United States v. Gosselin World Wide Moving, N.V. , 411 F.3d 502 ( 2005 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellant,
v.
 No. 04-4752
GOSSELIN WORLD WIDE MOVING,
N.V.; THE PASHA GROUP,
Defendants-Appellees.

UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
GOSSELIN WORLD WIDE MOVING,
N.V.,  No. 04-4876
Defendant-Appellant,
and
THE PASHA GROUP,
Defendant.

2 UNITED STATES v. GOSSELIN WORLD WIDE
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
THE PASHA GROUP,
Defendant-Appellant,  No. 04-4877
and
GOSSELIN WORLD WIDE MOVING,
N.V.,
Defendant.

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Gerald Bruce Lee, District Judge.
(CR-03-551)
Argued: March 18, 2005
Decided: June 14, 2005
Before WILKINSON and GREGORY, Circuit Judges, and
Frederick P. STAMP, Jr., United States District Judge
for the Northern District of West Virginia, sitting by designation.
Affirmed in part, reversed in part, and remanded for resentencing by
published opinion. Judge Wilkinson wrote the opinion, in which
Judge Gregory and Judge Stamp joined.
COUNSEL
ARGUED: John J. Powers, III, UNITED STATES DEPARTMENT
OF JUSTICE, Antitrust Division, Appellate Section, Washington,
D.C., for the United States. Charles Frederick Rule, FRIED, FRANK,
UNITED STATES v. GOSSELIN WORLD WIDE 3
HARRIS, SHRIVER & JACOBSON, L.L.P., Washington, D.C., for
Gosselin World Wide Moving, N.V., and The Pasha Group. ON
BRIEF: R. Hewitt Pate, Assistant Attorney General, Makan Del-
rahim, Deputy Assistant Attorney General, James M. Griffin, Deputy
Assistant Attorney General, Andrea Limmer, Hays Gorey, Jr., Mark
W. Pletcher, Craig Y. Lee, UNITED STATES DEPARTMENT OF
JUSTICE, Antitrust Division, Appellate Section, Washington, D.C.,
for the United States. Henry W. Asbill, COZEN O’CONNOR, P.C.,
Washington, D.C.; C. Allen Foster, Joe R. Reeder, Shirley Z. John-
son, GREENBERG TRAURIG, L.L.P., Washington, D.C., for Gos-
selin World Wide Moving, N.V. Anthony V. Nanni, Tommy P.
Beaudreau, Michael J. Anstett, Franklin M. Rubinstein, FRIED,
FRANK, HARRIS, SHRIVER & JACOBSON, L.L.P., Washington,
D.C., for The Pasha Group.
OPINION
WILKINSON, Circuit Judge:
In this case, we must decide whether defendants are criminally lia-
ble for a scheme that raised the prices the Department of Defense
("DOD") pays to transport its personnel’s belongings overseas.
Defendants have admitted to orchestrating this scheme and have
agreed to accept liability under the Sherman Act, 15 U.S.C. § 1(2000), and the federal anti-fraud statute, 18 U.S.C. § 371 (2000), if
we determine that their behavior is not immune from such liability
under the Shipping Act, 46 U.S.C. app. §§ 1701-1719 (2000). We
hold that the Shipping Act’s immunity provisions afford defendants
no relief from liability for the antitrust violation and conspiracy to
defraud they have admitted. We therefore affirm in part, reverse in
part, and remand for resentencing.
I.
A.
When personnel of the DOD are posted to foreign countries, the
International Through Government Bill of Lading program
4 UNITED STATES v. GOSSELIN WORLD WIDE
("ITGBL") covers their moving expenses. The DOD contracts with
private companies to provide this service. Under the Military Traffic
Management Command ("MTMC"), bids are solicited for "through
rates" from U.S. freight forwarding companies. A through rate is a
payment encompassing all the costs involved in a door-to-door move
of DOD personnel’s household effects. Bidding for through rates
occurs biannually and involves a two step process.
In the first step, or "initial filing," the freight forwarders file a bid
for a through rate associated with a particular route, or channel. The
low bid that emerges is referred to as the "prime through rate."
MTMC publishes this bid and the next four lowest bids. The company
that bids the prime is entitled to a set percentage of DOD freight busi-
ness for the associated channel.
In the second step, other freight forwarders resubmit bids in light
of the published prime. The remaining companies may match, or "me-
too," the prime for each channel, or they may bid a higher rate. When
the channel at issue operates in a competitive market, a forwarder
must typically me-too the prime to receive any DOD business. For-
warders that me-too the prime are also entitled to a set portion of
DOD business for the cycle and channel for which they have bid.
Because through rates are unitary, they encompass many costs, all
of which the U.S. forwarders become responsible for when the DOD
accepts their bids. Some of these costs relate to moving services
undertaken by other firms along the channel. Costs of this sort cover
five general categories of service: the carriage of goods between
inland U.S. cities and U.S. ports, services performed at U.S. ports,
ocean transportation between U.S. and foreign ports, foreign port ser-
vices, and carriage of goods between foreign ports and foreign inland
points. U.S. freight forwarders must naturally consider these costs in
setting their bids.
B.
Defendant Gosselin World Wide Moving N.V. ("Gosselin"), a Bel-
gian corporation, and defendant The Pasha Group ("Pasha"), a U.S.
corporation, operate in the channels between the United States and
Germany. Both companies provide a package covering local German
UNITED STATES v. GOSSELIN WORLD WIDE 5
moving agent services, European port services, and ocean transport
services in this market. Defendants thus deal with goods shipments
between German points of origin (the households of DOD personnel
abroad) and U.S. ports of destination. Gosselin and Pasha offer a
"landed rate," which is a fee that covers all the moving costs involved
in the portion of the channels they service.
Defendants also act as the exclusive agents of the International
Shippers’ Association ("ISA"), a conference of freight forwarders
organized to negotiate collectively with shippers operating in the
through transportation market. Many of the U.S. freight forwarders
who place bids in the MTMC are also ISA members. In their capacity
as ISA agents, Gosselin and Pasha negotiate service contracts with the
Trans Atlantic American Flag Line Operators ("TAAFLO"), a group
of U.S. ocean carriers. TAAFLO’s service contract with the ISA enti-
tles all ISA members to ocean transportation with TAAFLO member-
carriers at a predetermined rate.
In late 2001, initial filings for the summer bidding cycle of 2002
occurred. A U.S. freight forwarder ("FF1") filed prime through rates
with the MTMC for twenty-six of the channels between Germany and
the U.S. FF1 did not use the landed rate offered by either defendant.
Instead, by negotiating separately with each service provider at every
step of the transportation chain, FF1 was able to undercut its competi-
tors by three dollars per hundredweight in twelve of the twenty-six
channels. In December 2001, DOD published FF1’s prime bid along
with the next four lowest. The remaining forwarders then had until
January 12, 2002 to file their second round bids.
Gosselin was evidently alarmed that FF1 had been able to low-bid
for the twelve channels without using Gosselin’s landed rate. Later in
December, Gosselin’s managing director sent an email to another
landed rate provider, inviting the provider to collude with Gosselin to
prevent the me-too rates for the twelve routes at issue from converg-
ing to the prime. Such convergence was likely, as we have noted,
because of the competitiveness of the US-Germany through transpor-
tation market. The Gosselin managing director observed that by "not
taking [FF1’s bid] into consideration we would increase the rate level
with an average of [$3.63]." The director opined that "[t]his is the
only thing that in my mind can happen." In a reply email sent the
6 UNITED STATES v. GOSSELIN WORLD WIDE
same day, an executive at the competitor concurred, noting that "if we
do not react and give [the] industry a clear message which rate to base
the [me-too bids] on, then everyone will use the low rate and later
expect us to reduce our rates so those carriers can work under their
[me-too] rates."
Shortly after this exchange, Gosselin’s managing director for-
warded the emails to the president of Pasha. The Gosselin executive
identified the twelve channels, which had "quite some money on the
table," and inquired "what rate levels would you be able to support
if those [channels] would go to second level?" The director stressed
that "it is important we [ ] move rather quickly now." Pasha later indi-
cated its willingness to cooperate.
Defendants faced a difficult task in preventing the imminent me-
too bids from converging to the prime. FF1 had already demonstrated
that defendants’ landed rates could be undercut by contracting sepa-
rately for each transportation segment along the twelve channels.
Defendants therefore had to take preemptive action to prevent the
remaining U.S. forwarders from following FF1’s lead. In early Janu-
ary 2002, the managing director of Gosselin agreed in writing to pay
twelve of the largest German moving agents a specified fee. The Ger-
man agents, for their part, agreed not to handle business from freight
forwarders in those channels unless the forwarders submitted me-too
bids at the second lowest level (the "second low") or above. Gosselin
thereafter arranged a telefax to U.S. freight forwarders who were
finalizing their second-step bids advising them of the German agents’
undertaking.
Not content with securing their share of the DOD business desig-
nated for the second-round bids, defendants set about eliminating
FF1’s prime rate in the twelve channels at issue. First, they persuaded
FF1 to cancel its bid with the MTMC if the remaining freight for-
warders would file second-step bids at or above the second-low level.
Defendants then secured such an agreement from the remaining for-
warders. The forwarders overwhelmingly honored this agreement,
and those who strayed below the second-low level were persuaded to
withdraw their competitive bids.
As a result of defendants’ scheme, a good deal of household goods
shipments during the 2002 summer cycle in the twelve channels
UNITED STATES v. GOSSELIN WORLD WIDE 7
occurred at or above the second-low rate. The net financial effect of
the conspiracy was to cause the DOD to pay substantially more than
if FF1’s original prime rate had prevailed.
C.
The Department of Justice ("DOJ") charged defendants by infor-
mation with two counts. The first count alleged a conspiracy to
restrain trade in violation of the Sherman Act. 15 U.S.C. § 1 (2000).
The second count alleged a conspiracy to defraud the United States
under 18 U.S.C. § 371 (2000).
Defendants agreed to conditional pleas. They stipulated to a state-
ment of facts on the basis of which they would move the district court
to dismiss both counts. Gosselin and Pasha agreed in their pleas to
make only one argument in support of their motion to dismiss: that
the conduct set forth in the statement of facts "is immune from prose-
cution under the [Shipping Act.]" If the district court found such
immunity with respect to "both counts," and this finding was affirmed
on appeal, defendants would not enter a guilty plea. If the district
court denied the motion "as to either or both counts," however, the
defendant would plead guilty on the "remaining counts" subject to
withdrawal if a higher court overturned the district court’s finding.
The plea agreements also indicated that the parties would recommend
to the district court specified sentences in the form of financial penal-
ties depending on which count or counts survived the motion to dis-
miss.
Pursuant to the plea agreement, defendants filed a motion to dis-
miss on the basis of immunity under the Shipping Act, 46 U.S.C. app.
§§ 1701-1719 (2000). The district court granted the motion with
respect to the antitrust count, but denied it with respect to the conspir-
acy to defraud count. Following the arrangement set out in the plea
agreements, Gosselin and Pasha pled guilty to the conspiracy to
defraud count. Again pursuant to the pleas, the district court imposed
on each defendant a criminal fine of $4.6 million. After the final sen-
tencing order, the DOJ appealed the dismissal on immunity grounds
of the antitrust count and defendants cross-appealed their convictions
on the conspiracy to defraud count. We now address these appeals,
beginning with the issue of immunity under the Shipping Act.
8 UNITED STATES v. GOSSELIN WORLD WIDE
II.
Defendants’ collusion with each other and with other firms operat-
ing in the twelve transportation channels clearly violated the Sherman
Act’s injunction on combinations "in restraint of trade." 15 U.S.C. § 1(2000). "It has been held too often to require elaboration [ ] that price
fixing is contrary to the policy of competition underlying the Sherman
Act . . . ." United States v. McKesson & Robbins, Inc., 351 U.S. 305,
309 (1956). Defendants’ scheme, which prevented second round bids
from converging to the prime and even erased FF1’s first round prime
bid, amounted to naked bid rigging. And "bid rigging agreement is
price-fixing agreement of the simplest kind." United States v. Ports-
mouth Paving Co., 694 F.2d 312, 318 (4th Cir. 1982) (quoting United
States v. Bensinger Co., 430 F.2d 584, 589 (8th Cir. 1970)); see also
United States v. W.F. Brinkley & Son Constr. Co., Inc., 783 F.2d
1157, 1160 (4th Cir. 1986). Criminal antitrust liability is therefore
appropriate unless defendants enjoy immunity under another federal
law.
The Supreme Court has consistently construed the reach of exemp-
tions from antitrust laws narrowly, even when Congress confers these
exemptions in terms. See, e.g., Union Labor Life Ins. Co. v. Pireno,
458 U.S. 119, 126 (1982). This narrow construction of antitrust
immunity is appropriate because the robust marketplace competition
that antitrust laws protect is a "fundamental national economic pol-
icy." Carnation Co. v. Pac. Westbound Conference, 383 U.S. 213,
218 (1966); see also Otter Tail Power Co. v. United States, 410 U.S.
366, 374 (1973). This canon of construction has been employed by
the Supreme Court to defeat antitrust exemptions claimed under pro-
visions of the McCarran-Ferguson Act, see Group Life & Health Ins.
Co. v. Royal Drug Co., 440 U.S. 205, 231-32 (1979), the Miller-
Tydings and McGuire Acts, see McKesson, 351 U.S. at 316, and the
Agricultural Marketing Agreement Act, see United States v. Borden
Co., 308 U.S. 188, 198-200 (1939).
Defendants here claim exemption from antitrust law under a fed-
eral maritime statute, the Shipping Act of 1984. 46 U.S.C. app.
§§ 1701-1719 (2000). The Act modified an earlier law enacted in
1916. See 46 U.S.C. §§ 801-842 (1982). The earlier enactment grew
out of the difficulties faced by the U.S. shipping industry in the early
UNITED STATES v. GOSSELIN WORLD WIDE 9
part of the last century. See generally Puerto Rico Ports Auth. v.
FMC, 919 F.2d 799, 806-807 (1st Cir. 1990); Plaquemines Port, Har-
bor and Terminal Dist. v. FMC, 838 F.2d 536, 542-43 (D.C. Cir.
1988). To set U.S. shippers on an equal footing with foreign competi-
tors, who operated outside of U.S. antitrust strictures, Congress
granted them limited antitrust immunity. See 46 U.S.C. § 814 (1982).
This immunity, however, came with regulatory strings attached.
See id. § 804. The regulatory requirements of the 1916 Act were
designed to prevent the maritime transportation industry from monop-
olistically abusing its newly conferred grant of immunity. See Puerto
Rico Ports, 919 F.2d at 807. Regulation under the 1916 Act thus pre-
served some anti-competitive prohibitions. See id.; A & E Pacific
Constr. Co. v. Saipan Stevedore Co., Inc., 888 F.2d 68, 71 (9th Cir.
1989); Plaquemines, 838 F.2d at 542-43. Nonetheless, regulated firms
did enjoy the real benefit of operating outside the full strictures of
federal antitrust laws. Mindful of this benefit, the Supreme Court con-
cluded that the traditional canon of narrow construction, applicable to
antitrust exemptions generally, applied with full force to the coverage
provisions of the 1916 Act. See FMC v. Seatrain Lines, Inc., 411 U.S.
726, 732-33 (1973); Carnation, 383 U.S. at 217-218.
The 1916 Act was supplemented by the Shipping Act of 1984, 46
U.S.C. app. §§ 1701-1719 (2000). Although the 1984 Act contained
several new grants of antitrust immunity, see id. § 1706(a), nowhere
in the 1984 Act did Congress indicate an intention to override the
principle of narrow construction for antitrust exemptions that the
Supreme Court had long applied to the 1916 Act. Moreover, this
interpretive maxim has informed the construction of every other grant
of antitrust immunity in federal legislation. We therefore see no rea-
son to depart from ordinary practice in construing the 1984 Act.
III.
With the foregoing interpretive framework in mind, we turn to
defendants’ particular contentions. The district court found antitrust
immunity for Gosselin and Pasha in three distinct statutory provisions
10 UNITED STATES v. GOSSELIN WORLD WIDE
of the Shipping Act. We address immunity under each statutory pro-
vision separately.1
A.
Defendants first claim immunity under 46 U.S.C. app. § 1706(a)(4)
(2000), which exempts from antitrust liability "any agreement or
activity concerning the foreign inland segment of through transporta-
tion that is part of transportation provided in a United States import
or export trade."
Defendants argue that this provision covers all aspects of their
scheme to rig bids. The first step in this scheme, defendants empha-
size, was the agreement with twelve large German local agents to
handle no business from forwarders who filed bids below the second
low level. This agreement, defendants claim, is covered by
§ 1706(a)(4) because the German agents provide only services
between German ports and destinations in the interior — a "foreign
inland segment." Gosselin and Pasha had market leverage only in this
segment; in the other segment they service, ocean transportation, they
were constrained by their status as ISA agents and the strict terms of
the TAAFLO service contract. Thus the success of the remainder of
their scheme depended entirely on the continued viability of the
arrangement defendants had reached with the local German firms. For
this reason, defendants conclude, the scheme in its entirety should be
covered by the immunity provision of § 1706(a)(4).
We do not believe that the statutory exemption extends as far as
Gosselin and Pasha would have it. To begin with, the statutory lan-
guage does not support defendants’ position. For an agreement or
1
Defendants note that when parties enter into a conditional plea agree-
ment designed to permit defendants to challenge the prosecution theory
on a particular basis, any ambiguities in the stipulated facts must be
resolved in defendants’ favor and the government may not rely in its
prosecution on facts beyond those stipulated. See United States v. Har-
vey, 791 F.2d 294, 300 (4th Cir. 1986). Accordingly, in resolving the
contentions that defendants press on appeal, we take care not to rely on
allegations that were not admitted in the plea agreements and the incor-
porated statement of facts.
UNITED STATES v. GOSSELIN WORLD WIDE 11
activity to "[concern] the foreign inland segment," § 1706(a)(4)
(emphasis added), as the statute requires, the parties undertaking the
agreement or participating in the activity must have in mind some
consequence for the foreign inland segment that they intend their
behavior to have. Accord Hileman v. Pittsburgh & Lake Erie Props.,
Inc., 290 F.3d 516, 519 (3d Cir. 2002) ("‘[C]oncerning’ . . . is essen-
tially a connecting term, the scope and meaning of which is defined
in part by the terms it modifies."); Commerford v. Thompson, 1 F.
417, 420 (C.C. Ky. 1880) (observing that the "broadest sense" of the
term "‘concerning’" is "‘pertaining to or relative to’"). Because defen-
dants’ collusive effort was aimed at the entire through transportation
market, rather than just the foreign inland segment, we do not think
that they can claim exemption from antitrust liability under
§ 1706(a)(4). Indeed, defendants fixed bids for through transportation
rates, i.e. door-to-door rates, not just rates for the "foreign inland seg-
ment" of the routes. § 1706(a)(4).
It is true that defendants’ original agreement with the German local
agents may have had the relationship to a "foreign inland segment"
that the statute requires. Id. Indeed, United States v. Tucor Int’l, Inc.,
35 F. Supp. 2d 1172 (N.D. Cal. 1998), aff’d, 189 F.3d 834 (9th Cir.
1999), the case upon which Gosselin and Pasha chiefly rely, awarded
immunity under the Shipping Act. In Tucor, several Philippine firms,
operating in a through transportation market "packed, picked up, and
trucked household shipments [of U.S. military personnel] from Subic
Naval Base and Clark Air Force Base . . . to a Philippine seaport."
189 F.3d at 836. The firms were indicted under the Sherman Act for
conspiring amongst each other "to suppress competition by fixing
prices." Tucor, 35 F. Supp. 2d at 1175. Defendants pled guilty, but the
district court later dismissed the indictments on the basis of immunity
under § 1706(a)(4). The Ninth Circuit affirmed, finding that
§ 1706(a)(4)’s reference to a "foreign inland segment," "unambigu-
ously exempts the activities of [defendants]," Tucor, 189 F.3d at 836,
occurring as they did between points "entirely within a foreign coun-
try." Id. at 835.
There is an argument to be made that the agreement defendants
made with the local German firms fits under the immunity announced
in Tucor. And if defendants’ scheme had ended there, we would have
to decide whether the agreement did so qualify and whether Tucor
12 UNITED STATES v. GOSSELIN WORLD WIDE
should be adopted in this circuit. But the scheme did not stop there.
Rather, Gosselin and Pasha took additional steps to perfect their bid-
rigging plan. And we are not persuaded that these additional steps
"[concerned] the foreign inland segment," in the manner the statute
requires. § 1706(a)(4).
Gosselin and Pasha’s contacts with FF1, for instance, related not
to foreign inland services, but to defendants’ desire that FF1 withdraw
the prime through rate bid it had filed with MTMC. Similarly, the
agreement defendants secured from other U.S. freight forwarders to
file bids at or above the second low level had little to do with the Ger-
man inland segment of the through services these forwarders offered.
Rather, the agreement was a precommittment mechanism to ensure
that none of the freight forwarders defected from the anticompetitive
cartel that defendants were assembling. When some of these forward-
ers later broke ranks, defendants instituted measures to reign them in.
But these measures were designed only to secure withdrawal of the
competitive through rate bids the forwarders had filed in the second
round, not to have consequences for the foreign inland segment.
In short, none of the additional steps Gosselin and Pasha took
beyond their agreement with the German local agents had intended
effects for any aspect of the German inland part of the through trans-
portation market. It is unclear, therefore, how these steps "[con-
cerned]" this foreign inland segment, as they must for immunity to
attach under § 1706(a)(4).
Moreover, a broad immunity of the sort that Gosselin and Pasha
seek would threaten to excise antitrust liability from the through
transportation market completely. If § 1706(a)(4) exempted from anti-
trust all stages of a conspiracy that involves in some manner a foreign
inland segment, then any firm operating in any segment of any
through transportation channel need only execute an agreement with
a local moving agent to shield itself from the antitrust laws entirely.
It does not take much to imagine how sophisticated transportation
firms, intent on reaping larger gains, might abuse the immunity of
such a rule. The incentives for opportunistic associations with compa-
nies operating in foreign inland segments would simply be too great.
And without the constraint of anticipated antitrust liability, the prices
charged by companies in the through transportation market would
UNITED STATES v. GOSSELIN WORLD WIDE 13
escalate. Further, the agreements and activity for which defendants
seek immunity here were not regulated by the FMC. Lack of regula-
tory oversight might only exacerbate the upward pressure on prices
for through transportation engendered by the absence of antitrust lia-
bility.
The upshot of defendants’ interpretation of § 1706(a)(4) would
therefore be a through transportation market beset with collusive and
artificially inflated bids, detrimental to consumers and non-
cooperating competitors alike. The government, as a repeat purchaser,
would stand to lose much, and the extra money it would have to pay
would come from the fisc and thus taxpayers.
It is unlikely that Congress intended such dismaying effects, but if
there is any doubt over whether § 1706(a)(4) affords defendants
relief, it is settled by the maxim that exceptions to the antitrust laws
should be construed narrowly. See Seatrain, 411 U.S. at 732-33. The
Supreme Court has relied on this principle to render agreements sub-
ject to the antitrust laws rather than the lesser anticompetitive protec-
tions of FMC regulation. See id. Here defendants seek exemption
from legal enforcement by the DOJ for agreements that have not been
regulated by the FMC. We hold for reasons earlier expressed that
§ 1706(a)(4) does not immunize defendants’ scheme to raise through
rate bids in the twelve channels at issue.
B.
Defendants next claim immunity under § 1706(a)(2). That section
exempts from antitrust laws
any activity or agreement within the scope of this chapter
. . . undertaken or entered into with a reasonable basis to
conclude that (A) it is pursuant to an agreement on file with
the [FMC] and in effect when the activity took place, or (B)
it is exempt[ed by the FMC under § 1715] from any filing
or publication requirement of this chapter.
Defendants do not claim that their "activity or agreement[s]" were
undertaken "pursuant to an agreement on file with the" FMC. Rather,
14 UNITED STATES v. GOSSELIN WORLD WIDE
they point to a tariff filing exemption that the FMC granted to non-
vessel operating common carriers, like defendants, for the
"[t]ransportation of used military household goods and personal
effects by ocean transportation intermediaries." 46 C.F.R. § 520.13(c)
(2004). Gosselin and Pasha argue that they reasonably believed their
collusive "activit[ies] and agreement[s]" to be exempt from the filing
requirements of the Shipping Act under this regulation, and thus
beyond the antitrust laws under § 1706(a)(2)(B).
The touchstone of § 1706(a)(2)(B) is reasonableness. Yet the terms
of the exemption on which defendants rely, and other features of the
regulatory framework in which defendants operate, demonstrate that
their reliance was, if anything, unreasonable.
To begin with, the exemption facially covers only "tariffs," see 46
C.F.R. § 520.1(a) (2004), not the kind of agreements and activities
involved in defendants’ bid rigging scheme. Yet a distinction between
tariffs on the one hand and operating agreements on the other per-
vades the Shipping Act. Compare § 1703(a) (cataloguing the "agree-
ments by or among ocean common carriers" to which the "chapter
applies," including agreements to "discuss, fix, or regulate transporta-
tion rates"), with § 1707 (describing "tariffs" that "each common car-
rier and conference shall keep open to public inspection"). This
statutory distinction makes implausible defendants’ claim that they
understood the reference to tariffs in the exemption to cover the collu-
sive agreements they secured during the course of their scheme.2
2
Indeed, it would appear that the reach of the immunity in
§ 1706(a)(2)(B) is not as broad as defendants assume. Gosselin and
Pasha focus on the tariff disclosure dispensation they received, but the
statutory provision clearly requires a reasonable belief in an exemption
from "any filing or publication requirement of" the Shipping Act.
§ 1706(a)(2)(B) (emphasis added). Section 1706(a)(2)(B) thus refers not
only to § 1707 — the tariff disclosure provision — but also § 1704,
which governs disclosure of "agreement[s]." And § 1704(a), by its terms,
extends to agreements that "control, regulate, or prevent competition in
international ocean transportation." § 1703(a)(6). The agreements
secured during the course of defendants’ scheme would qualify under
this definition, making them subject to a "filing or publication require-
ment of" the Act under § 1706(a)(2)(B). But if this is so, defendants’
would hardly have a "reasonable basis to conclude that" their "activity
or agreement[s]" were exempt from "any" disclosure provision of the
statute, as they must to be immunized under § 1706(a)(2)(B).
UNITED STATES v. GOSSELIN WORLD WIDE 15
The terms of § 1715, the Shipping Act provision mentioned in
§ 1706(a)(2)(B) which governs the FMC’s exemption procedures, fur-
ther erodes Gosselin and Pasha’s claim of immunity under
§ 1706(a)(2)(B). Section 1715 conditions exemption from the disclo-
sure requirements of the Act on a finding by the FMC "that the
exemption will not result in substantial reduction in competition or be
detrimental to commerce." The FMC was thus required to make such
a finding before passing the tariff filing dispensation on which defen-
dants claim to have relied.
Section 1715 is quite clear in laying out the criteria for the granting
of filing exemptions: no "substantial reduction in competition" nor a
"[detriment] to commerce" may result from the exemption. The agree-
ments that defendants secured during their bid rigging scheme, how-
ever, accomplished just those ends: indeed, it was precisely by a
"reduction in competition" that Gosselin and Pasha succeeded in
inflating bids above the prime level, and this result was clearly "[det-
rimental] to commerce." The incongruence between the conditions
that § 1715 sets forth and the effects of defendants’ bid-rigging
scheme erodes defendants’ claim that they reasonably understood the
tariff filing exemption to permit such activity.
Pasha and Gosselin complain that the ex ante judgment of the FMC
under § 1715 should not apply ex post to our interpretation of the rea-
sonableness standard under § 1706(a)(2)(B). But the statutory phrase
"with a reasonable basis to conclude," § 1706 (a)(2), clearly contem-
plates an inquiry into the propriety of a party’s belief in light of the
circumstances. And one of those circumstances is surely the terms of
the statute governing the exemption. As sophisticated businesses
operating in a regulatory regime, defendants are properly charged
with knowledge of the statute that applies to their behavior. Accord
Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542,
1548 (9th Cir. 1989) (citing Kansas Power & Light v. Burlington N.
R.R. Co., 544 F. Supp. 1336, 1347 (D. Kan. 1982)) (indicating that
"specialized knowledge" including of "statutory . . . law" may prop-
erly be presumed of parties according to their "experience"). Thus
aware of the criteria set forth in § 1715, Gosselin and Pasha can
hardly claim a "reasonable basis to conclude that" their behavior was
covered by the tariff filing exemption. § 1706(a)(2). An exemption
conditioned upon no "substantial reduction in competition" simply
16 UNITED STATES v. GOSSELIN WORLD WIDE
should not be read to sanction, in any manner, behavior intended to
accomplish just such a reduction. § 1715.
Moreover, defendants’ position flies once again in the face of the
maxim that exceptions to antitrust liability should be narrowly con-
strued. Gosselin and Pasha’s claim that the scope of the tariff filing
exemption somehow applies to the stark anticompetitive agreements
here is simply not persuasive. Section 1706(a)(2)(B) may well extend
to behavior taken pursuant to an FMC filing or exemption whose anti-
competitive effects are inadvertent, tangential, or debatable. But
when, as here, the anticompetitive effects are intentional, direct, and
palpable, reading § 1706(a)(2)(B) to insulate these effects from liabil-
ity would encourage gross violations of the antitrust laws and vitiate
the canon of construction that aims to protect the operation of these
laws.
For the foregoing reasons, we do not believe that Congress
intended § 1706(a)(2)(B) to confer immunity on the kind of conduct
for which defendants are being prosecuted. We therefore find that
defendants’ scheme to rig bids is not exempt from antitrust under
§ 1706(a)(2)(B).
C.
The final part of the Shipping Act under which defendants claim
immunity is § 1706(c)(1). This provision states that "[a]ny determina-
tion by an agency or court that results in the denial or removal of the
immunity to the antitrust laws set forth in [§ 1706(a)] shall not
remove or alter the antitrust immunity for the period before the deter-
mination." Defendants contend that an adverse decision on one of the
two other statutory immunities they seek — § 1706(a)(4) and
§ 1706(a)(2)(B) — constitutes a "denial or removal," and that
§ 1706(c)(1) thus requires that any penalty be imposed only prospec-
tively.
Section 1706(c)(1) was designed for those instances in which a
firm has been operating under a clearly established statutory immu-
nity, whose validity or scope is subsequently called into doubt — for
instance because of a changed circumstance or because of some dis-
crete action on the part of the firm that the statute prohibits. See, e.g.,
UNITED STATES v. GOSSELIN WORLD WIDE 17
§ 1709 (listing a variety of prohibited actions for firms operating
under filed tariffs or agreements). When such an event occurs and
immunity is abrogated, § 1706(c)(1) ensures that subsequent legal or
administrative proceedings will not impose liability for the period
between the event and the proceedings. The provision thus affords the
regulated firm some time to re-engage the administrative process or
otherwise render itself compliant. Under this interpretation,
§ 1706(c)(1) promotes beneficial reliance by the regulated industry on
the regulatory process, particularly when the event that abrogates
immunity is the invalidation of a filed tariff or operating agreement.
Congress was evidently mindful of this end in passing this provision.
See, e.g., H.R. Rep. No. 98-53, pt. 1, at 33 (1983) ("[Section 1706(c)]
is needed to provide a degree of stability and certainty to an agree-
ment filed in good faith and valid on its face.")
To qualify for relief under § 1706(c)(1), defendants must therefore
identify a discrete event that triggers the provision’s grace period.
Obviously, that event cannot be our present denial of immunity under
another statutory provision of the Shipping Act, as defendants would
have it. Were we to countenance such an argument, a maritime firm
wishing to avoid full antitrust liability would simply invent a series
of spurious immunity arguments and remain perpetually one step
ahead of the judicial or administrative proceedings invalidating them.
Such a state of affairs would be the antithesis of the antitrust protec-
tions that the maxim requiring narrow construction of exemptions
therefrom contemplates. See Seatrain, 411 U.S. at 732-33. We there-
fore reject defendants’ interpretation of § 1706(c)(1).
D.
In short, we hold that defendants’ scheme to rig bids does not qual-
ify for immunity under any of the three provisions Gosselin and Pasha
rely on — § 1706(a)(4), § 1706(a)(2), and § 1706(c)(1).3 We therefore
3
Because we reach this conclusion on the substance of defendants’
immunity arguments, we need not address the government’s alternative
contention that the agreements for which Gosselin and Pasha seek immu-
nity are beyond the coverage provisions of the Shipping Act and likewise
beyond the FMC’s jurisdiction. See § 1703; see also Tucor, 189 F.3d 837(discussing a similar argument made in that case).
18 UNITED STATES v. GOSSELIN WORLD WIDE
conclude that defendants enjoy no immunity from antitrust prosecu-
tion under the Shipping Act.4
IV.
The charging information also contained a conspiracy to defraud
count. See 18 U.S.C. § 371 (2000). Defendants argued in their motion
to dismiss that the immunity provisions of the Shipping Act were
broad enough to insulate them from liability under a conspiracy to
defraud theory. Despite the district court’s conclusion that defendants
were indeed immunized from antitrust liability by the Shipping Act,
the court found that this immunity did not extend to conspiracy to
defraud. Employing the test set forth in Blockburger v. United States,
284 U.S. 299 (1932), the district court further determined that the ele-
ments of the antitrust claim did not subsume those of the conspiracy
to defraud claim. The district court thus concluded that defendants
could properly be prosecuted for the same behavior under both
counts. See United States v. Ashley Transfer & Storage Co., Inc., 858
F.2d 221, 224-25 (4th Cir. 1988) (finding that conduct may form basis
for prosecution under § 371 following acquittal on Sherman Act
count). As a result, the court rejected defendants’ motion to dismiss
the fraud count on Shipping Act immunity grounds, and, following
the terms of the plea agreements, Gosselin and Pasha pled guilty
under § 371.
4
One of the factors on which the district court rested its contrary deter-
mination was the "rule of lenity." Under this principle of interpretation,
the application of ambiguous criminal statutes should be resolved in
favor of a defendant. See, e.g., Rewis v. United States, 401 U.S. 808, 812
(1971). The Supreme Court has counseled, however, that there must be
a "genuine ambiguity" before lenity will apply, Perrin v. United States,
444 U.S. 37, 49 n.13 (1979), and has warned that no such ambiguity
exists when "the ambiguous reading relied on is an implausible reading
of the congressional purpose." Caron v. United States, 524 U.S. 308, 316
(1998). The Court has also directed that "traditional tools of statutory
construction" should be consulted before ambiguity is found. Id. (citing
United States v. Shabani, 513 U.S. 10, 17 (1994)). Finding, as we do,
that such "traditional tools," including "congressional purpose" and ordi-
nary canons of statutory construction, suffice to resolve the interpretive
issues before us, we see no occasion for resort to the rule of lenity.
UNITED STATES v. GOSSELIN WORLD WIDE 19
We have concluded that defendants enjoy no antitrust immunity
under the Shipping Act. We therefore need not determine, as the dis-
trict court did, whether immunity under the Shipping Act extends to
anticompetitive behavior that is also actionable under a conspiracy to
defraud theory. Furthermore, defendants concede on appeal that the
district court’s Blockburger analysis is "certainly correct" and that "si-
multaneous Sherman Act and Section 371 prosecutions are not multi-
plicitous." Prosecution of defendants’ particular course of action
under both statutes is therefore permissible.
In reviewing the district court’s disposition of the conspiracy to
defraud counts, it remains only to address the contention, raised on
appeal, that there is insufficient factual support in the plea agreements
and incorporated statement of facts for an adjudication of guilt under
§ 371.
Challenges to the factual basis for an adjudication of guilt follow-
ing a guilty plea are severely circumscribed. "A voluntary and intelli-
gent plea of guilty is an admission of all the elements of a formal
criminal charge." United States v. Willis, 992 F.2d 489, 490 (4th Cir.
1993) (quoting McCarthy v. United States, 394 U.S. 459, 466 (1969)).
A defendant who pleads guilty therefore "admits all of the factual
allegations made in the indictment," O’Leary v. United States, 856
F.2d 1142, 1143 (8th Cir. 1988) (per curiam), and waives "all non-
jurisdictional defects, including the right to contest the factual merits
of the charges." Willis, 992 F.2d at 490 (internal citations omitted);
see also United States v. Wiggins, 905 F.2d 51, 52 (4th Cir. 1990). In
these circumstances, courts have permitted a defendant to challenge
an adjudication of guilt only with the argument that "the facts under-
lying the charge" are insufficient "to constitute a crime." Stanback v.
United States, 113 F.3d 651, 654 (7th Cir. 1997).
The most that Gosselin and Pasha may argue, therefore, is that the
allegations in the plea agreements and the incorporated statement of
facts are so insubstantial that they could not constitute an offense
under § 371. It is clear that the factual recitations in the plea docu-
ments easily surmount this low hurdle. Conspiracy to defraud under
§ 371 requires three elements: "(1) the existence of an agreement, (2)
an overt act by one of the conspirators in furtherance of the objec-
tives, and (3) an intent on the part of the conspirators to agree as well
20 UNITED STATES v. GOSSELIN WORLD WIDE
as to defraud the United States." United States v. Tedder, 801 F.2d
1437, 1446 (4th Cir. 1986). The statute covers "not only conspiracies
intended to involve the loss of government funds but also any con-
spiracy for the purpose of impairing, obstructing, or defeating the
lawful function of any department of government." Id. The statement
of facts laid out in some detail the course of defendants’ conspiracy,
including the discrete agreements Gosselin and Pasha secured with
various firms engaged in the bidding cycle. The statement of facts
also unequivocally recites that the foregoing actions "[increased] the
rates paid by DOD for the transportation of military goods during the
[cycle] to levels higher than would have prevailed in the absence of
their conspiracy." The stipulation therefore contains an abundance of
information to establish a conspiracy to "[impair] . . . the lawful func-
tion of [a] department of government," id. — namely the MTMC pro-
gram.
V.
The final contention that Gosselin and Pasha raise on appeal con-
cerns their sentence. Following the adjudication of guilt on the con-
spiracy to defraud count, the district court considered the sentences
that the parties had agreed to recommend in the event of this outcome.
The district court settled on the figure recommended in the plea
agreements — a fine of $4.6 million for each defendant for its part
in the conspiracy to defraud. Gosselin and Pasha now argue that this
fine exceeded the maximum permissible under the relevant sentencing
statute, 18 U.S.C. § 3571 (2000). They assert that the "gross loss" to
the government as a result of the conspiracy to defraud was only $1
million, id. § 3571 (d), less than the $2.3 million amount on which the
plea agreements’ sentencing recommendations for the § 371 count
were predicated.
The sentencing arrangement that the parties agreed to is carefully
set out in each plea document. In the event of an adjudication of guilt,
"the United States and the defendant agree that the appropriate dispo-
sition of this case is, and agree to recommend jointly, that the Court
impose a sentence requiring the defendant to pay to the United States
a criminal fine . . . ." The agreements further provide that "Count 1
and Count 2 are [to be] grouped together" for sentencing purposes,
"and thus, the total fine paid will be the greater of" two figures that
UNITED STATES v. GOSSELIN WORLD WIDE 21
each sentencing agreement recites. The first figure is derived by
applying various listed Sentencing Guidelines factors to the penalty
provisions governing Sherman Act violations. The second figure is
derived by applying various listed Sentencing Guidelines factors to
the penalty provisions governing § 371 violations.
Operating under the assumption that defendants were guilty only of
conspiracy to defraud, the district court limited its attention during
sentencing to the conspiracy to defraud part of each plea agreement’s
sentencing recommendation. We have found additionally that the
Shipping Act affords defendants no immunity from the antitrust
count. We therefore vacate the sentence and remand for resentencing
in light of our immunity holding and the entirety of each plea agree-
ment’s sentencing provisions.
VI.
We have found that the three immunity provisions of the Shipping
Act under which Gosselin and Pasha claim antitrust immunity afford
them no relief. We have also determined that there was no error in the
district court’s adjudication of guilt on the conspiracy to defraud
count. Because the district court applied the sentencing provisions of
the plea agreement under the assumption that defendants were only
guilty of conspiracy to defraud, a remand for resentencing in light of
our disposition of the antitrust issue is in order. The judgment of the
district court is therefore
AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED FOR RESENTENCING.