United States v. South Florida Asphalt Company

• Citation: 329 F.2d 860
• Decision Date: 10 June 1964
• Docket Number: No. 19635.,19635.
• Parties: UNITED STATES of America, Appellant, v. SOUTH FLORIDA ASPHALT COMPANY et al., Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

329 F.2d 860 (1964)

UNITED STATES of America, Appellant, v. SOUTH FLORIDA ASPHALT COMPANY et al., Appellees.

No. 19635.

United States Court of Appeals Fifth Circuit.

March 26, 1964.

Rehearing Denied June 10, 1964.

Patrick M. Ryan, Atty., Dept. of Justice, Washington, D. C., Edward F. Boardman, U. S. Atty., Miami, Fla., for appellant.

Robert W. Rust, Thomas H. Anderson, Earl Waldin, Jr., Miami, Fla., Harrison D. Griffin, Fort Lauderdale, Fla., for appellees.

Before TUTTLE, Chief Judge, and WISDOM and GEWIN, Circuit Judges.

GEWIN, Circuit Judge.

This is an appeal by the Government from the dismissal of an information charging the defendants with engaging in a combination and conspiracy in restraint of interstate and foreign trade and commerce in the sale and distribution of "hot mix asphalt" and other materials used in road paving in violation of the Sherman Act¹ and the Clayton Act.²

The information alleged that the three corporate defendants are Florida Companies, referred to as "asphalt suppliers", engaged in the manufacture, sale and distribution of hot mix asphalt and other paving materials. The individual defendants are officers of the three corporations. The paving or asphalt materials are composed of rock, sand, and bitumen, the latter being a by-product obtained in refining crude oil. The bitumen used by the defendants is produced in Venezuela and other places outside of Florida, shipped into Florida by ocean tankers, and emptied into temporary storage vats to await delivery to "asphalt suppliers" such as the defendants. The temporary storage vats are owned and operated by the producers of the bitumen or their terminal agents. The bitumen is owned by the out-of-state producers until sold to the "asphalt suppliers".

Because the sufficiency of the allegations of the information are under attack, we consider it necessary to quote substantial portions of the information:

"7. Asphalt suppliers in the Broward County area are engaged in the manufacture of hot mix as-halt and the sale and distribution of hot mix asphalt and other asphalt materials to paving contractors and other purchasers in the Broward County area. In addition to the manufacture and sale of asphalt materials, most of the asphalt suppliers in the Broward County area offer asphalt materials laid in place and perform this service as sub-contractors to paving contractors, and make a charge and obtain a profit both from the sale of said asphalt materials and from their services in laying the materials in place.

"8. More than 95% of all bitumen purchased by said asphalt suppliers is purchased directly from producers and refiners of petroleum products located in Venezuela and States other than the State of Florida and is transported in interstate and foreign commerce to said asphalt suppliers through temporary storage facilities at deep-water ports along the Florida coast, particularly Port Everglades, Florida, which temporary storage facilities are owned and operated by said producers and refiners or by their terminal agents.

"9. The remainder of the asphalt materials purchased by said asphalt suppliers is obtained from one or more wholesale distributors doing business within or in the vicinity of the Broward County area who purchase asphalt materials from the aforesaid foreign and out-of-State sources for sale to said asphalt suppliers and other customers.

"10. The transportation and handling of bitumen and most asphalt materials require that such products be maintained at a high temperature so as to maintain them in a liquid state. Bitumen is transported from the aforesaid out-of-State sources into Florida by specially equipped ocean-going tankers which are heated by steam coils to keep the asphalt at a high temperature. Tanker loads of bitumen are regularly scheduled for shipment and delivery every four to six weeks to the aforesaid deep-water ports in Florida. When the bitumen is delivered to the aforesaid temporary storage facilities, it is pumped from the tankers into specially heated tanks for delivery to asphalt suppliers and other customers. The asphalt is then transported from said facilities in trucks provided by common carriers or by customers, including defendant asphalt suppliers.

"11. In connection with the awarding of contracts and in response to purchase orders from awarding authorities to supply asphalt materials for large public and private paving projects in the Broward County area, agents of the petroleum companies or their wholesale distributors regularly contact the asphalt suppliers to whom such contracts are awarded or with whom such purchase orders are placed for the purpose of soliciting or otherwise obtaining orders, understandings, or commitments to purchase the bitumen required by such projects. Said understandings or commitments include a determination of the quantity of bitumen needed to complete the project and the construction timetable in order to schedule shipments and deliveries of bitumen in sufficient quantity to meet the future requirements of such asphalt suppliers.

"12. Thus, substantial quantities of bitumen are sold and shipped by producers and refiners thereof from sources in Venezuela and States other than the State of Florida in direct response to orders, understandings, or commitments by asphalt suppliers to purchase bitumen in connection with specific paving projects in the Broward County area.

"13. In addition to the substantial quantities of bitumen shipped in interstate and foreign commerce in connection with the performance of large specific paving projects, the remaining quantity of bitumen shipped into the Broward County area from sources without the State of Florida is based on anticipation of current supplier demand, orders to be received, and sales to be made.

"14. Thus, defendant asphalt suppliers act as conduits through which bitumen flows in a continuous uniterrupted sic stream in foreign and interstate commerce from points of origin in Venezuela and States other than Florida to its final use in paving surfaces in the Broward County area.

"15. In the period of time from January 1, 1958 to June 1, 1961, the value of bitumen sold in the Broward County area was approximately $2,168,231.76. Of this total amount, approximately $1,839,569.75 or 85% was purchased by defendant and co-conspirator asphalt suppliers.

"16. Substantially all asphalt materials sold in the Broward County area are supplied by four asphalt suppliers: South Florida Asphalt Company, East Coast Asphalt Corp., R. H. Wright, Inc., and Weekley Asphalt Co., Inc. of Hallandale, Florida. The value of asphalt materials sold by said companies in the Broward County area exceeded $3,300,000 in the year 1960. Of this total amount, approximately $3,000,000 or 90% was sold by the three defendant asphalt suppliers.

V

OFFENSE CHARGED

"17. Beginning in or about August 1959, the exact date being unknown, and continuing thereafter up to and including the date of the filing of this Information, the defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of the hereinbefore-described interstate and foreign trade and commerce in the sale and distribution of asphalt materials, in violation of Section 1 of the Act of Congress of July 2, 1890, entitled `An Act to protect trade and commerce against unlawful restraints and monopolies\', c. 647, 26 Stat. 209 (15 U.S.C. § 1), as amended, commonly known as the Sherman Act.

"18. The aforesaid combination and conspiracy has consisted of a continuing agreement and concert of action among the defendants and co-conspirators, the substantial terms of which have been and are that they agree:

"(a) To raise, fix, stabilize, and maintain prices at which hot mix asphalt and other asphalt materials are sold to paving contractors in the Broward County area; and

"(b) To raise, fix, stabilize, and maintain prices at which hot mix asphalt and other asphalt materials are sold to State, county, and local governmental awarding authorities for use in the Broward County area.

"19. During the period of time covered by Count One of this Information and for the purpose of forming and effectuating the aforesaid combination and conspiracy, the defendants and co-conspirators, by agreement and concert of action, have done those things which, as hereinbefore charged, they conspired and agreed to do, including, among other things, the following:

"(a) During September 1959, defendants and co-conspirators met together and agreed to increase the price of asphalt materials to paving contractors and other customers in the Broward County area to uniform levels, effective October 1, 1959;

"(b) Pursuant to the aforesaid agreement, referred to in paragraph 19 (a) above, defendants notified paving contractors and other customers in the Broward County area by letters on September 20, 1959 through September 24, 1959, that effective October 1, 1959, the price of asphalt would be $8.25 per ton f. o. b. plant less a cash discount of 25c per ton if paid on or before the 10th of the month following purchase;

"(c) Thereafter, pursuant to the aforesaid agreement referred to in paragraph 19(a) above, defendants issued to paving contractors and other customers in the Broward County area copies of a common price list quoting identical prices and terms and conditions for the sale of various quantities and thicknesses of machine-laid asphalt, together with identical prices for prime and sand; and

"(d) Thereafter, during August 1960, defendants and co-conspirators met together and designated defendant R. H. Wright, Inc., as the supplier to submit the low bid to supply the asphalt requirements of Broward County, Florida, for the contract period September 1960 to September 1961, determined the price to be quoted by defendant R. H. Wright, Inc., and agreed that defendant East Coast Asphalt Corp. and South Florida Asphalt Company, and other co-conspirator suppliers, were to submit price quotations to

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