Opposition Brief — Ben M. Hogan Co. v. United States

Supreme Court, U.S.

FILED

@) Ju 2908

5

In the Supreme Court of the United Staten

OCTOBER TERM, 1987

BEN M. HOGAN COMPANY, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

CHARLES FRIED

Solicitor General

CHARLES F’. RULE

Acting Assistant Attorney General

JOHN J. POWERS, III

MARION L. JETTON

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

A SESS Setar EE eS SES OS SRI BHRea Eud- Ae soe eg

4 ay

Vi

QUESTION PRESENTED

Whether a jury instruction containing an errone-

ous presumption with respect to the interstate com-

merce element of a Sherman Act charge can be a

harmless error.

(I)

—

Ton ee tio pa a ea ne ence

TABLE OF CONTENTS

Page

sc ciaincraineerccvnademnnsnidisimidinenaas 1

I seepindisinnnisdclltijntiiiaundalaae 1

SORE sere x iaeaeliiianalest 2

EE eT Cee eon 7

is otealaipienitninianisiecisietiannanaian 12

TABLE OF AUTHORITIES

Cases:

Baker v. Montgomery, 811 F.2d 557 (11th Cir.

Ta in saiadicsniapliliniphagiieninvoneeuninnns 10

Bates v. Blackburn, 805 F.2d 569 (5th Cir. 1986) .. 10

Burger v. Kemp, No. 86-5375 (June 26, 1987) _....... 9

Burton v. Foltz, 810 F.2d 118 (6th Cir. 1987) ....10, 11, 12

Cabana Vv. Bullock, 474 U.S. 376 (1986) .................. 11

Charles v. Foltz, 741 F.2d 834 (6th Cir. 1984),

cert. denied, 469 U.S. 1193 (1985) ....................... 12

Connecticut v. Johnson, 460 U.S. 73 (1983) -........... 6, 11

Francis Vv. Franklin, 471 U.S. 307 (1985) -.............. 10

Hoover v. Garfield Heights Municipal Court, 802

sen cceentniintwmenonse 10-1i

Logan V. Abshire, 778 F.2d 283 (6th Cir. 1985) .... 12

Martin V. Foltz, 773 F.2d 711 (6th Cir. 1985) ........ 12

Pope V. Illinois, No. 85-1973 (May 4, 1987) ............. 9,11

Rose v. Clark, No. 84-1974 (July 2, 1986) ........... 2, 6, 7, 9,

10, 11

Sandstrom v. Montana, 442 U.S. 510 (1979) .......... 6, 10

United States v. Frady, 456 U.S. 152 (1982) ........... 10

United States v. Park, 421 U.S. 658 (1975) -............ 8

United States v. Voss, 787 F.2d 393 (8th Cir.

1986), cert. denied, No. 86-5398 (Oct. 14, 1986) .. 11

United States v. Washita Constr. Co., 789 F.2d

XE EE ee 8

Wisniewski v. United States, 353 U.S. 901 (1957)... 11

(III)

IV

Statutes :

Sherman Act § 1, 15 U.S.C. 1

18 U.S.C. 1341

Miscellaneous:

2 E. Devitt & C. Blackmar, Federal Jury Practice

and Instructions (3d ed. 1977) ............----------------

La Buy, Manual on Jury Instructions—Criminal,

ee re I sane chaeieeteicninns

In the Supreme Court of the United States

OCTOBER TERM, 1987

No. 86-1902

BEN M. HOGAN COMPANY, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals on remand

from this Court (Pet. App. 3la-36a) is reported at

809 F.2d 480. An earlier opinion of the court of ap-

peals (Pet. App. 1la-27a) is reported at 769 F.2d

1298.

JURISDICTION

The judgment of the court of appeals (Pet. App.

31a) was entered on January 12, 1987. A petition

for rehearing was denied on March 30, 1987 (Pet.

(1)

2

_ App. 37a). The petition for a writ of certiorari was

filed on May 29, 1987. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

STATEMENT

Following a jury trial in the United States District

Court for the Eastern District of Arkansas, peti-

tioner Ben M. Hogan Company, Inc., was convicted

of conspiring to fix bids in the award of Arkansas

State Highway and Transportation Department high-

way construction projects in central Arkansas, in vio-

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

Petitioner was fined $800,000 on this count (Pet.

App. la-2a).* The court of appeals reversed on the

ground that the jury instructions contained an unlaw-

ful conclusive presumption concerning the interstate

commerce element of the offense (id. at la-27a). This

Court granted the government’s petition for a writ

of certiorari, vacated the court of appeals’ judgment,

and remanded the case for reconsideration in light of

Rose v. Clark, No. 84-1974 (July 2, 1986). United

States v. Ben M. Hogan Co., No. 85-1067 (July 7,

1986). On remand, the court of appeals affirmed peti-

tioner’s Sherman Act conviction (Pet. App. 3la-33a).

1. a. The government’s proof of the bid-rigging

conspiracy was presented largely through the testi-

mony of the government’s principal witness, Leonard

Thompson, president of A.P.T. Construction Company

1 Petitioner was also convicted on three counts of mail

fraud, in violation of 18 U.S.C. 1341, and was fined $1,000 on

each count (Pet. App. 2a). These convictions were affirmed

by the court of appeals in its original decision in this case

(id. at 28a-29a), and they were not the subject of further

proceedings.

3

(APT), which was one of the co-conspirators.* Ac-

cording to Thompson, in May 1979 William Moore, a

vice president of petitioner, asked APT to submit a

complementary bid (i.e., a bid intentionally higher

than petitioner’s)* on highway project 60173 (Tr.

18-21 (Thompson)). In exchange, Moore promised

to “return the favor” at a later date (id. at 21-22).

Thompson agreed to Moore’s request and submitted a

bid that was higher than petitioner’s (id. at 21, 24-

25). Only petitioner and APT submitted bids, and

petitioner was awarded the construction job (GX 1).

In July i980, Thompson in turn asked Moore to

submit a complementary bid on highway project

60179, and in September 1980 he asked Moore to sub-

mit a complementary bid on project 60234 (Tr.

28-30, 40-41 (Thompson)). Moore agreed to do so

(id. at 29-30, 40-41). APT was the low bidder on

both projects and was awarded the work (id. at 30-

31, 43-47). See also Pet. App. 3a.

b. The government also proved in three separate

ways that the co-conspirators’ activities were in or

affected interstate commerce. First, unmingled fed-

eral revenue sharing funds were used to pay for the

three highway projects described by Thompson (2 Tr.

134-140; GXs 1 , 7. Second, APT, petitioner’s

co-conspirator, purchased heavy equipment, including

2 APT was charged in the same indictment and with the

same offenses as petitioner. Pursuant to a plea agreement,

APT entered a guilty plea to the Sherman Act count and to

one mail fraud count prior to trial. Pet. App. 2a n.1.

3’ The state encouraged competitive bidding and preferred

not to award a contract on the basis of a single bid (Pet.

App. 2a n.2). A complementary bid created the appearance

of competition where in reality there was none.

4

pavers, used on these projects that had been manu-

factured out-of-state and then shipped to Arkansas

(2 Tr. 149-151; 3 Tr. 160-162; Tr. 13-14 (Thomp-

son); GXs 14-17). Finally, the rigged projects in-

volved a busy U.S. highway in downtown Little Rock

and a state highway in North Little Rock that con-

nects directly to an interstate highway (1 Tr. 76-78;

GXs 4, 7, 19).*

c. Petitioner’s defense at trial was that there was

no agreement to rig bids on the highway construction

projects (see Pet. App. 4a). Petitioner conceded that

Moore and Thompson had spoken about highway proj-

ects 60173 and 60234 but denied that they had con-

spired to rig bids. Defense counsel asserted in his

opening and closing statements that Moore solicited

a complementary bid from Thompson for the sole

purpose of having more than one bid submitted to the

state highway department, which preferred to receive

more than one bid on a job (1 Tr. 28-29; 6 Tr. 449-

450, 457-459; see Pet. App. 2a n.2). Petitioner did

not challenge before the jury the sufficiency of the

evidence that the co-conspirators’ activities were in

or affected interstate commerce, nor did petitioner

offer any rebuttal evidence on this issue.®

* The revenue sharing funds spent on the projects amounted

to hundreds of thousands of dollars (GXs 1, 4, 7), and the

pavers used on the projects that were purchased in interstate

commerce cost over $170,000 (2 Tr. 149-151; 3 Tr. 160-162).

5 Moreover, petitioner did not argue to the jury in its open-

ing or closing statement that the government had failed to

prove the interstate commerce element of the offense (1 Tr.

24-28; 6 Tr. 440-462; R. 223-225, 227-286). Petitioner did

raise the sufficiency of the evidence on this issue in a pretrial

motion to dismiss the indictment and in motions for a judg-

ment of acquittal. All these motions were denied, and the trial

5

2. At the conclusion of the trial, the district court

instructed the jury concerning the interstate com-

merce element of a Sherman Act violation. Among

other things, the jury was instructed that the govern-

ment was required to prove beyond a reasonable doubt

“that the conspiracy * * * either affected interstate

commerce or occurred within the flow of interstate

commerce” and that “[t]he Sherman Act is not ap-

plicable unless it is first established that there is a

restraint or attempted restraint of interstate com-

merce” (Pet. App. 25a). After instructing the jury

on the interstate commerce element of the offense, the

court then instructed the jury concerning the type of

conduct prohibited by the Sherman Act. Specifically,

the court defined conduct that is a per se violation of

the Sherman Act by giving the following jury instruc-

tion taken from one of the standard manuals (id. at

5a (emphasis omitted) ): °

Certain types of conduct are regarded as un-

reasonable per se. This means that the mere

doing of the act itself constitutes an unreason-

able restraint on interstate commerce, and it is

not necessary to consider why the acts were com-

mitted, or their effect on the industry, or any

other explanatory matter. Conduct regarded as

unreasonable per se includes price fixing, divi-

sion of markets and bid rigging.

Although petitioner had not argued to the jury that

the government’s proof with respect to interstate

court told petitioner that it could make its argument on the

sufficiency of the evidence to the jury. R. 143-145; 3 Tr. 164,

168; 5 Tr. 367-368.

®See La Buy, Manual on Jury Instructions—Criminal

§ 8.01-4, 36 F.R.D. 457, 477 (1965).

6

commerce was insufficient, petitioner objected to this

instruction on the ground that it created an imper-

missible presumption of an effect on interstate com-

merce. The district court overruled petitioner’s objec-

tion. Jd. at 5a-6a n.5.

3. A divided panel of the court of appeals reversed

petitioner’s conviction on the Sherman Act count on

the ground that the jury instructions contained an

unlawful conclusive presumption that the agreement

to rig bids affected interstate commerce, in violation

of Sandstrom v. Montana, 442 U.S. 510 (1979) (Pet.

App. 5a-9a). The majority observed that if a con-

clusive presumption concerning an element of an of-

fense could ever be harmless this would clearly be

such a case,’ but the majority concluded that the

plurality opinion in Connecticut v. Johnson, 460 U.S.

73 (1983), required a new trial whenever a jury

instruction included a conclusive presumption on an

element of the offense (Pet. App. 8a-9a).*

4. The government filed a petition for a writ of

certiorari, asking that the petition be held and dis-

posed of as appropriate in light of the Court’s dis-

position of Rose v. Clark, No. 84-1974. After Rose v.

Clark was decided, the Court granted the govern-

ment’s petition, vacated the court of appeals’ judg-

7 Petitioner did not argue on appeal that the government’s

proof of the interstate commerce element was insufficient.

8 Judge Bright dissented (Pet. App. 24a-27a) on the ground

that the instructions, read as a whole, were not erroneous.

He noted that the instructions fully explained the interstate

commerce element and required the jury to find in the govern-

ment’s favor on that issue before considering whether the

offense was a per se violation of the Sherman Act (id. at

26a-27a). f

7

ment, and remanded the case to the court of appeals

for reconsideration in light of Rose v. Clark. United

States v. Ben M. Hogan Co., No. 85-1067 (July 7,

1986) (Pet. App. 30a).

5. On remand, a divided court of appeals reinstated

petitioner’s Sherman Act conviction (Pet. App. 31a-

36a). At the outset, the court determined that, under

Rose v. Clark, supra, a jury instruction containing an

erroneous conclusive presumption with respect to an

element of the offense can be harmless in a given case

(Pet. App. 32a). The court also concluded that the

challenged jury instruction given in this case was

harmless for two reasons. First, the trial court’s

overall instructions required the jury to find that the

bid-rigging conspiracy affected interstate commerce

before the jury could even consider whether the of-

fense was a per se violation. Second, the govern-

ment’s proof of this element of the crime was “so dis-

positive” that the jury would have found it unneces-

sary to rely on the presumption (ibid.).°

ARGUMENT

Petitioner does not question the court of appeals’

finding that the error in this case was in fact harm-

less beyond a reasonable doubt. Rather, petitioner

contends that the court of appeals erred by undertak-

® Judge Bowman dissented (Pet. App. 33a-36a). He argued

that Rose v. Clark is limited to erroneous rebuttable presump-

tions, and does not reach erroneous conclusive presumptions

(Pet. App. 33a-35a) and that the error in this case could not

be harmless because the ultimate fact that the government had

te prove (i.e., an effect on interstate commerce) did not logi-

cally follow from the basic fact that the government did prove

(7.e., a bid-rigging conspiracy).

8

ing to decide this issue. Petitioner argues that the

jury instructions contained an erroneous conclusive

presumption on an element of the offense and that

such a presumption can never be harmless. The court

of appeals correctly rejected this argument, and its

decision does not conflict with any decision of this

Court or of any other court of appeals. In fact, the

decision below is consistent with the only other court

of appeals decision on this issue. See United States v.

Washita Constr. Co., 789 F.2d 809, 823 (10th Cir.

1986) (same instruction does not amount to plain

error). Accordingly, review by this Court is not war-

ranted.”

It is settled law that a jury instruction containing

an erroneous presumption does not automatically

10 Tt is not clear that, when the jury instructions in this case

are read as a whole (see United States v. Park, 421 U.S. 658,

674-675 (1975)), there was any error at all. The jury was

expressly instructed that “[t]he Sherman Act is not applica-

ble unless it is first established that there is a restraint or

attempted restraint of interstate commerce” (Pet. App. 25a).

As Judge Bright pointed out in his dissent from the court of

appeals’ initial decision (id. at 24a-27a), the jury was thus

correctly and clearly instructed that it first must determine

the interstate commerce element of the offense and that it

must find a restraint in or affecting interstate commerce

before considering whether the defendant violated the Sher-

man Act. In addition, the prosecutor told the jury in his

opening and closing statements that the government had to

prove the interstate commerce element of the offense, and the

prosecutor outlined the evidence adduced on the element (1 Tr.

21-22; 6 Tr. 424-425). In these circumstances, it is reasonable

to conclude that the jurors interpreted the challenged portion

of the charge as a discussion only of the nature of a per se

offense. There is no need to resolve that issue in this case,

however, since the court of appeals correctly found that any

error on this score was harmless.

9

require reversal of a conviction. Rather, as long as

the issue is not taken away from the jury and a re-

viewing court can say beyond a reasonable doubt that

the jury would have found it unnecessary to rely on

the presumption, the error may be disregarded as

harmless. Burger v. Kemp, No. 86-5375 (June 26,

1987), slip op. 6 n.5; Rose v. Clark, slip op. 11-13;

see Pope v. Illinois, No. 85-1973 (May 4, 1987), slip

op. 6 & n.7. Here, the court of appeals correctly

found that the challenged instruction did not take the

issue away from the jury—indeed, “the jury could

not even consider the per se instruction unless it had

first found that interstate commerce had been af-

fected” (Pet. App. 32a). The jury was also told that

it was the sole trier of fact (6 Tr. 470), that the

government was required to prove every element of

the charged offenses beyond a reasonable doubt (id.

at 475-476), and that one of the elements of the Sher-

man Act charge was that the bid-rigging conspiracy

was in or affected interstate commerce (id. at 484,

491-492; see also Pet. App. 25a (Bright, J., dissent-

ing)). And petitioner has not challenged the court of

appeals’ finding that the government’s proof of the

interstate commerce element of the offense was “dis-

positive” on this point (id. at 34a). In these circum-

stances, the harmless error test articulated by this

Court has been satisfied.

Petitioner maintains that this Court’s decision in

Rose v. Clark, supra, permits harmless error analysis

to be applied only to presumptions that are labelled

rebuttable, but petitioner has misread that decision."

1 Petitioner argues (Pet. 7-8) that an erroneous jury in-

struction on an essential element of the offense can never be

harmless. The Court’s recent decision in Pope v. Illinois,

10

Although the jury instructions given in that case con-

tained a presumption properly labelled as rebuttable

rather than conclusive, the Court did not rest its hold-

ing in that case on that distinction. On the contrary,

the Court referred apparently interchangeably to

jury instructions that were unlawful under Francis

v. Franglin, 471 U.S. 307 (1985), which involved a

rebuttable presumption, and jury instructions that

were unlawful under Sandstrom v. Montana, 442 U.S.

510 (1979), which involved a presumption that might

have been interpreted as conclusive. Rose v. Clark,

slip op. 1 & n.1, 5 n.5, 9-10 & n.8, 11-12 n.11, 12-13

& n.12; id. at 6 (Stevens, J., concurring in the judg-

ment). Cf. United States v. Frady, 456 U.S. 152,

171-174 (1982) (a defendant who fails to object to

a jury instruction containing a conclusive presump-

tion must demonstrate both cause and actual prej-

udice to obtain habeas corpus relief). The other

lower courts have also interpreted the Rose v. Clark

decision to apply to both rebuttable and mandatory

presumptions. E.g., Baker v. Montgomery, 811 F.2d

557, 558 (11th Cir. 1987); Burton v. Foltz, 810 F.2d

118, 122-123 (6th Cir. 1987); Bates v. Blackburn,

805 F.2d 569, 578 (5th Cir. 1986).

Petitioner asserts (Pet. 8) that the ruling below

conflicts with the decision in Hoover v. Garfield

Heights Municipal Court, 802 F.2d 168 (6th Cir.

which was handed down after the court of appeals’ decision

on remand, rejected the argument petitioner advances (slip

op. 6 n.7 (citation omitted) ) (‘To the extent that cases prior

to Rose may indicate that a conviction can never stand if the

instructions provided the jury do not require it to find each

element of the crime under the proper standard of proof, * * *

after Rose, they are no longer good authority.’’).

aeenetes

11

1986), but that case is distinguishable.” Hoover

involved a trial court’s failure to give any instruction

on an essential element of the offense, rather than a

jury charge containing an erroneous presumption.

The court ruled that the failure to give any instruc-

tion could not be harmless under Rose v. Clark. 802

F.2d at 177-178. Even if the Sixth Circuit would

adhere to that ruling today,” the decision in that case

does not conflict with the decision below. In a subse-

quent case involving a conclusive presumption, the

Sixth Circuit distinguished its decision in Hoover as

limited to cases where the jury is “precluded from

considering” an element of the offense. Burton v.

Foltz, 810 F.2d at 122. In fact, both before and after

Rose v. Clark, the Sixth Circuit has applied the harm-

less error doctrine to jury instructions containing an

12 Petitioner also claims (Pet. 6) that the Eighth Circuit’s

decision in this case conflicts with its earlier decision in

United States v. Voss, 787 F.2d 393 (1986), cert. denied,

No. 86-5398 (Oct. 14, 1986). That claim, even if correct,

provides no basis for review by this Court. Wisniewski v.

United States, 353 U.S. 901 (1957). In any event, there is no

merit to petitioner’s claim. The Eighth Circuit’s ruling in

Voss relied heavily on the original panel decision in this case

(787 F.2¢ at 398-399 & n.4), which was subsequently vacated

by this Court. Voss also relied on other decisions that were

expressly disapproved by this Court ir. Rose v. Clark and

Pope V. Illinois. Compare Voss, 787 F.2d at 398-399 & n.3

(relying on Connecticut v. Johnson, 460 U.S. 73 (1983)

(plurality opinion), and Cabana v. Bullock, 474 U.S. 376, 384

(1986) ), with Rose v. Clark, slip op. 11 & n.11 (disapproving

Connecticut v. Johnson, supra), and Pope v. Illinois, slip op. 6

n.7 (disapproving Cabana v. Bullock, 474 U.S. at 384). Ac-

cordingly, there is no conflict between the decision below

and Voss.

13 The Sixth Circuit’s decision in Hoover preceded this

Court’s decision in Pope v. Illinois.

12

erroneous conclusive presumption. Burton, 810 F.2d

at 123; Logan v. Abshire, 778 F.2d 283, 284 (1985) ;

Martin v. Foltz, 773 F.2d 711, 719 (1985); Charles

v. Foltz, 741 F.2d 834, 839 (1984), cert. denied, 469

U.S. 1193 (1985). In these circumstances, there is

no conflict warranting review by this Court.”

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

CHARLES F’. RULE

Acting Assistant Attorney General

JOHN J. POWERS, III

MARION L. JETTON

Attorneys

JULY 1987

14 The question presented by petitioner is also unlikely to

recur. The court of appeals noted (Pet. App. 9a n.7) that

petitioner’s claim would be “without substance” if the jury

instructions had used the terms “trade” or “commerce,” rather

than “interstate commerce.” In fact, the court of appeals

expressly approved the standard jury instruction found at

2 E. Devitt & C. Blackmar, Federal Jury Practice and Instruc-

tions § 55.15, at 405 (3d ed. 1977), which is an instruction

frequently used by the government in Sherman Act conspiracy

prosecutions. To our knowledge, none of the other instruc-

tions used by the Department involve the language challenged

here. The question in this case therefore should not arise

in the future.

WV. &. GOVERNMENT PRINTING OFFICE; 1987 181463 40447