Klehr Et Ux. v. A. O. Smith Corp. Et Al.

521 U.S. 179 (1997)

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Nature of the Case

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Facts

Klehr (P) filed a civil RICO action against A.O. Smith (Ds) in August 1993, claiming that their injury began in 1974 when they purchased a Harvestore brand silo for their dairy farm based on D's false representations that it would prevent moldy and fermented cattle feed, thereby producing healthier cows, more milk, and higher profits. The feed became moldy and fermented, and both milk production and profits declined. They added that D committed other predicate acts, consisting of repeated misrepresentations to Ps and others, and sales to others, over many years. Ds moved to dismiss on the ground that the limitations period had run because Ps' claim had accrued before August 1989, and no special legal doctrine applied to toll the running of the limitations period or estopp Ds from asserting a statute of limitations defense. Ps responded that because Ds had taken affirmative steps to conceal its fraud, they did not become sufficiently suspicious to investigate the silo and to discover the mold until 1991. The District Court found Ps' lawsuit untimely. The Eighth Circuit affirmed, holding that a civil RICO action accrues as soon as the plaintiff discovers, or reasonably should discover, both the existence and source of his injury and that the injury is part of a pattern; and that Ps had suffered one single, continuous injury sometime in the 1970s which they should have discovered well before August 1989. The Circuit refused to toll the running of the statute on a 'fraudulent concealment' theory because, among other things, Ps had not been sufficiently diligent in discovering their claim.