U.S. v. Ben M. Hogan Co., Inc., 84-1757

• Decision Date: 20 September 1985
• Docket Number: No. 84-1757,84-1757
• Citation: 769 F.2d 1293
• Parties: 1985-2 Trade Cases 66,716, 18 Fed. R. Evid. Serv. 1241 UNITED STATES of America, Appellee, v. BEN M. HOGAN CO., INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1293

769 F.2d 1293

1985-2 Trade Cases 66,716, 18 Fed. R. Evid. Serv. 1241

UNITED STATES of America, Appellee, v. BEN M. HOGAN CO., INC., Appellant.

No. 84-1757.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 12, 1984.

Decided July 25, 1985.

Rehearing and Rehearing En Banc Denied Sept. 20, 1985.

Robert V. Light, Little Rock, Ark., and Richard J. Braun, Nashville, Tenn., for appellant.

Frederic Freilicher, Washington, D.C., for appellee.

Before BRIGHT, Senior Circuit Judge, and McMILLIAN and BOWMAN, Circuit Judges.

BOWMAN, Circuit Judge.

Defendant Ben M. Hogan Company, Inc. (Hogan), a corporation engaged in the business of highway construction, was indicted by a grand jury on one count of conspiring to restrain trade in violation of the Sherman Act, 15 U.S.C. Sec. 1, and on three associated counts of mail fraud under 18 U.S.C. Sec. 1341. Hogan was found guilty on all counts charged in the indictment. The District Court fined Hogan $800,000 on the Sherman Act count (Count One) and $1,000 each on the mail fraud counts (Counts Two through Four). Hogan appealed. We reverse Hogan's conviction on Count One and remand this case to the District Court for a new trial on Count One. We affirm Hogan's convictions on Counts Two through Four.

The theory upon which Hogan was prosecuted was, in essence, that between May 1979 and September 1980, Hogan conspired with A.P.T. Construction Company, Inc. (A.P.T.) ¹ to allocate between themselves, through the submission of rigged bids, work contracts for certain state highway construction projects. ² The government's principal witness, Leonard Thompson, president of A.P.T., testified that at the request of William Moore, vice president of Hogan, he agreed in May 1979 to submit a complementary bid, i.e., a higher bid than the bid Hogan planned to submit, on project 60173. Two bids were submitted on project 60173, one from Hogan and one from A.P.T. Hogan's bid was the lower and Hogan was awarded the contract. According to Thompson, in exchange for A.P.T.'s complementary bid on project 60173, Moore promised to return the favor in the future.

Thompson testified that in July 1980, he telephoned Moore with a request that Hogan bid in excess of the amount A.P.T. planned to bid on project 60179, and that Moore agreed to do so. Thompson also testified that he was able to make a similar arrangement regarding project 60179 with Jack Freshour, president of Freshour Construction Company (Freshour Construction). ³ A.P.T., Hogan, and Freshour Construction bid on project 60179. The contract on project 60179 was awarded to A.P.T., which proved to be the low bidder.

Thompson further testified that in September 1980, he telephoned Moore with a request that Hogan bid in excess of the bid A.P.T. planned to submit on project 60234 and that Moore agreed to do so. Thompson testified that when he made the same request of Freshour, Freshour told him that Freshour Construction did not intend to bid on project 60234. Hogan and A.P.T. were the only bidders on project 60234. A.P.T. was the low bidder and was awarded the contract on project 60234.

Thompson's testimony was contradicted by several witnesses. Moore acknowledged that he had had conversations with Thompson concerning projects 60173 and 60234 but denied entering into any agreements with Thompson to rig bids. Freshour testified that he never discussed making complementary bids with Thompson or anyone else. Freshour's wife testified that she had never encountered Thompson, while Thompson's testimony suggests that she had been present on one occasion when he claims to have met with Freshour at the Freshour residence.

Hogan's bid estimator and its asphalt plant superintendent testified that they never had been instructed to keep a bid above any particular amount, and that, in fact, they had standing instructions to update bids with price reductions if a downward price fluctuation during the pendency of a bid made it feasible to do so. Freshour Construction's bid estimator testified that he cut the profit margin on his company's bid on project 60179 in an effort to secure the contract.

Others eligible to bid on the projects in question testified that they were not contacted regarding the bidding on the projects alleged by Thompson to have been rigged. Thompson, however, testified that it was unnecessary to contact other bid proposal holders because their plants were located so far from the project sites that it would have been impossible from the standpoint of transportation costs for them to have underbid.

For reversal, Hogan argues that the District Court improperly instructed the jury regarding the interstate commerce element of the Sherman Act violation charged in Count One of the indictment. We agree, and we therefore reverse Hogan's conviction on Count One and remand this case to the District Court for a new trial on Count One. ⁴

Hogan also makes a number of other claims, all of which we have carefully considered and have found to be without merit. We will, however, discuss Hogan's additional claims to the extent that they are not resolved by our reversal for instructional error on Count One.

I.

The District Court correctly characterized this case as one concerning acts which, if proved, are deemed per se unreasonable under the Sherman Act. Having done so, the court instructed the jury that:

Certain types of conduct are regarded as unreasonable per se. This means that the mere doing of the act itself constitutes an unreasonable restraint on interstate commerce, and it is not necessary to consider why the acts were committed, or their effect on the industry, or any other explanatory matter. Conduct regarded as unreasonable per se includes price fixing, division of markets and bid rigging.

Trial Transcript (Tr.) at 492 [hereinafter referred to as per se instruction] (emphasis added). ⁵ Hogan argues (1) that the per se instruction informed the jury that if it found Hogan's actions constituted bid rigging, it could convict Hogan without considering whether the government had proved that Hogan's actions had an effect on interstate commerce; (2) that the per se instruction created a conclusive presumption of an effect on interstate commerce; and (3) that the government thereby was unconstitutionally relieved of its burden of proving every element of its Sherman Act case.

"A conclusive presumption removes the presumed element from the case once the [government] has proven the predicate facts giving rise to the presumption." Francis v. Franklin, --- U.S. ----, 105 S.Ct. 1965, 1971 n. 2, 85 L.Ed.2d 344 (1985). The Supreme Court has found conclusive presumptions in criminal instructions to " 'conflict with the overriding presumption of innocence with which the law endows the accused and which extends to every element of the crime,' and [to] 'invade [the] factfinding function' which in a criminal case the law assigns solely to the jury." Sandstrom v. Montana, 442 U.S. 510, 523, 99 S.Ct. 2450, 2459, 61 L.Ed.2d 39 (1979) (quoting Morissette v. United States, 342 U.S. 246, 275, 72 S.Ct. 240, 256, 96 L.Ed. 288 (1952) and United States v. United States Gypsum Co., 438 U.S. 422, 446, 98 S.Ct. 2864, 2878, 57 L.Ed.2d 854 (1978)).

We have examined the per se instruction and we conclude that it could have been understood by the jury to include an unconstitutional conclusive presumption of an effect on interstate commerce. We are convinced that the District Court did not intend to create such a situation; immediately prior to giving its per se instruction, the District Court gave a correct instruction on the interstate commerce element and on the government's burden of proof regarding that element. The per se instruction, however, contradicts the court's careful instruction on interstate commerce as a separate element of the Sherman Act offense. "Language that merely contradicts and does not explain a constitutionally infirm instruction will not suffice to absolve the infirmity. A reviewing court has no way of knowing which of the two irreconcilable instructions the jurors applied in reaching [a] verdict." 105 S.Ct. at 1975. ⁶

If ever there could be a case where the giving of a jury instruction that included a conclusive presumption concerning an element of a crime amounted to harmless error, this would be the case, for in the record before us there appears to be ample evidence from which the jury could have found--and perhaps did find--that the element was proved. But where "[t]he conclusive presumption the jury was instructed to apply permit[s] the jury to convict [the defendant] without ever examining the evidence concerning an element of the crime[ ] charged," a plurality of the Supreme Court has held that "[s]uch an error deprive[§ the defendant] of 'constitutional rights so basic to a fair trial that their infraction can never be treated as harmless error.' " Connecticut v. Johnson, 460 U.S. 73, 87-88, 103 S.Ct. 969, 977-978, 74 L.Ed.2d 823 (1983) (quoting Chapman v. California, 386 U.S. 18, 23, 87 S.Ct. 824, 827, 17 L.Ed.2d 705 (1967)). While the Connecticut v. Johnson plurality did not hold that "instructional error of constitutional dimensions may never be harmless," it did counsel that not every "form of instructional error should be analyzed for harmlessness." Id. 460 U.S. at 83, 103 S.Ct. at 976. Though the substantive issue of the flawed instruction in Connecticut v. Johnson was the critical issue of criminal intent, rather than the issue of an interstate effect on commerce, the form of the instruction clearly was that of a conclusive presumption. And the plurality's summary of its holding, see id. at 87-88, 103 S.Ct. at 977-978, indicates that it was the conclusive form of the instruction, more than the particular element of the crime to which the instruction pertained, that was of concern to the plurality.

Accordingly, we hold that by including the word "interstate" before the word "commerce" in its per se...