United States v. Allied Asphalt Paving Co., 77 CR 191.

• Citation: 451 F. Supp. 804
• Decision Date: 31 May 1978
• Docket Number: No. 77 CR 191.,77 CR 191.
• Parties: UNITED STATES of America, Plaintiff, v. ALLIED ASPHALT PAVING COMPANY et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

451 F. Supp. 804

UNITED STATES of America, Plaintiff, v. ALLIED ASPHALT PAVING COMPANY et al., Defendants.

No. 77 CR 191.

United States District Court, N. D. Illinois, E. D.

May 31, 1978.

COPYRIGHT MATERIAL OMITTED

Donald I. Baker, Ass't Atty. Gen., U.S. Dept. of Justice, John L. Burley, Richard Braun, U.S. Dept. of Justice, for plaintiff.

George J. Cotsirilos, William Barnett, Herbert Morton, Edward L. Foote, Chicago, Ill., for defendants.

Memorandum

LEIGHTON, District Judge.

This is a prosecution by an indictment which in one count charged Allied Asphalt Company, Arcole Midwest Corporation, Brighton Building & Maintenance Company, Material Service Corporation, Robert R. Anderson Co., Thomas Bowler, and Gerald R. Nagel with conspiracy in violation of Section 1 of the Sherman Act;¹ and in ten other counts, with mail fraud.² Prior to trial, Allied Asphalt, Arcole Midwest, Brighton Building, and Thomas Bowler pled guilty to the Sherman Act count; the three corporations also pled guilty to one count of mail fraud. They were sentenced in accordance with their plea agreement.

Material Service, Anderson Company and Nagel went to trial before a jury; and at the close of all the evidence, they moved for judgments of acquittal. Arguments were heard, during which the court asked questions that probed whether there was evidence from which the jury could reasonably find that defendants' conduct had the anti-competitive effect on interstate commerce which violated Section 1 of the Sherman Act; and whether, from the evidence as a whole, the jury could reasonably find defendants guilty of the mail fraud counts. Counsel responded; but after an extended colloquy, the court stated that "ruling on the motion is reserved because it is not satisfied with the answers given to some of the questions * * *." Accordingly, the case was submitted to the jury under the procedure which allows ruling on a motion for acquittal at the close of all the evidence to be reserved until a jury returns a verdict, after it returns a verdict of guilty, or it is discharged without having returned a verdict. Rule 29(b), Fed.R.Crim.P.

The jury deliberated and acquitted the Anderson Company of all charges, acquitted Material Service and Nagel of the mail fraud counts, but convicted them of the count that charged violation of the Sherman Act. These two defendants have now filed a joint motion supported by a brief with appendix in which they ask this court to grant the motions for acquittal they made at the close of all the evidence, or acquit them after the jury's verdicts; or in the alternative, grant them a new trial or arrest the judgments.

The government opposes the motion with a supporting memorandum. Thus two issues are presented. 1. Whether at the close of all the evidence the court properly reserved its ruling on defendants' motions for acquittal and submitted the case to the jury. 2. Whether the court should now grant defendants' post-verdict motions for acquittal, or in the alternative, their motion for a new trial or in arrest of judgment. Resolution of these issues requires a detailed review of the evidence.³

I.

O'Hare International Airport is owned and operated by the City of Chicago. It is part of a nationwide airport system from and to which aircraft move in this country. A substantial amount of the nation's industrial goods travel in interstate commerce through these airports by air transportation. The federal government and Chicago cooperate in financing the construction and repair of airports located within the city. This cooperation is governed by the Airport and Airway Development Act of 1970, 49 U.S.C. §§ 1701, et seq., commonly known as the Airport Development Aid Program, or A.D.A.P. The Federal Aviation Administration is the agency that furnishes, in cooperation with the City of Chicago, portions of the funds needed to pay for construction and repair of airport runways at O'Hare.

Early in January 1975, Chicago applied to FAA for federal funds to overlay, groove and mark Runway 9L-27R at its airport, O'Hare International. The application was granted; and on May 9, 1975, the city and the federal government entered into an agreement by which half of the money needed for repair of the runway was to be paid from funds administered through A.D. A.P. Accordingly, on May 14, 1975, the city, using a newspaper of general circulation in Chicago and Champaign, Illinois, advertised that it was accepting bids for improvement of Runway 9L-27R at O'Hare. At the same time, it sent information concerning this project to 44 or more construction and road building contractors who, ordinarily, would be interested in the kind of work the city wanted done at its airport.

The information contained in the advertisements and in the bid papers which included terms of the contemplated agreements, plans and specifications, told prospective bidders the size and scope of the project, state and federal laws that controlled, and the fact that there was a strict 45-day limit for performance of the contract. Between the first day of the advertisement and the opening of sealed bids on May 29, 1975, at least 22 construction companies, either as prospective contractors or subcontractors, registered with the city, made the necessary deposits, and received information concerning the project. Among them were Arcole Midwest Corporation, Allied Asphalt Paving Company, Brighton Building & Maintenance Company, Material Service Corporation, Robert R. Anderson Co., Palumbo Excavating Co., J. M. Corbett Co., and the Madden Company.

At the time, Arcole Midwest was a company engaged in the business of earth moving, asphalt and concrete paving of highways, bridge and airport construction. Its president and chief executive officer was Ernest Bederman who was familiar with bidding for public contracts; and who had, in the past, done work for the City of Chicago at O'Hare. Bederman wanted to bid for the runway project. As soon as bid papers were available, he examined them, went to the site and decided that for many reasons, including the time limit requirement, the work had to be done by a joint venture. Among other things, Bederman knew that Allied Asphalt owned a plant that was located on land that adjoined O'Hare Airport. Because time and distance were important factors in the completion of the O'Hare job, Bederman decided that Allied was the company with which he should form a joint venture for the runway project. From his knowledge of the work required and of the construction industry in the Chicago area, Bederman reviewed the companies he thought would compete with him for the contract. These were, in his appraisal of the situation, Brighton Building & Maintenance owned and operated by Thomas Bowler, Palumbo Excavating whose chief executive officer was Peter Palumbo, J. M. Corbett Co., and the Madden Company.

Bederman also knew that the Robert R. Anderson Company owned a controlling interest in Allied Asphalt Paving. He was acquainted with the fact that Anderson's president, Robert R. Anderson, was a director of Ailied Asphalt and treated by many as an Allied vice-president. Bederman decided to talk with Anderson in his capacity as an Allied Asphalt official. They met at lunch soon after the city advertised for bids on the O'Hare job. They agreed to a joint venture by Arcole and Allied. In their conversation, Anderson told Bederman he understood that for $80,000.00, Thomas Bowler was willing to refrain from bidding the O'Hare job on behalf of Brighton Building. Bederman decided to meet with Bowler to confirm this fact. He did; and in a lunch the two had later, Bowler told Bederman that for $80,000.00 paid by delivery of asphalt tonnage to two companies he owned, he would not bid on the O'Hare project. Bederman consented to this arrangement; the agreement not to bid was formed. However, contrary to his representations to Bederman, Bowler was not competing for, nor had he any intention of bidding on the O'Hare job.

A few days later, Bederman met with Donald McLean, president of Allied Asphalt, to work out the details of the agreement by which Arcole and Allied were going to bid for the O'Hare contract. Toward this end, Bederman and McLean, utilizing the staffs of estimators of their two companies, gathered information that would enable them to prepare the bid they were going to submit to the city. While this was going on, Bederman contacted Peter Palumbo of Palumbo Excavating Company and urged him not to bid the O'Hare job. Palumbo, however, insisted he was going to do so. As to the Corbett and Madden companies, Bederman was not able to get any information concerning their intentions. But the Corbett Company, because of serious financial difficulties, was unable to bid for the job in question; its chief executive, James Corbett, was not interested in the O'Hare project. The Madden Company, other than taking out the bid papers, did not show any interest in getting the O'Hare contract.

Material Service Corporation was not a competitor in the bidding for the O'Hare job; it is not a construction company; it is a seller of sand, gravel, stone, and ready-mix concrete to contractors in the construction industry. Gerald R. Nagel was and still is its senior vice-president in charge of sales. His duties for Material Service required him to report to an executive vice-president of the company, Arnold Sobel. Material Service kept abreast of projects like the O'Hare runway repaving because it sold materials to construction companies that bid on such contracts. Nagel knew of the May 14, 1975 advertisements by the City of Chicago and of the bid letting date, May 29. He knew the officials and executive personnel of Arcole Midwest, Allied Asphalt, Anderson Company, Palumbo Excavating, and the Corbett-Madden companies. In fact, Arcole Midwest was a major Material Service customer. Allied Asphalt, however, did not buy any of its construction needs from Material Service....