U.S. v. David E. Thompson, Inc., 79-1352

• Decision Date: 23 April 1980
• Docket Number: No. 79-1352,79-1352
• Parties: 1980-2 Trade Cases 63,301 UNITED STATES of America, Appellee, v. DAVID E. THOMPSON, INC., Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1147

621 F.2d 1147

1980-2 Trade Cases 63,301

UNITED STATES of America, Appellee, v. DAVID E. THOMPSON, INC., Defendant, Appellant.

No. 79-1352.

United States Court of Appeals, First Circuit.

Argued Jan. 9, 1980.

Decided April 23, 1980.

Jerry E. Benezra, Melrose, Mass., and Richard B. Bachman, with whom Hale, Sanderson, Byrnes & Morton, Boston, Mass., was on brief, for defendant, appellant.

Susan J. Atkinson, Atty., Dept. of Justice, Washington, D.C., with whom John H. Shenefield, Asst. Atty. Gen., Robert B. Nicholson, Washington, D.C., Eugene P. Hanson, New York City, Edward Friedman, Washington, D.C., and Rebecca Meiklejohn, Attys., Dept. of Justice, New York City, were on brief, for appellee.

Before COFFIN, Chief Judge, ALDRICH and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

This appeal is from a criminal conviction under the Sherman Antitrust Act, 15 U.S.C. §§ 1-7 (1976), ¹ of the corporate defendant David E. Thompson, Inc. (Thompson, Inc.), for conspiring with numerous other corporations and individuals to allocate among themselves architectural hardware projects in several New England states by submitting collusive, "rigged" bids on such projects. In support of its appeal Thompson, Inc. claims that the district court erred by (1) refusing to accept a proffered plea of nolo contendere, (2) by denying a motion for judgment of acquittal, (3) by applying an incorrect standard in admitting certain out of court statements of coconspirators, (4) by admitting into evidence allegedly irrelevant testimony and exhibits, and (5) by improperly instructing the jury concerning a presumption as to the duration of the conspiracy and refusing to instruct the jury that it might consider the defendant's stake in the conspiracy. After carefully examining the record in this complicated case, we affirm.

FACTS

The prosecution's case at trial consisted in large part of the immunized testimony of several individuals engaged in the architectural hardware business, particularly Robert McCabe, president of Campbell Hardware, Inc. Architectural hardware includes items such as door knobs, locks, hinges, and the like used in commercial buildings. These items are generally incorporated into new commercial buildings according to specifications drawn by the building architects, who sometimes rely upon the assistance of an architectural hardware supplier. The architects generally invite bids to supply the hardware called for in the specifications, with the contract usually going to the low bidder. In some instances, bids have been allowed by invitation only, with as few as three firms receiving invitations.

Sometime prior to 1962, bid rigging became a widespread practice among suppliers in the Boston area. A group of Boston suppliers of architectural hardware began meeting for the purpose of facilitating the rigging of bids in order to allocate projects among themselves. The purported aim of the bid rigging was to ensure that the supplier who assisted the architect in drawing up the specifications, often at substantial unreimbursed cost, received the contract. The rigging of bids was made possible by the fact that architects often asked the assisting supplier to select the firms invited to submit bids. Thus, when one of the members of the group drew up specifications for a project, he invited two or more other members of the group, and no one else, to submit bids which were in excess of his own bid.

From the very fact that putative competitors collaborated in such a way with one another, we can infer that the essence of this practice, or conspiracy, lay in its reciprocal nature. Each conspirator could assume that if he forewent the opportunity to underbid a coconspirator, he would receive a reciprocal, "complementary" bid in return on a future project. In this fashion, the conspirators ceased to compete with one another on a significant number of projects and the purchasers of their products, thinking they were receiving the benefits of competitive bidding, were cheated.

The involvement of Thompson, Inc. in the bid rigging activity began sometime in the mid-1960's. The company's founder and first owner-president, David E. Thompson, became aware of the bid rigging practice in the 1950's when he was part owner of another firm which participated in the bid rigging scheme. Shortly after Thompson formed Thompson, Inc., he contacted Robert McCabe and William Davies, two members of the group that met for the purpose of allocating projects among its members. In the jargon that the conspirators had developed, Thompson asked if McCabe and Davies would "go along" with him on a Bentley College project and submit "cover bids". At about this same time, approximately 1965, Thompson attended a fullscale meeting of the many firms engaged in bid rigging. Shortly thereafter, Thompson, Inc. bid successfully on the Bentley project with several other firms represented at the meeting submitting higher bids. Soon after the Bentley project, Thompson, Inc., reminded of its obligation to reciprocate, agreed to submit a "cover bid" for William Davies's successful attempt to secure the contract on an office building in Burlington, Massachusetts.

By 1970 bidding procedures had begun to change in the industry and as the conspirators found that they were writing fewer and fewer specifications it became more difficult for them to exercise control over the selection of firms who were invited to bid on projects. This change, accompanied by a perhaps surprising resurgence of competitive disagreements between representatives of various firms, brought an end to the chummy annual or semiannual restaurant meetings of the conspiring firms in 1970. However, some of them, including Thompson, Inc., apparently did not want to lose what seemed to be a comfortable modus operandi. Thus, a meeting of at least eight of the firms who had previously worked together in rigging bids was held at the Lexington Inn in Massachusetts. The members of this group, despite their efforts, were unable to come to an agreement on how to restore the level of bid rigging to its previous high point.

Several of the conspirators, however, not stymied by the failure of the full group to reach a consensus, persisted in their attempts to work together to rig bids. After the 1972 meeting, Robert McCabe, a long time, hard core conspirator, contacted Thompson, Inc. and several other firms that had previously attended meetings and, as had been the practice for over a decade, asked them to "go along" with him and submit "cover" bids on a Federal Reserve Building project. Faced with some apparent reluctance, McCabe sweetened his request with cash payments ranging from $1500 to $3500 and thereby secured sufficient compliance. Thompson, Inc. received $3500 and submitted a bid on the project in excess of McCabe's.

In the summer of 1973, McCabe again wished to rig bids and made the usual requests to several firms. He instructed Campbell Hardware, Inc.'s vice-president, John Madden, to ask Thompson, Inc. to "go along". Thereafter, Thompson, Inc. and several other firms contacted by McCabe submitted bids in excess of that of Campbell Hardware, Inc., which won the contract.

During the following few years McCabe actively engaged in efforts to ensure that the art of bid rigging was not forever lost. On some projects, he expressly sought "cover bids" from Thompson, Inc., and on others he apparently did not. On projects of both types, Thompson, Inc. in fact submitted bids higher than McCabe's, which were substantially in excess of the amounts which he would have submitted if he had thought that the bidding would in fact be competitive.

During these same years, H.C.I. Corp., an architectural hardware supplier in Maine, apparently became aware of the Boston firms' practices and contacted McCabe and Thompson, Inc. for cover bids on several Maine projects. Quickly accustoming itself to the conspirators' methods, H.C.I. Corp. exchanged cover bids on several projects with Thompson, Inc. through David Thompson himself and through C. Robert Taylor, Thompson's successor as appellant's president-owner. ²

In 1977 Taylor contacted a vice-president of Campbell Hardware and made the customary request for cover bids on two projects. Campbell Hardware complied on both occasions, bidding as instructed by Taylor, and on at least one of these occasions Thompson, Inc. won the contract. During the same year, Thompson, Inc. provided reciprocal services for Campbell Hardware on a contract for a Housing for the Elderly project, which Campbell won.

I. REJECTION OF NOLO CONTENDERE PLEA

Appellant attempted to enter a plea of nolo contendere before trial. ³ The government indicated that it opposed the acceptance of such a plea. The district court, citing its "practice to decline to accept an offer of a plea of nolo so long as the government does not consent to it", refused to accept the proffered plea. Appellant points to this decision as error, claiming that the court incorrectly delegated to the prosecution its independent duty to determine whether acceptance of the plea would be in the public interest.

"(A)cceptance of a nolo plea is solely a matter of grace. . . ." United States v. Cepeda Penes, 577 F.2d 754, 756 (1st Cir. 1978). We know of no case in which an appeals court reversed a district court's refusal to accept a plea of nolo not supported by the prosecution. Indeed, we know of only one case in which a district court accepted a plea of nolo over the government's objection, United States v. Cigarette Merchandisers Ass'n, Inc., 136 F.Supp. 212 (S.D.N.Y.1955), and that particular case involved a rather unusual procedural situation. See United States v. Standard Ultramarine & Color Co., 137 F.Supp. 167, 174 (S.D.N.Y.1955).

Whether it therefore follows that it is never an abuse of discretion for a district court to reject a plea of nolo when the prosecution opposes acceptance of the plea we need not decide. Entry of...