State of N.Y. v. Hendrickson Bros., Inc.

Decision Date16 February 1988
Docket NumberD,Nos. 1086,1088 and 1089,s. 1086
Parties, 1988-1 Trade Cases 67,891, 24 Fed. R. Evid. Serv. 1041 STATE OF NEW YORK, Plaintiff-Appellee, v. HENDRICKSON BROTHERS, INC., Amfar Asphalt Corp., Francis Ambrosio, Anthony Farino, Jack Farino, and Lizza Industries, Inc., Defendants-Appellants, Pratt & Pratt Inc., James J. Pratt, and Herbert Hochreiter, Defendants. ockets 86-9080, 87-7028 and 87-7068.
CourtU.S. Court of Appeals — Second Circuit

Joseph Opper, Asst. Atty. Gen., New York City (Robert Abrams, Atty. Gen. of the State of N.Y., Lloyd Constantine, Chief, Antitrust Bureau, Lawrence S. Kahn, Deputy Sol. Gen., George Sampson, Mark Moskovitz, Asst. Attys. Gen. New York City, on the brief), for plaintiff-appellee.

Milton S. Gould, New York City (Leon D. Lazer, Clifford Thau, David S. Tannenbaum, Shea & Gould, New York City, on the brief), for defendant-appellant Hendrickson Bros., Inc.

Paul F. Corcoran, Mineola, N.Y. (Michael H. Soroka, Speno Goldberg Moore Margules & Corcoran, P.C., Mineola, N.Y., on the brief), for defendants-appellants Amfar Asphalt Corp., Francis Ambrosio, Anthony Farino, and Jack Farino.

Roanne L. Mann, New York City (David N. Ellenhorn, Stein, Zauderer, Ellenhorn, Frischer & Sharp, New York City, on the brief), for defendant-appellant Lizza Industries, Inc.

Before FEINBERG, Chief Judge, KEARSE and WINTER, Circuit Judges.

KEARSE, Circuit Judge:

Defendants-appellants Hendrickson Brothers, Inc. ("Hendrickson"), Amfar Asphalt Corp. ("Amfar"), Francis Ambrosio, Anthony Farino, Jack Farino ("Farino"), and Lizza Industries, Inc. ("Lizza"), appeal from so much of a final judgment entered in the United States District Court for the Eastern District of New York following a jury trial before Jacob Mishler, Judge, as awarded plaintiff State of New York ("State") (1) $7,455,000 in treble damages against them for conspiracy to obtain highway construction contracts from the State at prices that were fixed and maintained at artificial and noncompetitive levels in violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1 (1982); (2) $375,000 in treble damages against Amfar, Ambrosio, Farino, Anthony Farino, and Lizza for conspiracy to fix prices on construction materials contracts awarded by Suffolk County ("County"), in violation of Sec. 1 of the the Sherman Act; and (3) $100 as a civil penalty against each defendant for the above conspiracies in violation of New York's Donnelly Act, N.Y.Gen.Bus.Law Secs. 340-347 (McKinney 1968). On appeal, some or all of the appellants contend principally (1) that the district court erred (a) in giving estoppel effect to the mail fraud convictions of certain of the defendants and (b) in admitting certain statements as coconspirator admissions; and (2) that they were entitled to judgment in their favor notwithstanding the verdict ("n.o.v."), or in the alternative a new trial, on the grounds that (a) without the improperly admitted evidence, the proof was insufficient to support a finding of conspiracy, (b) the State's claims were barred by the statute of limitations, and (c) the State failed to prove that defendants' conduct caused it injury. Appellants also contend that even if the State did adequately establish liability and injury, it was entitled to recover only a fraction of the amount it was awarded with respect to the highway construction contracts because most of those costs were funded by the United States Government. Finding no merit in any of appellants' contentions, we affirm the judgment.

I. BACKGROUND
A. The Parties and the Prior Criminal Proceedings

At all pertinent times herein, Hendrickson, Amfar, Lizza, and defendant Pratt & Pratt Inc. ("Pratt Inc."), were New York corporations engaged in the construction business on Long Island, New York, which includes Suffolk County. Ambrosio, Farino, and Anthony Farino were shareholders of Amfar and were, respectively, its president, secretary, and treasurer. Defendant Herbert Hochreiter was president of Lizza; defendant James J. Pratt ("Guy Pratt") was president of Pratt Inc.

The State commenced the present action in June 1983 pursuant to Sec. 4 of the Clayton Act, 15 U.S.C. Sec. 15 (1982). In its amended Following commencement of this action, proceedings were largely stayed pending completion of a criminal case then pending against most of the defendants. The Amfar defendants, Guy Pratt, and Pratt Inc. had been indicted in April 1983 by a federal grand jury for, inter alia, mail fraud, in violation of 18 U.S.C. Sec. 1341 (1982), in connection with the bidding on contracts awarded by NYSDOT and the County. Lizza and Hochreiter were added as defendants by a superseding indictment. After a trial on these charges ended in a hung jury, a second superseding indictment was filed, naming only Lizza and Hochreiter as defendants and charging them with, inter alia, 32 counts of mail fraud in connection with the rigging of one highway repair contract awarded by NYSDOT in 1977 (the "Shelter Island" contract) and the rigging of the 1978 and 1979 materials contracts awarded by the County. Lizza and Hochreiter were convicted on these charges, and Lizza was fined $52,000 and ordered to forfeit $1,000,000; Hochreiter received a sentence that included a fine, forfeiture, and imprisonment. Their convictions were affirmed on appeal. United States v. Lizza Industries, Inc., 775 F.2d 492 (2d Cir.1985), cert. denied, 475 U.S. 1082, 106 S.Ct. 1459, 89 L.Ed.2d 716 (1986). In the meantime, Guy Pratt and Pratt Inc. had pleaded guilty to ten counts of mail fraud in connection with a NYSDOT contract awarded in 1978 (the "Wantagh Avenue" contract).

complaint, the State principally sought (1) treble damages on its own behalf, alleging that all six appellants, along with the three defendants who are not appellants, had entered into a combination or conspiracy to "submit collusive, noncompetitive and rigged bids" to the State in connection with several contracts awarded by the State's Department of Transportation ("NYSDOT") for highway construction in 1977 and 1978; and (2) treble damages on behalf of the County, alleging that Amfar, Ambrosio, Farino, Anthony Farino (collectively the "Amfar defendants"), Lizza, and Hochreiter had conspired to fix prices in connection with highway construction materials purchased by the County in 1978 and 1979 (the "1978 and 1979 materials contracts"). The complaint also alleged that the two conspiracies violated the Donnelly Act, N.Y.Gen.Bus.Law Secs. 340-347.

B. The Evidence in the Present Action

Following conclusion of the criminal cases, proceedings in the present action were resumed, and the State's claims were tried to a jury. The principal issues included whether there was an overall conspiracy among all the defendants with respect to the NYSDOT contracts at issue here and whether there had been fraudulent concealment by the defendants sufficient to toll the four-year statute of limitations on the State's federal antitrust claims. The evidence, viewed generally in the light most favorable to the State, showed the following.

NYSDOT's normal practice was to award all highway construction contracts through a process of competitive bidding. Each bid form submitted by a contractor contained a statement certifying that the bid was not the result of collusion with other bidders. When a contract was awarded, the winning bidder signed a contract that reaffirmed the absence of collusion. As discussed in greater detail in Part II.B.1. below, the State accepted the noncollusion representations at face value and often revised its prior estimates of construction costs on the basis of the bids received.

During the period covered by the complaint, five highway construction contracts were awarded by NYSDOT to one of the defendant companies: the Veterans Memorial Highway ("Vets Highway") contract awarded to Lizza in February 1977, the Port Jefferson contract awarded to Amfar in June 1977, the Shelter Island contract awarded to Lizza in October 1977, the Long Island Expressway ("Expressway") contract awarded to Hendrickson in April 1978, and the Wantagh Avenue contract awarded to Pratt Inc. in October 1978. Virtually all of the losing bids on these five contracts were submitted by Hendrickson, Amfar, Lizza, or two other companies identified by an Amfar employee as members of a bid-rigging conspiracy. The 1978 and 1979 materials contracts were awarded by The State introduced in evidence the mail fraud convictions of Lizza and Hochreiter to prove that those defendants had participated in a scheme to defraud the State by rigging bids on the Shelter Island contract and to defraud the County by rigging bids on the 1978 and 1979 materials contracts. It introduced the mail fraud convictions of Pratt Inc. and Guy Pratt to prove that the Pratt defendants had participated in a scheme to defraud the State by rigging bids on the Wantagh Avenue contract.

the County to Lizza; Amfar was a losing bidder on each.

To support its contention that all of the defendants had participated in an overall conspiracy to rig the NYSDOT contracts, the State relied principally on the testimony of former Amfar vice president and controller Joseph LoMonte. LoMonte testified that in early 1977, Amfar, one of the smaller highway construction contractors on Long Island, had been approached by Frank Mascali & Sons ("Mascali"), a New York City contractor. Mascali asked Amfar to join it in making a joint-venture bid on the Vets Highway project, seeking to retaliate against Lizza for violating a territorial division agreement. Amfar decided against joining Mascali in such a bid. Amfar president Ambrosio then told LoMonte that the bidding on the Vets Highway contract had been rigged, that Lizza would win the contract, and that "as a reward" for not bidding with Mascali, Lizza would give Amfar a very lucrative subcontract on the project....

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