United States v. Wilshire Oil Company of Texas

• Decision Date: 16 June 1970
• Docket Number: No. 87-69.,87-69.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. WILSHIRE OIL COMPANY OF TEXAS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

427 F.2d 969 (1970)

UNITED STATES of America, Plaintiff-Appellee, v. WILSHIRE OIL COMPANY OF TEXAS, Defendant-Appellant.

No. 87-69.

United States Court of Appeals, Tenth Circuit.

March 24, 1970.

April 23, 1970.

Rehearing Denied June 16, 1970.

COPYRIGHT MATERIAL OMITTED

W. Richard Haddad, Atty., Dept. of Justice, Washington, D. C. (Richard W. McLaren, Asst. Atty. Gen., Howard E. Shapiro, Atty., Dept. of Justice, Washington, D. C., John E. Sarbaugh and Raymond D. Hunter, Attys., Dept. of Justice, Chicago, Ill., on the brief) for plaintiff-appellee.

Robert J. Woolsey, of Farmer, Woolsey, Flippo & Bailey, Tulsa, Okl. (Harry W. Colmery, of Colmery, Davis, Bennett, Leonard & McClure, Topeka, Kan., on the brief) for defendant-appellant.

Before LEWIS, HILL and SETH, Circuit Judges.

HILL, Circuit Judge.

On April 5, 1966, a federal grand jury for the District of Kansas indicted ten corporations¹ charging each with having violated 15 U.S.C. § 1. Specifically the indictment charged "the defendants and co-conspirators entered into and engaged in a combination and conspiracy in unreasonable restraint of the hereinbefore described interstate trade and commerce in liquid asphalt in violation of Section 1 of the * * * Sherman Act." All defendants except Wilshire plead nolo contendere and were subsequently fined from $25,000 to $40,000 each. Wilshire's case was tried to a jury and resulted in a guilty verdict and a fine of $25,000. Motions for judgment n.o.v., for judgment of acquittal, new trial and a motion to dismiss on double jeopardy grounds were all overruled, with the latter meriting a special hearing.² Wilshire has appealed.

A thumbnail sketch of the uncontroverted facts reflects that Wilshire is a Delaware corporation which, in late 1960, purchased Riffe Petroleum Company and operated it as an unincorporated division of Wilshire until August, 1963, when Riffe was sold. It was during that period of time that Wilshire admittedly sold liquid asphalt to the State of Kansas and allegedly participated in an illegal conspiracy to fix the price of such asphalt. The charged conspiracy operated in the following fashion. The state is divided into six highway districts. Yearly the state asphalt buyer determines the location or "points" in each district which will require asphalt during the ensuing year. Bid invitations are then mailed to all asphalt sellers in the area. Upon the enclosed blank bid is a list of all the asphalt-requiring "points" in the state. The sellers then list the per gallon price at which they are willing to deliver the asphalt to each "point" on which they wish to bid. The sealed bids are then opened publicly and contracts are awarded to the lowest bidder on each "point." The alleged bid rigging operated on an overunder system. During each year involved and prior to submitting their "point" bids, the alleged conspirators met to agree on freight rates to the various districts and "points" and to set a base per gallon price. Before the meeting was concluded each company was assigned certain "points" which it was to win in the bidding. Then, on the basis of the prearranged formula, each company bid under formula price on each "point" allocated to it and over the base cost, plus rates, on others not assigned to it. During the course of the conspiracy, from 1959-65, approximately 112,000,000 gallons of liquid asphalt valued at about $12,000,000 were sold and delivered by the named oil companies. Of the gross amount, about 2.6 million gallons were shipped in interstate commerce. Subsequent to the Wilshire-Riffe merger, it received contracts for ten to twelve million gallons per year, all of which were shipped intrastate.

On this statement of fact the appellant first argues that the indictment and evidence are insufficient since it is neither charged nor proved that Wilshire knowingly joined the conspiracy. We treat the indictment attack first. The fatal defect urged consists of a failure to allege that the conspiracy was formed and in existence; that Wilshire knew of its presence and knowingly agreed to join and commit acts in furtherance of its purposes. The single case cited as authority for this allegation³ is inappropriate and discussion of it will be deferred until a timely moment. To determine the sufficiency of an indictment the court views the entire document⁴ to ascertain whether the offense is charged with sufficient clarity so as to safeguard two constitutional guarantees: the Sixth Amendment right to be informed of the nature and cause of the accusation in order to prepare a defense; and the Fifth Amendment protection against twice being placed in jeopardy for the identical offense.⁵ The indictment adequately apprised Wilshire of its participation in the conspiracy and was not faulty for the reasons urged. The defendants and co-conspirators were charged with entering into and engaging in a continuing conspiracy from 1959 to 1965,⁶ but the indictment specifically stated that Wilshire only participated from December 31, 1960, until August 9, 1963,⁷ Rather than a devious attempt to conceal vital elements of a defect-free indictment, this was an adequate attempt to further vouchsafe Wilshire's constitutional rights. The record vividly reflects that appellant was made cognizant of the charge and facts constituting the breach of law;⁸ was able to plead, prepare a defense and produce witnesses to meet the charge. The practical effect was that the protection to be afforded by the indictment was furnished.

The brunt of the sufficiency of evidence argument focuses on the propriety of attributing the previously obtained guilty knowledge of a Riffe Division agent, to Wilshire after the merger. At this juncture Jones v. United States, 251 F.2d 288, 293 (10th Cir. 1958) is material. In that opinion we said: "A person does not become liable as a conspirator unless he knows of the existence of the conspiracy, agrees to become a party, and with that knowledge commits some act in furtherance thereof. citing cases This knowledge and participation may be inferred from the circumstances, acts and conduct of the parties." The agent caught in the crossfire of this argument was first employed by Riffe in early 1960, to represent its asphalt interests in Kansas and Colorado. Riffe was the broker for asphalt produced at the Century Refining Company at Shallow Water, Kansas, and it was the agent's responsibility to procure contracts with the state and local governments of Kansas. In 1960, the Riffe Company won only nine "points" in a single western Kansas division in the counties around Shallow Water. In 1961 the Wilshire agent attended the conspirator's meeting, and was able to win forty-two western Kansas "points." Wilshire argues that the only knowledge it could have had regarding their participation in the conspiracy was knowledge acquired prior to the merger and they are thereby liable for neither the pre-merger crime nor their post-merger involvement. The first argument is wide of the mark since the prosecution of Wilshire extends only from late 1960 to August, 1963. The latter statement is novel in that it ignores facts and circumstances which permit the court and jury to imply ratification or acquiescence. We pause to note that the argument does not deny that an agent's knowledge is imputed to the corporation if gained while acting in the scope of employment. The proposition merely suggests that Wilshire is immune from prosecution here because of a fortuitous series of events which placed them at the scene after the acquisition of the agent's information.

There is no question about the continuing nature of the plot nor is there reasonable doubt that Wilshire was a part thereof. And we believe the ticklish problem of pre-merger knowledge must be decided against Wilshire on the facts. Although appellant claims to have unwittingly bought into an ongoing conspiracy and for that reason it ought to be excused, the totality of the evidence supports the conclusion that Wilshire had ample opportunity to detect and reject the illegal practices. This is not a case where a company was purchased without chance for scrutinizing observation prior to assumption of control. The agreement of merger is dated September 23, 1960. This ought to have given appellant adequate time to become intimately familiar with the modus operandi of Riffe. And undisputed evidence was tendered by the Kansas salesman of Riffe Division from which it may be concluded that during the three year affiliation of Riffe with Wilshire, the vice-president in charge of the Riffe Division knew of and acquiesced in the continued conspiratorial participation. Wilshire is unable to rid itself of liability because of its inability to personally supervise the acquired company and its subordinates particularly when they failed to object a single time during the three year association. Viewed in the light most favorable to the Government, the evidence tendered by the prosecution provided ample basis for a jury, properly instructed, to find the requisite knowledge and participation by Wilshire.

Appellant next contends that the indictment and evidence are insufficient by their failure to set out factual allegations and proof of a conspiracy in restraint of interstate trade. It has long been settled that "agreements for price maintenance of articles moving in interstate commerce are, without more, unreasonable restraints within the meaning of the Sherman Act because they eliminate competition." Ethyl Gasoline Corporation v. United States, 309 U.S. 436, 458, 60 S.Ct. 618, 626, 84 L.Ed. 852 (1940). To sufficiently allege the interstate nature of the offense, the indictment need only charge that a combination was formed to fix prices on goods traveling interstate and that it had that effect or contributed to that end.⁹ The indictment alleged that "substantial quantities of liquid asphalt purchased by the State of Kansas and transported into Kansas in a continuous and...