Although the “discovery of injury” rule stated in the Bankers’ Trust opinion has become the prevailing accrual standard, the Bankers’ Trust opinion also stood for the proposition that “a plaintiff may sue for any injury he discovers or should have discovered within the four years of commencement of the suit, regardless of when the RICO violation causing such injury occurred.” 859 F.2d at 1103. In short, the Second Circuit was opposed to the notion that the statute of limitations could bar a claim based on an injury that had not yet occurred or had occurred within the four-year limitation period. Accordingly, the Bankers’ Trust decision guaranteed that the plaintiff could always recover for any injuries that occurred within four years of filing the claim.
Although not as problematic as the “last predicate act” rule, that allowed plaintiffs to bring suit within four years of the defendant’s last predicate act and recover for all injuries that were ever caused by the pattern of racketeering activity, Bankers’ Trust’s four-year free ticket also ran contrary to the plaintiff’s obligation to pursue its action with diligence.
To avoid a four-year free ticket and to obligate a plaintiff to act with diligence, most circuit courts have adopted the principle that civil RICO’s statute of limitations is restarted only when the plaintiff experiences a “new and independent” injury. For example, in Glessner v. Kenny, 952 F.2d 702 (3d Cir. 1991), the plaintiffs alleged that the defendant engaged in a scheme of fraudulent advertisements that caused them to purchase the defendant’s defective furnace. Plaintiff’s argued that they were injured when they purchased the furnace and that they were further injured when they had to buy replacement furnaces. Plaintiff’s purchases of defendant’s defective furnace were beyond the four-year limitations period and, thus, were barred, but plaintiffs argued that they were nonetheless entitled to recover for the expense of replacing the furnaces. The court disagreed:
. . . if Glessner’s only injury was limited to servicing his “blue flame” unit, the fact that he continued to service his unit after June, 1984 [the suit was filed in June 1988] could not be considered a “further injury” sufficient to revive the RICO cause of action. We do not regard the need ultimately to replace the unit to be a “separate” or “independent” type of injury [necessary to restart the statute of limitations] . . . . While the cost of replacement of the unit may be an element of damage, the mere continuation of damages into a later period will not serve to extend the statute of limitations.
Id. at 708. To constitute a new and independent injury sufficient to restart the statute of limitations with regard to those injuries, the new and independent injuries must be caused by a new pattern of racketeering.
As in Glessner, the Klehr plaintiff’s initial injury occurred when they purchased an allegedly defective silo. The plaintiffs thereafter experienced on-going injuries as a result of the alleged herd health problems that were caused whenever the silo was used. As explained by the Eighth Circuit in Klehr, the plaintiff’s injuries were not new and independent:
. . . [The plaintiff's] injuries are all [part] of . . . one cognizable pattern of conduct – [the defendant's] alleged misrepresentations regarding the [product]. We believe that these separate, discrete “injuries” that the [plaintiffs] identify are more appropriately categorized as one single, continuous injury that was sustained sometime in the 1970s [when the product was purchased] and for which the limitations period [expired long before the plaintiffs filed their complaint] . . . .
Id. at 239. Thus, in both Glessner and Klehr, the courts held that the plaintiffs’ damage claims were entirely barred by the statute of limitations even though injuries continued to occur within the limitations period. The injuries occurring within the limitations period were simply a continuation of the same injury that was sustained by the plaintiffs when they bought the allegedly defective products.
In 2008, the Seventh Circuit Court of Appeals further explained the nature of “continuing violations” and their impact (or lack thereof) on the running of the statute of limitations:
Like too many legal doctrines, the “continuing violation” doctrine is misnamed. . . . The statute of limitations begins to run upon injury (or, as is standardly the case with federal claims, upon discovery of the injury) and is not tolled by subsequent injuries. [Citations omitted.]
The office of the misnamed doctrine is to allow suit to be delayed until a series of wrongful acts blossoms into an injury on which suit can be brought. . . . It is thus a doctrine not about a continuing, but about a cumulative violation. . .
. . . [Because RICO liability arises from a pattern of racketeering activity,] a RICO claim cannot accrue at the time of the first predicate act. [Citations omitted.] So if that act happened to occur more than four years before the second act [forming the pattern], the damage caused by the first act would still be recoverable in a RICO suit. This is not such a case. A pattern of trying to force out [plaintiff] without having to pay the fair market value of its property was well established before the 2003 predicate acts. If [plaintiff] wanted to include the old acts in its RICO suit, it had to sue by 2004.
. . . [Plaintiff] knew from at least 1993 that it was being injured by defendants, and from 2000 at the very latest that it was being injured by a pattern of racketeering activity. It had not excuse for waiting six years after that to sue.
Limestone Development Corp. v. Village of Lemont, Illinois, 520 F.3d 797, 801-802 (7th Cir. 2008).