U.S. v. Goodman
| Decision Date | 01 August 1988 |
| Docket Number | No. 87-5116,87-5116 |
| Parties | 1988-2 Trade Cases 68,170 UNITED STATES of America, Plaintiff-Appellee, v. Lewis R. GOODMAN, John E. Lawson, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
John Evans, Zuckerman, Spaeder, Taylor & Evans, G. Richard Strafer, Coral Gables, Fla., for John E. Lawson.
E. David Rosen, Rosen Law Offices, P.A., Lawrence N. Rosen, Miami, Fla., for Lewis R. Goodman.
Dexter W. Lehtinen, U.S. Atty., Miami, Fla., John J. Powers, III, Dept. of Justice, Robert J. Wiggers, Washington, D.C., Nezida Davis-Sherman, Anti Trust Div., U.S. Dept. of Justice, Atlanta, Ga., for U.S.
Appeals from the United States District Court for the Southern District of Florida.
Before FAY and VANCE, Circuit Judges, and HOFFMAN *, Senior District Judge.
Appellants Lewis R. Goodman and John E. Lawson were indicted along with Industrial Waste Service, Inc. (IWS) in the Southern District of Florida for violating the Sherman Act, 15 U.S.C. Sec. 1. The charge involved the alleged allocation of customers in the garbage disposal industry in Dade and Broward County, Florida between 1971 and November 7, 1985, the date of the indictment. A second count of the indictment charged appellant Goodman with obstruction of justice in violation of 18 U.S.C. Sec. 1503. A judgment of acquittal was granted by the court as to the obstruction of justice charge at the close of the government's case. IWS entered a plea of nolo contendere to count one. Appellants were tried and convicted on the Sherman Act conspiracy charge from which they appeal. 1
Goodman was the chief operating officer of United Sanitation Services (United) during the time period alleged in the indictment. United was engaged in the solid waste disposal business providing garbage removal to commercial accounts in Dade County and part of Broward County, Florida. These accounts were generally construction sites, stores, condominiums, apartment houses and warehouses. United was the largest hauler in the area with approximately fifty-five to sixty trucks and seventy-five hundred to eight thousand customers. 2
Appellant Lawson was a corporate officer of IWS from the early 1970's until he left to form his own company, Imperial Sanitation Services, Inc., in December of 1981. IWS was a slightly smaller garbage The evidence at trial showed that United and IWS refrained from soliciting accounts of other haulers and pursued mainly new construction sites. There was also some evidence that possibly accounts were traded as compensation between haulers when one would acquire the account of another. Appellants claimed, and some evidence supported, that the policy not to solicit the accounts of other haulers was to avoid interference of contract suits and that the policies were internal to the particular companies, i.e., this was not an agreement between haulers.
disposal company than United, but the two were by far the largest in the industry in that area. A number of small haulers with only a few trucks were also present in the market.
As a part of its case the government introduced evidence of a major price increase in United's service. This evidence involved a large national garbage hauling and disposal company named Browning Ferris Industries (BFI). That company was new in the South Florida market and began soliciting United's and IWS's customers. Alfred Camacho the controller of WIN Building Corporation (WIN), a real estate developer in South Florida, testified concerning the garbage service received at some of WIN's projects. The following listings represent the prices charged in the contracts introduced by the government at two of WIN's projects serviced by United:
In (A), the warehouse, there is a drop in price from 1983 to 1985. Camacho explained that decrease on direct examination:
Q. Did there come a time in early 1984, when you were solicited by another garbage hauler?
A. Yes.
Q. And what hauler was that?
A. B.F.I.
Q. Did B.F.I. give you a quote?
A. Yes, they did.
Q. Did you go with B.F.I. for service?
A. No we didn't.
Q. Did you remain with United for garbage service?
A. Yes, we did.
Q. Would you explain--Well, did you contact United, United Sanitation, at the particular time that you got a quote from B.F.I.?
A. Yes, we did. I contacted United Sanitation.
Q. And did United Sanitation make you an offer, an offer to keep the service at that time?
A. Yes.
Q. And was the offer that United made, the price that was reflected in that 1984 contract that you mentioned?
A. That's right.
Q. A hundred twenty-one dollars and fifty cents?
A. Uh-huh.
Q. Were there any other changes in the new contract with United for the service on that particular period?
A. Well, two things we tried to get. We tried to limit the increase that United could pass along each year. This was a three year contract.
So, we did it by putting a clause in there, the increases would be no more than five percent per year. And we also asked that the increase in dumping fees not be passed on during the term of the contract.
R. at 463-64. A similar drop appears in the Imperial at Kendall apartment house contracts from 1982 to 1984. Camacho explained that he had received a bid from "another company," communicated it to United, and was then able to negotiate the lower price. Camacho also testified that in both instances he was unable to secure a bid from any other garbage haulers in the area.
Another witness called by the government was Philip Linhoff who negotiated contracts for garbage service for the Tony Roma Corporation in the Miami area. He did this for the nine Tony Roma restaurants in Dade and Broward County between May 1980 and August 1984. United supplied service for one of these restaurants located in Sunny Isles, Florida. In early February of 1982 United's prices increased and BFI took the account for three hundred seventeen dollars per month. United had increased its service from approximately three hundred dollars to one thousand dollars per month. Linhoff also testified that the North Miami Tony Roma restaurant was serviced by United until an April 1982 rate increase, at which time BFI underbid United and took over service of the account.
In an effort to rebut this evidence of high prices the defendants attempted to show an increase in environmental and other costs associated with the garbage removal and dumping business. They also attempted to show that BFI's prices were not competitive, and were even predatory, 4 as BFI suffered losses of approximately $1.8 million in South Florida for the five year period of 1979 through 1983. The government stipulated to the authenticity of BFI's profit and loss statements, but objected on relevancy grounds. The district court sustained the objection finding that the evidence was irrelevant in a charge of conspiracy to violate the antitrust laws.
Appellants contend that the trial court committed error in excluding evidence of BFI's profit and loss statements. They argue that the government opened the door for this evidence by introducing testimony of BFI's presence in the market undercutting the prices of United and IWS. The government takes the position that the issue of non-competitive or high pricing is not an element of the offense of conspiracy to allocate customers under the Sherman Act, 15 U.S.C. Sec. 1, and therefore is not relevant.
In United States v. Cadillac Overall Supply Co., 568 F.2d 1078, 1090 (5th Cir.), cert. denied, 437 U.S. 903, 98 S.Ct. 3088, 57 L.Ed.2d 1133 (1978), the former Fifth Circuit held that a customer allocation agreement alone is a per se violation of 15 U.S.C. Sec. 1. Cadillac involved a customer allocation agreement in Florida among a number of companies in the industrial garment industry. These companies would supply uniforms and industrial clothes to customers on a rental basis, along with the laundry and replacement of garments when necessary. The defendant companies agreed not to solicit each other's customers and to discourage customers from changing suppliers. If this discouragement did not work, the managers of the garment companies would meet to trade customer accounts in an effort to equalize the volume of the business. Cadillac, 568 F.2d at 1081. 5
Undoubtedly, the government is correct that a customer allocation agreement is a per se violation of the Sherman Act, and therefore pricing is not relevant. From the indictment through closing arguments the government attempted to prove the existence of the conspiracy, among other ways, with evidence of non-competitive high prices, although such pricing is not a necessary element of the charge. The indictment itself alleges an effect of the conspiracy that:
(a) Prices charged by the defendant corporation and the co-conspirator waste disposal service companies in Dade and Broward Counties have been maintained at artificially high and non-competitive levels.
At trial, the government's proof of these non-competitive high prices involved the testimony of two witnesses, heretofore noted, concerning BFI's underbidding of United's prices. 6 Alfred Camacho testified that he was able to renegotiate one contract with United due to a low bid from BFI, and a second after receiving a bid from "another company." Philip Linhoff testified that BFI underbid United at two Tony Roma restaurant locations and took the accounts.
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