U.S. v. Gillen, 78-2082

• Decision Date: 08 May 1979
• Docket Number: No. 78-2082,78-2082
• Citation: 599 F.2d 541
• Parties: 1979-1 Trade Cases 62,627 UNITED STATES of America v. Thomas J. GILLEN, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 541

599 F.2d 541

1979-1 Trade Cases 62,627

UNITED STATES of America v. Thomas J. GILLEN, Appellant.

No. 78-2082.

United States Court of Appeals Third Circuit.

Argued Feb. 12, 1979.

Decided May 8, 1979.

J. Shane Creamer (argued), Peter Goldberger, Carroll, Creamer, Carroll & Duffy, Philadelphia, Pa., for appellant.

John H. Shenefield, Asst. Atty. Gen., Barry Grossman, Daniel J. Conway (argued), Attys., Dept. of Justice, Washington, D. C., for appellee; John J. Hughes, Warren Marcus, Roger L. Currier, Attys., Dept. of Justice, Philadelphia, Pa., of counsel.

Before ALDISERT, ADAMS and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Circuit Judge.

The appellant, Thomas J. Gillen, was found guilty of conspiring to fix prices in violation of Section 1 of the Sherman Act. 15 U.S.C. § 1. He argues that the district court erred in not making specific findings on intent and that the evidence is insufficient to support the judgment of conviction. We disagree and affirm.

I.

Gillen was charged, along with James J. Tedesco, with conspiring to fix, stabilize and maintain prices of anthracite coal in unreasonable restraint of interstate trade and commerce in violation of Section 1 of the Sherman Act from 1966 through 1973. ¹ The companies named in the indictment were engaged in the mining, processing and marketing of anthracite coal and were among its major producers and sellers in the United States. ² Substantial quantities of anthracite coal were sold and shipped to customers located outside of Pennsylvania.

From 1961 through November, 1973, the Anthracite Producers Advisory Board, composed of representatives of the major anthracite organizations, met monthly to consider and recommend the total anthracite production quota as provided in the federally authorized Production Control Plan for the Anthracite Industry. Four or five times a year, after adjournment of the Advisory Board meetings, the same company representatives who constituted the Advisory Board would discuss and reach tentative agreements on the prices each represented company would charge for the various sizes of coal for the ensuing months. ³ In addition, agreements were reached at these so-called "after meetings" on the timing of the price change as well as the company to initiate the change. After the tentative agreement was reached, the representatives would report to their superiors for their approval. When approved, as they generally were, anthracite price circulars were issued by the companies. ⁴ These circulars which were issued three or four times a year were price lists for the sale of coal to line dealers. ⁵ These line dealers were dealers who were not located in the immediate vicinity of the colliery and who generally received coal shipments by rail or truck.

Gillen became president of Blue Coal Corporation in 1967 and continued as such until late 1973. He was also a part owner of Blue Coal from 1966 until November 26, 1973. The government's chief witness, Carl Tomaine, was Blue Coal's vice president in charge of domestic and retail sales from 1968 through 1973. The court below found that Tomaine as sales representative for Blue Coal reported what occurred at the "after meetings" to Gillen, who was then president of the company. It found further that Gillen knew and approved of the actions of Tomaine in the agreements reached at these meetings. It concluded that Gillen was a knowing participant in the price-fixing conspiracy from 1966 to November 26, 1973. Gillen was sentenced to a suspended prison term of six months, a $35,000 fine and two years probation.

II.

A. PRECEPTS OF LAW

With commendable vigor, Gillen's present counsel contends that "The district court erred in holding that intent is not an element of a criminal price-fixing conspiracy charge." The validity of appellant's argument depends on whether the United States Supreme Court in United States v. United States Gypsum Co., 438 U.S. 422, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978) changed the law of more than four decades on proof of intent in a price-fixing conspiracy case. Gypsum was decided a week after the trial judge filed his Memorandum of Decision containing findings of fact and verdict of guilty. ⁶ We must nevertheless consider Gypsum because we must apply the law in effect as of the time we render this decision. Bradley v. School Board of City of Richmond,416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974).

In determining the applicability of Gypsum to the instant case we have within the "hierarchy of legal precepts" a situation where "the rule of law is clear and the sole question is application to the facts at bar." Aldisert, Writing Judicial Opinions, III-2 (1979) (unpublished manuscript); See also Aldisert, The Judicial Process, 59-71 (1976).

B. THE DIFFERENT FACTUAL SITUATIONS

At issue in Gypsum was whether an exchange of price information for purposes of compliance with the Robinson-Patman Act, 15 U.S.C. § 13, was exempt from Sherman Act scrutiny. The defendants claimed that the purposes of these price exchanges were to permit them to take advantage of the "meeting competition" defense of Section 2(b) of the Robinson-Patman Act and to prevent customer fraud. The government alleged that this system of interseller price verification had the effect of stabilizing the price of gypsum board in violation of section 1 of the Sherman Act. The Court concluded that interseller price verification could not be used to establish a good faith defense under Section 2(b) by sellers with "lying buyers."

Thus Gypsum was not a situation where the parties agreed that a certain price would be charged; at most the parties sought information on what price had been or was being charged with no agreement or request for information on the price a competitor would charge in the future. In contrast, we have parties in the instant case who met three or four times a year "to discuss the coal prices that would appear on the circulars" . . . and to "reach a tentative agreement concerning the prices to be charged by the companies. . . . " Memorandum, Findings of Fact and Verdict, p. 2.

C. THE PRECEPTS ANNOUNCED BY THE TRIAL COURT AND THE SUPREME COURT

The trial judge, relying on United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333 (1912) and United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, 92 L.Ed. 1236 (1947), held:

There is no need to show any specific intent to restrain trade if a conspiracy to fix prices is shown to exist in an industry, the very nature of which involves large shipments of coal from the District in Pennsylvania to other states. See U. S. v. Griffith, 334 U.S. 100, 105(,) (68 S.Ct. 941,) 92 L.Ed. 1236, 1242 (1947); U. S. v. Patten, 226 U.S. 525, 543(,) (33 S.Ct. 141, 145,) 57 L.Ed. 333, 342 (1919). In the Patten case it was said:

" . . . (t)he conspirators must be held to have intended the necessary and direct consequences of their acts, and cannot be heard to say the contrary. In other words, by purposely engaging in a conspiracy which necessarily and directly produces the result which the statute is designed to prevent, they are, in legal contemplation, chargeable with intending that result."

"Proof that there was a conspiracy, that its purpose was to raise prices, and that it caused or contributed to a price rise is proof of the actual consummation or execution of a conspiracy under § 1 of the Sherman Act." U. S. v. Socony-Vacuum Oil Co., 310 U.S. 150 (60 S.Ct. 811, at 842), 84 L.Ed. 1129 (1939) at 1166.

The above holding by the trial court stated the principles set forth in cases for more than four decades. Thus Judge Herman was merely following the traditional precepts long accepted in price-fixing cases, most notably in United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940) which he explicitly cited.

Appellant contends that, regardless of the prior law, the trial judge erred because the Supreme Court in Gypsum, speaking through Chief Justice Burger, announced a different principle of law when it stated:

(A) defendant's state of mind or intent is an element of a criminal antitrust offense which must be established by evidence and inferences drawn therefrom and cannot be taken by the trier of fact through reliance on a legal presumption of wrongful intent from proof of an effect on prices.

98 S.Ct. at 2872.

Thus the ultimate issue is whether this language changed the long-established rule of law on price-fixing cases by requiring a more stringent burden of proof on the issue of intent.

Recognizing that the parameters of the conduct regulated by the Sherman Act may be at times elusive, we believe the Supreme Court's statement in Gypsum on intent was born out of a concern for borderline violations and was not meant to modify past precedent on price-fixing conspiracies, for the Court stated:

With certain exceptions for conduct regarded as Per se illegal because of its unquestionably anticompetitive (side) effects, See, e. g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129, the behavior proscribed by the Act is often difficult to distinguish from the gray zone of socially acceptable and economically justifiable business conduct. Indeed, the type of conduct charged in the indictment in this case the exchange of price information among competitors is illustrative in this regard. The imposition of criminal liability on a corporate official, or for that matter on a corporation directly, for engaging in such conduct which only After the fact is determined to violate the statute because of anticompetitive effects, without inquiring into the intent with which it was undertaken, holds out the distinct possibility of overdeterrence; salutary and procompetitive conduct lying close to the borderline of impermissible conduct might be shunned by businessmen who chose to be excessively cautious in the face of uncertainty regarding possible exposure to criminal...