United States v. Thomas Joyce , 895 F.3d 673 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 17-10269
Plaintiff-Appellee,
D.C. No.
v. 4:14-cr-00607-PJH-4
THOMAS JOYCE,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Northern District of California
Phyllis J. Hamilton, Chief District Judge, Presiding
Submitted June 13, 2018 *
San Francisco, California
Filed July 11, 2018
Before: Michael R. Murphy, ** Richard A. Paez,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Murphy
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
**
The Honorable Michael R. Murphy, United States Circuit Judge
for the U.S. Court of Appeals for the Tenth Circuit, sitting by
designation.
2 UNITED STATES V. JOYCE
SUMMARY ***
Criminal Law
Affirming a conviction for conspiring to suppress and
restrain competition by rigging bids, in violation of 15
U.S.C. § 1, the panel held that bid rigging is per se illegal
under Section 1 of the Sherman Act, and that the district
court therefore did not err by refusing to permit the
defendant to introduce evidence of the alleged ameliorative
effects of his conduct.
COUNSEL
Robert Waggener, San Francisco, California, for Defendant-
Appellant.
Mary Helen Wimberly and James J. Fredricks, Attorneys;
Marvin N. Price Jr., Acting Deputy Assistant Attorney
General; Andrew C. Finch, Principal Deputy Assistant
Attorney General; Makan Delrahim, Assistant Attorney
General; Kelsey C. Linnett and Alexis J. Loeb, Antitrust
Division; United States Department of Justice, Washington,
D.C.; for Plaintiff-Appellee.
***
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
UNITED STATES V. JOYCE 3
OPINION
MURPHY, Circuit Judge:
I. INTRODUCTION
Appellant Thomas Joyce was charged by indictment
with conspiring to suppress and restrain competition by
rigging bids, in violation of the Sherman Act, 15 U.S.C. § 1.
Joyce brought a pretrial motion, arguing the matter should
be adjudicated under a rule of reason analysis rather than the
per se analysis advocated by the government. The district
court ruled against Joyce, concluding the bid-rigging scheme
alleged in the indictment was illegal per se under Section 1
of the Sherman Act. Joyce proceeded to trial and was
convicted. He challenges his conviction, arguing the district
court erred by refusing to apply the rule of reason analysis to
the bid-rigging charge.
In this appeal, we are presented with the question of
whether bid rigging is a per se violation of Section 1 of the
Sherman Act. We conclude it is. Accordingly, exercising
jurisdiction pursuant to 28 U.S.C. § 1291, this court affirms.
II. BACKGROUND
The indictment in this matter alleged that Joyce
participated in a bid-rigging scheme involving foreclosed
real property in Contra Costa County, California.
Specifically, the indictment charged that Joyce and his
coconspirators agreed to suppress competition by refraining
from bidding against each other at public auctions. The
means and methods alleged included: agreeing not to
compete to purchase selected properties at public auctions;
designating which conspirators would win selected
properties at public auctions; refraining from bidding for
4 UNITED STATES V. JOYCE
selected properties at public auctions; purchasing selected
properties at public auctions at artificially suppressed prices;
negotiating, making, and receiving payoffs for agreeing not
to compete with coconspirators; and holding second, private
auctions, to determine the payoff amounts and choose the
conspirator who would be awarded the selected property.
Prior to trial, Joyce filed a “Motion to Adjudicate
Government’s Sherman Act Allegations Pursuant to the
Rule of Reason.” In the motion, Joyce asked the district
court to determine that the per se rule is inapplicable to the
bid-rigging charges. Under the per se rule, arguments and
evidence relating to, inter alia, the procompetitive nature of
the conduct at issue are excludable. See Arizona v. Maricopa
Cty. Med. Soc’y, 457 U.S. 332, 345 (1982). The district
court denied the motion, concluding bid rigging “falls
squarely within the per se category.” Joyce was convicted
at trial and sentenced to imprisonment for twelve months and
one day. In this appeal, he asserts the district court erred by
denying his motion and refusing to admit evidence that
allegedly shows the procompetitive benefits of his conduct.
III. ANALYSIS
Section 1 of the Sherman Act prohibits “[e]very contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce.” 15 U.S.C. § 1. Despite
the broad language used in the statute, the Supreme Court
has held that Section 1 prohibits only agreements that
unreasonably restrain trade. Bd. of Trade of Chi. v. United
States, 246 U.S. 231, 238 (1918); Standard Oil Co. of N.J. v.
United States, 221 U.S. 1, 58–60 (1911). Typically, the
determination of whether a particular agreement in restraint
of trade is unreasonable involves a factual inquiry commonly
known as the “rule of reason.” Metro Indus., Inc., v. Sammi
Corp., 82 F.3d 839, 843 (9th Cir. 1996). “The rule of reason
UNITED STATES V. JOYCE 5
weighs legitimate justifications for a restraint against any
anticompetitive effects.” Paladin Assocs., Inc. v. Mont.
Power Co., 328 F.3d 1145, 1156 (9th Cir. 2003).
The rule of reason inquiry, however, is inapplicable if
“the restraint falls into a category of agreements which have
been determined to be per se illegal.” United States v.
Brown, 936 F.2d 1042, 1045 (9th Cir. 1991). The “per se
rule is applied when the practice facially appears to be one
that would always or almost always tend to restrict
competition and decrease output.” NCAA v. Bd. of Regents
of Univ. of Okla., 468 U.S. 85, 100 (1984) (internal quotation
marks omitted). Such agreements or practices are
“conclusively presumed to be unreasonable” because of their
“pernicious effect on competition and lack of any redeeming
virtue.” N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5
(1958). If a business arrangement is a type conclusively
presumed to be unreasonable, the government is relieved of
any obligation to prove the unreasonableness of the specific
scheme at issue and any business justification for the
defendant’s conduct is neither relevant nor admissible. See
United States v. A. Lanoy Alston, D.M.D., P.C., 974 F.2d
1206, 1213 (9th Cir. 1992) (“In a criminal antitrust
prosecution, the government need not prove specific intent
to produce anticompetitive effects where a per se violation
is alleged.”).
The Supreme Court has held that horizontal price fixing
is a per se violation of the Sherman Act. United States v.
McKesson & Robbins, Inc., 351 U.S. 305, 309 (1956) (“It
has been held too often to require elaboration . . . that price
fixing is contrary to the policy of competition underlying the
Sherman Act . . . .”); see also Am. Ad Mgmt., Inc. v. GTE
Corp., 92 F.3d 781, 784 (9th Cir. 1996) (listing “horizontal
price fixing, division of markets, group boycotts, tying
6 UNITED STATES V. JOYCE
arrangements, and output limitations” as restraints of trade
the Supreme Court has “held to be within the per se
category”); United States v. MMR Corp., 907 F.2d 489, 497
(5th Cir. 1990) (“[T]he defendants point to various cases
which state the unassailable proposition that an agreement
among competitors to fix prices is a per se violation of
section 1 of the Sherman Act.”). Although this court has
never expressly held that bid rigging is a per se violation of
Section 1 of the Sherman Act, bid rigging is a form of
horizontal price fixing. See United States v. Fenzl, 670 F.3d
778, 780 (7th Cir. 2012) (describing bid rigging as “a form
of price fixing in which bidders agree to eliminate
competition among them, as by taking turns being the low
bidder”); United States v. Bensinger Co., 430 F.2d 584, 589
(8th Cir. 1970) (holding bid rigging is “a price-fixing
agreement of the simplest kind, and price-fixing agreements
are per se violations of the Sherman Act”), superseded on
other grounds as stated in DCS Sanitation Mgmt., Inc. v.
Occupational Safety & Health Review Comm’n, 82 F.3d 812(8th Cir. 1996). Bid rigging is, therefore, a per se violation
of the Sherman Act.
Joyce does not contest that the conduct described in the
indictment was classic bid rigging or that the evidence
presented at trial was insufficient to establish he engaged in
bid rigging. See Appellant Br. at 11 (referring to his own
conduct as a “bid rigging agreement”). Instead, he argues
the per se rule should not apply to the scheme in which he
participated because that scheme, which he says involved “a
few participants in a narrow set of public foreclosure
auctions,” did not have any “demonstrable effect on the
pricing or quantity of the real estate sold.” Id. When a
defendant’s conduct falls squarely into a category of
economic restraint necessarily prohibited by Section 1 of the
Sherman Act, however, the per se rule applies and “the need
UNITED STATES V. JOYCE 7
to study the reasonableness of an individual restraint” on
trade is eliminated. Leegin Creative Leather Prods., Inc. v.
PSKS, Inc., 551 U.S. 877, 886 (2007); Brown, 936 F.2d at
1045 (holding the “case-by-case analysis is unnecessary
when the restraint [on trade] falls into a category of
agreements which have been determined to be per se
illegal”). Accordingly, Joyce’s assertion that the district
court erred by not allowing him to present evidence to the
jury regarding the actual effect his conduct had on the market
for foreclosed properties is misplaced. The per se rule
eliminates the need to inquire into the specific effects of
certain restraints of trade. N. Pac. Ry. Co., 356 U.S. at 5.
The very purpose of the per se rule is to “avoid[] the
necessity for an incredibly complicated and prolonged
economic investigation into the entire history of the industry
involved, as well as related industries, in an effort to
determine at large whether a particular restraint has been
unreasonable.” Id.Joyce’s related argument that the courts are not
sufficiently familiar with non-judicial public foreclosure
auctions was rejected by the Supreme Court decades ago. In
1982, the Court held that the per se rule is applicable to price-
fixing agreements (of which bid rigging is a form) regardless
of the industry in which the conduct occurred. Maricopa
Cty. Med. Soc’y, 457 U.S. at 349–51 (applying the per se rule
to a price-fixing agreement among health care providers).
Rejecting two arguments identical to the ones Joyce makes
here, the Court stated:
We are equally unpersuaded by the argument
that we should not apply the per se rule in this
case because the judiciary has little antitrust
experience in the health care industry. The
argument quite obviously is inconsistent with
8 UNITED STATES V. JOYCE
Socony-Vacuum. In unequivocal terms, we
stated that, “[w]hatever may be its peculiar
problems and characteristics, the Sherman
Act, so far as price-fixing agreements are
concerned, establishes one uniform rule
applicable to all industries alike.” [310 U.S.
150, 222 (1940)]. We also stated that “[t]he
elimination of so-called competitive evils [in
an industry] is no legal justification” for
price-fixing agreements, id. at 220, yet the
[Ninth Circuit] Court of Appeals refused to
apply the per se rule in this case in part
because the health care industry was so far
removed from the competitive model.
Consistent with our prediction in Socony-
Vacuum, 310 U.S. at 221, the result of this
reasoning was the adoption by the Court of
Appeals of a legal standard based on the
reasonableness of the fixed prices, an inquiry
we have so often condemned. Finally, the
argument that the per se rule must be
rejustified for every industry that has not
been subject to significant antitrust litigation
ignores the rationale for per se rules, which
in part is to avoid “the necessity for an
incredibly complicated and prolonged
economic investigation into the entire history
of the industry involved, as well as related
industries, in an effort to determine at large
whether a particular restraint has been
unreasonable—an inquiry so often wholly
fruitless when undertaken.” [N. Pac. Ry. Co.,
356 U.S. at 5].
UNITED STATES V. JOYCE 9
The respondents’ principal argument is that
the per se rule is inapplicable because their
agreements are alleged to have
procompetitive justifications. The argument
indicates a misunderstanding of the per se
concept. The anticompetitive potential
inherent in all price-fixing agreements
justifies their facial invalidation even if
procompetitive justifications are offered for
some. Those claims of enhanced competition
are so unlikely to prove significant in any
particular case that we adhere to the rule of
law that is justified in its general application.
Id. (footnotes omitted). The Court’s holding in Maricopa
County makes it clear that for purposes of the per se rule, it
is irrelevant that Joyce’s bid rigging activities took place in
any particular industry or during a downturn in the broader
economy.
Because Joyce’s appellate arguments fail as a matter of
law, his attempt to persuade this court that his conduct was
procompetitive is unavailing. The government is not
required to “prove specific intent to produce anticompetitive
effects where a per se violation is alleged.” A. Lanoy Alston,
974 F.2d at 1213; see also N. Pac. Ry. Co., 356 U.S. at 5.
IV. CONCLUSION
Because bid rigging is per se illegal under Section 1 of
the Sherman Act, the district court did not err by refusing to
permit Joyce to introduce evidence of the alleged
ameliorative effects of his conduct. Accordingly, the
judgment of the district court is AFFIRMED.