Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc.

What This Case Is About

Kaiser Aluminum sued Avondale Shipyards for breach of a subcontract to supply aluminum tanks and insulation for liquefied natural gas vessels. Avondale counterclaimed that Kaiser had engaged in illegal tying arrangements — forcing Avondale to buy both tanks and insulation as a package — in violation of the antitrust laws. The Fifth Circuit affirmed the dismissal of Avondale’s antitrust counterclaim as time-barred and the striking of its antitrust defense.

The Facts

Avondale Shipyards was contracted to build three liquid natural gas vessels for El Paso Natural Gas Company. Avondale needed to subcontract the design and construction of the cryogenic cargo containment system. The only approved containment system used polyurethane spray insulation made by Kaiser Aluminum. Avondale alleged that Kaiser refused to sell the insulation unless Avondale also purchased aluminum tanks from Kaiser, and refused to submit separate bids for the two products — a classic antitrust “tying” arrangement.

Avondale agreed and entered into a $70,955,000 subcontract with Kaiser in May 1973. When Kaiser later sued for breach of that contract, Avondale raised the antitrust violation as both a counterclaim and an affirmative defense. The district court dismissed the counterclaim under Rule 12(b)(6) as prescribed (time-barred) and struck the antitrust defense under Rule 12(f).

What the Court Decided

The Fifth Circuit affirmed on both issues. On the antitrust counterclaim, the court held that the four-year statute of limitations for antitrust claims began to run when Avondale entered into the allegedly coerced contract in 1973, not when the harm was later felt. Avondale’s counterclaim, filed years later, was time-barred.

On the antitrust defense, the court upheld the district court’s decision to strike it under Rule 12(f), finding that the defense was insufficient as a matter of law. The court applied the established principle that an antitrust violation does not automatically render a contract void and unenforceable — it merely gives rise to a damages remedy.

Why This Case Matters for Your § 1983 Case

While Kaiser v. Avondale is an antitrust and contract case, it is cited in § 1983 litigation for several procedural principles:

• Statute of limitations: The case reinforces that limitations periods run from when the plaintiff knows or should know of the injury, not when consequences fully materialize. This principle applies directly to § 1983 claims, where the statute of limitations is borrowed from the state’s personal injury statute.
• Rule 12(b)(6) and 12(f) practice: The case illustrates how courts handle motions to dismiss counterclaims and motions to strike defenses — procedural tools that appear frequently in civil rights litigation.
• Contract defenses: If your § 1983 case involves a government contract, settlement agreement, or release, this case shows that alleged illegality in a contract does not automatically void it.

Key Takeaway

Claims and defenses based on alleged wrongdoing are subject to strict statutes of limitations that run from the time the wrongful act occurs — and procedural tools like Rule 12(b)(6) and Rule 12(f) can eliminate stale or legally insufficient claims at an early stage.