Opinion ID: 149112
Heading Depth: 3
Heading Rank: 2

Heading: HUK's Involvement in the Conspiracy

Text: Even if a reasonable jury could have found an overarching conspiracy, HUK insists that the evidence is insufficient to show that it willfully joined that conspiracy. In evaluating this argument, we note that in most civil conspiracy cases, the jury ha[s] to infer an agreement from indirect evidence. Halberstam, 705 F.2d at 486. A jury may infer that a defendant willfully joined the conspiracy if he understood the scheme's essential nature and general scope. Hobson v. Wilson, 737 F.2d 1, 52 (D.C.Cir. 1984) (internal quotation marks omitted), overruled in part on other grounds by Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). Under basic principles of agency law, corporate defendants are charged with constructive knowledge of all material facts that their agents and officers learn in the scope of their employment. See 2 William Fletcher, Cyclopedia of the Law of Corporations § 790 (2010); see also BCCI Holdings (Luxembourg), S.A. v. Clifford, 964 F.Supp. 468, 478 (D.D.C.1997). Thus, to uphold the jury's finding that HUK joined the conspiracy, we must be sure that the record contains sufficient evidence for the jury to have reasonably found that (1) an HUK employee, officer, or director knowingly joined the conspiracy and (2) in so doing, acted within the scope of his HUK duties. At trial, the plaintiffs presented testimony and evidence that revealed HUK's involvement in bidding on Contract 20A. In April 1988, the USAID and an Egyptian government agency called the Cairo Wastewater Organization solicited bids on Contract 20A from three prequalified contractors: George A. Fuller Co. (Fuller); Fru-Con Construction Company; and the Harbert-Jones 20A Joint Venture. A month later, Schmidt invited a group of prequalified contractors to meet in Frankfurt. Schmidt suggested that the others bid high on Contract 20A in exchange for a payoff. Although no agreement was reached at that meeting, several weeks later Schmidt and an executive of Bilfinger & Berger (B & B) (Fru-Con's parent company) agreed that Fru-Con would submit a high bid in exchange for a payoff equivalent to 2-3% of the contract value. The Harbert-Jones joint venture convened a bid reconciliation meeting in June. Jones's estimator, Carl Nagel, proposed that Harbert-Jones bid $95.2 million. Ian Young, HUK's lead estimator, represented Harbert at the meeting, where the Harbert team suggested to the Jones team that they include more conservative estimates. Based in part on these suggestions, the two sides initially agreed to bid $103 million. After Anderson arrived at the meeting and once additional philosophy changes, including more expensive methods of construction, were incorporated into the bid, the joint proposal increased to $130 million. Shortly thereafter, Harbert-Jones submitted a $125 million bid, which Young signed. On August 3, the final day to submit bids, Schmidt and an officer of Fuller's parent, Archirodon, signed a written agreement stipulating that Fuller would refrain from bidding on Contract 20A in exchange for Archirodon receiving either 5% of the contract value or 3% and a subcontract. In addition, Holzmann committed to caus[ing] Harbert-Jones to reciprocate by helping Fuller obtain another contract of similar value from the USAID, such as Contract 29. On the same day, Young directed that the Harbert-Jones bid be increased by 3.5%, to $129 million. The bids were opened the next day. Fru-Con had bid $152 million, Harbert-Jones had bid $129 million, and Fuller had not bid at all. Although the lower of the bids, Harbert-Jones's was substantially higher than the project's consultant had expected. As a result, the Cairo Wastewater Organization and the USAID opted to scale down the contract and solicit re-bids. In December, Anderson, Schmidt, and Archirodon representatives met to discuss the new round of bidding. In a handwritten addendum to the August agreement, they agreed that Fuller would receive a subcontract worth at least $2.5 million plus $500,000 cash. Later that month, Fru-Con bid $139 million for the scaled-down version of Contract 20A, and Harbert-Jones bid $115 million. Harbert-Jones won the contract, eventually submitting 33 invoices totaling over $107 million. In January 1990, Schmidt, Anderson, and a representative from Archirodon negotiated a payment schedule for the agreed-upon $3 million payoff. Holzmann made payments to Archirodon over the next year. Testimony and other evidence suggest that Harbert-Jones funneled money for these payoffs through HUK. For example, Holzmann billed HUK for services it never requested nor received, and HUK paid those invoices. According to HUK, this evidence is insufficient to support the jury's finding that the company agreed to join the overarching conspiracy. We disagree. The jury could have reasonably concluded that Ian Young, HUK's lead estimator, knowingly joined the conspiracy on behalf of HUK. Specifically, Young's interactions with Roy Anderson, his behavior at the Harbert-Jones bid-reconciliation meeting, and his involvement in increasing the bid on the same day that Schmidt secured Archirodon's no-bid promise all suggest he knowingly joined the conspiracy while acting within the scope of his employment for HUK. The jury had reason to believe that Anderson knew of the conspiracy by the time of the June 1988 bid-reconciliation meeting. Specifically, it heard testimony and viewed evidence that Anderson was the Vice President of HII, the 60% partner in the joint venture; that he was the lead man on the Egypt jobs; that he held powers of attorney from the President of HII, Bill Harbert, authorizing him without reservation to represent HII in the bidding; and that he may have been present at the May 1988 meeting in which Schmidt proposed the bid-rigging scheme, see Miller, 563 F.Supp.2d at 116 n. 87 (In light of Anderson's explicit status as HII's point-man in Europe for international contracting and his attendance at the December 1988 renegotiation with Fuller, it would be reasonable to infer that if a HII representative attended the May meeting, it would have been Anderson.). The jury also heard evidence suggesting that Anderson could have passed his knowledge along to Young: Colin Towsey, the Managing Director of HUK, testified that Anderson and Young had interactions ... with respect to the bidding on Contract 20A, and had discussions about what the estimating work would be. In addition, the jury could have reasonably inferred that Young knew of the conspiracy based on evidence that he sought to increase the bid at the Harbert-Jones bid reconciliation meeting. Nagel, Jones's estimator, testified that although Jones's pre-meeting proposal was $95.2 million, Young's arm twist[ing] pressured the Jones team to include more expensive methods of construction, thus significantly increasing the bid, first to $103 million and later, after Anderson's arrival, to $130 million. Nagel testified that he thought that even the $103 million figure was inflated. According to Nagel, the Jones team deferred to Young because Harbert was the majority owner of the joint venture, giving Harbert the hammer in the negotiations. Similarly, Young's August 3 order to increase the bid by 3.5%the same day Schmidt secured a no-bid agreement from Archirodoncould also lead a reasonable jury to conclude that he knew about the bid rigging. Reinforcing these inferences, the plaintiffs' expert explained that in order to make collusive agreements profitable, managers must exert influence on the prices their companies set. HUK challenges this view of the evidence, arguing that an innocent explanation supports Young's actions and that [c]onduct that is as consistent with other equally plausible explanations as with illegal conspiracy, without more, does not support an inference of conspiracy. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). According to HUK, at the bid-reconciliation meeting Young simply believed that more conservative construction techniques should be used. This explanation is bolstered, HUK tells us, by Nagel's statement on cross-examination that reasonable and experienced estimators could disagree about the need for such methods. Similarly, HUK contends that Young's August 3 order to increase the bid by 3.5% was completely innocentthe letter was one of two prepared in advance to deal with volatile steel prices. As the district court observed, however, these arguments largely ignore the standard of review for sufficiency challenges: In essence, HUK merely posits that anotherin its opinion, betterexplanation of the facts exists. But at this stage in the litigation, the relevant question is whether the view adopted by the jury in reaching its verdict was at all reasonable. Miller, 563 F.Supp.2d at 121 n. 98 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Here the jury had sufficient evidence to conclude that Young's efforts to increase the bid were motivated by knowledge of a bid-rigging conspiracy. Moreover, in crediting the plaintiffs' version of the facts over HUK's more innocent explanation, the jury would have had no need to speculate, as HUK claims it did. Testimony regarding Young's interactions with Anderson, the existence of a bid-rigging agreement between Harbert-Jones and Fru-Con, the timing of Young's actions, and the expert testimony about collusive agreements all support the jury's inference that Young knowingly joined the conspiracy. Cf. Matsushita, 475 U.S. at 596-97, 106 S.Ct. 1348 (where plaintiffs fail to show that defendants had any plausible motive to engage in conspiracy, conduct consistent with other, equally plausible explanations does not give rise to an inference of conspiracy). Sufficient evidence also supports the jury's finding that Young acquired knowledge of the conspiracy while acting within the scope of his employment for HUK. Not only was Young an HUK employee when Contract 20A was bid, but in his testimony, Colin Towsey, HUK's Managing Director, revealed that Young worked on the bid as part of his HUK employment. HUK counters that Towsey's testimony suggests that during the relevant period Young was actually working for BIE, HUK's 49% owner. But Towsey's testimony establishes only that HUK provide[d] some engineering and estimating support to BIE. Towsey never said that Young worked primarily or exclusively for BIE; in fact, Towsey indicated that Young worked in HUK's London office during this time, that he remained on HUK's payroll, and that [h]e was certainly the head of [HUK's] estimating team in connection with Contract 20A. Thus, based on Towsey's testimony the jury could have reasonably found that Young learned of the conspiracy and contributed to it in his capacity as an HUK employee. In sum, then, Young's actions provided sufficient evidence for the jury to conclude that HUK knowingly joined the conspiracy. HUK next challenges the jury's finding that it committed substantive FCA violations, i.e., that it knowingly present[ed], or cause[d] to be presented, a false or fraudulent claim and knowingly ma[de], use[d], or cause[d] to be made or used, a false record or statement material to a false or fraudulent claim with respect to Contract 20A. 31 U.S.C. § 3729(a). We have no need to address this argument. Because the jury had sufficient evidence to find that HUK conspired to submit false bids, supra at 58, HUK was liable for its co-conspirators' foreseeable actions in support of the conspiracy. See, e.g., Halberstam, 705 F.2d at 481. And as explained in Part II.G.1, BIE's admission that it both conspired to and did submit false claims with respect to Contract 20A was properly admitted against all of the defendants. That admission thus provides sufficient evidence for the jury to have found HUK liable for false claims submitted on Contract 20A. We therefore turn to the defendants' challenges to the jury's calculation of damages.