U.S. v. Flom

• Citation: 558 F.2d 1179
• Decision Date: 08 September 1977
• Docket Number: No. 76-1892,76-1892
• Parties: 1977-2 Trade Cases 61,618, 2 Fed. R. Evid. Serv. 451 UNITED STATES of America, Plaintiff-Appellee, v. Edward L. FLOM, David L. Hoffman, Frank W. Hunsberger, and Richard E. Volland, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1179

558 F.2d 1179

1977-2 Trade Cases 61,618, 2 Fed. R. Evid. Serv. 451

UNITED STATES of America, Plaintiff-Appellee, v. Edward L. FLOM, David L. Hoffman, Frank W. Hunsberger, and Richard E. Volland, Defendants-Appellants.

No. 76-1892.

United States Court of Appeals Fifth Circuit.

Sept. 8, 1977.

Chester Bedell, John A. DeVault, III, Jacksonville, Fla., for Flom.

Ralph C. Dell, Tampa, Fla., for Hunsberger.

Manuel M. Garcia, Tampa, Fla., for Hoffman.

C. Lawrence Stagg, Tampa, Fla., for Volland.

Barry Grossman, Chief, Donald I. Baker, Asst. Atty. Gen., Catherine G. O'Sullivan, Atty., Appellate Section, Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before JONES, COLEMAN and TJOFLAT, Circuit Judges.

COLEMAN, Circuit Judge.

Appellants were convicted of violating Section One of the Sherman Act ¹ by conspiring to allocate among the companies with whom they were connected contracts for sales of re-inforcing steel bars to construction contractors. They were sentenced to pay fines of varying amounts.

Because the jury was erroneously instructed and because the government was allowed to depart unfairly from its bill of particulars to the obvious prejudice of the defendants, we reverse and remand for a new trial.

I

At one time during the period of the alleged conspiracy, all appellants were officers of three companies ² in the business of fabricating and selling reinforcing steel bars, generally known as re-bars, for use in a wide range of Florida construction projects utilizing concrete. The customers were large and small private contractors working in both the private and public sectors. The steel bars were manufactured in rolling mills outside the state. From there they were regularly shipped to the defendant companies, where the product was fabricated according to the needs of the particular purchaser.

There was evidence on behalf of the government that appellants, along with unindicted representatives of other competing companies, met on a regular basis for the purpose of discussing various market factors of common interest. In these meetings, they allocated the business on upcoming construction contracts among their respective companies.

The agreed practice was that the selected winner would complete its estimate on the re-bars for that particular job. Through a member acting as an informational clearing house, the co-conspirators would be informed of the price below which they were not to bid. When the job was let, a complimentary bid, or no bid at all, would be submitted by the designated "losing bidders".

II

Appellants raise five principal issues:

1. That the trial court erred in permitting the government to introduce evidence of specific allocated contracts after the government represented at pre-trial hearings, and in its bill of particulars, that it did not intend to prove at trial any specific contract, or, in lieu of excluding the evidence, either requiring an amendment to the bill of particulars prior to the government's presenting such evidence or granting the defense a ten day continuance to prepare;

2. That the evidence was insufficient to prove the jurisdictional requirement of interstate commerce, and that the Court incorrectly instructed the jury on that issue;

3. That the Court erred in treating the offense charged as a "per se" violation of the Sherman Act, i. e. as a matter of law an unreasonable restraint on interstate commerce;

4. That the indictment was insufficient;

5. A new trial should have been granted due to various evidentiary rulings of the District Court.

III

Disposing of the fourth and fifth issues initially, before discussing those more difficult, we find that the trial court correctly found the indictment to be sufficient and was within its discretion in its evidentiary rulings.

Appellants claim error in the admission, Fed.R. of Evid. 803(6), of invoices received and held by defendant Flom's company (Florida Steel Corporation) in its regular course of business, but which were prepared and sent by another company. Foundation testimony was offered through an official of Florida Steel Corporation that the invoices were received and held in the regular course of business. No testimony of the preparing company was offered. Although the usual case involves an employee of the preparing business laying the necessary foundation under 803(6), the law is clear that under circumstances which demonstrate trustworthiness it is not necessary that the one who kept the record, or even had supervision over their preparation, testify, United States v. Pfeiffer, 8 Cir., 1976, 539 F.2d 668; United States v. Whitehouse Plastics, 5 Cir., 1974, 501 F.2d 692. That the trial judge has a broad zone of discretion in evidentiary matters is a basic principle recently reiterated by this Court in United States v. Miller, 5 Cir., 1974, 500 F.2d 751, reversed on other grounds 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976). The court below did not cross the line in finding that the foundation required by the Federal Rules of Evidence was supplied by the witness testifying at trial.

Likewise we find no merit in appellants' argument that the indictment was insufficient because it failed to enunciate with specificity the contracts allocated. The heart of a Section One violation is the agreement to restrain; no overt act, no actual implementation of the agreement is necessary to constitute an offense, Nash v. United States, 229 U.S. 373, 33 S.Ct. 780, 57 L.Ed. 1232 (1913). The indictment need not allege, nor the proof show, a specific contract.

IV

The trial court was correct in holding that a contract allocation scheme in interstate commerce is a per se violation of the Sherman Act. Conspiracies between firms to submit collusive, non-competitive, rigged bids are per se violations of the statute, United States v. Finis P. Ernest, Inc., 7 Cir., 1975, 509 F.2d 1256, cert. denied, 423 U.S. 874 and 893, 96 S.Ct. 142 and 191, 46 L.Ed.2d 105 and 124 (1975). An agreement that one company would not submit a bid lower than another is price fixing of the simplest kind and is a per se violation, United States v. Bensinger Company, 8 Cir., 1970, 430 F.2d 584. An agreement to "fix prices, allocate customers, rig bids, and coerce (others) to join the conspiracy" violated the Act (emphasis added), United States v. Pennsylvania Refuse Removal Association, 3 Cir., 1966, 357 F.2d 806, cert. denied, 384 U.S. 961, 86 S.Ct. 1588, 16 L.Ed.2d 674 (1966).

V

On the jurisdictional issue the government acknowledged (Brief, p. 47) that it

"relied on the 'flow of commerce' theory in this case, arguing that re-bar materials move in a continuous flow from steel mills outside Florida through the fabricating and warehousing facilities of the defendant corporations to the contractors."

VI

In 1942, the Fifth Circuit decided Jacksonville Paper Company v. Fleming, 128 F.2d 395. The case involved goods which had been warehoused only no processing or alteration. It was held:

"Without reviewing the multitude of decided cases as to when interstate transportation ends, we are justified in holding that after imported goods are delivered to and received by the importer, and become part of his property held within the State subject to his disposition, whether in the original containers or not, the subsequent sale and delivery of them within the State is intrastate commerce. The typical case is a stock of goods in a warehouse awaiting sales. It does not matter that the goods were imported with a view to selling them afterwards to particular customers, or that according to past experience they would likely be sold to them, or would surely be sold to someone very soon. If they come to rest in the hands of the importer, they have ceased to be in interstate commerce . . . . (Footnote omitted).

"There are, however, border line distinctions. Where Jacksonville Paper Company takes an order from a customer for goods and purchases them in another State to fill that order, and they are shipped interstate with the definite intention that those goods be carried at once to that customer, and they are so carried, the whole movement is interstate, and the fact that title may have passed during transit, or that vehicles may have been changed, will not prevent the entire work of delivery to their final destination being an employment in commerce. Where, however, the purpose to deliver particular goods to fill a particular precedent order arises only after the goods come to rest at their originally intended destination, the new intrastate transportation afterwards undertaken will not be a part of the original interstate movement . . . ."

128 F.2d at 398.

When the case came to the Supreme Court, styled Walling v. Jacksonville Paper Company, ³ the High Tribunal found it advisable to make some clarifying modifications:

"No ritual of placing goods in a warehouse can be allowed to defeat that purpose. The entry of the goods into the warehouse interrupts but does not necessarily terminate their interstate journey.

"If there is a practical continuity of movement from the manufacturers or suppliers without the state, through respondent's warehouse and on to customers whose prior orders or contracts are being filled, the interstate journey is not ended by reason of a temporary holding of the goods at the warehouse."

63 S.Ct. at 335, 336.

The Supreme Court said that with these modifications the decision of the Circuit Court of Appeals stated "the correct view of the law". ⁴

Appellants vigorously insist that Walling dictates a judgment of acquittal in their favor.

In Foremost Dairies, Inc. v. Federal Trade Commission, 5 Cir., 1965, 348 F.2d 674, cert. denied 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362, a Federal Trade Commission price discrimination case, milk passed in a steady flow from farms in Colorado through a Santa Fe processing plant to retail...