U.S. v. Foley, COLQUITT-CARRUTHER

• Citation: 598 F.2d 1323
• Decision Date: 19 April 1979
• Docket Number: Nos. 78-5013,INC,COLQUITT-CARRUTHER,s. 78-5013
• Parties: 1979-1 Trade Cases 62,577, 4 Fed. R. Evid. Serv. 658 UNITED STATES of America, Appellee, v. John P. FOLEY, Jr., and Jack Foley Realty, Inc., Appellants. UNITED STATES of America, Appellee, v. BOGLEY, INC., Appellant. UNITED STATES of America, Appellee, v., and John T. Carruthers, Jr., Appellants. UNITED STATES of America, Appellee, v. ROBERT L. GRUEN, INC., Appellant. UNITED STATES of America, Appellee, v. SCHICK & PEPE REALTY, INC., Appellant. UNITED STATES of America, Appellee, v. SHANNON & LUCHS CO., Appellant. UNITED STATES of America, Appellee, v. Robert W. LEBLING, Appellant. to 78-5019.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 1323

598 F.2d 1323

1979-1 Trade Cases 62,577, 4 Fed. R. Evid. Serv. 658

UNITED STATES of America, Appellee, v. John P. FOLEY, Jr., and Jack Foley Realty, Inc., Appellants.

UNITED STATES of America, Appellee, v. BOGLEY, INC., Appellant.

UNITED STATES of America, Appellee, v. COLQUITT-CARRUTHERS, INC., and John T. Carruthers, Jr., Appellants.

UNITED STATES of America, Appellee, v. ROBERT L. GRUEN, INC., Appellant.

UNITED STATES of America, Appellee, v. SCHICK & PEPE REALTY, INC., Appellant.

UNITED STATES of America, Appellee, v. SHANNON & LUCHS CO., Appellant.

UNITED STATES of America, Appellee, v. Robert W. LEBLING, Appellant.

Nos. 78-5013 to 78-5019.

United States Court of Appeals Fourth Circuit.

Argued Oct. 5, 1978.

Decided April 19, 1979.

Richard A. Hibey, Washington, D. C. (Robert J. McManus, Surrey, Karaski & Morse, Washington, D. C., William W. Cahill, Jr., Weinberg & Green, Baltimore, Md., on brief), for appellants Colquitt-Carruthers, Inc. and John T. Carruthers, Jr.

James P. Mercurio, Washington, D. C. (Salvatore A. Romano, Lewis E. Leibowitz, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., on brief), for appellant Shannon & Luchs Co.

John Henry Lewin, Jr., Baltimore, Md. (James K. Archibald, Venable, Baetjer & Howard, Baltimore, Md., on brief), for appellants Jack Foley Realty, Inc. and John P. Foley, Jr.

Raymond W. Bergan, Washington, D. C. (Robert P. Watkins, Williams & Connolly, Washington, D. C., E. Austin Carlin, Murphy & Carlin, Bethesda, Md., on brief), for appellants Bogley, Inc. and Robert W. Lebling.

William O. Bittman, Washington, D. C. (George R. Clark, Pierson, Ball & Dowd, Washington, D. C., on brief), for appellant Robert L. Gruen, Inc.

Charles N. Shaffer, Peter I. J. Davis, Shaffer & Davis, Rockville, Md., on brief, for appellant Schick & Pepe Realty, Inc.; Catherine G. O'Sullivan, Dept. of Justice, Washington, D. C. (John H. Schenefield, Asst. Atty. Gen., Robert B. Nicholson, Charles S. Stark, Gary L. Halling, Dept. of Justice, Washington, D. C., on brief), for United States of America.

Before WINTER, Circuit Judge, COWEN ^*, Senior Judge and PHILLIPS, Circuit Judge.

PHILLIPS, Circuit Judge:

Six corporate and three individual defendants appeal their felony convictions for conspiracy to fix real estate commissions in Montgomery County, Maryland in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Finding no error, we affirm.

During the critical period in question all the defendants were realtors engaged as competitors in the business of "reselling" houses. When a person desired to sell his house in Montgomery County he listed it with a realtor, provided he did not decide to attempt to sell it directly. The listing provided that when the house was sold a fixed percentage of the sales price would be paid as a commission to the realtor. This commission was divided among the firms involved in the sale, a portion going to the firm that obtained the listing, another portion to the firm that produced the buyer. To facilitate the operation of this shared commission arrangement, each of the defendants belonged to the Montgomery County Board of Realtors, a trade association that operated a multiple listing service. In the case of almost all houses listed with a member realtor, the member sent a card to the listing service containing a picture of the house and certain pertinent information, including the commission. Thus all member realtors had available a fairly comprehensive list of houses on the market in the county.

During the summer of 1974, and for some time before, the prevailing commission rate in Montgomery County was six percent of the sales price. A few houses were listed at seven percent, but additional services were apparently provided for the higher rate. At this time the real estate brokerage business in the county was in difficult straits. While the number of houses listed with brokers for resale had continued to rise as it had for several previous years, the number of sales had fallen, mortgage funds were in short supply and increasing costs of stationery, telephone service, advertising and gasoline had reduced the profit margin.

On September 5, 1974, defendant John Foley, the president of defendant Jack Foley Realty, Inc., hosted a dinner party at the Congressional Country Club in Bethesda, Maryland. The guests were nine of the leading realtors in Montgomery County, including each of the three individual defendants and one representative of each of the corporate defendants in this appeal. ¹ Following the meal, Foley arose and, after making some other remarks, announced that his firm was raising its commission rate from six percent to seven percent. A discussion about the rate change ensued. Within the following months each of the corporate defendants substantially adopted a seven percent commission rate.

A United States grand jury for the district of Maryland indicted the nine defendants on April 1, 1977. Following a number of preliminary motions, the only one of which is of interest to this appeal being the denial of a motion to dismiss for lack of subject matter jurisdiction, a nine day jury trial was held in September 1977 before Judge Stanley Blair. All defendants were found guilty and this appeal ensued.

Several issues are presented by the appeals. Part I of the opinion addresses the contention that the district court lacked subject matter jurisdiction because of an insufficient nexus between defendants' conduct and interstate commerce. Part II evaluates the sufficiency of the evidence that a conspiracy was formed and that each defendant participated in it. Part III deals with several objections to the jury instructions. Finally, Part IV discusses a number of evidentiary issues. Additional facts will be developed as pertinent to the several issues.

I. INTERSTATE COMMERCE

The defendants contend that their activities were not proven to be sufficiently related to interstate commerce to support their convictions under 15 U.S.C. § 1. Our review is to determine whether, within applicable principles of law, the evidence was sufficient, when viewed in the light most favorable to the Government, United States v. Sherman, 421 F.2d 198, 199 (4th Cir. 1970) (per curiam), to support the jury's finding on this issue. ²

We start with the applicable legal principles. Jurisdictional reach of the statute is coterminous with Congress' power to regulate interstate commerce. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 194, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974); United States v. South-Eastern Underwriters Association, 322 U.S. 533, 558 & n.46, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944); Greenville Publishing Co. v. Daily Reflector, Inc., 496 F.2d 391, 395 (4th Cir. 1974). Where conspiracy is charged, it must be shown that it has a sufficient nexus with interstate commerce, but this does not require proof that each charged defendant's activities had the requisite effect. E. g., United States v. Wilshire Oil Co., 427 F.2d 969, 974 (10th Cir. 1970). The existence of a sufficient nexus is to be determined on a practical rather than theoretical basis. E. g., Swift & Co. v. United States, 196 U.S. 375, 398, 25 S.Ct. 276, 49 L.Ed. 518 (1905). This means that the determination involves not only raw fact finding but evaluation of the facts by the trier of fact. Accordingly, the results in particular cases are likely to have turned, quite appropriately, on their peculiar facts rather than on legal standards generally applicable to particular categories of business, professional, or trade activities. Thus, the cases that have considered the relationship of particular real estate brokerage activities to commerce are in hopeless disarray so far as their raw results are concerned. See McLain v. Real Estate Board of New Orleans, Inc., 583 F.2d 1315, 1319-20 (5th Cir. 1978), cert. granted,--- U.S. ----, 99 S.Ct. 2159, 60 L.Ed.2d 1043 (1979) (collecting cases). This means that the guiding legal principles must be sought at a more general level than any keyed to the particular nature of the real estate brokerage business, and that detailed efforts to reconcile the disparate results in particular real estate brokerage cases are likely to be bootless.

The traditional mode of analysis seeks the requisite nexus along one or both of two general lines of inquiry unrelated in terms to particular categories of commercial activities. One inquires whether the activities alleged to be under illegal restraint lie directly in the flow of interstate commerce; the other, whether though intrastate in nature, they nevertheless have so great an impact on interstate commerce that they substantially affect it. See, e. g., Greenville Publishing Co. v. Daily Reflector, Inc., 496 F.2d at 395 (articulating and discussing the two tests). Obviously these are not bright line, mutually exclusive tests and it is quite possible to analyze a particular pattern of activities without express reliance upon either. ³ Each, after all, strives for answers to the more general question, whether the activities under alleged restraint have a sufficient nexus with interstate commerce. Particular activities may fall within both patterns. Activities directly in the flow of interstate commerce need have but minimal impact upon the commerce to "affect" it, since by definition they are a very part of the stream. See, e. g., Swift & Co. v. United States, 196 U.S. at 398-99, 25 S.Ct. 276. Activities not in the flow of interstate commerce, I. e., intrastate in basic nature, may only be found to affect interstate commerce if their impact upon it is substantial. Compare, e. g., Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328 (1948) (substantial), With, e. g., Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311 (1940) (unsubstantial). Under either test and in all events , the impact must be upon an identifiable stream of "commerce," and not simply upon a...