U.S. v. Portsmouth Paving Corp.

Decision Date27 January 1983
Docket NumberNo. 81-5157,81-5157
Citation694 F.2d 312
Parties1982-83 Trade Cases 65,034, 11 Fed. R. Evid. Serv. 1733 UNITED STATES of America, Appellee, v. PORTSMOUTH PAVING CORPORATION and R. Curtis Saunders, Jr., Appellants.
CourtU.S. Court of Appeals — Fourth Circuit

Gary J. Spahn, Richmond, Va., (James C. Roberts, Anthony F. Troy, Barbara Tessin Jones, Robert D. Seabolt, Mays, Valentine, Davenport & Moore, Richmond, Va., on brief), for appellants.

Marion L. Jetton, Dept. of Justice, Washington, D.C. (Hays Gorey, Jr., Diane R. Kilbourne, Teresa H. Clinton, Dept. of Justice, William F. Baxter, Asst. Atty. Gen., John J. Powers, III, Dept. of Justice, Washington, D.C., on brief), for appellee.

Before RUSSELL, WIDENER and PHILLIPS, Circuit Judges.

DONALD RUSSELL, Circuit Judge:

On November 25, 1980, the appellants, Portsmouth Paving Corporation and its president R. Curtis Saunders, Jr., were indicted, together with three other corporations and eight other individuals, for conspiracy to allocate contracts and to rig bids in violation of section 1 of the Sherman Act, 15 U.S.C. Sec. 1. After several plea agreements, the Government brought to trial two corporate and five individual defendants, including the appellants. Following an eight-day trial beginning on February 23, 1981, the jury was unable to agree on a verdict and the district court declared a mistrial. Subsequent to a ten-day second trial that began on April 20, 1981, the jury returned guilty verdicts against Portsmouth Paving, Saunders, and three other defendants, not parties to this appeal; two individual defendants were acquitted. Portsmouth Paving and Saunders were fined $400,000 and $30,000, respectively, and Saunders was also sentenced to imprisonment for a period of time not exceeding 120 days with probation for three years following release. They then filed this appeal.

The appellants were charged with combining and conspiring "[t]o allocate ... roadway construction and surface paving contracts" and "[t]o refrain from bidding or to submit collusive, non-competitive and rigged bids ... in connection with the roadway construction and surface paving contracts let in the Tidewater area" of Virginia by federal, state, and local authorities. The Tidewater area was defined in the indictment to include the cities of Chesapeake, Norfolk, Portsmouth and Virginia Beach. 1 The indictment also alleged that the defendants conspired "[b]eginning sometime in or about 1963, and continuing thereafter, the exact dates being unknown to the grand jury." The purported agreement covered two types of projects: Annually scheduled resurfacing work in each of the four Tidewater cities and other nonscheduled projects throughout the Tidewater region. According to the Government's theory, the conspirators would trade projects among themselves by agreeing to withhold bids or to submit artificially high "complementary " bids on certain projects. 2 Citing several sources of error, however, the appellants contend that their convictions should be reversed.

I

Portsmouth Paving and Saunders argue at considerable length that the evidence presented against them at both trials was insufficient as a matter of law to sustain the jury's verdict. 3 In determining whether the evidence was sufficient to prove the offense charged, 4 we must consider whether any rational trier of fact could find guilt beyond a reasonable doubt when the evidence is viewed in the light most favorable to the Government. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979); United States v. Shaver, 651 F.2d 236, 238 (4th Cir.1981). Application of that standard in this case compels the conclusion that the evidence was more than sufficient.

As a necessary predicate to defining the essential elements of the crime, we note that the contract allocation and bid rigging scheme alleged in the indictment is illegal per se under section 1 of the Sherman Act. See United States v. Koppers Co., Inc., 652 F.2d 290, 293 (2d Cir.), cert. denied, 454 U.S. 1083, 102 S.Ct. 639, 70 L.Ed.2d 617 (1981) (bid rigging, territorial allocation in Connecticut highway maintenance); United States v. Azzarelli Construction Co., 612 F.2d 292, 294 (7th Cir.1979), cert. denied, 447 U.S. 920, 100 S.Ct. 3010, 65 L.Ed.2d 1112 (1980) (bid rigging on Illinois highway projects); United States v. Flom, 558 F.2d 1179, 1183 (5th Cir.1977) (bid rigging on sales of reinforcing steel bars). Section 1 proscribes "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." Early in the history of the statute, the Supreme Court read section 1 to prohibit only those agreements resulting in unreasonable restraints of trade. See Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918). Notwithstanding the unreasonableness requirement, certain business agreements, because of their inherent tendency to eliminate competition, are presumed unreasonable and are therefore illegal per se. See Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958); Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1356 (9th Cir.1982). Under such circumstances, the Government is not required to prove unreasonableness.

Price fixing agreements are typical of those agreements per se violative of the Sherman Act. See United States v. McKesson & Robbins, Inc., 351 U.S. 305, 309-10, 76 S.Ct. 937, 940, 100 L.Ed. 1209 (1956); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 842, 84 L.Ed. 1129 (1940); National Electrical Contractors Association v. National Constructors Association, 678 F.2d 492 (4th Cir.1982); United States v. Society of Independent Gasoline Marketers, 624 F.2d 461, 465 (4th Cir.1979), cert. denied, 449 U.S. 1078, 101 S.Ct. 859, 66 L.Ed.2d 801 (1981). Even more egregiously contrary to vital competition among businesses, however, is the contract allocation agreement charged in the instant case. Such an accord eliminates not only price competition, but also competition in service and product quality. 1 R. Callmann, The Law of Unfair Competition, Trademarks and Monopolies Sec. 4.35, at 221 (4th ed.1981). Moreover, the collusive bid rigging dimension of the conspiracy charged makes the arrangement little less than a cartel, 5 which is "never legally nor economically justifiable." Id. Sec. 4.20, at 109. The undisputed effect is to force the contracting government entities to pay more for the goods and services sought than they would " 'had there been free competition in the open market.' " United States ex rel. Marcus v. Hess, 317 U.S. 537, 539 n. 1, 63 S.Ct. 379, 382 n. 1, 87 L.Ed. 443 (1943) (circuit court's description of "collusive bidding scheme" to defraud the United States); see United States v. Bensinger Co., 430 F.2d 584, 589 (8th Cir.1970) (bid rigging agreement is "price-fixing agreement of the simplest kind"). As a result, we do not hesitate to conclude that the Government was not required to establish the unreasonableness of the conspiracy charged.

The Government was required to prove, nonetheless, that Saunders and Portsmouth Paving agreed with at least one other individual or entity to participate in the unlawful contract allocation and bid rigging charged. 6 See South-East Coal Co. v. Consolidation Coal Co., 434 F.2d 767, 774 (6th Cir.1970), cert. denied, 402 U.S. 983, 91 S.Ct. 1662, 29 L.Ed.2d 149 (1971). The substance of the appellants' argument is that the Government's evidence failed to establish the time frame, territorial scope, and subject matter of the conspiracy alleged in the indictment. They further contend that their participation in the conspiracy charged was not proven. 7 In essence, admitting that the evidence showed the existence of a number of separate and distinct conspiracies, the appellants maintain that what the Government did prove fatally varied from the terms of the indictment. Our review of the record, however, obliges us to disagree.

At the first trial, Government witness Robert Remington testified that as manager of Sam Finley, Incorporated he was a party to a contract allocation agreement covering the cities of Norfolk, Chesapeake, Portsmouth, and Virginia Beach beginning "about late in the fall of 1963 or early in the spring of 1964." According to Remington, representatives of five companies, including Saunders of Portsmouth Paving, attended the first meeting. He testified that "[a]t the meeting we agreed to not fight, to get along, try to provide work. Everybody get their share of the work." 8 The companies ordinarily met at least annually through 1979, the frequency "depending on the volume of work that was up coming that needed to be discussed." At the second trial, Remington described the time frame of the agreement between the contractors in similar terms, affirming that Saunders attended the meetings "[f]rom the very beginning to the very end," that Saunders "was a regular attendee."

While several others besides Remington testified at both trials to the continuing nature of the contractors' agreement, the evidence reveals that during perhaps two intervals, totaling approximately two and one-half years, the contractors were unable to agree on the specific application of the bid rigging arrangement to the available work. Nevertheless, this evidence establishes nothing more than a temporary lull in the parties' ongoing efforts to keep competition between them to a minimum. Absent an affirmative showing of the termination of the agreement, the conspiracy must be presumed to have continued. See Joyner v. United States, 547 F.2d 1199, 1203 (4th Cir.1977); United States v. Basey, 613 F.2d 198, 202 (9th Cir.1979), cert. denied, 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 274 (1980); United States v. Menendez, 612 F.2d 51, 54 (2d Cir.1979). The...

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