United States v. Therm-All Inc , 352 F.3d 924 ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED AUGUST 10, 2004
June 14, 2004
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
__________________________
No. 02-20843
__________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
THERM-ALL, INC., and
SUPREME INSULATION, INC.,
Defendants-Appellants.
___________________________________________________
Appeals from the United States District Court
For the Southern District of Texas
__________________________________________________
ON PETITION FOR REHEARING EN BANC
(Opinion December 3, 2003, 5th Cir. 2003, ____F.3d____)
Before REAVLEY, JONES, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge.
Upon reconsideration, we withdraw our previous opinion, reported at 352 F.3d 924, and
substitute the following.1
After a seven-week trial, a jury convicted Therm-All, Inc. (“Therm-All”) and Supreme
1
No member of the panel nor judge in regular active service of the Court having requested
that the Court be polled on Rehearing En Banc (FED. R. APP. P. and 5th CIR. R. 35), the Petition for
Rehearing En Banc is denied.
1
Insulation, Inc. (“Supreme”) of conspiring to fix prices in the building insulation industry, in violation
of Section 1 of the Sherman Act, 15 U.S.C. § 1. Therm-All and Supreme (collectively “Defendants”)
raise the following six issues on appeal: (1) whether sufficient evidence supports the jury finding that
a conspiracy existed; (2) whether the Government produced evidence t hat the conspiracy existed
during the statute of limitations period; (3) whether a fatal variance existed between the indictment
and the proof at trial; (4) whether the district court improperly instructed the jury; (5) whether the
district court should have ordered a new trial based on prosecutorial misconduct; and (6) whether a
discovery error by the Government rises to the level of plain error. We conclude that the Defendants
do not prevail on any of these issues, so we affirm the judgment.
I. FACTS AND PROCEEDINGS
During the 1990’s, five companies, Therm-All, Supreme, Bay Insulation Supply Company
(“Bay Insulation”), Mizell Brothers Company (“Mizell Co.”), and CGI Silvercote (“CGI”), dominated
the market for laminated fiberglass. These companies laminated fiberglass so that it could be used
to insulate metal buildings. In 1992 and 1993, the metal-building industry expanded dramatically, and
consequently, prices of metal-building insulation plummeted. In late 1993, the fiberglass
manufacturers—suppliers for the five fiberglass laminating companies listed above—announced a
price increase and an “allocation” system under which they would be producing more residential and
less metal building insulation.
At trial, the Government presented evidence that during t he fiberglass manufacturer’s
allocation period, the five laminating companies acted in the following manner to bring about a
conspiratorial agreement. In October 1993, during a convention in Dallas, Texas, the laminating
companies discussed forming a committee to establish product and safety standards for metal building
2
insulation. Subsequently, the president of Therm-All, Robert Smigel (“Smigel”), telephoned the
national sales manager for Mizell Co., Wally Rhodes (“Rhodes”), to discuss whether Mizell Co. had
any interest in supporting this committee. Near the end of their conversation, Smigel (of Therm-All)
mentioned the prevailing low prices in the industry, and characterized the situation as “a dog-eat-dog
market.” Smigel said he thought Bay Insulation, which was expanding into many new areas at the
time, was responsible for the low prices, and Rhodes (of Mizell Co.) agreed. Smigel then said that
he had agreed with the sales manager of Bay Insulation, Mark Maloof (“Maloof”), to increase and
maintain prices. This would be accomplished, Smigel explained, by publishing price sheets with
nearly identical prices, and “selling . . . on the price sheet, not coming below the price sheet and not
jumping the brackets.” Rhodes “immediately” agreed that Mizell Co. would do the same. In January
1994, Rhodes had similar conversations with Maloof (of Bay Insulation) and with the president of
Supreme, Tula Thompson (“Thompson”), in which they agreed to raise prices, use bracket pricing,
and not deviate from the price sheets. Thus, by January 1994, Smigel, Thompson, Maloof, and
Rhodes had reached an agreement “to get the pricing up in the industry and make more money.”
Smigel then brought CGI into the conspiracy, as well as smaller regional competitors.2
The conspirators faxed each other price sheets, and spoke on the phone “to get the pricing
in line with each other . . . within a couple of dollars of each other in each [pricing] bracket,” trying
not to use the “exact” same prices so that customers would not get suspicious. For example, Rhodes
(of Mizell Co.) received a copy of Therm-All’s February 14, 1994 price sheet from Smigel’s Therm-
All office in January 1994, at which time Rhodes was working on Mizell Co.’s prices. Rhodes then
2
Witness Peter Yueh provided evidence of a smaller regional competitor joining the
conspiracy. Yueh was a former vice president of a company that sold laminated fiberglass primarily
in Texas; he testified that his former company became part of the conspiracy in January 1994.
3
“tried [his] best to get the numbers as close as [he] could . . . to [Therm-All’s] numbers without being
identical in every bracket.” When he finished, Rhodes faxed Mizell Co.’s draft price sheet to Smigel
a few days before it became effective.
Another example of conspiratorial conduct allegedly occurred when Rhodes (of Mizell Co.)
told Leif Nilson, Mizell Co.’s California plant manager, that he had an agreement with Thompson (of
Supreme) to keep the California prices up, and therefore, they were to stick to the price sheets. On
one occasion, Rhodes faxed Nilsen “Supreme’s price sheet” containing a Supreme fax header.
Several witnesses explained how the various companies policed and enforced the agreement.
Rhodes (of Mizell Co.) testified that when a conspirator believed another conspirator was offering
too low a price to a mutual customer, the conspirator could call Rhodes and verify the complaint or
obtain an explanation. Rhodes provided an example of this conduct, stating that Smigel (of Therm-
All) called him several times in 1994 complaining that a Mizell Co. salesperson in Pennsylvania had
jumped a bracket. Nilsen (of Mizell Co.) also called Rhodes whenever he believed that Supreme was
pricing below the agreed-upon level. Rhodes responded to Nilsen that he would “call and see what
was going on,” and then called back to say that he had discussed the incident with Supreme and that
it would not happen again.
Evidence also existed that Supreme called co-conspirators when it suspected they were not
complying with the agreement. Supreme’s California salesman, Jim Miranda (“Miranda”), told his
plant manager that, according to a customer, Supreme’s quote to that customer was higher than
Mizell Co.’s quote. The plant manager relayed this information to Thompson (of Supreme), who
called Rhodes (of Mizell Co.), who told Thompson that the customer must have been “pulling
[Miranda’s] leg.”
4
The following evidence is also noteworthy for purpo ses of this appeal. First, Miranda
provided testimony at trial (1) that Thompson (of Supreme) obtained a price sheet from Rhodes (of
Mizell Co.), and (2) that Miranda (of Supreme) himself had told this information to the grand jury.
Second, Rhodes (of Mizell Co.) testified that the conspiracy continued through June 1995. Third,
Mark Engebretson (“Engebretson”), a Therm-All employee, testified that he had conversations with
Roger Ferry (“Ferry”), a CGI employee, about pricing information. The telephone records of
Engebretson (of Therm-All) revealed that on June 8, 1995, he had a short conversation with Ferry
(of CGI), and sent Ferry a fax on June 15, 1995. Fourth, Rhodes (of Mizell Co.) testified that a price
sheet that CGI had in its possession contained the handwriting of a Therm-All vice president, Dennis
Kaczmarek (“Kaczmarek”), on it.
The jury acquitted Smigel (of Therm-All) and Thompson (of Supreme), but found Therm-All
and Supreme guilty. Therm-All and Supreme filed motions for judgment of acquittal and new trial,
but the district court denied those motions. Thermal-All and Supreme timely appeal.
II. STANDARD OF REVIEW
This Court reviews de novo the denial of an appellant’s motion for acquittal. United States
v. Medina, 161 F.3d 867, 872 (5th Cir. 2002). A motion for a judgment of acquittal challenges the
sufficiency of the evidence to convict. See FED. R. CRIM. P. 29(a). In ruling on the motion for
acquittal, this Court reviews the evidence, all reasonable inferences drawn from it, and all credibility
determinations in the light most favorable to the Government. Glasser v. United States, 315 U.S. 60,
80 (1942); Medina, 161 F.3d at 872.
This Court reviews the denial of a motion for new trial for abuse of discretion. Miss. Chem.
Corp. v. Dresser-Rand Co., 287 F.3d 359, 365 (5th Cir. 2002). This Court will uphold a jury verdict
5
if “a rational trier of fact could have found that the evidence established the essential elements of the
offense beyond a reasonable doubt.” United States v. Lopez, 74 F.3d 575, 577 (5th Cir. 1996).
III. DISCUSSION
Defendants raise six issues on appeal. The first is whether the Government produced
sufficient evidence to show that a conspiracy existed. The second is whether evidence exists that the
alleged conspiracy continued during the limitations period. The third is whether a fatal variance exists
between the indictment and the proof at trial. The fourth is whether the district court improperly
instructed the jury. The fifth is whether the district court should have ordered a new trial based on
the Government’s closing argument. The sixth is whether a discovery error by the Government rises
to the level of plain error. We address each in turn.
A. Sufficiency of the evidence
Defendants first argue that the evidence does not support the jury verdicts against them
because the jury did not convict Thompson (of Supreme), Rhodes (of Mizell Co.), or Smigel (of
Therm-All) of illegal activity. This argument fails. In United States v. Cargo Service Stations, Inc.,
657 F.2d 676, 684-85 (5th Cir. 1981), this Court faced the same issue. There, the Government
alleged that several companies and their agents violated Section 1 of the Sherman Act. Id. The jury
convicted the companies but acquitted their agents. Id. at 684-85. On appeal, the companies argued
that the evidence did not support their convictions because every person who could have acted as
their agent had been acquitted. Id. This Court rejected that argument, stating:
In this Circuit consistency is not required. That the verdict may have been the result
of compromise, or of a mistake on the part of the jury, is possible. But verdicts
cannot be upset by speculation or inquiry into such matters. As the Supreme Court
explained in a similar case in which the corporation was acquitted and the individual
was convicted, “whether the jury’s verdict was a result of carelessness or compromise
6
or a belief that the responsible individual should suffer the penalty instead of merely
increasing, as it were, the cost of running the business of the corporation, is
immaterial. Juries may indulge in precisely such motives or vagaries.” United States
v. Dotterweich, 320 U.S. 277, 279 (1943).
Id. at 685 (internal citations and quotations omitted). Thus, because a consistency of verdicts is not
necessary to convict a corporation, the Defendants’ argument fails.
Defendants next contend that they could no t have been guilty of conspiring to fix prices
because circumstantial evidence demonstrates otherwise. Specifically, Therm-All cites evidence that
its price increases were correlated with the fiberglass manufacturers’ allocation period; Supreme cites
evidence that it increased sales during that period and took customers away from Mizell Co. and Bay
Insulation. This evidence, however, does not compel the conclusion that Therm-All and Supreme
could not have engaged in price-fixing activity. The jury could reasonably infer that despite market
conditions affecting the price, and despite competitive activity, the companies conspired to raise the
aggregate prices of their goods. Indeed, direct testimony supports such an inference.3 The
Defendants’ circumstantial evidence thus falls well short of establishing that the jury verdict was an
unreasonable one.
B. Statute of limitations
The Defendants argue that the Government failed to produce any evidence that the conspiracy
occurred within the applicable statute of limitations period. The Government counters this argument
by contending that antitrust law does not require that it produce any evidence of the conspiracy’s
continued existence during the limitations period because Defendants failed to make a showing of
abandonment. For the reasons discussed below, we hold that in a price-fixing conspiracy, the
3
For this same reason, we also reject Supreme’s brief argument that the verdict is against the
great weight of the evidence.
7
government must produce evidence of the conspiracy’s continued existence during the limitations
period. We further hold that in this instance, the Government has satisfied that burden.
(1) Whether the Government was required to prove the conspiracy’s existence in the
limitations period
The question of whether the government must produce evidence that a price-fixing conspiracy
continued to exist during the limitations period is res nova for this Court. The issue arises in part
from a statement made in a historic antitrust case, United States v. Kissel, 218 U.S. 601 (1910). In
Kissel, the Supreme Court addressed whether the government must prove that a defendant has acted
in the limitations period to show that an antitrust conspiracy occurred during that time. 218 U.S. at
601. To answer this question, the Court first discussed the issue of whether a conspiracy was a
continuing crime. Id. at 607 (“[W]e first will consider whether a conspiracy can have continuance
in time.”). The defendants asserted that the conspiracy was a completed crime once the participants
had formed the agreement—not a continuing crime. Id. Based on that assertion, the defendants
further argued that despite subsequent acts in furtherance of the agreement (which by themselves
were not actionable), the statute of limitations should run from the time of the original agreement.
Id. The Court rejected this argument, holding that the antitrust conspiracy was indeed a continuing
crime. Id. at 607-08. The Court reasoned that “if [the defendants] do continue such efforts in the
pursuance of the plan, the conspiracy continues up to the time of abandonment or success.” Id. at
608. This statement, then, was the basis for the Court rejecting the defendants’ argument that the
subsequent acts were not part of the original act of conspiracy.
The above statement can be interpreted two ways. The first interpretation posits that the
conspiracy is presumed to continue indefinitely, whereas the second posits that the conspiracy is
8
presumed to continue up to the point of the last act in furtherance of the conspiracy. Under the first
interpretation, once a conspirator has committed an act of continuing effort, the conspiracy would
continue indefinitely unless the conspirator made a showing of abandonment or success. The
indefinite presumed existence would imply that the conspiracy is indefinitely actionable. The
limitations period would always be tolled absent a showing of abandonment or success.
Under the second interpretation, once a conspirator has committed an act of continuing effort,
the conspiracy would continue from the point of the original conspiratorial agreement until the last
act of continuing effort. That presumption of its continued existence between those two points in
time would only be rebutted if the conspirator had made a showing of abandonment or success. In
effect, the statute of limitations would reset from that act of continuing effort. The indictment would
therefore have to be brought within the applicable limitations period after that act of continuing effort.
That is, the government would have to show that the conspirator committed an act of continuing
effort within a time period before the date that the indictment was brought.
The facts and reasoning of Kissel compel the second interpretation. As previously noted, the
Supreme Court stated that a “conspiracy continues up to the time of abandonment or success” in the
context of rejecting the defendants claim that an act of continuing effort should not be part of the
same actionable conduct as the original conspiratorial agreement. Kissel, 218 U.S. at 608. The
Court held that the limitations period did not expire from the original conspiratorial act because—as
stated in the cited sentence—a presumption exists that the conspiracy continues between the original
conspiratorial act and the act of continuing effort (absent a showing of abandonment or success). Id.In so holding, the Court relied upon the fact that “[t]he overt acts relied upon [occurred] within three
years of the indictment [and were] alleged to have been done in pursuance of the conspiracy . . . .”
9
Kissel, 218 U.S. at 609-10. The Court therefore reasoned that because the overt acts (1) occurred
within three years of the indictment (the limitations period), and (2) denoted efforts to carry out the
conspiracy, the original antitrust conspiracy continued into that period.4 Id. Kissel thus implies that
if conspirators co mmit overt acts in furtherance of a conspiracy, the statute of limitations period
resets from the commission of those acts. The statute of limitations runs from the last overt act.5
Stated another way, an overt act must occur within a certain time period—as defined in the statute
of limitations—prior to the date on which the indictment is brought.
The Supreme Court further clarified this principle in the civil context of a continuing antitrust
conspiracy in Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971).6 The Court
stated:
Generally, a cause of action accrues and the statute begins to run when a defendant
commits an act that injures a plaintiff’s business. . . . In the context of a continuing
conspiracy to violate the antitrust laws, . . . this has usually been understood to mean
that each t ime a plaintiff is injured by an act of the defendants . . . the statute of
limitations runs from the commission of the act.
Id. at 338. Thus, the statute of limitations runs from the commission of each act that is subsequent
to the original conspiracy act. Id. The party bringing the antitrust action must therefore show that
4
Notably, the Court did not rely on the fact that the conspirators had failed to show
abandonment or success in concluding that the conspiracy continued to exist.
5
A leading antitrust treatise supports this understanding of the statute of limitations as it
relates to an antitrust conspiracy. 2 HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF
ANTITRUST PRINCIPLES AND THEIR APPLICATION 208 (2d ed. 2000). In explaining continuing
antitrust conspiracies, the treatise states that “[t]he idea of the continuing conspiracy or violation is
that the defendant continues to commit acts in furtherance of the violation and each of these
additional acts causes additional injury. The statute is said to be tolled as long as such qualifying acts
continue to be committed.” Id.6
Although Zenith was a civil suit, the stated principle should also be true in the criminal
context because criminal proceedings require a higher burden of proof than civil proceedings.
10
the conspiracy continued into the limitations period.
a. Relevant Fifth Circuit precedent
This Court has addressed whether a continuing antitrust conspiracy extends into the statute
of limitations period in Poster Exchange, Inc. v. National Screen Service Corp., 517 F.2d 117 (5th
Cir. 1975), and again in Al George, Inc. v. Envirotech Corp., 939 F.2d 1271 (5th Cir. 1991). While
these cases arose in the civil context, this fact does not distinguish the burden-of-proof principle
because civil proceedings require a less stringent burden of proof than criminal. In Poster Exchange,
this Court considered whether an antitrust conspiracy continued into the limitations period where the
defendants, before the limitations period began, allegedly agreed not to sell items to the plaintiff. 517
F.2d at 117. This Court held that to invoke the continuing-conspiracy doctrine, the plaintiffs had to
show that “there had been a specific act or wo rd o f refusal [by defendants to do business with
plaintiff] during the limitations period.” Id. at 129. Because the summary-judgment record did not
make clear that the defendants had committed an act during the limitations period, this Court
remanded for further findings. Id. at 128-29.
In Al George, this Court again considered whether a plaintiff had to show an act within the
limitations period to allege an antitrust violation. 939 F.2d at 1273-74. This Court recognized that
“‘a newly accruing claim for damages must be based on some injurious act actually occurring during
the limitations period, not merely the abatable but unabated inertial consequences of some
pre-limitations action.’” 939 F.2d at 1274 (quoting Poster Exchange) (emphasis in Al George).
Because the plaint iff failed to allege an overt act within the statute of limitations time period, this
Court held that the limitations period had run. Id. at 1275.
b. Ninth Circuit persuasive authority
11
In United States v. Brown, 936 F.2d 1042 (9th Cir. 1991), the Ninth Circuit faced the same
question as this Court does in the instant case. There, the court considered whether a district court
provided a correct jury instruction in a criminal price-fixing conspiracy case. Id. at 1048. The court
held that the district court “correctly stated” the law when the district court instructed the jury both
that (1) the government did not need to show an overt act in furtherance of a price-fixing conspiracy,
and (2) the government must show an overt act in order to establish that the price-fixing conspiracy
existed within the limitations period. Id. Thus, the Brown decision recognizes that even though the
government need not show an overt act in furtherance of a price-fixing conspiracy, the government
was still required to show some act within the limitations period.
Additional Ninth Circuit precedent further supports the above interpretation of Kissel. In
United States v. Inryco, Inc., 642 F.2d 290 (9th Cir. 1981), the court interpreted Kissel as standing
for the following statement of law:
While a Sherman Act conspiracy is technically ripe when the agreement to restrain
competition is formed, it remains actionable until its purpose has been achieved or
abandoned, and the statute of limitations does not run so long as the co-conspirators
engage in overt acts designed to accomplish its objectives. U. S. v. Kissel, 218 U.S.
601, 607-608 (1910).
Id. at 293 (emphasis added). This passage sets forth the rule of law that the statute of limitations is
tolled only if a conspirator engages in overt acts. While the passage also presumes that a conspiracy
continues to exist until its purpose has been achieved or abandoned, this statement cannot be
construed to mean that this presumed continued existence automatically tolls the statute of
limitations. Were the statement read as such, it would render the passage’s explicit condition for
tolling meaningless. In order for the presumption to continue, there must be an overt act. Absent
an overt act, the presumption that a conspiracy remains actionable must end after the limitations
12
period has run from the time of the last overt act. Thus, the passage means that the statute of
limitations is tolled only if a conspirator commits an overt act.
c. Conflicting authority
Despite the apparent clarity of the rule that the government must produce evidence that a
price-fixing conspiracy exists during the limitations period, the language of a Sixth Circuit opinion
can be construed as hol ding otherwise.7 In United States v. Hayter Oil Co. Inc. of Greenville,
Tennessee, 51 F.3d 1265 (6th Cir. 1995), the Sixth Circuit faced an issue similar to that posed in the
instant case. The court explained the limitations law governing price fixing as follows:
Because the price-fixing agreement itself constitutes the crime, the government is only
required to prove that the agreement existed during the statute of limitations period
and that the defendant knowingly entered into that agreement. Proof of an overt act
taken in furtherance of the conspiracy within the statute of limitations period would
clearly demonstrate the continued existence of the conspiracy. However, once a
7
The Government argues that the rationale of a recent Second Circuit opinion, United States
v. Spero, 331 F.3d 57 (2d Cir. 2003), should control here. We disagree. In Spero, the Second
Circuit held that a RICO conspiracy would continue, even into the limitations period, until the
defendants made an affirmative showing that they had withdrawn. United States v. Spero, 331 F.3d
at 60-61. As a preliminary matter, this case is two steps removed from the instant case. First, this
case occurs in the Second Circuit—not the Fifth. Second, this case arises in the RICO context—not
antitrust. The Second Circuit has not actually applied the cited rationale in the context of a price-
fixing agreement. For these two reasons, alone, Spero is not persuasive. More importantly, the
rationale of Spero appears to conflict with Kissel, and expressly conflicts with Al George, Poster
Exchange, Brown, and Inryco.
Even if precedent did not speak to this issue, Spero is not persuasive. “Limitations serve the
same functions in anti-trust as elsewhere in the law: to put old liabilities to rest, to relieve courts and
parties from ‘stale’ claims where the best evidence may no longer be available, and to create
incentives for those who believe themselves wronged to investigate and bring their claims promptly
. . . .” 2 HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND
THEIR APPLICATION 205 (2d ed. 2000). Adopting the Second Circuit’s rule would circumvent the
policy underlying the law of limitations. The rule of Spero allows the government to bring claims well
after any evidence is found to substantiate the original act of conspiracy. It nullifies much of the
incentive to bring a claim after the last alleged injurious act because the statute of limitations would
only begin running from the time that the defendant made a showing of abandonment. We therefore
decline to adopt the Second Circuit’s rationale in the context of a price-fixing conspiracy.
13
conspiracy has been established, it is presumed to continue until there is an
affirmative showing that it has been abandoned.
51 F.3d at 1270-71 (citation omitted) (emphasis added). The last sentence of this quotation implies
that once a conspiracy has been established, even outside the limitations period, that conspiracy is
presumed to continue indefinitely until it has been abandoned. The facts of the case, however,
suggest that the court did not rely on this statement of law to show that the agreement continued into
the limitations period. The facts consisted of defendants committing multiple acts in furtherance of
the price-fixing conspiracy both outside of and within the limitations period. Id. at 1271.
Specifically, undisputed evidence demonstrated that prior to the limitations period a conspiracy
existed; evidence also existed that during the limitations peri od, the conspirators set prices at an
agreed-upon level and made telephone calls discussing prices. Id. Based on these alleged events, the
court concluded that “[t]here is . . . sufficient evidence in the record that the conspiracy continued
past the relevant statute of limitations date.” Id. Accordingly, the court did not rely solely on the
proposition that there is a presumption of a continued conspiracy in holding that the defendants had
continued their price-fixing conspiracy during the limitations period. Id at 1270-71. The facts and
reasoning of Hayter Oil do not warrant construing the single cited sentence to be a sufficient reason
to presume the continued existence of the conspiracy within the limitations period.
The single sentence in Hayter Oil also seems to conflict with the Sixth Circuit’s general
requirement that the government “is . . . required to prove that the agreement existed during the
statute of limitations period.” 51 F.3d at 1270 (emphasis added). If the cited sentence were to mean
that the presumption continues even into the limitations period—regardless of whether the
government shows any act during that period—the court would have nullified its prior statement that
14
the government is “required to prove” that the conspiracy existed during that time. Thus, to preserve
the meaning of the court’s statement regarding the government’s burden of proof, it seems necessary
to construe the cited sentence regarding the presumption of continued existence as mere support for
the court’s prior statement that any overt act demonstrates the conspiracy’s continued existence. In
effect, the Sixth Circuit seems to treat the identified presumption as a justification for allowing an
overt act—which might otherwise be insufficient to convict for conspiracy—to be sufficient to show
that the conspiracy occurred within the limitations period. This reading preserves the meaning of
both the statement imposing a burden of proof on the government, and the statement concerning the
conspiracy’s continued existence. In any event, the Hayter Oil court did not rely only on this single
sentence to hold that the Government satisfied its burden of proof to show that the conspiracy
continued into the limitations period. It would therefore be inappropriate to conclude that the cited
presumption satisfies the government’s burden “to prove that the agreement existed during the statute
of limitations period.” See id.Thus, although the Sixth Circuit has possibly espoused a view that appears to mean that a
price-fixing conspiracy is presumed to continue into the limitations period, its statement is not
persuasive for this Court to presume the conspiracy’s continued existence absent any evidence of
such. Supreme Court precedent, this Court’s precedent, and persuasive authority of the Ninth Circuit
lead us to conclude that the government must produce evidence that the conspiracy continued during
that time.
(2) Whether the Government did produce evidence in the limitations period
Defendants argue that the Government failed to produce evidence demonstrating that the
price-fixing conspiracy existed within the limitations period. The argument fails. The limitations
15
period is five years under 18 U.S.C. § 3282, and the grand jury indicted the Defendants on May 31,
2000. Accordingly, the Government was required to produce evidence showing the conspiracy’s
continued existence after May 31, 1995. The Government did so. Rhodes (of Mizell Co.) testified
that the conspiracy continued through June 1995. This testimony is direct evidence that the
participants were involved in conspiratorial acts, i.e., the acts of setting prices at agreed-upon levels,
during the limitations period. The Defendants’ limitations argument is thus unfounded. The jury
could have reasonably inferred that the conspiracy continued into the limitations period based on this
evidence.
C. The indictment and the proof at trial
Therm-All argues that a fatal variance exists between the indictment, which alleged a single,
nationwide conspiracy, and the proof at trial, which Therm-All claims only established multiple
conspiracies.8 To prevail on this claim, Therm-All must prove “(1) a variance between the indictment
and the proof at trial, and (2) that the variance affected the defendant’s substantial rights.” United
States v. Herrera, 289 F.3d 311, 318 (5th Cir. 2002). As discussed below, Therm-All fails to prove
either point.
(1) Alleged variance between the indictment and the proof at trial
No fatal variance appears between the indictment and the evidence. The indictment alleges
a single, nationwide conspiracy, and the evidence appears to support that allegation. When counting
conspiracies, “this Court will consider (1) the existence of a common goal, (2) the nature of the
scheme, and (3) overlapping of participants in the various dealings.” United States v. Morgan, 117
F.3d 849, 858 (5th Cir. 1997). “A jury’s finding that the government proved a single conspiracy
8
Supreme does not appeal this point of error.
16
must be affirmed unless the evidence, viewed in the light most favorable to the government, would
preclude reasonable jurors from finding a single conspiracy beyond a reasonable doubt.” Id.“This [C]ourt has defined the ‘common goal’ factor used to count conspiracies broadly.”
Morgan, 117 F.3d at 858; accord United States v. Morris, 46 F.3d 410, 415 (5th Cir. 1995)
(observing that the Fifth Circuit has broadly defined this criterion and has adopted an expansive
notion of “common purpose”). In Morris, this Court held that the common goal of a single
conspiracy was t o “to profit from the illicit purchase and selling of cocaine.” 46 F.3d at 415.
Similarly, the activity at issue here stems from a common goal of deriving illicit profits from the sale
of common goods. Direct testimony of Rhodes (of Mizell Co.) and Smigel (of Therm-All) supports
the inference that the Defendants had a common goal of raising and maintaining prices.
The nature of the scheme also points to the conclusion that the evidence supports an inference
of a single, nationwide conspiracy. This Court has defined the nature-of-the-scheme criterion to mean
that “if an agreement contemplates bringing to pass a continuous result that will not continue without
the continuous cooperation of the conspirators to keep it up, then such agreement constitutes a single
conspiracy.” Morris, 46 F.3d at 415-16 (quoting United States v. Perez, 489 F.2d 51, 62 (5th Cir.
1973)). “The existence of a single conspiracy will be inferred where the activities of one aspect of
the scheme are necessary or advantageous to the success of another aspect or to the overall success
of the venture, where there are several parts inherent in a larger common plan.” Id. at 416 (emphasis
added). Here, evidence exists that prior to the alleged conspiracy, Bay Insulation aggressively priced
its goods at a low level that sent the market into a price war. Smigel (of Therm-All), who only did
business in the north, complained that Bay Insulation’s low prices resulted in a “dog-eat-dog market.”
Evidence thus suggests that without the continuous cooperation of all conspirators involved, the
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price-fixing conspiracy would have collapsed. It appears advantageous, and ultimately necessary, for
all alleged conspirators to have engaged in fixing prices if the alleged conspiracy were successful.
The third consideration—whether participants in the various dealings overlap—also supports
an inference of a single conspiracy. In United States v. Richerson, 833 F.2d 1147, 1154 (5th Cir.
1987), this Court opined that “[p]arties who knowingly participate with core conspirators to achieve
a common goal may be members of an overall conspiracy.” This Court further explained:
A single co nspiracy exists where a “key man” is involved in and directs illegal
activities, while various combinations of other participants exert individual efforts
toward a common goal. . . . The members of a conspiracy which functions through
a division of labor need not have an awareness of the existence of the other members,
or be privy to the details of each aspect of the conspiracy.
Id. (internal citation omitted); accord Morris, 46 F.3d at 416-17. Here, evidence exists that Rhodes
(of Mizell Co.) was a key actor in the alleged illegal price fixing, policing and contacting all other
conspirators, including Therm-All. Thus, the jury could have inferred that Rhodes acted as a “core
conspirator” to achieve the common goal of fixing prices for all participants.
Because evidence supports the existence of (1) a common goal, (2) the necessity of
continuous cooperation among the conspirators for the conspiracy’s success, and (3) the presence
of a key actor coordinating the efforts of the conspirators, we conclude that no fatal variance arises
between the indictment and the proof at trial.
(2) Therm-All’s substantial rights
Assuming arguendo that a variance did exist between the indictment and the proof at trial,
Therm-All fails to show that it was prejudiced. “When the indictment alleges the conspiracy count
as a single conspiracy, but the government proves multiple conspiracies and a defendant’s
involvement in at least one of them, then clearly there is no variance affecting that defendant’s
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substantial rights.” United States v. Morrow, 177 F.3d 272, 291 (5th Cir. 1999) (internal quotations
omitted). As discussed above, the evidence was sufficient to support the jury finding that Therm-All
was involved in the conspiracy.
D. Jury instruction
Defendants argue that the district court improperly instructed the jury in two ways: (1) by
failing to include a jury instruction on competitive pricing; and (2) by failing to include intent as an
element of the antitrust violation. Their argument fails. “We recognize that[] when a defendant
properly requests an instruction on a theory of defense that is supported by some evidence, it is
reversible error not to adequately present the theory.” United States v. All Star Industries, 962 F.2d
465, 473 (5th Cir. 1992). Nevertheless, “[w]hen a charge is challenged on appeal, we evaluate it in
its entirety, looking to see whether the charge as a whole was correct.” United States v. Hagmann,
950 F.2d 175, 180 (5th Cir.1992); accord All Star, 962 F.2d at 473.
With respect to the Defendants’ first point of error, the district court instructed the jury as
follows:
Mere similarity of prices charged does not, without more, establish the existence of
a conspiracy . . . . Nor is it illegal to . . . exchange pricing information without more.
...
A person or company may lawfully charge prices identical to those charged by
competitors and may even copy the price lists of a competitor or follow and conform
exactly to the price policies and charges of a competi tor as long as the person or
company does not do so pursuant to a price-fixing agreement or mutual understanding
with a competitor.
...
Conduct that is as consistent with permissible competition or independent action as
with illegal collusion, standing alone, is not sufficient to prove that the Defendant
joined the conspiracy.
...
You should consider all of the evidence, giving it the weight and credibility you think
it deserves, when determining whether similarity of pricing resulted from independent
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acts of businesses competing freely in the open market or whether it resulted from a
mutual agreement or understanding between two or more conspirators.
These jury instructions demonstrate that the district court instructed the jury as to how evidence of
competitive pricing could be favorable to the Defendants. The first part of Defendants’ argument is
therefore without merit.
Defendants’ second assignment of error with respect to the jury charge is that the district
court failed to include intent as an element of the antitrust violation. For this proposition, they rely
on United States v. Gypsum, 438 U.S. 422, 430 (1978). In Gypsum, the Government produced
circumstantial evidence of a price-fixing conspiracy in the form of information exchanges between
the companies about prices. Id. The district court instructed the jury that it could presume the
element of intent if the effect of the information exchanges was to raise, fix, maintain, and stabilize
prices. Id. On appeal, the Supreme Court reversed the defendants’ convictions, stating that intent
is an “element of a criminal antitrust offense which must be established by evidence and inferences
drawn therefrom . . . .” Id. at 435.
This Court interpreted the Gypsum holding in United States v. Cargo Service Stations, Inc.,
657 F.2d 676 (5th Cir. 1981). In so doing, this Court opined that convictions in a price-fixing case
“would be valid even if they rested solely on circumstantial evidence so long as the jury was required
. . . to find that defendants knowingly engaged in a conspiracy to fix prices.” Cargo Service, 657
F.2d at 683 n.5. In the instant case, the district court instructed the jury as follows: “[T]he
Government has to prove beyond reasonable doubt that the Defendant knowingly agreed with a
competitor to raise, fix and maintain prices, and that the Defendant actually intended to carry out the
agreement in fact.” According to Cargo Service, the district court’s jury instruction was completely
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valid. Defendants’ argument fails.
E. Alleged prosecutorial misconduct
Defendants contend that the district court erred in denying their motion for new trial because
the Government allegedly argued facts to the jury for which there was no supporting evidence. When
considering whether a prosecutor’s remarks cast doubt on a jury’s verdict, this Court examines “(1)
the magnitude of the statement’s prejudice, (2) the effect of any cautionary instructions given, and
(3) the strength of the evidence of the defendant’s guilt.” Morrow, 177 F.3d at 298 (quoting United
States v. Tomblin, 46 F.3d 1369, 1389 (5th Cir.1995)). “A defendant must show that the
prosecutor’s statements affected his substantial rights.” Morrow, 177 F.3d at 298.
(1) Therm-All’s argument
Therm-All argues that the prosecutor incorrectly characterized an evidentiary document from
the price book of Rhodes (of Mizell Co.) as a “draft Therm-All price sheet.” Yet Smigel (of Therm-
All) admitted that the document was a draft price sheet. Furthermore, the district court immediately
instructed the jury that the prosecutor’s statement was only “argument by counsel,” and that if this
argument “should differ from your views, you follow your own views of the evidence.” The
statement does not appear to have created prejudice.
Therm-All next contends that the prosecutor improperly stated that Kaczmarek (of Therm-
All) “handed off” a price sheet to a CGI representative. In fact, however, the prosecutor stated that
Kaczmarek had denied providing CGI a price sheet, and then the prosecutor rhetorically asked if that
denial “made sense” in view of the fact that Smigel (of Therm-All) and Kaczmarek had worked
closely together. The prosecutor never actually stated that Kaczmarek provided CGI with a price
sheet. Moreover, even if the prosecutor had made such a statement, evidence supports that assertion.
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CGI produced the disputed document, indicating that it was in CGI’s possession, and Smigel had
testified that the document bore the handwriting of Kaczmarek.
Therm-All lastly contends that evidence does not support the prosecutor’s argument that
Engebretson (of Therm-All) sent Ferry (of CGI) a price sheet. We first note that Therm-All never
objected to the prosecutor’s statement before the district court, so we review the disputed statement
for plain error. See United States v. Munoz, 150 F.3d 401, 415 (5th Cir. 1998). With respect to the
evidence, Engebretson testified that he had conversations with Ferry, and specifically remembered
that they had spoken about pricing. Engebretson’s telephone records reveal that on June 8, 1995,
he had a short conversation with Ferry, and sent Ferry a fax on June 15, 1995. Based on that
evidence, the prosecutor argued that Engebretson was talking to Ferry about pricing, and that he was
“sending [Ferry] a price sheet—exchanging pricing.” The prosecutor also argued that Engretson was
faxing “stuff” to Ferry through June 15, 1995, and was talking to Ferry about prices.
Therm-All complains that these two comments are completely unsupported by the evidence.
This contention is unavailing. Even though no direct evidence may have existed that Engebretson
(of Therm-All) faxed a price sheet to Ferry (of CGI), the magnitude of the alleged prejudice appears
minimal given that evidence did exist that Engebretson conversed with Ferry about pricing, and faxed
documents to Ferry. Indeed, Engebretson’s testimony substantially supports the Defendants’ guilt
even without the assertion that he faxed a price sheet to Ferry. We thus conclude that the
prosecutor’s suggestion that Engebretson faxed Ferry a price sheet does not constitute plain error.
(2) Supreme’s Argument
Supreme argues that the prosecutor improperly referred to the grand jury testimony of
Supreme employee, Miranda. While it is true that the government may not bolster a witness’s
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credibility with prior grand jury testimony that is not in the record, see United States v. Murrah, 888
F.2d 24, 26 (5th Cir. 1989), this sort of violation is not present here. Miranda testified at trial that
the answer he was providing was the same as his testimony to the grand jury. Thus, the record
supported the prosecutor’s argument that the grand jury testimony supported the credibility of
Miranda’s statement. Moreover, the district court stated the following limiting instruct ion after
Supreme objected to the prosecutor’s statement: “There is no evidence from the grand jury before
us . . . . But, even if there is any grand jury [testimony] . . . , it is not introduced for the truth. You
may not rely on grand jury testimony, period, for anything except . . . credibility of a witness . . . .”
Given the content of the record, and the limiting instruction of the district court, denying the motion
for new trial was not an abuse of discretion.
Supreme also argues that the prosecutor improperly referred to the plea agreement of Rhodes
(of Mizell Co.) as evidence of a nationwide price-fixing conspiracy. This argument is tenuous,
however, because after referring to the plea agreement as such, the prosecutor recanted his
statements. The district court instructed the prosecutor to “make it clear that [Rhodes’] plea of guilty
is to be considered by the jury only as it weighs on his own credibility.” The prosecutor then stated
to the jury: “I just got in a little trouble. . . . Mr. Rhodes’ plea agreement comes in to you to solely
assess his credibility and not as evidence against the Defendant in this case. And that’s absolutely
true.” The district court then added: “The existence of that plea agreement is not evidence against
anybody in this trial.” Given these statements, the district court appears to have corrected any
prejudicial effect of the reference to Rhodes’ plea agreement. No abuse of discretion is apparent.
F. Discovery violation
Therm-All argues that the Government violated Federal Rule of Criminal Procedure
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16(a)(1)(C) by failing to turn over certain telephone records of Therm-All employees during
discovery.9 As a preliminary matter, we note that Therm-All forfeited this argument by failing to raise
it before the district court. “[P]lain forfeited errors affecting substantial rights should be corrected
on appeal only if they ‘seriously affect the fairness, integrity, or public reputation of judicial
proceedings.’” United States v. Calverley, 37 F.3d 160, 164 (5th Cir. 1994) (quoting United States
v. Olano, 507 U.S. 725, 736 (1993)). Consequently, unless the error is plain and affects Therm-All’s
substantial rights, we decline to find an abuse of discretion for the court’s alleged failure to correct
the error. See id. at 162.
The phone records that the Government failed to turn over represented phone calls that
Therm-All employees made during the early 1990s. Therm-All points out that those records did not
show that Engebretson (of Therm-All) or Smigel (of Therm-All) called Rhodes (of Mizell Co.) or
Maloof (of Bay Insulation). Therm-All contends that this evidence demonstrated an absence of
contact between the alleged conspirators, thereby making the evidence material to its defense.
Therm-All’s argument does not rise to the level of plain error. Direct evidence existed that
Therm-All participated in the conspiracy, including testimony that Smigel (of Therm-All) agreed to
set prices, that Smigel and Rhodes policed the agreement, and that Engebretson (of Therm-All) was
involved, all of which were corroborated by documentary evidence. Furthermore, if telephone
records were important to its defense, Therm-All had the means and opportunity to establish what
its own telephone records either proved or did not prove. In short, Therm-All has in no way
demonstrated that the Government’s action affected the fairness or integrity of the trial.
IV. CONCLUSION
9
Supreme does not appeal this point of error.
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For the foregoing reasons, we AFFIRM the district court’s judgment against both Therm-All
and Supreme.
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