Opposition Brief — American Radiator & Standard Sanitary Corp. v. United States

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1

INDEX

» plumbing

prices of acid :

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whotenaler

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cast. iron

the

I. The court of appeals applied an

appro-

Cae

right to confronte-

rrr er ww ewer 2 —— —

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priate standard of review ___-

I]. There was no violation of the

14

Sixth Amendment

tion.

21

25

26

29

concerning

deprive the peti

fair trail

the

this Court.

18

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‘

decision

among the

by this

prosecutor’

Kohler strike

tioners of

issues

warrant

11

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— — —-—᷑ —— P— natn ns

1

CITATIONS

ree

(Cases: |

Brady v. Maryland, 373 US. 83 N 28

Bruton v. United States, 21 U.S. 123 15, 17

Califerma v. Green, 308 U8. 148 L

Clune v. United States, eU 15

“Tae Raking Co. v. 1 2x1

2d 137 22, 23

Delaney v. United States, 283 US. 588 15

Dutton v. Ans. 40 U8. 74, revedhing, 400

F. 1e 185, 16, 19

Glasser v. United States, 315 US. ao 13

dev. United States, 10 U. K 118 2s

Hanley v. United States, 416 F. 2 1160,

certiorari denied, 397 U.. 910 2

Harrington v. California, 205 U8. 250 13, 16

Lutwak v. United States, 344 U. % 15

(O'Neil v. Van, 422 F. 2d 319, certiorari

granted, November 9, 1970, No. 336, O.T., |

1970 16, 17

Standard Oil Company of California v. ‘Moore,

251 F. 2d a cot certiorari denied, 356 U.S. |

. 22

Standard Oil Company of Texas v. United

States, J F. 21 130... 27

, Townaend v. Henderson, 405 F. 2d 22. . 16,17

United States v. Armour & Co., 168 F. 2d 342. 27

United States v. Gooding, 12 Wheat. 0 15

United States v. Gypeum Co., 333 U.. 264 24

United States v. Chas. Pfizer & Co., 426 F. 2d 32. 23

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

r 13

United States v. ree, aa

— . ln 27

*

eee

na re ey aa i

————

Sherman Act, en 1, 15 USC, 1

23 UNC. 1732. 2 5

* UBC. f ARS

UC. Wit cane 3

Rule m . n. Crim. P

— —— —

Wigmore on Evidence (3d ed.) § 104%.

Oo

In the Supreme Gourt of the Wnited States

OcroBer Team, 1970

—

No, 1047

AMERICAN RApiAtoR & STANDARD SANITARY

CORPORATION, ET AL, PETITIONERS

v.

UNI STAT OF AMERICA

No. 1048

Lo- WANN CoRvoraTION, PETITIONER

17. 1

UNITED Sr OF AMERICA

No. 1049

Norman R. Hein, eeririoner

*.

UNITED Sr ATEN OF AMERICA

n

No. 1050

Kou.er (Co., PETITIONER

V.

UNITED Srarrs OF AMERICA

ON PETITIONS FOR WRITS OF CERTIORARI TO THE UNITED

STATES COURT OF APPBALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

(1)

RTE CREEPER ARERR

2993344

The opinion of the court of appeals (Pet. App. In-

72a ') is not vet reported,

JURISDICTION

The judgment of the court of appeals was entered

on September 23, 1970, and petitions for rehearing

were denied on November 3, 1970. The petitions for

writs of certiorari were filed on December 3. 1970.

The jurisdiction of this Court is invoked under 28

1.8. C. 1254(1).

QUESTIONS PRESENTED

I. Whether, in affirming jury verdicts convicting

petitioners of participation in an antitrust price-fixing

couspiracy, the court of appeals applied the proper

standard of appellate review,

2. Whether petitioners’ right) of confrontation

under the Sixth Amendment was violated by appli-

cation of the federal co-conspirator exception, and

other well-recognized exceptions, to the hearsay rule.

3. Whether the court of appeais correctly held that

cross-examination of petitioner Held concerning the

The court’s opinion appears identically at pages la-72u in

‘the appendices of the petitions in Nos, 1048, 1049, 1050. It also

appears at Pet. App. No. 1047, Ta-78a. For convenience, the

United States will use the text of the opinion set forth in

Now, 1048, 1049 and 1050 and refer to this simply as “Pet.

App”

As used herein . A.“ refers to the four-volume Joint Ap-

pendix to the main briefs in the court of appeals. “E” refers

to the three-volume “Exhibits to Joint Appendix”; “T” refers

to the trial transcript.

3

1954 strike against Kohler Company did not con-

stitute prejudicial error as to Held and Kohler, when

considered in the context of the entire trial, and the

strength of the government n case. | 5

CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED

The Fifth Amendment of the Constitution provides:

** * nor shall any person * * * be deprived

of life, liberty, or property, without due process

of law; gil eed

The Sixth Amendment to the Constitution provides:

In all criminal prosecutions, the accused shall

enjoy the right * * * to be confronted with the

wit against him; * * *,

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

Every contract, combination in the form of

trust or otherwise, or conspiracy, in restraint

of trade or commerce among the several

States * * is declared to be illegal:

Every person who shall make any contract or

engage in any combination or conspiracy de-

clared by sections 1-7 of the title to be illegal

shall be deemed guilty of a misdemeanor * * *,

STATEMENT

On October 6, 1966, a grand jury returned a single

count indictment charging eight corporations, eight

high-ranking employees of those corporations and a

trade association with conspiring to fix the prices of

enameled cast iron and vitreous china plumbing fix-

tures, in violation of Section 1 of the Sherman Act

4

(Pet. App. 2a-3a).’ The indictment stated that at

meetings held in several cities the defendants agreed

to raise prices on enameled cast iron and vitreous

able discounts on thone fixtures, and to discontinue the

production of regular enameled cast iron fixtures,

_ leaving production only of higher-priced acid resistant

fixtures; and that the defendants had carried out their

agreement (Pet. App. 2a—ta). .

Eleven of the seventeen defendants pleaded nolo

contendere and were sentenced on their pleas (Pet.

App. In). The petitioners chose to stand trial. After

a sixteen-week jury trial, all six petitioners were con-

vieted (Pet. App. 5a-Ga). The court of appeals

affirmed (Pet. App. 66a). — a6

The conspiracy consisted of four phases, interrelated

as to timing and participants, yet possessing sufficient

distinctiveness to merit separate discussion.

The defendants other than the petitioners were Crane (unn

pany and its vice-president, Robert Casner; Universal-Rundle

Corp. and its vice-president, Stanley Backnér; Rheem Manu-

facturing Co. and its vice-president, Robert Pierson; Wallace-

Murray Corp. and its president, John Balmer; Briggs Manu-

facturing Company; George Kelch, President of - petitioner

Borg-Warner’s Ingersoll-Humphryes Division; and the Plumb-

ing Fixtures Manufacturers, Association (PFMA) (Pet. App.

Zu a).

The affirmance was unanimous as to petitioners Americun

Standard, Borg-Warner, Decker, and Quinn. Judge Aldisert dis-

sented from the affirmance of the convictions of Kohler Company

and Held. All the affirmances were as {o all aspects of the con-

apiracy except for petitioner Decker: as to him, the court of ap-

peals affirmed on a finding of sufficient evidence regarding the.

conspiracy to eliminate regular enameled fixtures, and did not

decide the sufficiency ‘question regarding other aspects of the

conspiracy,

— ——é—3— — k & —ů

5

A. THE AGRE MENT TO INCREASE BATHTUB PRICES

In Oetober and November, 1962, the cov n defendant

corporations producing enameled east iron plumbing

high volume enameled cast iron bathtubs (Pet. App.

8a). This uniform price inerease was the direct de-

sult of an agreement reached by the sales officials of

the corporatio:m in a meeting held on September 17,

1962, at petitioner Quinn’s room at the Sheraton-

Chieago Hotel (Pet. App. 8a). Petitioners Quinn and

Held were there, as was defendant Keleh of Borg-

Warner; high-ranking officials of Crane, Universal-

Rundle, Rheem and Wallace-Murray also participated

(Pet. App. a-). A: the court of appeals noted,

t here was substantial ‘eyewitness’ testimony con-

cerning price discussions and agreements at this gath-

ering’’ (Pet. App. 9a). :

Kor example, Mr. Callanan, who had participated in

the meeting for Rheem, testified not only that there

had been a discussion of specific bathtub prices, but

also that there had been agreement as to what the new

prices would be. Similarly, Mr. Cannon of Wallace-

items in accord with certain specified conditions. The bathtubs

involved in this phase of the conspiracy were such items, (Pet.

App. 8a). :

. The question. Mr. Callanan, was: What was decided with

respect to the specitic increased price on bathtubs in that

reon /

“The (unt: If anything.

“Tux Wrrxess: The prices as reflected in my bulletin of No-

vember 2, 1062 [which were identical to the prices of all the

other manufacturers], were the prices that I came out of that

room with that understanding.” (Pet. App. 9a).

415-099—T1__2

6

Murray reported to his superior of the Sheraton-

Chieago agreement that there had been a discussion of

prices and that there was a tentative agree-

ment to inerease prices * . (Pet. App. In).

n. THE AGREEMENT TO MAINTAIN AND INCREASE THY

PRICES OF VITREOUS CHINA PLUMBING FIXTURES

The. conspirators who met in petitioner Quinn's

hotel room on September 17, 1962, were not only con-

cerned with raising bathtub prices; they also wanted

to put into effect a general increase in the prices of

vitreous china fixtures. They agreed that higher prices

were a necessity, but they feared that an increase at

that time would not hold if the **short-line” manufac-

turers * kept their prices at current levels (Pet. App.

1la-12a). However, on November 20, 1962, petition-

ers Quinn and Held, along with Keleh of Borg-

Warner and high-ranking officials of Crane and

Rheem, met at the Shoreham Hotel in Washington

(Pet. App. 12a). Rheem's vice-president, Pierson, ten-

tified that Casner of Crane announced that Crane

would soon raise prices to a specific level, Discussion

of these prices followed and, aceording to Pierson,

It was my opinion when I left that people probably

would follow the lead of Crane in some form or an-

other“ (Pet. App. 13a),

Crane did announce a 7 pereent across-the-board in

In the trade, a “short-line” manufacturer is one that pro-

duces only the most commonly used vitreous china fixtures.

Petitioners American Standard, Kohler and Borg-Warner (and

all the other indicted corporations except Briggs) were “full-

line” companies,

7 7

crease on all china fixtures on January 14, 1063.

Shortly thereafter all the indicted corporations except

Borg-Warner raised their prices to the level of Crane's

(Pet. App. 13a).’ The conspirators, fearing that this

inerease would not, hold firm, met at the Waldorf-

Astoria Hotel in New York on February 7, 1963, “* * *

to try to maintain the new prices” (Pet. App. 13a).

Petitioners Deeker, Quinn, and Held were present, as

were Kelch of Borg-Warner and several other high-

ranking sales officials (Pot. App. 13a-14a). Bonnett

„f Wallace-Murray testified that the men diseussed

new china prices and that petitioner Quinn stated

that * * the general consensus was that the new

prices would—we would try to maintain the new

prices” (Pet. App. 14a). Five days later, Borg-

Warner raised its prices to conform with-those of the

other conspirators,

(, THE AGREEMENT TO LIMIT MAXIMUM’ DISCOUNTS

FROM WHOLESALER NET PRICES ,

The conspirators further agreed that they each

would limit the discounts from wholesaler net prices

to a maximum of 15 percent for enameled cast iron

and 20 percent far vitreous china fixtures (Pet, App.

5a). Once again, agreement was reached at the Sep-

tember 17, 1962, meeting at Quinn ' Chicago-Sheraton

"Briggs had had no representative at the Shoreham Hotel _

meeting, but it increased its prices only after its vice-president,

letz, had discussed the price increase with Crane officials

and agreed to raise its prices to the agreed levels, (Pet. App.

13a).

W

REPRE

8

hotel. room, Once again, the proof of agreement cauw

from eyewitness testimony, Callanan of Rheem tenti

fied that he came away from the meeting “of the EE

ton that other people would be using the name structure’

(Art. App. In). The ’ ‘other people” were the “other

membem who were in the room that evening,”

and the “structure” Ws fifteen per cent on iron and

twenty per cent on china” (Pet, App: 16). (%% of

Wallave-Murray confirmed ‘these percontagen in hin

tewtinwny; he noted that in the dineunsion he - had

agreed to verify actual prices quoted from his com.

petitors, in order to prevent building contractors Crom.

playing off one manufacturer against another and

wetting un better clincaunt than the | 1 percont asl 20

| percent allowed ILA, 27a; yd 24a), When the eon- \

spirators met on February 7, 1963, at the Waldorf-

Astoriin Hotel, they rene their earlier agreement

to limit discounts, Bonnett of Wallace-Murray tenti

fied that petitioner Quinn reported ty him that ‘were

liad: been a dixctimsion of dixcounts and a “temative

disctinsion or agreement” to limit the dincounts to 15

percent on cast iron and 20 percent on vitreous china

(Pet, App. Idn-17n). Bonnett assured Quinn that his

company “would try to adhere to thane dincounts”

(et, App. 17a),’

*Honnett, upon returning to Pittsburgh, instructed hin sub-

1 ordinate Cannon not to discount from wholesaler net

more than those percentages on those products (J. A. Aha zin).

°

90

n. Tun AGREEMENT TO PLAMINATR REGULAR ENA NN

CANT IRON PLUMBING VIXTURER AND ‘TO INCREASE, THE.’ |

„

n OV ACID BUNTANT vir

Another axpeet of the conspiracy was the agreement

tu stop production of regular enameled east iron fix-

tures and impose an inereased price structure on the

urid resistant fixtures which would remain in produe-

tion, Regular enameled cast iron fixtures were impor-

tant to the conspirators’ business, They accounted,

tur example, for more than $20,000,000 in grows annual

wales ut American Standard (Pet. App. 17a), (um-

petition from steel and plastic fixtures, hoth of which

re acid-resistant, was intense (Pot. App. 17a), In

order to implement an industry decision to diseontinie

> fundamental a line of fixtures, however, strong

protective cover wax needed (JA 507 a, 479u-482n ),

The device selected wan to change the Enameled Cast

Iron Plumbing Fixtures Commercial Standard hy

having it provide for acid-resistant finish only, and

then cite the revision to justify discontinuation of

regular enamel, Publication of the revised standard

would also serve as the signal for the defendants’

scheme to hecome operational (JA 4700-4720, 403a,

405n, 4180 ; 3940-396a).° 1

The conspirators agreed upon the elimination of

regular cast iron and the new prices for acid resistant

east iron at a meeting on March 28, 1963, in Quinn's

* The Commercial Standard ‘is a recorded voluntary standard

of the trade published by the U.S, Department of Commerce ‘

( 158), Sinee the standard is purely voluntary, it could not re.

quire the conspirators to discontinue the nse of regular enam-

oled cant iron fixtures,

3

7

e

— 5

* *

room at the Palm Beach Biltawre Hotel (Pet. App.

Ida). Pierson of Rheem testified that petitioners

Quinn, Decker and Held were present, as were Keleh

of Borg-Warner and: several other key officials of

other corporations (Pet. App. 18a). Pierson testified

mont explicitly of this meeting :

A. The dinctumsion resolved [sie] around the

specitic timetable that would oeeur’ in this

change freun in the elimination of regular ‘ena

nel and the pricing schedule that would resolve

asa result of this change. ö i ;

Q. Were specific prices mentioned during the

course of this meeting !? as

A. Yes. ee

Q. What was decided at this meeting, if any-

thing, Mr. Pierson ?

A. Well, as I said originally, there was a

_timetable established and a new pricing struc-

ture, which I felt was agreed by all those

present, [Pet, App, 182-192; emphasis added by

court of appeals, | |

A the court.of appeals found, Cannon of Wallace-

Murray contirmed Pierson, testifying that the par-

ticipants had discussed the “proper philosophy” of

brieing im the new all acid-resistant market and

that they had decided upon certain prices (Pet. App.

The record shows that the conspirators had frequently dis-

cussed the need to eliminate regular enamel and to restructure

the prices of acid-resistant enamel before: at the Sheraton-

Chicago meeting in September, 1962 (JA 871a, S54a-bbbu, 477a-

478a); at meetings at the Shoreham Hotel in November, 1962.

(JA 435a-436a, 4 u- da. 458a-450a; Kü); at the Americana

Hotel in New York (JA 376a-377a).

11

17% ). Callanan ale confirmed the price Aineturnnserts ane

the specificity of the prices selected (Pet. App. 19a).

He alse testified that “There was a general disetunsion

Hat the timing of the thing would tie in with the

Instance of Commercial Standards’’ (IA m en).

In order to reaffirm their Palm Beach agreement,

the conspirators met two months later at the Airport

Hotel in Pittsburgh on May 15, 1963 (Pet, App. 20a).

Decket, Quinn, and Held were present, as were Keleh

of Borg-Warter and officials of Crane, Wallace-

Murray, Rheem, and Universal-Rundle (Pet, App.

4). Bonnett of Wallace-Murray testified that they

discussed specific prices and that “It was my under.

standing when let the meeting that the prices would

generally be on this level” (Pet, A pp. 20a). The some-

what general nature of the discussion wax due to the

fact that this meeting was to reaffirin the decision

taken earlier at Palm Beach. As Cannon of Wallace-

Murray testified, at the time of the Pittsburgh meet-

ing he already knew the price structure to be announced —

in July and August of that year (JA 4030 ).

he conspirators held a final, confirmatory meeting —

in Quinn's room at the Waldorf-Astoria Hotel on

"The purported justification for removing non-acid-resistant

enamel from the Commercial Standard was that it was no

longer un industry-wide item. The PFMA Enameled Cast Tron

Standards Committee so stated on February 7, 1963 (Eg

15). As the defendants themselves admitted at trial (JA B

Situ, Sibu, 47a, 51 Ga, la-), this representation was un-

true, In turn, the Commerce Department on, June 7. 1963, i,,

u new, revised standard (effective July 10, 1963) that “for the

first time made acid resistant east iron enamel fixtures the

industry standard” (Pet. App. 17a-1#a),

—

12

June 26, 1963 (Pet. App. 20a). In the words of Pier-

son, Who attended, there was 'n general review of the

proposed plan on this product line and the pricing that

was related thereto” (Pet. App. 20a). A copy of the

announcement that American Standard intended to

issue concerning the changeover and the new prices

wis discussed by the group (Pet. App. 20a-21a). On

July 1, 1963, American Standard made this announce-

ment public: within two months all the other indicted

‘east iron manufacturers had announced their discon-

tinuance of reguiar enameled cast iron fixtures and

new, higher prices for acid resistant fixtures (Pet.

App. 18a).

The court of appeals stated: The government's

evidence of price fixing by the appellants was com-

pelling * * * the cumulative effect of the govern-

ment’s case was overwhelming”’ (Pet. App. 65a-66a).

As the court noted, the government’s case largély

relied on‘the consistently incriminating eyewitness tes-

timony of the’ petitioners’ own co-conspirators (Pet.

App. 66a), and showed an extensive and successful

conspiracy to ‘fix prices on enameled cast iron and

vitreous china plumbing fixtures.

ARGUMENT

I, THE COURT OF APPEAIS APPLIED THE APPROPRIATE

STANDARD OF REVIEW

_ In many respects this is a typical antitrust criminal

conspiracy case: there are several defendants, the trial

consumed sixteen weeks, and the record of trial runs

to more than 10,000 transcript pages and 900 exhibits.

-~

13

In at least one respect, however, this case is decidedly

atypical. Here, the government’s proof rested not pri-

marily on inferences to be drawn from eireumstantinl

evidence of parallel business behavior hut on direct

testimony of witnesses who were themselves partici-

pants in illegal price discussions and agreements, The

appropriate standard for appellate review in this type

of case was long ago established by this Court: where

the evidence against the defendants is strong, jury

verdicts will not be reversed for errors unless the re-

viewing court is persuaded that misconduct of the

trial prevented the jury from determining the case

on a dispassionate consideration of the evidence, See

United States v. Socony-Vacuum Oil Co., 310 U.S. 150,

239-240. See also Glasser v. United States, 315 U.S.

60, 83.

The court of appeals correctly applied this standard

in discharging its difficult review function here. To be

sure, it found and identified errors; total absence of

error in a lengthy and hard-fought trial of this mag-

nitude and complexity would be surprising indeed.

But after a’ painstaking review of the entire record,

and thorough consideration of all the many issues

raised by petitioners here, the court concluded that:

Whether the errors be viewed in isolation or

cumulatively we are completely satisfied that

they did not deprive appellants of a fair trial

or operate to their substantial prejudice. On

the contrary, we are satisfied from our examina-

tion of the record in its totality that the appellants

received a fair trial and that their conviction

415—039—71——3

| ll ae

14

was entirely warranted f rom the evidence. [ Pet.

App. 66 u]

This conclusion was in full conformity with the

court's duty under the federal harmless error stat-

ute.” It in true that the court spoke of the strength

of the government's case; indeed the court found the

government's proof “overwhelming’’ (Pet. App. 65a).

But the court made plain that it had viewed “the

record in its totatity’; under the doctrine of harmless

error an appraisal of the strength of the government's

cane in canential. Even error of constitutional scope and

there was no such error in this case——may be harmless

in the face of overwhelming government proof, Har-

riagton v. California, 395 US. 250, 254. 4 fortiori,

overwhelming government proof may render ordinary

error harniless,

We submit that petitioners had a full and fair trial,

and that the claims they seek to present here were

fully considered and correctly rejected hy the court

below under the appropriate standard of review.

Hl, THERE WAS NO VIOLATION OF THE PETITIONERS’ SIXTH

AMENDMENT RIGHT TO CONFRONTATION

A. Petitioners request this Court to declare the co-

conspirator hearsay exception a denial of the right of

“Except as to petitioners Kohler Co. and Held, and with

reference to only a single issue to be discussed infra, this deter-

mination was unanimous.

28 U.S.C, 2111: “On the hearing of any appeal * * * the

court shall give judgment after an examination of the record

without regard to errors or defects which do not affect the

substantia! rights of the parties.”

15

confrontation (Pet. No. 1047, 15-16). The co-conspixa-

tor exception to the hearsay rule has been part of fed-

eral law for well over a century. United States v.

Gaoding, 12 Wheat. 460. As the court of appeals ob-

served, this Court has held it not to be a violation of

the Sixth Amendment. Lutwak v. United States, 344

U.S. 604. See, also, Clune v. United States, 159 U.S, 500;

Delaney v. United States, 263 U.S. 586.

Petitioners do not dispute this precedent, but they

claim that the co-conspirator hearsay exception is ‘in

conflict with the rationales” of Bruton v. /nited

States, 391 U.S. 123, and Evans v. Dutton, 400 F. 2d

826 (C. A. 5) (Pet. No., 1047, 15). But Bruton ex-

pressly did not involve the co-conspirator exception to

the hearsay rule, 391 U.S. 123, 128, n. 3, and this

Court, since the instant petitions were filed, has re-

versed the Fifth Cireuit's decision in Dutton v. Evans,

400 U.S. 74. :

In Dutton v. Evans, supra, the Court held that

Georgia's co-conspirator exception to the hearsay rule

was not a violation of appellee’s right of confrontation

under the Sixth and Fourteenth Amendments. While

the validity of the federal evidentiary rule was not in

issue, 400 U.S. at 82, the federal rule is considerably

more restrictive of vo-conspirator hearsay than the

Georgia rule whose application to Evans was held con-

stitutional.

Moreover, looking to the impact of the co-conspira-

tor hearsay admitted in this case, one is struck by its

insignificance. The court of appeals, after a thorough

16

_ examination,” concluded that the instances in which

- declarations of a co-conspirator who did not testify were

received “amounted at best to a handful * * *, The sum

of its weight was extremely small and insignificant

when the record is considered as a whole” (Pet. App.

38a). Any confrontation issue in this ease is raised in

a context of harmless error beyond a doubt. See Dut-

ton v. Evans, supra; Harrington v. California, supra;

Lutwak, supra, |

B. There is no merit to the contention (Pet. No.

1047, 16-17) that the decision of the court below con-

flicts with decisions of the Sixth and Ninth Circuits.

In both Townsend v. Henderson, 405 F. 2d 324 (C. A.

6) and O'Neil v. Nelson, 422 F. 2d 319 (C. A. 9), cer-

tiorari granted, No, 336, O. T. 1970, November 9, 1970,

confessions of one co-defendant, made while in police

custody * and incriminating to another co-defendant,

were received in violation of the rule of Bruton v.

United States, 391 U.S. 123. The question before the

courts of appeal in each of those cases was whether

'* Petitioners’ contention that the court of appenls rejected

their confrontation claims “[w]ithout. particularized analysis of

the evidence in question” (Pet. No, 1047, 15) is inaccurate. As

the court's opinion makes clear (see, e. ., Pet. App. 37a, 38a),

the court examined the record with care in considering the

confrontation: issue and with little assistance from petitioners,

who “have made little attempt to dosament their claim by spe-

cific page references to the record” (Pet. App. 37a, n. 15). Peti-

tioner's contention (Pet. No. 1047, 16, n. 1) that co-conspirator

hearsay was the only evidence of Quinn’s agreement to fix china

prices prior to American's January 1963 increase is inaccurate.

See Pet. App. 17a-21a.

The disputed declaration in Tone nd was made to a prison

official while the declarant was kept in solitary confinement,

and was held to be an involuntary confession. 7d. at 327-328.

——— eT ee

17 >

the constitutional error in the prosecution 's admitted

violation of Bruton was cured by the opportunity

which each appellant had at trial to cross-examine the

co-defendant. Since in each instance the co-defendant

denied ever making the confession, the courts of ap-

peal held that cross-examination was not useful and

the Bruton error loomed too large to be harmless.

Townsend v. Henderson, 405 F. 2d at 328-329;

O Neil v. Nelson, 422 F. 2d at 321-322.

By contrast, the testimony to which the petitioners

now object was fully admissible against ali the defend-

ants under well-developed rules of evidence and deci-

sions of this Court. Bonnett on direet related his con-

versation with Quinn in a Waldorf-Astoria hotel

room; Quinn told him that he and the other conspira-

tors had agreed to limit discounts (JA 302a-303a).

This declaration was admissible against Quinn as an

admission by a party, see Wigmore on Evidence (3d

Edition), § 1048, and against his co-conspirators under

traditional principles approved by this Court. Supra,

p. 15.“ :

** Petitioners’ observation (Pet. No. 1047, 16) that Quinn

denied this conversation with Bonnett is in essence a complaint

that the jury chose to believe Bonnett, not Quinn. Petitioners’

contention (Pet. No. 1047, 16, n. 2) that “prosecution witnesses

were allowed to give opinion evidence without being able to

recall the facts upon which their opinions were based” is

without merit. Of the four witnesses to whose testimony peti-

tioners refer, two (Quinn and Held) were defense witnesses;

the other two, Callanan and Pierson, dealt in specifica and

were subject to vigorous cross-examination. See, for example,

JA 215a-224a; 228a-229a. |

0

G, Petitioners’ contention that the admission of the

HCA (or Pape) notes denied their Sixth Amendment

right to confrontation (Pet. No, 1047, 10-14) ix un

founded, ‘These notes, (168 178) written hy Ray-

mond Pape on stationery of the Hotel Corporation

of American ( HCA“), were found stapled together

in the files of Crane Co,, Pape’s employer and a

defendant (Pet. App. Bin). The HCA notes “echoed

figures and statements” whieh Quinn had written on

an internal Amerienn Standard worksheet dated

March 1, 1963 (Pet. App. 87a; E146). ‘These two

documents were part of the government's proof that

the conspirators had met on March 28, 1963, at the

Palm Beach Biltmore (an HCA hotel) and had

agreed on the basis of American Standard’s projec-

tions, to eliminate regular ename! and fix prices on

iid resistant enamel (Pet. ‘App. 30a), Pape, the au-

thor of the notes, was seriously ill with heart disease

at the time of the trial—indeed he died of heart fail-

tre shortly after the trial—and accordingly, although

he was technically available to testify, the government

promised not to call him if it could possibly avoid

doing so (Pet. App. Zla, n. 11). The United States

did not call Pape as a witness but introduced his notes

instead, ;

The main argument?’ petitioners now advance is

that the confrontation clause requires the government

*

Petitioners also contend that in upholding the admission

of the notds the court of appeals “* © « erroneously equated

the right to confrontation with the hearsay rule contrary to

this Court's express rejection of such an equation jn Califor-

nia v. Green, 399 U.S. 149 (1970)" (Pet. No. 1047, 14). The

19

to produce a witness to testify to any fact, so long as

it is incriminating and so long as the witness is liter-

ally available (Pet. No, 1047, 14). Such a position,

which would exclude on constitutional grounds vir-

tually all extra-judicial declarations of an available

witness, was not accepted by this Court in Califor-

nia v. Green, 399 U.S. 149," and is inconsistent with

the recent decision in Dutton v. Evans, 400 U. S. 74. In

Dutton, declarant was available to testify, though. he

probably would have claimed the privilege against self-

incrimination, The prosecution did not call him to the

stand and used instead a hearsay declaration ; this Court

found no violation of the defendant’s right to confron-

tation, Here the government introduced Pape’s written

notes without calling him as a witness to avoid danger- 7

ous strain upon a man in demonstrably precarious

health.”

Finally, we note, the Pape notes related only to the

fourth aspect of the conspiracy: Even if one assumes

court of appeals did not make such an equation, The court did

hold that the notes were not hearsay (Pet. App. 38a-39a),

but only in response to petitioners’ arguments below that they

were (Pet. App. 37a-38a). The rejection of this argument, made

hriefty again in this Court (Pet. No. 1047, 12), was correct.

See, C. J., McCormick, Evidence (1954), 463-466,

Mr. Just ice Harlan advanced a related, but less sweeping

position, bostomed on due process grounds, in California v. Green,

supra, at 186-187 (concurring). He has now rejected this prior

view. Dutton v. Evana, 400 U.S. 74, 93 (concurring).

„ » Petitioners, of course, could have called Pape had they

thought his testimony would be useful to them. He was, after

nll, an executive of a co-defendant corporation. Presumably

they feared the impact of his testimony, or else they recognized

what the government earlier recognized: that a man this sick

should be spared the ordeal of testifying if — possibly be

b

done.

2

they pertained ta nme other time op place than the.

Palm Beach meeting, proof of the other three NI

of the. conspiracy remains amimpnived, Nhe Hotes

would nonetheless remain cogent and proper proof

of: American Standard’s participation in thin unt

of the conspiracy, And the remaining proof ¢.y,, pp.

“{-12, supra, would be more than adequate to establinh

the complicity, un well, of the other defendants.

D. ‘The ennentially related enim that: the Ie

eutor violated his duty under Brady v, Maryland,

S73 U8, Kl, by tailing to produce the transeript of

Pape's grand jury testimony before trial (Pet, 1047,

1-20; Pet, 1048, 7-11; Pet, 1040, 18-18) in un-

sound, Although petitioners filed a hlanket, pretrial

motion far: production of “all material helpful or

exculpatory” to them (I.A, n), the motion was

Withdrawn upon the prosecutor's assertion that he

was aware of no such material in hin A, .

Never during trial did petitioners indiente heile

interest in the Pape transeript, Never wax the trial

judge asked to review the prowectitor's judgment that

this or any other document was hot subject to pro-

duction under Brady,

In their opening brief on appeal, petitioner un-

sorted for the firat time that introduction of Pape's

notes without putting Pape on the stand suggested

that -Pape’s grand jury testimony had heen up-

pressed to conceal inconsistencies hetween it and the

‘government's theory of authorship and signifieance

of the notes, The government is satisfled that the

transcript was not producible under Brady; we bo-

— — —— ——— —

21

lieve, moreover, that appellants gave up their right.

to make the claim on appeal by not affording the

trial judge an opportunity to pass on their conten-

tions in the first instance, Nevertheless, we volun-

tarily produced the transeript to appellants and to

the court of appeals, in order to help rebut sweeping

allegations of prosecutor misconduct.

Petitioners briefed and argued below their claim,

renewed here, that isolated passages of the transcript

contained arguably exculpatory material, The court of

appeals, after consideration of the entire transeript,

fully vindicated the prosecutor’s judgment. It had

little trouble concluding that Pape’s testimony was

“extremely incriminating” and contained no “material

exculpatory evidence“ (Pet. App. 54a). Under these

circumstances it cannot be said that the prosecutor and

the court below misconceived the prosecutor’s responsi-

hility under Brady v. Maryland.

HH, THE DECISION BELOW CREATES NO CONFLICT AMONG

THE CIRCUITS REQUIRING RESOLUTION NOW RBY THIS

COURT

Petitioner American Standard contends (Pet. No.

1047, 20-22) that the decision below “reflects” a con-

fliet among the circuits concerning the proper inter-

pretation of 28 U.S.C. 1732(a) and the weight to

he given by a jury to a defendant’s statements at trial

and at the time he committed the crime, These conten-

tions are erroneous. | 1

A. American Standard offered as evidence internal

company correspondence and memoranda containing

25 „

22

information from its field offices regarding the prices,

supposedly charged by its competitors (Pet. App.

42a). Tho trial court, however, rejected the company's

claim that these were “business records” within the

meaning of 28 U.S.C. 1732, and it exeluded them as

hearsay (Pet. App. 48a). The court of appeals Nüix-

tained this ruling, holding that the reports were pri.

marily based on information from “sourees whose

trustworthiness could not be ascertained from the doe-

uments themselves” and that Ameriean Standard was

often not a party to the transactions that the exhibits

concerned (Pet. App. 43a).

In so holding, the court. relied on Standard Oil

Company of California v. Moore, 251 be. 2d 188 (CLA,

9), certiorari denied, 356 U. S. 975. The court said that

it was “not inclined to adopt the contrary reasoning

of the Sixth Cirenit in Continental Baking Co, v.

United States, 281 PF. 2d 137, 148 (6th Cir. 1960)"

(Pete App. 48a). A careful reading of Continental

Baking, however, reveals that the Sixth Circuit did

not dispute or rejeet Moore. Rather, it distinguished

that case as having been predicated’ on the lack

of showing of a regular procedure for transmittal

of the disputed reports about competiters: in the

The court's judgment that these particular documents were

untrustworthy was well grounded in fact. These “business rec-

ords were punctuated with rumors and unsubstantiated reports

from undisclosed sources, See, for example, the gossipy nature

of AS 61, 66, or 88 (American Standard Exhibits). Further-

more, American's own district manager, O'Connell, admitted

that he received reports which contained incorrect information

(T. 6066) and that he forwarded reports of competitors’

activities whether or not he knew them to be true (T. 6023),

23

case before it, Continental “had.an established policy“

providing for just such transmittal, Continental Bak-

ing Company v. United States, 281 F. 2d 137, 148

(C. A. 6)." In so distinguishing Moore, the Sixth

Circuit may well have interpreted it erroneously;

indeed we believe the decision below reflects a sounder

reading of Moore, But there is no dispute among

the circuits concerning the central premise of Moore—

that documents can be admissible as business records

under 28 JJ. S. C. 1732 only if there is a basis for

reasonable assurance that the information they contuin

is trustworthy and reliable. Thus no substantial dis- N

agreement ix presented which requires resolution h

this Court, ae .

4B. The court of appeals approved a jury instruction

on the weight to be given ‘to. testimony of Witnesses

who were defendants or officials of defendant cor-

porations and who denied entering into the illegal agree-

ments; the court in United States v. Chas. Pfizer d (o.,

426 F. 2d 32, 40 (C. A. 2), disapproved a similar in-

struction.” We believe that the Third Circuit was

*" Petitioners’ citation to Hanley v. United States, 416 F.2d

1160 (CA. 5), certiorari denied, 397 U.S. 910, does not advance

Pa its argument (Pet. No. 1047, 21, n. 1). Hanley was based

“squarely on Continental Baking and its treatment of Moore.

/d., at 1168, The petition for a writ of certiorari denied in Hanley.

No, 888, O. T. 1969, was based almost exclusively on the

asserted conflict. . |

*The government has filed a petition for a writ of certiorari

in Pfizer,

24

correct in this case. Tlie instruction” was premised

on the well-settled proposition that what constitutes

an illegal ‘‘agreement” under the Sherman Act is

a mixed question of law and fact. See, e. g., United

States v. Gypsum Co., 333 U.S. 364, 396

But this is not the ease for resolution of any

conflict there may be between the circuits. The court

below correctly noted that petitioners failed to object

to this instruction as given (Pet. App. 5la), and

thus failed to preserve the issue for appeal. Fed. R.

Crim. P. 30.

“The trial court's full instruction on this point was as

follows:

You must, obviously, give du@*and deliberate thought

to this testimony, and ultimately give to it such weight

as it merits in your. impartial judgment. In performing

this task, you will have in mind the definition of a com-

bination and conspiracy as it has been given to you in

these instructions, recalling among other things, that the

final answer to the central question in this case must

be based upon the actual conduct of the defendants during

the period covered by ‘the indictment, and that the things

the defendants did and said at the time, may in such a

case be weightier than the things they say thereafter.

You will take into consideration, also, that if all the

elements are shown to establish a conspiracy, it would make

no diffsrence that the alleged conspirators did not believe

that they were violating the law or intend to commit

such a violation.

This is by no means to suggest to you that you overlook

or reject the sworn testimony of the corporate defendants’

officers, That is for your judgment, not mine. The point

being made here is that assertions of innocence by such

officers may reflect partly legal as well as factual con-

tentions and must be weighed along with all the evidence

of every kind that has been submitted to you [J.A.

1954a-1955a].

25

IV. THE PROSECUTOR’S QUESTIONS CONCERNING THE

KOHLER STRIKE DID NOT DEPRIVE THE PETITIONERS OF

THEIR RIGHT TO A FAIR TRIAL

The prosecutor opened his cross-examination of peti-

tioner Held with some questions based upon the

officially-reported findings of the National Labor Rela-

tions Board, concerning the 1954 strike at Kohler Co.

Held, a Kohler vice-president and director, on direct

examination had not mentioned the strike, while trac-

ing the history of the company and emphasizing its

beneficence to its workers (Pet. App. 27a).“ The

court of appeals majority held that Kohler and Held

had “invited some such inquiry” (Pet. App. 27a) and

that Kohler’s counsel Tad ‘‘opened the door further“

by urging that 8 threshold objection

to the cross-examination be overruled (Pet. App. 26a,

27a).“ The court nevertheless concluded that the trial

judge Should have terminated the line of inquiry

prior to ¢ompletion because ‘‘its potential for prejudice

outweighed its evidentiary value“ (Pet. App. 27a).

But considering the minimal impact of a brief inter-

lude in the lengthy trial, weighed against the strength

of the government’s case, the majority found that the

incident did not deny petitioners a fair trial (Ibid.).

* Kohler’s counsel had foreshadowed this approach in his

opening statement when he emphasized Kohler’s sense of re-

sponsibility as the principal employer in the county and its

devotion to full employment, even at the cost of selling at a

loss (JA 1603a-1604a).

Indeed, the prosecutor first sought to avoid injection of

these considerations into the case by unsuccessfully objecting to

the entire line of examination on direct as immaterial (Pet.

App. 24a; JA 1734a).

1 enn

3

*

Accepting the view of the court of appeals that the

Chose NTIMINALION Was excessive, it was on sound

ground in concluding that in the circumstances the

error could not have had sufficient prejudicial effect

lo warrant reversal, The entire epixede took at most

an hour of a trial that lasted sixteen weeks (Pet.

App. 27a). Equally Wnportant, this bit of cross.

Nanmmatwen took place several weeks prior to the

conclusion of the trial, and, in keeping with Kohler“

request, the matter was not even adverted to in the sum-

ations or the Jury charge (Pet, App. 27a). The

dissenting judge conceded that “what is posed is a

“Close question” (Pet, App. 67a). The court of appeals

eatefully examined the place of this brief episode in

the context of the entire trial and the strength of

the evidence of petitioners’ guilt, and coneluded that

the error was harmless,”

VO PIER ies RAISED BY THE PETITIONS DO NOT

WARRANT REVIEW BY THIS couRT

Kohler challenges the Jury instruction on criminal

responsibility of a corporation fer the acts of its

agents (Pet. 1050. 3). The instruction, quoted at Pet.

App. o9a-00a, was an accurate restatement of the law

severning aefs of agents within the scope of their

©The claim of petitioner Borg-Warner that it, too, was

prejudiced by this episode is xroundless (Pet. No. 1048, 11-12).

Of Hure. this cross-examination never mentioned Rorg-

Warner, nor hinted at any involvement by it in the Kohler

strike. Moreover, thegtrial judge clearly and carefully instructed

the jury that this part of the examination did not

nvalve any defendants except: Held and Kohler (JA 1749a-

Lyin, 17 etia ),

27

authority and the course of their cmploywent, as the

court below held (Pet. App. 58a-Gla). Kohler’s main

claim throughout these proceedings has been that its

sales manager, Held, was acting beyond his authority

in making price-fixing agreements with competitors,

heeause Kohler has a firm policy against such practice

(Pet. 5-6). But it is the corporation which bene-

fits directly from such illegal activities, and for this

reason it: is well settled that a corporation may not

insulate itself from antitrust liability merely because

its avent’s activities may be contrary to corporate

regulations. Standard Oil Company of Texas v. United

States, 307 F. 2d 120, 127 (C. A. 5); United States v.

Armour & Ch., 168 F. 2d 342, 343 (C. A. 3). A contrary

rule, by affording an easy means for evasion of responsi-

bility, would seriously weaken the deterrent. effect of

the antitrust laws. See United States v. vane, Inc.,

300 F. Supp. 84, 95 (S. D. N. v.).

Kohler also complains that it was denied a fair

trial by the exclusion of certain doc ‘umentary economic

evidence (Pet. 1050, 6-8). One exhibit purported to

show pricing data outside the indictment period ;

Kohler’s own economic expert, Dr. Beckman, conceded

that studies which were admitted formed a sufficient

basis for the conclusions to which he testified (. A.

1527a). Another excluded exhibit purported to show

some 650 discounts in excess of the agreed-upon limits;

this exhibit was not only misleading (Pet. App. 44a)

but also cumulative in light of substantial testimony

that such discounts had been granted. (Ibid.; J.A.

1444a, 1454a.) Indeed, the trial judge offered Kohler.

an opportunity to introduce the invoices which sup-

3

tra

— Pome

28

posedly supported the exhibit (J. A. 1485a), but peti-

tioner apparently did not think the matter of sufficient

importance to do so.

Borg-Warner’s contention (Pet. No. 1048, 22-25)

that the court of appeals erroneously affirmed the

trial court's “missing witness” charge is based on

an error of fact. Contrary to petitioner's statement

that “Borg-Warner had put in no ease” (Pet. No.

1048. 23). Borg-Warner put in u enge of its Own,

by introducing several exhibits (see, . ., M3816) and

taking a witness as jts own on ceross-examination in

order to go beyond the scope of direct examination

(JA 739). On such a record, the missing witness

instruction was entirely proper. Graves v. United

States, 150 U.S. 118.

Similarly without merit are Borg-Warner yfaceusa-

tions of improper conduct by the trial judge‘and the

prosecutor (Pet. No. 1048, 13-14). The court of ap-

peals examined the record with meticulous eare and

concluded that Judge Rosenberg had behaved with

fairness through a long, and wearing trial (Pet. App.

22a-28a). As to the prosecutor's closing remarks,

the court held that any prejudice was insignificant

in light of the trial court's corrective instructions

(Pet. App. 29a-30a).

These and other arguments made in the various

petitions were raised and exhaustively considered in

the court below. To the extent that we have not dis-

cussed any argument, the eareful and comprehensive

opinion of the court of appeals affords an adequate

answer. |

* »

— —

20

CONCLUSION

For the foregoing reasons, the petitions for writs

of certiorari should be denied.

Respectfully submitted.

lanwix N. Grisworp,

Solicitor General.

RICHARD W. McLaren,

Assistant Attorney General.

Grecory B. Hovenpon,

JOHN C. Fricano,

Rosert B. NIcHOLson,

Attorneys.

Fepruary 1971.

U.8. GOVERNMENT PRINTING OFFICE: 1971 N