U.S. v. Dynalectric Co.
| Decision Date | 21 November 1988 |
| Docket Number | No. 87-8451,87-8451 |
| Citation | 859 F.2d 1559 |
| Parties | , 57 USLW 2374, 1988-2 Trade Cases 68,347, 27 Fed. R. Evid. Serv. 1057 UNITED STATES of America, Plaintiff-Appellee, v. DYNALECTRIC COMPANY; Paxson Electric Company; G.W. Walther Ewalt; Wesley C. Paxson, Sr., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
John R. Lowery, Kutak Rock & Campbell, Atlanta, Ga., for Dynalectric and Ewalt.
Emmet J. Bondurant, Bondurant, Mixson & Elmore, Atlanta, Ga., for Paxson.
Rodney O. Thorson, Skadden, Arps, Slate, Meaher & Flom, Washington, D.C., for Dynalectric.
John J. Powers, III, Dept. of Justice, Main Appellate Section, Andrea Limmer, Washington, D.C., for U.S.
James H. Kelley, McGuire, Woods, Battle & Boothe, Washington, D.C., for appellants.
Appeal from the United States District Court for the Northern District of Georgia.
Before RONEY, Chief Judge, and ANDERSON, Circuit Judges, and ALLGOOD *, Senior District Judge.
Defendants Dynalectric Co., Paxson Electric Co., G.W. Walther Ewalt, and Wesley C. Paxson, Sr. appeal from their criminal antitrust and federal mail fraud convictions. Each defendant was convicted of one count of conspiring to violate Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and two counts of violating the federal mail fraud statute, 18 U.S.C. Sec. 1341. We affirm.
The corporate defendants in this case, Dynalectric Co. ("Dynalectric") and Paxson Electric Co. ("Paxson Electric"), are electrical contracting companies. The individual defendants, G. W. Walther Ewalt ("Ewalt") and Wesley Paxson, Sr. ("Paxson"), are the presidents of Dynalectric and Paxson Electric, respectively. This case arises from an alleged conspiracy among the defendants and Fischbach & Moore, 1 another electrical contracting company, to rig the bidding on the electrical subcontracting portion of a major construction project at the Snapfinger Creek Wastewater Treatment Plant in Dekalb County, Georgia. Dynalectric, Paxson Electric, and Fischbach & Moore were the only electrical contractors who submitted bids on the Snapfinger project.
In 1982, the Justice Department empaneled several grand juries in the District of Columbia and began a wide-ranging investigation into allegations of bid rigging in the electrical contracting industry. Some records of the Snapfinger project were subpoenaed in 1982. In September, 1984, Paxson testified before the grand jury pursuant to an immunity order. His testimony was that he had never participated in bidrigging and specifically that the Snapfinger project was not rigged. Following Paxson's exculpatory testimony, 2 the grand jury did not probe further into the Snapfinger contract until Bernard Trepte ("Trepte"), a Fischbach & Moore employee, testified extensively about the Snapfinger bidrigging before the grand jury in October 1985. Subsequently, the Justice Department revived its investigation of the Snapfinger project. As a result of this investigation, the defendants were indicted on September 19, 1986.
The gist of the conspiracy was that the conspirators agreed on their bid prices before they submitted their Snapfinger bids, thereby circumventing the competitive bidding process. The conspirators agreed that Paxson Electric would be the low bidder. Paxson Electric prepared its bid and then notified Dynalectric and Fischbach & Moore what their bids should be. In exchange for their cooperation, Paxson Electric agreed to forgive an $89,000 debt of Fischbach & Moore and to evenly divide the Snapfinger profits with Dynalectric. The defendants characterized the arrangement between Paxson Electric and Dynalectric as a silent joint venture.
The conspiracy was fleshed out when Ewalt, Paxson, and Trepte met in an Atlanta hotel room the evening before the Snapfinger bids were submitted. Trepte and Paxson first came to terms; Trepte originally had pushed for Fischbach & Moore to get the Snapfinger contract but eventually agreed to let Paxson Electric be the low bidder if Dynalectric also agreed to go along with the scheme. Trepte then left the hotel room and was told that if Paxson could convince Ewalt to participate in the bid rigging, he would receive a phone call notifying him of what Fischbach & Moore's bid should be. Trepte received a call the next day informing him of the bid price. As a consequence of that call, he raised Fischbach & Moore's bid by $500,000.
The bids were submitted on September 7, 1979. Paxson Electric was the low bidder for the electrical subcontracting portion of the Snapfinger project and was awarded the subcontract by the George Hyman Company ("Hyman"), the general contractor who was awarded the overall Snapfinger contract. 3 On the $5 million dollar Snapfinger contract, Paxson Electric made a profit of approximately $1.7 million and paid half of this amount--$880,000--to Dynalectric pursuant to their alleged silent joint venture agreement. Evidence at trial established that Dynalectric did virtually no work on the Snapfinger project, yet received half of Paxson Electric's profits. Paxson Electric made its final payment to Dynalectric in 1983 and received its final payment via mail from Hyman on January 24, 1985.
The defense at trial was that the joint venture was a legitimate one consummated in order to allow Paxson Electric to overcome anticipated minority representation problems in its dealings with Hyman. The defendants contended that the joint venture was not entered until several months after the Snapfinger bidding. They also denied that Ewalt, Paxson, and Trepte had met the evening before the bidding to discuss rigging the bids.
The defendants first challenge the district court's holding that the indictment was not barred by the five year statute of limitations for criminal conspiracies, 18 U.S.C. Sec. 3282. We affirm.
Section 3282 provides that the statute of limitations runs for five years "after [the] offense shall have been committed." 4 The indictment was filed on September 16, 1986. The district court concluded that the antitrust conspiracy was not committed (i.e. completed) until Hyman made the last payment to Paxson Electric in January 1985 and therefore that the indictment was filed well within the five year limitation period. The appellants argue that at the latest, the conspiracy was committed on January 14, 1980, the date on which the contract was entered after the bids were submitted in September 1979. They argue that the payoffs from Paxson Electric to Dynalectric (the last of which were in 1983) and the payments from Hyman to Paxson Electric (the last of which was in January 1985) were results--rather than objectives--of the conspiracy. The task before us is to decide whether the conspiracy to restrain trade was committed when the contract was awarded to Paxson Electric following the submission of rigged bids or whether the conspiracy continued either until Paxson Electric received the last payments under the contract or until Paxson Electric made the last disbursement of the illicit profits to Dynalectric pursuant to the alleged joint venture agreement.
We agree with the district court. The case law, applied to the particular facts of this case, amply supports the district court's conclusion that the payments from Hyman to Paxson Electric, pursuant to the Snapfinger subcontract, and the payments from Paxson Electric to Dynalectric, pursuant to the alleged joint venture agreement, were elements of a continuing conspiracy to restrain trade rather than merely the results of a completed conspiracy.
Our analysis of the relevant cases begins with United States v. Kissel, 218 U.S. 601, 31 S.Ct. 124, 54 L.Ed. 1168 (1910), the seminal Supreme Court case interpreting the criminal statute of limitations in the context of an antitrust conspiracy. Justice Holmes, writing for the Court, concluded that a conspiracy can have "continuance in time." 218 U.S. at 610, 31 S.Ct. at 127. Holmes explained that a criminal conspiracy continues in time beyond the initial conspiratorial agreement until the objectives of the conspiracy either are abandoned or succeed. Id. Holmes also explained, however, that once the objects of the conspiracy succeed or are abandoned, "the mere continuance of the result of [the] crime does not continue the crime ... for purposes of the statute of limitations." 218 U.S. at 607, 31 S.Ct. at 126.
To determine the extent to which a conspiracy continues over time, we must determine the objectives of the conspiracy. In any given case, the limits of a conspiracy to restrain trade depend on what the conspirators agreed to do. As the Supreme Court explained in Grunewald v. United States, 353 U.S. 391, 397, 77 S.Ct. 963, 970, 1 L.Ed.2d 931 (1957), "the crucial question in determining whether the statute of limitations has run is the scope of conspiratorial agreement for it is that which determines both the duration of the conspiracy and whether the act relied on as an overt act may properly be regarded as in furtherance of the conspiracy." In short, Kissel and Grunewald teach that a conspiracy continues until the objectives of the conspiracy succeed or are abandoned and that to determine the objectives of any given conspiracy, the court must look to the conspiratorial agreement.
The relevant contours of a conspiratorial agreement in any given case are those charged in the indictment. United States v. Northern Improvement Co., 814 F.2d 540, 542 (8th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 141, 98 L.Ed.2d 98 (1987); United States v. Inryco, Inc., 642 F.2d 290, 293-94 (9th Cir.1981), cert. dismissed, 454 U.S. 1167, 102 S.Ct. 1045, 71 L.Ed.2d 324 (1982); United States v. Davis, 533 F.2d 921, 929 (5th Cir.1976) 5 ("For purposes of the statute of limitations [18 U.S.C. Sec. 3282] the overt acts alleged in the indictment and proved at trial mark the duration of the conspiracy."); United...
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...whether the statute of limitations has run is the scope of the conspiratorial agreement...."); United States v. Dynalectric Co., 859 F.2d 1559, 1564 (11th Cir. 1988) (stating that one must look to the conspiratorial agreement to determine conspiracy's (83.) See Grunewald, 353 U.S. at 405-06......
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Antitrust violations.
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