Opinion ID: 75579
Heading Depth: 3
Heading Rank: 1

Heading: jurisdiction

Text: Appellants argue that the indictment failed to plead and the Government failed to prove the jurisdictional element of the Sherman Act. This jurisdictional element may be pleaded and proven under either of the following two theories: (1) the offending activities took place in the flow of interstate commerce (flow theory); or (2) the defendants’ general business activities had or were likely to have a substantial effect on interstate commerce (effects theory). United States v. Fitapelli, 786 F.2d 1461, 1462 (11th Cir. 1986). In this case, the jury was charged under both the flow theory and the effects theory. We must therefore first examine the indictment to determine whether both theories have been sufficiently pleaded.4 If we conclude the indictment properly pleaded both theories, we must then examine whether the Government sufficiently proved either theory at trial. See id. at 1463-64. Looking first at the issue of proper pleading, Appellants claim the indictment failed to plead the flow theory. The flow theory focuses directly on the 4 If the indictment failed to properly plead both the flow theory and the effects theory, it would be fatally defective because the district court, in instructing the jury on both theories, would have “instructed the jury on a theory of jurisdiction which had not been charged by the grand jury,” destroying Appellants’ “right to be tried only on the charges against them.” Fitapelli, 786 F.2d at 1463-64. 8 challenged anti-competitive conduct, rather than on the defendants’ general business activities. See id. at 1462. Appellants argue that the indictment in this case was fatally defective because it alleged only that Appellants’ general business activities, not specifically the anti-competitive activities at issue in this case, were within the flow of interstate commerce. The indictment contains the following language: The business activities of the defendants and co-conspirators that are the subject of this Indictment were within the flow of, and substantially affected, interstate and foreign trade and commerce. (emphasis added). By stating that the business activities “that are the subject of this Indictment were within the flow of, and substantially affected, interstate and foreign trade and commerce,”5 the indictment sufficiently alleged jurisdiction under both the flow theory and the effects theory.6 The phrase “the business activities . . . that are the 5 We note that this sentence is grammatically awkward, as it is not immediately clear whether the phrase “that are the subject of this Indictment” modifies “business activities” or “defendants and co-conspirators.” Upon further examination, however, it becomes clear that the phrase cannot modify “defendants and co-conspirators.” The word “defendants” refers to all parties who are “the subject of this Indictment.” The word “co-conspirators” must then refer to unindicted co-conspirators (such as McConnell and Kovinsky). The phrase in question must therefore modify “business activities.” 6 Appellants also argue that the indictment failed to plead the effects theory. They concede that under the effects theory, this circuit requires only that the defendant’s general business activities, not the specific anti-competitive conduct in question, have a substantial effect on interstate commerce. See Shahawy v. Harrison, 778 F.2d 636, 640 (11th Cir. 1985). Appellants argue, however, that Shahawy was wrongly decided and is likely to be overturned by 9 subject of” the indictment refers to the specific anti-competitive conduct challenged in the indictment, not merely to Appellants’ general business activities. Appellants also argue the Government failed to prove either jurisdictional theory at trial.7 We conclude the Government proved jurisdiction under the effects theory. The record reveals that scrap metal subject to Appellants’ price-fixing agreement was exported to India and Korea and was shipped interstate to Alabama, Georgia, and Indiana. Furthermore, Sunshine directed a shipment of auto scrap from the Bahamas to Atlas pursuant to the agreement. “As a matter of practical economics, a substantial relationship with interstate markets has been established and, therefore, jurisdiction has been proven under the effect[s] theory.” Fitapelli, 786 F.2d at 1465. Having concluded that jurisdiction was proven under the effects theory, we need not address whether it was proven under the flow theory. United States v. Cargo Serv. Stations, Inc., 657 F.2d 676, 679, 680 n.2 (5th Cir. Unit B 1981).8 this Court sitting en banc or by the Supreme Court. As we are bound by circuit precedent, we will not address this argument here, but we will note that even under Appellants’ argument, the indictment properly pleads the effects theory for the same reason it properly pleads the flow theory. 7 Appellants claim the Government relied exclusively on the flow theory at trial, but failed to prove it. According to Appellants, the fact that Atlas and Sunshine exported processed scrap did not satisfy the Government’s burden of proof under the flow theory. 8 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this Court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior 10