U.S. v. Haversat

• Decision Date: 22 April 1994
• Docket Number: 93-2091 and 93-2201,93-2203,Nos. 93-2090,s. 93-2090
• Parties: 1994-1 Trade Cases P 70,574 UNITED STATES of America, Appellant/Cross-Appellee, v. Robert A. HAVERSAT, Appellee/Cross-Appellant. UNITED STATES of America, Appellant/Cross-Appellee, v. David B. GIBSON, Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 790

22 F.3d 790

1994-1 Trade Cases P 70,574

UNITED STATES of America, Appellant/Cross-Appellee, v. Robert A. HAVERSAT, Appellee/Cross-Appellant.

UNITED STATES of America, Appellant/Cross-Appellee, v. David B. GIBSON, Appellee/Cross-Appellant.

Nos. 93-2090, 93-2203, 93-2091 and 93-2201.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 11, 1993.

Decided April 22, 1994.

John J. Powers, Washington, DC, argued (Joseph H. Widmar, John J. Powers, III and Marion L. Jetton, P. Terry Lubeck, Robert W. Wilder, Sanford M. Adler and Gregory E. Neppl, appear on the brief), for appellant/cross-appellee U.S.

Paul R. Grand of New York City, argued (Paul R. Grand, Diana D. Parker and Alan P. Williamson, appear on the brief), for appellee/cross-appellant Haversat.

Larry H. Krantz of New York City, argued (Jeffrey C. Slade and Larry H. Krantz, appear on the brief), for appellee/cross-appellant Gibson.

Before BOWMAN, Circuit Judge, JOHN R. GIBSON, ^* Senior Circuit Judge, and HANSEN, Circuit Judge.

HANSEN, Circuit Judge.

Robert A. Haversat and David B. Gibson each pleaded nolo contendere to a single count of conspiring to fix prices in violation of section 1 of the Sherman Antitrust Act, 15 U.S.C. Sec. 1. The district court departed downward at sentencing and sentenced Haversat and Gibson each to pay a $250,000 fine. The government appeals the sentences. Haversat and Gibson cross appeal the district court's findings denying them an acceptance of responsibility adjustment and determining the volume of commerce affected by the price-fixing scheme. We affirm the district court's findings on acceptance of responsibility and the volume of commerce affected, but we reverse the district court's downward departures, vacate the sentences imposed, and remand for resentencing.

I.

From 1977 to 1986, Robert A. Haversat served as president of McKinney Products Company (McKinney). In May of 1986, Haversat represented McKinney at two secret meetings with McKinney competitors in the architectural hinge industry to discuss and implement a price-fixing scheme designed to boost the price of and profits from architectural hinges sold in the United States. Representatives of McKinney, The Stanley Works (Stanley), the Hager Hinge Company (Hager), and Lawrence Brothers (Lawrence Bros.), attended the meeting and joined the price-fixing scheme. These four firms controlled the vast majority of the architectural hinge market in the United States at the time of the meetings.

The vice president of sales for Stanley at that time, John Hollfelder, organized the first meeting and made the first proposal for a price-fixing scheme. Hollfelder proposed a 20 to 35 percent reduction in the published price for the hinges accompanied by a reduction of and limitation on the discounts given to customers. Some manufacturers had offered discounts previously as high as 70 percent and the proposal was to reduce the discounts to no more than 40 percent. At the second meeting, the representatives of each company again discussed the scheme. Haversat stated that David B. Gibson, then McKinney's marketing manager, was aware of the scheme. The parties decided that they would implement the scheme and Stanley would publish a new price book with the agreed-on prices and the other competitors would follow with similar price books.

In September of 1986, David Gibson took over as president of McKinney. Gibson attended two more meetings, in February and August of 1987, to discuss the progress of the price-fixing scheme. The price-fixing conspiracy continued well into 1988. Each of the participating companies made millions of dollars during the operation of the conspiracy.

The conspiracy came to the attention of the United States Department of Justice Antitrust Division, which initiated an investigation. The investigation resulted in a one-count indictment being filed May 22, 1990, charging Haversat and Gibson, as well as three other individuals and four corporations (including McKinney), with conspiring to fix prices in violation of 15 U.S.C. Sec. 1.

Haversat and Gibson pleaded nolo contendere to the charges on August 20, 1992. They were sentenced March 31--April 1, 1993. Both defendants had a base-offense level of 9 under U.S.S.G. Sec. 2R1.1(a) (Oct. 1987). ¹ The district court added a two-level increase, to level 11, after finding pursuant to U.S.S.G. Sec. 2R1.1(b)(2) that the volume of commerce affected by the conspiracy exceeded $15 million. The district court also found that neither defendant was entitled to an acceptance of responsibility reduction under U.S.S.G. Sec. 3E1.1.

The district court, however, pursuant to U.S.S.G. Sec. 5K2.0, departed below the Guideline range for both Haversat and Gibson and sentenced them both at the equivalent of an offense level 6. The district court did not impose any incarceration or probation upon either defendant and imposed a fine of $250,000 on each of them. Without the downward departure, these defendants would have been sentenced at an offense level of 11 and faced 8 to 14 months of imprisonment and a fine of $800,000 to $2,000,000. See U.S.S.G. Sec. 2R1.1(c) (1987). The government appeals the sentences of both Haversat and Gibson, arguing that the downward departures were not warranted in this case. Haversat and Gibson cross appeal, arguing that they were entitled to acceptance of responsibility and that the district court erred in calculating the volume of commerce involved.

II.

"The only circumstance in which the district court can disregard the mechanical dictates of the Guidelines is when it finds 'that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission.' " Burns v. United States, 501 U.S. 129, ----, 111 S.Ct. 2182, 2184-85, 115 L.Ed.2d 123 (1991) (quoting 18 U.S.C. Sec. 3553(b)). The Guidelines explicitly provide for the "departures" authorized by 18 U.S.C. Sec. 3553(b) in U.S.S.G. Sec. 5K2.0. We use a three-step test to determine if the departure is appropriate under Sec. 3553(b):

First, as a question of law, we determine 'whether the circumstances the district court relied on for departure are sufficiently unusual in kind or degree to warrant departure.' ... Second, as a question of fact, we determine 'whether the circumstances justifying departure actually exist.' ... Finally, with deference to the district court, we review the reasonableness of the degree of departure under an abuse of discretion standard.

United States v. Sweet, 985 F.2d 443, 445 (8th Cir.1993) (quoting United States v. Lara-Banda, 972 F.2d 958, 960 (8th Cir.1992)); see also Williams v. United States, --- U.S. ---- - ----, 112 S.Ct. 1112, 1120-21, 117 L.Ed.2d 341 (1992) (under 18 U.S.C. Sec. 3742(f) court of appeals must remand for resentencing "if the sentence was imposed as a result of an incorrect application of the Guidelines or if the sentence is an unreasonable departure from the applicable guideline range.").

III.

A. Departure in Haversat's Sentencing

The district court referred to the following factors in support of its decision to depart downward in Haversat's case: ² Haversat's assistance to the court; his good character and exemplary life; the coercive economic influence of Stanley; and the fact that he was a relative newcomer who "swam with the crowd" and lacked the courage to object to the scheme. The government contends that none of the factors enumerated by the district court support the departure. Haversat argues on appeal that two of those factors support the departure: his substantial assistance to the courts and his exceptional character. ³

(1) Assistance to the Court

The district court found that a downward departure was appropriate because Haversat's actions assisted the court in administering justice and saving court resources. (Defs.' Jt.App. at 190-91.) Haversat contends his nolo plea and his assistance in settling the related civil antitrust lawsuit are the particular acts that assisted the court. The government argues that these acts are not, as a matter of law, a basis for a downward departure under section 5K2.0. Haversat argues that this assistance to the courts presents a sufficient basis for the departure. See United States v. Garcia, 926 F.2d 125, 127-28 (2d Cir.1991) (defendant's substantial assistance to the courts is grounds for departure).

We have never authorized a downward departure on the basis of a defendant's assistance to the courts. ⁴ We have held, however, that district courts lack the authority to depart downward under U.S.S.G. Sec. 5K2.0 on the basis that the defendant's early guilty plea conserved judicial resources. United States v. Garlich, 951 F.2d 161 (8th Cir.1991). A guilty plea before trial is a factor to be considered only in the acceptance of responsibility determination under U.S.S.G. Sec. 3E1.1. Id. at 163-64. ⁵

The reasoning of Garlich applies with equal force in this case. Haversat's argument that his early nolo plea should be a basis for a downward departure because it assisted the court is virtually identical to Garlich's argument that downward departure was appropriate because his early guilty plea saved judicial resources. The nolo plea then is a factor to be considered (if at all) only in the determination of acceptance of responsibility. Similarly, Haversat's assistance in settling a related civil lawsuit is also more properly treated as a factor to be considered in relation to acceptance of responsibility. Helping to settle a related civil suit is somewhat similar to providing "voluntary assistance to authorities in the recovery of the fruits and instrumentalities of the offense," which is an appropriate consideration for determining acceptance of responsibility. U.S.S.G. Sec. 3E1.1, comment. (n. 1(e)).

Moreover, substantial assistance to the administration of justice is also counted, to some degree, under U.S.S.G. Sec. 5K1.1, which allows a sentencing co...