United States v. Wilshire Oil Company of Texas, 427 F.2d 969, 10th Cir. (1970)
United States v. Wilshire Oil Company of Texas, 427 F.2d 969, 10th Cir. (1970)
United States v. Wilshire Oil Company of Texas, 427 F.2d 969, 10th Cir. (1970)
2d 969
1970 Trade Cases P 73,118
On April 5, 1966, a federal grand jury for the District of Kansas indicted ten
corporations1 charging each with having violated 15 U.S.C. 1. Specifically the
indictment charged 'the defendants and co-conspirators entered into and
engaged in a combination and conspiracy in unreasonable restraint of the
hereinbefore described interstate trade and commerce in liquid asphalt in
violation of Section 1 of the * * * Sherman Act.' All defendants except Wilshire
plead nolo contendere and were subsequently fined from $25,000 to $40,000
each. Wilshire's case was tried to a jury and resulted in a guilty verdict and a
fine of $25,000. Motions for judgment n.o.v., for judgment of acquittal, new
trial and a motion to dismiss on double jeopardy grounds were all overruled,
with the latter meriting a special hearing.2 Wilshire has appealed.
On this statement of fact the appellant first argues that the indictment and
evidence are insufficient since it is neithr charged nor proved that Wilshire
knowingly joined the conspiracy. We treat the indictment attack first. The fatal
defect urged consists of a failure to allege that the conspiracy was formed and
in existence; that Wilshire knew of its presence and knowingly agreed to join
and commit acts in furtherance of its purposes. The single case cited as
authority for this allegation 3 is inappropriate and discussion of it will be
deferred until a timely moment. To determine the sufficiency of an indictment
the court views the entire document4 to ascertain whether the offense is
charged with sufficient clarity so as to safeguard two constitutional guarantees:
the Sixth Amendment right to be informed of the nature and cause of the
accusation in order to prepare a defense; and the Fifth Amendment protection
against twice being placed in jeopardy for the identical offense.5 The
indictment adequately apprised Wilshire of its participation in the conspiracy
and was not faulty for the reasons urged. The defendants and co-conspirators
were charged with entering into and engaging in a continuing conspiracy from
1959 to 1965,6 but the indictment specifically stated that Wilshire only
participated from December 31, 1960, until August 9, 1963,7 Rather than a
devious attempt to conceal vital elements of a defect-free indictment, this was
an adequate attempt to further vouchsafe Wilshire's constitutional rights. The
record vividly reflects that appellant was made cognizant of the charge and
facts constituting the breach of law,8 was able to plead, prepare a defense and
produce witnesses to meet the charge. The practical effect was that the
protection to be afforded by the indictment was furnished.
4
There is no question about the continuing nature of the plot nor is there
reasonable doubt that Wilshire was a part thereof. And we believe the ticklish
problem of pre-merger knowledge must be dicided against Wilshire on the
facts. Although appellant claims to have unwittingly bought into an ongoing
conspiracy and for that reason it ought to be excused, the totality of the
evidence supports the conclusion that Wilshire had ample opportunity to detect
and reject the illegal practices. This is not a case where a company was
purchased without chance for scrutinizing observation prior to assumption of
control. The agreement of merger is dated September 23, 1960. This ought to
have given appellant adequate time to become intimately familiar with the
modus operandi of Riffe. And undisputed evidence was tendered by the Kansas
salesman of Riffe Division from which it may be concluded that during the
three year affiliation of Riffe with Wilshire, the vice-president in charge of the
Riffe Division knew of and acquiesced in the continued conspiratorial
participation. Wilshire is unable to rid itself of liability because of its inability
to personally supervise the acquired company and its subordinates particularly
when they failed to object a single time during the three year association.
Viewed in the light most favorable to the Government, the evidence tendered
by the prosecution provided ample basis for a jury, properly instructed, to find
the requisite knowledge and participation by Wilshire.
6
Appellant next contends that the indictment and evidence are insufficient by
their failure to set out factual allegations and proof of a conspiracy in restraint
of interstate trade. It has long been settled that 'agreements for price
maintenance of articles moving in interstate commerce are, without more,
unreasonable restraints within the meaning of the Sherman Act because they
eliminate competition.' Ethyl Gasoline Corporation v. United States, 309 U.S.
436, 458, 60 S.Ct. 618, 626, 84 L.Ed. 852 (1940). To sufficiently allege the
interstate nature of the offense, the indictment need only charge that a
combination was formed to fix prices on goods traveling interstate and that it
had that effect or contributed to that end.9 The indictment alleged that
'substantial quantities of liquid asphalt purchased by the State of Kansas and
transported into Kansas in a continuous and uninterrupted flow of interstate
commerce directly from the refinery of the American Oil Company which is
located at Sugar Creek, Missouri, to job sites in Kansas.' The purpose was 'to
fix, maintain, and establish non-competitive prices for the sale of liquid asphalt
to the state of Kansas.' And the effect was that 'prices of liquid asphalt to the
State of Kansas have been fixed, maintained, and established at high, artificial,
and noncompetitive levels.' Hence, the substance of the statutory offense is
charged as are the facts supporting the offense and the indictment is sufficient.
The evidence is not insufficient merely because Wilshire itself was not shown
to have shipped into Kansas. The apposite inquiry is whether appellant was
engaged in a plot which maintained prices on products, a part of which, moved
in interstate trade.10 The evidence is undisputed that Standard Oil shipped
asphalt into Kansas. It is not contested that Standard won numerous 'points' in
northeast Kansas as a result of the conspiracy nor is it denied that the interstate
goods went to those 'points.' None of the agents deny that Standard was an
active participant in the scheme, nor does the Standard salesman. Furthermore,
contrary to Wilshire's argument, all oil company representatives agreed that
there was one Kansas conspiracy which dealt with all the highway districts. A
careful review of the testimony and exhibits reflects abundant evidence from
which the jury could properly find the existence of one conspiracy which
included Wilshire in western Kansas and Standard Oil in eastern Kansas.
8
The next point urged by Wilshire is that the court erred in overruling their
motion for a new trial based on the jurors' reading of a newspaper headline.
Near the close of the trial several prejudicial newspaper articles were called to
the court's attention. Following the practice commenced in Mares v. United
States, 383 F.2d 805 (10th Cir. 1967), each juror was separately examined by
the court. The trial court determined that three jurors saw part of a headline but
that each heeded the admonition of the court and desisted from reading the
story. The headline read: 'Attempt Made At Oil Accord-- Kansas Highway
Board Meets With Counsel for Firms-- No Commitments Yet-- Talks Explore
Possibility of Anti-trust Settlement.' Although there is no mention of Wilshire
in the headline, appellant argues that prejudicial conclusions are the natural
result of having viewed the caption. Ultimate reliance is placed on Mares v.
United States, supra, and Marshall v. United States, 360 U.S. 310, 79 S.Ct.
1171, 3 L.Ed.2d 1250 (1959), which, as the trial court noted, do not govern the
instant situation. In Mares the story and headlines reported prior confessions of
the defendant for the very crime for which he was then being tried. In Marshall
the newspaper exposed evidence which had previously been ruled inadmissible
at trial. The instant headlines and story do not approach such prejudicial
comment. The trial judge found no reason to infer prejudicial conclusions from
the jurors' brief encounter and neither can we. Welch v. United States, 371 F.2d
287 (10th Cir. 1966). We find neither error nor abuse of discretion in the trial
court's manner of handling the problematical issue.
On the proposition that Wilshire and others were convicted in a federal court
for participation in an asphalt conspiracy in Missouri, it is contended that the
prosecution here twice places Wilshire in jeopardy. Appellant's basic plea is
that the government is attempting to splinter a single conspiracy into two parts,
i.e., a Missouri conspiracy and a Kansas conspiracy, when in fact and law the
two are but fragments of a single scheme. The indictments in Kansas and
Missouri are in some respects identical, with the following relevant exceptions.
(1) Different parties are named in each: there are eight corporations common to
both; two were named in Kansas and not in Missouri; ten corporate and
seventeen individual defendants were named in Missouri and not in Kansas. (2)
There are overlapping but different dates of existence: in Missouri it was from
1960-63 and in Kansas from 1959-65. (3) The offenses charged vary: the
Missouri indictment charged that the defendants and co-conspirators acted to
'suppress and eliminate competition in the sale of liquid asphalt to the State of
Missouri * * *'; the Kansas indictment charged the co-conspirators and
defendants with conspiring 'to fix, maintain, and establish non-competitive
prices for the sale of liquid asphalt to the State of Kansas * * *.' Although a
single plot may not be severed into several in order to proliferate penalties,
prosecution for one offense will not confer immunity from subsequent
prosecutions of distinct, though related, offenses.11 Thus the pertinent inquiry is
whether the record presented by Wilshire is sufficient to establish that it and all
other oil companies indicted in Missouri and Kansas had a single, common and
continuing objective of fixing, maintaining and establishing prices to suppress
and eliminate competition in the sale of liquid asphalt to Kansas and Missouri.12
If so, there would be but one conspiracy even though its purposes were
advanced in diverse states by diverse parties. Contrariwise, if the Missouri
defendants did not share such broad objectives with their Kansas counterparts,
but were attempting only to fix prices within their respective states, there were
multiple conspiracies with each pursuing its own distinct illegal end.
10
Because the resolution of the question depends on the facts of each case, we are
hesitant to follow other decisions unless they are on all fours with this suit.
Appellant urges that the Honda cases 13 and United States v. H. E. Koontz
Creamery, Inc., 257 F.Supp. 295 (D.Md.1966) are such cases. After careful
examination of the facts in each, we are unable to concur with Wilshire's
analogy. In each of these cases the courts were dealing with facts which do not
coalesce with Wilshire's.
11
In Koontz, the defendants were milk distributors who had been earlier
convicted for fixing prices on school milk in the Baltimore area. They were
then indicted for fixing other wholesale and retail milk prices during the same
period of time in the same area. The trial court granted their motion to dismiss
on double jeopardy grounds on the following facts. The defendants in both
cases were substantially identical; they met or were represented at meetings at
the same principal place under the auspices of the Milk Distributors
Association; the meetings were called and conducted the same whether the
purpose was school bids, labor costs, the price of raw milk, jugs, jug pricing
and deposits, or other matters of interest; at the meetings the subject matter
usually covered numerous topics relating to the overall price control scheme.
The court concluded: 'The purpose of the defendants, conspiratorial or not, was
to maintain market price stability in the Baltimore milk market. * * * and that
actions with respect to school milk, street milk, and jug milk were actions
designed to control certain aspects of distribution, all of which were facets of, or
factors in, the overall price structure.' United States v. Koontz Creamery, Inc.,
257 F.Supp. at 305.
12
In the Honda cases, American Honda was first tried and convicted for fixing
prices on Honda motorcycles in the Los Angeles area. Thereafter indictments
were returned against them in northern California, northern Illinois and
southern Ohio for identical offenses. In each of the latter cases Honda moved
for dismissal on double jeopardy grounds, which were granted. The persuasive
evidence in those cases was as follows: Honda dealers in each area are
concerned with the retail price structure in all other areas; price-cutting affects
the ability of dealers to maintain proper servicing and advertising and in turn
the product's reputation is injured; all dealers are concerned about discounting
in one area because of the tendency of others to follow suit; the widespread
price stability is a strong inducement to prospecitive dealers; and discounting in
any area affects trade-in value as compiled for the trade Blue Book. The courts
said: 'It is unrealistic to conclude that dealers in one region were wholly
unconcerned with the maintenance of prices in other regions and concerned
only with price maintenance by dealers in their own particular region.' United
States v. American Honda Motor Company, 271 F.Supp. at 985 and United
States v. American Honda Motor Co., 273 F.Supp. at 818.
13
answering that there was never any statement made to him that there was any
connection between the bids in the two states. And on cross-examination he
further elaborated that there was never a meeting where they talked about one
state and then switched to the other. At the conclusion of the evidentiary
hearing, the trial judge entered findings which, coupled with the testimony,
refute any favorable comparison of this case to the Kootz or Honda cases.14 In
short, there is a general absence of testimonial evidence which supports
appellant's double jeopardy claim. Our conclusion is but an echo of the trial
judge's that the parties here were tried for a plot involving a distinctively
separate conspiratorial purpose.
14
It is also urged that counsel for the Government was guilty of making
inflammatory remarks sufficient to entitle Wilshire to reversal. The remarks
were improper15 but even if they were prejudicial their impact was promptly
removed by the trial court's instruction to the jury. The determination of the
extent of permissible argument rests primarily in the discretion of the trial
court. We do not agree that remarks made by counsel were of such gravity as to
require reversal in view of the timely admonition of the lower court.16
15
The trial court imposed a fine of $25,000 on Wilshire. The maximum fine
allowed by 15 U.S.C.A. 1 is $50,000. Appellant says the fine was excessive.
We have often held that when the punishment is within the statutory limit, this
court will not interfere with the trial court's exercise of discretion in fixing the
punishment absent unusual circumstances,17 none of which are present here.
16
Affirmed.
The ten corporations indicted were: Wilshire Oil Company, Socony Mobil Oil
Company, Skelly Oil Company, the Consumers Cooperative Association,
American Petrofina Company of Texas, Union Asphalt and Roadoils, Colorado
Oil and Gas Corporation, the American Oil Company (Standare of Indiana),
Phillips Petroleum Company, and Apco Oil Corporation
and conclusions of law under Rule 23, F.R.Crim.P., 18 U.S.C.A., which the
trial court correctly deemed inapplicable. Nonetheless, upon Wilshire's request
the court recited its findings, framing them in terms of the Government's burden
of establishing beyond a reasonable doubt that there was not a single multi-state
conspiracy
3
Imperial Meat Co. v. United States, 316 F.2d 435 (10th Cir. 1963); Carlson v.
United States, 249 F.2d 85 (10th Cir. 1957); United States v. Armour & Co.,
137 F.2d 269 (10th Cir. 1943)
United States v. Tijerina, 407 F.2d 349 (10th Cir. 1969); Nelson v. United
States, 406 F.2d 1136 (10th Cir. 1969); Woodring v. United States, 376 F.2d
619 (10th Cir. 1967); Frankfort Distilleries v. United States, 144 F.2d 824 (10th
Cir. 1944); United States v. Armour & Co., 137 F.2d 269 (10th Cir. 1943); 8
Moore's Federal Practice P7.04 at 7-14 to 7-20
See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84
L.Ed. 1129 (1940); Pevely Dairy Co. v. United States, 178 F.2d 363 (8th Cir.
1949)
10
United States v. Painters' Dist. Council No. 14, etc., 44 F.2d 58 (N.D.Ill.1930);
Boyle v. United States, 40 F.2d 49 (7th Cir. 1930)
11
Hattaway v. United States, 399 F.2d 431 (5th Cir. 1968); Nelms v. United
States, 291 F.2d 390 (4th Cir. 1961); United States v. Cohen, 197 F.2d 26 (3d
Cir. 1952); Upshaw v. United States, 157 F.2d 716 (10th Cir. 1946); United
States v. American Honda Motor Co., 273 F.Supp. 810 (N.D.Ill.1967); United
States v. American Honda Motor Co., 271 F.Supp. 979 (N.D.Cal.1967)
12
13
United States v. American Honda Motor Co., 289 F.Supp. 277 (S.D.Ohio
1968); United States v. American Honda Motor Co., 273 F.Supp. 810
(N.D.Ill.1967); United States v. American Honda Motor Co., 271 F.Supp. 979
(N.D.Cal.1967)
14
The trial judge found: '* * * that the government has established beyond a
reasonable doubt that there was not one large conspiracy split into small ones *
* *. The sole subject of the Kansas conspiracy was to allocate points or by
allocating points, fix the prices of liquid asphalt sold to the State of Kansas, and
the purpose of the Missouri conspiracy was identical except that it had to do
with the sale of liquid asphalt to the State of Missouri
I find that the conspiracies charged * * * were completely different and
unconnected although necessarily, as the evidence progressed, there was some
reference back and forth to the dealings between the defendant here and the
other defendants in the case, and the State of Missouri.
I find that the proof of the matters charged in the Kansas indictment would not
have been admissible had there been a trial on the Missouri indictment and that
if admitted, it would not have sustained a conviction on the Missouri
indictment.'
15
16
Bailey v. United States, 410 F.2d 1209 (10th Cir. 1969); Aiuppa v. United
States, 393 F.2d 597 (10th Cir. 1968), vacated on other grounds, Giordono v.
United States, 394 U.S. 310, 89 S.Ct. 1164, 22 L.Ed.2d 297 (1969)
17
See Weissman v. United States, 387 F.2d 271 (10th Cir. 1967); Welch v.
United States, 371 F.2d 287 (10th Cir. 1966); Martin v. United States, 364 F.2d
894 (10th Cir. 1966)