U.S. v. Skw Metals & Alloys, Inc.
| Decision Date | 04 December 1997 |
| Docket Number | No. 96-CR-71S.,96-CR-71S. |
| Citation | 4 F.Supp.2d 166 |
| Parties | UNITED STATES of America, v. SKW METALS & ALLOYS, INC. and Charles Zak, Defendants. |
| Court | U.S. District Court — Western District of New York |
Melvin Lubinski and Edward Friedman, U.S. Dept of Justice, Antitrust Division, New York City, for Plaintiff.
George P. Kucik and Nada S. Sulaiman, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, & Victor T. Fuzak and Kevin M. Kearney, Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo, NY, for Defendants.
DECISION AND ORDER
Presently before this Court are Defendants' objections to the interpretation of the 1990 Antitrust Sentencing Guideline (U.S.S.G. § 2R1.1) contained in the Presentence Investigation Reports. Specifically, Defendants object to the Probation Officer's conclusion that where the Antitrust Guideline refers to "the volume of commerce done by him or his principal in goods or services that were affected by the violation" (U.S.S.G. § 2R1.1(b)(2)), sentencing pursuant to the Guideline should take into account the total sales of the product involved in the conspiracy made by the Defendant, rather than those sales that can be directly connected to the price-fixing conspiracy.
On March 17, 1997, upon a jury verdict, Defendants Charles Zak and SKW Metal & Alloys, Inc. ("SKW") were convicted on Count One of a two-count Indictment for conspiring to fix prices of commodity ferrosilicon in violation of the Sherman Act, 15 U.S.C. § 1. Presentence Investigation Reports were prepared by U.S. Probation Officer Michael Quarantillo regarding Defendants Zak ("Zak PSR") and SKW ("SKW PSR").1 On September 23, 1997, counsel for parties appeared before this Court for a status conference regarding sentencing of Defendants. It became clear from the proceedings at this status conference, and from the parties' submissions, that sentencing in this matter should be delayed pending the Court's decision on the proper interpretation of the "volume of commerce" as used in the Antitrust Sentencing Guideline. U.S.S.G. § 2R1.1.
Defendants contend that "volume of commerce" should be interpreted narrowly, so that it includes only those sales of ferrosilicon that could be directly attributed to the price-fixing conspiracy, that is, the sales that were made at or above the illegally-fixed target price. The Government contends that "volume of commerce" should be interpreted broadly, so that it includes SKW's total sales of ferrosilicon products over the entire duration of the conspiracy.
For the reasons set forth below, this Court agrees with the Defendants that under the Antitrust Guideline, the term "volume of commerce" refers only to those sales that can be directly connected to the price-fixing conspiracy, that is, those sales made by Defendant SKW for which the conspirators successfully achieved their illegally-fixed target price.
The 1990 version of the Antitrust Guideline, U.S.S.G. § 2R1.1,2 entitled "Bid Rigging, Price-Fixing or Market Allocation agreements Among Competitors" provides:
(a) Base Offense Level: 9
(b) Specific Offense Characteristics
(1) If the conduct involved participation in an agreement to submit non-competitive bids, increase by 1 level.
(2) If the volume of commerce attributable to the defendant was less than $1,000,000 or more than $4,000,000, adjust the offense level as follows:
Volume of Commerce Adjustment to
(Apply the Greatest) Offense Level
(A) Less than $1,000,000 subtract 1
(B) $1,000,000—$4,000,000 no adjustment
(C) More than $4,000,000 add 1
(D) More than $15,000,000 add 2
(E) More than $50,000,000 add 3
For purposes of this guideline, the volume of commerce attributable to an individual participant in a conspiracy is the volume of commerce done by him or his principal in goods or services that were affected by the violation. When multiple counts of conspiracies are involved, the volume of commerce should be treated cumulatively to determine a single, combined offense level.
(c) Fines
A fine shall be imposed in addition to any term of imprisonment. The guideline fine range for an individual conspirator is from 4 to 10 percent of the volume of commerce, but not less than $20,000. The fine range for an organization is from 20 to 50 percent of the volume of commerce, but not less than $100,000.
U.S.S.G. § 2R1.1 (1990) (emphasis added).
Therefore, a sentence pursuant to the Antitrust Guideline is dependent in part on the "volume of commerce" in two ways: as an adjustment to the offense level pursuant to § 2R1.1(b)(2), and as a determinant of the appropriate fine pursuant to § 2R1.1(c).
The Probation Officer adopted the broad interpretation of "volume of commerce" supported by the Government, calculating the volume of commerce for the purposes of the Guideline at $29,971,000, from the "net sales of [SKW's] ferrosilicon from October 1, 1989 through June 30, 1991."3 (Zak PSR ¶ 8.; SKW PSR ¶ 7.) Based on this value, the Probation Officer recommended a two level upward adjustment for Defendant Zak pursuant to § 2R1.1(b)(2). (Zak PSR ¶ 14.) This value was also used to calculate the appropriate fine range for Defendants Zak and SKW pursuant to § 2R1.1(c). (Zak PSR ¶ 39.; SKW PSR ¶ 31.)
Defendants object to the use of SKW's total net sales of ferrosilicon products during the alleged conspiracy period. Defendants argue that the volume of commerce, for purposes of the Antitrust Guideline, should be based only on the sales of ferrosilicon that could be directly attributed to the price-fixing conspiracy, that is, the amount sold at or above the floor price, a total no greater than $100,627. (Zak Obj. 5; SKW Obj. 5.) The Government argues that under the Antitrust Guideline, the volume of commerce is Defendant SKW's total sales of ferrosilicon products during the entire duration of the conspiracy. (Gov't Resp. 3.)
Both parties contend that their positions are supported by the plain language of the Antitrust Guideline. The first effort in interpreting the phrase "volume of commerce ... in goods or services that were affected by the violation" is the common, everyday usage. See Williams v. United States, 503 U.S. 193, 199-201, 112 S.Ct. 1112, 1119, 117 L.Ed.2d 341 (1992) (); United States v. Goldberger & Dubin, P.C., 935 F.2d 501, 506 (2d Cir.1991) ().
Not surprisingly, the parties disagree on the reading of the plain language of the Antitrust Guideline, even after consultation with WEBSTER'S THIRD NEW INT'L DICTIONARY for a definition of the word "affect." Defendant Zak notes that "affect" is defined as "to produce an effect ... upon", "to produce a material influence upon or alteration in", or "to have a detrimental influence on." Defendant contends that this places the burden on the Government to establish a connection between the price-fixing conspiracy and SKW's ferrosilicon prices. (Zak Obj. 7.) Meanwhile, the Government noted that the word "affect" is synonymous with the word "influence", which is defined as "to affect or alter the conduct, thought, or character of by direct or intangible means." (Gov't Resp. 4.); see also Hayter Oil, 51 F.3d at 1272-73. The Government argues that this supports a broader definition of the volume of commerce, since "`affected' commerce must include all commerce that was influenced by or subject to the price fixing agreement." (Gov't Resp. 4.) As such, "SKW's volume of commerce must include all sales of commodity ferrosilicon products that it made during the duration of the conspiracy." (Gov't Resp. 4-5.)
While not conclusive, the plain language of the Antitrust Guideline tends to support the Defendants' position that the "volume of commerce ... affected by the violation" applies to goods that were sold by SKW at or above prices agreed upon as part of the conspiracy. This is the meaning that appears most obvious to this Court simply by reading the Antitrust Guideline. Consultation with a dictionary would only strengthen this Court's initial impression that the Guideline envisions a narrower view than the Government proposes. The Antitrust Guideline uses the word "affected" not "influenced", and this Court is reluctant to go fishing for synonyms to assist it in statutory interpretation. Nonetheless, the plain language of the statute is not entirely sufficient for purposes of a clear definition of the "volume of commerce" to be used here.
The Defendants and the Government also contend that their respective positions are supported by the Sentencing Commission's Commentary to the Antitrust Guideline. Commentary that interprets a guideline or explains its application generally controls. See U.S.S.G. § 1B1.7; see also Stinson v. United States, 508 U.S. 36, 44, 113 S.Ct. 1913, 1918, 123 L.Ed.2d 598 (1993) ().
A close and thorough reading of the 1990 Antitrust Guideline Commentary supports the view that "volume of commerce," as used in the Antitrust Guideline, includes only those products that were sold at or above the target price of the conspiracy. Several statements in the Commentary establish that there should be a connection between the profit gained by the price-fixing conspiracy and the sentence imposed pursuant to the Antitrust Guideline. In order to profit from the conspiracy, a firm would have to sell products at a price that was illegally inflated by the conspiracy.
For example, the Commentary to the Antitrust Guideline states:
Because the guideline sentences depend on the volume of commerce...
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