. at 608. The petition further
alleged as follows:
Eagleson, his family, and various firms or corporations
in which he or his family have an interest, had a
financial interest in the organization of each of
Canada's entries assembled by Eagleson for the World
Ice Hockey Championships and the Canada Cup
tournaments organized by Eagleson. Eagleson, his
family, and various firms or corporations in which he
or his family have an interest, received the following in
exchange for Eagleson's involvement in organizing
these events:
a. fees;
b. profits from the sale of television and other rights
for the events initially acquired by Eagleson, his
family, or said firms or corporations, at less than fair
_________________________________________________________________
2. The district court described the Garvey Report at greath length. See
Forbes, 19 F. Supp. 2d at 363-64.
16
market value through Eagleson's efforts in breach of
Eagleson's fiduciary duties to the NHLPA;
c. free travel and accommodation vouchers;
d. indirect payments received from firms or
corporations owned by Arthur Harnett, [insurance
broker] Robert Bradshaw, or Harold Ballard but
operated and controlled by Eagleson;
e. reimbursement of overhead expenses, some of
which had previously been reimbursed by the
NHLPA; and
f. payment or reimbursement of the salaries of
individuals employed by Eagleson, his family or said
firms or corporations for services other than services
rendered in respect of the events from which
Eagleson arranged for reimbursement.
The [petitioners] estimate the total profits received by
Eagleson, his family or firms or corporations in which
they have an interest, to be in the millions of dollars.
. . . .
To assure himself of the NHL's support for his
assembling Canada's team at the World Ice Hockey
Championships and the Canada Cups, Eagleson agreed
with the NHL to use his influence to cause the NHLPA
to negotiate for less than it could have achieved in
collective bargaining conducted in good faith without
such influence . . . .
App. at 611-12.
The petition eventually was dropped on the basis of an
agreement of the parties. App. at 645.
The 1991 Eagle-Tribune articles
In September 1991, The Eagle-Tribune of Lawrence,
Massachusetts, published a series of articles on the subject
of "[i]ntrigue and conflict in the world of big-time hockey."
App. at 646-78. These articles discussed the Sports
Illustrated article, the Garvey report, and the Alberta
Labour Relations Board petition and their contents. The
17
articles in The Eagle-Tribune, however, listed several "major
findings," including the following:
The head of the players' union, Eagleson, has
repeatedly placed himself in a position of conflict of
interest between players and team owners, and
between union and personal business. Some players
and other agents charge the players have wound up
the losers. Meanwhile, they contend, Eagleson has won
the favor of the league and team owners and advanced
his own career, becoming perhaps the most powerful
man in hockey.
. . . .
Eagleson became Canada's international hockey czar
by obtaining the blessing of NHL owners, with whom
he has bargained on behalf of the players. Eagleson
also has close ties with NHL executives and some
individual owners, but maintains he has been able to
remain a tough negotiator for the players.
. . . .
Hockey players, who face the most restrictive free agent
rules in North American professional sports, may have
lost a major chance to win free agency when they
consented to a 1979 merger between the NHL and the
rival World Hockey Association (WHA). As a result,
according to one study, hockey salaries have slumped
in relation to salaries in the three other major sports.
App. at 646-47. Citing the Sports Illustrated article, The
Eagle-Tribune indicated that, because Eagleson needed NHL
approval to use NHL players in international tournaments,
"[c]ritics say that makes Eagleson beholden to the same
people he has bargained with on behalf of the players."
App. at 655.
The 1994 indictment
In March 1994, a grand jury in the District of
Massachusetts indicted Eagleson on 32 counts of
racketeering, mail fraud, embezzlement of labor
organization assets, witness tampering, and accepting
kickbacks affecting an employee welfare benefit plan. App.
18
at 296. The indictment included specific allegations that,
over a period of many years, Eagleson obtained improper
personal profits from international tournaments and from
his position of control over the players' disability insurance
program. The indictment included the following allegations,
among others:
Eagleson stole profits from the sale of rinkboard
advertising for various international tournaments--
profits which properly belonged to the NHLPA, the
NHL, and Hockey Canada. These profits included air
travel passes tendered by Air Canada as payment for
rinkboard advertising space. Eagleson kept these
passes for his personal use and for the use of his
family and associates. Eagleson also provided Air
Canada with tickets to Canada Cup games in return
for air passes which he converted to his own use. The
indictment also alleged that Eagleson transferred
advertising rights for the 1991 Canada Cup
tournament to a company, All Canada Sports
Promotions, Ltd. which was controlled by one of
Eagleson's business associates, Irving Ungerman, and
that All Canada Sports Promotions, Ltd. resold the
rights and paid Eagleson a portion of its profit. The
indictment further charged that Eagleson's "interest in
and involvement with rinkboard advertising sales at
international hockey tournaments, and his
arrangement with Air Canada, and income and value
derived therefrom, was hidden and undisclosed to the
members of the NHLPA," and it alleged that Eagleson
made "false and fraudulent representations concerning
his activities associated with the Canada Cup
tournaments and other international hockey events."
App. at 319.
Eagleson received kickbacks from insurance brokers in
exchange for placing the NHLPA's insurance business
with those brokers. These kickbacks included cash
payments and insurance for Eagleson and his family at
little or no cost.
Eagleson falsely represented to NHLPA members that
neither he nor his family had received any money from
international hockey events.
19
Eagleson, acting as chief negotiator for Hockey Canada,
"paid unnecessary, inappropriate and excessive
salaries and incurred other unnecessary and
inappropriate expenses on behalf of Hockey Canada,
including monies paid to members of Eagleson's family,
business associates of Eagleson, and companies with
which Eagleson was associated." App. at 314-15.
Eagleson "falsely represented to [NHLPA] members that
. . . NHLPA expense records were properly kept, and
that an `independent audit' of NHLPA records found no
improper benefits or practices." App. at 331.
Eagleson made false representations to two injured
players, Glen Sharpley and Bob Dailey, in the course of
charging them improper fees for Eagleson's assistance
in collecting on their disability claims. When members
of the NHLPA raised concerns about Eagleson's
behavior toward these two players, Eagleson falsely
represented to NHLPA members that Sharpley's claim
was a "difficult case" requiring the assistance of
outside counsel. Eagleson did not disclose that
Eagleson himself was the outside counsel whose
assistance Sharpley paid for. App. at 346.
According to an affidavit from an Assistant U.S. Attorney,
the indictment resulted from a "lengthy and
comprehensive" investigation which produced information
and evidence "much of which was not and is not publicly
available." App. at 283-84.3
_________________________________________________________________
3. Eagleson eventually pled guilty in January 1998 to an information
alleging three counts of mail fraud. Count One alleged that Eagleson
sent a letter to NHLPA members in 1989 falsely representing that neither
he, nor his family or any company with which he was associated, ever
had received any money directly or indirectly from international hockey
events. Count Two alleged that Eagleson fraudulently converted NHLPA
funds to his personal benefit by causing the NHLPA to incur expenses
for clothing, theater tickets, and other goods and services. Eagleson sent
a letter to NHLPA members in 1989 falsely representing that no such
improper expenditures had occurred. Count Three alleged mail fraud
based on a 1989 letter from Eagleson to members of the NHLPA which
made false representations regarding Eagleson's involvement in the
handling of Glen Sharpley's disability claim. App. at 183-96, 370-75.
20
II. DISCUSSION
A. Accrual of Plaintiffs' Claim
The first question we address is when plaintiffs' Count I
claim accrued. While RICO does not include a limitations
period for civil claims, the Supreme Court held in Agency
Holding Corp. v. Malley-Duff Assocs., 483 U.S. 143, 156,
107 S. Ct. 2759, 2767 (1987), that the four-year limitations
period in civil antitrust actions seeking treble damages
under the Clayton Act is applicable to RICO actions. 4 See
also Klehr v. A.O. Smith Corp., 521 U.S. 179, 183, 117 S. Ct.
1984, 1987 (1997). That conclusion, however, did not
establish when a RICO claim accrues, i.e., when the four-
year term starts running. Following the Supreme Court's
decision in Malley-Duff, we established our accrual rule in
Keystone Insurance Co. v. Houghton, 863 F.2d 1125 (3d Cir.
1988), as follows:
The rule which we announce provides that the
limitations period for a civil RICO claim runs from the
date the plaintiff knew or should have known that the
elements of a civil RICO cause of action existed, unless,
as a part of the same pattern of racketeering activity,
there is further injury to the plaintiff or further
predicate acts occur which are part of the same
pattern. In that case, the accrual period shall run from
the time when the plaintiff knew or should have known
of the last injury or the last predicate act which is part
of the same pattern of racketeering activity. The last
predicate act need not have resulted in injury to the
plaintiff but must be part of the same `pattern.'
Id. at 1126.
However, due to two Supreme Court opinions, the rule
governing the accrual of civil RICO claims has changed
several times in recent years and thus Keystone does not
remain the law. First, in Klehr the Court specifically
rejected the "last predicate act" portion of our rule in
Keystone on the ground that it "creates a limitations period
that is longer than Congress could have contemplated." See
_________________________________________________________________
4. We are exercising plenary review on this appeal. See Nelson v. Upsala
College, 51 F.3d 383, 385 (3d Cir. 1995).
21
521 U.S. at 187, 117 S.Ct. at 1989. The Court noted that
other courts of appeals had adopted one of two accrual
rules for RICO claims: (1) an "injury and pattern discovery"
rule, under which a RICO claim accrues when the plaintiff
discovers, or reasonably should have discovered, both the
existence and source of his injury and that the injury is
part of a pattern of racketeering activity, and (2) an "injury
discovery" rule, under which a RICO claim accrues when
the plaintiff simply discovers or should have discovered his
injury. See id. at 185, 117 S.Ct. at 1988-89; Annulli v.
Panikkar, 200 F.3d 189, 195 (3d Cir. 1999). The Court
declined to resolve this conflict, however, choosing instead
to leave the matter for another day as the statute of
limitations barred the action before it under either
formulation. See id. at 191-93, 117 S.Ct. at 1991-92.
In the wake of Klehr, we chose to follow the"injury and
pattern discovery" rule; in effect, we adhered to the
Keystone rule minus the "last predicate act" exception
which the Supreme Court had rejected in Klehr . See
Annulli, 200 F.3d at 192, 195; see also Rolo v. City
Investing Co. Liquidating Trust, 155 F.3d 644, 656 (3d Cir.
1998). Thus, under Annulli, "a civil RICO claim accrues and
the statute of limitations begins to run when the plaintiff
knew or should have known that each element of a civil
RICO claim existed--namely, that he was injured, that the
defendant was the source of this injury, and that a pattern
of activity prohibited by RICO caused this harm." Annulli,
200 F.3d at 195. The district court applied the"injury and
pattern discovery" rule in this case. See Forbes, 19 F.
Supp.2d at 356-57.
Earlier this year, however, the Supreme Court rejected
the "injury and pattern discovery" rule. See Rotella v. Wood,
120 S. Ct. 1075, 1078-80 (2000). In its place, the Court
contemplated that it eventually would adopt one of two
accrual rules: (1) an injury discovery rule, or (2) an "injury
occurrence rule" under which knowledge of injury would be
irrelevant. The Court, however, again left the matter
unsettled, as it decided that at that time it would not
choose between the rules. See id. at 1080 n.2.
Thus, once again we must make a decision regarding
when a RICO action accrues even though we are aware that
22
the Supreme Court ultimately may accept or reject our
choice. After careful consideration, we will adopt an injury
discovery rule rather than an injury occurrence rule. We do
so for what seems to us to be the sound reason that the
injury discovery rule is in harmony with the general notion
that a discovery rule applies whenever a federal statute of
limitation is silent on the issue.5 Under the injury discovery
rule, we must determine when the plaintiffs knew or should
have known of their injury. Thus, we alter the judicial
landscape unfavorably to the plaintiffs from the shape in
which it existed when this case was before the district court
and consider the case under an accrual rule more adverse
to plaintiffs than that the district court applied.
We, of course, start with the complaint. Count I of
plaintiffs' fourth amended complaint describes the alleged
injury as follows:
64. The object and purpose of the racketeering act ivity
. . . was to cause Eagleson . . . and the NHLPA to come
under the influence and control of the NHL, the
Member Clubs, Ziegler, and Wirtz, and to fail to
aggressively represent the interests of the NHLPA
players by granting unreasonable concessions to and
failing to seek benefits from the NHL and the Member
Clubs during the period from the mid-1970's through
at least the end of 1991 . . . . The further object and
purpose was to enable the Member Clubs to pay far
less in compensation to the NHLPA players then they
would otherwise have paid, thereby unjustly enriching
themselves at the players' expense.
. . . .
72. As a direct and proximate result of the conduc t of
defendants described above, the plaintiffs and each
member of the plaintiff class have been injured in their
business or property, as provided, in 18 U.S.C.
S 1964(c), including, but not limited to, losses of
hundreds of thousands of dollars, each, in salary and
other benefits which they would have earned as
_________________________________________________________________
5. The parties do not dispute that Rotella applies retroactively to this
case.
23
employees of the Member Clubs but for the illegal
activity set forth above.
App. at 67-68.
On the record before us, it is clear as a matter of law that
plaintiffs were aware, or should have been aware, of the
injuries they alleged at least as early as 1989. The Garvey
report, issued to NHLPA members that year, argued
extensively that NHL players were receiving reduced salary
and benefits as a result of Eagleson's failure to engage in
vigorous collective bargaining. The report stated that "[n]o
benefits of any significance have been achieved in the entire
decade of the 80's through collective bargaining" and
charged that "the [NHLPA] has gone backward while sports
unions in all other sports have made major gains." The
report presented statistics to show that NHL players are
"last [in professional sports] in salaries, benefits, percentage
of gross, and in information." App. at 106. The report
argued that Eagleson's failure to bargain vigorously against
the NHL owners was the reason for the players' poor
situation:
Frankly, if any other union leader did what Alan
Eagleson has done over the past 22 years, the news
media would be screaming for an investigation. The
conflicts of interest are shocking, but even more
shocking is a pattern of sweetheart agreements with
the NHL over all these years. It may sound harsh, but
he has not pursued player interests at critical times in
your history as a union. There is a legitimate question
whether there is, in fact, a `players' association. For the
most part, it seems that Alan runs the Association as
his private preserve . . . .
. . . .
Last on the list [of professional sports with respect to
such matters as free agency, impartial arbitration, and
players' percentage of gross revenues] is the NHL. Last
because the Players Association under Alan Eagleson
has never been prepared for bargaining. We don't know
how tough the NHL is at the bargaining table because
they have never been tested. Never a serious law suit
filed against the league to obtain free agency, and,
24
when they had it handed to them on a plate with the
proposed WHA-NHL merger, Eagleson gave away player
freedom without a whimper.
. . . .
Alan Eagleson is a brilliant attorney and politician.
He admits that John Ziegler is one of his best friends
and Bill Wirtz, who lives near him in Florida, is an
extremely close friend despite the fact that Wirtz is the
chief negotiator for the NHL. Given his brilliance, there
is really no excuse for the lack of preparation for
bargaining except one--he does not take bargaining
seriously because he is comfortable with the cozy
relationship that has been so good for him . . . .
. . . .
Alan Eagleson has been a vital part of the NHL
establishment. He has contributed greatly [through his
failure to bargain aggressively with the owners] to
keeping salaries down, profits up. He has helped
maintain [the NHL's] monopoly status, he keeps
players tied up [by failing to bargain for free agency],
he allows the League to control through non-impartial
arbitration; he eliminates freedom whenever it raises
its ugly head; and he keeps you in the dark on the
economics of the League while singing management's
song about the `fragile' NHL.
App. at 109, 110, 112, 145 (emphases in original).
We have no doubt that by 1989 (and probably earlier),
NHL players were aware that they did not enjoy similar
salaries, free agency rights, or other advantages available to
players in other professional sports. Furthermore, we do
not understand how anyone who has considered the Garvey
report--which was commissioned at the behest of some 200
NHL players--can doubt that it should have led the players
to believe that their situation was largely a result of the
"cozy" collective bargaining relationship between Eagleson
on the one hand and Ziegler, Wirtz, and the owners on the
other. Thus, by 1989 at the latest, plaintiffs were aware, or
should have been aware, of the injury which they allege in
Count I (reduced salary and benefits) and the source of the
25
injury (the improper bargaining behavior by Eagleson).
Under an injury discovery rule, nothing more was required
to trigger the running of the four-year limitations period.
See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d
1380, 1386 (3d Cir. 1994) (limitations period commences
when "plaintiff has discovered or, by exercising reasonable
diligence, should have discovered (1) that he or she has
been injured, and (2) that this injury has been caused by
another party's conduct"; "We have in the past stated that
a claim accrues in a federal cause of action upon
awareness of actual injury, not upon awareness that this
injury constitutes a legal wrong").6
Indeed, possibly aware that clearly their Count I claim
accrued prior to November 7, 1991, the plaintiffs argue that
--regardless of their awareness of the alleged injury--the
statute of limitations was tolled until 1994 (when Eagleson
was indicted) because defendants' acts of fraudulent
concealment prevented them from learning facts essential
to pleading the predicate acts of bribery underlying their
Count I claim. Thus, we now turn to the issue of fraudulent
concealment.
B. Fraudulent Concealment
In Rotella, the Supreme Court stated that,"[i]n rejecting
pattern discovery as a basic rule, we do not unsettle the
understanding that federal statutes of limitations are
generally subject to equitable principles of tolling, and
where a pattern remains obscure in the face of a plaintiff 's
diligence in seeking to identify it, equitable tolling may be
_________________________________________________________________
6. Plaintiffs contend that the district court made errors with respect to
its allocation of the burden of proof. If we were reviewing a judgment
entered by the district court predicated on findings made at a nonjury
trial we would be obliged to consider these contentions but inasmuch as
we are exercising plenary review of a summary judgment, we have no
need to make an analysis of the district court's allocation of the burden
of proof. After all, we are applying the law ourselves to the historical
facts and, even though we reach the same result as did the district
court, we make our determinations on the basis of the law as we find it
to be for the reasons we have set forth. Thus, it does not matter whether
the district court erred with respect to placing the burden of proof as we
do not defer to its decision.
26
one answer to the plaintiff 's difficulty . . .." Rotella, 120
S. Ct. at 1084 (citation omitted). Unlike the discovery rule,
which determines the time of the initial commencement of
a limitations period, "[e]quitable tolling functions to stop
the statute of limitations from running where the claim's
accrual date has already passed." Oshiver, 38 F.3d at 1387.
Among the circumstances warranting equitable tolling are
situations where "the defendant has actively misled the
plaintiff respecting the plaintiff 's cause of action," i.e.
fraudulent concealment. Id. at 1387. "[W]here the plaintiff
has been actively misled . . . the equitable tolling doctrine
provides the plaintiff with the full statutory limitations
period, starting from the date the facts supporting the
plaintiff 's cause of action either become apparent to the
plaintiff or should have become apparent to a person in the
plaintiff 's position with a reasonably prudent regard for his
or her rights." Id. at 1389. We have described the
differences between the discovery rule inquiry and the
equitable tolling inquiry as follows:
[T]he discovery rule and the equitable tolling doctrine
are similar in one respect and different in another. The
doctrines are similar in that each requires a level of
diligence on the part of the plaintiff; that is, each
requires the plaintiff to take reasonable measures to
uncover the existence of injury. The plaintiff who fails
to exercise this reasonable diligence may lose the
benefit of either doctrine. The two doctrines differ,
however, with respect to the type of knowledge or
cognizance that triggers their respective applications.
The discovery rule keys on a plaintiff 's cognizance, or
imputed cognizance, of actual injury. Equitable tolling,
on the other hand, keys on a plaintiff 's cognizance, or
imputed cognizance, of the facts supporting the
plaintiff 's cause of action. Underlying this difference
between the discovery rule and equitable tolling is the
more fundamental difference in purpose between the
two rules. The purpose of the discovery rule is to
determine the accrual date of a claim, for ultimate
purposes of determining, as a legal matter, when the
statute of limitations begins to run. Equitable tolling
. . . presumes claim accrual. Equitable tolling steps in
27
to toll, or stop, the running of the statute of limitations
in light of established equitable considerations.
Id. at 1390 (emphasis added) (citations and footnotes
omitted).
We have indicated that the plaintiff has the burden of
proving fraudulent concealment. See In re Lower Lake Erie
Iron Ore Antitrust Litig., 998 F.2d 1144, 1179 (3d Cir.
1993). The plaintiff must show active misleading by the
defendant, see Oshiver, 38 F.3d at 1391 n.10, and must
further show that he exercised reasonable diligence in
attempting to uncover the relevant facts. See id. at 1390;
see also Klehr, 521 U.S. at 194, 117 S.Ct. at 1993 (in the
civil RICO context, " `reasonable diligence' does matter, and
a plaintiff who is not reasonably diligent may not assert
`fraudulent concealment.' "). Further, the plaintiff must
show that he actually was "mis[led] . . . into thinking that
he d[id] not have a cause of action," Davis v. Grusemeyer,
996 F.2d 617, 624 (3d Cir. 1993); in other words, the
tolling lasts only "until the plaintiff knows, or should
reasonably be expected to know, the concealed facts
supporting the cause of action . . . ." Oshiver, 38 F.3d at
1392. Thus, ordinarily when plaintiffs seek to demonstrate
a case for equitable tolling, and defendants seek summary
judgment on the issue, a court must determine (1) whether
there is sufficient evidence to support a finding that
defendants engaged in affirmative acts of concealment
designed to mislead the plaintiffs regarding facts supporting
their Count I claim, (2) whether there is sufficient evidence
to support a finding that plaintiffs exercised reasonable
diligence, and (3) whether there is sufficient evidence to
support a finding that plaintiffs were not aware, nor should
they have been aware, of the facts supporting their claim
until a time within the limitations period measured
backwards from when the plaintiffs filed their complaint.
Absent evidence to support these findings there is no
genuine dispute of material fact on the issue and the
defendants are entitled to summary judgment. See
Northview Motors, Inc. v. Chrysler Motors Corp., No. 99-
3873, ___ F.3d ___, 2000 WL 1273953, at *8 (3d Cir. Sept.
8, 2000).
28
We will assume without deciding that the defendants,
particularly Eagleson, engaged in affirmative acts of
concealment designed to mislead plaintiffs about a fact
supporting their Count I claim--namely, the fact that
Eagleson was profiting personally from his control over the
international tournaments and the disability insurance
program. We also will assume without deciding that the
plaintiffs exercised reasonable diligence in an attempt to
uncover the relevant facts. Nevertheless, we will affirm the
order for summary judgment as the plaintiffs either knew
or reasonably should have known the facts supporting their
course of action well prior to four years before they brought
this case on November 7, 1995.
As the NHL defendants correctly indicate, the allegations
in the Complaint against them appeared in the 1984 Sports
Illustrated article and 1989 Garvey Report, and a virtual
carbon copy of the complaint was filed with the Alberta
Labour Relations Board before the limitations period
expired. See app. at 601-44. Thus, the plaintiffs knew of
sufficient facts to support their claim at least 6 years before
they filed this case. In particular, they certainly knew of
Eagleson's poor representation of them and that, with the
cooperation of the NHL defendants, he was profiting from
international hockey through use of the players' labors.
Although it is true that Eagleson denied wrongdoing,
nonetheless, his denials do not allow plaintiffs, who were
aware of their potential claim, to allege ignorance.
Moreover, inasmuch as civil RICO actions tend to arise in
business situations in which the defendants will deny
wrongdoing, an expansive application of tolling rules will
create a limitations period beyond what Congress
contemplated. See Klehr, 521 U.S. at 187, 117 S. Ct. at
1989.
We also point out that while the Supreme Court in
Rotella indicated that "where a pattern remains obscure in
the face of a plaintiff 's diligence in seeking to identify it,
equitable tolling may be . . ." applicable, Rotella, 120 S. Ct.
at 1084, there was nothing obscure about the actionable
conduct here. The Garvey report said the "conflicts of
interest are shocking" and "even more shocking is a pattern
of sweetheart agreements." App. at 109. Furthermore, it
29
had been evident for many years that Eagleson used his
position for personal illegitimate gain.
We recognize that plaintiffs insist they lacked sufficient
information until Forbes was indicted to plead their RICO
claim consistently with Fed. R. Civ. P. 11 and, indeed,
support this contention with their affidavits. But we are
satisfied that plaintiffs' statements on this point do not
create a genuine dispute of fact precluding the district
court from granting summary judgment on the tolling issue
as the unmistakable historical facts demonstrate that the
plaintiffs were aware or should have been aware of the facts
supporting their Count I claim long before November 7,
1991. Thus, contrary to plaintiffs' position, we have no
doubt that they and their attorneys could have signed a
federal complaint consistently with Rule 11 prior to
November 7, 1991.7 As the district court noted, plaintiffs
"could have actually pled almost every allegation in their
complaint concerning defendants alleged S 302 violations"
based on the facts contained in the various publications
available to them. Forbes, 19 F.3d at 372. Furthermore, the
Garvey report which was available to them long before
November 7, 1991, gave the plaintiffs an additional basis
for the action.
Although Rule 11 imposes a duty of reasonable inquiry
as to the facts set forth in a pleading, Dura Systems, Inc. v.
Rothbury Investments, Ltd., 886 F.2d 551, 556 (3d Cir.
1989), "[i]t is not necessary that an investigation into the
facts be carried to the point of absolute certainty." Kraemer
v. Grant County, 892 F.2d 686, 689 (7th Cir. 1990). We so
held in Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 95
(3d Cir. 1988) (citations omitted), in which we overturned
an award of sanctions under Rule 11 indicating,
At the time plaintiffs' counsel filed the [antitrust]
complaint here, he knew facts that supported a
_________________________________________________________________
7. Plaintiffs seem to contend that prior to its amendment in 1993 Rule
11 placed a more stringent burden on a person signing a pleading than
it did following the amendment and that we should consider the effect of
Rule 11 as it existed prior to the amendment. We are satisfied, however,
that Rule 11, either before or after 1993, was not an impediment to
plaintiffs bringing this action long before they did so.
30
reasonable suspicion of cooperation between
defendants and other parties who could have been
expected to benefit from the defendants' intransigence.
These factual circumstances and the rational
inferences that may be drawn from them convince us
that the allegations of the first count comported with
Rule 11's pre-filing investigation requirement.
See also Morda v. Klein, 865 F.2d 782, 785-86 (6th Cir.
1989) ("It would be particularly difficult to fault plaintiffs
for a lack of prefiling inquiry when, as here, defendants
have refused plaintiffs access to material information that
would bear on certain allegations made in the complaint.").
In this regard we point out that "[a] signer's obligation
personally to comply with the requirements of Rule 11
clearly does not preclude the signer from any reliance on
information from other persons." Garr v. U.S. Healthcare,
Inc., 22 F.3d 1274, 1278 (3d Cir. 1994). It is inconceivable
to us that if plaintiffs had brought this action in a timely
fashion and had been unsuccessful that a court would have
found that the imposition of Rule 11 sanctions against
them for having filed the complaint would have been
appropriate.8
Finally, we are not impressed with the plaintiffs'
argument that they were justified in delaying bringing their
action as the government, notwithstanding its resources,
did not obtain an indictment until 1994 after it completed
its investigation. After all, even though RICO is a criminal
statute, surely civil RICO cases are brought in situations in
which it is hardly conceivable that there could be a criminal
indictment. See Tabas v. Tabas, 47 F.3d 1280, 1302, 1310
(3d Cir. 1995) (en banc) (Greenberg, J., dissenting). Thus,
the mere fact that the government did not obtain an
indictment before a time within plaintiffs' four-year statute
_________________________________________________________________
8. We are not holding that merely because plaintiffs could have filed
their
complaint long before they did without violating Rule 11, that their
failure to do so precludes tolling on a fraudulent concealment basis.
Rather, we simply are holding that Rule 11 does not save plaintiffs' claim
in the circumstances of this case. We do not determine whether there is
a class of claims in which the statute of limitations is tolled even
though
the potential plaintiffs could have filed a complaint during the tolling
period without violating Rule 11.
31
of limitations period does not mean that the statute of
limitations in this case should be deemed equitably tolled
until the return of the indictment.
III. CONCLUSION
For the foregoing reasons the orders for summary
judgment entered August 27, 1998, and September 10,
1999, as made final by order entered October 14, 1999, will
be affirmed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
32