Princeton Economics Group, Inc.

Defendants in an alleged conspiracy to fix the prices charged for aspartame obtained summary judgment on the grounds that the plaintiffs' claims were barred by statute of limitations considerations. According to Judge Legrome D. Davis of the U.S. District Court for the Eastern District of Pennsylvania, the two named plaintiffs in this case ceased purchasing aspartame from the defendants more than four years before the filing of their complaints, and there was no justification for tolling the statute of limitations. The Judge concluded that there was insufficient evidence to prove that either plaintiff "exercised reasonable diligence" or "should not have been aware of the facts supporting their claims." The plaintiffs have responded to this ruling by filing a motion for reconsideration. It remains to be seen whether the summary judgment ruling will remain a sweet outcome for defendants or whether reconsideration will give the plaintiffs a renewed opportunity to obtain what they claim to be their just desserts.

The two plaintiffs in this case - Nog, Inc. and Sorbee International Ltd.- alleged that Ajinomoto U.S.A., Inc., Holland Sweetener North America, Inc., The NutraSweet Company, and related entities engaged in a worldwide conspiracy to allocate markets and set artificially high prices for aspartame, an artificial sweetener that is used in various foods and beverages. Counsel for plaintiffs alleged that "plaintiffs and other Class members did not discover, and could not have discovered through the exercise of reasonable diligence, that defendants were violating the antitrust laws... until shortly before this litigation was commenced." Counsel also argued that plaintiffs "exercised all due diligence during the Class Period including, among other ways, by promptly investigating the facts giving rise to [their] claims... upon having a reasonable suspicion of the existence of defendants' conspiracy... and by seeking discovery" to the extent permitted by law.

Plaintiffs filed their initial complaint on April 25, 2006. Accordingly, for plaintiffs to have a cause of action that falls within the four-year statute of limitations, plaintiffs must have purchased aspartame from one of the defendants some time after April 25, 2002. Because neither plaintiff did so, the Judge considered but then rejected plaintiffs' position that the statute of limitations should be tolled. The Judge concluded that "the record does not reveal any affirmative steps taken by either Nog or Sorbee to investigate the allegations in these claims or uncover the existence of their alleged injury."

Nog, which produced a sugar-free syrup used in ice creams, did not purchase aspartame from any defendant after July 1995, and its total purchases through that time amounted to less than $500. Despite knowing that the price of aspartame was "high" when it purchased from NutraSweet, Nog did not make any attempt to negotiate a lower price nor did it investigate why the price was so high. Nog did not have firsthand knowledge or information about the claims in its complaint, and Nog did not take any steps to investigate its claims during the proposed class period.

The other plaintiff, Sorbee, manufactured and distributed sugar-free products including hard candies and lollipops, some of which contained aspartame. Sorbee purchased aspartame from NutraSweet through mid-1999 but thereafter purchased from a distributor until March 2001 when it switched to sucralose. Sorbee executives were not aware of any attempts to purchase aspartame from any supplier other than NutraSweet and the plaintiff had no independent information or knowledge about the allegations in its complaint.

The Judge disagreed with the plaintiffs' claim that they are not required to exercise any due diligence because there were no "red flags" that would trigger the plaintiffs' obligation to investigate. Judge Davis stated that "though the warnings in this case are not extensive or unequivocal, there is no question that the record reveals the existence of a certain degree of warnings with respect to the aspartame market," and "in light of these warnings, it is clearly unreasonable for plaintiffs to have taken no steps or actions to investigate their claims." The Judge also noted that the plaintiffs failed to identify "what ultimately alerted plaintiffs to the existence of their claims," and without this information, "it is impossible to determine whether this information was available four years prior to the filing of the initial complaint."

PEG was retained by counsel for the defendants in this case. Defense counsel includes David Marx and Amanda Metts of McDermott Will & Emory LLP, Andrew Marovitz of Mayer Brown LLP, and Paul Hayes of Cleary Gottlieb Steen & Hamilton LLP. Dr. Peter Bronsteen and Dr. John Bigelow worked on this project for PEG.

A copy of Judge Davis's summary judgment opinion can be obtained by clicking this link: PDF Version of Summary Judgment Opinion. Questions about the litigation consulting services provided by PEG can be directed to Dr. Peter Bronsteen or Dr. John Bigelow.