United States v. American Cyanamid Co., 60 Civ. 3857-CLB.

• Decision Date: 25 February 1977
• Docket Number: No. 60 Civ. 3857-CLB.,60 Civ. 3857-CLB.
• Citation: 427 F. Supp. 859
• Parties: UNITED STATES of America, Plaintiff, v. AMERICAN CYANAMID COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

427 F. Supp. 859

UNITED STATES of America, Plaintiff, v. AMERICAN CYANAMID COMPANY, Defendant.

No. 60 Civ. 3857-CLB.

United States District Court, S. D. New York.

February 25, 1977.

COPYRIGHT MATERIAL OMITTED

Stephen F. Sonnett, Stanley M. Gorinson, Mary K. Smith, Kevin R. Sullivan, Dept. of Justice, Antitrust Div., Washington D.C., for plaintiff.

George S. Leisure, Jr., Allan Freedman, P. Michael Anderson, Donovan, Leisure, Newton & Irvine, New York City, for defendant.

MEMORANDUM AND ORDER

BRIEANT, District Judge.

The United States seeks an order pursuant to Rule 42(b), F.R.Crim.P., adjudging American Cyanamid Company ("Cyanamid") in criminal contempt for the willful violation of a Consent Decree, and the Final Judgment filed pursuant thereto on August 4, 1964, and of the Supplemental Order amending this Final Judgment, filed on May 27, 1969.

Cyanamid is alleged to have committed a criminal contempt by manufacturing and/or importing in excess of thirty million (30,000,000) pounds of melamine during a period when the production capacity of nonconspiratorial melamine producers had not increased by the required twenty-five million pounds, all in violation of the amended decree. Familiarity with all prior decisions in this case is assumed. The cause was tried before me on May 3 and 6, 1976. Defendant waived a jury.

At the close of the trial the Government moved to strike a great number of Cyanamid's exhibits which were introduced into evidence subject to the Government's motion. As a result, the trial record was left open pending a decision from this Court as to the admissibility of these exhibits. It was agreed that in the event any of the contested exhibits were admitted, the Government would be allowed, if it wished, the opportunity to rebut the material contained therein. If, however, all of the documents are excluded, then the trial record will be closed when this ruling is issued.

The Court is therefore constrained to decide the admissibility issue prior to and separately from its decision as to whether the guilt of the defendant has been proved beyond a reasonable doubt. Since Cyanamid offered its evidence in eight individual and distinct groups, it is reasonable to rule separately with respect to each group.

Group 1 of the exhibits offered by Cyanamid, consisting of correspondence between the Department of Justice and counsel for Cyanamid, was admitted into evidence without objection. We begin, therefore, with a consideration of Group 2.

The exhibits of Group 2 consist of trade press articles concerning activity in the melamine industry. Of the nine exhibits in this group, five were admitted without objection; the remaining four exhibits, however, were objected to on the ground of relevancy. Each of these four exhibits is a trade press article, written between 1966 and 1969, which reports on developments in the melamine industry. Specifically, Ex. 3 estimates the capacity of a new Premier melamine plant; Ex. 5 predicts the capacity of the new Ashland melamine plant; Ex. 9 describes the production capability of the new Melamine Chemicals, Inc. ("MCI") plant; and Ex. 195 is a trade report which, inter alia, contains a list of annual capacities of melamine producers. Premier, Ashland and MCI are each nonconspiratorial melamine producers within the meaning of the amended decree.

To determine whether these exhibits are relevant, we must first examine the proposition which is sought to be proved by their admission. Relevancy of an exhibit or testimony can only be determined in the context of the proposition which it seeks to prove. If a contested item tends to prove or disprove the matter under consideration, then it is relevant and admissible, unless its receipt is prohibited by the Federal Rules of Evidence or the Constitution. Expressed differently, if these contested items would have a tendency to make the existence of the fact to be proved more or less probable, then they are relevant.

In order to establish its charge of criminal contempt against Cyanamid, the Government must prove five items: (1) that the defendant had knowledge of the Final Judgment as amended issued pursuant to the Consent Decree; (2) that the defendant knowingly produced and/or imported over thirty million pounds of melamine in 1972; (3) that the annual nonconspiratorial melamine production capacity in the United States did not increase by twenty-five million pounds from 1964 to 1972; (4) that the defendant knew that the annual nonconspiratorial production capacity had not increased by twenty-five million pounds; and (5) that the defendant knowingly and wilfully violated the terms of the Final Judgment as amended by producing and importing more than thirty million pounds of melamine in 1972. Since the first two items were proved by a stipulation of the parties, only the last three items remain to be proved.

Cyanamid's Group 2 exhibits are offered to demonstrate the production capacity figures assigned to nonconspiratorial melamine producers by the trade press. Since this information was published in the trade press, the Court may infer that Cyanamid had knowledge of these projected figures, which in turn is relevant concerning Cyanamid's contention that it did not wilfully violate the Final Judgment as amended. These exhibits, therefore, have relevance with respect to the question of intent.

The Government has challenged the relevance of these exhibits on the ground that they were published from four to six years prior to the date of Cyanamid's alleged offense. This challenge is rejected. Each of these items discusses the projected production capacities of the nonconspiratorial melamine producers. It is likely, therefore, that Cyanamid was aware of these figures when it made its production plans for the future. In addition, the figures used in these articles arguably gave Cyanamid an insight into industry use of the words "production capacity." The definition or usage of these words is, of course, critical to this case since the term is used in both the Final Judgment and the Supplemental Order issued by this Court.¹ The Government's motion to strike is denied as to defendant's exhibits 3, 5, 9 and 195.

Group 3 of Cyanamid's exhibits consists of correspondence between Cyanamid and other melamine producers. Of the eight exhibits in this group, three are not objected to; the remaining five involve an exchange of correspondence in December 1972, in which Cyanamid attempts to reach an agreement with Premier (a nonconspiratorial melamine producer) whereby Cyanamid would agree to purchase any melamine which Premier produced, but was unable to sell due to its higher prices. Premier's excess inventory was, in fact, purchased by Cyanamid.

The Government has objected to the admission of these exhibits as irrelevant. Once again we must examine the proposition which Cyanamid is attempting to prove by this evidence. Cyanamid contends that this transaction was suggested by a government attorney at a meeting held at the Department of Justice in November 1972. Cyanamid made an offer of proof, at trial, which indicated that this suggestion was made in order to prevent any "harm" to Premier as a result of Cyanamid's intended overproduction. The government attorney allegedly informed Cyanamid that if Premier were adequately protected against harm, then disputed provisions of the Final Judgment as amended, claimed by Cyanamid to be ambiguous, would be interpreted favorably and without further dispute.

Cyanamid offers these documents to demonstrate that its overproduction was not a wilful violation of the Final Judgment as amended. Because Cyanamid protected Premier against possible harm by purchasing its unsold inventory, Cyanamid expected that the Government would interpret the Final Judgment in a manner that would permit Cyanamid to produce more than thirty million pounds of melamine in 1972. Defendant contends that since the Government sanctioned Cyanamid's overproduction it cannot now claim that this overproduction was a wilful, criminal contempt of the terms of the Final Judgment as amended.

The Court grants the Government's motion to strike these five exhibits of Group 3 on two grounds. The meeting in which the Premier purchase was discussed was held in late November 1972. The actual correspondence was exchanged in December. At either of these dates Cyanamid had already produced or imported more than thirty million pounds of melamine. This transaction, therefore, sheds no light on the issue of Cyanamid's wilful and knowing violation of the terms of the Judgment.

In addition, assuming arguendo, that Cyanamid had not yet produced or imported the thirty million pounds of melamine by November 29, 1972, or that having done so, it could have extricated itself from a violation by exporting the excess to itself in Canada, or elsewhere, the representations of a single government attorney could not serve as a defense. United States v. Schine, 260 F.2d 552, 557 (2d Cir. 1958), cert. denied 358 U.S. 934, 79 S.Ct. 318, 3 L.Ed.2d 306 (1959). Therefore, the Government's motion to strike is granted as to exhibits 77, 79, 80, 81 and 86.

We turn now to Group 4 of defendant's exhibits which consists of eleven of Cyanamid's internal memoranda. These exhibits are offered to prove Cyanamid's intent or state of mind with respect to the issue of knowing and wilful violation of the terms of the Final Judgment as amended. Since these exhibits demonstrate that Cyanamid had no single clear understanding of the term "production capacity," Cyanamid argues that this establishes its contention that it could not have wilfully violated the terms of the Final Judgment as amended.

In addition, several of these exhibits were written by an author who also wrote documents submitted in evidence by the Government. These are offered by Cyanamid to show that the author defined "production capacity" in one way and then again in another, contradictory fashion,...