Opinion ID: 543660
Heading Depth: 3
Heading Rank: 3

Heading: Contacts with independent marketers

Text: 91 Finally, the appellants rely upon a number of items of evidence which they contend indicate that the appellees used direct contacts in order to coordinate their activities with the independent segment of the market. 19 For example, the appellants presented testimony indicating that Paul Erdos, an officer of the Serve Yourself & Multiple Pump Association (SYMPA), an organization of independent gasoline dealers, had conversations with officials of a number of the appellees concerning various pricing matters. Erdos testified that, during the pre-Container period, he had conversations concerning dealer tankwagons and wholesale prices with employees of several of the appellees. Charles Temme of ARCO also testified that during the 1960s Erdos provided information concerning upcoming restoration attempts and that Erdos urged ARCO's support. The evidence also indicates that during the post-Container period Erdos continued to obtain information concerning dealer tankwagons, either from direct personal contacts, postings, or the trade press. Thus, James Carbonetti of Mobil stated that, during the second half of the 1970s, he provided Erdos with information concerning Mobil's posted tankwagon prices. 20 Erdos also contacted members of the trade press in order to confirm changes in dealer tankwagon levels. Finally, the appellants have produced evidence indicating that Erdos sometimes complained directly to oil companies concerning their dealers' pricing practices. 92 The most significant evidence of a connection between the major oil companies and the independents comes from the testimony of Kenneth Galligan, an official with Powerine Oil Company. Galligan testified that he and other Powerine officials had a number of conversations with Herb Wetzler of Gulf concerning the independents' pricing. For example, Galligan stated that, shortly after he joined Powerine in 1969, he and several other Powerine officials spoke with Wetzler, who told them that it would benefit everyone if the independents could be priced and moved as a group, much as the majors had been able to coordinate their pricing. 93 Galligan also testified that he had other meetings with Wetzler during the period from July 1970 to September 1971. Galligan stated that the purpose of those meetings was to gain [Wetzler's] cooperation in getting commitments from major oil companies who retailed gasoline in the markets [in which Galligan operated], and to arrange with [Wetzler] and establish with him the prices to which those companies would move to on specific dates prior to the time the restoration was made at service station level. Galligan testified that Wetzler told him that a specific oil company would move its tankwagon price to support a retail price ... in certain areas on certain dates. It should be noted, however, that Galligan testified on cross-examination that he had no personal knowledge concerning whom Wetzler contacted or which majors he contacted. He testified to the same effect on direct examination, stating that Wetzler refused to tell him. 94 Galligan also testified that he contacted Herb Wetzler, Paul Erdos, and several non-major oil company executives concerning a proposed schedule for a retail price increase in October 1970. In particular, Galligan spoke to Wetzler, who told Galligan that the majors had told Wetzler that if there were any difficulties with the price move, Galligan should wait until Wetzler had had a chance to straighten it out. The following week, Wetzler and Erdos spoke to Galligan and confirmed that the price move had been successful. 95 Galligan also testified concerning conversations with majors other than Gulf. For example, Galligan testified that, sometime between 1969 and July 1970, he overheard several conversations between Jack Keane of Powerine and Nerheim of Standard. Galligan testified that Keane and Nerheim discussed retail price hikes among independents, and Keane would ask Nerheim what he thought of a particular proposal. Nerheim would usually respond by first saying something like As you know, Jack, we don't get into that, and then saying something that would indirectly indicate approval such as That might be a good idea or The weather looks good. Galligan also stated that he overheard Keane and Nerheim discussing the schedule whereby the oil companies would restore retail prices. In one case, Standard would go first and Shell second, while in another Standard went first and Mobil second. Galligan testified that he instructed Keane to make these calls in order to confirm information he had received from Wetzler and Erdos concerning when Standard stations would restore their retail prices. After Keane had made one such call, Galligan and Keane discussed what had taken place during the call. Galligan stated that he and Keane concluded that Wetzler's information that Standard was committed was true. 96 In addition, Galligan testified that Keane had received confirmation of Mobil's participation in a restoration directly from a Mobil marketing manager. Furthermore, Galligan testified that the person in charge of retail pricing in Los Angeles for Shell Oil Company committed in advance to retail price restorations. Galligan's information on this score was based on what he was told by Erdos and Wetzler. 97 In addition to this testimony concerning contacts between the independents and the major oil companies, the appellants presented other evidence concerning contacts among the independents themselves. This evidence indicates that Erdos was involved in coordinating the responses of independent dealers to restoration attempts by the appellees. For example, several memoranda prepared by Newton Carey, a general manager for the independent oil company Simas Brothers, summarized a number of phone calls that Carey received and made to other independents. Several of these calls, including a number involving Erdos, concerned price changes among the independents after major oil company restorations. Many of the calls appear to have involved quite blatant price-fixing activity. Thus, Carey's October 12, 1970 memorandum to Mr. Simas states that I phoned Mr. Erdos and asked him about getting those Douglas stations up in the El Cerrito area. He said that he would phone. 98 Furthermore, Galligan testified that, while at Powerine, he asked Erdos on numerous occasions to contact competitors, both major and independent, to see what their reaction would be to a proposed retail price restoration. Erdos would get a commitment from these competitors before the restoration took place. Galligan also stated that Powerine would never restore its prices unless it had a prior commitment from the vast majority of major oil companies. 99 Other portions of Galligan's testimony are to the same effect. Galligan stated that Erdos was frequently a source of advance information concerning various companies' participation in price increases, although most of the time Galligan got this information indirectly through Keane or Wetzler. Galligan stated that Erdos' job was to get people in line for future pricing, and after the price increase had taken effect, to threaten noncomplying dealers that they had better participate or they would face retaliation from their suppliers. 100 We have little difficulty concluding that, if admissible, this testimony is sufficient to permit a jury to conclude that representatives of several of the appellees were involved in activities designed to assure that the independent sector of the market would follow restoration attempts, and that several officials of independent companies engaged in direct price-fixing with one another in order to produce such coordination. The appellees, however, argue that there are a number of evidentiary problems in Galligan's testimony and that, without this testimony, the appellants do not have sufficient evidence to establish a link between the independent market and the appellees. For several reasons, the district court agreed with the appellees. First, the court concluded that most of Galligan's testimony was irrelevant or immaterial. Second, the court also concluded that most of the testimony was hearsay. Third, the court noted that Galligan's testimony had been challenged by every other relevant witness and that Galligan had been substantially discredited. Petroleum Prods., 656 F.Supp. 1302-03. In reaching these conclusions, however, the district court did not focus upon any specific portions of Galligan's testimony; the court simply rejected it in a wholesale fashion. 101 In light of our above discussion of certain specific portions of Galligan's deposition, we have little doubt that such testimony is relevant and material to the issues in this case. The hearsay issue, however, is somewhat more difficult. We note that much of the information provided by Galligan consists of out-of-court statements of third parties. As such, the statements initially appear to fit within the definition of hearsay specified in Fed.R.Evid. 801(c). Upon closer analysis, however, we conclude that each of the statements qualifies as nonhearsay under either Rule 801(d)(2)(D) or Rule 801(d)(2)(E). 102 Rule 801(d)(2)(D) provides that a statement made by a party's agent or servant may be introduced against that party if it concerns a matter within the scope of the agency or employment and was made during the existence of the relationship. We conclude that this exception applies to Wetzler's various statements that Gulf would support retail price restorations. Wetzler was Gulf's marketing director, and the statements are therefore related to a matter within Wetzler's scope of employment. We reach this conclusion despite the fact that the appellees point out that Wetzler testified that he did not have authority, on his own, to raise Gulf's prices whenever he wanted to do so. First, we note that Wetzler testified that he was responsible for gathering market intelligence for his superiors and that he acted as a liaison between top Gulf management and the field with respect to price changes approved by top management [or] initiated in the field. In light of these duties of Wetzler, it seems clear that the statements that Galligan claims Wetzler made are related to a matter within his scope of employment. Second, in light of the fact that the Supreme Court has held that under Fed.R.Evid. 104(a) an out-of-court statement may be considered by the court in making the preliminary factual determinations concerning admissibility of statements under Rule 801(d)(2)(E), see Bourjaily v. United States, 483 U.S. 171, 177-81, 107 S.Ct. 2775, 2779-82, 97 L.Ed.2d 144 (1987), we conclude that Wetzler's out-of-court statements may themselves be considered in determining the preliminary question, under Rule 801(d)(2)(D), of the scope of Wetzler's employment duties. Since the statements clearly indicate an ability to communicate information on behalf of Gulf, we conclude that, considering all of the evidence, Wetzler's statements concerned a matter within the scope of his employment. 103 In light of this conclusion, no further showing is required to admit these statements against Gulf. See United States v. Ramsey, 785 F.2d 184, 191 (7th Cir.) (statements admitted under Rule 801(d)(2)(D) may be used to prove conspiracy without any showing that the existence of the conspiracy is corroborated by independent, nonhearsay evidence), cert. denied, 476 U.S. 1186, 106 S.Ct. 2924, 91 L.Ed.2d 552 (1986); see also United States v. Cross, 816 F.2d 297, 302 (7th Cir.1987) (same). Similarly, Nerheim's statement that Standard was committed to a retail restoration is admissible against Standard. None of these statements is admissible against the other defendants, however, unless they meet the requirements of Rule 801(d)(2)(E), which relates to statements of a coconspirator. 104 Rule 801(d)(2)(E) provides that a statement made by a co-conspirator of a party may be introduced against that party if the statement was made during the course, and in furtherance, of the conspiracy. The numerous instances wherein various third parties assertedly told Galligan that certain defendants had agreed to price restorations would appear to be prime candidates for this exception from the definition of hearsay. As noted above, Galligan's testimony included evidence of the following statements: Wetzler said Standard was committed to a particular restoration; Nerheim said that on particular occasions Shell and Mobil were committed; Erdos and Wetzler said Shell was committed to a particular increase. 105 Before these statements can be admitted, however, they must meet all of the prerequisites of Rule 801(d)(2)(E). Specifically, the party seeking to introduce the statement must show, by a preponderance of the evidence, that there was a conspiracy involving the declarant and the nonoffering party, and that the statement was made 'in the course and in furtherance of the conspiracy.'  Bourjaily, 483 U.S. at 175, 107 S.Ct. at 2778. Although a judge may consider the statements themselves in deciding whether these prerequisites have been met, see id. at 177-81, 107 S.Ct. at 2779-82, the offering party must present some evidence aside from the proferred co-conspirator's statements [to] show that the [nonoffering party] knowingly participated in the alleged conspiracy. United States v. Silverman, 861 F.2d 571, 577 (9th Cir.1988); see also United States v. Gordon, 844 F.2d 1397, 1402 & n. 2 (9th Cir.1988). Moreover, in Silverman we defined the character of the additional evidence: [E]vidence of conduct that is completely consistent with defendant's unawareness of the conspiracy cannot serve as corroborating evidence under Rule 801(d)(2)(E). Silverman, 861 F.2d at 578. 106 In the antitrust context the Silverman requirement can be met if the circumstantial evidence offered in addition to the co-conspirator's statements is adequate to defend against summary judgment under Matsushita. Under Matsushita in order to survive summary judgment on the basis of circumstantial evidence alone, a plaintiff must offer evidence that is consistent with an inference of illegal conduct and permitting that inference must not be significantly harmful. This requirement comports with the Silverman mandate against allowing wholly innocuous conduct alone to serve as proof of conspiracy. Id. 107 In the instant case, the press releases, price postings and evidence of competitor contacts previously discussed provide evidence of a conspiracy aside from Galligan's statements. Since we have concluded earlier that appellant's evidence is sufficient to survive summary judgment under Matsushita, the appellants have met their burden of producing some evidence apart from Galligan's testimony that indicates the existence of conspiracy. 108 The remaining question, then, is whether this evidence along with Galligan's statements are sufficient to show by a preponderance of the evidence that there was a conspiracy. Viewing the evidence in the light most favorable to appellants, we find that there is sufficient evidence to conclude, for purposes of Rule 801(d)(2)(E), that the appellees were co-conspirators. 21 The statements are therefore admissible against all defendants under Rule 801(d)(2)(E). 109 Finally, we reject the district court's suggestion that Galligan's testimony could be disregarded because it had been substantially discredited. Petroleum Prods., 656 F.Supp. at 1303. It is well-established that [c]redibility determinations ... are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986). The two cases cited by the district court, Mesirow v. Pepperidge Farm, Inc., 703 F.2d 339, 344 (9th Cir.), cert. denied, 464 U.S. 820, 104 S.Ct. 83, 78 L.Ed.2d 93 (1983), and Radobenko v. Automated Equip. Corp., 520 F.2d 540, 543-44 (9th Cir.1975), do not support its conclusion. Mesirow and Radobenko dealt with the narrow situation where the only material issue of fact was created by a party's own directly contradictory affidavits or deposition testimony, given during the course of the same litigation. In Mesirow and Radobenko, we held that, under those narrow circumstances, the party's conflicting statements do not create a genuine issue of material fact. In the present case, by contrast, Galligan is not a party, and he has not given flatly contradictory testimony during the course of this litigation. 110 Since Galligan's testimony is admissible for summary judgment purposes against all of the appellees, we conclude that his testimony, considered along with the other evidence discussed in this subsection, is sufficient to create a jury question as to whether the appellees, as part of their efforts to coordinate their own prices, also sought to assure that the independent oil companies would coordinate their pricing behavior. 22 111