U.S. v. Bullis

• Decision Date: 28 February 1996
• Docket Number: No. 94-3859,94-3859
• Citation: 77 F.3d 1553
• Parties: 1996-1 Trade Cases P 71,322, 107 Ed. Law Rep. 512 UNITED STATES of America, Plaintiff-Appellee, v. Jerome W. BULLIS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1553

77 F.3d 1553

1996-1 Trade Cases P 71,322, 107 Ed. Law Rep. 512

UNITED STATES of America, Plaintiff-Appellee, v. Jerome W. BULLIS, Defendant-Appellant.

No. 94-3859.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 21, 1995.

Decided Feb. 28, 1996.

Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division, No. 93 CR 6; William C. Lee, Judge.

John J. Powers, III, Department of Justice, Antitrust Division, Appellate Section, Washington, DC, Marvin Price, Steven E. Uhr, United States Department of Justice, Chicago, IL, Michael G. Pateyuk, United States Department of Justice, Antitrust Division, Chicago, IL, Mark S. Popofsky (argued), Department of Justice, Washington, DC, for Plaintiff-Appellee.

Jeffrey E. Stone (argued), Scott Martin, McDermott, Will & Emery, Chicago, IL, for Defendant-Appellant.

Before CUMMINGS, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

The defendant was convicted of one count of conspiring to rig bids, allocate customers, and fix prices on dairy products sold to schools and school districts in northern Indiana and southern Michigan in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. He appeals his conviction on the grounds that the superseding indictment was the result of prosecutorial vindictiveness and that there was an impermissible variance between the single conspiracy charged in the superseding indictment and the proof at trial. He appeals his sentence on the ground that it is in violation of the Ex Post Facto Clause. We affirm both the conviction and the sentence.

I

In order to ensure they received competitive prices on dairy supply contracts, the school districts involved in this case solicited sealed bids. The bidding season among the various school districts ran from May until August, and school districts awarded contracts for the whole school year. School districts generally awarded contracts to the lowest bidder. They made payments on the contracts throughout the school year.

At the beginning of the bidding season for the 1985-86 school year, the defendant, Jerome Bullis, who was the general manager of Allen Dairy located in Fort Wayne, Indiana, contacted Richard Bylsma, who was the treasurer and controller of the New Paris Creamery located in Elkhart, Indiana. Bullis requested that Bylsma meet with him so that they could discuss their bids for the coming school year. Bylsma agreed, and they, as well as Thomas Schenkel, who was in charge of sales at Schenkel's All Star Dairy located in Huntington, Indiana, and at Pure Sealed Dairy located in Fort Wayne (collectively "Schenkel's dairies"), met at the Jade Buddha Restaurant in Kendalville, Indiana. At the meeting, the three agreed that their respective dairies would not competitively bid against each other. The conspirators carried out the scheme by allocating various school districts among the dairies. The three agreed on the maximum amount a dairy could bid on one of its allocated school districts and agreed that, with respect to that district, the other two dairies would either bid above that amount or not submit a bid. With the exception of one school district allocated to Schenkel's dairies and successfully bid on by New Paris, the dairies won the contracts for the districts they had been allocated.

Bullis contacted Bylsma again in May 1986, prior to the 1986-87 bidding season, to set up another meeting. They again decided to meet at the Jade Buddha Restaurant. However, instead of Bullis, Gerald Widenhofer, the sales manager, represented Allen Dairy. The conspirators agreed that each dairy would be allocated the same school districts for the 1986-87 school year as for the 1985-86 school year. The conspirators also agreed on updated prices.

Bullis telephoned Bylsma again in May 1987, prior to the 1987-88 bidding season, to set up another meeting. However, because of investigations into the dairy industry that were being conducted elsewhere in the country, they decided not to meet. Bullis told Bylsma that the conspirators' dairies would all receive the same school districts as in the previous years. Bullis sent Bylsma an updated price list, which the participating dairies used to bid on contracts for the 1987-88 school year.

The allocations had been disrupted in 1986 when Scholl Dairy, located in Michigan City, Indiana, successfully bid on two school districts within the ambit of the conspiracy. During the 1987-88 bidding season, Andrian Lehman, the branch manager of the local distribution facility of Schenkel's All Star Dairy, at the direction of Tom Schenkel, contacted Stephen Scholl, president of Scholl Dairy, and proposed an allocation of four school districts. Scholl initially declined, but eventually agreed after Lehman made the same offer before the start of the 1988-89 bidding season.

Prior to the 1988-89 bidding season, Scholl also agreed with Widenhofer to allocate certain school districts between Scholl Dairy and Allen Dairy. At this time, Bullis was still the general manager of Allen Dairy and responsible for submitting the school bids. Again, the conspirators carried out the anticompetitive bidding scheme through setting the maximum bidding price for the winning dairy, which would also act as the minimum bidding price for the nonwinning dairies.

Prior to the 1989-90 and 1990-91 bidding seasons, Scholl and Schenkel agreed to allocations of schools and relevant bidding prices. Scholl and Widenhofer also agreed to allocations and prices for the 1989-90 and 1990-91 bidding seasons. And although Scholl and Schenkel did not specifically renew their allocations during the 1991-92 bidding season, their dairies won the various school district contracts consistent with the allocations of the previous years. Scholl and Widenhofer did talk during the 1991-92 bidding season and agreed to maintain the same allocations as the previous year, with some modifications to pricing. Payments made on allocated contracts continued into 1992.

Bullis left the Indiana dairy industry in July 1989 when he took a job with SECO Dairies located in Florida. SECO was a buying group that purchased large quantities of dairy items, repackaged them, and then sold them in smaller quantities to dairies. SECO was not involved in bidding on school milk contracts. Although Bylsma retained a position at New Paris, prior to the 1990-91 bidding season he relinquished responsibility for bidding on school milk contracts. This change occurred as a result of an internal investigation into price fixing by the attorneys for New Paris' parent corporation, Finevest. After being questioned about potential price fixing, Bylsma informed the Finevest attorneys of the bid-rigging conspiracy. They all agreed that he should no longer bid on school dairy contracts. Finevest's attorneys then contacted the government in June 1991. Although Bylsma's story was relayed to the government by way of Finevest, he did not have direct contact with the government until December 3, 1991.

After Bullis left Allen Dairy in 1989, he made two relevant phone calls to Bylsma. In the first, which occurred during 1990, Bullis told Bylsma that he did not think that the price fixing investigation would reach Indiana and that Bylsma should not worry about it. In the second, which occurred in early November 1991, ¹ Bullis said that "the investigation into price fixing in Indiana was deep and it could get real shitty" and that "all he was going to tell them was that he was talking about pooling milk."

On December 16, 1992, the defendant, Jerome Bullis, was indicted along with Thomas Schenkel, Gerald Widenhofer, Schenkel's All Star Dairy, and Six S Corporation (d/b/a Pure Sealed Dairy). The one-count indictment alleged a violation of the Sherman Act involving a conspiracy to fix dairy prices on school dairy contracts in eleven counties in northern Indiana and southern Michigan lasting from 1985 to 1988. A superseding indictment was entered on March 19, 1993, and it added six Indiana counties to those already described in the original indictment and extended the charged duration of the conspiracy until 1992. Following a two-week trial in which Bylsma and Scholl testified under grants of immunity, the jury convicted Bullis and acquitted the other defendants. The district court found, as the probation officer had recommended in the presentence report, that Bullis remained a member of the conspiracy until it terminated in 1992. As a result, the district court applied the 1993 Sentencing Guidelines, and on November 30, 1994, the district court sentenced Bullis to thirty months of incarceration and one year of supervised release. The district court also imposed a $50 special assessment and a $5,000 fine. On December 13, 1994, the district court granted Bullis' motion for bond pending appeal. Bullis filed a timely notice of appeal on December 8, 1994, and we have jurisdiction over his appeal pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a).

II

A

In the first challenge to his conviction, Bullis argues that the superseding indictment was the result of prosecutorial vindictiveness and that the district court erred in denying his motion to dismiss the superseding indictment on that ground. We will review the district court's legal conclusions de novo, but we will not upset the district court's factual findings unless they were clearly erroneous. United States v. Gilbert, 45 F.3d 1163, 1168 (7th Cir.1995).

The superseding indictment set forth the same, single count as the original indictment: a violation of 15 U.S.C. § 1. In fact, the superseding indictment is identical to the original indictment, except that it expanded the duration of the charged conspiracy to include the school years 1988-89 through 1991-92, and it expanded the geographic scope of the charged conspiracy to include school districts in an additional six counties. On March 2, 1993, the government notified the court and the...