U.S. v. Rose, 05-10447.

• Decision Date: 10 May 2006
• Docket Number: No. 05-10447.,05-10447.
• Citation: 449 F.3d 627
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Daniel T. ROSE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

449 F.3d 627

UNITED STATES of America, Plaintiff-Appellee, v. Daniel T. ROSE, Defendant-Appellant.

No. 05-10447.

United States Court of Appeals, Fifth Circuit.

May 10, 2006.

Steven Jeffrey Mintz (argued), John J. Powers, III, Asst. Chief Atty., U.S. Dept. of Justice, Antitrust Div., Washington, DC, David B. Shapiro, U.S. Dept. of Justice, Dallas, TX, for U.S.

Marcia Gail Shein (argued), Law Office of Marcia G. Shein, Decatur, GA, for Rose.

Appeal from the United States District Court for the Northern District of Texas.

Before GARWOOD, BENAVIDES and OWEN, Circuit Judges.

OWEN, Circuit Judge:

Following a jury trial, Daniel Rose was convicted of conspiring to "suppress and eliminate competition by fixing the price, rigging bids, and allocating customers for choline chloride sold in the United States[,]" in violation of section 1 of the Sherman Act.¹ Rose appeals his conviction, asserting insufficiency of the evidence, and challenges his sentence based on the district court's findings regarding the volume of commerce affected by the offense and Rose's alleged role as a manager or supervisor. Because the evidence is sufficient to support the jury's verdict, we AFFIRM Rose's conviction. However, we VACATE Rose's sentence and REMAND for resentencing.

I

Daniel Rose became president of DuCoa, L.P. in August 1997. DuCoa manufactured choline chloride, a B complex vitamin essential for the proper growth and development of animals. At that time, DuCoa and two of its competitors, Bioproducts, Inc., and Chinook Group Limited, were responsible for more than 90% of choline chloride sales in the United States. The Department of Justice began a grand jury investigation into price-fixing of bulk vitamins, and officers of Bioproducts eventually approached the Department of Justice and exposed a price-fixing conspiracy involving choline chloride. Five current and former officers of DuCoa and Chinook pleaded guilty. DuCoa itself pleaded guilty.

Rose was indicted for conspiracy to violate section 1 of the Sherman Act, and the charge against him proceeded to trial. A mistrial was declared when the jury was unable to agree on a verdict, but upon retrial, the jury returned a verdict adverse to Rose. The district court sentenced Rose to 30 months imprisonment, one year of supervised release, and a $20,000 fine, adopting the following findings and recommendations in the Presentence Report: (1) a one-level enhancement for bid-rigging, pursuant to U.S.S.G. § 2R1.1(b)(1); (2) a five-level enhancement for affecting a volume of commerce of over $15 million, which included the commerce affected from August 1997 through September 1998, pursuant to U.S.S.G. § 2R1.1(b)(2)(E); and (3) a three-level enhancement for Rose's role in the offense as a manager or supervisor, pursuant to U.S.S.G. § 3B1.1(b).

In this appeal, Rose contends: (1) the evidence is insufficient to support his conviction; (2) the district court clearly erred by finding that he was a manager or supervisor; and (3) the district court clearly erred by holding him responsible for the volume of commerce affected before February 1998.

II

We begin by reviewing Rose's conviction. When the defendant moves for judgment of acquittal at the close of the evidence, as Rose did here, we decide whether the evidence is sufficient by "viewing the evidence and the inferences that may be drawn from it in the light most favorable to the verdict" and determining whether "a rational jury could have found the essential elements of the offense[] beyond a reasonable doubt."² The jury has the sole responsibility for weighing the evidence and making credibility determinations.³ "It is not necessary that the evidence exclude every rational hypothesis of innocence or be wholly inconsistent with every conclusion except guilt, provided a reasonable trier of fact could find the evidence establishes guilt beyond a reasonable doubt."⁴ "However, we must reverse a conviction if the evidence construed in favor of the verdict gives equal or nearly equal circumstantial support to a theory of guilt and a theory of innocence of the crime charged."⁵

Section 1 of the Sherman Act prohibits conspiracies "in restraint of trade or commerce among the several States . . . ."⁶ "[C]onspiracies under the Sherman Act are not dependent on any overt act other than the act of conspiring."⁷ Moreover, conspiracies to "submit collusive, noncompetitive, rigged bids,"⁸ allocate customers,⁹ and fix prices are per se violations of the Sherman Act.¹⁰ To show that Rose actually intended to enter into the conspiracy, "the government was required to show that [he] knowingly joined or participated in [it]."¹¹

Viewing the evidence in the light most favorable to the verdict, the conspiracy was conceived and formed by at least 1989, when the market for choline chloride was roughly divided evenly between DuCoa, Bioproducts and Chinook. The three companies entered into an agreement to keep their respective shares of the market at one-third through price fixing, customer allocation, and bid rigging. Specifically, the companies agreed to fix the list price for choline chloride, which was the price announced in various trade journals and used as a reference point in determining the price for particular customers. The companies allocated customers by deciding which company would offer the lowest price for choline chloride to a particular customer at the next bidding opportunity. This agreement was aimed at stabilizing the market and keeping the price of choline chloride higher than it would otherwise be.

From time to time, the companies disregarded the agreement by engaging in competitive activity, for example, attracting another's customers by offering a lower price. At the time Rose became the president of DuCoa in August 1997, there had been increased disregard of the market-sharing and pricing agreement and decreased communication among the conspirators. The former president of DuCoa, Lindell Hilling, testified that he nevertheless viewed the agreement to be in effect at that time. Hilling had been president of DuCoa since 1987 and was actively involved in the conspiracy. He testified that, before Rose succeeded him, he met with Rose to explain the business to him. Hilling believed he was openly discussing the conspiracy with Rose, although he did not use terms such as "conspiracy," "bid rigging," or "allocating customers." Hilling had prepared handwritten notes prior to the meeting to guide the discussion, and they included phrases such as "Settle Market Share Issues." He gave a copy to Rose to use during their conference. The phrase "Between Competitors" was written by Rose on those notes during the meeting.

Pete Fischer—Rose's subordinate and the president of DuCoa's basic products division, including choline chloride—had joined the conspiracy by 1992. Like Hilling, Fischer believed the agreement was still in effect when Rose became president, despite the increase in competitive activity among the conspirators. Fischer testified that he discussed the agreement with Rose in the latter part of September 1997 when the two were on a business trip in Europe. Fischer testified that he and Rose discussed the recent instability of the market. Fischer felt that Rose needed to know about the agreement so that they could develop a strategy "to manage the market going forward." According to Fischer, once the two returned from Europe, they developed a strategy "to draw a line in the sand" and "show that [DuCoa was] still dealing from a position of strength" by taking a major account, Tyson Foods, from Bioproducts. Fischer said the "intent[] was to bring [Bioproducts] . . . back to the table to reallocate product to [bring] the market back into equilibrium[,] so that prices could be stabilized and margins increased."

Subsequently, the plan was effectuated when a company that DuCoa supplied, South Central Products, underbid Bioproducts and acquired a contract to supply Tyson Foods with half of its needs for choline chloride. Chinook supplied the other half. Following this development, two Chinook executives, John Kennedy and Robert Samuelson, met with Thomas Sigler of Bioproducts, and with Fischer, Rose, and Antonio Felix from DuCoa, in Atlanta, Georgia in January 1998 during the Southeastern Poultry Convention to discuss the situation. At the meeting, which was held off-site at a small café to avoid arousing suspicion, Rose was introduced to the competitors, and Sigler demanded that DuCoa return the Tyson account. DuCoa refused. No agreements were reached during this meeting.

Fischer arranged for another meeting to be held the following month, in February 1998. To prepare, he and Felix, a DuCoa vice president, "put together particular accounts that [they] felt could be moved over to [Bioproducts] and/or Chinook, if necessary, to reallocate the additional volume[] that [DuCoa] picked up at Tyson." Fischer and Felix discussed these accounts with Rose. The competitors, including Rose, then met at the Hilton Hotel at Chicago's O'Hare airport. They began the gathering by discussing the size of the choline chloride market in the United States and then determined "who was long on volume and who was short on volume . . . [to] determine a path forward to bring that volume back into equilibrium." Felix and Kennedy testified that Chinook agreed to give one of its accounts, Cagle's, to Bioproducts to make up for the loss of Tyson and equalize shares between the competitors. DuCoa also agreed that its customer Roche "would be moved to [Bioproducts]." The competitors further agreed to raise prices effective April 1, 1998 and how that would be announced in a trade publication and letters to customers. Felix, from DuCoa, had prepared a price proposal for the group to consider, but "it was decided to . . . go with higher prices than the ones proposed by DuCoa." Rose actively participated in the conference, and according to Felix, was "leading the meeting"...