U.S. v. Therm-All, Inc.

• Decision Date: 14 June 2004
• Docket Number: No. 02-20843.,02-20843.
• Citation: 373 F.3d 625
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. THERM-ALL, INC., and Supreme Insulation, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

373 F.3d 625

UNITED STATES of America, Plaintiff-Appellee, v. THERM-ALL, INC., and Supreme Insulation, Inc., Defendants-Appellants.

No. 02-20843.

United States Court of Appeals, Fifth Circuit.

June 14, 2004.

Rehearing Denied July 14, 2004.

COPYRIGHT MATERIAL OMITTED

John P. Fonte (argued), John J. Powers, III, Asst. Chief Atty., U.S. Dept. of Justice, Antitrust Div., Washington, DC, James Lee Turner, Asst. U.S. Atty., Houston, TX, for Plaintiff-Appellee.

Karl R. Wetzel (argued), Wegman, Hessler & Vanderburg, Cleveland, OH, for Therm-All Inc.

David Benjamin Gerger, David Gerger & Associates, Houston, TX, Curtis E. Woods (argued), Sonnenschein, Nath & Rosenthal, Kansas City, MO, for Supreme Insulation Inc.

Appeals from the United States District Court for the Southern District of Texas.

ON PETITION FOR REHEARING EN BANC

(Opinion Dec. 3, 2003, 5th Cir.2003, 352 F.3d 924)

Before REAVLEY, JONES and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge.

Upon reconsideration, we withdraw our previous opinion, reported at 352 F.3d 924, and substitute the following.¹

After a seven-week trial, a jury convicted Therm-All, Inc. ("Therm-All") and Supreme Insulation, Inc. ("Supreme") of conspiring to fix prices in the building insulation industry, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Therm-All and Supreme (collectively "Defendants") raise the following six issues on appeal: (1) whether sufficient evidence supports the jury finding that a conspiracy existed; (2) whether the Government produced evidence that the conspiracy existed during the statute of limitations period; (3) whether a fatal variance existed between the indictment and the proof at trial; (4) whether the district court improperly instructed the jury; (5) whether the district court should have ordered a new trial based on prosecutorial misconduct; and (6) whether a discovery error by the Government rises to the level of plain error. We conclude that the Defendants do not prevail on any of these issues, so we affirm the judgment.

I. FACTS AND PROCEEDINGS

During the 1990's, five companies, Therm-All, Supreme, Bay Insulation Supply Company ("Bay Insulation"), Mizell Brothers Company ("Mizell Co."), and CGI Silvercote ("CGI"), dominated the market for laminated fiberglass. These companies laminated fiberglass so that it could be used to insulate metal buildings. In 1992 and 1993, the metal-building industry expanded dramatically, and consequently, prices of metal-building insulation plummeted. In late 1993, the fiberglass manufacturers — suppliers for the five fiberglass laminating companies listed above — announced a price increase and an "allocation" system under which they would be producing more residential and less metal building insulation.

At trial, the Government presented evidence that during the fiberglass manufacturer's allocation period, the five laminating companies acted in the following manner to bring about a conspiratorial agreement. In October 1993, during a convention in Dallas, Texas, the laminating companies discussed forming a committee to establish product and safety standards for metal building insulation. Subsequently, the president of Therm-All, Robert Smigel ("Smigel"), telephoned the national sales manager for Mizell Co., Wally Rhodes ("Rhodes"), to discuss whether Mizell Co. had any interest in supporting this committee. Near the end of their conversation, Smigel (of Therm-All) mentioned the prevailing low prices in the industry, and characterized the situation as "a dog-eat-dog market." Smigel said he thought Bay Insulation, which was expanding into many new areas at the time, was responsible for the low prices, and Rhodes (of Mizell Co.) agreed. Smigel then said that he had agreed with the sales manager of Bay Insulation, Mark Maloof ("Maloof"), to increase and maintain prices. This would be accomplished, Smigel explained, by publishing price sheets with nearly identical prices, and "selling ... on the price sheet, not coming below the price sheet and not jumping the brackets." Rhodes "immediately" agreed that Mizell Co. would do the same. In January 1994, Rhodes had similar conversations with Maloof (of Bay Insulation) and with the president of Supreme, Tula Thompson ("Thompson"), in which they agreed to raise prices, use bracket pricing, and not deviate from the price sheets. Thus, by January 1994, Smigel, Thompson, Maloof, and Rhodes had reached an agreement "to get the pricing up in the industry and make more money." Smigel then brought CGI into the conspiracy, as well as smaller regional competitors.²

The conspirators faxed each other price sheets, and spoke on the phone "to get the pricing in line with each other ... within a couple of dollars of each other in each [pricing] bracket," trying not to use the "exact" same prices so that customers would not get suspicious. For example, Rhodes (of Mizell Co.) received a copy of Therm-All's February 14, 1994 price sheet from Smigel's Therm-All office in January 1994, at which time Rhodes was working on Mizell Co.'s prices. Rhodes then "tried [his] best to get the numbers as close as [he] could ... to [Therm-All's] numbers without being identical in every bracket." When he finished, Rhodes faxed Mizell Co.'s draft price sheet to Smigel a few days before it became effective.

Another example of conspiratorial conduct allegedly occurred when Rhodes (of Mizell Co.) told Leif Nilson, Mizell Co.'s California plant manager, that he had an agreement with Thompson (of Supreme) to keep the California prices up, and therefore, they were to stick to the price sheets. On one occasion, Rhodes faxed Nilsen "Supreme's price sheet" containing a Supreme fax header.

Several witnesses explained how the various companies policed and enforced the agreement. Rhodes (of Mizell Co.) testified that when a conspirator believed another conspirator was offering too low a price to a mutual customer, the conspirator could call Rhodes and verify the complaint or obtain an explanation. Rhodes provided an example of this conduct, stating that Smigel (of Therm-All) called him several times in 1994 complaining that a Mizell Co. salesperson in Pennsylvania had jumped a bracket. Nilsen (of Mizell Co.) also called Rhodes whenever he believed that Supreme was pricing below the agreed-upon level. Rhodes responded to Nilsen that he would "call and see what was going on," and then called back to say that he had discussed the incident with Supreme and that it would not happen again.

Evidence also existed that Supreme called co-conspirators when it suspected they were not complying with the agreement. Supreme's California salesman, Jim Miranda ("Miranda"), told his plant manager that, according to a customer, Supreme's quote to that customer was higher than Mizell Co.'s quote. The plant manager relayed this information to Thompson (of Supreme), who called Rhodes (of Mizell Co.), who told Thompson that the customer must have been "pulling [Miranda's] leg."

The following evidence is also noteworthy for purposes of this appeal. First, Miranda provided testimony at trial (1) that Thompson (of Supreme) obtained a price sheet from Rhodes (of Mizell Co.), and (2) that Miranda (of Supreme) himself had told this information to the grand jury. Second, Rhodes (of Mizell Co.) testified that the conspiracy continued through June 1995. Third, Mark Engebretson ("Engebretson"), a Therm-All employee testified that he had conversations with Roger Ferry ("Ferry"), a CGI employee, about pricing information. The telephone records of Engebretson (of Therm-All) revealed that on June 8, 1995, he had a short conversation with Ferry (of CGI), and sent Ferry a fax on June 15, 1995. Fourth, Rhodes (of Mizell Co.) testified that a price sheet that CGI had in its possession contained the handwriting of a Therm-All vice president, Dennis Kaczmarek ("Kaczmarek"), on it.

The jury acquitted Smigel (of Therm-All) and Thompson (of Supreme), but found Therm-All and Supreme guilty. Therm-All and Supreme filed motions for judgment of acquittal and new trial, but the district court denied those motions. Thermal-All and Supreme timely appeal.

II. STANDARD OF REVIEW

This Court reviews de novo the denial of an appellant's motion for acquittal. United States v. Medina, 161 F.3d 867, 872 (5th Cir.1998). A motion for a judgment of acquittal challenges the sufficiency of the evidence to convict. See FED. R. CRIM. P. 29(a). In ruling on the motion for acquittal, this Court reviews the evidence, all reasonable inferences drawn from it, and all credibility determinations in the light most favorable to the Government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); Medina, 161 F.3d at 872.

This Court reviews the denial of a motion for new trial for abuse of discretion. Mississippi Chem. Corp. v. Dresser-Rand Co., 287 F.3d 359, 365 (5th Cir.2002). This Court will uphold a jury verdict if "a rational trier of fact could have found that the evidence established the essential elements of the offense beyond a reasonable doubt." United States v. Lopez, 74 F.3d 575, 577 (5th Cir.1996).

III. DISCUSSION

Defendants raise six issues on appeal. The first is whether the Government produced sufficient evidence to show that a conspiracy existed. The second is whether evidence exists that the alleged conspiracy continued during the limitations period. The third is whether a fatal variance exists between the indictment and the proof at trial. The fourth is whether the district court improperly instructed the jury. The fifth is whether the district court should have ordered a new trial based on the Government's closing argument. The sixth is whether a discovery error by the Government rises to the level of plain error. We address each in turn.

A. Sufficiency of the evidence

Defendants first argue that the evidence does not support the jury verdicts against them because the jury did not convict Thompson (of...