Source: https://www.scribd.com/document/304321/US-Department-of-Justice-Antitrust-Case-Brief-01768-215795
Timestamp: 2018-07-20 05:35:28
Document Index: 308545324

Matched Legal Cases: ['§ 1', '§ 3', '§ 4', '§ 4', '§ 5', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 7', '§ 1706', '§ 1706', '§ 8', '§ 8', '§ 371']

US Department of Justice Antitrust Case Brief - 01768-215795 | Plea | Competition Law
GOSSELIN WORLD WIDE MOVING, N.V. AND THE PASHA GROUP, PETITIONERS v. UNITED STATES OF AMERICA
PAUL D. CLEMENT Solicitor General Counsel of Record THOMAS O. BARNETT Acting Assistant Attorney General SCOTT D. HAMMOND Deputy Assistant Attorney General JOHN J. POWERS, III ANDREA LIMMER Attorneys Department of Justice Washington, D.C. 20530-0001 (202) 514-2217
Whether the court of appeals correctly held that Section 7(a)(4) of the Shipping Act of 1984, 46 U.S.C. App. 1706(a)(4), which grants antitrust immunity to “any agreement or activity concerning the foreign inland segment of through transportation that is part of transportation provided in a United States import or export trade,” does not immunize an agreement to fix the through rates bid by United States freight forwarders to the Department of Defense for the door-todoor shipment of military and civilian household goods from points in Germany to points in the United States.
Page Opinions below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cases: Arthur Andersen LLP v. United States, 125 S. Ct. 2129 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) . . . 15 F. Hoffmann-La Roche Ltd . v. Empagran S.A., 542 U.S. 155 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 19 FMC v. Seatrain Lines, Inc., 411 U.S. 726 (1973) . . . . . 9, 18 TRW Inc. v. Andrews, 534 U.S. 19 (2001) . . . . . . . . . . . . . 15 United States v. Borden Co., 308 U.S. 188 (1939) . . . . . . . 18 United States v. Broce, 488 U.S. 563 (1989) . . . . . . . . . . . . 21 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) . . . . . . . . . . . . . . . . 8, 10, 11, 12, 16 238 F.3d 1171 (9th Cir. 2001) . . . . . . . . . . . . . . . . . . . . 8, 11 United States v. United States Gypsum Co., 438 U.S. 422 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
IV Statutes: Page
Agricultural Marketing Agreement Act of 1937, ch. 296, 50 Stat. 246 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Capper-Volstead Act, 7 U.S.C. 451 et seq. . . . . . . . . . . . . . 18 Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. 6a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Sherman Act § 1, 15 U.S.C. 1 . . . . . . . . . . . . . . . . . . . . . . . . . 2 Shipping Act of 1984, 46 U.S.C. App. 801 et seq.: 46 U.S.C. App. 1702(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 46 U.S.C. App. 1702(24) (§ 3 (24)) . . . . . . . . . . . . . . . . . . 14 46 U.S.C. App. 1703 (§ 4) . . . . . . . . . . . . . . . . . . . . . . . . . . 16 46 U.S.C. App. 1703-1706 . . . . . . . . . . . . . . . . . . . . . . . . . 16 46 U.S.C. App. 1703(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 46 U.S.C. App. 1703(a)(1) (§ 4(a)(1)) . . . . . . . . . . . . . . . . 14 46 U.S.C. App. 1703(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 46 U.S.C. App. 1704(a) (§ 5(a)) . . . . . . . . . . . . . . . . . . . . . 14 46 U.S.C. App. 1706 (§ 7) . . . . . . . . . . . . . . . . . . . . . . . . . 16 46 U.S.C. App. 1706(a)(1) . . . . . . . . . . . . . . . . . . . . . . 14, 17 46 U.S.C. App. 1706(a)(2) . . . . . . . . . . . . . . . . . . . . . . . 8, 17 46 U.S.C. App. 1706(a)(2) (§ 7(a)(2)) . . . . . . . . . . . . . . . . . 8 46 U.S.C. App. 1706(a)(3) (§ 7(3)) . . . . . . . . . . . . . . . 15, 16 46 U.S.C. App. 1706(a)(4) (§ 7(a)(4)) . . . . . . . . . . . . . . . . . . 7, 8, 10, 14, 15, 16, 18 46 U.S.C. App. 1706(c)(1) (§ 7(c)(1)) . . . . . . . . . . . . . . . . . 8 46 U.S.C. App. 1706(c)(2) (§ 7(c)(2)) . . . . . . . . . . . . . . . . 22 18 U.S.C. 371 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 21, 22 18 U.S.C. 1512(b)(2)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 18 U.S.C. 1512(b)(2)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 49 U.S.C. 13703(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
V Statutes—Continued: Page
49 U.S.C. 13703(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 49 U.S.C. 13703(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Miscellaneous: H.R. Conf. Rep. No. 600, 98th Cong., 2d Sess. (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 H.R. Rep. No. 53, 98th Cong., 1st Sess. (1983) . . . . . . . . . . 15 S. 1593, 97th Cong., 1st Sess. (1981) . . . . . . . . . . . . . . . . . . 15 S. 1983, 97th Cong., 2d Sess. (1982) . . . . . . . . . . . . . . . . 15, 16 Table off code here
The judgment of the court of appeals was entered on June 14, 2005. A petition for rehearing was denied on July 12, 2005 (Pet. App. 55a-56a). On September 22, 2005, Justice Thomas extended the time within which to file a petition for a writ of certiorari to and including November 25, 2005, and the petition was filed on November 23, 2005. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). (1)
In accordance with a conditional plea agreement, petitioners moved to dismiss an information charging them with one count of conspiring to fix the prices that the Department of Defense (DOD) paid for the shipment of military and civilian household goods from Germany to the United States, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and one count of conspiring to defraud the United States, in violation of 18 U.S.C. 371. The parties submitted a stipulated factual record. Pet. App. 57a-67a. The district court dismissed the Sherman Act count, holding that the challenged agreement is immune from prosecution under the Shipping Act of 1984 (Shipping Act), 46 U.S.C. App. 1701 et seq. Pet. App. 40a-50a, 53a. The court denied the motion to dismiss the fraud count. Id. at 50a-52a, 53a. Petitioners then entered guilty pleas to the fraud count and were sentenced in accordance with the plea agreement. On cross-appeals, the court of appeals reversed the dismissal of the Sherman Act count, affirmed the judgment of conviction on the fraud count, and remanded for resentencing. Id. at 1a-24a. 1. DOD procures transportation services for the movement of household goods of its military and civilian personnel to and from foreign countries through the International Through Government Bill of Lading (ITGBL) program. DOD administers that program through the Surface Distribution Deployment Command (formerly the Military Traffic Management Command) in Alexandria, Virginia. Pet. App. 58a. DOD solicits bids for through rates from United States freight forwarders, which are companies that contract with DOD and shoulder the ultimate responsi-
3 bility for shipment. Pet. App. 58a. “Through rates” are the rates bid by U.S. freight forwarders (in dollars per hundredweight) for all the moving and transportation services provided in the door-to-door move from the foreign country to the United States. Ibid . The bidding occurs twice a year for six-month cycles (summer and winter) in a two-step bidding process. Id. at 60a-61a. In the first step, or “initial filing,” U.S. freight forwarders file a through rate for each route—called a “channel.” Id. at 61a. The low bidder sets the “prime through rate” for that channel, and thereby captures the percentage of the household goods traffic that DOD reserves for the freight forwarder setting the prime rate. The second lowest rate in the initial filing is termed the “second-low rate.” In the second step of bidding, the other freight forwarders can match, or “me-too,” the prime through rate or can file a higher rate. Typically, a freight forwarder must me-too the prime rate to receive business in that cycle. Ibid. A through rate bid comprises a single rate for five services: (1) origin (local German) agent services; (2) European port agent services; (3) ocean transport services; (4) U.S. port agent services; and (5) U.S. destination agent services. Pet. App. 58a. As subcontractors for U.S. freight forwarders, petitioners Gosselin World Wide Moving N.V. (Gosselin), a Belgian corporation, and The Pasha Group (Pasha), a U.S. corporation, offer a “landed rate,” which bundles the local German agent services, European port services, and ocean services, and includes the landed rate provider’s mark-up. It thus reflects the handling of the shipment from its German origin to the U.S. port of destination. Petitioners also act as the exclusive co-agents of the International Shippers’ Association (ISA), an association of freight for-
4 warders organized to consolidate household goods for shipment on ocean-going vessels. Id. at 57a, 59a-60a. U.S. freight forwarders buy ocean carriage from petitioners, either as part of the landed rate or as a separate service as agents of ISA. Id . at 59a-60a. Additionally, Pasha participates in the ITGBL program as a freight forwarder through its wholly-owned subsidiary, Gateways International, Inc., id. at 57a-58a, and Gosselin provides local agent services in Germany through its subsidiary, Gosselin GmbH, id. at 60a. Petitioners admitted that, for the summer cycle of 2002, they agreed with U.S. freight forwarders to raise the through rates filed by U.S. freight forwarders in 12 channels from Germany to the United States. Pet. App. 62a-67a. In the initial filing for that cycle, a U.S. freight forwarder, referred to as “FF-1” in the information, filed prime through rates (i.e., submitted the lowest bid) in 26 of the 52 channels from Germany to the United States. FF-1 did not use the landed rate provided by either petitioner but, by negotiating separately with various subcontractors for each step in the transportation, was able to bid through rates that were approximately $3 per hundredweight lower than those of freight forwarders using petitioners’ landed rates in 12 of the 26 channels. Id. at 62a. In December 2001, DOD published FF-1’s prime bids and those of the next four lowest bidders. U.S. freight forwarders then had until January 16, 2002, to file their second-round me-too bids. Ibid . On December 26, 2001, Gosselin’s managing director sent an email to a landed rate competitor (an unindicted co-conspirator (UCC), that, like Gosselin, also operated a local German agency), identifying the 12 channels of concern to Gosselin and stating that, by “not taking the low into consideration we would increase the rate level
5 with an average of 3.63 Usd * * *. This is the only thing that in my mind can happen.” Pet. App. 62a. The head of UCC replied: “[A]gree to your position. . . . You know if we do not react and give [the] industry a clear message which rate to base m/2 [me-too] on, then everyone will use the low [prime] rate and later expect us [the landed rate providers] to reduce our rates so those carriers can work under their m/2 rates.” Ibid . Gosselin promptly forwarded those emails to the chief executive of Pasha, the remaining landed rate provider in the United States. In that email, Gosselin’s managing director noted the 12 targeted channels “with quite some money on the table.” Pet. App. 63a. He stated: “I don’t know where you are at this moment with [another freight forwarder that filed prime rates in Germany to U.S. channels], but what rate levels would you be able to support if those states would go to the second level? I think it is important we move rather quickly now. Maybe when you have a chance we can talk in the next days.” Ibid. Pasha thereafter agreed with Gosselin to eliminate the prime through rates in 12 of the 26 channels and replace them with higher rates at the second-low level. Id. at 64a. To implement the agreement, Gosselin’s managing director agreed to pay a specified rate to 12 of the largest German packing and hauling agents (including its own subsidiary, Gosselin GmbH) for origin (local German) services. Pet. App. 63a. In return, a German agent sent to U.S. freight forwarders a fax letter, dated January 8, 2002, that had been edited and approved by Gosselin’s managing director. Ibid. The fax informed U.S. freight forwarders that German agents “will offer their capacity only to those carriers me-tooing the second rate level into the [enumerated 12 ] states * * *. It
6 was emphasized strongly that business to these states will only be handled at the second low rate level, so, metoo can only happen at this level.” Id. at 63a-64a. Gosselin sent a copy of this fax to Pasha on January 9, 2002. Id. at 64a. Petitioners also agreed with FF-1 that FF-1 would cancel its prime rates in the 12 targeted channels, on the understanding that no other U.S. freight forwarder would me-too those prime through rates or file a rate below the second-low level. Pet. App. 64a. To keep their promise to FF-1, petitioners directed the other U.S. freight forwarders not to me-too the prime through rates in those 12 channels, but instead to file me-too rates at or above the second-low level. Ibid . The other U.S. freight forwarders agreed, and most of them filed me-too through rates at or above the second low level in the 12 targeted channels. Id. at 65a. In the few instances in which a U.S. freight forwarder ignored or misunderstood the instructions and filed me-too rates lower than the second-low level, petitioners persuaded them to cancel those lower rates. Ibid . In addition, before the cancellations were effective, petitioners provided misleading information to DOD personnel in Germany to ensure that DOD did not tender any shipments to a freight forwarder with a me-too rate on file below the second-low level. Ibid . 2. The government charged petitioners by information in the Eastern District of Virginia, where DOD is located. Petitioners admitted that the conduct at issue constituted a conspiracy to eliminate competition by fixing and raising through rates filed with DOD and that they unlawfully, willfully, and knowingly conspired to defraud the United States. Their conspiracy increased the rates paid by DOD for the transportation of military
7 household goods during the summer 2002 cycle by more than $1 million over what DOD would have paid in the absence of the conspiracy. Pet. App. 66a.1 Petitioners’ conditional plea agreement permitted them “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 prosecution under the [Shipping Act.]’ ” Pet. App. 7a. Petitioners presented that argument to the district court, which dismissed the antitrust count based on its construction of Section 7(a)(4) of the Shipping Act, 46 U.S.C. App. 1706(a)(4). Section 7(a)(4) provides antitrust immunity for “any agreement or activity concerning the foreign inland segment of through transportation that is part of transportation provided in a United States import or export trade.” 46 U.S.C. App. 1706(a)(4). The district court focused its analysis on the foreign aspects of petitioners’ business activities, rather than on the through rate agreement itself. The court found that petitioners provided some “local agent service,” Pet. App. 41a, a factual premise that was not true for Pasha, see id. at 57a-58a, 60a. The court then held that “a basic reading of the statute concludes [sic] that Defendants’ business ‘concerns’ the foreign inland segment.” Id. at 44a (emphasis added); see id. at 44a-45a (“Defendants’ behavior did concern a foreign inland segment of through transportation.”). The court reasoned that
Petitioners incorrectly contend that the government engaged in “manifest forum shopping” (Pet. 2) by charging them in the Eastern District of Virginia. The investigation in this case began before petitioner Gosselin’s managing director came to Hawaii for a trade conference, and it was commenced in the Eastern District of Virginia because the victim of the charged conspiracy—DOD—is located in that district.
8 “[d]efendants’ conduct” did not have to relate “exclusively” or “significantly” to the foreign inland segment because Congress had not defined the term “concern” in the Shipping Act or indicated whether it should be given a broad or narrow scope. Id. at 45a. That “ambiguity,” the court stated, required a construction in favor of petitioners. Ibid . The court held, however, that the Shipping Act provided no immunity under the federal fraud statute, and it refused to dismiss count two of the information. Id. at 50a-52a.2 3. The court of appeals reversed the district court’s dismissal of the antitrust count. It held that a through rate agreement does not come within the plain meaning of Section 7(a)(4) because it is an agreement to fix “doorto-door rates, not just rates for the ‘foreign inland segment’ of the routes.” Pet. App. 11a-12a. The court rejected petitioners’ reliance on United States v. Tucor International, Inc., 35 F. Supp. 2d 1172 (N.D. Cal. 1998), aff ’d, 189 F.3d 834 (9th Cir. 1999). 3 It observed that, unlike the conduct at issue in Tucor, petitioners’ activities did not occur entirely outside the United States. Rather, petitioners “took additional steps to perfect their bid-rigging plan,” Pet. App. 12a, by having U.S. freight forwarders submit rigged bids to DOD. Id. at 12a-13a. Petitioners’ agreement with FF-1 and the
The district court also held that petitioners’ conduct was immunized by two other sections of the Shipping Act—Section 7(a)(2) and (c)(1), 46 U.S.C. App. 1706(a)(2) and (c)(1). See Pet. App. 46a-50a. The court of appeals rejected the district court’s interpretation of those statutory provisions, id. at 14a-20a, and petitioners do not seek review of that portion of the court of appeals’ decision in this Court. 3 See United States v. Tucor Int’l, Inc., 238 F.3d 1171 (9th Cir. 2001) (rejecting Tucor defendants’ Hyde Amendment claims for attorneys fees).
9 other U.S. freight forwarders related to through rates and “had little to do with the German inland segment of the through services that these forwarders offered.” Id. at 13a. Furthermore, when some of the freight forwarders “broke ranks,” petitioners’ measures to “rei[n] them in” were intended “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.” Ibid . The court also reasoned that “a broad immunity of the sort that [petitioners] seek would threaten to excise antitrust liability from the through transportation market completely,” because “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.” Pet. App. 13a. Because the activity for which petitioners sought immunity was not regulated by the Federal Maritime Commission (FMC)—the agency charged with enforcing the Shipping Act—the “upshot of [petitioners’] interpretation of § 1706(a)(4) would therefore be a through transportation market beset with collusive and artificially inflated bids, detrimental to consumers and noncooperating competitors alike.” Id. at 14a. The court thought it “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.” Ibid. (citing FMC v. Seatrain Lines, Inc., 411 U.S. 726, 732-733 (1973)).4
The court of appeals did “not address the government’s alternative contention that the agreements for which [petitioners] seek immunity are beyond the coverage provisions of the Shipping Act and likewise beyond the FMC’s jurisdiction. See [46 U.S.C. App.] 1703; see also
10 Because the court of appeals found no antitrust immunity under the Shipping Act for the conduct charged, the court did not reach the question whether such immunity would have extended, as petitioners urged, to immunize their conduct under the federal fraud statute as well. Pet. App. 21a.5
Petitioners contend (Pet. 11-29) that the court of appeals erred in holding that petitioners’ bid-rigging scheme is not entitled to antitrust immunity under the Shipping Act. That decision does not conflict with any decision of this Court or of another court of appeals, including the Ninth Circuit’s decision in United States v. Tucor International, Inc., 189 F.3d 834 (1999), and it does not present any issue warranting this Court’s review. l. Contrary to petitioners’ contention (Pet. 12), the court of appeals’ decision does not create “a square conflict” with the Ninth Circuit’s decision in Tucor. Section 7(a)(4) provides antitrust immunity for agreements “concerning the foreign inland segment of through transportation.” 46 U.S.C. App. 1706(a)(4) (emphasis added). The conduct charged in Tucor and found immune from prosecution was an agreement among local Philippine agents to fix the inland rate they charged to U.S. freight forwarders for the Philippine segment of through transportation. 35 F. Supp. 2d at 1185. ParaTucor, 189 F.3d at 837 (discussing a similar argument made in that case).” Pet. App. 20a n.3. 5 The court rejected petitioners’ challenges to the factual basis for their fraud conviction, concluding that the facts to which petitioners had stipulated established a factual predicate for fraud. Pet. App. 21a-23a. That holding is not challenged here.
11 graph 4(a) of the Tucor indictment charged a conspiracy among Philippine truckers to fix the prices “to be paid by U.S. freight forwarders for moving services” to the local agents. C.A. App. 83 (emphasis added).6 The decisions in Tucor emphasized that the indictment alleged an agreement involving activities that occurred “exclusively” and “entirely” within the Philippines—foreign inland transportation. 35 F. Supp. 2d at 1183, 1185; 189 F.3d at 835-836; 238 F.3d at 1176. Moreover, the U.S. freight forwarders in Tucor were victims of a local agents’ scheme to raise rates for the local segment of a through rate, not co-conspirators in an agreement to raise through rates.7
Petitioners claim that “[i]n Tucor, the United States alleged that foreign carriers operating in the Philippines conspired with others to suppress competition by fixing prices for the transportation of military household goods between the Philippines and the United States.” Pet. 6 (emphasis added). In fact, Paragraph 2 of the Tucor indictment charged a conspiracy “to suppress competition by fixing prices for moving services supplied in connection with the transportation of military shipments of household goods between the Philippines and the United States.” 35 F. Supp. 2d at 1175 (emphasis added) (correctly quoting the indictment). Paragraph 3 additionally specifies that both U.S. freight forwarders and DOD were victims of the conspiracy “among the defendants and co-conspirators” charged in the Tucor case to increase prices. C.A. App. 82. In this case, U.S. freight forwarders were participants in the conspiracy to fix through rates, and not, as in Tucor, the victims of a local agency conspiracy. 7 Subparagraph 4(c) of the Tucor indictment charged that the defendants and co-conspirators caused the U.S. freight forwarders to cancel the low rates filed with DOD because they could no longer honor them when their costs for the foreign inland segment increased, C.A. App. 83, but that cancellation of rates was simply a practical consequence of the agreement. There is no allegation in the indictment that the U.S. freight forwarders had joined the conspiracy, which was intended to “increase to U.S. freight forwarders and the United States
12 The Ninth Circuit expressly recognized the importance of that distinction: “[T]hrough transportation” * * * includes all of the interrelated segments from the point of origin in the Philippines to the service person’s new home in the U.S., though provided by different carriers along the way. The defendants are motor carriers operating entirely within the Philippines. For their part of the “through transportation,” they packed, picked up, and trucked household shipments from Subic Naval Base and Clark Air Force Base, both in the Philippines, to a Philippine seaport. That is where the defendants’ involvement ended.
189 F.3d at 836. By contrast, the charged conduct in this case was an agreement between petitioners and U.S. freight forwarders to fix through rates charged by U.S. freight forwarders to DOD. The price fixing was not limited to a foreign segment of the transportation. Rather, the U.S. freight forwarders carried out their role in the conspiracy by submitting rigged bids to DOD for transportation services that included segments of transportation in the United States, rather than a segment entirely within some foreign country, as in Tucor.
Petitioners claim that the German agents in this case, like the truckers in Tucor, “reached an agreement among themselves to raise the prices that they receive.” Pet. 13. The stipulated facts in this case, however, show that Gosselin agreed “to pay the German agents a specified rate in the 12 channels provided that the shipments moved in those channels at the second-low level.” Pet. App. 63a. The German agents, in turn, threatened to
Department of Defense the prices paid for moving services.” See C.A. App. 82 (Tucor Indictment para. 3).
13 boycott “freight forwarders in the 12 channels unless the freight forwarders submitted me-too bids at the second level or above.” Ibid. Nothing in the factual stipulation indicates that the German agents did anything more than accept Gosselin’s offer to pay them more in exchange for their support of its attempt to raise through rates by conspiring with Pasha and the U.S. freight forwarders to submit rigged bids to DOD during the second round of bidding.8 The court of appeals correctly recognized that petitioners initiated the through rate agreement and then used the local German agents to ensure its efficacy through the boycott letter that Gosselin’s managing director helped to draft. Pet. App. 62a-64a; see id. at 5a6a (the conspiracy was initiated when “Gosselin was evidently alarmed that FF1 had been able to low-bid for the twelve channels without using Gosselin’s landed rate”); see also id. at 31a-32a. Gosselin’s managing director conferred with Pasha and UCC about raising the me-too rates before he helped prepare the boycott letter, and he promised to pay the agents a specified fee in return for their agreement to go along with the boycott. Id. at 5a-6a, 31a-32a. Petitioners then persuaded FF-1 to agree to withdraw its prime through rate and “secured [agreement] from other U.S. freight forwarders to file bids at or above the second low level,” all of which “had little to do with the German inland segment of the through services these forwarders offered.” Id. at 13a.
Indeed, the district court criticized petitioners for arguing beyond the stipulated facts, stating that “the additional facts that [petitioners] supply, concerning an initial price-fixing agreement among German agents” are “outside the factual record and this Court cannot consider them.” Pet. App. 39a-40a.
14 The court of appeals correctly recognized that Tucor involved a distinctly different factual situation, that the holding of Tucor was limited to those specific facts, and that Tucor did not prevent the court from applying the plain language of the Shipping Act to the facts of this case. Pet. App. 12a-13a. 2. The court of appeals’ decision is consistent with the plain language of Section 7(a)(4), which does not provide a blanket antitrust exemption for through rate agreements. Section 7(a)(4) exempts only those “agreement[s] or activit[ies] concerning the foreign inland segment of through transportation.” 46 U.S.C. App. 1706(a)(4) (emphasis added). Petitioners argue that, because Congress did not expressly limit immunity to agreements that “solely” or “only” concern the “foreign inland segment of through transportation,” the exemption must apply more broadly to agreements concerning through rates that merely include a foreign inland segment. But Congress did not have to say “solely” to make its intentions clear. Section 7(a)(4) states the coverage of the immunity Congress intended to provide. Congress was familiar with through rates, which it defined in Section 3(24) as transportation “between a United States point or port and a foreign point or port.” 46 U.S.C. App. 1702(24). And it knew how to exempt an agreement on through rates, as it showed by its grant of immunity in Section 4(a)(1) for vessel-operating common carriers. See 46 U.S.C. App. 1703(a)(1), 1704(a), 1706(a)(1). If Congress had wanted to exempt any and all agreements on through rates that included charges for transportation within a foreign county, it could have easily said so directly. Instead, Congress carefully limited the exemption to agreements concerning “the for-
15 eign inland segment of through transportation.” 46 U.S.C. App. 1706(a)(4).9 Petitioners’ resort to legislative history is also unpersuasive. Petitioners claim that Congress eliminated the word “solely” from Section 7(a)(4) in the drafting process and thereby indicated its intent to provide immunity beyond the “foreign inland segment.” Pet. 17, 2426. The provision of the 1981 bill that they cite, however, relates to the immunity ultimately enacted as Section 7(a)(3).10 Petitioners have never claimed immunity under that Section, which immunizes only “any agreement or activity that relates to transportation services within or between foreign countries, whether or not via the United States, unless that agreement or activity has a direct, substantial, and reasonably foreseeable effect on the commerce of the United States.” 46 U.S.C. App. 1706(a)(3) (emphasis added). See H.R. Rep. No.
See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 517 (1992) (citing the “familiar principle of expressio unius est exclusio alterius,” which cautions that, when Congress enacts a provision explicitly defining the reach of a statute, it implies that matters not specifically defined are not within the statute’s reach); accord TRW Inc. v. Andrews, 534 U.S. 19, 28 (2001) (“Congress implicitly excluded a general discovery rule by explicitly including a more limited one.”). 10 Congress spent years considering legislation that it ultimately enacted as the Shipping Act of 1984. The 1981 provision that petitioners cite gave antitrust immunity to “any agreement or activity that relates solely to transportation services between foreign countries.” S. 1593, 97th Cong., 1st Sess. § 8(a)(4) (1981) (emphasis added). That provision remained in the committee bill reported out in 1982, although it was expanded to cover agreements on transportation “within” as well as “between” foreign countries. S. 1593, 97th Cong., 2d Sess. § 8(a)(4) (1982).
16 53, 98th Cong., 1st Sess. Pt. 2, at 32-33 (1983); H.R. Conf. Rep. No. 600, 98th Cong., 2d Sess. 37 (1984).11 Section 7(a)(4) has separate origins. It first appeared as Section 8(a)(7) of the 1982 committee bill, and it provided an exemption for “any agreement or activity concerning the inland portion of any intermodal movement occurring outside the United States, though part of transportation provided in a United States import or export trade.” S. 1593, 97th Cong., 2d Sess. (1982). It did not change substantively from its initial drafting, and it does not reflect in its language or its legislative history any congressional intent to extend immunity from agreements and activities “concerning the foreign inland segment of through transportation” to any agreement or activity concerning a through rate that includes a foreign inland segment.12 The court of appeals also correctly observed that petitioners’ interpretation of Section 7(a)(4) would “threaten
The district court in Tucor also confused the history of Section 7(a)(3) with that of Section 7(a)(4). See Pet. 24, citing Tucor, 35 F. Supp. 2d at 1181-1182; Pet. 19 (discussing comity). 12 As already noted (see note 4, supra), the court of appeals did not address the government’s additional argument that there is no immunity in this case because Section 4 of the Shipping Act, 46 U.S.C. App. 1703, which sets forth the agreements that are covered by the Act, including the agreements to which Section 7 immunity extends, covers only agreements “by or among ocean common carriers” or “among marine terminal operators and among one or more marine terminal operators and one or more ocean common carriers.” 46 U.S.C. App. 1703(a) and (b). Because no ocean common carrier was a party to the agreement in this case, the agreement was not covered by the Shipping Act, was not regulated by the FMC, and could receive no immunity under Section 7. See 46 U.S.C. App. 1703-1706; H.R. Conf. Rep. No. 600, supra, at 28 (“section [4] states the coverage of the bill,” and “[w]hen read in connection with sections 5 and 7, the effect is to remove the listed agreements from the reach of the antitrust laws”).
17 to excise antitrust liability from the through transportation market completely.” Pet. App. 13a. Petitioners are incorrect in claiming (Pet. 26) that FMC or foreign regulation fills that gap. To the extent that agreements affecting U.S. commerce are subject to FMC regulation, Congress did grant immunity. See 46 U.S.C. App. 1706(a)(1) and (2). But agreements or arrangements among U.S. freight forwarders setting the rates charged to DOD for the movement of property are not subject to FMC regulation, and foreign regulation is plainly not adequate to protect against an agreement aimed at raising prices charged to a United States agency responsible for the national defense.13 Petitioners also claim that “the Court of Appeals began its analysis” of the Shipping Act “on the wrong foot by starting with the interpretive premise that ‘exemptions from antitrust laws’ should be ‘narrowly’ construed.” Pet. 17. They argue that reliance on that premise is inappropriate in this case because an “ambiguous” statute should not be interpreted to interfere with the sovereign authority of another country and because a court should exercise restraint in interpreting a criminal statute. Pet. App. 17a-18a (quoting F. HoffmanPetitioners incorrectly assert that “antitrust exemptions already apply to every other segment of the transportation of household military goods.” Pet. 25. In fact, no law immunizes agreements among U.S. freight forwarders to fix their through rates, and no law exempts foreign port agents’ services, U.S. port agency services, liftvan charges, or foreign general agent services from the antitrust laws. The ICC Termination Act provides limited antitrust immunity for motor carriers to agree on joint rates with different carriers providing different segments of an overall move, but that immunity is coupled with concomitant regulation by the Surface Transportation Board to ensure that the agreements are not unduly restrictive of competition. 49 U.S.C. 13703(a)(2), (3) and (5).
18 LaRoche Ltd. v. Empagram S.A., 542 U.S. 155, 164 (2004). Those arguments ignore the plain language of the Shipping Act, the facts of this case, and prior decisions of this Court. There is nothing ambiguous about Section 7(a)(4) of the Shipping Act as applied to the facts of this case. Petitioners entered into an agreement to fix through rates paid by DOD for transportation that occurs in part within the United States; they did not enter into an agreement concerning only transportation within a foreign country or countries. Pet. App. 11a-14a. Petitioners do not claim that their agreement to fix through rates was subject to FMC regulation. Rather, they assert that the Shipping Act gave them antitrust immunity without any of the Act’s “regulatory strings attached.” Id. at 9a. Particularly in light of that sweeping claim, the court of appeals was correct in observing that its interpretation of the plain language of the Shipping Act was supported by this Court’s decisions holding that exemptions from the antitrust laws should be strictly construed.14 The United States has a strong sovereign interest in protecting the competitive process that DOD uses to select companies that provide services supporting national defense activities, a process that does not interSee, e.g., Seatrain Lines, 411 U.S. at 733 (construing the 1916 Shipping Act); Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 216 (1966) (“the implementation of rate-making agreements which have not been approved by the Federal Maritime Commission is subject to the antitrust laws”); see also United States v. Borden Co., 308 U.S. 188, 206 (1939) (no antitrust immunity under the Agricultural Marketing Agreement Act of 1937, ch. 296, 50 Stat. 246, or the CapperVolstead Act, 7 U.S.C. 451 et seq., for conduct unregulated by Secretary of Agriculture).
19 fere with the sovereign authority of Germany. The United States is prosecuting “domestic conduct” (Pet. 17) that was carried out in the United States. Petitioners’ conspiracy resulted in U.S. companies submitting rigged bids to DOD. That conspiracy affected the shipment of household goods within the United States as the final leg of the door-to-door move from Germany. And that conspiracy affected a quintessentially domestic interest—more than $l million in overcharges to DOD borne by U.S. taxpayers. Contrary to petitioners’ suggestion (Pet. 17-20), this case bears no similarity to Empagran, supra. The Court ruled in Empagran that foreign plaintiffs could not sue under the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. 6a, for injuries sustained “solely” in foreign countries. 542 U.S. at 159. The Court emphasized, however, that “a purchaser in the United States could bring a Sherman Act claim under the FTAIA based on domestic injury [although] a purchaser in Ecuador could not bring a Sherman Act claim based on foreign harm.” Ibid .; see id . at 165 (application of antitrust laws to foreign anticompetitive conduct that causes injury in the United States is fully consistent with principles of comity). The United States’ criminal prosecution in this case, which seeks to protect the American public from anticompetitive conduct, does not interfere with the ability of Germany to investigate and prosecute any conduct by petitioners or their coconspirators that, in Germany’s estimation, violates German laws. See id. at 170-171.15
Likewise, Germany’s investigation and possible prosecution of local German agents does not override the interests of the United States in this case. See Pet. 26. “The German government’s demonstrated ability to regulate conduct within its own borders,” Pet. 27 (emphasis added),
20 The court of appeals did not “neglect[] the principle that criminal statutes should be narrowly construed.” Pet. 20 (citing Arthur Andersen LLP v. United States, 125 S. Ct. 2129 (2005)). That principle does not trump all other principles of statutory construction. Indeed, in this case, the statute at issue—the Shipping Act— is a civil statute, and, moreover, the rule that antitrust exemptions must be construed narrowly has been applied in both civil and criminal cases. See note 14, supra (citing cases). Petitioners do not deny that they violated the Sherman Act if the Shipping Act does not immunize their conduct. This case bears no similarity to Arthur Andersen, where the defendant was convicted of obstruction of justice, 18 U.S.C. 1512(b)(2)(A) and (B), and this Court examined the obstruction statute to determine the mens rea element of the offense defined in that criminal statute.16 Petitioners’ suggestions that their reliance on Tucor should exempt them from prosecution, Pet. 20, and that they were not given “fair warning” that their conduct was illegal, Pet. 21, cannot be reconciled with the stipulated facts. Nothing in the stipulation or the information—which constitute the complete factual record in
does not preclude the United States from regulating conduct within its own borders aimed at DOD and harming American taxpayers. 16 In Arthur Andersen, this Court reversed a conviction because the jury was permitted to find the defendant guilty of “knowingly” or “corruptly” persuading another person “with intent” to induce that person to withhold testimony or documents from a judicial proceeding without finding a criminal intent or “consciousness of wrongdoing.” 125 S. Ct. at 2134; see United States v. United States Gypsum Co., 438 U.S. 422, 434-446 (1978) (mens rea is an element of a criminal Sherman Act prosecution). The Court’s decision in Arthur Andersen does not suggest that the normal rules of statutory construction have no place in criminal prosecutions or in interpreting statutory language.
21 this case, Pet. App. 57a—suggests that the petitioners knew about or relied on Tucor in entering into their agreement to fix through rates. See Pet. 20 (claiming such reliance without record citation). Moreover, any reliance would not have been justified because, as explained above, Tucor involved markedly different criminal conduct. 3. There is no merit to petitioners’ final suggestion (Pet. 28-29) that, if the Court decides to review the court of appeals’ determination that petitioners are not entitled to immunity on the antitrust count of the information, it should also examine whether petitioners are entitled to immunity on the fraud count as well. The court of appeals correctly ruled, and petitioners do not challenge, “that the factual recitations in the plea documents easily” state facts that “constitute an offense under § 371.” Pet. App. 22a. If petitioners had wanted to test the government’s theory of fraud in this case, they should have refused to enter into a conditional plea bargain agreement limiting the arguments they could make in this case (see p. 7, supra), pleaded not guilty, and put the government to its burden of proof at trial. Instead, they admitted facts that established a Section 371 violation and pleaded guilty to that offense. Petitioners should not be relieved of the consequences of their guilty pleas even if this Court decides to review the decision of the court of appeals with respect to the Sherman Act. Cf. United States v. Broce, 488 U.S. 563, 571 (1989) (voluntary and intelligent plea cannot be challenged based on a relinquished defense, even if defendants
22 “may believe that they made a strategic miscalculation”).17 In any event, the Shipping Act’s exemptions are expressly limited to the “antitrust laws,” which in turn are limited to the antitrust statutes in Title 15. See 46 U.S.C. App. 1702(2), 1706(c)(2). The Shipping Act makes no mention of the federal fraud statute. Accordingly, the express language of the Shipping Act fully supports the district court’s conclusion that the statute does not preclude a prosecution for a violation of 18 U.S.C. 371.
PAUL D. CLEMENT Solicitor General THOMAS O. BARNETT Acting Assistant Attorney General SCOTT D. HAMMOND Deputy Assistant Attorney General JOHN J. POWERS, III ANDREA LIMMER Attorneys
Petitioners incorrectly claim (Pet. 28) that “there is no allegation of any separate fraudulent or misleading statements made by the petitioners” apart from the conduct charged in Count One. To the contrary, petitioners stipulated to the fact that, in addition to the price fixing, they conspired to provide misleading information to DOD to ensure that no shipments were tendered to U.S. freight forwarders that had filed me-too rates below the second-low level. Pet. App. 65a.
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