United States v. Aeroquip Corporation, Cr. No. 41312.

• Decision Date: 30 April 1968
• Docket Number: Cr. No. 41312.
• Parties: UNITED STATES of America, Plaintiff, v. AEROQUIP CORPORATION, Anchor Coupling Co., Inc., Imperial-Eastman Corporation, National Hose Assemblies Manufacturers Association, Parker-Hannifin Corporation, Stewart-Warner Corporation, Stratoflex, Inc., the Weatherhead Company, George P. Byrne, Jr., William F. Rogge, C. A. Thomas and Augustus S. Wade, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

284 F. Supp. 114

UNITED STATES of America, Plaintiff, v. AEROQUIP CORPORATION, Anchor Coupling Co., Inc., Imperial-Eastman Corporation, National Hose Assemblies Manufacturers Association, Parker-Hannifin Corporation, Stewart-Warner Corporation, Stratoflex, Inc., the Weatherhead Company, George P. Byrne, Jr., William F. Rogge, C. A. Thomas and Augustus S. Wade, Defendants.

Cr. No. 41312.

United States District Court E. D. Michigan, Southern Division.

April 30, 1968.

Jesse Climenko and Jerome D. Grant, of Shea, Gallop, Climenko & Gould, New York City, Maxwell F. Badgley and John Schomer, of Badgley, Domke, McVicker & Marcoux, Jackson, Mich., for Aeroquip Corp.

Harrison T. Watson, of Watson Lott & Wunsch, Detroit, Mich., for William F. Rogge.

Patrick W. O'Brien, William A. Wineberg, Jr., Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., and A. Stewart Kerr, Sweeny, Dodd, Kerr, Wattles & Russell, Detroit, Mich., for Anchor Coupling Co., Inc.

Edward H. Hatton, Robert L. Bombaugh and Hugh M. King, Raymond, Mayer, Jenner & Block, Chicago, Ill., William R. Bryant, Jr., Watson, Lott, & Wunsch, Detroit, Mich., for Imperial-Eastman Corporation.

John A. Sullivan, Cadwalader, Wickersham & Taft, New York City, William R. Bryant, Jr., Local Counsel, Watson, Lott & Wunsch, Detroit, Mich., for National Hose Assemblies Manufacturers Association and George P. Byrne, Jr.

William D. Ginn, John F. McClatchey, Thompson, Hine & Flory, Cleveland, Ohio, William R. Bryant, Jr., Watson, Lott & Wunsch, Detroit, Mich., for Parker-Hannifin.

Earl A. Jinkinson, John W. Stack, Winston, Strawn, Smith & Patterson, Chicago, Ill., Robert C. Winter, Local Counsel, Clark, Klein, Winter, Parsons & Prewitt, Detroit, Mich., for Stewart-Warner Corp.

Cecil E. Munn, Edward Kemble, Cantey, Hanger, Gooch, Cravens & Scarborough, Fort Worth, Tex., John Feikens, Local Counsel, Feikens, Dice, Sweeny & Sullivan, Detroit, Mich., for Stratoflex Inc. and C. A. Thomas.

Bruce W. Eaken, Victor H. DeMarco, George H. Rudolph, Jones, Day, Cockley & Reavis, Cleveland, Ohio, William R. Bryant, Jr., Local Counsel, Watson, Lott & Wunsch, Detroit, Mich., for Weatherhead Co. and Augustus S. Wade.

Dwight B. Moore, David G. Budd, Carl L. Steinhouse, Acting Chief, Anti-Trust Dept., Dept. of Justice, Cleveland, Ohio, Lawrence Gubow, U. S. Dist. Atty., Detroit, Mich., for the United States.

MEMORANDUM OPINION AND ORDER DENYING THE GOVERNMENT'S MOTION TO CONNECT AND GRANTING DEFENDANTS' MOTIONS FOR JUDGMENT OF ACQUITTAL.

MACHROWICZ, District Judge.

This is a criminal anti-trust matter in which seven corporations, one trade association and four individuals were indicted for violating section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The corporate defendants in this case are Aeroquip Corporation, herein after referred to as Aeroquip, Anchor Coupling Co., Inc., hereinafter referred to as Anchor, Imperial-Eastman Corporation, hereinafter referred to an Imperial, Parker-Hannifin Corporation, hereinafter referred to as Parker, Stewart Warner Corporation, hereinafter referred to as Stewart Warner, Stratoflex, Inc., hereinafter referred to as Stratoflex, and The Weatherhead Company, hereinafter referred to as Weatherhead. The defendant trade association, The National Hose Assemblies Manufacturers Association, is hereinafter referred to as the Association. The individual defendants, together with the position each held during all or part of the time period covered in the indictment are William F. Rogge, vice-president and general manager, Industrial Division, Aeroquip; C. A. Thomas, president, Stratoflex; Augustus S. Wade, general sales manager, Ft. Wayne Division, Weatherhead; and George P. Byrne, Jr., secretary, the Association.

A jury was empanelled and the government entered its proofs. At the end of nine weeks of trial, during which extensive documentary and testimonial evidence was introduced, the government rested subject to its motion to admit into evidence a certain document identified as PX 693-695 and subject further to its motion to connect all evidence as to all defendants which the court has heretofore admitted as to various defendants only.

Defendants filed motions for judgment of acquittal and motions to dismiss challenging the sufficiency of the indictment. Extensive briefs were filed on behalf of all parties. The motions came on for hearing and, following extensive arguments and filing of briefs, were then taken under advisement.

The first motion to be considered herein is the motion to admit PX 693-695 and to connect the evidence as to all defendants. PX 693-695 is a letter written by defendant Rogge to George Fischer, then manager of hose sales of B. F. Goodrich and allegedly chairman of a liaison committee of the Rubber Manufacturers' Association working with a subcommittee of the defendant Association. The letter is clearly admissible as against its author defendant Rogge. However, it also contains statements which, if made in furtherance of the alleged conspiracy, would be admissible against all such defendants as were shown by independent proof to be members of such conspiracy. The ruling on the admission of this document was postponed by the court, because of its highly prejudicial nature, until such time as the alleged conspiracy and the connection of each of the defendants had been established by independent proof. The motion raises the issue whether such proof now exists in the record to warrant the admission of this letter as a declaration of a co-conspirator in furtherance of the conspiracy, binding upon anyone other than the declarant himself. In connection with the same inquiry, the court must consider whether other declarations of alleged co-conspirators, previously admitted only as to the declarant, and other evidence previously admitted only as to certain defendants should now be connected up and considered as evidence against all defendants.

The first question to be determined is what kind of proof must be introduced before acts and declarations of co-conspirators may be considered as against any other alleged co-conspirators. The government cites United States v. Ragland, 375 F.2d 471 (2d Cir. 1967), for the proposition that the government must show only a likelihood of the existence of a combination among the defendants for the declarations of co-conspirators to be admissible. The language in that opinion referred to is as follows:

The threshold requirement for admissibility is satisfied by a showing of a likelihood of an illicit association between the declarant and the defendant although it might later eventuate that the independent evidence so admitted proves to be insufficient to justify submitting to the jury the issue of defendant's alleged guilty involvement with declarant. * * * In determining preliminary questions of fact relating to admissibility of the hearsay the trial judge has wide discretion, * * * and need only be satisfied, if he accepts the independent evidence as credible, that the evidence is sufficient to support a finding of a joint undertaking. (At 477.)

In further support of this proposition, the government cites the following language in Continental Baking Co. v. United States, 281 F.2d 137 (6th Cir. 1960):

The Government had introduced evidence of meetings in which all the alleged conspirators participated, dating back to about October, 1953. That evidence was sufficient to provide a foundation for the introduction of evidence of other acts on the part of one conspirator, in furtherance of the conspiracy, binding on all. (At 151-152.)

Defendants cite many of the same cases relied upon by the government, but read in them a requirement of a much higher burden that the government must shoulder before hearsay declarations and acts of conspirators are admissible against any other alleged co-conspirators. Defendants contend that the law requires independent evidence of at least a strong likelihood of an illicit association between a declarant and alleged conspirators before acts and statements of one are admissible against the others, (see the language of Ragland quoted above,) and that these acts and statements are only admissible when done in furtherance of the conspiracy's objectives.

The Supreme Court, in Krulewitch v. United States, 336 U.S. 440, 69 S.Ct. 716, 93 L.Ed. 790 (1949), made the following remarks on this issue:

There are many logical and practical reasons that could be advanced against a special evidentiary rule that permits out-of-court statements of one conspirator to be used against another. But however cogent these reasons, it is firmly established that where made in furtherance of the objectives of a going conspiracy, such statements are admissible as exceptions to the hearsay rule. This prerequisite to admissibility, that hearsay statements by some conspirators to be admissible against others must be made in furtherance of the conspiracy charged, has been scrupulously observed by federal courts. (At 443-444, 69 S.Ct. at 718.)

See also Logan v. United States, 144 U.S. 263, 12 S.Ct. 617, 36 L.Ed. 429 (1892).

Based upon a review of these and other authorities, the court finds that the government, in a conspiracy case, must at least show, by substantial independent proof, a strong likelihood of the existence not only of an association but of the very conspiracy charged in the indictment, including its objectives and purposes, and the connection of the various defendants to the illicit combination. Although this proof need not be sufficient by itself to justify submitting the case to the jury, as indicated in the above-quoted language of Ragland, it still must be more than such as merely establishes the existence of some combination of defendants for any purpose. The agreement or combination to pursue an illegal purpose or a legal purpose through illegal means must be established by independent proof, as must the connection of each defendant therewith, before acts and...