In this case, the Supreme Court clarified when a civil RICO claim accrues for statute of limitations purposes and held that acts of "fraudulent concealment" by a defendant will not toll (stop the running of) the statute of limitations unless a plaintiff was "reasonably diligent" in attempting to discover a defendant's unlawful activity.The petitioners in this case were dairy farmers who brought their civil RICO suit in 1993. In 1991, they discovered longstanding defects in a silo that they had purchased from respondents in 1974. To bring their RICO claim within the applicable four-year statute of limitations, petitioners argued that respondents' fraudulent conduct in connection with this sale continued into 1989 and that it concealed their injuries. The Eighth Circuit rejected these arguments and held that the RICO claim accrued sometime before 1989 -- when the petitioners should have discovered their injuries and respondents' pattern of conduct.
The Supreme Court affirmed. First, the Court rejected petitioners' assertion that their claim was timely because the last predicate act of fraud had occurred within four years of their filing date. The Court first noted that this position created a limitations period "longer than Congress could have contemplated" and that it was "inconsistent with the ordinary Clayton Act rule," which the Court had previously held to be " the most appropriate limitations period for RICO actions." In rejecting the last-predicate-act standard of accrual, the Court expressly reserved the question whether a claim accrues when a plaintiff discovers both an injury and a pattern or when the plaintiff simply discovers an injury.
Second, the Court held that a defendant's fraudulent concealment of the underlying injury does not toll the civil RICO statute of limitations unless a plaintiff was "reasonably diligent" in trying to discover this injury. Again drawing heavily on antitrust decisions, the Court reasoned that a civil RICO action exists "to encourage those victims themselves diligently to investigate and thereby to uncover unlawful activity."
The NAM filed an amicus brief urging the Court to reject the "last predicate act" rule in determining when the statute of limitations period begins to run. Instead, a four-year period should begin to run when the alleged injuries and legal violations are readily apparent and there have been no affirmative acts of fraudulent concealment.