Petition — Henry S. Branscome, Inc. v. United States

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kiLED

~ OCT 4 1983

ALEXANDER L. STEVAS,

IN THE CLERK

Supreme Court of the United States

OCTOBER TERM, 1983

HENRY S. BRANSCOME, INC. and HENRY S. BRANSCOME,

Petitioners,

V.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

VINCENT J. FULLER

Counsel of Record

BARRY S. SIMON

WILLIAM J. MURPHY

LINDA C, RAY

839 - 17th Street, N.W.

Washington, D.C. 20006

(202) 331-5000

Attorneys for Petitioners

Of Counsel:

WILLIAMS & CONNOLLY

839 - 17th Street, N.W.

Washington, D.C. 23006

— ——

=

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED *

1. Whether under this Court’s decision in McLain v.

Real Estate Bd. of New Orleans, 444 U.S. 232 (1980),

the government in a criminal Sherman Act case may

prove an effect on interstate commerce through evidence

concerning the alleged conspirators’ total annual pur-

chases of interstate products rather than through evi-

dence related only to the quantity of those products used

in the activities infected by the alleged conspiracy. The

Court of Appeals in this case affirmed a conviction which,

under the reading of McLain adopted by a majority of

the Courts of Appeals, should have been reversed for lack

of any evidence on the interstate commerce element of a

Sherman Act offense.

2. Whether under this Court’s decision in Gulf Oil

Corp. v. Copp Paving Co., 419 U.S. 186 (1974), the gov-

ernment in a criminal Sherman Act case may prove an

effect on interstate commerce through evidence that local

roads resurfaced by the alleged conspirators are part of a

“network” that ultimately is connected with interstate

highways.

3. Whether under this Court’s decision in Gulf Oil

Corp. v. Copp Paving Co., 419 U.S. 186 (1974), a trial

court may instruct a jury in a criminal Sherman Act

case that it should consider whether “the highways, sec-

ondary roads and streets involved in the case were part

of our network of interstate travel and commerce” in

determining whether an alleged conspiracy to rig bids

for resurfacing those roads constituted a “restraint of

trade or commerce among the several States.”

* The parties to the proceeding below included a co-defendant at

trial, the Basic Construction Company. The appeals of Petitioners

and Basic were consolidated, but totally distinct points of error

were raised by Basic. Basic also has filed with this Court a Petition

for Writ of Certiorari, seeking review of the judgment of the Court

of Appeals. No. 83-272 (August 19, 1983).

Petitioner Henry S. Branscome, Inc. is a Virginia corporation

solely owned by Petitioner Henry S. Branscome and his wife.

Branscome, Inc. has no parent company, subsidiaries or affiliates

within the meaning of this Court’s Rule 28.1.

(i)

TABLE OF CONTENTS

EE

EE EE EEE

og iy 4 e610), |

STATEMENT OF THE CASE .......................0................

SS EE

B. Statement of Essential Facts ..............00...00000..

C. The District Court’s Rulings on the Questions

Neen ussadaesasopeneasbes

REASONS FOR GRANTING THE WRIT .0....ccc00000--

A. Under the Reading of McLain v. Real Estate

Bd. of New Orleans, 444 U.S. 232 (1980),

Adopted By a Majority of the Courts of Ap-

peals, No Evidence Was Presented at Trial To

Prove an Effect on Interstate Commeree ..........

B. Under This Court’s Decision in Gulf Oil Corp.

v. Copp Paving Co., 419 U.S, 186 (1974), the

Government’s Evidence Concerning the Fact

that the Roads in Issue Are Part of a Network

That Ultimately Connects With Interstate High-

ways Was Irrelevant, As a Matter of Law, to

the Interstate Commerce Element of a Sherman

es msmessececctovesscs

C. The District Court’s Instructions Improperly

Permitted the Jury to Find the Essential Inter-

state Commerce Element of a Sherman Act

Offense Based on Evidence Concerning the

Fact that the Roads in Question Are Part of

an Interstate Network of Highways ................

I ice saicrcecdoticesesneseivenerreveseseonsecceeseveovseseececes

10

19

24

27

iv

TABLE OF AUTHORITIES

CASES: Pie

Bunker Ramo Corp. v. United Business Forms,

Inc., F.2d ——, 1983-2 Trade Cas. {| 65,515

6 Bf A REE eee Olona 15

Cardio-Medical Associates, Ltd. v. Crozer-Chester

Medical Center (two opinions), 552 F. Supp.

1170, 586 F. Supp. 1065 (E.D. Pa. 1982) ............ 15

Construction Aggregate Transport, Inc, v. Florida

Rock Industries, Inc., 710 F.2d 752 (11th Cir.

TEED cscher cisions ontcoummice Mievcavusszeonnnsyennsieienmamanaiaion 14, 27

Cordova & Simonpietri Insurance Agency, Inc. V.

Chase Manhattan Bank, 649 F.2d 36 (1st Cir.

AeA at MIRC Re AP AOE Minh i se ee oe 15

Crane V. Intermountain Health Care, Inc., 637 F.2d

op RE ft Se Rae ee ieee nel Onn mio 14

Englert v. City of McKeesport, 564 F. Supp. 375

CO a ea esc tit en sictinedeteeepaeuhaicechadnaseebes 15

Feldman v. Jackson Memorial Hospital, 509 F.

Me ke Oe : | eee ea 14

Furlong v. Long Island College Hospital, 710 F.2d

BR OE I FD ciscdecdebicnckcncstessansecstniiemoctioesiees . 14-15

Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186

oe, GROAN TREY RRM Rene wee Mea renied ma te so. 9 & 8, 19, 21-27

Heart of Atlanta Motel, Inc. v. United States, 379

BE. SEI ROMIIID |‘ scusicnbeccicechecnccntinnsildeeenaeethcbameanebatonines 23

Heille v. City of St. Paul, 512 F. Supp. 810 (D.

Minn. 1981), aff'd, 671 F.2d 1134 (8th Cir.

NY | scnsctskLscsaiciseptiniciniectinineteee denlinGiedsdateadibiene basoals 23

James R. Snyder Co, v. Associated General Con-

tractors, 677 F.2d 1111 (6th Cir. 1982) ............. 15

Katzenbach v. McClung, 379 U.S. 294 (1964)........ 23

Lease Lights, Inc. v. Public Service Co., 701 F.2d

Re Ce re I aise eictesesthcnsiesters tarts 15

McElhinney Vv. Medical Protective Co., 549 F. Supp.

Be RL A MEINE Sectctccictsiiesiceonncsesctcneeiitaieeisasteleacal 14

McLain v. Real Estate Bd. of New Orleans, 444

8 Es RSET Sh 7, 9-10, 12-19

Malini v. Singleton & Associates, 516 F. Supp. 440

Cas 7k Rs IED bien hd bicisunninssncanentecdutteealinns 15

Miller v. Indiana Hospital, 562 F. Supp. 1259

(W.D, Pa, 1983) 14

v

TABLE OF AUTHORITIES—Continued

Page

Mishler v. St. Anthony’s Hospital Systems, 694 F.2d

Ie I MI IED onc sconsasnicessncibeocecbbensateeneneads 15

Pao v. Holy Redeemer Hospital, 547 F. Supp. 484

eae ladiecsiniieamnts 15

Pontius vy. Children’s Hospital, 552 F. Supp. 1852

fig a. TSRNASENS ESS Sa eae en 15

Power East Ltd. v. Transamerica Delaval Inc., 558

ye) OR a ASS ap | ee 15

Ronwin v. State Bar of Arizona, 686 F.2d 692 (9th

Cir. 1981), cert. granted sub nom. Hoover v.

Ronwin, No. 82-1474, 103 S. Ct. 2084 (1983).... 13

Schnabel v. Building & Construction Trades Coun-

cil, 563 F. Supp. 1080 (E.D. Pa. 1983) ................ 15

Stone v. William Beaumont Hospital, 1983-1 Trade

Cas, 7 65,848 (E.D. Mich. 1981) ........................ 15

Stromberg v. California, 283 U.S. 359 = (1981)........ 27

Thornhill Publishing Co. v. General Telephone &

Electronics Corp., 594 F.2d 730 (9th Cir. 1979) .. 28, 27

United States v. Foley, 598 F.2d 1323 (4th Cir.

1979), cert. denied, 444 U.S, 1043 (1980) ........... 9

United States v. H & M, Inc., 562 F. Supp. 651

I I Miia S since ccnmcdicaaasipelanioe 14

United States v. Socony-Vacuum Oil Co., 310 U.S.

RRR er Rees ea eh AG SiN ort 9

University Emergency Physicians v. Richmond

County Hospital Authority, 1982-83 Trade Cas.

TE Is FI RIED. Sascceserceienicansenitnnnsitindmmsigns 14

Western Waste Service Systems v. Universal Waste

Control, 616 F.2d 1094 (9th Cir.), cert. denied,

BT SN IID iss sesintsscssnesinsoccesonapuahsmtuguekaiend 13-14, 17

Yates v. United States, 354 U.S. 298 (1957) .......... 27

STATUTES:

Section 1 of the Sherman Act, 15 U.S.C. §1........... passim

OTHER AUTHORITIES:

ABA Section of Antitrust Law, Jury Instructions

in Criminal Antitrust Cases 1964-1976 (1978).. 9

vi

TABLE OF AUTHORITIES—Continued

Kissam, Webber, Bigus & Holzgraefe, Antitrust

and Hospital Privileges: Testing the Conven-

tional Wisdom, 70 Calif. L. Rev. 595 (1982)...

Comment, Expanding Federal Antitrust Jurisdic-

tion: A Close Look at McLain v. Real Estate

Board, Inc., 19 Hous. L. Rev. 143 (1981) ............

Note, “Affecting Commerce” Under the Sherman

Act—How Local the Squeeze, 31 Drake L. Rev.

155 (1981-82) ................ divktiicieceepeien ines

Note, The Interstate Commerce Test for Jurisdic-

tion in Sherman Act Cases and Its Substantive

Applications, 15 Ga. L. Rev. 714 (1981) .000000....

Page

16-17

15-16

16

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No.

HENRY S. BRANSCOME, INC. and HENRY S. BRANSCOME,

Petitioners,

Vv.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Petitioners Henry 8. Branscome, Inc. and Henry S.

Branscome pray that a writ of certiorari issue to review

the judgment of the United States Court of Appeals for

the Fourth Circuit entered in this case.

OPINIONS BELOW

The Court of Appeals, in a per curiam opinion, affirmed

Petitioners’ convictions of one count of conspiring in re-

straint of trade in violation of the Sherman Act, 15

U.S.C. § 1. The Court of Appeals’ opinion is reported at

711 F.2d 570, and is set forth in the Appendix at la.

The Court of Appeals denied a timely Petition for Re-

hearing and Suggestion for Rehearing En Banc in an

Order reproduced in the Appendix at 10a.

The questions presented in this Petition were raised

during trial and in post-trial motions filed with the Dis-

trict Court. The District Court denied those motions in

an unpublished “Memorandum Order” reproduced in the

Appendix at 1la.

2

On August 12, 1983, Petitioners filed with this Court

an Application for Stay of the Mandate of the United

States Court of Appeals for the Fourth Circuit. No.

A-108. On that same date, Justice Brennan, to whom the

Application had been referred, entered an Order tempo-

rarily staying the mandate of the Court of Appeals pend-

ing further order of this Court. Justice Brennan’s Order

is reproduced in the Appendix at 14a.’

JURISDICTION

The judgment of the Court of Appeals was entered on

June 27, 1983. A timely Petition for Rehearing and Sug-

gestion for Rehearing En Banc was denied in an Order

dated August 5, 1983. This petition is filed within sixty

days of the entry of that Order. This Court has juris-

diction pursuant to 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS

Section 1 of the Sherman Act, 15 U.S.C. § 1, provides

as follows:

Every contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or

commerce among the several States, or with foreign

nations, is declared to be illegal. Every person who

shall make any contract or engage in any combina-

tion or conspiracy hereby declared to be illegal shall

be deemed guilty of a felony, and, on conviction

thereof, shall be punished by fine not exceeding one

million dollars if a corporation, or, if any other per-

son, one hundred thousand dollars, or by imprison-

ment not exceeding three years, or by both said pun-

ishments, in the discretion of the court.

1 Petitioners have been informed by the Clerk’s Office that the Ap-

plication thereafter was referred by Justice Brennan to the Court

for final determination. The Application included appendices re-

producing the opinions belww, portions of the briefs in the Court

of Appeals, and all portions of the trial record relevant to the ques-

tions presented in this Petition.

8

STATEMENT OF THE CASE

A. Proceedings Below

On October 18, 1981, Petitioners Henry S. Branscome,

Inc. and its President, Henry S. Branscome, were indicted

on a single count of conspiracy in restraint of trade or

commerce among the States, in violation of the Sherman

Act, 15 U.S.C. $1. The indictment charged Petitioners,

and alleged co-conspirators, with rigging highway resur-

facing bids on “certain sections of the plant mix schedule

work contracts let [by the Commonwealth of Virginia]

in the Peninsula area in April, 1978.” J.A. 22.2 The in-

dictment named as co-defendants the Basic Construction

Company (petitioner in No. 83-272) and one of its em-

ployees, David M. Howell. The unindicted co-conspirators

were Rea Construction Company, Blakemore Construction

Company, and officers of those companies.

Following pre-trial proceedings, the case was tried to

a jury before United States District Judge John A. Mac-

Kenzie. Trial commenced on February 22, 1982, and the

jury returned a verdict of guilty as to all three defend-

ants on February 26, 1982. Following the verdict, Peti-

tioners timely filed Motions for a New Trial and Motions

in Arrest of Judgment pursuant to Rules 33 and 34 of

the Federal Rules of Criminal Procedure. J.A. 54-59.

Those motions, which raised the questions presented here-

in and which renewed trial motions for judgments of ac-

quittal, were denied by the District Court in its Memo-

randum Order dated June 21, 1982. App. 1la-138a.

2 The Joint Appendix filed in the Court of Appeals will be des-

ignated herein as “J.A.” The Appendix to this Petition will be

referred to as “App.” References to the trial transcript will be

designated “Tr.”

8 Howell’s trial was severed from that of the remaining defend-

ants at the request of defendant Basic. Following a jury trial, on

December 9, 1981, Howell was found guilty of participating in the

alleged conspiracy. He did not appeal from that conviction.

4

On June 22, 1982, judgments of conviction were en-

tered. Henry S. Branscome, Inc. was fined $225,000. The

company president, Henry S. Branscome, was fined

$18,000, and he was sentenced to a term of imprisonment

of one year, all but 120 days of which were suspended,

and a three year period of probation. J.A. 64-65. Those

judgments of conviction and the conviction of co-defendant

Basic were affirmed in a judgment of the Court of Ap-

_ peals entered on June 27, 1983. The questions presented

in this Petition, which were the principal issues addressed

in Petitioners’ brief in the Court of Appeals, and the only

issues raised by Petitioners’ counsel during oral argu-

ment, were not mentioned in the Court of Appeals’ per

curiam opinion. See App. 7a-8a.‘

Because the Court of Appeals’ judgment, in affirming

the rulings of the District Court, created clear conflicts

with prior decisions of this Court and other Courts of

Appeals, Petitioners’renewed their efforts to have the

Court of Appeals address the questions presented herein.

A timely Petition for Rehearing and Suggestion for Re-

hearing En Banc that again presented these questions to

the Court of Appeals was denied, however, without opin-

ion. App. 10a.

B. Statement of Essential Facts

The record facts pertinent to the questions presented

may be summarized succinctly.’ The indictment returned

in this case alleged a simple conspiracy among four as-

phalt paving companies to divide among themselves cer-

tain “plant mix schedule work’’—more commonly referred

to as highway resurfacing contracts—in the Peninsula

*In a section of the opinion addressing an argument raised by

appellant Basic, the Court of Appeals did state: “We have con-

sidered the appellant’s [sic] remaining assignments of error and

find them to be without merit.” App. 9a.

5A more detailed statement of the evidence presented at trial

on the interstate commerce element of the offense is contained

within the Reasons for Granting the Writ.

5

area of Virginia.® These contracts were let for bid by the

Commonwealth of Virginia in April, 1978. The indict-

ment did not allege that the defendants had engaged in

similar bid-rigging conspiracies in other years or in other

parts of Virginia, or that they had rigged bids with re-

spect to any other type of highway construction or main-

tenance work, or any other private or public paving work.

J.A. 22-23.

According to the evidence adduced at trial, the Com-

monwealth of Virginia is divided into eight highway dis-

tricts. Each year the Virginia Highway Department de-

termines that certain segments of the highways in each

district need to be resurfaced. A schedule of resurfacing

work is then prepared for each district, and the schedules

are advertised for bid to asphalt paving contractors.

Each contract to be awarded is an “item” on a district

schedule. Tr. 153-56; 205.

The government’s allegations and proof at trial focused

exclusively on four schedule items in two highway dis-

tricts let for bid by the Commonwealth on April 4, 1978.

All four of the alleged conspirators submitted bids on

Suffolk District item 5-D-8,’ which called for repaving

approximately eight miles of Routes 5, 31 and 199 in

James City County. Henry S. Branscome, Inc. was the

low bidder on that item and received the contract for a

bid of $341,695. The government offered testimony from

officials of the other three firms that bid on item 5-D-8—

* The Peninsula area was defined by the indictment to be the area

in and around the cities of Hampton, Newport News, and Williams-

burg, including the counties of James City, York, Gloucester,

Middlesex, and Mathews. See J.A. at 19.

7 The contract items are designated by numbers and letters that

refer to their location and the date of the letting. Each highway

district has a number. The two districts at issue here are numbers

5 and 6, Suffolk and Fredericksburg. Thus, Job 5-D-8 refers to the

Suffolk District schedule, item D on that schedule, and the year

1978. See Tr. at 207-08.

6

Blakemore, Rea and Basic—that they were informed

what Branscome’s bid would be, and that they agreed to

make Branscome the low bidder.

The government offered further evidence that employ-

ees of Rea and Basic had decided among themselves that

Rea would receive schedule item 6-H-8, which involved the

resurfacing of approximately seven miles of Routes 33,

227 and 602 in Gloucester and Middlesex Counties, and

that Basic would receive schedule items 6-I-8 and 6-J-8,

which together involved the resurfacing of approximately

six miles of Routes 17, 614, 621 and 642 in Gloucester

and Mathews Counties. Basic and Rea were the only

bidders on those three items. The government’s witnesses

testified, however, that in order for Basic and Rea to be

assured that their arrangement would succeed, they

needed to obtain agreements with other potential bidders

on these Fredericksburg District items, principally Brans-

come and Blakemore. J.A. 131-34; 142-47.

The trial testimony, viewed from the light most favor-

able to the government, established that Henry Branscome

agreed not to bid on items 6-H-8, 6-I-8, and 6-J-8 in ex-

change for a guarantee from Basic and Rea that he would

be the low bidder on item 5-D-8. The testimony further

established that Branscome agreed to pay John Blake-

more, the president of Blakemore Construction Company,

$18,000 if Blakemore would agree to submit a bid on the

5-D-8 job that was higher than Branscome’s bid. Blake-

more testified that this payment was made over one year

later when Branscome overpaid Blakemore by approxi-

mately $18,000 for equipment that the Branscome Com-

pany had rented from Blakemore. J.A. 197-211.*

8 Henry Branscome testified at trial that he never agreed to pay

Blakemore any money to submit a “complementary bid” on the

5-D-8 job and that he had no interest in the Fredericksburg District

items that Basic and Rea had divided among themselves. He testi-

fied further that the bid his company submitted on the 5-D-8 job

was a competitive bid, developed in advance of the bid letting and

never wis revised to take advantage of the alleged collusive agree-

\e

7

C. The District Court’s Rulings on the Questions Presented

Throughout the trial proceedings, Petitioners asserted

that under McLain v. Real Estate Bd. of New Orleans,

444 U.S. 232 (1980), the government had to prove an

effect on interstate commerce through those activities in-

fected by the alleged conspiracy, and not through the de-

fendants’ general business activities. Thus, Petitioners

asserted that the interstate commerce questions presented

by this Petition had to be resolved in a narrow factual

context—a single-count indictment involving an alleged

collusive agreement among four asphalt paving contrac-

tors to divide among themselves twenty miles of state

highway resurfacing work. But despite the narrow scope

of the indictment, the evidence concerning the interstate

commerce element of the offense that was offered by the

government at trial, and admitted over repeated objec-

tions by Petitioners’ counsel, had nothing to do with this

alleged restraint of trade. In apparent reliance on an

interpretation of McLain accepted by a minority of the

Courts of Appeals, the government offered testimony and

exhibits showing the total yearly purchases by the alleged

conspirators of the one ingredient of asphalt that was

produced vutside of Virginia and used by these companies

in every aspect of their businesses. Thus, it was the gov-

ernment’s position that an effect on interstate commerce

could be proved by evidence relating to the interstate

aspects of the general business activities of the alleged

conspirators, rather than the activities “infected” by the

alleged conspiracy.

Moreover, the government urged upon the District

Court and the jury the erroneous theory that because

ment. Finally, although Branscome admitted paying Blakemore

money to which he was not entitled in May, 1979, Branscome do

nied that this payment was made pursuant to an agreement reached

in connection with the bidding on the 5-D-8 job a year earlier. J.A.

333-39.

8

the alleged conspiracy involved the resurfacing of roads,

and because those roads ultimately were connected to in-

terstate hizhways, the actions of the alleged conspirators

necessarily were both in the flow of interstate commerce,

and substantially affected that commerce. In support of

this theory, previously rejected by this Court in Gulf Oil

Corp. v. Copp Paving Co., 419 U.S, 186 (1974), the gov-

ernment offered expert testimony and a highway traffic

study concerning traffic patterns on Interstate 64 and

Interstate 95 (interstate highways that were not the sub-

ject of the resurfacing contracts), and the combined miles

traveled by vehicles bearing out-of-state license plates on

all roads in the Peninsula area.

By contrast, the trial record shows that the government

offered no evidence concerning the quantity of interstate

products purchased by the alleged conspirators for com-

pleting the twenty miles of road resurfacing contracts at

issue. The government likewise offered no evidence con-

cerning out-of-state vehicular traffic patterns on those

small segments of rural roadway that were resurfaced

pursuant to the alleged collusive bidding agreement.

The District Court admitted the government’s ir-

relevant and prejudicial evidence and presented the gov-

ernment’s erroneous legal theories to the jury. Even

though the government conceded on appeal that its “in

the flow of commerce” theory was untenable, and even

though there is a clear conflict among the federal Courts

of Appeals concerning the government’s “effect on com-

merce” theory, the Court of Appeals failed even to ad-

dress the questions presented herein. If it had addressed

these issues, and resolved them in accordance with this

Court’s precedents and the majority position espoused by

the Courts of Appeals for the First, Second and Tenth

Circuits, the Court of Appeals in this case would have

reversed Petitioners’ convictions and remanded for entry

of judgments of acquittal. Instead, the Court of Appeals

simply ignored the District Court’s errors, and affirmed

Petitioners’ convictions.

9

REASONS FOR GRANTING THE WRIT

One essential element of a Sherman Act offense is that

the alleged anti-competitive conduct must constitute a

“restraint of trade or commerce among the several

States.” 15 U.S.C. § 1. Thus, the government must offer

sufficient proof at trial that the restraint involved inter-

state commerce, and the jury must be instructed on the

government’s burden to establish this element of the of-

fense. See United States v. Foley, 598 F.2d 1828, 1328

n.2 (4th Cir. 1979), cert. denied, 444 U.S. 1043 (1980).

See generally United States v. Socony-Vacuum Oil Co.,

810 U.S. 150, 210 (1940); ABA Section of Antitrust

Law, Jury Instructions in Criminal Antitrust Cases 1964-

(976, at 169-75 (1978).

Under this Court’s decisions interpreting the Sherman

Act, the interstate commerce element of the offense may

be sustained on proof that either (1) the challenged ac-

tivities of the defendants were themselves “in the flow

of” interstate commerce; or (2) the defendants’ local ac-

tivities nonetheless had “as a matter of practical eco-

nomics” a “substantial” or “not insubstantial” effect on

some identified aspect of interstate commerce. McLain v.

Real Estate Bd. of New Orleans, 444 U.S. 282, 241-42,

246 (1980). In this case, the principal legal issues ad-

dressed by the Petitioners prior to trial, during trial, in

post-trial motions and on appeal all involved the suffi-

ciency of the government’s evidence and the propriety of

the District Court’s instructions under this two-pronged

test of interstate commerce.

The questions presented by this Petition have engen-

dered significant controversy and conflicts among the fed-

eral Courts of Appeals, and those conflicts concerning the

jurisdictional reach of the Sherman Act are constantly

recurring—both in civil and in criminal antitrust litiga-

tion around the country. The conflicting lower court de-

cisions on these questions demonstrate a need for this

Court’s definitive guidance. Moreover, these questions are

10

particularly appropriate for resolution in this criminal

Sherman Act setting, where the trial record is complete,

clear and concise, and where this Court’s decision may re-

sult in the reversal of erroneous convictions, the removal

of a sentence of imprisonment, and the entry of judg-

ments of acquittal.

A. Under the Reading of McLain v. Real Estate Bd. of

New Orleans, 444 U.S. 232 (1980), Adopted By a

Majority of the Courts of Appeals, No Evidence Was

Presented at Trial to Prove an Effect on Interstate

Commerce

This case squarely raises the question whether an effect

on interstate commerce under §1 of the Sherman Act

may be proved by examining the interstate aspects of the

defendants’ businesses in their entirety, or whether proof

of such an effect must be limited to the interstate aspects

of those activities that were “infected’’ by the alleged

conspiracy. This question has created substantial, re-

curring conflicts among the federal courts based on di-

vergent interpretations of this Court’s decision in McLain

v. Real Estate Bd. of New Orleans, 444 U.S, 282 (1980).

See pages 12-18, infra.

The trial record establishes that the asphalt paving

material used by the alleged conspirators to resurface the

local roads in question was manufactured in Virginia,

but was made from a combination of locally-mined sand

and aggregates and a petroleum by-product refined out-

side of Virginia. The petroleum by-product, known as

liquid asphalt cement or AC-20, was purchased by the

alleged conspirators from Texaco, Ine. and Chevron,

U.S.A., Inc. Employees of those companies testified at

trial and they introduced into evidence Government Ex-

hibits 60 and 61, which summarized the yearly sales of

AC-20 by those two oil companies to the alleged conspira-

tors during the period between 1977 and 1979. J.A. 80-

90; 121-26; 381-82. Counsel for Petitioners objected to

11

the introduction of these exhibits because the sales records

that they summarized bore no relationship to the quanti-

ties of AC-20 purchased and used by the companies in-

volved to manufacture the asphalt paving material needed

to resurface the twenty miles of roadway placed in issue

by the indictment. The District Court overruled these

objections without explanation. J.A. 86, 124.

On cross-examination, these witnesses conceded that

they had no knowledge concerning the uses to which the

alleged conspirators put the AC-20 that they purchased,

and that the exhibits did not show the quantities of AC-

20 purchased for use in resurfacing the roads in question.

In fact, several of the alleged conspirators had asphalt

plants outside the Peninsula area, and the government’s

exhibits did not even break out the quantities of AC-20

delivered to the specific plants that manufactured the

asphalt used on these jobs. J.A. 88 89; 126.

The effect of the District Court’s ruling admitting this

evidence was to permit the government to argue to the

jury convincingly that the alleged conspirators purchased

sufficient quantities of AC-20 to have a substantial effect

on the interstate market for that product. For example,

Exhibits 60 and 61 show that in 1978 the alleged con-

spirators purchased over $3 million worth of AC-20. J.A.

381-82. But those substantial quantities of AC-20 were

purchased to manufacture asphalt used in the construc-

tion and repair of highways, parking lots and driveways

all over Virginia, not only for the State Department of

Highways, but also for federal contracting authorities

and for private firms and individuals. By contrast, the

government offered no evidence, and none appears in the

record, concerning the quantities of AC-20 required and

purchased to perform the contracts that were obtained

pursuant to the alleged bid-rigging conspiracy. For that

reason, Petitioners moved for judgments of acquittal at

the close of the prosecution’s case. This motion, renewed

in post-trial briefs, was denied by the District Court,

again without explanation. J.A. 214-15.

12

The District Court’s rulings admitting the govern-

ment’s evidence on purchases of AC-20 and denying Pe-

titioners’ motion for judgments of acquittal, clearly pre-

sent for resolution by this Court the question of the

proper interpretation of McLain, which has embroiled

the federal courts in continuing conflict.

In McLain, the Court was confronted with a claim

that a civil complaint alleging a price-fixing conspiracy

among real estate brokers in New Orleans did not allege

adequately an effect on interstate commerce. The Court

observed that although real estate brokerage, like road

resurfacing, may be a local activity, the plaintiffs could

establish federal jurisdiction by demonstrating ‘a sub-

stantial effect on interstate commerce generated by [de-

fendants’] brokerage activity.” 444 U.S. at 242. The

Court made this statement in the context of rejecting the

defendants’ claim that the plaintiffs were required to

allege and prove that the conspiracy to fix commission

rates itself had adversely affected interstate commerce.

Id. at 242-43,

Some courts and commentators have misconstrued this

passage from McLain to mean that it is always per-

missible for the plaintiff in a Sherman Act case to sat-

isfy his burden of proof on interstate commerce by show-

ing that the defendant’s business as a whole has a sub-

stantial effect on interstate commerce. That was not the

holding of McLain, nor does this interpretation of Mc-

Lain follow from the Court’s language. In McLain, the

alleged agreement in establishing commission rates “in-

fected”’ all of the defendants’ brokerage activities. Thus,

the Court observed that plaintiffs could satisfy their bur-

den by focusing on the substantial effects on specified as-

pects of interstate commerce that were generated by the

defendants’ “brokerage activity.” 444 U.S. at 242.

In a later passage of the McLain opinion the Court

made it clear that it is not sufficient for plaintiffs in

Sherman Act cases to establish an effect on interstate

13

commerce by proof concerning the defendants’ general

business activities if those activities are not implicated

by the alleged offenses. In remanding the McLain case

for trial, this Court stated:

To establish federal jurisdiction in this case, there

remains only the requirement that [defendants’] ac-

tivities which allegedly have been infected by a price-

fixing conspiracy be shown “as a matter of practical

economics” to have a not insubstantial effect on the

interstate commerce involved.

444 U.S. at 246 (citations omitted) (emphasis added).

The government tried this case on the theory that

it need not show a practical economic effect on the inter-

state market for AC-20 caused by the “activities which

allegedly [had] been infected by [the] conspiracy.” Id.

Rather, all of the government’s proof concerning the al-

leged conspirators’ purchases of AC-20 was directed to

their business activities as a whole, and not just to the

road resurfacing activities that were “infected” by the

alleged bid rigging. Although the government’s theory

was contrary to the language of McLain and past hold-

ings of this Court, it derived support for its position

from the decision in Western Waste Service Systems Vv.

Universal Waste Control, 616 F.2d 1094, 1096-97 (9th

Cir.), cert. denied, 449 U.S. 869 (1980). In that deci-

sion, and others since, the Court of Appeals for the Ninth

Circuit has misread McLain to mean that “a party need

only show that a defendant’s general business .. . af-

fected interstate commerce in order to meet the jurisdic-

tional requirement.” Ronwin v. State Bar of Arizona,

686 F.2d 692, 699 n.7 (9th Cir. 1981), cert. granted sub

nom. Hoover v. Ronwin, No. 82-1474, 103 S. Ct. 2084

(1983) .°

® The petition for a writ of certiorari in Ronwin did not present

this question, and thus resolution of that case does not promise

to eliminate the substantial lower court confusion over the meaning

of McLain.

14

The misinterpretation of McLain set forth in Western

Waste Service Systems has been adopted by several fed-

eral district courts, and recently was cited with apparent

approval by the Court of Appeals for the Eleventh Cir-

cuit. See Construction Aggregate Transport, Inc. V.

Florida Rock Industries, Inc., 710 F.2d 752, 766-69 &

nn.30-31 (11th Cir. 1983); Miller v. Indiana Hospital,

562 F. Supp. 1259, 1283-85 (W.D. Pa. 1983); United

States v. H & M, Inc., 562 F. Supp. 651, 657 (M.D. Pa.

1983); University Emergency Physicians v. Richmond

County Hospital Authority, 1982-83 Trade Cas. © 65,097,

at p. 71,151 (S.D. Ga. 1982); McElhinney v. Medical

Protective Co., 549 F. Supp. 121, 127 (E.D. Ky. 1982) ;

Feldman v. Jackson Memorial Hospital, 509 F. Supp.

815, 821 (S.D. Fla. 1981).

The clear majority of the Courts of Appeals, however,

have recognized the Ninth Circuit’s misreading of Mc-

Lain and have rejected the “general business activities

test” of Sherman Act jurisdiction. The Court of Appeals

for the Tenth Circuit, sitt'ng en banc, specifically rejected

a Sherman Act plaintiff's reliance on McLain for the

proposition that jurisdiction may be established “if inter-

state commerce is substantially affected by the defend-

ants’ general or overall business.”’ Crane v. Intermoun-

tain Health Care, Inc., 637 F.2d 715, 721 (10th Cir.

1980). In so holding, the Court declined to adopt the

reasoning of Western Waste Service Systems, because the

acceptance of a “general business” test would work a

substantial departure from this Court’s precedents, and

from the very language of McLain itself. See 637 F.2d

at 721-24.

Crane’s interpretation of McLain—that only those ac-

tivities infected by the alleged conspiracy can be con-

sidered in demonstrating an effect on interstate com-

merce-—has been twice reaffirmed by the Tenth Circuit,

and also has been adopted by the Courts of Appeals for

the First and Second Circuits. See Furlong v. Long Island

15

College Hospital, 710 F.2d 922, 925-26 (2d Cir. 1983) ;

Lease Lights, Inc. v. Public Service Co., 701 F.2d 794,

799-800 (10th Cir. 1983); Mishler v. St. Anthony’s Hos-

pital Systems, 694 F.2d 1225, 1227-28 (10th Cir. 1981) ;

Cordova & Simonpietri Insurance Agency, Inc. v. Chase

Manhattan Bank, 649 F.2d 36, 45 (1st Cir. 1981). More-

over, Crane and its progeny have been followed by many

federal district courts outside those Circuits. See, e.g.,

Englert v. City of McKeesport, 564 F. Supp. 375, 376

(W.D. Pa. 1983); Power East Ltd. v. Transamerica

Delaval Inc., 558 F. Supp. 47, 49 (S.D.N.Y. 1983);

Pontius v. Children’s Hospital, 552 F. Supp. 1352, 1361

(W.D. Pa. 1982); Cardio-Medical Associates, Ltd. v.

Crozer-Chester Medical Center (two opinions), 552 F.

Supp. 1170, 536 F. Supp. 1065, 1072-85 (E.D. Pa. 1982) ;

Pao v. Holy Redeemer Hospital, 547 F. Supp. 484, 488-

90 (E.D. Pa. 1982) ; Stone v. William Beaumont Hospital,

1983-1 Trade Cas. § 65,348, at p. 70,070 (E.D. Mich.

1981); Malini v. Singleton & Associates, 516 F. Supp.

440, 442 (S.D. Tex. 1981).""

This significant conflict among the federal courts over

the meaning of McLain also has engendered substantial

controversy among legal commentators." Petitioners sub-

10 Examination of the cases suggests that within Pennsylvania

alone two United States District Court Judges have adopted the

Ninth Circuit’s reading of McLain, while four Judges have rejected

that interpretation. A seventh Judge has declined to enter the

fray. See Schnabel v. Building & Construction Trades Council, 563

F. Supp. 1030, 1044 (E.D. Pa. 1983). The conflict among the fed-

eral courts also has been recognized, but not resolved, by the

Courts of Appeals for the Sixth and Seventh Circuits. See Bunker

Ramo Corp. Vv. United Business Forms, Inc., —— F.2d , 1983-2

Trade Cas. § 65,515, at p. 68,526 (7th Cir. 1983) ; James R. Snyder

Co. vy. Associated General Contractors, 677 F.2d 1111, 1113-15 (6th

Cir. 1982).

11In three law review notes, McLain has been read erroneously

to expand Sherman Act jurisdiction to those cases in which the de-

fendants’ general business activities may be proved to have a sub-

stantial effect on interstate commerce. The Houston Law Review

16

mit that the correct reading of McLain, and an expla-

nation for the confusion, is set forth in the following

passage from a recent law review article:

Further confusion about the interstate commerce

test has been introduced by the Supreme Court’s most

recent decision on this issue. In McLain v. Real Es-

tate Board of New Orleans, the Court held that ac-

tivities of real estate brokers in New Orleans that

were “infected” by the brokers’ price-fixing activities

could have an effect upon interstate commerce suffi-

cient to establish Sherman Act jurisdiction. This

holding rejected the narrower view that the alleged

violation itself must have an effect upon interstate

commerce, with the Court reasoning that an alleged

violation may not have any effect and thus could not

be reached under the Sherman Act if only the viola-

tion’s effects were considered on the jurisdictional

issue. Unfortunately, there also is language in Mc-

Lain which suggests that a plaintiff need only show

that a defendant’s total activities, independent of

the alleged violation, have a substantial effect upon

interstate commerce—if that language is read out-

side the context of the full opinion. This reading of

McLain, which has been followed by some lower

courts, would in essence eliminate the interstate com-

merce test from antitrust law, since the total activi-

ties of virtually any defendant, no matter how loca!

its business, are likely to have some effects upon in-

terstate commerce. Yet this reading is based upon an

suggests that this expansion of federal jurisdiction is unwarranted

and unwise, and that this Court should reconsider McLain. The

Drake Law Review favors the broad reading of McLain. The

Georgia Law Review warns of the serious repercussions that would

result from an application of a general business activities test

to nonjurisdictional issues arising under the Sherman Act. See

Comment, Expanding Federal Antitrust Jurisdiction: A Close Look

at McClain v. Real Estate Board, Inc., 19 Hous. L. Rev. 143 (1981) ;

Note, “Affecting Commerce” Under the Sherman Act—How Local

the Squeeze, 31 Drake L. Rev. 155 (1981-82); Note, The Interstate

Commerce Test for Jurisdiction in Sherman Act Cases and Its

Substantive Applications, 15 Ga. L. Rev. 714 (1981).

17

abstraction of language from its rightful context,

and is unnecessary to justify McLain or any other

Supreme Court decision on this issue. This sugges-

tive language should thus be viewed as casual dicta

at worst or simply an inadvertent expression that

has been wrongly torn from its context by other law-

yers and judges.

Kissam, Webber, Bigus & Holzgraefe, Antitrust and

Hospital Privileges: Testing the Conventional Wisdom,

70 Calif. L. Rev. 595, 632-33 (1982) (footnotes omitted)

(emphasis added).

The judgment of the Court of Appeals affirming Peti-

tioners’ convictions necessarily had the effect of ac-

cepting the District Court’s evidentiary rulings and the

government’s explicit reliance on the Western Waste

Service Systems line of decisions. See Brief for Appel-

lee at 29-30 (“the government was only required to prove

a substantial effect on interstate commerce generated by

{Petitioners’] construction business’’).'* Moreover, be-

cause the government presented no evidence tending to

show an effect on the interstate market for AC-20 caused

by the activities “infected” by the alleged conspiracy,

Petitioners were entitled to a judgment of acquittal, un-

less the Ninth Circuit’s reading of McLain is correct.”

12 In opposing Petitioners’ application for a stay, No. A-108, the

government argued that this case is not an appropriate vehicle

for resolving the conflict among the Circuits because the District

Court’s instructions incorporated Petitioners’ interpretation of

McLain. Memorandum for the United States in Opposition, at 3-4.

See App. at 16a. It should be noted that the trial court accepted

Petitioners’ proposed instructions on this point over the govern-

ment’s specific objection. More importantly, the fact that the jury

received an instruction that correctly interpreted McLain is irrele-

vant given the fact that there was no evidence from which the jury

could have found an effect on the interstate market for AC-20

caused by the activities placed in issue by the indictment. Under

the majority view of McClain, this case never should have gone to

the jury at all.

1 On appeal, the government argued in a footnote that the jury

could have found an effect on the market for AC-20 caused by the

18

This case thus squarely presents for resolution by this

Court the substantial conflict among the Circuits con-

cerning the meaning of McLain, even though the Court of

Appeals did not choose to address that conflict in its

opinion.

This case is a particularly appropriate vehicle for the

resolution of the conflict. Most of the decisions cited

above that have addressed the meaning of McLain have

construed the “effect on interstate commerce” test in

terms of the sufficiency of the allegations of a Sherman

Act complaint. When the lower courts find that those

allegations are insufficient, the plaintiff is given an op-

portunity to amend and to correct the deficiencies of his

pleadings. Appeals from such decisions, when they are

taken, are interlocutory in nature, and inappropriate for

this Court’s review. In this case, on the other hand, the

judgments of conviction are final, and the trial record

is complete. Moreover, the record facts are remarkably

manageable. Al/ the evidence concerning the alleged con-

spirators’ purchases of AC-20 is contained in the testi-

mony of two witnesses covering a mere 16 pages of the

trial transcript, and two single-page exhibits. J.A. 80-

90; 121-26; 381-82. Finally, Petitioner Henry S. Brans-

come will serve a sentence of imprisonment unless the

Court selects this case as the vehicle to resolve the inter-

activities infected by the alleged conspiracy by reasoning that the

bid-rigging conspiracy increased the price paid by the Common-

wealth for these contracts, thereby reducing the available state

funds for other road resurfacing contracts, and concomitantly

reducing the demand for AC-20. Brief for Appellee at 29, n.32.

This argument never was presented to the jury by the prosecution

or by the District Court in its charge, and for good reason. The

government simply presented no evidence at trial concerning the

Commonwealth's budget for road resurfacing projects that would

have permitted an inference that an increase in the cost of the

contracts at issue would have resulted in less road resurfacing work

being let for bid. The government repeated this argument, based

on presumed facts dehors the record, in its response to Petitioners’

stay application. No. A-108, Memorandum in Opposition, at 5 n.6.

19

circuit conflict over McLain’s meaning. Thus, this case

presents both an ideal and a compelling context for the

issuance of the requested writ.

B. Under This Court’s Decision in Gulf Oil Corp. v. Copp

Paving Co., 419 U.S. 186 (1974), the Government’s Evi-

dence Concerning the Fact that the Roads in Issue

Are Part of a Network That Ultimately Connects

With Interstate Highways Was Irrelevant, As a Mat-

ter of Law, to the Interstate Commerce Element of a

Sherman Act Offense

In addition to the evidence concerning purchases of

AC-20, the government attempted to satisfy its burden

of proof on the interstate commerce element of the offense

under a theory rejected by this Court in Gu/f Oil Corp.

v. Copp Paving Co., 419 U.S. 186 (1974). This theory

was presented through a single witness, a Virginia High-

way Department traffic engineer, who introduced into

evidence Government Exhibit 11, a publication summa-

rizing average daily traffic volume during the year 1978

on interstate, arterial and primary routes located in Vir-

ginia, J.A. 90-121; 373-76. Given the nature of the rural

roads resurfaced pursuant to the alleged conspiracy, it is

not surprising that the evidence introduced by the gov-

ernment through this witness involved statistics relating

to everything but the volume of traffic on the segments of

the roads actually at issue. All this evidence was ad-

mitted by the District Court over continuing defense

objections. See J.A. 92, 94, 97-98, 99, 127-30.

The government’s expert testified that some of the roads

resurfaced pursuant to the alleged conspiracy are ‘“‘con-

nected” to Interstate 64, which was not itself one of the

roads involved. J.A. 93-94. He went on to testify, based

on Exhibit 11, concerning the number of “interstate ve-

hicles” traveling on various segments of /nterstate 64

during a given day. The study was based on the num-

ber of vehicles counted on those segments of Interstate

64 on an average day that bore out-of-state license

20

plates. J.A. 98. Thereafter, the expert testified con-

cerning the total number of miles traveled by vehicles

bearing out-of-state tags on all the roads in the five

counties of Virginia that constitute the Peninsula area.

J.A. 98-100. The witness further testified that out-of-

state vehicles traveling in the Suffolk and Fredericksburg

Highway Districts accounted for approximately 35% of

the total miles traveled in Virginia by out-of-state ve-

hicles. J.A. 100-01. Finally, the witness testified that it

was his opinion that the highway system in this country

forms a network, that the interstate highways in the

Peninsula area are major “collectors and distributors” of

traffic within that network, and that the local roads

placed in issue by the indictment are part o/ this inter-

connected highway nework. J.A. 101-04.

On cross-examination, the government’s highway ex-

pert conceded that his testimony concerning the national

interstate highway network was “premised essentially

on the notion that every road in the country is some-

how connected to every other road.” J.A. 107. He further

conceded that his testimony was not based on the “inter-

state character” of the roads resurfaced by the alleged

conspirators, since he had no idea which segments of those

roads were let for bid in April, 1978. Jd. The expert

testified that the Commonwealth did not even measure

out-of-state vehicle mileage on the secondary roads that

were placed in issue by this indictment. J.A. 108-09. As

for the computation of the out-of-state mileage figures

in Exhibit 11, he conceded that those figures were based

solely on counts of vehicles bearing out-of-state tags

and that the exhibit did not purport to be an “origin and

destination” study that actually surveyed the number of

interstate trips. J.A. 110-11. Finally, with respect to

several of the road segments actually at issue, the ex-

pert used Exhibit 11 to determine approximately the

relatively small number of vehicles bearing out-of-state

tags that traveled on those roads during an average day.

J.A. 115-18.

21

Petitioners’ principal objection to the admission of this

witness’s direct testimony and Government Exhibit 11

was that the use of the roads in question by vehicles

bearing out-of-state license tags is irrelevant, as a mat-

ter of law, to the interstate commerce inquiry. This ob-

jection was based explicitly on this Court’s decision in

Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 (1974).

J.A. 129.

On appeal the government argued that the Copp Pav-

ing decision is inapplicable to the “effect on commerce”

test available to a plaintiff under the Sherman Act, and

that Exhibit 11 was offered as proof under the “effect”

test. See Brief for Appellee at 31, 36-38. This Court’s

decision in Copp Paving, however, precludes the govern-

ment’s reliance on the highway traffic study under either

the “in the flow of commerce” test that it relied upon

at trial, or the “effect on commerce” test to which it

retreated on appeal.

The plaintiff in Copp Paving, an asphalt paving con-

tractor with operations analogous to those of the Peti-

tioners, claimed that the oil companies which produced

AC-20 had fixed prices, had divided markets, and had

engaged in price discrimination, tying practices, and

attempts to monopolize, all in violation of the Sherman,

Clayton and Robinson-Patman Acts. The District Court

concluded that the plaintiff’s jurisdictional showing un-

der all three Acts “rested solely on the fact that some

of the streets and roads in the Los Angeles area are seg-

ments of the federal interstate highway system, and on

a stipulation that a greater than de minimis amount of

asphaltic concrete is used in their construction and re-

pair.” 419 U.S. at 191 (emphasis added). The Dis-

trict Court held that showing to be insufficient to sup-

port federal jurisdiction, but the Ninth Circuit reversed,

holding that “ ‘the production of asphalt for use in inter-

state highways rendered the preducers “instrumental-

ities” of interstate commerce and place them “in” that

22

commerce as a matter of law.’” Jd. at 192, quoting 487

F.2d at 204. This holding led the Court of Appeals to

conclude that jurisdiction properly attached to all of

Copp’s claims under the Sherman, Clayton and Robinson-

Patman Acts. This Court granted certiorari limited

solely to the “in commerce” questions presented under

the Clayton and Robinson-Patman Acts. Jd. at 193. How-

ever, the Court’s decision also addressed the “effect on

commerce” questions that had been presented by Copp’s

complaint and that are at issue in this Sherman Act case.

After this Court held that Copp could not establish

jurisdiction under the “in commerce” theory applicable

to the Clayton Act by proof that the defendants sup-

plied materials that were used in the construction and

repair of intrumentalities of commerce, i.e., interstate

highways, 419 U.S. at 197-98, it turned to Copp’s al-

ternative contention that the Clayton Act should be read

broadly to incorporate the ‘effect on commerce” test ap-

plicable to the Sherman Act. This Court declined the

invitation to redefine the jurisdictional reach of the

Clayton Act because of the total inadequacy of Copp’s

evidentiary showing. Justice Powell stated: ‘‘[Copp] pre-

sented no evidence of effect on interstate commerce.

Instead it argued merely that such effects could be pre-

sumed from the use of asphaltic concrete in interstate

highways.” Jd. at 202. Copp’s “arguments” and “pre-

sumed effects’ did not constitute the requisite evidence

that “apparently local acts in fact have adverse conse-

quences on interstate markets and the interstate flow of

goods [needed] to invoke federal antitrust prohibitions.”

Id.

The government has argued that its evidence in this

case was more substantial than the proof offered under

the “effect” test by Copp, because it attempted to quantify

the use by out-of-state vehicles of the “interstate” high-

way network in the Peninsula area. Brief for Appellee,

at 32. In fact, however, the government’s evidence in

23

this case was far less substantial than the plaintiff's

showing in Copp Paving. Copp at least proved that

products manufactured by the defendants actually were

used to construct segments of the federal interstate

highway system. Here, the government showed only that

the alleged conspirators resurfaced segments of local

roads that ultimately were connected, like every other

road is connected, to the federal interstate highway

system." Thus, the government’s proof in this case

stretched the “interstate highway nexus” theory spe-

' cifically rejected by this Court in Copp Paving to new

and even more “nebulous” limits. See 419 U.S. at 198.

The District Court ruled in this case that the holding

of Copp Paving was not applicable to Sherman Act cases.

App. at 12a-13a. The Court of Appeals implicitly adopted

this narrow reading of Copp Paving, which has been re-

jected by the Court of Appeals for the Ninth Circuit. See

Thornhill Publishing Co. v. General Telephone & Elec-

tronics Corp., 594 F.2d 730, 737 (9th Cir. 1979). Such

4In the Court of Appeals, the government relied on decisions

construing Congress’ power under the Commerce Clause in support

of its argument that proof of interstate highway traffic may estab-

lish the requisite effect on interstate commerce in a Sherman Act

case. See Brief for Appellee at 26, n.30 (citing Heart of Atlanta

Motel, Inc. v. United States, 379 U.S. 241 (1964) and Katzenbach

v. McClung, 379 U.S. 294 (1964)). The government’s evidence in

this case did not establish any effect on interstate highway travelers

caused by the activities infected by the alleged conspiracy. More-

over, in Copp Paving itself, this Court recognized that “[{t]he

jurisdictional inquiry under general prohibitions like... §1 of

the Sherman Act, turning as it does on the circumstances presented

in each case and requiring a particularized judicial determination,

differs significantly from that required when Congress itself has

defined the specific persons and activities that affect commerce

and therefore require federal regulation.” 419 U.S. at 197 n.12.

See also Heille vy. City of St. Paul, 512 F. Supp. 810, 813 n.4

(D. Minn. 1981), aff'd, 671 F.2d 1134 (8th Cir. 1982) (application

of the analysis of Commerce Clause decisions to cases arising

under the Sherman Act “would read the interstate commerce

requirement out of the... Act’).

24

a narrow reading of Copp Paving is inexplicable in view

of this Court’s specific rejection of the “interstate high-

way nexus” theory in the context of the “effect on com-

merce” test of Sherman Act jurisdiction. Moreover, even

assuming that highway traffic studies might be admis-

sible in some Sherman Act cases to show an effect on

commerce, the courts below clearly erred in permitting the

government to introduce evidence concerning interstate

highways not placed in issue by the indictment and total

out-of-state vehicular mileage in county-wide areas. This

Court should issue the requested writ because the

District Court decided this important question of federal

law in a manner that cannot be reconciled with this

Court’s decision in Copp Paving, and the Court of Ap-

peals failed to correct that fundamental error.

C. The District Court’s Instructions Improperly Per-

mitted the Jury to Find the Essential Interstate Com-

merce Element of a Sherman Act Offense Based on

Evidence Concerning the Fact that the Roads in

Question Are Part of an Interstate Network of High-

ways

At trial, Petitioners proposed instructions to the Dis-

trict Court that: a) would have told the jury expressly

that the activities of the defendants were not “in” inter-

state commerce, but that they could find the interstate

commerce element of the offense based on the effects on

commerce caused by defendants’ local activities; and b)

would have withheld from the jury’s consideration the

government’s evidence concerning highway traffic pat-

terns in the Peninsula area. J.A. 36-38. The government

opposed Petitioners’ proposed instructions, and the Dis-

trict Court charged the jury that they should consider

whether “the highways, secondary roads and streets in-

volved in the case were part of our network of interstate

travel and commerce.” App. at 16a. The Court did not

make it clear to the jury whether this strand of the

government’s evidence was to be considered as an effect

25

on interstate commerce, or instead as placing the defend-

ants’ activities in resurfacing the roads within the flow

of that commerce. In fact, although the District Court

explained to the jury that there are two alternative

“tests” of interstate commerce, it never informed them

that one of those tests was not applicable to this case.

See App. at 15a."

In post-trial motions, Petitioners urged the District

Court to grant them a new trial because the instructions

permitted the jury to find that the interstate commerce

element of the offense had been satisfied by proof con-

cerning the interstate character of “our network” of

highways. Petitioners argued that this instruction was

based on the notion that highway resurfacing neces-

sarily was “in the flow of interstate commerce,” and that

this theory of jurisdiction specifically had been rejected

by this Court in Copp Paving. The District Court then

ruled, for the first time, that the challenged instruc-

tion was “concerned with the facts from which the jury

could infer a substantial effect on interstate commerce.”

App. at 13a. On appeal, the government adopted as its

own the District Court’s post hoc rationalization of its

instructions. Brief for Appellee, at 26.

For the reasons stated in Part B, supra, the govern-

ment’s evidence concerning the highway traffic study was

not sufficient proof of an effect on interstate commerce

such that the jury should have been charged on that

theory. Moreover, a reasonable jury would have con-

strued the District Court’s instructions on this point, to

In this regard, the District Court apparently accepted the

government’s stated trial position that the traffic study was relevant

evidence under both prongs of the interstate commerce test. See

Government’s Consolidated Response and Opposition to Defendants’

Pretrial Motions, filed Nov. 24, 1981, at 7-11; J.A. 27-28 (govern-

ment’s proposed instructions); J.A. 344-46 (government’s closing

argument).

26

the extent those instructions were comprehensible at all,'*

to permit them to return a verdict of guilt simply be-

cause the roads in question “were part of our network of

interstate travel and commerce.” App. at 16a. This

theory of interstate commerce, which presumes that those

who repair an instrumentality of interstate commerce

are thereby placed “in” that commerce as a matter of law,

was squarely rejected in Copp Paving. As Justice

Powell concluded for the Court:

Copp’s “in commerce” argument rests essentially

on a purely formal “nexus” to commerce: the high-

ways are instrumentalities of interstate commerce;

therefore any conduct of petitioners with respect to

an ingredient of a highway is per se “in commerce.”

Copp thus would have us expand the concept of the

flow of commerce by incorporating categories of ac-

tivities that are perceptibly connected to its instru-

mentalities, . . . The chain of connection has no

logical endpoint. The universe of arguably included

activities would be broad and its limits nebulous in

the extreme. . . . More importantly, to the extent

that those limits could be defined at all, the defini-

tion would in no way be anchored in the economic

realities of interstate markets, the intensely practical

concerns that underlie the purposes of the antitrust

laws.

419 U.S, at 198 (citations omitted) (emphasis added).

Given the record in this case, the District Court’s rul-

ing that the challenged instruction was designed to present

to the jury evidence concerning an effect on commerce is

not entirely convincing. Other courts have recognized

that the “instrumentalities” theory of interstate com-

16 The District Court’s charge to the jury on interstate commerce

was drawn in equal parts from the diametrically opposed instruc-

tions proposed by Petitioners and the government. As a result, the

instructions failed to give the jury any meaningful guidance on

this complex issue. See J.A. 865-66 (Petitioners’ objections to the

charge).

27

merce is an offspring of the “in the flow of commerce”

test, and not the “effect on commerce” test. See Con-

struction Aggregate Transport, Inc. Vv. Florida Rock In-

dustries, Inc., 710 F.2d 752, 770 n.33 (11th Cir. 1983) ;

Thornhill Publishing Co. v. General Telephone & Elec-

tronics Corp., 594 F.2d 730, 737 (9th Cir. 1979). In

any event, this Court’s decision in Copp Paving should

have precluded the District Court from instructing the

jury at all concerning the government’s nebulous theory

that the roads in question were part of “our network of

interstate travel and commerce.” Because the jury may

have concluded that the government satisfied its burden

of proof on the interstate commerce element of the of-

fense solely by virtue of this evidence concerning pur-

ported interstate traffic moving on highways in the Penin-

sula area, the convictions of Petitioners must be reversed,

even if the evidence concerning purchases of AC-20 was

adequate to sustain the convictions. See Yates v. United

States, 354 U.S. 298, 312 (1957); Stromberg v. Cali-

fornia, 283 U.S. 359, 367-68 (1931). The Court of Ap-

peals’ affirmance of Petitioners’ convictions thus was

in conflict not only with this Court’s decision in Copp

Paving, but with the principles of Yates and Stromberg

as well.

CONCLUSION

This case affords the Court an opportunity to resolve

a frequently-recurring and growing conflict among the

Courts of Appeals concerning how an effect on inter-

state commerce may be proved in cases arising under the

Sherman Act. The questions presented are important be-

cause they arise during the pleading and proof stages of

all Sherman Act cases, both treble damage actions by

private parties and criminal prosecutions by the gov-

ernment. Moreover, the questions raised herein are pre-

sented on a trial record that is remarkably manageable

and clear. Finally, if Petitioners are correct in their

interpretations of this Court’s controlling precedents,

28

their criminal convictions must be reversed and the case

remanded for entry of judgments of acquittal.

For all the reasons set forth herein, a writ of certiorari

should issue to review the judgment and opinion of the

Court of Appeals for the Fourth Circuit.

Respectfully submitted,

VINCENT J. FULLER

Counsel of Record

Barry S. SIMON

WILLIAM J. MURPHY

LINDA C, RAY

&39 - 17th Street, N.W.

Washington, D.C, 20006

(202) 331-5000

Attorneys for Petitioners

Of Counsel:

WILLIAMS & CONNOLLY

839 - 17th Street, N.W.

Washington, D.C, 20006

Dated: October 4, 1983

APPENDIX

la

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE FOURTH DISTRICT

Nos. 82-5200

82-5207

82-5208

UNITED STATES OF AMERICA,

Appellee

Vv.

BASIC CONSTRUCTION COMPANY,

HENRY S. BRANSCOME,

HENRY S. BRANSCOME, INC.,

Appellants

Appeal from the United States District Court

for the Eastern District of Virginia, at Newport News

John A. MacKenzie, District Judge

Argued February 9, 1983

Decided June 27, 1983

Before: BUTZNER, Senior Circuit Judge, and RUSSELL

and WIDENER, Circuit Judges.

2a

Lewis T. Booker (L. Neal Ellis, Jr.. Hunton & Williams,

on brief) and William J. Murphy (Vincent J. Fuller,

Barry S. Simon, Linda C. Ray, Williams & Connolly;

William F. Miller, Rideout & Miller, on brief) for Appel-

lants; Margaret G. Halpern, Department of Justice ( Wil-

liam F. Baxter, Assistant Attorney General; John J.

Powers, III, Department of Justice; Theresa H. Clinton,

Diane R. Kilbourne, on brief) for Appellee.

PER CURIAM:

This is an appeal from a conviction for violation of

section 1 of the Sherman Act, 15 U.S.C. § 1. The defend-

ants, Basic Construction Co., Henry S. Branscome, Inc.,

and Henry Branscome, were charged with conspiring in

April of 1978 to rig the bidding for state road paving

contracts. A jury found the defendants guilty, and both

Basic and Branscome' appeal. We affirm.

I,

Basic’s principal contention is that the district court

gave erroneous jury instructions regarding the criminal

liability of a corporation for acts of its employees. With

regard to corporate liability, the court instructed the jury

as follows:

A corporation is legally bound by the acts or state-

ments of its agents done or made within the scope

of their employment, and within their apparent au-

thority, acts done within the scope of employment

and acts done on behalf of or to the benefit of a

corporation, and directly related to the performance

of the type duties the employee has general authority

to perform.

1 Henry S. Branscome, Inc., and its owner, Henry Branscome,

filed a joint appeal. Together they will be referred to as “Brans-

come,”

8a

When the act of an agent is within the scope of

his employment or within the scope of his apparent

authority, the corporation is held legally responsible

for it. This is true even though the agent’s acts may

be unlawful, and contrary to the corporations [sic]

actual instructions.

A corporation may be responsible for the action

of its agents done or made within the scope of their

authority, even though the conduct of the agents may

be contrary to the corporation’s actual instructions,

or contrary to the corporation’s stated position.

However, the existence of such instructions and

policies, if any be shown, may be considered by you

in determining whether the agents, in fact, were

acting to benefit the corporation.

At trial, Basic introduced evidence which would have

tended to prove that it had a longstanding, well known,

and strictly enforced policy against bid rigging. Such

evidence tended to show that the bid rigging activities

for which it was charged were perpetrated by two rela-

tively minor officials and were done without the knowl-

edge of high level corporate officers. Basic argues that,

in light of this evidence, the district court should have

instructed the jury that it could consider the evidence of

Basic’s antitrust compliance policy in deciding whether

the company had the requisite intent to violate the Sher-

man Act.

Basic rests its argument primarily on United States v.

United States Gypsum Co., 438 U.S. 422 (1978). Gyp-

sum involved a criminal antitrust prosecution in which

the district court had instructed the jury that, if it found

that the practice of competing producers giving to other

producers on request, the price of gypsum board that was

currently offered to a specific customer had the effect of

fixing or raising prices, then they should presume as a

da

matter of law that the parties intended such a result. 7d.

at 434. The Supreme Court held that these instructions

were erroneous. The Court said that intent is an

element that must be ; roved, and cannot be presumed, in

a criminal antitrust prosecution. Jd. at 434-36. Basic

argues that the instructions given by the district court in

the instant case run counter to the holding in Gypsum

because they fix absolute criminal liability on a corpora-

tion for acts done by its employees, although such acts

may have been in violation of corporate policies and ex-

press instructions. Gypsum, Basic argues, requires that

the government prove that the corporation, presumably

as represented by its upper level officers and managers,

had an intent separate from that of its lower level em-

ployees to violate the antitrust laws. Consequently, Basic

asserts that the jury should have been instructed to con-

sider corporate antitrust compliance policies in deter-

mining whether Basic had the requisite intent.

We do not think that Gypsum requires so much.

Rather, the case, on the point at issue, holds that intent

to violate the antitrust laws must be proved in a criminal

antitrust prosecution, and it defines the required intent.

The Court there was not confronted with, and did not

decide, the issue of corporate liability for the acts of

employees. The instructions given by the district court

in the instant case are amply supported by case law. See

United States v. Koppers Co., 652 F.2d 290, 298 (2d

Cir.), cert. denied, 454 U.S. 1083 (1981); United States

v. Hilton Hotels Corp., 467 F.2d 1000, 1004-07 (9th Cir.

1972), cert. denied, 409 U.S. 1125 (1973) ; United States

v. American Radiator & Standard Sanitary Corp., 433

F.2d 174, 204-05 (8d Cir. 1970), cert. denied, 410 U.S.

948 (1971). These cases hold that a corporation may be

held criminally responsible for antitrust violations com-

mitted by its employees if they were acting within the

scope of their authority, or apparent authority, and for

the benefit of the corporation, even if, as in Hilton Hotels

and American Radiator, such acts were against corporate

‘sc 5a

policy or express instructions. In United States v. Kop-

pers Co., the Second Circuit rejected the argument, as

do we, that Gypsum changes the law on corporate crim-

inal antitrust liability for the acts of its employees. 652

F.2d at 298.

In the instant case, the district court properly allowed

the jury to consider Basic’s alleged antitrust compliance

policy in determining whether the employees were acting

for the benefit of the corporation. It also properly in-

structed on the issue of intent in an antitrust prosecu-

tion, i.e, that corporate intent is shown by the actions

and statements of the officers, directors, and employees

who are in positions of authority or have apparent au-

thority to make policy for the corporation.

II.

Basic also argues that the court erroneously admitted

evidence of an admission by silence by one of Basic’s cor-

porate officers, William Shaw. At trial, one of Basic’s

minor officials, Colosi, testified about a meeting he had

with Shaw and another minor official of Basic, Howell,

regarding the bidding on another road project. Colosi

testified that at the end of the meeting, as he was leaving

the room, he heard Howell say to Shaw, “I'll see if we

can get anything for this work.” Colosi did not hear any

reply by Shaw. Colosi further testified that he believed

this referred to bid rigging and that Howell was talking

about trading the job there being discussed for one in

the future.

Basic contends that the district court erred in admit-

ting this evidence because it claims there was no evidence

that Shaw heard, understood, or acquiesced in Howell’s

statement to him so as to render the evidence admissible

as an admission under FRE 801(d) (2) (B).

Howell, Colosi, and Shaw were all present in the same

room when the conversation took place, and we think

6a

there was credible evidence to support the government’s

position that Shaw heard, understood, and acquiesced in

Howell’s statement, thus meeting the requirements of

FRE 801(d) (2) (B). See United States v. Moore, 522

F.2d 1068, 1075-76 (9th Cir. 1975). From the transcript,

it is clear the court properly decided the relevance of the

statement as going to Basic’s defense that it had a long-

standing policy against bid rigging, but, of course, as

the trial court recognized, it could have been used by

the jury for any purpose, and there was no request to

limit it.

The testimony came during the government’s case in

chief and was in rebuttal to a defense Basic had previ-

ously articulated, that of its longstanding policy against

bid rigging. Yet, at the time the evidence was admitted,

the claimed defense had not been the subject of evidence

offered by Basic or sought to be established by cross-

examination. We think the practice of admitting evi-

dence to refute a defendant’s opening statement in a

criminal case is a practice to be discouraged and that

rebuttal evidence ordinarily should not be permitted for

that purpose during the government’s case in chief. A

criminal case is far different from a civil case in which

the pleaded position of a party may establish relevance,

and in nearly all instances in the defense of a criminal

case the defendant does not finally have to decide on the

defense he will make until the government closes its case

in chief. Thus, in some instances, admitting evidence to

rebut a defense made by a criminal defendant only in the

opening statement of his attorney may get highly preju-

dicial and irrelevant evidence into the record. In this

ease, the defendant followed through on its articulated

defense, so any error committed in admitting the con-

versation between Howell and Shaw was harmless. But

this is not to say that it would be so in all cases, and,

as we have said, the practice should be discouraged.

Ta

ITI.

Branscome contends that it was reversible error for

the district court to permit the introduction of evidence

concerning the conviction of a codefendant, Howell. How-

ell, a former Basic employee, was included in the indict-

ment against Basic and Branscome, but was tried and

convicted separately prior to the“trial of Branscome and

Basic. At a pretrial conference, counsel for Basic said

that he intended to bring out the fact that Howell was

convicted, and the court ruled, over Branscome’s objec-

tion, that both Basic and the government could refer to

Howell’s conviction.

During trial, two references were made to Howell’s

conviction. The first reference was made in the govern-

ment’s opening statement. The second reference was

made during the direct examination of Colosi. When

Colosi was asked about the result of Howell’s trial, the

court interrupted the questioning and stated that Howell

had been tried and convicted. The court further said

that the conviction of Howell had nothing to do with the

trial of the other three defendants. At the conclusion of

the trial, the court again cautioned the jury that they

were not to be concerned with any disposition made with

respect to a codefendant not on trial in the case at bar.

No other reference was made to Howell’s conviction.

Branscome’s contention that the admission of this evi-

dence is reversible error is controlled by United States v.

Curry, 512 F.2d 1299 (4th Cir.), cert. denied, 423 U.S.

832 (1975). In Curry we held that it was not error for

the court to tell the jury that certain codefendants

charged in the same indictment as the defendants being

tried had plead nolo contendre. Jd. at 1303. We noted

that, although it might be preferable to tell the jury only

that the case against the codefendants had been previ-

ously disposed of, any prejudice caused by the evidence

was cured by instructions that the jury could not con-

sider the pleas as evidence of guilt of the defendants on

8a

trial. Jd. We therefore hold that the references made to

Howell’s conviction in conjunction with timely and ap-

propriate cautionary instructions do not constitute re-

versible error. We caution, however, that it is far better

to simply tell the jury that cases of codefendants not on

trial have been disposed of without saying how, and that

they should not consider that matter, particularly as evi-

dence of guilt.

IV.

Steve Colosi, a key government witness, was one of the

Basic employees directly involved in the bid-rigging con-

spiracy. At trial he testified as to the events surrounding

the conspiracy charged and the practices and attitudes of

other Basic employees regarding bid rigging. Basic at-

tempted to impeach Colosi’s testimony by presenting the

testimony of two witnesses as to their opinions of Colosi’s

honesty and trustworthiness. According to Basic’s offer

of proof, these witnesses would have testified that Colosi

was neither honest nor trustworthy. The district court,

however, refused to admit the evidence, stating that it

had “absolutely no place in this case.”

Basic asserts that the district court erred in refusing

to admit this evidence, and we agree. Federal Rule of

Evidence 608(a) expressly allows impeachment through

opinion evidence of a witness’s character for truthful-

ness. See United States v. Truslow, 530 F.2d 257, 264-

65 (4th Cir. 1975); A. Saltzburg & K. Redden, Federal

Rules of Evidence Manual 346-47 (3d ed. 1982). Under

the facts of this case, however, the district court’s refusal

to admit the evidence did not affect substantial rights and

therefore was harmless error. 28 U.S.C. § 2111; Federal

Rules of Criminal Procedure 52(a).

We base our conclusion that the exclusion of the evi-

dence was harmless error on several considerations.

First, Basic thoroughly attacked Colosi’s credibility on

cross-examination. Colosi admitted l’.ng to counsel dur-

ing a pre-trial interview about his bid-rigging activities,

9a

to using without permission company vehicles and gaso-

line for personal purposes, and to paving his driveway

with materials and labor procured from Basic. Second,

at least one of the witnesses willing to testify as to his

opinion of Colosi’s character for honesty and trustworthi-

ness was a Basic employee at the time of trial. This

relationship to Basic might well have weakened the

weight of that particular opinion evidence. Third, much

of Colosi’s testimony related to the events surrounding the

April 1978 bid-rigging conspiracy. The government, how-

ever, presented the testimony of two other witnesses who

were involved in the conspiracy, and their testimony re-

garding the events was in agreement with that of Colosi’s

testimony.

Taken together, these considerations lead us to the

conclusion that it is highly unlikely that the district

court’s refusal to allow opinion evidence as to Colosi’s

character for truthfulness would have affected the out-

come of the trial. We therefore hold that the district

court’s ruling was harmless error.

We have considered the appellant’s remaining assign-

ments of error and find them to be without merit.

Accordingly, the convictions are

Affirmed.

Judge Russell and Judge Butzner concur in the opin-

ion and in the result.

Judge Widener concurs in all of the opinion except

part IV. While he agrees that the failure to admit the

evidence of Colosi’s bad cnaracter for truthfulness was

error, he does not agree that it was harmless, and thus

cannot agree in the result. He therefore respectfully

igsents and would award a new trial.

10a

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Nos. 82-5207

82-5208

UNITED STATES OF AMERICA,

Appellee

Vv.

HENRY S. BRANSCOME, INC. and HENRY S. BRANSCOME,

Appellants

ORDER

There having been no request for a poll of the court on

the petition for rehearing en banc, it is accordingly AD-

JUDGED and ORDERED that the petition shall be, and

it hereby is, denied.

The panel has considered the petition for rehearing and

is of opinion it is without merit.

It is accordingly ADJUDGED and ORDERED that the

petition shall be, and it hereby is, denied.

With the concurrences of Judge Russell and Judge

Butzner.

/s/ H. Widener, Jr.

For the Court

Filed: August 5, 1983

lla

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Newport News Division

Criminal Action No. 81-38-NN

UNITED STATES OF AMERICA

vs.

BASIC CONSTRUCTION Co., et al.

MEMORANDUM ORDER

Henry S. Branscome, Inc, and Henry Branscome indi-

vidually have moved this Court to arrest the judgment of

conviction returned against them, by jury, on February

26, 1982, or to grant them a new trial. Having reviewed

the memoranda of the parties, and the record, the Court

has concluded that no cause exists to set aside the jury

verdict. Accordingly, defendants’ motions are denied. Be-

cause most points now raised by defendants were raised

previously, the Court will make only brief comment on

selected points.

Defendants make much of what they consider to be the

prosecution’s mischaracterization of the Court’s role in is-

suing immunity orders. Defendants claim that the Court’s

imprimatur was somehow placed upon the prosecution’s

case because the prosecution failed to disclose to the jury

that the Court lacked discretion in the granting of im-

munity when the prosecution makes an immunity request.

Despite their outrage, defendants failed to refer the Court

to any case in which the failure to inform the jury of the

Court’s lack of discretion in immunity decisions caused

<

12a

the setting aside of a jury verdict. If, indeed, the prose-

cution’s statement contained any error, taken in the con-

text of the entire trial, it can only be considered harm-

less.

Defendants are persistent in their claim that the acts

for which they have been prosecuted have an insufficient

nexus to interstate commerce to be actionable under the

Sherman Act. 15 U.S.C. §$1, 2. Principally, defendants

rely upon Gulf Oil Corp. v. Copp Paving Co., 419 U.S.

186 (1974). Copp Paving Co. makes it clear that the

Sherman Act reaches all conduct having an affect on in-

terstate commerce. In enacting the Sherman Act, Con-

gress intended to exercise its full power to regulate inter-

state commerce. Jd, at 194-95. “If it is interstate com-

merce that feels the pinch, it does not matter how local

the operation which applies the squeeze.” Jd. at 195, quot-

ing United States v. Women’s Sportswear Mfgrs. Assn.,

336 U.S. 460, 464 (1949).

' Unlike the Clayton and Robinson-Patman Acts, the

Sherman Act does not require a showing that the activi-

ties in issue were in the flow of interstate commerce.

Copp Paving Co., supra at 195. Although not necessary to

a Sherman Act case, defendants contend the Court in-

structed the jury: ‘That they could conclude that the de-

fendants were engaged in activities that were in the flow

of interstate commerce if they found ‘that a substantial

amount of interstate traffic moved on the highways, sec-

ondary roads and streets involved... .’” Defendants

memorandum of points and authorities in support of mo-

tion for new trial at 13, quoting transcript of proceedings

at 1118. Defendants argue that Copp Paving Co. pre-

cludes such an instruction, that the passage of interstate

traffic on a roadway, without more, is insufficient basis

for a finding that the defendants’ activities were in the

flow of interstate commerce. See Copp Paving Co. at 197-

98.

13a

Regardless of whether the building and resurfacing of

roadways is in the flow of interstate commerce, and it

should be noted that Copp Paving Co. involved the sup-

pliers of roadbuilding materials, not the roadbuilders

themselves, defendants misread the instructions. The

challenged portion of the instruction does not discuss the

flow of interstate commerce; it is concerned with the

facts from which the jury could infer a substantial effect

on interstate commerce. See transcript of proceedings at

1118.

Defendants have also moved the Court to require the

prosecution to produce all material in its possession con-

cerning statements made by any prosecution witness for

in camera review. Defendants have set forth nothing that

would cause this Court to conduct an in camera review.

None will be undertaken.

Defendants’ newly discovered evidence also does not re-

quire a new trial. The presence of a paralegal during the

trial, employed by Crenshaw, Ware and Johnson, did not

violate the Court’s sequestration order.

Because no adequate cause exists to set aside the jury

verdict, defendants’ motion for arrest of judgment and a

new trial are DENIED.

/s/ John A. MacKenzie

United States District Judge

Norfolk, Virginia

June 21, 1982

l4a

SUPREME COURT OF THE UNITED STATES

No. A-108

HENRY S. BRANSCOME, INC. AND HENRY S. BRANSCOME,

Petitioners,

V.

UNITED STATES

ORDER

UPON CONSIDERATION of the application of coun-

sel for the petitioners,

IT IS ORDERED that the mandate of the United

States Court of Appeals for the Fourth Circuit, case Nos.

82-5207 and 82-5208, be, and the same is hereby, stayed

pending the receipt of a response and further order of

the undersigned or of the Court.

/s/ William J. Brennan, Jr.

Associate Justice of the Supreme

Court of the United States

Dated this 12th day of August, 1983

l5a

DISTRICT COURT’S CHARGE TO THE JURY

ON THE INTERSTATE COMMERCE ELEMENT

OF THE OFFENSE

(Reproduced from Trial Transcript pages 1116-1119 and

Court of Appeals Joint Appendix pages 359-362)

The fifth essential element of the offense prohibited by

the Sherman Act is that the alleged bid rigging by a de-

fendant must involve interstate commerce. Interstate

commerce includes transactions occuring across state

lines, or in the flow of interstate commerce, as well as

transactions which occur entirely within a state, if they

have a not insubstantial effect on interstate commerce.

A conspiracy may restrain interstate commerce even

though some or all of the defendants are not engaged in

interstate commerce and even though some or all of the

means employed may be acts that occur wholly within a

state, if there is not insubstantial effect on interstate

commerce.

Interstate commerce, as I said, means traffic, transpor-

tation, communication, or commercial dealings across

state lines, or in transactions which may occur within a

state which have a not insubstantial effect on interstate

commerce.

The Sherman Act would not be applicable to any case,

a all defendants would be found not guilty, if the gov-

ernment has failed to establish beyond a reasonable doubt

that the defendants’ activities are in or have substan-

tially affected interstate commerce—had failed to estab-

lish beyond a reasonable doubt that the defendants’ ac-

tivities are in or have substantially affected interstate

commerce.

l6a

The government has attempted to prove that the de-

fendants’ local activities had a not insubstantial effect on

interstate commerce by showing that a not insubstantial

amount of liquid asphalt used in the resurfacing work

at issue here was in fact manufactured outside the State

of Virginia and then shipped into the state for the use of

the defendants and the other alleged conspirators in mak-

ing the asphalt cement used in paving the roads.

In order to find that the required effect on interstate

commerce has been proved by the government in this case

you should ask yourselves whether the bid rigging con-

spiracy alleged in the case has been shown as a matter of

practical economics to have not an insubstantial effect on

the interstate commerce involved. That is, the sale of

liquid asphalt by interstate producers to Virginia buyers.

From the evidence presented you must determine whether

the defendants’ activities did or did not have such a sub-

stantial effect on interstate commerce. If you are satis-

fied that the government has proved that the defendants’

activities had such a substantial effect on interstate com-

merce beyond a reasonable doubt, you may then go to

consider whether or not any of the defendants was a

member of the conspiracy, which is an element which

would, of course, have to be first proved.

The government has sought to show that this element,

in connection with interstate commerce, has been statis-

fied in two different ways. The first by showing that the

highways, secondary roads and streets involved in the

case were part of our network of interstate travel and

commerce.

And the second effort by the government is based upon

their offering evidence that a substantial amount of as-

phalt used on the project was manufactured or processed

outside of Virginia and that it was then shipped into the

state for use on the jobsites.

17a

It is not necessary that the government prove all of

these things. You may find that the government has

proved the interstate commerce element of the crime if

you find either that a substantial amount of interstate

traffic moved on the highways, secondary roads and

streets involved, or that a substantial amount of asphalt

or other materials was manufactured outside of the state,

shipped in commerce to Virginia and then used by the

paving contractors on the highways.