United States v. Joyce, 17-10269

• Decision Date: 11 July 2018
• Docket Number: No. 17-10269,17-10269
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas JOYCE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

895 F.3d 673

UNITED STATES of America, Plaintiff-Appellee,

v.Thomas JOYCE, Defendant-Appellant.

No. 17-10269

United States Court of Appeals, Ninth Circuit.

Submitted June 13, 2018^* —San Francisco, California

Filed July 11, 2018

Robert Waggener, San Francisco, California, for Defendant-Appellant.

Mary Helen Wimberly and James J. Fredricks, Attorneys; Marvin N. Price Jr., Acting Deputy Assistant Attorney General; Andrew C. Finch, Principal Deputy Assistant Attorney General; Makan Delrahim, Assistant Attorney General; Kelsey C. Linnett and Alexis J. Loeb, Antitrust Division; United States Department of Justice, Washington, D.C.; for Plaintiff-Appellee.

Before: Michael R. Murphy,^** Richard A. Paez, and Sandra S. Ikuta, Circuit Judges.

MURPHY, Circuit Judge:

I. INTRODUCTION

Appellant Thomas Joyce was charged by indictment with conspiring to suppress and restrain competition by rigging bids, in violation of the Sherman Act, 15 U.S.C. § 1. Joyce brought a pretrial motion, arguing the matter should be adjudicated under a rule of reason analysis rather than the per se analysis advocated by the government. The district court ruled against Joyce, concluding the bid-rigging scheme alleged in the indictment was illegal per se under Section 1 of the Sherman Act. Joyce proceeded to trial and was convicted. He challenges his conviction, arguing the district court erred by refusing to apply the rule of reason analysis to the bid-rigging charge.

In this appeal, we are presented with the question of whether bid rigging is a per se violation of Section 1 of the Sherman Act. We conclude it is. Accordingly, exercising jurisdiction pursuant to 28 U.S.C. § 1291, this court affirms.

II. BACKGROUND

The indictment in this matter alleged that Joyce participated in a bid-rigging scheme involving foreclosed real property in Contra Costa County, California. Specifically, the indictment charged that Joyce and his coconspirators agreed to suppress competition by refraining from bidding against each other at public auctions. The means and methods alleged included: agreeing not to compete to purchase selected properties at public auctions; designating which conspirators would win selected properties at public auctions; refraining from bidding for selected properties at public auctions; purchasing selected properties at public auctions at artificially suppressed prices; negotiating, making, and receiving payoffs for agreeing not to compete with coconspirators; and holding second, private auctions, to determine the payoff amounts and choose the conspirator who would be awarded the selected property.

Prior to trial, Joyce filed a "Motion to Adjudicate Government’s Sherman Act Allegations Pursuant to the Rule of Reason." In the motion, Joyce asked the district court to determine that the per se rule is inapplicable to the bid-rigging charges. Under the per se rule, arguments and evidence relating to, inter alia , the procompetitive nature of the conduct at issue are excludable. See Arizona v. Maricopa Cty. Med. Soc’y , 457 U.S. 332, 345, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982). The district court denied the motion, concluding bid rigging "falls squarely within the per se category." Joyce was convicted at trial and sentenced to imprisonment for twelve months and one day. In this appeal, he asserts the district court erred by denying his motion and refusing to admit evidence that allegedly shows the procompetitive benefits of his conduct.

III. ANALYSIS

Section 1 of the Sherman Act prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." 15 U.S.C. § 1. Despite the broad language used in the statute, the Supreme Court has held that Section 1 prohibits only agreements that unreasonably restrain trade. Bd. of Trade of Chi. v. United States , 246 U.S. 231, 238, 38 S.Ct. 242, 62 L.Ed. 683 (1918) ; Standard Oil Co. of N.J. v. United States , 221 U.S. 1, 58–60, 31 S.Ct. 502, 55 L.Ed. 619 (1911). Typically, the determination of whether a particular agreement in restraint of trade is unreasonable involves a factual inquiry commonly known as the "rule of reason." Metro Indus., Inc., v. Sammi Corp. , 82 F.3d 839, 843 (9th Cir. 1996). "The rule of reason weighs legitimate justifications for a restraint against any anticompetitive effects." Paladin Assocs., Inc. v. Mont. Power Co. , 328 F.3d 1145, 1156 (9th Cir. 2003).

The rule of reason inquiry, however, is inapplicable if "the restraint falls into a category of agreements which have been determined to be per se illegal." United States v. Brown , 936 F.2d 1042, 1045 (9th Cir. 1991). The "per se rule is applied when the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output." NCAA v. Bd. of Regents of Univ. of Okla. , 468 U.S. 85, 100, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984) (internal quotation marks omitted). Such agreements or practices are "conclusively presumed to be unreasonable" because of their "pernicious effect on competition and lack of any redeeming virtue." N. Pac. Ry. Co. v. United States , 356 U.S. 1, 5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). If a business arrangement is a type conclusively presumed to be unreasonable, the government is relieved of any obligation to prove the unreasonableness of the specific scheme at issue and any business justification for the defendant’s conduct is neither relevant nor admissible. See United States v. A. Lanoy Alston, D.M.D., P.C. , 974 F.2d 1206, 1213 (9th Cir. 1992) ("In a criminal antitrust prosecution, the government need not prove specific intent to produce anticompetitive effects where a per se violation is alleged.").

The Supreme Court has held that horizontal price fixing is a per se violation of the Sherman Act. United States v. McKesson & Robbins, Inc ., 351 U.S. 305, 309, 76 S.Ct. 937, 100 L.Ed. 1209 (1956) ("It has been held too often to require elaboration ... that price fixing is contrary to the policy of competition underlying the Sherman Act ...."); see also Am. Ad Mgmt., Inc. v. GTE Corp. , 92 F.3d 781, 784 (9th Cir. 1996) (listing "horizontal price fixing, division of markets, group boycotts, tying arrangements, and output limitations" as restraints of trade the Supreme Court has "held to be within the per se category"); United States v. MMR Corp. , 907 F.2d 489, 497 (5th Cir. 1990) ("[T]he defendants point to various cases which state the unassailable proposition that an agreement among competitors to fix prices is a per se violation of section 1 of the Sherman Act."). Although this court has never expressly held that bid rigging is a per se violation of Section 1 of the Sherman Act, bid rigging is a form of horizontal price fixing. See United States v. Fenzl , 670 F.3d 778, 780 (7th Cir. 2012) (describing bid rigging as "a form of price fixing in which bidders agree to eliminate competition among them, as by taking turns being the low bidder"); United States v. Bensinger Co. , 430 F.2d 584, 589 (8th Cir. 1970) (holding bid rigging is "a price-fixing agreement of the simplest kind, and price-fixing agreements are per se violations of the Sherman Act"), superseded on other grounds as stated in DCS Sanitation Mgmt., Inc. v. Occupational Safety & Health Review Comm’n , 82 F.3d 812 (8th Cir. 1996). Bid rigging is, therefore, a per se violation of the Sherman Act.

Joyce does not contest that the conduct described in the indictment was classic bid rigging or that the evidence presented at trial was insufficient to establish he engaged in bid rigging. See Appellant Br. at 11 (referring to his own conduct as a "bid rigging agreement"). Instead, he argues the per se rule should not apply to the scheme in which he participated because that scheme, which he says involved "a few participants in a narrow set of public foreclosure auctions," did not have any "demonstrable effect on the pricing or quantity of the real estate sold." Id . When a defendant’s conduct falls squarely into a category of economic restraint necessarily prohibited by Section 1 of the Sherman Act, however, the per se rule applies and "the need to study the reasonableness of an individual restraint" on trade is eliminated. Leegin Creative Leather Prods., Inc. v. PSKS, Inc. , 551 U.S. 877, 886, 127 S.Ct. 2705, 168 L.Ed.2d 623 (2007) ; Brown , 936 F.2d at 1045 (holding the "case-by-case analysis is unnecessary when the restraint [on trade] falls into a category of agreements which have been determined to be per se illegal"). Accordingly, Joyce’s assertion that the district court erred by not allowing him to present evidence to the jury regarding the actual effect his conduct had on the market for foreclosed properties is misplaced. The per se rule eliminates the need to inquire into the specific...