Opinion ID: 453009
Heading Depth: 3
Heading Rank: 1

Heading: Erroneous exclusion of defense evidence.

Text: 45 A recurring theme in the briefs and arguments of all appellants is that the district court incorrectly excluded evidence concerning the nature of the appellant's activities in the context of the pharmaceutical market. Through one fashion or another, this evidence was calculated to show that the antitrust laws of the United States relieved the appellants of criminal responsibility and that evidence of the operation of these laws was material to the defense. Two arguments are made. 46 Appellants first argue that the pricing scheme avoided by their misrepresentations was itself illegal under antitrust law. Avoidance of an illegal scheme is not a crime, they urge, and thus, because they did not believe their misrepresentations to have been criminal, scienter was absent and a finding of fraud precluded. We find this argument untenable. The merits of manufacturers' claims of right to sell drugs domestically at uniform prices is immaterial to the issue of fraud. If defendants doubted the legality of that practice their recourse would have been through antitrust action, not through a scheme of misrepresentations communicated through U.S. mails and wires. 47 Secondly, appellants argue that their misrepresentations were not material because the manufacturers were aware appellants did not really represent charitable or export interests. Without materiality, they point out, there could be no fraud. This argument, too, cannot stand. The district court, while he excluded evidence on the antitrust laws, allowed considerable evidence on the operation and the legitimacy of the American diversion industry, including defendants' allegation that some manufacturers wink at representations of nonprofit or export status in order to use the diversion market as a dumping-ground for drugs nearing expiration. Thus the issue of materiality was framed for the jury, and in finding fraud they determined that issue.