United States v. Vega-Martínez

• Decision Date: 31 January 2020
• Docket Number: Nos. 18-1189,18-1395,18-1258,s. 18-1189
• Parties: UNITED STATES of America, Appellee, v. Luciano VEGA-MARTÍNEZ, aka Lucio; René Garay-Rodríguez, aka Gary, Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

949 F.3d 43

UNITED STATES of America, Appellee,

v.Luciano VEGA-MARTÍNEZ, aka Lucio; René Garay-Rodríguez, aka Gary, Defendants, Appellants.

Nos. 18-1189

18-1395

18-1258

United States Court of Appeals, First Circuit.

January 31, 2020

Ignacio Fernández de Lahongrais, San Juan, PR, on brief for appellant Vega-Martínez.

Julie Sonderlund for appellant Garay-Rodríguez.

Steven J. Mintz, Attorney, U.S. Department of Justice, Antitrust Division, with whom Makan Delrahim, Assistant Attorney General, Andrew C. Finch, Principal Deputy Assistant Attorney General, Richard A. Powers, Deputy Assistant Attorney General, Michael F. Murray, Deputy Assistant Attorney General, Stratton C. Strand, Attorney, Antitrust Division, Robert B. Nicholson, Attorney, Antitrust Division, Mark C. Grundvig, Attorney, Antitrust Division, Washington, DC, Emma M. Burnham, Attorney, Antitrust Division, and Samson Asiyanbi, Attorney, Antitrust Division, were on brief, for appellee.

Before Torruella, Thompson, Kayatta, Circuit Judges.

KAYATTA, Circuit Judge.

The two appellants in this case are school-bus operators who contracted with the Caguas, Puerto Rico municipal school system to drive school children to and from school each day. Instead of competing with one another in bidding on routes offered by the municipality in 2013, they gathered together with four other school-bus operators in an old-fashioned bid-rigging and market-allocation conspiracy. In brief, they all agreed on which company would submit the lowest bid on each route, thereby protecting themselves from the price-reducing effects of fair competition. Following trial, conviction, and sentencing on charges of mail fraud and violations of section 1 of the Sherman Act, Luciano Vega-Martínez and René Garay-Rodríguez now appeal, claiming an absence of interstate nexus, insufficiency of the evidence, and assorted other issues. For the following reasons, we affirm.

I.

In 2013, Vega-Martínez, Garay-Rodríguez, and their co-defendants owned competing bus companies that sought to provide busing for low-income students from Caguas to public schools in the area. That year, the municipality announced that it would hold an auction for four-year school-bus-transportation contracts. Rather than submitting competing bids, the conspirators met and agreed to divide up the routes among themselves. For each route, a "winner" was pre-designated, and that "winner" was assured that, at most, only one other bidder would bid on the route (to make it look like there was competition). The other bid, if any, would be a high bid (to allow plenty of room for the winner's non-competitive "low" bid).

After the meeting, bids were submitted. The municipality rejected all of the bids and instead negotiated contracts with each of the low bidders without the benefit of knowing that the low bids were undisciplined by fair competition. The municipality then sent award letters to the successful defendants in the mail. Over a year later, news of the bid rigging leaked. Worse yet for the defendants, it turned out that one of the bus-company owners, Raquel Aldea-Rodríguez, had taped the meeting at which the scheme was put together. In May 2015, the defendants were charged in an indictment alleging conspiracy to restrain trade ( 15 U.S.C. § 1 ), conspiracy to commit mail fraud ( 18 U.S.C. § 1349 ), and substantive mail fraud counts ( 18 U.S.C. § 1341 ). After a seven-day trial, all of the defendants were convicted on all of the charged counts. The defendants made Rule 29 motions, which were all denied. They were each sentenced to a prison term of one year and one day, plus a year of supervised release.

The district court then allowed the parties to separately brief the issue of restitution. To calculate the amount of restitution due from each defendant, the court ultimately compared the price paid for each route under the 2014 contracts with the prices paid for the same routes in 2017 following a competitive auction in 2016. Defendants Garay-Rodríguez and Vega-Martínez now appeal. Garay-Rodríguez challenges several aspects of his conviction, and both challenge the restitution amounts set by the district court.

II.

A.

The Sherman Act reaches only activities in the flow of interstate commerce or that, "while wholly local in nature," would substantially affect interstate commerce if successful. McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 241–42, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980) ; see also Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 330–32, 111 S.Ct. 1842, 114 L.Ed.2d 366 (1991). When confronted with horizontal agreements to fix prices within a single state, the Supreme Court has based jurisdiction "on a general conclusion that the defendants' agreement ‘almost surely’ had a market[-]wide impact and therefore an effect on interstate commerce." Summit Health, 500 U.S. at 331, 111 S.Ct. 1842 (quoting Burke v. Ford, 389 U.S. 320, 322, 88 S.Ct. 443, 19 L.Ed.2d 554 (1967) ); see also Goldfarb v. Va. State Bar, 421 U.S. 773, 784–85, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975) (finding an effect on interstate commerce where the "volume of commerce involved" was "substantial" and it was "inseparab[le] ... from the interstate aspects of [related] transactions").

Garay-Rodríguez nevertheless contends that his bid rigging was beyond the reach of the Sherman Act for three reasons: either the indictment failed to allege a sufficient nexus to interstate commerce, or the proof fell short, or the jury was not instructed that it was required to find such a nexus. For the following reasons, we find that the indictment alleged that the defendants' conduct flowed in and had an effect on interstate commerce, that the evidence at trial supported those allegations, and that there was no plain error in the jury instructions.

1.

Before trial, Garay-Rodríguez and his co-defendants moved to dismiss the Sherman Act count for failure to allege a nexus between the scheme and interstate commerce.¹ The district court denied the motion. We review de novo the sufficiency of an indictment. United States v. Stepanets, 879 F.3d 367, 369 (1st Cir. 2018) ; United States v. Guerrier, 669 F.3d 1, 3 (1st Cir. 2011). In so doing, we do not evaluate the sufficiency of the evidence that the government might have to back up the indictment.

Guerrier, 669 F.3d at 4–5. Rather, we will find an indictment sufficient if it "apprise[s] the defendant of the charged offense so that the defendant can prepare a defense and plead double jeopardy in any future prosecution for the same offense." United States v. Rodríguez-Rivera, 918 F.3d 32, 34 (1st Cir. 2019) (internal citations omitted) (quoting Stepanets, 879 F.3d at 372 ); see also Fed. R. Crim. P. 7(c)(1) ("The indictment or the information must be a plain, concise and definite written statement of the essential facts constituting the offense charged."). It may "parrot ‘the statutory language to describe the offense, but it must also be accompanied by such a statement of facts and circumstances as to inform the accused of the specific offense with which he is charged.’ " United States v. Parigian, 824 F.3d 5, 9 (1st Cir. 2016) (quoting United States v. Savarese, 686 F.3d 1, 6 (1st Cir. 2012) ).

Here, the indictment did more than was necessary. It plainly set forth the elements of the charged offenses, including that the defendants' activities "were within the flow of, and substantially affected, interstate trade and commerce." It further alleged that the bus contracts were funded or supported at least in part by federal funds, and that the buses used by the defendants had all been shipped via interstate commerce. Whether the evidence was sufficient to back up these assertions was a matter for trial. See Rodríguez-Rivera, 918 F.3d at 34 ; Guerrier, 669 F.3d at 4–5.

2.

At trial, the government's burden increased. It had to submit evidence sufficient to establish an interstate nexus beyond a reasonable doubt. Cf. United States v. DiSanto, 86 F.3d 1238, 1246 (1st Cir. 1996) (requiring interstate-commerce element to be proven beyond a reasonable doubt in the context of a Commerce Clause challenge). The government carried this burden. It proved, for example, that the funds used to pay the defendants were provided by the federal government under the No Child Left Behind Act. Raymond Rivera-Pacheco, a CPA hired by the Puerto Rico Department of Education, testified that Caguas used $436,566.32 in federal funds from the No Child Left Behind Act to pay for school transportation in 2013–2014. The conspiracy's grab of those federal funds is likely sufficient by itself to establish an interstate nexus, given that the funds flowed in interstate commerce. See Goldfarb, 421 U.S. at 783–84, 95 S.Ct. 2004 (deeming intrastate price fixing by lawyers for title work on federally guaranteed real estate purchases to have an interstate nexus); Englert v. City of McKeesport, 736 F.2d 96, 98 n.4 (3d Cir. 1984) (federal financing of construction projects "would be sufficient to meet the jurisdictional requirement" of the Sherman Act); United States v. Davis, 707 F.2d 880, 884 (6th Cir. 1983) (federal funding of sheriff's office was sufficient to put sheriff's alleged racketeering within the flow of interstate commerce in Hobbs Act context); United States v. Am. Soc'y of Anesthesiologists, Inc., 473 F. Supp. 147, 151, 156–57 (S.D.N.Y. 1979) (insurance payments, including some federal and state funds, flowed in interstate commerce); DeGregorio v. Segal, 443 F. Supp. 1257, 1267 (E.D. Pa. 1978) (federal nursing home reimbursements flowed in interstate commerce via the state of Pennsylvania's Medicaid program). But see Loan Store, Inc. v. Indep. Food Stamps Assocs., Inc., 671 F. Supp. 844, 848, 848 n.5 (D. Mass. 1987) (federal funding of the food-stamp program was "far too speculative" a basis for Sherman Act jurisdiction where the complaint "d[id] not allege [an effect on] the flow of food stamps").

Here we have more than the federal funds alone. The defendants'...