U.S. v. Brighton Bldg. & Maintenance Co., s. 77-2295

• Decision Date: 26 June 1979
• Docket Number: 77-2296,Nos. 77-2295,77-2297 and 77-2299,s. 77-2295
• Citation: 598 F.2d 1101
• Parties: 1979-1 Trade Cases 62,637, 4 Fed. R. Evid. Serv. 769 UNITED STATES of America, Plaintiff-Appellee, v. BRIGHTON BUILDING & MAINTENANCE CO., Krug Excavating Company, Western Asphalt Paving Co., Union Contracting & Materials Co., Thomas J. Bowler, George B. Krug, Sr., J. M. Corbett Co., Thos. M. Madden Co. and Palumbo Excavating Co., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1101

598 F.2d 1101

1979-1 Trade Cases 62,637, 4 Fed. R. Evid. Serv. 769

UNITED STATES of America, Plaintiff-Appellee, v. BRIGHTON BUILDING & MAINTENANCE CO., Krug Excavating

Company, Western Asphalt Paving Co., Union Contracting &

Materials Co., Thomas J. Bowler, George B. Krug, Sr., J. M.

Corbett Co., Thos. M. Madden Co. and Palumbo Excavating Co.,

Defendants-Appellants.

Nos. 77-2295, 77-2296, 77-2297 and 77-2299.

United States Court of Appeals, Seventh Circuit.

Argued June 13, 1978.

Decided May 18, 1979.

Rehearing and Rehearing En Banc Denied June 26, 1979.

Raymond J. Smith, George D. Crowley, Charles R. Purcell, Chicago, Ill., for defendants-appellants.

William D. Coston, Andrea Limmer, U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, and SPRECHER and BAUER, Circuit Judges.

FAIRCHILD, Chief Judge.

This is an appeal from judgments upon conviction of defendants, Brighton Building & Maintenance Co., Krug Excavating Co., Western Asphalt Paving Co., Union Contracting & Materials Co., Thomas J. Bowler, George B. Krug, Sr., J. M. Corbett Co., Thos. M. Madden Co., and Palumbo Excavating Co. of one count of conspiracy and combination in unreasonable restraint of interstate trade in violation of Section 1 of the Sherman Anti-Trust Act (15 U.S.C. § 1) and thirty-seven counts of mail fraud (18 U.S.C. § 1341). Two additional defendants, Arcole Midwest Corp. and Crown-Trygg Co. were also indicted. Arcole Midwest pleaded guilty and did not participate in trial. The remaining defendants pleaded not guilty. On November 2, 1977, the jury found Crown-Trygg not guilty on all counts and the remaining defendants guilty on all counts. The individual defendants, Bowler and Krug, were sentenced to prison terms. They and the corporate defendants were fined.

I

The indictment alleged that the State of Illinois let contracts on July 29, 1975 for the construction of Federal-Aid Interstate Route No. 55; that this was to be done by competitive bidding as required by law; that defendants and others engaged in a combination and conspiracy to suppress and eliminate competition in unreasonable restraint of trade by agreeing among themselves to allocate two projects to defendants Brighton, Krug Excavating, and Western (B-K), one project to a joint venture composed of defendants Palumbo, Madden, and Corbett (PMC), and two projects to defendant Arcole, and to submit collusive bids on those projects.

Count I charged that the combination and conspiracy were a violation of the Sherman Act, 15 U.S.C. § 1. The other counts charged the creation of a scheme to defraud the State and the United States of money and the right to competition in the awarding of contracts, and each count charged a mailing for the purpose of executing the scheme, in violation of 18 U.S.C. § 1341.

The appellants claim that there was insufficient evidence on which to make a finding of the conspiracy and scheme; that there was error in the instructions with respect to intent and theories of defense; that there were other trial errors.

II

Five construction projects are involved in this case. They were numbered 82, 83, 84, 85, and 88.

Ernest Bederman was president of defendant Arcole, a highway contractor, and was the government's key witness.

Corporate defendants Brighton and Krug Excavating bid jointly, and are referred to as B-K. Defendant Thomas Bowler was chief executive of Brighton and defendant George Krug, Sr., was president of Krug Excavating. Corporate defendants Palumbo (of which Peter Palumbo was president), Madden (of which Robert Madden was president), and Corbett (of which James C. Corbett was president) bid jointly and are referred to as PMC. Arcole also bid.

There was evidence, very largely supplied by Bederman, that before the bids were submitted, Bowler and Krug, Palumbo, Madden and Corbett, and Bederman had reached agreement that the bids would be filed in such pre-arranged fashion that B-K would be the only or the low bidder on jobs 82 and 83, Arcole on 85 and 88, and PMC on 84.

As "security" for performance of the agreement, B-K wanted Bederman to take possession of the PMC bidding books (the documents needed to make a bid) on 82 and 83. PMC wanted Bederman to take possession of the B-K bidding book on 84. Bederman testified that he did take possession of all these books, but that B-K must surreptitiously have taken back its bidding book on 84. B-K submitted a bid on 84 as well, lower than the PMC bid, and B-K was awarded the contract. Krug told Bederman they had "dumped" 84, but had not "bothered" Arcole's jobs.

There is no question but that Bederman's testimony traced the making of an agreement. He met first with Bowler and Krug and later with Palumbo, Madden, and Corbett. He testified that he reported back to Bowler and Krug, and on the morning of July 29, Bederman, Palumbo and Madden were together with Bowler and Krug in the hotel quarters of the latter. He testified that all agreed to the plan of collusive bids.

Defendants question Bederman's testimony that after meeting with PMC he reported back to B-K so as to accomplish an agreement, and they further question his testimony that he had on the table in front of him at the hotel quarters the B-K bidding book on 84 as well as the PMC bidding books on 82, 83, 85, and 88, and that by distracting him in some way B-K "got their proposal book out of the stack of proposals in front of me." We are unable to say that the testimony is inherently incredible. The jury could decide, as they apparently did, that it was true.

Counts II through XXXVIII were the mail fraud counts. Each count charged defendants with causing a mailing by a third party, usually the State of Illinois. The mailings all occurred after July 29, 1975 and contained returns of bidding documents, awards of contracts, and payments for work performed.

The PMC defendants argue that they cannot be convicted of these uses of the mails because the mailings occurred after the PMC defendants were no longer members of any conspiracy to carry out the scheme. These mailings by the State were, however, virtually inevitable results of activity on and before July 29. The PMC defendants could properly be found to be jointly responsible with others for setting the scheme in motion up to that time, and thus causing the mailings by third parties. Thus defendants could be found criminally liable for the mailings which necessarily resulted from earlier activity which these defendants conspired to bring about.

Defendants have not challenged the proposition that these mailings advanced the execution of the scheme.

III

Defendants contend that the jury was not sufficiently and properly instructed on the element of intent. Excerpts from the instructions, bearing on that point, were as follows:

"Under Section 1 (of the Sherman Act), it is a crime for any person or corporation to make any contract, or engage in any combination or conspiracy in unreasonable restraint of interstate commerce. To convict a defendant under this section of the law the Government must establish beyond reasonable doubt that a defendant made a contract, or that a defendant was knowingly and intentionally a member of a combination or conspiracy; that the purpose of the contract, or of the conspiracy was to achieve an objective that would create an unreasonable restraint of interstate commerce.

"It is not necessary to find a specific intent to violate the law, for the parties are deemed to have intended the necessary and direct consequences of their acts.

". . . To convict a defendant of this crime the Government must prove beyond a reasonable doubt that he was a member of a conspiracy whose purpose was to effect an unreasonable restraint on interstate or foreign commerce.

". . . A conspiracy under Section 1 of the Sherman Act is an agreement is an agreement by two or more persons or corporations to accomplish a common objective which would result in an unreasonable restraint of interstate commerce.

"To be a member of the conspiracy a party must know of it, and intentionally assist in its furtherance. . . .

"Certain types of conduct are regarded as unreasonable per se. This means that the mere doing of the act itself constitutes an unreasonable restraint in 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.

"Where conduct unreasonable per se is shown, it cannot be justified or excused by the elimination of competitive evils, or the good motives of the conspirators, or the fact that prices were not unreasonably high or arbitrary."

We think it is a fair summary of these instructions that in order to convict defendants, it must be proved that they intentionally agreed or formed a combination or conspiracy for the purpose of rigging the bids and thus allocating the contracts among themselves; that because an agreement, combination, or conspiracy to rig the bids and allocate the contracts is Per se an unreasonable restraint of trade, it is not necessary that the government prove that such conduct is an unreasonable restraint of trade; that it is unnecessary for the government to prove that the defendants knew that the agreement, combination, or conspiracy to rig the bids and allocate the contracts was a violation of the law. ¹

Defendants challenge the sufficiency of the instructions with respect to the element of intent. The B-K defendants expressly concede that the instructions on this subject were in accord with the interpretation of the "pre-1974 case law." All defendants argue that the law must necessarily have changed at the time Congress increased the maximum penalties for § 1 violation from one year imprisonment and a $50,000 fine to three years imprisonment and a $1,000,000 fine, and raised the offense from a misdemeanor...