210 F.2d 732 (9th Cir. 1954), 13218, Las Vegas Merchant Plumbers Ass'n v. United States

Docket Nº:13218.
Citation:210 F.2d 732
Case Date:February 01, 1954
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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210 F.2d 732 (9th Cir. 1954)




No. 13218.

United States Court of Appeals, Ninth Circuit.

February 1, 1954

Rehearing Denied March 22, 1954.

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Alexander H. Schullman, Richard Ricahrds, Los Angels, Cal., David Zenoff, John W. Bonner, Las Vegas, Nev., for appellants.

Wallace Howland, Special Asst. to Atty. Gen., Don H. Banks, Arthur H. Tibbits, Trial Attorneys, Joseph C. Putnam, Harold Haidt, San Francisco, Cal., Attys., Anti-Trust Division, San Francisco, Cal., James W. Johnson, Jr., U.S. Atty., Reno, Nev., for appellee.

Before HEALY and BONE, Circuit Judges, and JAMES M. CARTER, District judge.

JAMES M. CARTER, District Judge.

This is an appeal by eleven defendants following conviction by a jury of violations of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note. The appellants consist of four corporations and seven individuals. 1 Fines were imposed on all appellants; three of the individual appellants were also sentenced to terms of six months in the custody of the Attorney General. All have appealed. The appeals are presented on one record but appellant Alsup has filed a separate notice of appeal and separate briefs.


The Sufficiency of the Indictment

All appellants contended in the trial court and contend here that the indictment does not state facts sufficient to constitute an offense against the United States.

The indictment in Sec. I. identifies the defendants (appellants herein) and in

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Sec. II sets forth definitions of terms. In Sec. III, set forth in the margin, 2 the trade and commerce involved is described.

In summary it alleges: Practically all plumbing and heating supplies used in southern Nevada are manufactured in other States and are sold and shipped in interstate commerce into Nevada. Plumbing contractors then distribute, sell and install these supplies and make a charge and obtain a profit from both the selling and installing; over three-fourths of all such supplies so used in southern Nevada are distributed, sold and installed by plumbing contractors who are members of the defendant association and defendant exchange, and a major part of all such supplies are distributed, sold and installed by the defendant plumbing contractors. The service performed by plumbing contractors in distributing, selling and installing such supplies is an integral part of, and necessary to the movement in interstate commerce of such supplies; plumbing contractors are conduits for such movement, such supplies flow in a continuous uninterrupted stream from points of origin out of state to places of use and installation in southern Nevada.

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Sec. IV of the indictment describes the offense charged. It alleges the beginning in August 1950, and continuing until the return of the indictment (March 27, 1951) the defendants named and others unknown, have conspired to unreasonably suppress and eliminate competition in the sale and distribution of plumbing and heating supplies in restraint of the interstate trade and commerce described, in violation of Sec. 1 of the Sherman Act, 15 U.S.C.A. § 1. It then describes a scheme to fix prices and to divide the available market by the employment and use of an 'estimator' who would figure a plumbing job and fix the price, to which the plumbing contractors would adhere. If two or more plumbing contractors were to bid on the job an allocation committee would designate who should submit the lowest bid. Complimentary and factitious bids at higher prices would be used. To enforce compliance with and adherence to the plan, defendant (appellant) Alsup would induce journeymen and apprentice plumbers not to work on any job for any plumbing contractor other than the one designated; that wholesalers would be boycotted if they sold or offered to sell such supplies at prices and terms not agreeable to defendant plumbing contractors.

Sec. V of the indictment alleges that the effect of the conspiracy charged has been to 'directly, unreasonably, arbitrarily and unlawfully restrain and obstruct the flow of plumbing and heating supplies in interstate commerce into southern Nevada' by:

(a) suppressing and eliminating competition among plumbing contractors in the sale, distribution and installation of plumbing and heating supplies by fixing prices for both the supplies and the subsequent installation of such supplies;

(b) narrowing and restricting the market in which builders, owners and other consumers are able to purchase such supplies in southern Nevada.

Sec. VI of the indictment alleges jurisdiction and venue.

Appellants have summarized their attack on the sufficiency of the indictment, as follows:

(1) The trial court failed to distinguish between intrastate and interstate commerce in denying the motion to dismiss the indictment.

(2) The indictment shows on its face that the plumbing contractors are engaged in the sale, distribution and installation of fabricated plumbing and heating systems rather than the re-sale or distribution of any specific item of such supplies.

(3) The fact that plumbing contractors are essential for the installation of plumbing and heating supplies shipped in interstate commerce is not sufficient to bring appellants within the purview of the Sherman Act.

(4) The allegations with respect to the flow of plumbing and heating supplies are insufficient to charge a violation of the Sherman Act.

In the enactment of the Sherman Act Congress exercised its full power over interstate commerce. U.S. v. Frankfort Distilleries, 1945, 324 U.S. 293, 298, 65 S.Ct. 661, 89 L.Ed. 951; U.S. v. Southeastern Underwriters Ass'n, 1944, 322 U.S. 533, 558, 64 S.Ct. 1162, 88 L.Ed. 1440; U.S. v. Chrysler Corp., etc., infra.

The Sherman Act therefore extends not only to transactions in the stream of interstate commerce, but also to intrastate transactions which substantially affect 3 interstate commerce. U.S. v. Chrysler Corp., etc., 180 F.2d at page 560

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infra; Mandevill Island Farms, Inc., v. American Crystal Sugar Co., 1948, 334 U.S. 219, 235, 68 S.Ct. 996, 92 L.Ed. 1328.

A. The indictment sufficiently alleges restraint of the flow of commodities in interstate commerce

The sufficiency of the 'in commerce' allegations of the indictment rests on the allegations showing the stream of commerce from out of state manufacturers and suppliers, thru the plumbing contractor as conduits to the final use and installation of the supplies in southern Nevada.

The single allegation that plumbing contractors are essential for the installation of plumbing supplies shipped in interstate commerce, is not the whole indictment as appellants' argument (2 above) would infer, but is part of the 'conduit' or commerce allegations.

The allegations of the indictment which allege restraint on the flow of plumbing supplies in interstate commerce are clearly sufficient. Comparable allegations as to restraints on the flow of commerce were found sufficient in U.S. v. Chrysler Corp. Parts Wholesalers, 9 Cir., 1950, 180 F.2d 557, 559. U.S. v. General Motors Acceptance Corp., 7 Cir., 1941, 121 F.2d 376, 401, certiorari denied 314 U.S. 618, 62 S.Ct. 105, 86 L.Ed 497; Lake Valley Farm Products, Inc., v. Milk Wagon Drivers Union, 7 Cir., 1940, 108 F.2d 436, 440, reversed on other grounds 311 U.S. 91, 61 S.Ct. 122, 85 L.Ed. 63; U.S. v. Mountain States Lumber Dealers Ass'n, D.C. Colo. 1941, 40 F.Supp. 460, 461.

In Standard Oil Co. v. Federal Trade Commission, 7 Cir., 1949, 173 F.2d 210, 214, reversed on other grounds, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed 239, Justice Minton, then on the Seventh Circuit, stated:

'* * * The modern concept of commerce is one which gives full sweep to the commerce clause of the Constitution within the limits of the implementing statute, and a realistic view of what business is doing as it moves across state lines to accomplish its purpose. The late cases support the view that the petitioner's operations are in commerce from the refinery to its customers.'

This concept was expressly affirmed by the Supreme Court, 340 U.S. 231, 236-238, 71 S.Ct. 240, 95 L.Ed. 239, although the case was reversed on a wholly different ground. Also: U.S. v. Minneapolis Elec. Contractors Ass'n, D.C. Minn. 1951, 99 F.Supp. 75, 79. U.S. v. Universal Milk Bottle Service, Inc., D.C. Ohio 1949, 85 F.Supp. 622, 629, affirmed 6 Cir., 1951, 188 F.2d 959.

Price fixing agreements are unreasonable per se- U.S. v. Socony-Vacuum Oil Co., 1940, 310 U.S. 150, 223, 60 S.Ct. 811, 84 L.Ed. 1129.

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Agreements to divide a market for products moving in interstate commerce are unreasonable per se, Addyston Pipe & Steel Co. v. U.S., 1899, 175 U.S. 211, at page 241-245, 20 S.Ct. 96, 44 L.Ed 136. If an indictment alleges the flow of goods in interstate commerce and charges price fixing or a dividing up of the market for such goods, then the final effect of such illegal activities on such commerce and the substantiality of that effect becomes a question of law under the facts alleged. The indictment here alleges such a substantial effect.

B. The indictment sufficiently alleges that conspiracy therein charged, even if purely local or intrastate in nature, nevertheless affected interstate commerce in the flow of plumbing supplies

In our case the indictment, in Sec. V, alleges that the effect of the conspiracy charged has been and is to 'directly, unreasonably, arbitrarily and unlawfully restrain and obstruct the flow of plumbing and heating supplies in interstate commerce into southern Nevada, by:

'(a) suppressing and eliminating competition * * *

'(b) narrowing and restraining the market * * *.'

The allegation is similar to an allegation which this court held sufficient as showing an effect on...

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