U.S. v. Reicher

• Decision Date: 29 December 1992
• Docket Number: No. 91-2282,91-2282
• Citation: 983 F.2d 168
• Parties: 1992-2 Trade Cases P 70,083 UNITED STATES of America, Plaintiff-Appellant, v. Bernard D. REICHER, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 168

983 F.2d 168

1992-2 Trade Cases P 70,083

UNITED STATES of America, Plaintiff-Appellant, v. Bernard D. REICHER, Defendant-Appellee.

No. 91-2282.

United States Court of Appeals, Tenth Circuit.

Dec. 29, 1992.

John J. Powers, III, Attorney (James F. Rill, Asst. Atty. Gen., Charles A. James, Deputy Asst. Atty. Gen., Catherine G. O'Sullivan, Robert B. Nicholson, John P. Fonte and David Seidman, also Attorneys, Dept. of Justice, Washington, DC, Duncan S. Currie and J. Oliver Lee, Jr., Attorneys, Dept. of Justice, Dallas, TX, with him on the briefs) for plaintiff-appellant.

Teresa E. Storch, Asst. Federal Public Defender, Albuquerque, NM, for defendant-appellee.

Before LOGAN, HOLLOWAY and BARRETT, Circuit Judges.

LOGAN, Circuit Judge.

Defendant Bernard D. Reicher was convicted by a jury of conspiring to rig bids in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. Although the district court denied defendant's motion for dismissal of the Sherman Act count at the close of all the evidence, it subsequently reversed its position and granted defendant's motion for judgment of acquittal after discharge of the jury pursuant to Fed.R.Crim.P. 29(c). The decision of the district court is reported as United States v. Reicher, 777 F.Supp. 901 (D.N.M.1991). The United States has appealed.

Reicher was indicted for his participation in a scheme to rig bids for the award of a contract with Los Alamos National Laboratory (the Lab). In 1984, engineers at the Lab became interested in building a specialized structure for laser testing (the Optical Channel Assembly, or OCA), to be assembled from urethane insulated panels. At the time, Reicher's company, B.D. Reicher & Son, Inc., was the regional representative for Bally, one of the major insulated panel manufacturers. Over a period of several months, Reicher and one of his employees worked with engineers at the Lab modifying the OCA specifications to accommodate Bally's standard panel measurements.

In June 1985, Lab officials sent out bid packages to prospective bidders appearing on a list it had compiled. Because the Lab procurement officer had determined that there were numerous companies throughout the country capable of building the OCA from the final specifications, it was decided that the project would be bid competitively. Lab procurement procedure required the submission of at least two bids for the project to be let. However, as the deadline for the submission of bids approached, Reicher learned that his company's was likely to be the only bid. Based on his discussions with Lab officials, Reicher believed that if the OCA project were not let in this round of bidding, there would be insufficient time to select a contractor by other means before the end of the year, after which the funds would no longer be available.

So, to insure that the OCA project would be let and that his company would be the successful bidder, Reicher called James Giolas of Giolas Sales Company, another potential bidder appearing on the Lab bid list. Reicher persuaded Giolas to sign a bid form and mail it to Reicher without filling in a quotation. Reicher and one of his employees subsequently completed Giolas' blank bid form and submitted it to the Lab. The Lab awarded the contract to B.D. Reicher & Son as the low bidder.

A district court decision "setting aside a jury verdict of guilty is entitled to no deference." United States v. Hayes Int'l Corp., 786 F.2d 1499, 1500 (11th Cir.1986). We therefore review the sufficiency of the evidence de novo, in a light most favorable to the prosecution. United States v. Bishop, 890 F.2d 212, 219 (10th Cir.1989).

Section one of the Sherman Antitrust Act provides:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

15 U.S.C. § 1. Despite this broad language, almost from its inception the Sherman Act has been read to prohibit only those restraints of trade that are unreasonable. Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918). However, in addition to this rule of reason the courts have also developed a doctrine of per se violations to cover those business relationships that "because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). Bid rigging is one such per se violation. United States v. Mobile Materials, Inc., 881 F.2d 866, 869 (10th Cir.1989), cert. denied, 493 U.S. 1043, 110 S.Ct. 837, 107 L.Ed.2d 833 (1990).

Bid rigging is defined as:

Any agreement between competitors pursuant to which contract offers are to be submitted [to] or withheld from a third party constitutes bid rigging per se violative of 15 U.S.C. section 1.

Id. (quoting United States v. Portsmouth Paving Corp., 694 F.2d 312, 325 (4th Cir.1982)). In acquitting Reicher of the antitrust violation, the district court placed particular emphasis on the word "competitors." It found that because the evidence was clear that Giolas' company could not have performed the contract had it won the bid, Giolas was only an "apparent competitor" of Reicher's, and without two companies capable of competing there could be no conspiracy actionable under the antitrust laws. 777 F.Supp. at 905-06. Because we believe the district court's interpretation of the word "competitors" is too narrow, we reverse.

Here the decisive circumstance in defining "competitors" is the simple fact that Giolas Sales submitted a bid for the OCA contract. Despite its ultimate inability to perform the contract, Giolas held itself out as a competitor for the purposes of rigging what was supposed to be a competitive bidding process. This is exactly the sort of "threat to the central nervous system of the economy," United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 226 n. 59, 60 S.Ct. 811, 846 n. 59, 84 L.Ed. 1129 (1940), that the antitrust laws are meant to address. The cases cited by the district court in support of its position do not hold otherwise.

The cases on which Reicher relies most heavily for the proposition that physical incapacity should be an issue in determining competitors in a relevant market are United States v. Sargent Elec. Co., 785 F.2d 1123 (3d Cir.), cert. denied, 479 U.S. 819, 107 S.Ct. 82, 93 L.Ed.2d 36 (1986), and United States v. Ashland-Warren, Inc., 537 F.Supp. 433 (M.D.Tenn.1982). In Sargent (a 2 to 1 decision in which each judge wrote separately) the lead opinion stated that the initial inquiry is whether each party to a conspiracy was "an actual or potential competitor in that market" and that "[a]n agreement among persons who are not actual or potential competitors in a relevant market is for Sherman Act purposes brutum fulmen [an empty threat]." 785 F.2d at 1127. In Ashland-Warren the court stated that "price-fixing by means of bidrigging is flatly impossible when the alleged conspirators are not also competitors.... Unless the offending group consists of competitors, a bidrigging scheme lacks any utility." 537 F.Supp. at 445. The two cases, however, involved whether there were multiple conspiracies; the remarks were made in the context of deciding whether double jeopardy protected against a second conviction for bid rigging in different geographical areas; and in each the defendant was found not entitled to the defense. The cases are distinguishable and we believe, properly construed, are not inconsistent with our holding in the instant case. ¹

Several circuit courts have found antitrust violations when one of the conspirators lacked the capacity to perform...