IN THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Nos. 99-3097, 99-3107, 99-3279
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MICHAEL D. ANDREAS,
Defendant-Appellant
Nos. 99-3098, 99-3106, 99-3363
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
TERRANCE S. WILSON
Defendant-Appellant
No. 99-3078
UNITED STATES OF AMERICA,
Plaintiff-Cross-Appellant,
v.
MICHAEL D. ANDREAS and
TERRANCE S. WILSON,
Defendants-Cross-Appellees
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
(Hon. BLANCHE M. MANNING)
REPLY BRIEF FOR CROSS-APPELLANT
UNITED STATES OF AMERICA
SCOTT R. LASSAR
United States Attorney
Of Counsel
PHILIP GUENTERT
Assistant United States Attorney
219 S. Dearborn Street
Fourth Floor
Chicago, Illinois 60604
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JOEL I. KLEIN
Assistant Attorney General
A. DOUGLAS MELAMED
Deputy Assistant Attorney General
JOHN J. POWERS, III
MARION L. JETTON
ROBERT J. WIGGERS
ANDREA LIMMER
Attorneys
Department of Justice
Room 10542
601 D Street, N.W.
Washington, D.C. 20530
(202) 514-3680
JAMES M. GRIFFIN
MARVIN N. PRICE, JR.
ROBIN R. MANN
JAMES H. MUTCHNIK
KEVIN C. CULUM
Attorneys
Department of Justice
209 S. LaSalle Street
Chicago, Illinois 60604
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TABLE OF CONTENTS
ARGUMENT
The Sentences of Andreas and Wilson Should Have Been
Enhanced Due to Their Roles in the Conspiracy
- This Court Can Review the District Court's Decision for
Legal as
Well as Factual Errors
- The District Court Committed Reversible Factual and Legal Errors
- a. Andreas
- Wilson
CONCLUSION
TABLE OF AUTHORITIES
Cases:
Astor Chauffeured Limousine Co. v. Runnfeldt Investment Corp.,
910 F.2d 1540 (7th Cir. 1990) 5
Chaveriat v. Williams Pipe Line Co., 11 F.3d 1420 (7th Cir.
1993) 6
Medcom Holding Co. v. Baxter Travenol Laboratories, Inc., 106 F.3d 1388
(7th Cir. 1997) 5
United States v. Bradley, 165 F.3d 594 (7th Cir. 1999) 5
United States v. Damico, 99 F.3d 1431 (7th Cir. 1996), cert.
denied, 519 U.S. 1151 (1997) 1
United States v. DeGovanni, 104 F.3d 43 (3rd Cir. 1997) 8
United States v. Dillard, 43 F.3d 299 (7th Cir. 1994) 8, 10
United States v. Emerson, 128 F.3d 557 (7th Cir. 1997) 1
United States v. Evans, 92 F.3d 540 (7th Cir. 1996) 7, 9
United States v. Hardamon, 188 F.3d 843 (7th Cir. 1999) 4, 7
United States v. Kamoga, 177 F.3d 617 (7th Cir.), cert. denied, 120
S.Ct 355 (1999) 3, 4, 6, 7
United States v. Mustread, 42 F.3d 1097 (7th Cir. 1994) 7
United States v. Sierra, 188 F.3d 798 (7th Cir. 1999) 3
United States v. Szarwark, 168 F.3d 993 (7th Cir. 1999) 5
United States v. Tai, 41 F.3d 1170 (7th Cir. 1994) 1
United States v. Young, 34 F.3d 500 (7th Cir. 1994) 10
Statutes and Guidelines:
18 U.S.C. 3661 4
18 U.S.C. 3742(e)(1)-(2) and (f)(1) 1
28 U.S.C. 991(b)(1)(B) 1
U.S.S.G. §3B1.1 3
U.S.S.G. §3B1.1, Commentary, Note 4 2, 9
U.S.S.G. §3B1.1(a) 3, 6
U.S.S.G. §3B1.1(b) 3
U.S.S.G. §6A1.3 4
ARGUMENT
The Sentences of Andreas and Wilson Should Have Been
Enhanced Due to Their Roles in the Conspiracy
- This Court Can Review the District Court's Decision for Legal as Well as
Factual Errors.
In their briefs as cross-appellees, defendants implicitly deny this Court's power to review
the district court's legal errors by insisting that its application of the Sentencing Guidelines was
a purely factual determination that can be reviewed only for clear error. Andreas Reply Brief
and Cross-Appellee Br. 18 ("Andreas Reply"); Wilson Combined Responsive/Reply Br. 20
("Wilson Resp. Br.). That is, of course, a significant misstatement of the law. By statute this
Court, in an appeal by the defendant or the government, is to determine whether a sentence was
imposed "in violation of law" or "as a result of an incorrect application of the sentencing
guidelines," and if it finds such an error it is to remand the case for the imposition of a correct
sentence. 18 U.S.C. 3742(e)(1)-(2) and (f)(1). Moreover, the very purpose of allowing appeals
of Guidelines violations is to further the legislative purpose of "avoiding unwarranted sentencing
disparities among defendants with similar records who have been found guilty of similar
criminal conduct," 28 U.S.C. 991(b)(1)(B), a goal that can be achieved only if district courts
apply the Guidelines in accordance with their policy and with settled legal standards. As this
Court has routinely held, therefore, it can review sentencing decisions for errors of law as well
as errors of fact, and review of legal errors is de novo. See United States v.
Emerson, 128 F.3d
557, 562 (7th Cir. 1997); United States v. Damico, 99 F.3d 1431, 1436
(7th Cir. 1996), cert.
denied, 519 U.S. 1151 (1997); United States v. Tai, 41 F.3d 1170, 1174
(7th Cir. 1994).
In any event, the district court's conclusions regarding defendants' roles in the conspiracy
cannot be reconciled with indisputable facts. The record establishes the leadership and
managerial roles of Andreas and Wilson by demonstrating that their co-conspirators followed
them and adopted Andreas's and Wilson's proposals. As discussed in the Government's earlier
brief (U.S. Br. 3-10, 66-73), the other companies did not merely continue to agree on
prices
among themselves, as they had been doing prior to Archer Daniels Midland Co.'s ("ADM")
entry into the market. They ceded a large fixed market share to ADM, as Andreas had insisted
both personally and through Wilson and Whitacre. Moreover, before ADM's entry, price fixing
arrangements were "very loose." Tr. 1683.(1) After its
entry the other conspirators adopted the
organizational framework Wilson advocated: they established a legitimate-looking "cover"
organization to disguise their unlawful meetings, and a system of sales volume allocations, with
reports to a central auditor to ensure prices remained stable. This record of accomplishment is
the ultimate proof of the leadership and managerial roles of Andreas and Wilson. Finally, as set
out in the earlier brief (U.S. Br. 66-73), the district court's decision denying sentencing
enhancements is built on a number of subsidiary factual and legal errors that require setting it
aside.
- The District Court Committed Reversible Factual and Legal Errors.
- Andreas.
- Andreas's primary response to the government's brief is a variation on his earlier
theme that he is not guilty of conspiring at all (Andreas Reply 19-21), a contention rejected by
the jury and the district court, which warrants no further rebuttal here.(2) See U.S. Br. 14-17.
- As we noted in our opening brief, Section 3B1.1 provides that a defendant's offense
level should be increased if the defendant was an organizer, leader, manager, or supervisor of
criminal activity "that involved five or more participants or was otherwise extensive." U.S.S.G.
§3B1.1 (a), (b). In this case, Andreas apparently does not deny that the lysine conspiracy
"involved five or more participants or was otherwise extensive" within the meaning of U.S.S.G.
§3B1.1(a), as found by the district court. SA 225. Rather, Andreas argues (Andreas
Reply 21-23) that there is no reliable evidence that ADM sales executives participated in the
conspiracy
and that the government should be estopped from arguing otherwise. Both arguments are
wrong.
To begin with, the exact number of ADM executives who participated in the conspiracy
is not important given the district court's undisputed finding that "[t]he sheer girth of the lysine
conspiracy" supported a finding that the conspiracy was otherwise extensive. SA 225. In this
situation, the district court correctly noted that the issue is whether Andreas had a greater role in
the offense than others (id. at 225-26), an issue we address infra at p. 7.
Indeed, even assuming
that fewer than five of the conspiracy participants reported to Andreas, an adjustment for his role
in the offense is still warranted if he "organized or supervised a criminal activity involving four
other participants." United States v. Kamoga, 177 F.3d 617, 621 (7th Cir.),
cert. denied, 120
S.Ct 355 (1999). Section 3B1.1 "is designed precisely to prevent masterminds of criminal
schemes from escaping responsibility for their role simply by delegating some authority to only
one or two deputies." Id. at 621-22. Rather, an adjustment for role in the offense is
warranted
when other participants in the conspiracy act "according to the organizer's design and in
furtherance of his or her plan." Id. at 622. That plainly happened in this case when
the
non-ADM participants in the conspiracy accepted the allocation plan urged by Andreas at Irvine
and acted to implement it.
In any event, the government did present reliable evidence at the sentencing hearing
supporting its contention that at least four ADM sales executives (Shuji Tani, Marty Allison,
Alfred Jansen, and John Ashley) were told about the conspiracy after the Irvine meeting and
subsequently helped implement it. GA 205-06, 208, 213-14.(3) Contrary to Andreas's argument
(Reply 22-23), the statements are admissible and credible.
Hearsay evidence is admissible for
purposes of sentencing, "provided that the information has sufficient indicia of reliability to
support its probable accuracy." U.S.S.G. §6A1.3. Accord, 18 U.S.C. 3661; United
States v.
Hardamon, 188 F.3d 843, 849 (7th Cir. 1999). In this case, the accuracy of
the statements in
issue is buttressed by their detail and their consistency with the evidence at trial.(4) Moreover,
since the statements are facially credible, a decision to reject them on grounds of credibility
would have called for an explanation. The district court, however, failed even to acknowledge
the existence of the government's evidence, citing instead to a witness who said nothing about
whether any ADM sales executives were aware of the lysine conspiracy. SA 225; U.S. Br. 68
&
n. 54. A finding that is contrary to the only probative evidence of record on an issue is clearly
erroneous. See, e.g., United States v. Szarwark, 168 F.3d 993, 996-97
(7th Cir. 1999); United
States v. Bradley, 165 F.3d 594, 596 (7th Cir. 1999).
Andreas's contention that the doctrine of judicial estoppel bars reliance on this probative
evidence (Reply 21-22) is untenable. That doctrine only applies when a party intentionally
adopts inconsistent positions to gain unfair advantage in consecutive proceedings, prevailing on
one theory in the first case and then adopting its opposite in the second. See, e.g.,
Medcom
Holding Co. v. Baxter Travenol Laboratories, Inc., 106 F.3d 1388, 1396-97
(7th Cir. 1997). In
this case the doctrine is inapplicable because judicial estoppel applies only when the second
position taken is inconsistent "with one underlying a prior judgment," Astor Chauffeured
Limousine Co. v. Runnfeldt Investment Corp., 910 F.2d 1540, 1548 (7th Cir.
1990), and here
there is no prior judgment. Moreover, the government has been consistent in its position in this
case that Tani, Allison, Jansen, and Ashley were participants in the conspiracy. It stated that
position in its Bill of Particulars even before trial, and if Andreas considered that position
inconsistent with the government's theory of guilt he could have raised it at trial.(5)
In any event, Andreas's belated contention that the government has contradicted itself is
wrong. The evidence at trial showed that at the time of the June 1992 meeting in Mexico City
the only ADM personnel who knew of it were Andreas, Wilson, and Whitacre, and that up to the
time of Andreas's October 25, 1993, meeting with Kazutoshi Yamada at which a market
allocation agreement was finally reached, Andreas had opposed informing other ADM sales
executives of the existence of the conspiracy. U.S. Br. 4; SA 676-78. The prosecutor referred to
that evidence several times in his closing statement to rebut Andreas's defense at trial that,
regardless of what he said on tape, his intentions were innocent; the argument was that keeping
the arrangements with ADM's competitors secret even from his own sales staff implied an
awareness of guilt. That evidence and line of argument is entirely consistent with the sentencing
evidence that Tani and Allison learned of the conspiracy from other persons, or were informed
after October 1993.(6)
Nor is there any contradiction between the jury verdict and use of the sentencing
evidence. The issue at trial was Andreas's subjective state of mind, which is wholly irrelevant to
the coverage of U.S.S.G. §3B1.1(a); he can be given the four point enhancement even if
he did
not know that the salesmen had learned of the conspiracy. United States v. Kamoga,
177 F.3d at
621-22. Similarly, it was unnecessary for the jury to believe that he continued to hide the
conspiracy from his sales executives after October 1993, let alone that he was successful in
doing so, in order to find that he intended to fix prices and allocate market shares. There was
ample other evidence to support that element of the offense. Under these circumstances, the
government properly relied on the Tani and Allison statements for purposes of sentencing.
- In arguing that the district court had a "solid factual basis" for its conclusion that
Andreas was not a leader (Reply 23-25), Andreas ignores the court's underlying errors of law in
construing §3B1.1's reference to "organizer or leader." As pointed out in the government's
earlier brief, the court erred particularly in assuming that to be a leader a defendant needed
power to control the other participants, and in failing to understand the law regarding collective
leadership (U.S. Br. 69-71). That is clear from the court's holding that Andreas could not have
been a leader because he could not "coerce Ajinomoto and the rest," or just "directly call[]
someone at Ajinomoto, Sewon, Eurolysine, and so forth, and simply order[] them to sell a
specific volume at the set 'agreement price,'" but instead had to negotiate with Yamada. SA
227. As this Court has repeatedly held, "[c]ontrol *** is not the decisive factor,"
Hardamon,
188 F.3d at 852, quoting Kamoga, supra, 177 F.3d at 612, and
"influence" is enough. See
United States v. Mustread, 42 F.3d 1097, 1105 (7th Cir. 1994).
Andreas's initial defense of the district court's reasoning rehashes his contention that
there was no agreement between ADM and its competitors (Reply 23), ignoring the jury's
verdict and the district court's findings. The fact that the other companies had been fixing prices
before ADM entered the market (Reply 19, 23) is wholly consistent with Andreas taking a
leading role after ADM entered. See United States v. Evans, 92 F.3d 540, 545
(7th Cir. 1996).
In fact, while ADM's entry initially destabilized the market, the evidence clearly showed
that the conspiracy ultimately followed the course along which Andreas led it, giving ADM the
benefit of a large guaranteed market share at fixed high prices. As Mimoto acknowledged at
trial (Tr. 1001-02), he and the other lower level participants in the conspiracy were unable to
reach an agreement on a sales volume allocation and looked to top management, including
Andreas, to resolve the dispute. See also Tr. 1707 (Ikeda). And, indeed, Andreas broke the
impasse by meeting personally with Yamada at Irvine and agreeing on a compromise that
ultimately was accepted by all of the conspirators. U.S. Br. 7-9. This is exactly the sort of
leadership of criminal activity that warrants a four level increase for role in the offense. Cf.
United States v. Dillard, 43 F.3d 299, 307 (7th Cir. 1994) (defendant's
"participation in the
operation was most critical to its success").
Contrary to Andreas's contention (Reply 24) the government does not "confuse
legitimate business hierarchy with the very different concept of relative responsibility for illegal
conduct" in arguing that Andreas was more culpable than Wilson. In United States v.
DeGovanni, 104 F.3d 43, 46 (3rd Cir. 1997), the case on which Andreas
relies, the court held that
a police sergeant who engaged in extracurricular criminal activities with some of his police
subordinates was not a leader of the criminal activities in which his police rank played no part.
His status in the police department "was not enough to substantiate an enhancement for
active
supervision of other members of the conspiracy" where he was a mere "rank and
file" participant
in the criminal activity. Ibid. In this case, by contrast, Andreas engaged in the
conspiracy in his
capacity as a corporate officer of ADM and on its behalf. He made the decisions for ADM, he
actively directed and controlled the roles of his corporate subordinates in the conspiracy, and he
personally negotiated the sales volume allocation with Yamada. Andreas had greater relative
responsibility for the illegal conduct not because he was higher in the legitimate business
hierarchy, but because he actively exercised the power that status gave him to advance the
criminal conspiracy.
Andreas further argues (Reply 24) that the collective leadership principle of
Evans, 92
F.3d at 545 (cited at U.S. Br. 70-71), is "inapposite" merely because the leaders of the
conspiracy in this case did not call themselves a "board of directors" or operate by majority vote
as they did in Evans. Those distinctions, however, are immaterial. The Guidelines
themselves
plainly say that substance, not nomenclature, is what counts. U.S.S.G. §3B1.1,
Commentary,
Note 4. The organization in this case may have been somewhat less formal than in
Evans, and
decisions may have been made by consensus rather than majority vote, but the fundamental
concept of collective leadership is the same. Andreas and Yamada, whose companies shared
60% of the market allocation (U.S. Br. 71 n. 57), together with the heads of the smaller
companies involved, jointly made the important decisions for the conspiracy. The holding of
Evans thus squarely applies, and the district court erred as a matter of law in not
applying it.
- Wilson.
Wilson, in his laconic response to the government's argument that he should have
received an enhanced sentence based on his management role in the conspiracy, basically tracks
Andreas's argument. Wilson asserts that the government is only complaining of factual errors,
and that he could not be a leader or manager because the other firms had been fixing prices
before ADM entered the market, and they sometimes conspired against ADM. Wilson Resp. Br.
20-21. Like Andreas's arguments, Wilson's contentions are wrong because they ignore the
finding that Wilson participated in a conspiracy with the other firms,(7) and this Court's holding in
Evans that latecomers may become leaders.
As with Andreas, Wilson's contention that he was not a manager of the conspiracy is
belied by the fact that other members of the conspiracy followed his lead. The other firms
adopted all the steps that he advocated, including the establishment of an industry association as
a cover for their price fixing activities,(8) filing of reports
on sales volumes with Kanji Mimoto as
a means to implement their sales volume allocation agreement (GA 4-5), and a compensation
arrangement in case a firm exceeded its quota. See GA 135 (Ikeda confirming that everyone
accepted "ADM's *** proposal"). The district court decision did not mention these facts, let
alone negate them (Wilson Resp. Br. 21 n. 27), but applied the legally erroneous assumption that
Wilson had to exercise control over the other participants in order to be a manager. As shown in
the government's main brief, influence over the others is sufficient to make a defendant a leader
or manager (U.S. Br. 69-70). This Court has repeatedly held that "control over others is not the
sine qua non of a finding that a person is [a] manager or supervisor." Dillard, 43
F.3d at 307,
quoting United States v. Young, 34 F.3d 500, 507 (7th Cir. 1994). In
light of its legal error, the
district court's decision must be set aside.
CONCLUSION
For the reasons set forth in the Brief for the United States and in this brief, the judgment
of the district court must be set aside to the extent it refused to enhance the sentences for
Andreas's and Wilson's leadership and managerial roles, respectively, and the case remanded for
resentencing under proper legal standards.
Respectfully submitted.
SCOTT R. LASSAR
United States Attorney
Of Counsel
PHILIP GUENTERT
Assistant United States Attorney
219 S. Dearborn Street
Fourth Floor
Chicago, Illinois 60604
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JOEL I. KLEIN
Assistant Attorney General
A. DOUGLAS MELAMED
Deputy Assistant Attorney General
JOHN J. POWERS, III
MARION L. JETTON
ROBERT J. WIGGERS
ANDREA LIMMER
Attorneys
Department of Justice
Room 10542
601 D Street, N.W.
Washington, D.C. 20530
(202) 514-3680
JAMES M. GRIFFIN
MARVIN N. PRICE, JR.
ROBIN R. MANN
JAMES H. MUTCHNIK
KEVIN C. CULUM
Attorneys
Department of Justice
209 S. LaSalle Street
Chicago, Illinois 60604
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CERTIFICATE OF SERVICE
I, Robert J. Wiggers, hereby certify that on this 2nd day of December 1999, I caused to
be served a copy of REPLY BRIEF FOR CROSS-APPELLANT UNITED STATES OF
AMERICA by first-class mail on the following:
Reid H. Weingarten, Esquire
Steptoe & Johnson LLP
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036-1795
John M. Bray, Esquire
King & Spaulding
1730 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
FOOTNOTE
1. "Tr." refers to the trial transcript. In addition, "SA" refers to the
joint appendix of
Andreas and Wilson; "RSA" refers to their joint supplemental appendix; "GA" refers to the
government's supplemental appendix; "G.Ex." refers to a government exhibit; and "Dkt.No."
refers to the district court docket number.
2. In making this argument Andreas suggests that the factors
mentioned in Note 4 to
U.S.S.G. §3B1.1 are exclusive (Andreas Reply 19). That is contrary to the law of this
Circuit.
See U.S. Br. 71 n. 58, citing United States v. Sierra, 188 F.3d 798, 803-04
(7th Cir. 1999).
3. Tani learned of the conspiracy from one of the Japanese
co-conspirators. GA 205-06.
Allison learned of it "during the fall of 1993," along with Jansen, from Whitacre. GA 213-14.
Allison also said that Ashley was aware of it. GA 214. Andreas's claim that Jansen was
not told
about the conspiracy (Andreas Reply 21) refers only to the time of the Mexico City meeting in
June 1992 (RSA 19).
4. Allison's statement, for example, includes a list of meetings he
and a colleague
attended with representatives of European competitors to implement the conspiracy. GA
215-16. Tani said that Mimoto told him about meeting in Hawaii with Wilson and Whitacre,
GA
205-06; the meeting was proven at trial both by an FBI videotape of it and by Mimoto's
testimony. Tr. 1081. The trial evidence shows that it was held on March 10, 1994, while Tani
said that Mimoto told him about it in March 1993. Speaking over four years after the event Tani
apparently confused the year, but the other details confirm the truthfulness of his statement.
5. While Andreas suggests (Reply 22) that the government is
adopting a new position on
appeal, it actually identified the four executives as participants in its Bill of Particulars, Nos. 3
and 17, and Exhibit A (filed Apr. 28, 1998) (Dkt.No. 279), as well as in its Sentencing
Memorandum at 67 (filed Jan. 28, 1999) (Dkt.No. 480), to which the statements of Allison and
Tani were attached (GA 204, 211). Andreas's reference to a colloquy regarding Wilson's
sentence (RSA 107-08) is irrelevant because the government never contended that Wilson
controlled ADM's lysine sales executives.
6. The prosecutor went through the various conspiratorial meetings
in chronological
order, pointing out the defendants' involvement, and commenting on the fact the ADM's
salesmen were not to be told about them. Tr. 5620-21 (Mexico City meeting, June 1992),
5652-53 (Decatur, April 1993), 5674 (Vancouver, June 1993), 5692-93 (Irvine, October 1993),
5703
(Hawaii, March 1994). Only the last reference raises any question with respect to the
government's position at sentencing, and given the overall record that inconsequential error
hardly
warrants the "strong medicine" of judicial estoppel. See Chaveriat v. Williams Pipe Line
Co.,
11 F.3d 1420, 1428 (7th Cir. 1993).
7. The facts underlying the government's argument are set out in its
Statement of Facts in
its main brief (U.S. Br. 2-10) and in the Presentence Investigation Report.
8. Such an industry association had been used as a cover in the citric
acid price fixing
conspiracy (Tr. 2640-41). Although Wilson's proposal for a similar lysine association was
initially greeted with some suspicion, it was ultimately adopted (Tr. 4208, 4589-90). See G.Ex.
3/10/94 1B96, 98, 94, 95-T5, at 150 (Wilson describing association as "perfect, perfect cover").
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