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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
UNITED STATES OF AMERICA )
)
v. ) Criminal No: H-92-152
)
JOHN J. JOHNSON, )
) (filed 2/17/94)
Defendant. )
)
)
UNITED STATES' PRE-TRIAL MEMORANDUM OF LAW
Respectfully submitted,
"/s/"
JANE E. PHILLIPS
"/s/"
JOAN E. MARSHALL
"/s/"
MARK R. ROSMAN
Attorneys
Antitrust Division
U.S. Department of Justice
Earle Cabell Federal Bldg.
1100 Commerce Street, Room 8C6
Dallas, Texas 75242-0898
Tel: (214) 767-8051
Page I
TABLE OF CONTENTS
PAGE
INTRODUCTION...............................................1
I STATEMENT OF THE CASE ....................................1
II LEGAL ISSUES RELATING TO THIS SHERMAN
ACT CONSPIRACY............................................5
A. Bid Rigging is a Per Se Violation of the
Sherman Act..........................................5
B. The Agreement to Rig Bids is the Offense.............6
C. Proof that the Defendant Knowingly Joined a
Conspiracy to Rig Bids Provides Proof of the
Requisite Intent ....................................6
D. The Defendant's Activities Were Within
The Flow of, or Substantially Affected,
Interstate Commerce..................................8
E. Impermissible Defenses to a Violation of the
Sherman Act..........................................10
III LEGAL ISSUES RELATING TO THE FALSE
STATEMENT COUNT ..........................................11
IV LEGAL ISSUES RELATING TO THIS MAIL
FRAUD CONSPIRACY..........................................13
V PROOF OF THE EXISTENCE OF A CONSPIRACY....................16
VI EVIDENTIARY ISSUES........................................18
A. Testimony of the Witnesses ..........................18
1. Evidence of the Conspiracy......................18
2. Admissibility of Acts and Declarations
of Co-Conspirators..............................18
3. A Witness May Testify to his State
of Mind Concerning Any Conspiratorial
Agreements ....................................19
4. A Co-Conspirator May Testify As to
the Common Meaning of Terms Used by
Co-Conspirators and His Understanding
of Their Statements ............................20
Page ii
TABLE OF CONTENTS - CON'T
PAGE
5. Verbal Acts ....................................21
6. It Is Permissible For A Witness
to State The Substance Of A
Conversation Even Though He May
Not Recall Specific Details ....................23
7. Use of Grand Jury Statements As
Substantive Evidence At Trial ..................25
8. Use Of Leading Questions To
Hostile Witnesses ..............................26
9. Impeachment by Contradiction
Is Not Permitted On Collateral
Matters ........................................27
B. Introduction Of Documentary
Evidence ............................................29
1. Conspirators' Records Of Bid
Rigging Are Admissible As
Business Records Under
Fed. R. Evid. 803(6)............................29
2. Conspirators' Records Of Bid
Rigging Are Also Admissible As
Co-Conspirator Statements
Under Fed. R. Evid. 801(d)(2)(E)................31
3. Business Records Prepared By One
Company and Received and Kept By
Another Are Admissible Under
Fed. R. Evid. 803(6)............................31
4. A Summary Chart Reflecting The
Contents Of Voluminous Business
Records Is Admissible Under Fed. R.
Evid. 1006 Where Examination Of
Those Records Individually Is
Inconvenient.....................................33
CONCLUSION............................................37
.
Page iii
TABLE OF AUTHORITIES
CASES PAGE
American Tobacco Co. v. United States,
328 U.S. 781 (1946).............................................16
Batsell v. United States,
217 F.2d 257 (8th Cir. 1954) . ................................21
Bourjaily v. United States,
483 U.S. 171 (1987) ............................................18,19
Business Electronics v. Sharp Electronics,
485 U.S. 717 (1988) . . .......................................5
Chumbler v. Alabama Power Co.,
362 F.2d 161 (5th Cir. 1966) ..................................27
Ellis v. City of Chicago,
667 F.2d 606 (7th Cir. 1981)....................................27
Ford Motor Co. v. Auto Supply Co., Inc.,
661 F.2d 1171 (8th Cir. 1981) ..................................34
Gulf South Machine, Inc. v. Kearney
and Trecker Corp., 756 F.2d 377
(5th Cir.), cert. denied, 474 U.S. 902 (1985) ............30
Haney v. Mizell Memorial Hospital,
744 F.2d 1467 (11th Cir. 1984) .................................26,27
Head v. Halliburton Oilwell Cementing Co.,
370 F.2d 545 (5th Cir. 1966)....................................27
Hood v. Tenneco Texas Life Ins. Co.,
739 F.2d 1012 (5th Cir. 1984) . . . ..........................6
McLain v. Real Estate Board of New Orleans, Inc.,
444 U.S. 232 (1980).............................................9
McNally v. United States,
483 U.S. 350 (1987) ............................................14
Melton v. O. F. Shearer & Sons, Inc.,
436 F.2d 22 (6th Cir. 1970) ....................................27
Mississippi River Grain Elevator, Inc. v.
Bartlett & Co., Grain, 659 F.2d 1314
(5th Cir. 1981) ................................................32
TABLE OF AUTHORITIES
Page iv
CASES - CONTINUEDPAGE
Nash v. United States,
229 U.S. 373 (1913) . ..........................................6
Overton v. United States,
403 F.2d 444 (5th Cir. 1968) . . ...............................23
Perkins v. Volkswagen of America, Inc.,
596 F.2d 681 (5th Cir. 1979) ..................................27
Pittsburgh Plate Glass Co. v. United States,
260 F.2d 397 (4th Cir. 1958), aff'd,
360 U.S. 395 (1959) ............................................17
Tripp v. United States,
381 F.2d 320 (9th Cir. 1967) . . . ...........................24
Ward v. United States,
296 F.2d 898 (5th Cir. 1961) ..................................22
White Industries v. Cessna Aircraft Co.,
611 F. Supp. 1049 (W.D. MO. 1985) ..............................35
United States v. Alfred,
867 F.2d 856 (5th Cir. 1989)....................................14
United States v. All Star Industries,
962 F.2d 465 (5th Cir.), cert. denied,
113 S. Ct 377 (1992) ...........................................5,6,7,8,10
United States v. Allen, 354 F.2d 398
(10th Cir.), cert. denied, 434 U.S. 836 (1977)....................14
United States v. Alvarez,
625 F.2d 1196 (5th Cir. 1980) (en banc), cert.
denied, 101 S.Ct. 2017 (1981) ..................................17
United States v. Ascarrunz
838 F.2d 759 (5th Cir. 1988) ...................................8
United States v. Aubrey,
878 F.2d 825 (5th Cir.), cert. denied,
110 S.Ct. 289 (1989) . . ......................................15
United States v. Beebe,
792 F.2d 1363 (5th Cir. 1986) ..................................13
Page v
TABLE OF AUTHORITIES
CASES - CONTINUED PAGE
United States v. Bi-Co Pavers, Inc.,
741 F.2d 730 (5th Cir. 1984)....................................8
United States v. Bigham,
812 F.2d 943 (5th Cir. 1987)....................................25
United States v. Blankenship,
746 F.2d 233 (5th Cir. 1984)....................................24
United States v. Booty,
621 F.2d 1291 (5th Cir.), modified
& reh'g denied, 627 F.2d 762 (5th Cir. 1980) .................25
United States v. Boyd,
566 F.2d 929 (5th Cir. 1978)....................................21
United States v. Bryant,
770 F.2d 1283 (5th Cir. 1985) ..................................12
United States v. Burke,
495 F.2d 1226 (5th Cir.), cert. denied,
419 U.S. 1079 (1974)............................................21,22
United States v. Cadillac Overall Supply Co.,
568 F.2d 1078 (5th Cir.), cert. denied,
473 U.S. 903 (1978).............................................7,9
United States v. Cargo Service Stations,
657 F.2d 676 (5th Cir. 1981), cert. denied,
455 U.S. 1017 (1982) ...........................................7,8,9
United States v. Caucci, 635 F.2d 441
(5th Cir.), cert. denied,
454 U.S. 831 (1981) ..........................................13
United States v. Cohen,
631 F.2d 1223 (5th Cir. 1980) ..................................28
United States v. Consolidated Packaging Corp.,
575 F.2d 117 (7th Cir. 1978) ...................................7
United States v. Coyler,
571 F.2d 941 (5th Cir. 1978)....................................32
United States v. Cruz,
805 F.2d 1464 (11th Cir. 1986),
cert. denied, 481 U.S. 1006 (1987)..............................23
Page vi
TABLE OF AUTHORITIES
CASES - CONTINUED PAGE
United States v. Daniels,
572 F.2d 535 (5th Cir. 1978)....................................21
United States v. Dennis,
625 F.2d 782 (8th Cir. 1980)....................................25
United States v. Diez,
515 F.2d 892 (5th Cir. 1975)....................................36
United States v. Distler,
671 F.2d 954 (6th Cir.), cert. denied,
454 U.S. 827 (1981) ............................................26
United States v. Duncan,
919 F.2d 981 (5th Cir. 1990), cert. denied,
111 S.Ct. 2036 (1991) ..........................................14,15,16,34,36
United States v. Dynalectric Co.,
859 F.2d 1559 (11th Cir. 1988) ................................14
United States v. Elam,
678 F.2d 1234 (5th Cir. 1982) ..................................16,17
United States v. Evans,
572 F.2d 455 (5th Cir.), cert. denied,
439 U.S. 870 (1978) ............................................31,35,36
United States v. Flom,
558 F.2d 1179 (5th Cir. 1977) ..................................5,32
United States v. Freeman,
619 F.2d 1112 (5th Cir.), cert. denied,
450 U.S. 910 (1980) ............................................21
United States v. Gillen,
599 F.2d 541 (3d Cir. 1979), cert. denied,
100 S.Ct. 137 (1979)............................................10
United States v. Goodman,
605 F.2d 870 (5th Cir. 1979)....................................19
United States v. Green,
964 F.2d 365 (5th Cir. 1992) . . . ...........................15
United States v. Gremillion,
464 F.2d 901 (5th Cir.), cert. denied,
409 U.S. 1085 (1972) . . ......................................30
Page vii
TABLE OF AUTHORITIES
CASES - CONTINUED PAGE
United States v. Guzman,
781 F.2d 428 (5th Cir. 1986). . ................................11,12
United States v. Hatch,
926 F.2d 387 (5th Cir. 1991) . . . ...........................14
United States v. Hawkins,
661 F.2d 436 (5th Cir. 1981),
cert. denied, 456 U.S. 991 (1982) ..............................27
United States v. Holley,
826 F.2d 331 (5th Cir. 1987)....................................12
United States v. Hyde,
448 F.2d 815 (5th Cir. 1971),
cert. denied, 404 U.S. 1058 (1972)..............................29,30
United States v. Keane,
522 F.2d 534 (7th Cir. 1975),
cert. denied, 424 U.S. 976 (1976) ..............................23
United States v. Krulewitch,
167 F.2d 943 (2d Cir. 1948),
rev'd on other grounds, 336 U.S. 440 (1949) ....................24
United States v. Lambert,
501 F.2d 943 (5th Cir. 1974)(en banc) ..........................12
United States v. Lemire,
720 F.2d 1327 (D.C. Cir. 1983),
cert. denied, 467 U.S. 1226 (1984) ............................37
United States v. Lichenstein,
610 F.2d 1272 (5th Cir.),
cert. denied, 447 U.S. 907 (1980) ..............................11
United States v. Lueben,
838 F.2d 751 (5th Cir. 1988)....................................12
United States v. MMR Corp.,
907 F.2d 489 (5th Cir. 1990),
cert. denied, 111 S.Ct. 1388 (1991) ...........................6,10,17
United States v. Massey,
827 F.2d 995 (5th Cir. 1987)....................................13,16
Page viii
TABLE OF AUTHORITIES
CASES - CONTINUEDPAGE
United States v. Mandujano,
499 F.2d 370 (5th Cir. 1974), cert. denied,
419 U.S. 1114 (1975) ..........................................21
United States v. Matlock,
415 U.S. 164 (1974) ...........................................19
United States v. Maze,
414 U.S. 395 (1974) ............................................15
United States v. Mazyak,
650 F.2d 788 (5th Cir. 1981),
cert. denied, 455 U.S. 922 (1982) ..............................31
United States v. McClelland,
868 F.2d 704 (5th Cir. 1989) ...................................14
United States v. Metropolitan Enterprises,
728 F.2d 444 (10th Cir. 1984)...................................7
United States v. Miller,
771 F.2d 1219 (9th Cir. 1985) ..................................23
United States v. Mobil Materials, Inc.,
871 F.2d 902 (10th Cir.), aff'd on reh'g,
881 F.2d 866 (10th Cir. 1989),
cert. denied, 110 S.Ct 837 (1990)...............................8
United States v. New York Great Atlantic
& Pacific Tea Co., 137 F.2d 459 (5th Cir.),
cert. denied, 320 U.S. 783 (1943) ..............................20
United States v. Notarantonio,
758 F.2d 777 (1st Cir. 1985)....................................12
United States v. Olantunjui,
872 F.2d 1161 (3rd Cir. 1989)...................................14
United States v. Paramount Pictures, Inc.
334 U.S. 131 (1948).............................................8
United States v. Parke, Davis & Co.,
362 U.S. 29 (1960)..............................................18
United States v. Perez,
823 F.2d 854 (5th Cir. 1987) ..................................19
Page ix
TABLE OF AUTHORITIES
CASES - CONTINUED PAGE
United States v. Pool,
660 F.2d 547 (5th Cir. 1981)....................................19
United States v. Possick,
849 F.2d 332 (8th Cir. 1988)....................................34
United States v. Postal,
589 F.2d 862 (5th Cir.),
cert. denied, 444 U.S. 832 (1979) ..............................31
United States v. Puente,
982 F.2d 156 (5th Cir. 1993)....................................11,12
United States v. Reese,
775 F.2d 1066 (9th Cir. 1985) ..................................17
United States v. Richmond, 700 F.2d
1183 (8th Cir. 1983)............................................11
United States v. Robinson,
774 F.2d 261 (8th Cir. 1985)....................................34
United States v. Rodgers,
466 U.S. 475 (1984) ............................................13
United States v. Rodgers,
624 F.2d 1303 (5th Cir. 1980),
cert. denied, 101 S.Ct. 1360 (1981) ............................14
United States v. Sheppard,
688 F.2d 952 (5th Cir. 1982) . . . ...........................30
United States v. Smith,
550 F.2d 277 (5th Cir.), cert. denied,
434 U.S. 841 (1977) ............................................21
United States v. Smyth,
556 F.2d 1179 (5th Cir.),
cert. denied, 98 S.Ct. 190 (1977) ..............................34
United States v. Socony-Vacuum Oil Co.,
310 U.S. 150 (1940).............................................6,17
United States v. Stephens,
779 F.2d 232 (5th Cir. 1985)....................................36
Page x
TABLE OF AUTHORITIES
CASES - CONTINUED PAGE
United States v. Tafoya,
757 F.2d 1522 (5th Cir.),
cert. denied, 474 U.S. 921 (1985) . . ........................30,31
United States v. Thompson,
811 F.2d 841 (5th Cir. 1987)....................................30
United States v. Trenton Potteries Co.,
273 U.S. 392 (1927) ............................................17,21
United States v. United States Gypsum Co.,
438 U.S. 432 (1978).............................................7,10
United States v. Veytia-Bravo,
603 F.2d 1187 (5th Cir. 1979),
cert. denied, 444 U.S. 1024 (1980)........................32
United States v. Wheeler,
902 F.2d 778 (5th Cir. 1986)....................................14
United States v. Winn, 948 F.2d 145
(5th Cir. 1991), cert. denied,
112 S.Ct. 1599 (1992) ..........................................36
United States v. White,
765 F.2d 1469 (11th Cir. 1985)..................................12
United States v. Williamson,
424 F.2d 353 (5th Cir. 1970)....................................27
United States v. Young Bros., Inc.,
728 F.2d 682 (5th Cir. 1984),
cert. denied, 469 U.S. 881 .....................................5,7,9,15
STATUTES, RULES AND REGULATIONS
15 U.S.C. § 1.....................................................5
18 U.S.C. § 1001..................................................11
18 U.S.C. § 371 ..................................................13
18 U.S.C. § 1341..................................................14
Page xi
TABLE OF AUTHORITIES
STATUTES, RULES AND REGULATIONS - CONTINUED
PAGE
Fed. R. Civ. P. 43(b) ............................................22
Fed. R. Crim. P. 17 ..............................................35
Fed. R. Evid. 602 ................................................20
Fed. R. Evid. 608(b)..............................................27
Fed. R. Evid. 611(c)..............................................26,27
Fed. R. Evid. 701 ................................................20
Fed. R. Evid. 704 ................................................20
Fed. R. Evid. 801(c)..............................................22
Fed. R. Evid. 801(d)(1)(A)........................................25
Fed. R. Evid. 801(d)(2)(E)........................................18,19,31
Fed. R. Evid. 803(6)..............................................29,31,32
Fed. R. Evid. 1006................................................33
MISCELLANEOUS
Advisory Committee's Note to Rule 701.............................21
Advisory Committee's Note to subdivision (c) of Rule 801..........22
Advisory Committee's Note to Rule 803(6)..........................32
TREATISES
3 J. WEINSTEIN AND M. BERGER,
WEINSTEIN'S EVIDENCE............................................21,26,27,28,34
6 WIGMORE, EVIDENCE § 1770........................................29
C. McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE....................23,24,28,29
.
Page 1..
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
UNITED STATES OF AMERICA )
)
v. ) Criminal No: H-92-152
)
JOHN J. JOHNSON, )
)
Defendant. )
)
)
UNITED STATES' PRE-TRIAL MEMORANDUM OF LAW
INTRODUCTION
The defendant in this case is charged with (1)
conspiring to rig bids for the award and performance of contracts
to supply wholesale grocery products to public schools and other
public entities located in southeastern Texas, in violation of
Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) making a false
statement, in violation of 18 U.S.C. § 1001; and (3) conspiring
to commit mail fraud, in violation of 18 U.S.C. § 371. This
Pretrial Memorandum sets forth the factual background of the
crimes charged, various substantive legal issues relating to
these charges, and the relevant law applicable to a variety of
evidentiary issues that may arise during trial.
.
Page 2
I
STATEMENT OF THE CASE
The majority of school districts and many other
institutions in the Houston area periodically solicit competitive
bids for contracts to supply grocery products to the institution
for a given period of time. The duration of a contract can vary
from a few months to an entire year. However, most of the school
districts solicit bids twice yearly, the first bid covering fall
semester and the second covering spring semester. These bids
request prices on a variety of foods and food service products,
including frozen meats and vegetables, dry and canned goods, and
juices.
Generally, the school districts structure their bids in
one of two ways, either as a "line item" bid or a "fee" bid.
Under a line item bid, the wholesale grocery company submits a
unit price for each food or food-related item which the school
district anticipates purchasing during the upcoming contract
period. On a fee bid, the wholesale grocery company discloses
its unit cost for each item required by the school district and
submits a fee schedule showing the handling and delivery charge
which the grocery company will add to its unit cost. A fee bid
is awarded on an all-or-nothing basis, while line item bids are
awarded either on an all-or-nothing basis or separately to the
low bidder on each line item.
Payments for these contracts are routinely sent by the
school districts through the U.S. mail to the wholesale grocery
Page 3
company that is awarded a part of or the entire bid. A
substantial portion of the funding used by the public school
districts to purchase wholesale groceries for their breakfast and
lunch programs is provided by the Food and Nutrition Service,
United States Department of Agriculture, through its Child
Nutrition programs.
During the period charged in the indictment, defendant
John J. Johnson was the vice president and bid manager for
Glazier Foods Company ("Glazier Foods"). Glazier Foods sold and
distributed wholesale grocery products in the Houston area,
competing primarily with Sysco Food Services, Inc. of Houston and
the Houston Division of White Swan, Inc. The defendant's duties
at Glazier Foods during the period charged included the
preparation and submission of bids on behalf of his employer for
the award and performance of contracts to supply wholesale
groceries to school districts and other public entities.
The Indictment charges that the defendant discussed
among his competitors the submission of bids on upcoming
contracts to supply wholesale grocery products to certain public
school districts and other public entities in southeastern Texas;
designated which corporate co-conspirator would be the lowest
responsive bidder for all or part of contracts to supply
wholesale grocery products to certain public school districts and
other public entities; discussed and agreed upon prices to be
submitted on bids to these customers; and refrained from bidding
or submitted intentionally high, complementary bids for all or
Page 4
part of contracts to supply wholesale grocery products to certain
public school districts and entities. The defendant rigged and
discussed bids in at least twenty-five (25) school districts and
other public entities with his co-conspirators over a period of
five years. This was a classic case of bid-rigging activity.
One of the bids the defendant rigged with a competitor
is the subject of the False Statement count of the Indictment.
In August 1989, the defendant knowingly and willfully made false
and fraudulent statements and entries as to material facts, in
matters within the jurisdiction of the Veterans Administration,
an agency of the United States of America. These false
statements were contained in the Certificate of Independent Price
Determination which was incorporated into, and formed part of,
Glazier Foods' bid on Contract No. V580P-4645, a frozen juice
contract, awarded by the Veterans Administration Medical Center
#580 in Houston, Texas, on or about September 1, 1989. This bid
was submitted and caused to be submitted by the defendant on
behalf of Glazier Foods.
Finally, the indictment alleges that the defendant
knowingly and willfully conspired with his competitors to use the
United States mails in furtherance and execution of a scheme and
artifice to defraud public school districts in southeastern Texas
of money. The Indictment charges that it was a part and object
of the conspiracy that the defendant and others would submit
collusive, rigged, and fraudulent bids to school districts for
the award and performance of contracts to supply grocery products
Page 5.......
for a specified period of time and cause to be placed in a United
States post office or an authorized depository for mail, among
other things, periodic billing statements from and payments to
the corporate co-conspirators for wholesale grocery products they
supplied for contracts awarded to them on the basis of their
collusive, rigged, and fraudulent bids.
II
LEGAL ISSUES RELATING TO
THIS SHERMAN ACT CONSPIRACY
A. Bid Rigging is a Per Se Violation of the
Sherman Act
Section 1 of the Sherman Act, 15 U.S.C. § 1, declares
every contract, combination, and conspiracy in restraint of trade
to be illegal. "Despite the scope of its literal meaning, the
Supreme Court has always recognized that Section 1 was `intended
to prohibit only unreasonable restraints of trade.'" United
States v. All Star Industries, 962 F.2d 465, 468-69 (5th Cir.),
cert. denied, 113 S.Ct. 377 (1992) (emphasis in original)
[quoting Business Electronics v. Sharp Electronics, 485 U.S.
717, 724, 108 S.Ct. 1515, 1519 (1988)]. Big rigging is a per se
violation of the Sherman Act because it is among the practices
conclusively presumed to unreasonably restrain trade. All Star
Industries, 962 F.2d at 469 n.8, citing United States v.
Flom, 558 F.2d 1179, 1183 (5th Cir. 1977). See also United
States v. Young Bros., Inc., 728 F.2d 682, 687 (5th Cir. 1984),
cert. denied, 105 S.Ct. 246 (1984) (conspiracies between firms to
Page 6.......
submit collusive, noncompetitive, rigged bids are per se
violations of the Sherman Act). When a per se violation has
occurred, the government is not required to show any
anticompetitive effects because they are presumed to exist. All
Star Industries, 962 F.2d at 475 n.21; Hood v. Tenneco Texas
Life Ins. Co., 739 F.2d 1012, 1017 n.11 (5th Cir. 1984).
B. The Agreement to Rig Bids Constitutes the Offense
The agreement to rig bids for the award and performance
of contracts to supply wholesale groceries to public school
districts and other public entities constitutes the complete
Sherman Act offense. United States v. Socony-
Vacuum Oil Co., 310 U.S. 150, 218-223, 60 S.Ct. 811, 842-44
(1940) (basis of Sherman Act violation is the agreement itself).
The government need not allege or prove overt acts in furtherance
of a conspiracy to rig bids because the Sherman Act punishes the
mere act of conspiring. Nash v. United States, 229 U.S. 373,
378, 33 S.Ct. 780, 782 (1913). See also Socony-Vacuum, 60 S.Ct.
811, 845 n.59. The government is not required to prove a formal,
express agreement with all the terms precisely set out
and clearly understood by the conspirators. United States v. MMR
Corp., 907 F.2d 489, 495 (5th Cir. 1990), cert. denied, 111
S.Ct. 1388 (1991). It is enough that the government show that
the defendant accepted an invitation to join in a conspiracy that
unlawfully restrained trade. Id.
C. Proof that the Defendant Knowingly Joined a
Conspiracy to Rig Bids Provides Proof of the
Requisite Intent
Page 7.......
When the charged offense arises from conduct which is
per se illegal, proof of the requisite intent is unavoidably
"built into" proof of the conspiratorial agreement itself. See
United States v. United States Gypsum Co., 438 U.S. 422,
445-446, 98 S.Ct. 2864, 2877-78 (1978). "[A] finding that
[defendants] intended to fix prices supplies the criminal intent
necessary for a conviction of a criminal antitrust offense."
United States v. Cargo Service Stations, 657 F.2d 676, 683-4,(5th
Cir. 1981), cert. denied, 455 U.S. 1017 (1982). The government
is not required to prove that the defendant knew his actions were
illegal or that he specifically intended to restrain trade
or to violate the law. All Star Industries, 962 F.2d at 474
n.18. Proof of the requisite intent in this case will be
provided by proof that the defendant knowingly joined a
conspiracy to rig bids. Young Bros., Inc., 728 F.2d at 687.
Knowledge need not be proved by direct evidence, United
States v. Metropolitan Enterprises, 728 F.2d 444, 450-51
(10th Cir. 1984); Young Bros., Inc., 728 F.2d at 687 n.6; and "a
single act may be sufficient to draw a defendant within the ambit
of a conspiracy where the act is such that one may infer from it
an intent to participate in the unlawful enterprise."
United States v. Consolidated Packaging Corp., 575 F.2d 117, 126
(7th Cir. 1978). In fact, once the conspiracy has been
established, only slight evidence is needed to connect additional
participants to it. United States v. Cadillac Overall Supply
Co., 568 F.2d 1078, 1087 (5th Cir.), cert. denied, 473 U.S.
903 (1978). Also, any
Page 8.......
acts performed in furtherance of the agreement need not be
illegal to bind a co-conspirator; they need only be acts for the
purpose of forming or effectuating the
conspiracy. United States v. Bi-Co Pavers, Inc., 741 F.2d 730,
734 (5th Cir. 1984).
Although "mere knowledge" of the existence of the
conspiracy may not constitute "membership" in the conspiracy,
"acquiescence" may be deemed participation so as to establish a
defendant's culpability. See, e.g., United States v. Paramount
Pictures, Inc., 334 U.S. 131, 146, 68 S.Ct. 915, 924 (1948);
United States v. Ascarrunz, 838 F.2d 759, 763 (5th Cir. 1988) (in
some circumstances, association of co-conspirators along with
other evidence may be sufficient to establish the existence of a
conspiracy).
D. The Defendant's Activities Were Within the Flow of, or Substantially Affected,
Interstate
Commerce
Because the challenged activity in this case is per se
violative of the Sherman Act, the government is not required to
prove an actual adverse impact or harm on interstate commerce.
See All Star Industries, 962 F.2d at 475 n.21. Indeed, "[t]he
combination and conspiracy is prohibited without regard to the
success or failure of the concerted activity." United States v.
Mobil Materials, Inc., 871 F.2d 902, 908 (10th Cir.), aff'd
on reh'g, 881 F.2d 866 (10th Cir. 1989), cert. denied, 110
S.Ct. 837 (1990). See Cargo Service Stations, Inc., 657 F.2d at
683-84. Nonetheless, because Section 1 of the Sherman Act
forbids conspiracies "in restraint of trade or commerce among the
several
Page 9....
states," the government is required to prove that the business
activities of the defendant and his co-conspirators
had some relationship to interstate commerce.
The government may prove the nexus between interstate
commerce and the defendant's business activities under either of
two independent theories: (1) the "in commerce" theory; or (2)
the "effect on commerce" theory. See McLain v. Real Estate Board
of New Orleans, Inc., 444 U.S. 232, 242, 100 S.Ct. 502, 508-09
(1980); Young Bros., Inc., 728 F.2d at 688; Cargo Service
Stations, Inc., 657 F.2d at 679; Cadillac Overall Supply Co.,
568 F.2d at 1082.
The "in commerce" theory requires the government to
prove that the business activities in question are an essential,
integral part of an interstate transaction and are inseparable
from their interstate aspects. McLain, 100 S.Ct. at 510. The "effect on
commerce" theory requires the government to prove that the
challenged activities have a not insubstantial effect on
interstate commerce. Id. at 511.
In the instant case, the United States may offer
evidence to establish interstate commerce under one or both of
the above theories in the following ways: (1) that substantial
quantities of wholesale grocery products subject to bid-rigging
agreements were shipped to the defendant's corporate
co-conspirators in Texas from points of origin outside the state
in the flow of interstate commerce, and (2) the federal
government, through the National School Lunch Program, partially
Page 10.....
reimbursed or subsidized the public school districts in Texas for
their purchase of food items for meals to public school students.
As part of this program, a substantial amount of federal funds
were transferred from outside the State of Texas into Texas.
E. Impermissible Defenses to a Violation of the
Sherman Act
As argued in detail in the Government's Motion in Limine
at pp. 4-5, because per se agreements are illegal without regard
to whatever economic justification a particular agreement may be
thought to have, no inquiry into the reasonableness of a
particular per se agreement is permitted. Consequently, evidence
of justification or reasonableness is inadmissible if a per se
agreement is shown. All Star Industries, 962 F.2d at 475 n.21
(where there is per se illegal agreement, it is no defense that
the agreement did not have anti-competitive effects or that
defendant's motives were benevolent); MMR Corp., 907 F.2d at 498
(if there was agreement to rig bids, it is no defense that
resulting costs and profit of job were reasonable).
Likewise, ignorance or mistake of law is not a defense
to a charge of purposeful and intentional action such as a
Sherman Act conspiracy. See, e.g., Gypsum, 98 S.Ct. at 2878;
United States v. Gillen, 599 F.2d 541, 550 (3d Cir. 1979), cert.
denied, 100 S.Ct. 137 (1979). Thus, evidence of ignorance or
mistake is inadmissible if a per se agreement is shown.
Defendant may attempt to assert as a defense that he was
forced by his co-conspirators to engage in the bid-rigging
conspiracy, and that he had no choice but to succumb to alleged
Page 11......
threats of some sort. Such a defense is impermissible.
"Economic coercion" is no legal defense to a Section 1 charge, or
to any criminal prosecution. See Govt.'s Second Motion in
Limine, pp. 5-7.
III
LEGAL ISSUES RELATING TO FALSE STATEMENT COUNT
The government must establish the following five
elements to prove a violation of 18 U.S.C. § 1001: "'(1) a
statement, that is (2) false (3) and material (4) made with the
requisite specific intent, [and] (5) within the purview of
government agency jurisdiction.'" U.S. v. Puente, 982 F.2d 156,
158 (5th Cir. 1993), quoting United States v. Lichenstein, 610
F.2d 1272, 1276 (5th Cir.), cert. denied, 447 U.S. 907 (1980).
A false representation is one that is incorrect and
untrue and is made with an intent to deceive or mislead. United
States v. Guzman, 781 F.2d 428, 431 (5th Cir. 1986). The
false statement may be written or oral, sworn or unsworn,
voluntary or required by law, signed or unsigned. United States
v. Richmond, 700 F.2d 1183, 1187 (8th Cir. 1983). Written
statements or representations prosecuted under section 1001
include false certifications, cover letters, answers to simple
factual questions, and expense records. United States v.
Notarantonio, 758 F.2d 777, 785 (1st Cir. 1985).
Materiality of false statements made in violation of 18
U.S.C. § 1001 is a question for the court to decide. Page 12........
States v. Holley, 826 F.2d 331 (5th Cir. 1987); United
States v. Bryant, 770 F.2d 1283, 1290 (5th Cir. 1985). The
test for materiality, is whether a false statement is capable of
affecting or influencing the exercise of a government function.
United States v. Lueben, 838 F.2d 751, 754 (5th Cir. 1988). It
is immaterial whether the false statements actually affected the
government agency, as reliance is not an issue in a 1001
prosecution. Id. The false statement "must simply have the
capacity to impair or pervert the functioning of a governmental
agency." United States v. White, 765 F.2d 1469 (11th Cir. 1985), citing
United States v. Lambert, 501 F.2d 943, 946 (5th Cir. 1974) (en
banc).
Section 1001 prohibits the knowing and willful making of
a false statement. The requirement that the false representation
be made "knowingly and willfully" is satisfied if the defendant
acts deliberately and with the knowledge that the representation
is false. Guzman, 781 F.2d at 431. Reckless indifference has
been held sufficient to satisfy the section 1001 scienter
requirement so that a defendant who deliberately avoids learning
the truth cannot circumvent criminal sanctions.
Puente, 982 F.2d at 159. A defendant cannot be relieved of the
consequences of a material misrepresentation for lack of
knowledge when the means of ascertaining truthfulness are
available. Id. Defendant's knowledge of the falsity may be
proven through circumstantial evidence. United States v. Beebe,
792 F.2d 1363, 1367-68 (5th Cir. 1986); United States v. Caucci,
Page 13......
635 F.2d 441, 444-445 (5th Cir.), cert. denied, 454 U.S. 831
(1981).
The fifth element requires that the false statement be
in a matter within the jurisdiction of any department or agency.
For the purposes of section 1001, department and agency are
defined in 18 U.S.C § 6. "Agency" includes any department,
independent establishment, commission, administration, authority,
or board of the United States, or any corporation where the
United States has a proprietary interest. Jurisdiction within
the meaning of section 1001 should not be narrowly or technically
defined. United States v. Rodgers, 466 U.S. 475, 480, (1984).
In this case, the Veterans Administration Hospital qualifies as
an agency within the meaning of Section 1001.
IV
LEGAL ISSUES RELATING TO THIS MAIL FRAUD CONSPIRACY
In order to prove that the defendant violated 18 U.S.C.
§ 371, the government must show: "(1) the existence of an
agreement by two or more persons to work together for an illegal
purpose...............................
(2) that the defendant, having knowledge of that agreement,
voluntarily joined the conspiracy, United States v. Alfred, 867
F.2d 856, 871 (5th Cir. 1989); and (3) that an overt act was
committed in furtherance of the agreement. United States v.
Wheeler, 902 F.2d 778, 782 (5th Cir. 1986). Defendant is
charged with conspiring to commit mail fraud.
The essential elements of mail fraud under 18 U.S.C.
Page 14...........
§ 1341 are: (1) the existence of a scheme to defraud, and (2)
the use of the mails for the purpose of executing the scheme.
United States v. Hatch, 926 F.2d 387, 392 (5th Cir. 1990) (citing
United States v. McClelland, 868 F.2d 704, 706 (5th Cir. 1989);
United States v. Duncan, 919 F.2d 981, 990 (5th Cir. 1990),
cert. denied, 111 S.Ct. 2036 (1991).
A "scheme to defraud" includes any plan or course of
action intended to deceive or cheat another out of money or
property. McNally v. United States, 483 U.S. 350, 360, 107 S.Ct.
2875, 2881 (1987). There is no requirement that the scheme to
defraud actually must succeed in defrauding its victim of money
or property. United States v. Dynalectric Co., 859 F.2d 1559,
1576 (11th Cir. 1988). Bid-rigging schemes are fraudulent in
nature and constitute schemes to defraud. United States v.
Rodgers, 624 F.2d 1303, 1309-10 (5th Cir. 1980), cert.
denied, 101 S.Ct. 1360 (1981). A scheme to defraud under the
mail fraud statute may be effected by deceitful statements of
half truths or the concealment of material facts. United States
v. Olantunjui, 872 F.2d 1161, 1167 (3rd Cir. 1989); United
States v. Allen, 354 F.2d 398, 410 (10th Cir.), cert.
denied, 434 U.S. 836 (1977).
Fraudulent intent may be proven by direct or
circumstantial evidence, and it may be inferred from all of the
facts and circumstances surrounding a transaction. United States
v. Aubrey, 878 F.2d 825, 827 (5th Cir.), cert. denied, 110
S.Ct. 289 (1989). A defendant need not actually be involved in
the mailings directly; it is sufficient to show that an
individual
Page 15.....
does an act with the knowledge that use of the mails
will follow in the ordinary course of business. United States v.
Green, 964 F.2d 365, 369 (5th Cir. 1992). In the case at
bar, the government's evidence of intent will include proof that
defendant and others knowingly agreed to rig bids for the award
and performance of contracts to supply wholesale grocery products
to public school districts.
A fraudulent scheme constitutes a federal crime if a
defendant "causes" the mails to be used, and the mailings are
"sufficiently closely related" to the scheme. See United States
v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 648 (1974); Young
Bros., Inc., 728 F.2d at 689. Although the statute requires
that the mailing be for the purpose of executing the scheme, the
scheme does not need to contemplate the use of the mails as an
essential element. Duncan, 919 F.2d at 990. As long as the
mailing is part of the execution of the fraud or incident to an
essential part of the scheme, the evidence will sustain a
conviction for mail fraud. Id. Communications that are innocent
in themselves may still form the basis of a mail fraud
conviction. Green, 964 F.2d at 369. Mailings that distribute
the proceeds of the scheme to the perpetrators are incident to
an essential part of the scheme. Duncan, 919 F.2d at 991.
Because the defendant is charged with conspiring to
commit mail fraud rather than the substantive offense of mail
fraud, the government need not prove an actual mailing. Massey,
827 F.2d at 1001. The government will show that the use of the
Page 16.....
mails to further the bid-rigging scheme was "reasonably
forseeable." Id. at 1002. Circumstantial evidence is sufficient
to prove the existence of a conspiracy to commit mail fraud, and
an agreement may be inferred from concert of action among the
alleged participants. Hatch, 926 F.2d at 393.
V
PROOF OF THE EXISTENCE OF A CONSPIRACY
Evidence in a conspiracy case need not show that the
conspirators entered into any express or formal agreement, or
that they directly stated among themselves the object or purpose
of the conspiracy, or the means by which the object or purpose
was to be accomplished. Rather, what the evidence must show is
that a conspiracy was formed and that the conspirators, in some
way or manner, came to a mutual understanding to try to
accomplish a common and unlawful plan. American Tobacco Co. v.
United States, 328 U.S. 781, 809-10, 66 S.Ct. 1125, 1139
(1946).
The government need not prove that each participant knew all the
other co-conspirators and directly interacted with each other.
United States v. Elam, 678 F.2d 1234, 1247 (5th Cir. 1982).
Further, it is not necessary for the government to prove that the
defendant and co-conspirators knew all the details of the
agreement, participated in all of its operations, joined at the
same time, or became aware of all the activities of the other
participants. United States v. Alvarez, 625 F.2d 1196, 1198 (5th
Cir. 1980) (en banc), cert. denied, 101 S.Ct. 2017 (1981).
Page 17.......
The evidence in the case need not establish that
all the means or methods set forth in the indictment were agreed
upon to carry out the alleged conspiracy, Socony-Vacuum, 60 S.Ct. 856;
nor that all means or methods which were agreed upon, were
actually used or put into operation, United States v. Trenton
Potteries Co., 47 S.Ct. at 381; nor that all persons alleged
to have been members of the conspiracy were such. See, e.g.,
United States v. Reese, 775 F.2d 1066, 1071 (9th Cir. 1985).
The government need not prove the defendant's precise obligations
under the agreement charged in the indictment; it need only prove
that the defendant agreed to join the bid-rigging
conspiracy. MMR Corp., 907 F.2d at 496. "Likewise, it need not
be proved that the conspiracy continued for the duration charged
in the indictment." Pittsburgh Plate Glass Co. v. United States,
260 F.2d 397, 401 (4th Cir. 1958), aff'd, 79 S.Ct. 1237 (1959).
VI
EVIDENTIARY ISSUES
A. Testimony of the Witnesses
1. Evidence of the Conspiracy.
Although a conspiracy, like any other crime, may be
established by direct testimonial or documentary evidence,
conspiracies are often secret or camouflaged and thus have to be
proved by inferences drawn from relevant and competent
circumstantial evidence, including the conduct of the defendant
charged. See United States v. Parke, Davis & Co., 362 U.S. 29,
Page 18.......
80 S.Ct. 503 (1960); Duncan, 919 F.2d at 991.
2. Admissibility of Acts and Declarations of
Co-Conspirator's.
A co-conspirator's statement is admissible under
Fed. R. Evid. 801(d)(2(E) if: (1) the declaration was in
furtherance of the conspiracy; (2) it was made during the
conspiracy; and (3) there is proof of the existence of the
conspiracy and of the defendant's connection to it. In
determining the existence of these criteria, the court may look
to the proffered statements themselves, as well as any other
material, whether or not the foundational matter is itself
admissible into evidence. Bourjaily v. United States, 483 U.S.
171, 107 S.Ct. 2775 (1987). The foundation need only be
established by a preponderance of the evidence. Id. at 2778.
In this case, the government plans to offer
independent evidence of the conspiracy which will strongly
support the conspiracy charge. Nevertheless, according to
Bourjaily, the government may offer the statement which it seeks
to introduce as at least one part of the proof to establish the
co-conspirator exception foundation. The Court remains free,
under Bourjaily, to "receive the ["hearsay"] evidence and give it
such weight as his judgment and experience counsel." 107 S. Ct.
at 2782, quoting United States v. Matlock, 415 U.S. 164, 175
(1974); United States v. Perez, 823 F.2d 854 (5th Cir. 1987).
Rule 801(d)(2)(E)'s requirement that a
co-conspirator statement be "in furtherance" of the conspiracy is
Page 19.......
satisfied if the statement was made to keep a co-conspirator
informed of the course of the conspiracy. United States v. Pool,
660 F.2d 547, 562 (5th Cir. 1981). Accord United States v.
Goodman, 605 F.2d 870, 878 (5th Cir. 1979)(statements to keep
co-conspirator abreast of conspiracy were "in furtherance").
3. A Witness May Testify to His State of Mind
Concerning Any Conspiratorial Agreements.
The central issue with respect to each defendant in
a Sherman Act case is whether that defendant was party to an
agreement to restrain trade. Accordingly, a witness is permitted
to testify as to whether an agreement was reached in any
particular transaction or conversation. Such testimony is proper
since it describes a key fact in the case, and is based upon the
witness' own personal observations, knowledge and inferences.
Fed. R. Evid. 602, 701. The testimony is not impermissible
conclusion, but rather a statement of the witness' state of mind.
Fed. R. Evid. 803(3). However, even if characterized improperly
as testimony constituting opinion on an ultimate issue (the
existence of an agreement), it still would be proper. See Rule
70l (Opinion Testimony by Lay Witnesses) and Rule 704 (Opinion on
Ultimate Issue).
This issue was addressed by the Fifth Circuit in
United States v. New York Great Atlantic & Pacific Tea Co., 137
F.2d 459 (5th Cir.), cert. denied, 320 U.S. 783 (1943), a
criminal antitrust case. There, the court commented as follows:
Just as a witness may in a civil
suit say, not as a conclusion but
as a fact, that he made or entered
Page 20.....
into an agreement at a certain time and place,
so an indictment may charge, and a witness may
say, in a criminal case that a defendant made or
entered into an agreement at a particular time
or in a particular place.
Id. at 463.
4. A Co-Conspirator May Testify as to the Common
Meaning of Terms Used by
Co-Conspirators and His Understanding
of Their Statements.
In this case, the government will ask witnesses what
they understood certain words or phrases used by co-conspirators
to mean. The government will also ask each witness whether the
co-conspirator also understood the words or phrases to have such
a meaning. Fed. R. Evid. 701 specifically makes such lay witness
opinion or inference testimony admissible
if it is "(a) rationally based on the perception of the witness
and (b) helpful to a clear understanding of his testimony or the
determination of a fact in issue." Courts have generally
admitted lay opinion and inference testimony which meets the
criteria of Rule 701. For example, in United States v.
Mandujano, 499 F.2d 370 (5th Cir. 1974), cert. denied, 419
U.S. 1114 (1975), the Fifth Circuit approved admission of an FBI
agent's testimony that, when the defendant used the term "stuff,"
the agent understood the defendant to mean narcotics. Id. at 379
(citing Trenton Potteries Co., 273 U.S. at 407, and Batsell v.
United States, 217 F.2d 257, 262 (8th Cir. 1954). See United
States v. Freeman, 619 F.2d 1112, 1120 (5th Cir.), cert. denied, 450 U.S.
910 (1980); United States v. Daniels, 572 F.2d 535,
Page 21...........
540-41 (5th
Cir. 1978); United States v. Smith, 550 F.2d 277, 281 (5th
Cir.), cert. denied, 434 U.S. 841 (1977).
The lay opinion testimony to be offered in this
case will be based on the witnesses' personal observations and
will facilitate an understanding of factual issues. Under Rule
701, such testimony should be admitted because it will "put the
trier of fact in possession of an accurate reproduction of the
event." Notes of Advisory Committee on Fed. R. Evid. 701; 3 J.
Weinstein & M. Berger, Weinstein's Evidence ¶ 701[02](1985 &
Supp. 1986).
5. Verbal Acts.
Out-of-court statements that are verbal acts are
admissible and should not be excluded as hearsay. United States
v. Boyd, 566 F.2d 929, 936-37 (5th Cir. 1978); United
States v. Burke, 495 F.2d 1226, 1232 (5th Cir.), cert. denied,
95 S.Ct. 667 (1974).
Fed. R. Evid. 801(c) defines hearsay as "a
statement, other than one made by the declarant while testifying
at the trial or hearing, offered in evidence to prove the truth
of the matter asserted." The Advisory Committee's Note to
subdivision (c) of Rule 801 contains the following discussion of
verbal acts:
The definition [in Rule 801(c)]
follows along familiar lines in
including only statements offered
to prove the truth of the matter
asserted. [Citations omitted.]
If the significance of an offered
Page 22.....
statement lies solely in the fact that it was
made, no issue is raised as to the truth of
anything asserted, and the statement is not
hearsay. [Citation with text omitted.] The
effect is to exclude from hearsay the entire
category
of "verbal acts" and "verbal parts
of an act," in which the statement
itself affects the legal rights of
the parties or is a circumstance
bearing on conduct affecting their
rights.
The Fifth Circuit has applied the verbal acts
doctrine in criminal cases. In Ward v. United States, 296 F.2d
898 (5th Cir. 1961), the defendant appealed his conviction for
attempting to bribe a juror claiming, inter alia, that the trial
court erred in admitting the juror's testimony as to his
conversations, not in the presence of the defendant, with an
accomplice of the defendant. The juror's testimony about such a
conversation in which the bribe offer was made was held to be
admissible on two grounds, one of which was the verbal act
doctrine since the accomplice-juror conversation was the
transaction at issue, i.e., the act or statement was the very
fact fixing criminal liability. Id. at 903. See Overton v.
United States, 403 F.2d 444, 447 (5th Cir. 1968).
When a declarant directs, orders, or instructs another
person to perform or refrain from performing an act, such written
or oral statement by the defendant is generally not capable of
being either true or false. Such a statement is not offered for
the truth of the matter asserted, but rather for the fact that it
was made by defendant, and if relevant, the statement should be
Page 23......
received as non-hearsay. United States v. Keane, 522 F.2d 534,
558 (7th Cir. 1975), cert. denied, 96 S.Ct. 1481 (1976). These
statements are admissible as verbal acts that are probative of
the existence of a conspiracy and the effects they might have
upon the persons who heard them. United States v. Cruz, 805 F.2d
1464, 1478 (11th Cir. 1986), cert. denied, 107 S.Ct. 1631
(1987); United States v. Miller,771 F.2d 1219, 1233 (9th Cir.
1985) (statements made by co-conspirator warning another to keep
his prices higher were non-hearsay).
6. It Is Permissible for a Witness to State
the Substance of a Conversation Even Though
He May Not Recall Specific Details.
Some witnesses in this case will testify about
conversations and events which occurred several years ago. In
some cases, the witnesses understandably will not be able to
recall the details of the conversations and events but will be
able to recall their substance. This testimony is admissible,
notwithstanding the witnesses' inability to recall the details.
While the law is exacting in
demanding firsthand observation,
it is not so impractical as
to insist upon preciseness of
attention by the witness in
observing, or certainty of
recollection in recounting the
facts. Accordingly, when a
witness uses such expressions as
"I think," "My impression is," or
"In my opinion," this will be no
ground of objection if it appears
that he merely speaks from an
inattentive observation, or an
unsure memory, though it will if
the expressions are found to mean
that he speaks from conjecture or
from hearsay.
Page 24....
C. McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE § 10, at
pp. 21-22 (2d ed. 1972) [Citations and footnotes omitted].
Dean McCormick's summary accurately reflects the case law.
See, e.g., United States v. Blankenship, 746 F.2d 233, 241 (5th
Cir. 1984) (witness' testimony found credible even though he
could not recall details of conversations); Tripp v. United
States, 381 F.2d 320, 321 (9th Cir. 1967) (The contention
that testimony was vague and uncertain goes to its weight, not
its admissibility); United States v. Krulewitch, 167 F.2d 943,
948 (2d Cir. 1948), rev'd on other grounds, 336 U.S. 440, 69
S.Ct. 716 (1949) ("Here the witness, as commonly occurs, was
trying in vain to reproduce the identical language used in a
conversation he had so long before that his memory was unequal to
the task.... He then was permitted to give his understanding of
what was said to him--in effect the substance of what was said.
The evidence was the best that the circumstances permitted and
was properly put before the jury for whatever it was worth.").
7. Use of Grand Jury Statements As Substantive Evidence At
Trial.
Various witnesses called to testify in this matter
will have testified before the grand jury which returned the
instant Indictment. It may become necessary during the trial to
refer witnesses to portions of their earlier grand jury
statements. Should their account at trial vary with the earlier
statements under oath, the government may seek the Court's
Page 25.....
permission to read portions of those statements into the record.
If a witness has testified to facts before a grand
jury and forgets or denies them at trial, his grand jury
testimony or any fair representation of it falls squarely within
Fed. R. Evid. 801(d)(1)(A), and such testimony may be properly
admitted and considered as substantive evidence. United States
v. Bigham, 812 F.2d 943, 946 (5th Cir. 1987); United States
v. Booty, 621 F.2d 1291, 1299 (5th Cir.), modified & reh'g
denied, 627 F.2d 762 (5th Cir. 1980).
Prior testimony need not be "diametrically opposed"
to the witness' current answers in order to be inconsistent
within the meaning of Rule 801(d)(1)(A). "Inconsistency . . .
may be found in evasive answers, inability to recall, silence, or
changes of position." United States v. Dennis, 625 F.2d 782, 795
(8th Cir. 1980). Inconsistency is also found in partial or vague
recollection where the prior testimony is more certain and
detailed. U.S. v. Distler, 671 F.2d 954, 958 (6th Cir.), cert.
denied, 102 S.Ct. 118 (1981). See Bigham, 812 F.2d at 946.
8. Use Of Leading Questions To Hostile
Witnesses
It has long been permissible in federal courts for
a party calling a hostile witness to examine that witness by
leading questions, there being no danger of false suggestion when
the witness is hostile to the examiner. Fed. R. Evid. 611(c)
represents a modification of this practice:
LEADING QUESTIONS - Leading
questions should not be used on
Page 26.....
the direct examination of a witness except as
may be necessary to develop his testimony.
Ordinarily leading questions should be
permitted on cross-examination. When a party
calls a hostile witness, an adverse party, or
a witness identified with an adverse party,
interrogation may be by leading questions.
While a witness' hostility ordinarily must be
demonstrated to the court, Rule 611(c) provides that certain
categories of witnesses can be treated automatically as hostile:
adverse parties and witnesses identified with adverse parties.
Judge Weinstein's treatise suggests that, under Rule 611(c),
an employee of a defendant at the time of events giving rise
to the legal action is identified with the defendant.
3 J. WEINSTEIN AND M. BERGER, WEINSTEIN'S EVIDENCE, ¶ 611[05], at
611-81 to 611-82. Accord Haney v. Mizell Memorial Hospital, 744
F.2d 1467, 1478 (11th Cir. 1984); Ellis v. City of Chicago, 667
F.2d 606, 613 (7th Cir. 1981); Perkins v. Volkswagen of America,
Inc., 596 F.2d 681, 682 (5th Cir. 1979).
Rule 611(c) was intended to enlarge the class of
persons who could be regarded automatically as hostile under the
now-abrogated Fed. R. Civ. P. 43(b). WEINSTEIN, above. The last
sentence of Rule 611(c) goes considerably further than the old
Fed. R. Civ. P. 43(b) and, by implication, would include a "party
sought to be called [who] could have been sued, either instead of
the named defendant or as a co-defendant." WEINSTEIN, at 611-82
to 611-83, citing Chumbler v. Alabama Power Co., 362 F.2d 161,
Page 27............
163 (5th Cir. 1966) (a Rule 43(b) case). See also Melton v. O.
F. Shearer & Sons, Inc., 436 F.2d 22, 27 (6th Cir. 1970).
In the instant case, certain government witnesses
also could be adversely affected by any testimony they give.
Fellow employees of defendant may be considered hostile for the
purpose of using leading questions on direct examination.
9. Impeachment by Contradiction Is Not Permitted
On Collateral Matters.
The Fifth Circuit has held that impeachment by
contradiction is not permitted on collateral matters. United
States v. Hawkins, 661 F.2d 436, 444 (5th Cir. 1981), cert.
denied, 102 S.Ct. 2274 (1982); United States v. Williamson, 424
F.2d 353, 356 (5th Cir. 1970); Head v. Halliburton Oilwell
Cementing Co., 370 F.2d 545, 546 (5th Cir. 1966). This
ruling is also consistent with Fed. R. Evid. 608(b).
This so-called "collateral" rule -- i.e., that
extrinsic evidence is not admissible to show a specific
contradiction on a matter classified as collateral -- is a
distinct limitation on the scope of impeachment by contradiction
that is otherwise allowed. 3 WEINSTEIN'S EVIDENCE, ¶ 607 [05],
and cases cited therein. The need for this limiting rule stems
from practical considerations. "To permit disputes at trial
about such extraneous or 'collateral' facts that are material
only for 'testing' a witness, by allowing the attacker to call
other witnesses to disprove them, is not practical. Dangers of
surprise, of confusion of the jury's attention, and of time
Page 28...
wasting are apparent." C. McCORMICK'S HANDBOOK OF THE LAW OF
EVIDENCE, § 47 (2d ed. 1972).
If the collateral fact sought to be contradicted is
elicited on cross-examination, this safeguarding rule (that a
witness may not be impeached by producing extrinsic evidence of
"collateral" facts to "contradict" the first witness' assertions
about those facts) is sometimes expressed by saying that the
party cross-examining is bound by the witness' answer.
United States v. Cohen, 631 F.2d 1223, 1226 (5th Cir. 1980). In
Cohen, the defendant sought to attack the credibility of a
government witness by showing via another witness that the
government witness had been involved in drug law violations. The
Fifth Circuit stated:
It is doubtful that the original cross-
examination of [the Government witness]
about his drug trafficking was
appropriate . . . but there was no
objection. When such testimony does go
in, "the examiner must take his
answer," and the examiner cannot offer
impeachment testimony. As Rule 608
states, "[s]pecific instances of the
conduct of a witness, for the purpose
of attacking . . . his credibility . .
. may not be proved by extrinsic
evidence . . ."
Id. at 1226.
If the "collateral" fact happens to have been drawn
out on direct examination, Dean McCormick suggests that the rule
against contradiction should still be applied, because despite
the lessened danger of surprise, "waste of time and confusion of
issues stand as objections." Page 29......
OF EVIDENCE, § 47 (2d ed. 1972).
B. Introduction Of Documentary Evidence
1. Conspirators' Records of Bid Rigging Are
Admissible as Business Records Under Fed.
R.Evid. 803(6).
A conspirator's records or notes of bid rigging or
bid-rigging conversations that were regularly prepared as part of
the scheme charged are admissible under Fed. R. Evid. 803(6) as
records of regularly conducted business activity. In United
States v. Hyde, 448 F.2d 815, 846 (5th Cir. 1971), cert.
denied, 404 U.S. 1058 (1972), the Fifth Circuit held that
handwritten notes of a meeting, kept on note cards, the author of
which testified that he regularly kept informal notes of
transactions in similar situations, were admissible as business
records. The court stated, "[m]aking memoranda of the details of
a complicated oral business agreement" would be within the
business records exception. Id. Similarly, in United States v.
Sheppard, 688 F.2d 952 (5th Cir. 1982), the court upheld the
admission at trial as business records of freight bills with
handwritten notations on them, finding that the bills were "drawn
up and notations made thereon as a regular practice of the
freight company in the course of a regularly conducted business
activity. Such records are clearly admissible under 803(6)."
Id. at 953.
The fact that the notes are handwritten records
does not affect their admissibility. See, e.g., Gulf South
Machine, Inc. v. Kearney and Trecker Corp., 756 F.2d 377, 381
Page 30......
(5th Cir.), cert. denied, 474 U.S. 902 (1985)(upholding admission
of a handwritten log book recording malfunctions of company
machines when those entries were made by the machine operators);
Sheppard, 688 F.2d at 953; United States v. Gremillion, 464 F.2d
901, 907 (5th Cir.), cert. denied, 409 U.S. 1085 (1972)
(business worksheet with handwritten notation in the margin fully
met the requirements of admissibility under the business
records exception); Hyde, 448 F.2d at 846.
Finally, whether the business records contain
illegal information or detail illegal transactions is irrelevant.
United States v. Thompson, 811 F.2d 841, 846 (5th Cir. 1987)
(savings and loan application that contained false and illegal
information admissible under 803(6)); United States v. Tafoya,
757 F.2d 1522, 1528-29 (5th Cir.), cert. denied, 474 U.S. 921
(1985) (no error in admitting memorandum containing potentially
false billing information).
2. Co-Conspirators' Records of Bid Rigging Are Also
Admissible as Co-Conspirator Statements Under
Fed. R. Evid. 801(d)(2)(E).
In addition to being admissible business records,
records of bid-rigging are admissible as co-conspirator
statements. The Fifth Circuit has interpreted the co-conspirator
exception in Rule 801(d)(2)(E) broadly, allowing its use to
Page 31........
introduce a wide variety of writings. For example, in United
States v. Evans, 572 F.2d 455, 488 (5th Cir.), cert. denied,
439 U.S. 870 (1978), the court found that daily appointment
calendars maintained by one defendant were admissible against
that defendant as admissions, and against all defendants as
co-conspirator statements because the writings "tended to promote
and further the conspiracy." In United States v. Postal, 589
F.2d 862, 886 n.41 (5th Cir.), cert. denied, 444 U.S. 832
(1979), admission of a ship's logbook under the co-conspirator
exception was upheld. Finally, in United States v. Mazyak, 650
F.2d 788, 791 (5th Cir. 1981), cert. denied, 455 U.S. 922
(1982), nautical charts on a seized vessel were admitted as
co-conspirator statements.
3. Business Records Prepared By One Company and
Received and Kept By Another Are Admissible
Under Fed. R. Evid. 803(6).
Rule 803(6) is premised on the idea that records of
regularly conducted activity carry with them sufficient indicia
of reliability to warrant admission. Reliability or
trustworthiness is supplied by the Rule's requirements of
systematic checking, of regularity and continuity which produce
habits in precision, of actual experience of business in relying
upon such records, or by a duty to make an accurate record as
part of a continuing job or occupation. Advisory Committee Notes
to Rule 803(6).
In United States v. Flom, 558 F.2d 1179, 1182 (5th
Cir. 1977)(citations omitted), the trial court admitted into
Page 32......
evidence under Rule 803(6) invoices received and held by
defendant's company, but which were prepared and sent by another
company. Foundation testimony was offered through an official of
defendant's company that the invoices were received and held in
the regular course of business. No testimony of the preparing
company was offered. The Fifth Circuit held that "the law is
clear that under circumstances which demonstrate trustworthiness
it is not necessary that the one who kept the record, or even had
supervision over their preparation,
testify . . ." Id. See also Mississippi River Grain Elevator,
Inc. v. Bartlett & Co., Grain, 659 F.2d 1314, 1319 (5th Cir.
1981); United States v. Veytia-Bravo, 603 F.2d 1187, 1191-92 (5th
Cir. 1979) ("Rule 803(6) does not require that the records be
prepared by the business which has custody of them."), cert.
denied, 444 U.S. 1024 (1980); United States v. Coyler, 571 F.2d
941, 947 (5th Cir. 1978) (noting that the question "was settled"
in Flom).
4. A Summary Chart Reflecting The Contents
of Voluminous Business Records is Admissible
Under Fed. R. Evid. 1006 Where Examination
of Those Records Individually is
Inconvenient.
Fed. R. Evid. 1006 expressly provides that the
contents of voluminous documents may be introduced into evidence
in the form of a chart, summary, or calculation where it would be
impractical or inconvenient to examine those documents
individually. Rule 1006 is designed to save the court time and
to aid the jury in understanding and evaluating complex and
Page 33..
fragmentary information.
During the course of the investigation which led to
this Indictment, the defendant's employer and other competitors,
and the victim school districts and other institutions, were
served with grand jury subpoenas requiring, among other things,
the production of business records which would reflect the prices
they bid for school grocery contracts between 1985 and May 1990.
The subpoenaed parties responded by producing numerous bids,
sales invoices, work orders, and billing statements to the grand
jury. The government has now reviewed these documents and
prepared an accurate summary of estimated total food purchases by
school districts and other institutions affected by the
conspiracy for use as evidence in the trial of this case. This
exhibit clearly and succinctly summarizes and reflects the
information contained in the documents submitted to the grand
jury. In addition to this summary, the government intends to
offer a summary of the documents received from Frosty Acres
Brands, Inc., a buying cooperative through which the defendant's
employer purchased supplies during the period of this Indictment.
This summary is intended to show how the Sherman Act conspiracy
affected interstate commerce.
In order to be admissible as evidence under Rule
1006, several conditions must be met. First, the underlying
documents must be voluminous. United States v. Duncan, 919 F.2d
981, 988 (5th Cir. 1990), cert. denied, 111 S.Ct. 2036 (1991);
see also United States v. Robinson, 774 F.2d 261, 276 (8th Cir.
Page 34......
1985). It is not, however, required that the underlying
documents contain complex calculations to be eligible for
summation. Robinson, 774 F.2d at 276. Likewise, there is no
requirement that it be "literally impossible to examine all the
underlying records, but only that in-court examination would be
an inconvenience." United States v. Possick, 849 F.2d 332, 339
(8th Cir. 1988). The vast number of documents which form the
underlying data for the government's summary exhibits easily
qualify as voluminous writings which cannot conveniently be
examined in court.
Second, a Rule 1006 summary must be based on
documents which are themselves admissible in evidence. Ford
Motor Co. v. Auto Supply Co., Inc., 661 F.2d 1171, 1175 (8th
Cir. 1981). It is not necessary, however, for the underlying
documents to be actually admitted into evidence. United States
v. Smyth, 556 F.2d 1179, 1184 (5th Cir.), cert. denied, 98
S.Ct. 190 (1977). Whether or not originals are introduced at
trial, the summary may be relied on as evidence-in-chief. 5 J.
Weinstein and M. Berger, WEINSTEIN'S EVIDENCE, § 1006[02] (1992).
The underlying data in this case consists of the business
records of the school districts involved in the conspiracy and,
the business records of a buying cooperative, and thus, is
admissible under Fed. R. Evid. 803(6). The government has
tendered to defense counsel a stipulation concerning the
admissibility of these underlying documents as business records
in an effort to streamline the trial of this case and prevent a
waste of the
Page 35...
Court's time.
Third, in order for a Rule 1006 summary to be
admissible, the originals or duplicates of the underlying
materials must be made available for examination or copying by
the other parties, at a reasonable time and place. Evans,
572 F.2d at 492. The defendant in this case has had unlimited
access to the underlying documentation and, in fact, has been
permitted to inspect and copy these materials.
Finally, a Rule 1006 summary must be an accurate
summarization of the underlying materials involved. White
Industries v. Cessna Aircraft Co., 611 F. Supp. 1049, 1070 (W.D.
MO. 1985). This requirement must, however, be approached
sensibly since some human error in transcribing or collating a
voluminous mass of documents is practically inevitable. Id. The
government has made every effort to insure the accuracy of these
summaries. In addition, the government has provided defense
counsel with a copy of the summaries prior to trial so that any
challenge to the accuracy of the exhibit may be addressed in a
pre-trial conference. See Fed. R. Crim. P. 17.1.
The Fifth Circuit has also allowed summary exhibits
or charts to be admitted into evidence where the underlying data
has been admitted into evidence. United States v. Winn, 948 F.2d
145, 158-59 (5th Cir. 1991), cert. denied, 112 S.Ct. 1599
(1992); Duncan, 919 F.2d at 988; United States v. Stephens, 779
F.2d 232, 239 (5th Cir. 1985). The evidentiary use of summaries
under these conditions rests with the sound discretion of the
trial
Page 36.....
judge. Id. Merely because the underlying documents are
already in evidence does not mean that they can be conveniently
examined in court, and a more restrictive reading of Rule 1006
would be clearly inconsistent with one proper method of laying a
foundation for admission of summary charts -- admitting the
documentation on which the summary is based. See Winn, 948 F.2d
at 158-59; Stephens, 779 F.2d at 239. In addition, prior
introduction of the underlying evidence would comply with the
requirement that the documents be made available for examination
or be produced in court since, if the evidence were already
introduced, it would certainly have been produced in court.
Evans, 572 F.2d at 491. Therefore, even where the underlying
data is already in evidence a summary of that evidence may also
be admitted.
By design, any summary "must rest on certain
assumptions." United States v. Diez, 515 F.2d 892, 905 (5th Cir.
1975) (illustrative charts used by the government allowed into
evidence to show attribution of income). The summaries do not
have to be free from assumptions but must rely on assump-
tions "supported by evidence in the record." Id. Where the
witness who will introduce the summary chart has detailed
personal knowledge about the underlying documents from which the
summary was prepared, and has carefully reviewed the summary and
verified its accuracy, any assumptions contained in the summary
chart will be supported by the record. See United States v.
Lemire, 720 F.2d 1327, 1349 (D.C. Cir. 1983), cert. denied,
467
Page 37..
U.S. 1226 (1984) (preparation of summary charts by someone other
than the witness not objectionable where the witness carefully
reviews the charts to ensure that they reflect information
already in evidence).
CONCLUSION
The government respectfully submits this Memorandum
in support of the substantive and evidentiary issues of law that
may arise during the trial of this case.
Respectfully submitted,
_______________/s/________________
JANE E. PHILLIPS
_______________/s/________________
JOAN E. MARSHALL
_______________/s/________________
MARK R. ROSMAN
Attorneys
Antitrust Division
U.S. Department of Justice
Earle Cabell Federal Bldg.
1100 Commerce Street, Room 8C6
Dallas, Texas 75242-0898
Tel: (214) 767-8051
Page 38
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the
United States' Pre-Trial Memorandum of Law has been served via
Federal Express this 16th day of February, 1994, to:
Lynne Liberato, Esq.
Haynes And Boone, L.L.P.
1600 Smith Street
Suite 3700
Houston, Texas 77002-3445
Joel M. Androphy, Esq.
Berg & Androphy
3704 Travis Street
Houston, Texas 77002
_______________/s/________________
MARK R. ROSMAN
Attorney
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