U.S. v. W.F. Brinkley & Son Const. Co., Inc.

• Decision Date: 21 February 1986
• Docket Number: No. 84-5355,84-5355
• Citation: 783 F.2d 1157
• Parties: , 1986-1 Trade Cases 66,963 UNITED STATES of America, Appellee, v. W.F. BRINKLEY & SON CONSTRUCTION COMPANY, INC. and William F. Brinkley, Jr., Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1157

783 F.2d 1157

54 USLW 2508, 1986-1 Trade Cases 66,963

UNITED STATES of America, Appellee, v. W.F. BRINKLEY & SON CONSTRUCTION COMPANY, INC. and William

F. Brinkley, Jr., Appellants.

No. 84-5355.

United States Court of Appeals, Fourth Circuit.

Argued Aug. 2, 1985.

Decided Feb. 21, 1986.

N. Carlton Tilley, Jr. (William L. Osteen, Osteen, Adams, Tilley & Walker, Greensboro, N.C., on brief), for appellants.

Robert B. Nicholson (John P. Fonte, Charles P. Rule, Acting Asst. Atty. Gen., Washington, D.C., Carl W. Mullis, III, Atlanta, Ga., Bargery G. Williams, on brief), for appellee.

Before PHILLIPS and SNEEDEN, Circuit Judges, and JONES, United States District Judge for the Western District of North Carolina, sitting by designation.

SNEEDEN, Circuit Judge:

The defendants, William F. Brinkley, Jr. and W.F. Brinkley & Son Construction Company ("Brinkley & Son"), appeal their convictions of one count of conspiring to rig bids on a construction project in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. Brinkley, president of Brinkley & Son was sentenced to 30 days incarceration and fined $25,000. The company was fined $100,000.

The appellants contend that the trial court erred by denying their motion for judgment of acquittal and by improperly instructing the jury on the definition of bid rigging and on the requisite intent to violate Section 1 of the Sherman Act. Finding no error below, we affirm their convictions.

I.

This case concerns the 1979 bidding process for a portion of the Pasquotank River Supply Project undertaken by Elizabeth City, North Carolina. For several years Elizabeth City considered the need to supplement its raw water supply, finally concluding that obtaining water from the adjacent Pasquotank River was the best alternative. The overall project was divided into several subprojects, each of which was to be awarded through a competitive bidding process. Contract 12, at issue in this case, involved constructing a pumping station at the river and laying a pipeline system to carry the water to a treatment plant.

Contract 12, along with several other subprojects, was first let for bidding in 1977. The city received bids from Brinkley & Son; Dickerson, Inc. ("Dickerson"); Crain & Denbo, Inc. ("Crain & Denbo"); and Dellinger, Inc. ¹ Brinkley & Son was the low bidder with a bid of $653,000. Contract 12 was not awarded in 1977, however, because bids on other projects were significantly higher than expected and the city decided not to award any of the contracts.

In the summer of 1979, Elizabeth City again offered Contract 12 for bidding. Brinkley & Son, Dickerson, and Crain & Denbo submitted bids. Brinkley & Son was again the low bidder--this time with a significantly higher bid of $995,000--and was awarded the contract.

At trial, representatives of both Dickerson and Crain & Denbo testified as immunized witnesses for the government concerning events which preceded the 1979 bidding. Frank Carpenter, the Utility Division manager for Dickerson, testified that he spoke with William Brinkley prior to the bidding and told him that they should try to get the contract together again ² and that Dickerson would "honor" Brinkley's low bid from 1977. Joint Appendix at 59-60 and 103. Carpenter stated that Brinkley indicated his agreement with that suggestion. Joint Appendix at 60. While Carpenter could not recall the specific wording of his conversation with Brinkley--a point on which he was vigorously cross-examined by defense counsel--he remembered that the substance of the conversation was that Dickerson would intentionally submit a high or "complementary" bid to ensure that Brinkley would again be the low bidder. Joint Appendix at 79. Carpenter further testified that, to the best of his recollection, the amount which Dickerson bid in 1979 for Contract 12 was given to him by Brinkley. Joint Appendix at 73.

Harold Crain, Jr., and Edward Denbo, Jr., of Crain & Denbo, the third company to submit a bid in 1979, also testified. Both Crain and Denbo stated that, on the morning of the day that bids were to be submitted, they telephoned William Brinkley and asked that he give them a "safe" number to bid on Contract 12. Joint Appendix at 165. Both further testified that Brinkley agreed to give them an amount to bid on the project. Joint Appendix at 129-130 and 165. Crain and Denbo indicated that they had originally intended to submit a competitive bid but were unable to complete the bid when a subcontractor failed to give them a price for the pipeline work. Joint Appendix at 145 and 167. Thus, their options at that point were to submit no bid, to guess on an amount, or to obtain a safe number from another contractor. Joint Appendix at 156. They testified that they rejected the alternative of failing to submit a bid because they did not want to offend the project engineer. Joint Appendix at 147. Fearing a costly mistake if they simply guessed on a bid amount, they decided to contact William Brinkley for a safe number to bid. ³ Joint Appendix at 149. Both Crain and Denbo stated during cross-examination that they decided not to submit a competitive bid prior to discussions with Brinkley. Joint Appendix at 146 and 181.

Gene Greer, an employee of Crain & Denbo, then testified that he went to Brinkley's motel shortly before noon on the day of the bidding and was given an amount to bid by Brinkley. Greer stated that he then filled out a bid, placed it in a sealed envelope, and gave it to Brinkley to turn in for him. Joint Appendix at 185-187. Greer further testified that Brinkley appeared to be working on Brinkley & Son's bid, which was due at 2:00 p.m. that afternoon. Joint Appendix at 185-186.

II.

The appellants first argue that the district court erred in denying their motion for judgment of acquittal, both at the conclusion of the government's case and at the close of all the evidence, because there was insufficient evidence of an agreement between Crain & Denbo and appellants to rig bids. ⁴ Pointing out that unilateral action cannot violate Section 1 of the Sherman Act, the appellants argue that there was no agreement to rig bids because Crain and Denbo ⁵ had decided not to compete for Contract 12 before contacting Brinkley. ⁶ Appellants maintain that Crain & Denbo's decision was thus the result of unilateral action and not the result of a conspiracy involving the appellants. Under the appellants' view, one could never be convicted of bid rigging for simply giving a competitor a safe number to bid once that competitor had decided for himself not to compete for a particular contract. ⁷

We agree with appellants' assertion that unilateral action does not violate Section 1, but that is the extent of our agreement with their position. Contrary to the appellant's argument that Crain & Denbo acted unilaterally, the facts of this case clearly demonstrate concerted action by Crain & Denbo and Brinkley on the submission of bids to Elizabeth City. While Crain and Denbo might have decided between themselves not to submit a competitive bid on Contract 12, they went beyond unilateral action when they contacted Brinkley requesting a safe number to bid and he consented to give them one. At that point, there was an agreement between two competitors pursuant to which bids would be submitted to Elizabeth City. Such an agreement is clearly bid rigging. As Judge Russell explained in United States v. Portsmouth Paving Corp., "[a]ny 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. Sec. 1." 694 F.2d 312, 325 (4th Cir.1982), (citations omitted).

The appellants would have liability under the Sherman Act turn on the fact that Crain and Denbo decided not to bid competitively for Contract 12 prior to contacting Brinkley. We cannot accept such a proposition. Regardless of which competitor initiated the contact, and regardless of the reason, the agreement between these competitors clearly deprived Elizabeth City of the benefits of a competitive bidding process. By agreeing to give his remaining competitor an amount to bid, Brinkley gained the knowledge that Crain & Denbo would not actually be competing for Contract 12. That knowledge afforded him the opportunity to inflate his bid, confident that he would still be the low bidder. ⁸ Crain & Denbo received a number which it could submit as a "complementary" or intentionally high bid, thus preserving the appearance of being a legitimate competitor for the contract. The only entity that did not benefit from the arrangement was Elizabeth City, which thought it was awarding the contract for the lowest possible cost.

Moreover, as the government points out in its brief, accepting the appellants' position would lead to self-serving testimony in virtually every bid rigging trial. Brief for Appellee at 20. Rarely would a competitor make anything other than a unilateral decision not to submit a competitive bid.

It is clear that appellants' conduct constituted bid rigging in violation of the antitrust laws and that the evidence in this case is more than sufficient to support the jury's verdict. The district court therefore properly denied appellants' motion for judgment of acquittal.

III.

The appellants next contend that the trial court erred in its instruction defining bid rigging. This argument need not long detain us. By withdrawing their objection to this portion of the trial court's instructions, Joint Appendix at 229-230, appellants failed to properly preserve this issue on appeal as required by Rule 30 of the Federal Rules of Criminal Procedure. Appellants now assert, as they must, that the trial court's instruction defining bid rigging constituted plain error. They suggest that the district court should have told the jury that "[b]id rigging is an agreement between two or more persons to eliminate, reduce, or interfere with competition for a...